<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1999
1933 ACT REGISTRATION NO. 333-46113
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
ON
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
LLANY SEPARATE ACCOUNT R FOR FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE
(EXACT NAME OF REGISTRANT)
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(NAME OF DEPOSITOR)
120 Madison Street, Suite 1700, Syracuse, NY 13202
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
Depositor's Telephone Number, including Area Code
(888) 223-1860
<TABLE>
<S> <C>
Robert O. Sheppard, Esquire COPY TO:
Lincoln Life & Annuity Company of New York George N. Gingold, Esquire
120 Madison Street, Suite 1700 197 King Philip Drive
Syracuse NY 13202 West Hartford, CT 06117-1409
(NAME AND ADDRESS OF AGENT FOR SERVICE)
</TABLE>
Approximate date of proposed public offering: Continuous.
INDEFINITE NUMBER OF UNITS OF INTEREST IN VARIABLE LIFE INSURANCE CONTRACTS
(TITLE OF SECURITIES BEING REGISTERED)
An indefinite amount of the securities being offered by the Registration
Statement has been registered pursuant to Rule 24F-2 under the Investment
Company Act of 1940. The first Form 24F-2 for the Registrant, for the fiscal
year ending December 31, 1998 is not yet due.
It is proposed that this filing will become effective:
/ / immediately on filing, pursuant to Rule 485(b)
/ / on 1999, pursuant to Rule 485(b)
/ / 60 days after filing pursuant to Rule 485(a)
/X/ on May 3, 1999 pursuant to Rule 485(a)
<PAGE>
CROSS REFERENCE SHEET
(RECONCILIATION AND TIE)
REQUIRED BY INSTRUCTION 4 TO FORM S-6
<TABLE>
<CAPTION>
ITEM OF FORM
N-8B-2 LOCATION IN PROSPECTUS
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<S> <C>
1 Cover Page Highlights
2 Cover Page
3 *
4 Distribution of Policies
5 LLANY, the Separate Account and the General Account
6(a) LLANY, the Separate Account and the General Account
6(b) *
9 Legal Proceedings
10(a)-(c) Right-to-Examine Period; Surrenders of the Policy;
Accumulation Value; Reports to Owners
10(d) Right to Exchange the Policy; Policy Loans; Surrenders of the
Policy; Allocation of Net Premium Payments
10(e) Lapse and Reinstatement
10(f) Voting Rights
10(g)-(h) Substitution of Securities
10(i) Premium Payments; Transfers; Death Benefit; Policy Values;
Settlement Options
11 The Funds
12 The Funds
13 Charges and Fees
14 The Policy
15 Premium Payments; Transfers
16 LLANY, the Separate Account and the General Account
17 Surrender of the Policy
18 LLANY, the Separate Account and the General Account
19 Reports to Owners
20 *
21 Policy Loans
22 *
23 LLANY, the Separate Account and the General Account
24 Incontestability; Suicide; Misstatement of Age or Gender
25 LLANY, the Separate Account and the General Account
26 Fund Participation Agreements
27 LLANY, the Separate Account and the General Account
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM OF FORM
N-8B-2 LOCATION IN PROSPECTUS
- ----------------- --------------------------------------------------------------
<S> <C>
28 Directors and Officers of LLANY
29 LLANY, the Separate Account and the General Account
30 *
31 *
32 *
33 *
34 *
35 *
37 *
38 Distribution of Policies
39 Distribution of Policies
40 *
41(a) Distribution of Policies
42 *
43 *
44 The Funds; Premium Payments
45 *
46 Surrender of the Policy
47 LLANY, the Separate Account and the General Account; Surrender
of the Policy, Transfers
48 *
49 *
50 LLANY, the Separate Account and the General Account
51 Cover Page; Highlights; Premium Payments; Right to Exchange
the Policy
52 Substitution of Securities
53 Tax Matters
54 *
55 *
</TABLE>
* Not Applicable
<PAGE>
PROSPECTUS 2
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
LLANY SEPARATE ACCOUNT R FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE PROSPECTUS
DATED XXXXX
HOME OFFICE LOCATION:
120 MADISON STREET
SUITE 1700
SYRACUSE, NY 13202
(888) 223-1860
ADMINISTRATIVE OFFICE:
PERSONAL SERVICE CENTER MVLI
350 CHURCH STREET
HARTFORD, CT 06103-1106
(800) 552-9898
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A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
BENEFITS PAYABLE ON DEATH OF SECOND OF TWO INSUREDS
- --------------------------------------------------------------------------------
This Prospectus describes a flexible premium variable life insurance contract
(the "Policy"), offered by Lincoln Life & Annuity Company of New York ("LLANY"
"we", "our" or "us"). The Policy provides death benefits when the second of the
two named Insureds dies (a "Second Death Policy"). (Page references are to this
Prospectus unless otherwise stated.)
The Policy features:
- flexible premium payments (described on page 10);
- a choice of one of two death benefit options (described on
page 25); and
- a choice of underlying investment options (described on page
15).
It may not be advantageous to replace existing insurance or supplement an
existing flexible premium variable life insurance contract with the Policy.
The Policy described in this Prospectus is available only in New York.
The mutual funds available through LLANY's Separate Account R ("Variable
Account") are:
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
BARON CAPITAL FUNDS TRUST
Baron Capital Asset Fund
BT INSURANCE FUNDS TRUST
BT EAFE-Registered Trademark- Equity Index Fund
BT Equity 500 Index Fund
BT Small Cap Index Fund
DELAWARE GROUP PREMIUM FUND, INC.
Delchester Series
Devon Series
Emerging Markets Series
REIT Series
Small Cap Value Series
Trend Series
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio -- Service Class
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
Growth Opportunities Portfolio -- Service Class
JANUS ASPEN SERIES
Balanced Portfolio
Worldwide Growth Portfolio
LINCOLN NATIONAL
LN Bond Fund, Inc.
LN Capital Appreciation Fund, Inc.
LN Equity-Income Fund, Inc.
LN Global Asset Allocation Fund, Inc.
LN Money Market Fund, Inc.
LN Social Awareness Fund, Inc.
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST
MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
International Fund -- Class 2
Stock Fund -- Class 2
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE FUNDS AVAILABLE AS INVESTMENT OPTIONS THROUGH THE SEPARATE ACCOUNT UNDER THE
POLICY OFFERED BY THIS PROSPECTUS. ALL PROSPECTUSES SHOULD BE READ CAREFULLY TO
UNDERSTAND THE POLICY AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CONTENTS PAGE
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<S> <C>
HIGHLIGHTS...................................... 3
Initial Choices To Be Made.................... 3
Level or Varying Death Benefit................ 3
Amount of Premium Payment..................... 4
Selection of Funding Vehicles................. 4
Charges and Fees.............................. 5
Changes in Specified Amount................... 5
LLANY, THE SEPARATE ACCOUNT AND THE GENERAL
ACCOUNT........................................ 6
BUYING VARIABLE LIFE INSURANCE.................. 7
Replacements.................................. 8
APPLICATION..................................... 8
OWNERSHIP....................................... 9
BENEFICIARY..................................... 9
INSUREDS........................................ 10
THE POLICY...................................... 10
Policy Specifications......................... 10
PREMIUM FEATURES................................ 10
Planned Premiums; Additional Premiums......... 10
Limits on Right to Make Payments of
Additional and Planned Premiums............ 11
Premium Load; Net Premium Payment........... 11
RIGHT-TO-EXAMINE PERIOD......................... 11
TRANSFERS AND ALLOCATION AMONG ACCOUNTS......... 11
Allocation of Net Premium Payments............ 11
Transfers..................................... 11
Optional Sub-Account Allocation Programs...... 12
Dollar Cost Averaging....................... 12
Automatic Rebalancing....................... 13
POLICY VALUES................................... 13
Accumulation Value............................ 13
Variable Account Value........................ 14
Variable Accumulation Unit Value............ 14
Variable Accumulation Units................. 14
Fixed Account and Loan Account Value.......... 14
Net Accumulation Value........................ 15
FUNDS........................................... 15
Substitution of Securities.................... 19
Voting Rights................................. 19
Fund Participation Agreements................. 20
CHARGES AND FEES................................ 20
Deductions Made Monthly....................... 20
Monthly Deduction........................... 20
Cost of Insurance Charge.................... 21
Mortality and Expense Risk Charge............. 21
Fund Expenses................................. 22
Surrender Charges............................. 24
Transaction Fee for Excess Transfers.......... 25
DEATH BENEFITS.................................. 25
Death Benefit Options......................... 25
Changes in Death Benefit Options and Specified
Amount....................................... 26
Federal Income Tax Definition of Life
Insurance.................................... 26
<CAPTION>
CONTENTS PAGE
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<S> <C>
NOTICE OF DEATH OF INSUREDS..................... 26
PAYMENT OF DEATH BENEFIT PROCEEDS............... 27
Settlement Options............................ 27
POLICY LIQUIDITY................................ 27
Policy Loans.................................. 28
Partial Surrender............................. 28
Surrender of the Policy....................... 29
Surrender Value............................. 29
Deferral of Payment and Transfers............. 29
ASSIGNMENT; CHANGE OF OWNERSHIP................. 29
LAPSE AND REINSTATEMENT......................... 30
Lapse of a Policy............................. 30
No Lapse Provision.......................... 30
Reinstatement of a Lapsed Policy.............. 31
COMMUNICATIONS WITH LLANY....................... 31
Proper Written Form........................... 31
OTHER POLICY PROVISIONS......................... 31
Issuance...................................... 31
Date of Coverage.............................. 31
Right to Exchange the Policy.................. 31
Incontestability.............................. 32
Misstatement of Age or Gender................. 32
Suicide....................................... 32
Nonparticipating Policies..................... 33
TAX ISSUES...................................... 33
Tax Treatment of Death Benefit................ 33
Federal Income Tax Considerations............. 33
Taxation of LLANY............................. 34
Other Considerations.......................... 34
FAIR VALUE OF THE POLICY........................ 34
DIRECTORS AND OFFICERS OF LLANY................. 35
DISTRIBUTION OF POLICIES........................ 36
CHANGES OF INVESTMENT POLICY.................... 37
OTHER CONTRACTS ISSUED BY LLANY................. 37
STATE REGULATION................................ 37
REPORTS TO OWNERS............................... 37
ADVERTISING..................................... 38
PREPARING FOR YEAR 2000......................... 38
EXPERTS......................................... 39
REGISTRATION STATEMENT.......................... 39
Appendix 1...................................... 40
Illustration of Accumulation Values, Surrender
Values, and Death Benefits................... 40
Appendix 2...................................... 43
Corridor Percentages.......................... 43
Financial Statements............................ S-1
</TABLE>
2
<PAGE>
HIGHLIGHTS
This section is an overview of key Policy features. Your
Policy is a flexible premium variable life insurance policy.
Your Policy insures two Insureds. If one of the Insureds
dies, the Policy pays no death benefit. Your Policy will pay
the death benefit only when the second Insured dies. A
"second-to-die" policy might be suitable when both of the
Insureds have income of their own and only want to provide
financial support for their dependents if both of them
should die, or to provide liquidity to heirs when the Second
Insured dies. If replacement income or immediate cash
liquidity is needed upon the death of one Insured, this type
of policy may not be suitable.
The Policy's value may change on a:
1) fixed basis;
2) variable basis; or a
3) combination of both fixed and variable bases.
Review your personal financial objectives and discuss them
with a qualified financial counselor before you buy a
"second-to-die" variable life insurance policy. As a death
benefit is only paid upon the second Insured's death, this
Policy may, or may not, be appropriate for your financial
goals. The value of the Policy and, under one option, the
death benefit amount, depends on the investment results of
the funding options you select.
At all times, your Policy must qualify as life insurance
under the Internal Revenue Code of 1986 (the "Code") to
receive favorable tax treatment under Federal law. If these
requirements are met, you may benefit from such tax
treatment. LLANY reserves the right to return your premium
payments if they result in your Policy failing to meet Code
requirements.
INITIAL CHOICES TO BE MADE
The Policy Owner (the "Owner" or "you") is the person named
in the "Policy Specifications" who has all of the Policy
ownership rights. You, as the Owner, have three important
choices to make when the Policy is first purchased. You need
to choose:
1) one of the two Death Benefit Options described on page
25;
2) the amount of premium you want to pay; and
3) the amount of your Net Premium Payment to be placed in
each of the funding options you select. The Net Premium
Payment is the balance of your Premium Payment that
remains after certain charges are deducted from it.
LEVEL OR VARYING DEATH BENEFIT
The Death Benefit is the amount LLANY pays to the
Beneficiary(ies) when the second Insured dies. Before we pay
the Beneficiary(ies), any outstanding loan account balances
or outstanding amounts due are subtracted from the Death
Benefit. LLANY calculates the Death Benefit payable as of
the date of the second Insured's death.
When you purchase your Policy, you must choose one of two
Death Benefit Options:
1) a level death benefit; or
2) a varying death benefit.
3
<PAGE>
If you choose the level Death Benefit Option, the Death
Benefit will be the greater of:
1) the Specified Amount, which is the amount of the death
benefit in effect for the Policy when the second Insured
died (The Specified Amount is on the Policy's Specification
Page); or
2) the Corridor Death Benefit, which is the death benefit
calculated as a percentage of the Accumulation Value.
If you choose the varying Death Benefit Option, the Death
Benefit will be the greater of:
1) the Specified Amount plus the Net Accumulation Value when
the second Insured died. The Net Accumulation Value is the
total of the balances in the Fixed Account and the Variable
Account minus any outstanding Loan Account amounts; or
2) the Corridor Death Benefit.
See page 25 for more details.
AMOUNT OF PREMIUM PAYMENT
When you apply for your Policy, you must decide how much
premium to pay. Premium payments may be changed within the
limits described on page 11.
You may use the value of the Policy to pay the premiums due
and continue the Policy in force if sufficient values are
available for premium payments. Be careful; if the
investment options you choose do not do as well as you
expect, there may not be enough value to continue the Policy
in force without more premium payments. Charges against
Policy values for the cost of insurance (see page 21)
increase as the Insureds get older.
If your Policy lapses because your Monthly Premium Deduction
is larger than the Net Accumulation Value, you may reinstate
your Policy. More information is on page 30.
When you first receive your Policy you will have 10 days to
look it over. This is called the "Right-to-Examine" time
period. Use this time to review your Policy and make sure
that it meets your needs. During this time period, your
Initial Premium Payment will be deposited in the Money
Market Account. If you then decide you do not want your
Policy, we will return all Premium Payments to you with no
interest paid. See page 11.
SELECTION OF FUNDING VEHICLES
This Prospectus focuses on the Variable Account investment
information that makes up the "variable" part of the Policy.
If you put money into the variable funds, you take all the
investment risk on that money. This means that if the mutual
funds(s) you select go up in value, the value of your
Policy, net of charges and expenses, also goes up. If they
lose value, so does your Policy. Each fund has its own
investment objective. You should carefully read each fund's
Prospectus before making your decision.
You must choose the Fund(s) in which you want to place each
Net Premium Payment. These Fund Sub-Accounts make up the
Variable Account. Each Sub-Account invests in shares of a
certain Fund. You may also place your Net Premium Payment or
part of it into the Fixed Account. A Variable Sub-Account is
not guaranteed and will increase or decrease in value
according to the particular Fund's investment performance.
See page 13.
4
<PAGE>
You may also use LLANY's Fixed Account to fund your Policy.
Net Premium Payments made into the Fixed Account:
- become part of Lincoln Life's General Account;
- do not share the investment experience of the Separate
Account; and
- have a guaranteed minimum interest rate of 4% per year.
Interest beyond 4% is credited at LLANY's discretion. For
additional information, see page 7 and the Policy itself.
CHARGES AND FEES
We deduct a premium load of 8% from each Premium Payment. We
make monthly deductions for administrative expenses
(currently, $12.50 per month for the first Policy Year and
$5 per month afterwards), the Cost of Insurance and any
riders that are placed on your Policy. For Policy Years
1-20, a monthly charge of $0.09 per $1,000 of Specified
Amount is deducted. If the No-Lapse Provision is selected,
there will be an additional monthly charge of $0.01 per
$1,000 of Specified Amount. See page 20.
We make daily charges against the Variable Account for
mortality and expense risk, at an annual rate of .80%. See
page 21.
Each Fund has its own management fee charge, also deducted
daily. Each Fund's expense levels will affect its investment
results. The table on page 22 shows you the current expense
levels for each Fund.
Each Policy Year you will be allowed to make 12 transfers
between funding options. Beyond 12, a $25 fee may apply. See
page 12.
We charge you $25, but not more than 2% of the amount
withdrawn, each time you request a partial surrender of your
Policy. If you totally surrender your Policy within the
first 15 years, a surrender charge will be deducted in
computing what will be paid you. If you surrender your
Policy within the first 15 years after an increase in the
Specified Amount, a surrender charge will also be imposed,
in addition to any existing surrender charge. See page 24.
You may borrow within described limits against the Policy.
You may surrender the Policy in full or withdraw part of its
value. A Surrender Charge is applied if the Policy is
surrendered totally.
If you borrow against your Policy, 8% annual interest will
be charged to the Loan Account Value. You may pay that
interest or have it added to your loan. LLANY will credit
interest on the Loan Account Value at an annual rate equal
to the interest rate charged minus 1% for the first ten
Policy Years, and thereafter at the annual interest rate
charged on the loan.
LLANY may derive a profit from its charges and may use these
profits to finance distribution of the Policies.
CHANGES IN SPECIFIED AMOUNT
The Initial Specified Amount is the amount originally chosen
by the Applicant and is initially equal to the Death
Benefit. Within certain limits, you may decrease or, with
satisfactory evidence of insurability, increase the
Specified Amount. The minimum specified amount is currently
$250,000. Such changes will affect other aspects of your
Policy. See page 26.
5
<PAGE>
LLANY, THE SEPARATE ACCOUNT AND
THE GENERAL ACCOUNT
Lincoln Life & Annuity Company of New York is a life
insurance company chartered under New York law on June 6,
1996. Wholly-owned by The Lincoln National Life Insurance
Company ("Lincoln Life") and in turn by Lincoln National
Corporation ("LNC"), a publicly held Indiana insurance
holding company incorporated in 1968, it is licensed to sell
life insurance and annuity contracts in New York. Its
principal office is at 120 Madison Street, Suite 1700,
Syracuse, NY 13202. LLANY, Lincoln Life, LNC and their
affiliates comprise the "Lincoln Financial Group" which
provides a variety of wealth accumulation and protection
products and services.
LLANY Separate Account R for Flexible Premium Variable Life
Insurance ("Account R") is a "separate account" established
pursuant to a resolution of the Board of Directors of LLANY.
Under New York law, the assets of Account R attributable to
the Policies, though LLANY's property, are not chargeable
with liabilities of any other business of LLANY and are
available first to satisfy LLANY's obligations under the
Policies. Account R income, gains, and losses are credited
to or charged against Account R without regard to other
income, gains, or losses of LLANY. Account R's values and
investment performance are not guaranteed. Account R is
registered with the Securities and Exchange Commission (the
"Commission") as a "unit investment trust" under the 1940
Act and meets the 1940 Act's definition of "separate
account". Such registration does not involve supervision by
the Commission of Account R's or LLANY's management,
investment practices, or policies. LLANY has numerous other
registered separate accounts which fund its variable life
insurance policies and variable annuity contracts.
Account R is divided into Sub-Accounts, each of which is
invested solely in the shares of one of the mutual funds or
the Fixed Account available as funding vehicles under the
Policies. On each Valuation Day, Net Premium Payments
allocated to Account R will be invested in Fund shares at
net asset value, and monies necessary to pay for deductions,
charges, transfers and surrenders from Account R are raised
by selling Fund shares at net asset value.
The Funds now available in Account R and their investment
objectives are on pages 15-19. More Fund information is in
the Funds' prospectuses, which must accompany or precede
this prospectus and should be read carefully. The Funds may
or may not achieve their investment objectives.
Some Funds have investment objectives and policies similar
to those of other funds managed by the same investment
adviser. Their investment results may be higher or lower
than those of the other funds, and there can be no
assurance, and no representation is made, that a Fund's
investment results will be comparable to the investment
results of any other fund.
LLANY reserves the right to add, withdraw or substitute
Funds, subject to the conditions of the Policy and to
compliance with regulatory requirements, if in its sole
discretion legal, regulatory, marketing, tax or investment
considerations so warrant or in the event a particular Fund
is no longer available to LLANY for investment by the
Sub-Accounts. No substitution will take place without prior
approval of the Commission, to the extent required by law.
Shares of the Funds may be used by LLANY and other insurance
companies to fund both variable annuity contracts and
variable life insurance policies. While this is not
perceived as problematic, the Funds' governing bodies
(Boards of Directors/Trustees) have agreed to monitor events
to identify any material irreconcilable conflicts which
6
<PAGE>
might arise and to decide what responsive action might be
appropriate. If a separate account were to withdraw its
investment in a Fund because of a conflict, a Fund might
have to sell portfolio securities at unfavorable prices.
A Policy may also be funded in whole or in part through the
"Fixed Account", part of LLANY's General Account supporting
its insurance and annuity obligations. We will credit
interest on amounts held in the Fixed Account as we
determine from time to time, but not less than 4% per year.
Interest, once credited, and Fixed Account principal are
guaranteed. Interests in the Fixed Account have not been
registered under the 1933 Act in reliance on exemptive
provisions. The Commission has not reviewed Fixed Account
disclosures, but they are subject to securities law
provisions relating to accuracy and completeness.
BUYING VARIABLE LIFE INSURANCE
The Policies this Prospectus offers are variable life
insurance policies which provide death benefit protection.
Investors not needing death benefit protection should
consider other forms of investment, as there are extra costs
and expenses of providing the insurance feature. Further,
life insurance purchasers who are risk-aversive or want more
predictable premium levels and benefits may be more
comfortable buying more traditional, non-variable life
insurance. However, variable life insurance is a flexible
tool for financial and investment planning for persons
needing death benefit protection and willing to assume
investment risk and to monitor investment choices they have
made.
Flexibility starts with the ability to make differing levels
of premium payments. A young family just starting out may
only be able to pay modest premiums initially but hope to
increase premium payments over time. At first, this family
would be paying primarily for the insurance feature (perhaps
at ages where the insurance cost is relatively low) and
later use a Policy more as a savings vehicle. A customer at
peak earning capacity may wish to pay substantial premiums
for a limited number of years prior to retirement, after
which Policy values may suffice, based on future expected
return results, though not guaranteed, to keep the Policy
inforce for the expected lifetime and to provide, through
loans, supplemental retirement income. A customer may be
able to pay a large single premium, using the Policy
primarily as a savings and investment vehicle for potential
tax advantages.
Sufficient premiums must always be paid to keep a policy
inforce, and there is a risk of lapse if premiums are too
low in relation to the insurance amount and if investment
results are less favorable than anticipated. The No Lapse
Provision, if elected, may help to assure a death benefit
even if investment results are unfavorable.
Flexibility also results from being able to select, monitor
and change investment choices within a Policy. With the wide
variety of fund options available, it is possible to
finetune an investment mix and change it to meet changing
personal objectives or investment conditions. Policy owners
should be prepared to monitor their investment choices on an
ongoing basis.
Variable life insurance has significant tax advantages under
current tax law. A transfer of values from one fund to
another within the Policy generates no taxable gain or loss.
And any investment income and realized capital gains within
a fund are automatically reinvested without being taxed to
the Policy owners. Policy values therefore accumulate on a
tax-deferred basis. These situations would normally result
in immediate tax liabilities in the case of direct
investment in mutual funds.
While these tax deferral features also apply to variable
annuities, liquidity (the ability of Policy owners to access
Policy values) is normally more easily achieved with
variable
7
<PAGE>
life insurance. Unless a policy has become a "modified
endowment contract" (see page 33), an owner can borrow
Policy values tax-free, without surrender charges and at
very low net interest cost. Policy loans can be a source of
retirement income. Variable annuity withdrawals are
generally taxable to the extent of accumulated income, may
be subject to surrender charges, and will result in penalty
tax if made before age 59 1/2.
Depending on the death benefit option chosen, accumulated
Policy values may also be part of the eventual death benefit
payable. If a Policy is heavily funded and investment
performance is very favorable, the death benefit may
increase even further because of tax law requirements that
the death benefit be a certain multiple of Policy value,
depending on the Insured's age (see page 25). The death
benefit is income-tax free and may, with proper estate
planning, be estate-tax free. A tax advisor should be
consulted.
The costs and expenses of variable life insurance ownership
which are directly related to Policy values (i.e. asset
based costs) are not unlike those incurred through
investment in mutual funds or variable annuities. The
significant additional cost of variable life insurance is
the "cost of insurance" charge which is imposed on the
"amount at risk" (the death benefit less Policy value) and
increases as the insured grows older. This charge varies by
age, underwriting classification, smoking status and in most
states by gender. The effect of its increase can be seen in
illustrations in this Prospectus (see Appendix 1) or in
personalized illustrations available upon request.
REPLACEMENTS
Before purchasing the Policy to replace, or to be funded
with proceeds borrowed or withdrawn from, an existing life
insurance policy, an applicant should consider a number of
matters. Will any commission will be paid to an agent or any
other person with respect to the replacement? Are coverages
and comparable values are available from the Policy, as
compared to his or her existing policy? For example, the
Insureds may no longer be insurable, or the contestability
period may have elapsed with respect to the existing policy,
while the Policy could be contested. The Owner should
consider similar matters before deciding to replace the
Policy or withdraw funds from the Policy for the purchase of
funding a new policy of life insurance.
APPLICATION
Any person who wants to buy a Policy must first complete an
application on a form provided by LLANY.
A complete application identifies the prospective Insureds
and provides sufficient information about them to permit
LLANY to begin underwriting the risks under the Policy. We
require medical history and examination of each of the
Insureds. LLANY may decline to provide insurance on the
lives of the Insureds or, if it agrees to provide insurance,
it may place one or both Insureds into a special
underwriting category (these include preferred, non-smoker
standard, smoker standard, non-smoker substandard and smoker
substandard). The amount of the Cost of Insurance deducted
monthly from the Policy value after issue varies among the
underwriting categories as well as by Age and, in most
states, gender of the Insureds.
The applicant will select the Beneficiary or Beneficiaries
who are to receive Death Benefit Proceeds payable on the
Second Death, the initial face amount (the Initial Specified
Amount) of the Death Benefit and which of two methods of
computing the Death Benefit is to be used. (See DEATH
BENEFITS, Death Benefit Options). The applicant will also
indicate both the frequency and amount of Premium Payments.
(See PREMIUM
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FEATURES.) The applicant must also determine how Policy
values are initially to be allocated among the available
funding options following the expiration of the Right-to-
Examine Period. (See RIGHT-TO-EXAMINE PERIOD).
OWNERSHIP
The Owner is the person or persons named as Owner in the
application, and on the Date of Issue will usually be
identified as Owner in the Policy Specifications. If no
person is identified as Owner in the Policy Specifications,
then the Insureds are the Owner. The person or persons
designated to be Owner of the Policy must have, or hold
legal title for the sole benefit of a person who has, an
"insurable interest" in the lives of each of the Insureds
under applicable state law. The Owner may be either or both
of the Insureds, or any other natural person or non-natural
entity. The Owner owns and exercises the rights under the
Policy prior to the Second Death.
The Owner is the person who is ordinarily entitled to
exercise the rights under the Policy so long as either of
the Insureds is living. These rights include the power to
select the Beneficiary and the Death Benefit Option. The
Owner generally also has the right to request policy loans,
make partial surrenders or surrender the Policy. The Owner
may also name a new owner, assign the Policy or agree not to
exercise all of the Owner's rights under the Policy.
If the Owner is a person other than the last surviving
Insured, and that Owner dies before the Second Death, the
Owner's rights in the Policy will belong to the Owner's
estate, unless otherwise specified to LLANY.
BENEFICIARY
The Beneficiary is designated by the Owner or the Applicant
and is the person who will receive the Death Benefit
proceeds payable under the Policy. The person or persons
named in the application as Beneficiary are the
Beneficiaries of the Death Benefit under the Policy.
Multiple Beneficiaries will be paid in equal shares, unless
otherwise specified to LLANY.
Except when LLANY has acknowledged an assignment of the
Policy or an agreement not to change the Beneficiary, the
Owner may change the Beneficiary at any time while either of
the Insureds is living. Any request for a change in the
Beneficiary must be in a written form satisfactory to LLANY
and submitted to LLANY. Unless the Owner has reserved the
right to change the Beneficiary, such a request must be
signed by both the Owner and the Beneficiary. On
recordation, the change of Beneficiary will be effective as
of the date of signature or, if there is no such date, the
date recorded. No change of Beneficiary will affect, or
prejudice LLANY as to, any payment made or action taken by
LLANY before it was recorded.
If any Beneficiary dies before the Second Death, the
Beneficiary's potential interest shall pass to any surviving
Beneficiaries, unless otherwise specified to LLANY. If no
named Beneficiary survives the Second Death, any Death
Benefit Proceeds will be paid to the Owner or the Owner's
executor, administrator or assignee.
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INSUREDS
There are two Insureds under the Policy. At the Date of
Issue of the Policy the Owner must have an insurable
interest in each of the Insureds. On the Second Death, a
Death Benefit is payable under the Policy.
THE POLICY
The Policy is the life insurance contract described in this
Prospectus. The Date of Issue is the date on which LLANY
begins life insurance coverage under a Policy. A Policy Year
is each twelve month period, beginning with the Date of
Issue, during which the Policy is in effect.
On issuance, a life insurance contract (Policy) will be
delivered to the Owner. The Policy sets forth the terms of
the Policy, as applicable to the Owner, and should be
reviewed by the Owner on receipt to confirm that it sets
forth the features specified in the application. The
ownership and other options set forth in the Policy are
registered, and may be transferred, solely on the books and
records of LLANY. Possession of the Policy does not
represent ownership or the right to exercise the incidents
of ownership with respect to the Policy. If the Owner loses
the form of Policy, LLANY will issue a replacement on
request. LLANY may impose a Policy replacement fee.
POLICY SPECIFICATIONS
The Policy includes a Policy Specifications page, with
supporting schedules, in which is set forth certain
information applicable to the specific Policy. This
information includes the identity of the Owner, the Date of
Issue, the Initial Specified Amount, the Death Benefit
Option selected, the Insureds, the issue Ages, the
Beneficiary, the initial Premium Payment, the Surrender
Charges, Expense Charges and Fees, Guarantee Maximum Cost of
Insurance Rates, and the No Lapse Premium if the No Lapse
Provision has been selected.
PREMIUM FEATURES
The Policy permits flexible premium payments, meaning that
the Owner may select the frequency and the amount of Premium
Payments. After the Initial Premium Payment is paid there is
no minimum premium required, unless to maintain the No Lapse
Provision. (See LAPSE AND REINSTATEMENT No Lapse Provision).
The initial Premium Payment is due on the Effective Date
(the date on which the initial premium is applied to the
Policy) and must be equal to or exceed the amount necessary
to provide for two Monthly Deductions or, if selected, the
No Lapse Premium.
PLANNED PREMIUMS; ADDITIONAL PREMIUMS
Planned Premiums are the amount of premium (as shown in the
Policy Specifications) the Applicant chooses to pay LLANY on
a scheduled basis. This is the amount for which LLANY sends
a premium reminder notice. Planned Premiums may be billed
with an annual, semiannual, or quarterly frequency.
Pre-authorized automatic Premium Payments can also be
arranged at any time.
Any subsequent Premium Payments (Additional Premiums) must
be sent directly to the Administrative Office. Additional
Premiums will be credited only when actually received by
LLANY.
Unless specifically otherwise directed, any payment received
(other than any Premium Payment necessary to prevent, or
cure, Policy lapse) will be applied first to reduce Policy
indebtedness. There is no premium load on such payments to
the extent applied to reduce indebtedness.
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LIMITS ON RIGHT TO MAKE PAYMENTS OF ADDITIONAL AND PLANNED
PREMIUMS
The Owner may increase Planned Premiums, or pay Additional
Premiums, subject to the following limitations and LLANY's
right to limit the amount or frequency of Additional
Premiums.
LLANY may require evidence of insurability if any payment of
Additional Premium (including Planned Premium) would
increase the difference between the Death Benefit and the
Accumulation Value. If LLANY is unwilling to accept the
risk, the increase in premium will be refunded without
interest and without participation of such amounts in any
underlying investment.
LLANY may also decline any Additional Premium (including
Planned Premium) or a portion thereof that would result in
total Premium Payments exceeding the maximum limitation for
life insurance under federal tax laws. The excess amount
would be returned.
PREMIUM LOAD; NET PREMIUM PAYMENT
LLANY deducts 8.0% from each Premium Payment. This amount,
sometimes referred to as premium load, covers certain
Policy-related state tax and federal income tax liabilities
and a portion of the sales expenses incurred by LLANY. The
Premium Payment, net of the premium load, is called the Net
Premium Payment.
RIGHT-TO-EXAMINE PERIOD
The Owner may return the Policy to LLANY for cancellation as
follows. If the Owner mails or delivers the Policy to the
Administrative Office on or before 10 days after delivery of
the Policy (60 days for Policies issued in replacement of
other insurance) and notice of surrender rights to the
Owner, (Right-to-Examine Period) LLANY will refund to the
Owner all Premium Payments.
Any Premium Payments received by LLANY before the end of the
Right-to-Examine Period will be held in the Money Market
Account, and will be allocated to the Sub-Accounts
designated by the Owner at the end of a Right-to-Examine
Period. If the Policy is returned for cancellation within
the Right-to-Examine Period, we will return any Premium
Payments within seven days, although any refund of a Premium
Payment made by check may be delayed until the check clears.
TRANSFERS AND ALLOCATION AMONG ACCOUNTS
ALLOCATION OF NET PREMIUM PAYMENTS
The allocation of Net Premium Payments among the Fixed and
Variable Sub-Accounts may be set forth in the application.
An Owner may change the allocation of future Net Premium
Payments at any time. In any allocation, the amount
allocated to any Sub-Account must be in whole percentages.
No allocation can be made which would result in a
Sub-Account Value of less than $50 or a Fixed Account Value
of $2,500. LLANY, at its sole discretion, may waive minimum
balance requirements on the Sub-Accounts.
TRANSFERS
The Owner may make transfers among the Sub-Accounts, on the
terms set forth below, at any time before the younger
Insured reaches or would have reached Age 100. The Owner
should carefully consider current market conditions and each
Sub-Account's investment policies and related risks before
allocating money to the Sub-Accounts.
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Transfer of amounts of at least $500 from one Variable
Sub-Account to another or from the Variable Sub-Accounts to
the Fixed Account are possible at any time. Within 30 days
after each anniversary of the Date of Issue, the Owner may
transfer up to 20% of the Fixed Account Value (as of the
preceding anniversary of the Date of Issue) to one or more
Variable Sub-Accounts. Up to 12 transfer requests (a request
may involve more than a single transfer) may be made in any
Policy Year without charge, and any value remaining in a
Sub-Account after a transfer must be at least $500. LLANY
reserves the right to impose a charge for each transfer
request in excess of 12 requests in any Policy Year. LLANY
may further limit transfers from the Fixed Account at any
time.
Transfers must be made in proper written form, unless the
Owner has given written authorization to LLANY to accept
telephone transactions. Contact our Administrative Office
for authorization forms and information on permitted
telephone transactions. Written transfer requests or
adequately authenticated telephone transfer requests
received at the Administrative Office by the close of the
New York Stock Exchange (usually 4:00 PM ET) on a Valuation
Day will be effected as of that day. Otherwise, requests
will be effective as of the next Valuation Day.
Any transfer among the Variable Sub-Accounts or to the Fixed
Account will result in the crediting and cancellation of
Accumulation Units based on the Accumulation Unit values
next determined after the Administrative Office receives a
request in proper written form or adequately authenticated
telephone transfer requests. Any transfer made which causes
the remaining value of Accumulation Units for a Variable
Sub-Account or the Fixed Account to be less than $500 will
result in those remaining Accumulation Units being canceled
and their aggregate value reallocated proportionately among
the other Variable Sub-Accounts and the Fixed Account to
which Policy values are then allocated.
OPTIONAL SUB-ACCOUNT ALLOCATION PROGRAMS
The Owner may elect to participate in programs providing for
Dollar Cost Averaging or Automatic Rebalancing, but may
participate in only one program at any time.
DOLLAR COST AVERAGING
Dollar Cost Averaging systematically transfers specified
dollar amounts from the Money Market Sub-Account. Transfer
allocations may be made to one or more of the Sub-Accounts
on a monthly or quarterly basis. These transfers do not
count against the free transfers available. By making
allocations on a regularly scheduled basis, instead of on a
lump sum basis, an Owner may reduce exposure to market
volatility. Dollar Cost Averaging will not assure a profit
or protect against a declining market.
If the Owner elects Dollar Cost Averaging, the value in the
Money Market Sub-Account must be at least $1,000 initially.
The minimum amount that may be allocated is $50 monthly.
An election for Dollar Cost Averaging is effective after the
Administrative Office receives a request from the Owner in
proper written form or by telephone, if adequately
authenticated. An election is effective within ten business
days, but only if there is sufficient value in the Money
Market Sub-Account. LLANY may, in its sole discretion, waive
Dollar Cost Averaging minimum deposit and transfer
requirements.
Dollar Cost Averaging terminates automatically: (1) if the
number of designated transfers has been completed; (2) if
the value in the Money Market Sub-Account is insufficient to
complete the next transfer; (3) within one week after the
Administrative Office receives a request for termination in
proper written form or by telephone, if adequately
authenticated; or (4) if the Policy is surrendered.
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<PAGE>
Currently, there is no charge for Dollar Cost Averaging, but
LLANY reserves the right to impose a charge.
AUTOMATIC REBALANCING
Automatic Rebalancing periodically restores to a
pre-determined level the percentage of Policy value
allocated to each Variable Sub-Account (e.g. 20% Money
Market, 50% Growth, 30% Utilities). The Fixed Account is not
subject to rebalancing. The pre-determined level is the
allocation initially selected on the application, until
changed by the Owner. If Automatic Rebalancing is elected,
all Net Premium Payments allocated to the Variable
Sub-Accounts will be subject to Automatic Rebalancing.
The Owner may select Automatic Rebalancing on a quarterly,
semi-annual or annual basis. Automatic Rebalancing may be
elected, terminated or the allocation may be changed at any
time, effective within ten business days upon receipt by the
Administrative Office of a request in proper written form or
by telephone, if adequately authenticated.
Currently, there is no current charge for Automatic
Rebalancing, but LLANY reserves the right to impose a
charge.
POLICY VALUES
The Accumulation Value is the sum of the Fixed Account
Value, Variable Account Value and the Loan Account Value.
The Accumulation Value of the Policy depends on the
performance of the underlying investments. Policy values are
used to fund Policy fees and expenses, including the Cost of
Insurance. Premium Payments to meet your objectives will
vary based on the investment performance of the underlying
investments. A market downturn, affecting the Variable
Sub-Accounts upon which the Accumulation Value of a
particular Policy depends, may require Additional Premium
Payments beyond those expected (unless the No Lapse
Provision requirements have been satisfied) to maintain the
level of coverage or to avoid lapse of the Policy. We
strongly suggest you review periodic statements to see if
Additional Premium Payments must be made to avoid lapse of
the Policy.
We will tell you at least annually the Accumulation Value,
the number of Accumulation Units which remain credited to
the Policy, the current Accumulation Unit values, the
Variable Sub-Account values, the Fixed Account Value and the
Loan Account Value.
ACCUMULATION VALUE
The portion of a Premium Payment, after deduction of 8.0%
for the premium load, is the Net Premium Payment. It is the
Net Premium Payment that is available for allocation to the
Fixed Account or Variable Sub-Accounts.
We credit Net Premium Payment to the Policy as of the end of
the Valuation Period in which it is received at the
Administrative Office. The Valuation Period is the time
between Valuation Days, and a Valuation Day is every day on
which the New York Stock Exchange is open and trading
unrestricted. Accumulation units are valued on every
Valuation Day.
The Accumulation Value of a Policy is determined by: (1)
multiplying the total number of Variable Accumulation Units
credited to the Policy for each Variable Sub-Account by its
appropriate current Variable Accumulation Unit Value; (2) if
a combination of Variable Sub-Accounts is elected, totaling
the resulting values; and (3) adding any values attributable
to the Fixed Account and the Loan Account. The Accumulation
Value will be affected by Monthly Deductions.
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VARIABLE ACCOUNT VALUE
The Variable Account Value is the portion of the
Accumulation Value attributable to the Variable Account.
VARIABLE ACCUMULATION UNIT VALUE
When all or a part of a Net Premium Payment is allocated to
a Variable Sub-Account, the amount allocated is converted
into Variable Accumulation Units by dividing the amount
allocated to the Variable Sub-Account by the value of the
Variable Accumulation Unit for the Variable Sub-Account
calculated at the end of the Valuation Period in which it is
received at the Administrative Office. The Variable
Accumulation Unit value for each Variable Sub-Account was
established at $10.00 for the first Valuation Period of the
particular Variable Sub-Account. The Variable Accumulation
Unit value for each Variable Sub-Account would thereafter
vary independently of the other Variable Sub-Accounts and
may increase or decrease from one Valuation Period to the
next. Allocations to Variable Sub-Accounts are made only as
of the end of a Valuation Day.
VARIABLE ACCUMULATION UNITS
A Variable Accumulation Unit is a unit of measure used in
the calculation of the value of each Variable Sub-Account.
The Variable Accumulation Unit value will be as determined
for the Valuation Period during which a Premium Payment or
request for transfer is received by LLANY. The Variable
Accumulation Unit value for a Variable Sub-Account for any
later Valuation Period is determined as follows:
1.The total value of Fund shares held in the Variable
Sub-Account is calculated by multiplying the number of
Fund shares owned by the Variable Sub-Account at the
beginning of the Valuation Period by the net asset
value per share of the Fund at the end of the Valuation
Period, and adding any dividend or other distribution
of the Fund if an ex-dividend date occurs during the
Valuation Period; minus
2.The liabilities of the Variable Sub-Account at the end
of the Valuation Period; such liabilities include daily
charges imposed on the Variable Sub-Account, and may
include a charge or credit with respect to any taxes
paid or reserved for by LLANY that LLANY determines
result from the operations of the Variable Account; and
3.The result of (2) is divided by the number of Variable
Accumulation Units outstanding at the beginning of the
Valuation Period.
The daily charges imposed on a Variable Sub-Account for any
Valuation Period are equal to the daily mortality and
expense risk charge multiplied by the number of calendar
days in the Valuation Period. The amount of Monthly
Deduction allocated to each Variable Sub-Account will result
in the cancellation of Variable Accumulation Units that have
an aggregate value on the date of such deduction equal to
the total amount by which the Variable Sub-Account is
reduced.
The number of Variable Accumulation Units credited to a
Policy will not be changed by any subsequent change in the
value of a Variable Accumulation Unit. Such value may vary
from Valuation Period to Valuation Period to reflect the
investment experience of the Fund used in a particular
Variable Sub-Account and fees and charges under the Policy.
FIXED ACCOUNT AND LOAN ACCOUNT VALUE
The Fixed Account Value and the Loan Account Value reflect
amounts allocated to LLANY's General Account through payment
of premiums or through transfers from the Variable Account.
LLANY guarantees the Fixed Account Value.
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NET ACCUMULATION VALUE
The Net Accumulation Value is the Accumulation Value less
the Loan Account Value. The Net Accumulation Value
represents the net value of the Policy and is the basis for
calculating the Surrender Value.
FUNDS
Each of the Variable Sub-Accounts is invested solely in the
shares of one of the Funds available under the Policies.
Each of the Funds is a series of one of sixteen
Massachusetts or Delaware business trusts or Maryland
corporations. Each such trust or corporation is registered
as an open-end management investment company under the 1940
Act. All of the Funds except for the Delaware Group REIT
Series and the Delaware Group Emerging Market Series are
diversified under the 1940 Act.
Listed below are the Fund Groups, their investment advisers
and distributors, and the Funds within each that are
available under the Policies:
AIM VARIABLE INSURANCE FUNDS, INC., managed by AIM Advisors,
Inc., and distributed by AIM Distributors Inc., 11 Greenway
Plaza, Suite 100, Houston, TX 77046-1173
AIM V.I. Growth Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
BARON CAPITAL FUNDS TRUST, managed and distributed by Baron
Capital Inc., 767 Fifth Avenue, New York, NY 10153
Baron Capital Asset Fund
BT INSURANCE FUNDS TRUST, managed by Bankers Trust Company,
130 Liberty Street (One Bankers Trust Plaza), New York, NY
10006 and distributed by First Data Distributors, Inc., 4400
Computer Drive, Westborough, MA 01581
BT EAFE-Registered Trademark- Equity Index Fund
BT Equity 500 Index Fund
BT Small Cap Index Fund
DELAWARE GROUP PREMIUM FUND, INC., managed by Delaware
Management Company, Inc., One Commerce Square, Philadelphia,
PA 19103 and for International and Emerging Markets,
Delaware International Advisors, Ltd., 80 Cheapside, London,
England ECV2 6EE, and distributed by Delaware Distributors,
L.P., 1818 Market Street, Philadelphia, PA 19103
Delaware Group Delchester Series
Delaware Group Devon Series
Delaware Group Emerging Markets Series
Delaware Group REIT Series
Delaware Group Small Cap Value Series
Delaware Group Trend Series
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II, AND VARIABLE
INSURANCE PRODUCTS FUND III, managed by Fidelity Management
& Research Company and distributed by Fidelity Distributors
Corporation, 82 Devonshire Street, Boston, MA 02103
Fidelity VIP II Contrafund Portfolio -- Service Class
Fidelity VIP III Growth Opportunities Portfolio --
Service Class
JANUS ASPEN SERIES, managed by Janus Capital, 100 Fillmore
St. Denver, CO 80206-4928, and self-distributed.
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Janus Balanced Portfolio
Janus Worldwide Growth Portfolio
LINCOLN NATIONAL FUNDS, managed by Lincoln Investment
Management, Inc., 200 East Berry Street, Fort Wayne IN
46802, and distributed by Lincoln Financial Advisors, Inc.,
350 Church Street, Hartford CT 06103. Sub-advisors are also
noted.
LN Bond Fund, Inc.
LN Capital Appreciation Fund, Inc. (Sub-advised by Janus
Capital)
LN Equity-Income Fund, Inc. (Sub-advised by Fidelity
Management Trust Co.)
LN Global Asset Allocation Fund, Inc. (Sub-advised by
Putnam Investment Management, Inc.)
LN Money Market Fund, Inc.
LN Social Awareness Fund, Inc. (Sub-advised by Vantage
Investment Advisors)
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST, managed
by Massachusetts Financial Services Company and distributed
by MFS Fund Distributors, Inc., 500 Boylston Street, Boston,
MA 02116
MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST, managed and
distributed by N&B Management Incorporated, 605 Third
Avenue, 2nd Floor, New York, NY 10158-0006
N&B AMT Mid-Cap Growth Portfolio
N&B AMT Partners Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND, managed by
Templeton Investment Counsel, Inc. and its Templeton and
Franklin affiliates and distributed by Franklin/ Templeton
Distributors, Inc., 100 Fountain Parkway, St. Petersburg, FL
33716-1205
Templeton International Fund -- Class 2
Templeton Stock Fund -- Class 2
The investment advisory fees charged the Funds by their
advisers are shown on page 21 of this Prospectus.
Below is a brief description of the investment objective and
program of each Fund. There can be no assurance that any of
the stated investment objectives will be achieved.
AIM V.I. GROWTH FUND (Large Cap Stocks): Seeks growth of
capital principally through investment in common stocks of
seasoned and better capitalized companies considered by AIM
to have strong earnings momentum. Current income will not be
a criterion of investment selection, and any such income
should be considered incidental.
AIM V.I. INTERNATIONAL EQUITY FUND (Large Cap Stocks): Seeks
to provide long term growth of capital by investing in a
diversified portfolio of international equity securities the
issuers of which are considered by AIM to have strong
earnings momentum. Any income realized by the Fund will be
incidental and will not be an important criterion in the
selection of portfolio securities.
AIM V.I. VALUE FUND (Large Cap Stocks): Seeks to achieve
long-term growth of capital by investing primarily in equity
securities judged by AIM to be undervalued relative to the
current or projected earnings of the companies issuing the
securities, or relative to current market values of assets
owned by the companies issuing the securities or relative to
the equity markets generally. Income is a secondary
objective and would be
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<PAGE>
satisfied principally from the interest (interest and
dividends) generated by the common stocks, convertible bonds
and convertible preferred stocks that make up the Fund's
portfolio.
BARON CAPITAL ASSET FUND (Mid Cap Stocks): Seeks capital
appreciation through investments in securities of small
sized companies with market capitalizations of approximately
$100 million to $1 billion, and medium sized companies with
market capitalizations of $1 billion to $2 billion, with
undervalued assets or favorable growth prospects.
BT EAFE-REGISTERED TRADEMARK- FUND (Large Cap Stocks --
International): Seeks to replicate as closely as possible
(before the deduction of Expenses) the total return of the
Europe, Australia, Far East Index (the
EAFE-Registered Trademark- Index) , a
capitalization-weighted index containing approximately 1,100
equity securities of companies located outside the United
States.
BT EQUITY 500 INDEX FUND (Large Cap Stocks): Seeks to
replicate as closely as possible the performance of the
Standard & Poor's 500 Composite Stock Price Index, before
the deduction of Fund expenses.
BT SMALL CAP INDEX FUND (Small Cap Stocks): Seeks to
replicate as closely as possible (before the deduction of
Expenses) the total return of the Russell 2000 Small Stock
Index (the "Russell 2000"), an index consisting of
approximately 2,000 small-capitalization common stocks.
DELAWARE GROUP DELCHESTER SERIES (High Yield Bonds): Seeks
as high a current income as possible by investing in rated
and unrated corporate bonds (including high yield bonds
commonly known as junk bonds), U. S. government securities
and commercial paper. An investment in this Series may
involve greater risks than an investment in a portfolio
comprised primarily of investment grade bonds.
DELAWARE GROUP DEVON SERIES (Large Cap Stocks): Seeks
current income and capital appreciation by investing
primarily in income-producing common stocks, with a focus on
common stocks that the investment manager believes have the
potential for above-average dividend increases over time.
Under normal circumstances, the Series will invest at least
65% of its total assets in dividend paying common stocks.
DELAWARE GROUP EMERGING MARKETS SERIES (Specialty): Seeks to
achieve long-term capital appreciation by investing
primarily in equity securities of issuers located or
operating in emerging counties. The Series is an
international fund. As such, under normal market conditions,
at least 65% of the Series' assets will be invested in
equity securities of issuers organized or having a majority
of their assets or deriving a majority of their operating
income in at least three countries that are considered to be
emerging or developing.
DELAWARE GROUP REIT SERIES (Specialty): Seeks to achieve
maximum long-term total return. Capital appreciation is a
secondary objective. It seeks to achieve its objectives by
investing in securities of companies primarily engaged in
the real estate industry.
DELAWARE GROUP SMALL CAP VALUE SERIES ( Small Cap Stocks):
Seeks capital appreciation by investing primarily in small
cap common stocks whose market value appears low relative to
their underlying value or future earnings and growth
potential. Emphasis will also be placed on securities of
companies that may be temporarily out of favor or whose
value is not yet recognized by the market.
DELAWARE GROUP TREND SERIES (Small Cap Stocks): Seeks
long-term capital appreciation by investing primarily in
small-cap common stocks and convertible securities of
emerging and other growth-oriented companies. These
securities will have been judged to be responsive to changes
in the marketplace and to have fundamental characteristics
to support growth. Income is not an objective.
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FIDELITY VIP II CONTRAFUND PORTFOLIO -- SERVICE CLASS (Large
Cap Stocks): Seeks capital appreciation by investing
primarily in securities of companies whose value the advisor
believes is not fully recognized by the public.
FIDELITY VIP III GROWTH OPPORTUNITIES PORTFOLIO -- SERVICE
CLASS (Large Cap Stocks): Seeks capital growth by investing
primarily in common stocks and securities convertible into
common stocks.
JANUS BALANCED PORTFOLIO (Large Cap Stocks): Seeks long term
growth of capital, balanced by current income. The Portfolio
normally invests 40-60% of its assets in securities selected
primarily for their growth potential and 40-60% of its
assets in securities selected primarily for their income
potential.
JANUS WORLDWIDE GROWTH PORTFOLIO (Large Cap Stocks): Seeks
long-term growth of capital in a manner consistent with the
preservation of capital by investing primarily in common
stocks of foreign and domestic insurers.
LINCOLN NATIONAL BOND FUND (Long-Term Bonds): Seeks maximum
current income consistent with prudent investment strategy.
The fund invests primarily in medium-and long-term corporate
and government bonds.
LINCOLN NATIONAL CAPITAL APPRECIATION FUND (Large Cap
Stocks): Seeks long-term growth of capital in a manner
consistent with preservation of capital. The fund invests in
a large number of companies of all sizes if the companies
are competing well and if their products and services are in
high demand. It may also buy some money market securities
and bonds, including junk (high risk) bonds.
LINCOLN NATIONAL EQUITY-INCOME FUND (Large Cap Stocks):
Seeks to achieve reasonable income by investing primarily in
income-producing equity securities. The fund invests mostly
in high-yielding bonds (including junk bonds)
LINCOLN NATIONAL GLOBAL ASSET ALLOCATION FUND (Large Cap
Stocks): Seeks long-term total return consistent with
preservation of capital. The fund allocates its assets among
several categories of equity and fixed-income securities,
both of U.S. and foreign insurers.
LINCOLN NATIONAL MONEY MARKET FUND (Money Market): Seeks
maximum current income consistent with the preservation of
capital. The fund invests in short term obligations issued
by U.S. corporations, the U.S. government, and
federally-chartered banks and U.S. branches of foreign
banks.
LINCOLN NATIONAL SOCIAL AWARENESS FUND (Specialty): Seeks to
achieve long-term capital appreciation, by investing in
stocks of established companies which adhere to certain
specific social criteria.
MFS EMERGING GROWTH SERIES (Large Cap Stocks): Seeks
long-term growth of capital by investing primarily in common
stocks of companies management believes to be early in their
life cycle but which have the potential to become major
enterprises.
MFS TOTAL RETURN SERIES (Balanced or Total Return): Seeks
primarily to obtain above-average income (compared to a
portfolio invested entirely in equity securities) consistent
with the prudent employment of capital, and secondarily to
provide a reasonable opportunity for growth of capital and
income.
MFS UTILITIES SERIES (Specialty): Seeks capital growth and
current income (income above that available from a portfolio
invested entirely in equity securities) by investing, under
normal circumstances, at least 65% of its assets in equity
and debt securities of utility companies.
18
<PAGE>
N&B AMT MID-CAP GROWTH PORTFOLIO (Mid Cap Stocks): Seeks out
capital appreciation by investing in equity securities of
medium sized companies.
N&B AMT PARTNERS PORTFOLIO (Large Cap Stocks): Seeks capital
growth by investing in common stocks and other equity
securities of medium to large capitalization established
companies.
TEMPLETON INTERNATIONAL FUND -- CLASS 2 (Large Cap Stocks):
Seeks long-term capital growth through a flexible policy of
investing in stocks and debt obligations of companies and
governments outside the United States. Any income realized
will be incidental.
TEMPLETON STOCK FUND -- CLASS 2 (Large Cap Stocks): Seeks
capital growth through a policy of investing primarily in
common and preferred stocks issued by companies, large and
small, in various nations throughout the world, including
the United States.
The Delaware Group Delchester Series Delaware Group Emerging
Markets Series, Delaware Group Small Cap Value Series, Janus
Balanced, Lincoln National Bond Fund, Lincoln National
Equity-Income Fund, Lincoln National Global Asset Allocation
Fund, MFS Emerging Growth Series, MFS Total Return Series,
and MFS Utilities Series may invest in non-investment grade,
high-yield, high-risk debt securities (commonly referred to
as "junk bonds"), as detailed in the individual Fund
Prospectuses.
There is no assurance that the investment objective of any
of the Funds will be met. You assume all of the investment
performance risk for the Variable Sub-Accounts you select.
There is investment performance risk in each of the Variable
Sub-Accounts, although the amount of such risk varies
significantly among the Variable Sub-Accounts. Owners should
read each Fund's prospectus carefully and understand the
risks before making or changing investment choices.
Additional Funds may, from time to time, be made available
as underlying investments, with prior approval of the New
York Insurance Department. The right to select among Funds
will be limited by the terms and conditions imposed by LLANY
(SEE ALLOCATION OF NET PREMIUM PAYMENTS).
SUBSTITUTION OF SECURITIES
If the shares of any Fund should no longer be available for
investment by the Variable Account or if, in the judgment of
LLANY, further investment in such shares should cease to be
appropriate in view of the purpose of the Variable Account
or in view of legal, regulatory or federal income tax
restrictions, LLANY may substitute shares of another Fund.
There will be no substitution of securities in any Variable
Sub-Account without prior approval of the Commission.
VOTING RIGHTS
LLANY will vote the shares of each Fund held in the Variable
Account at special meetings of the shareholders of the
particular Fund in accordance with instructions received by
the Administrative Office in proper written form from
persons having a voting interest in the Variable Account.
LLANY will vote shares for which it has not received
instructions in the same proportion as it votes shares for
which it has received
instructions. The Funds do not hold regular meetings of
shareholders.
The number of shares which a person has a right to vote will
be determined as of a date to be chosen by the appropriate
Trust not more than sixty (60) days prior to the meeting of
the particular Fund. Voting instructions will be solicited
by written communication at least fourteen (14) days prior
to the meeting.
The Funds' shares are issued and redeemed only in connection
with variable annuity contracts and variable life insurance
policies issued through separate accounts of LLANY and other
life insurance companies. The Funds do not foresee any
disadvantage
19
<PAGE>
to Owners arising out of the fact that shares may be made
available to separate accounts which are used in connection
with both variable annuity and variable life insurance
products. Nevertheless, the Fund Groups' Boards intend to
monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to
determine what action, if any, should be taken in response
thereto. If such a conflict were to occur, one of the
separate accounts might withdraw its investment in a Fund.
This might force a Fund to sell portfolio securities at
disadvantageous prices.
FUND PARTICIPATION AGREEMENTS
LLANY has entered into agreements with the various Funds and
their advisers or distributors under which LLANY makes the
Funds available under the Policies and performs certain
administrative services. In some cases, the advisers or
distributors may compensate LLANY at annual rates of between
.10% and .25% of assets in a particular Fund attributable to
the Policies.
CHARGES AND FEES
LLANY deducts charges in connection with the Policy to
compensate it for providing the insurance benefit set forth
in the Policy, administering the Policy, assuming certain
risks in connection with the Policy and for incurring
expenses associated with the distribution of the Policy.
The nature and amount of these charges are as follows:
DEDUCTIONS MADE MONTHLY
We make various expense deductions monthly. The Monthly
Deduction, including the Cost of Insurance Charge and
charges for supplemental riders or benefits, if any, is made
from the Net Accumulation Value.
The Monthly Deductions are deducted proportionately from the
value of each underlying investment subject to the charge.
In the case of Variable Sub-Accounts, Variable Accumulation
Units are canceled and the value of the canceled Variable
Accumulation Units is withdrawn in the same proportion as
their respective values have to the Net Accumulation Value.
The Monthly Deductions are made on the Monthly Anniversary
Day starting on the Date of Issue. The Monthly Anniversary
Day under the Policy is the same day of each month as the
Date of Issue, provided that if there is no such date in a
given month, it is the first Valuation Day of the next
month. If the day that would otherwise be a Monthly
Anniversary Day is not a Valuation Day, then the Monthly
Anniversary Day is the next Valuation Day.
If the Net Accumulation Value is insufficient to cover the
current Monthly Deduction, you have a 61-day period (Grace
Period) to make a payment sufficient to cover that
deduction. (See LAPSE AND REINSTATEMENT. LAPSE OF A POLICY).
If either Insured is still living when the younger Insured
would have attained Age 100 and the Policy has not been
surrendered, no further Monthly Deductions will be made and
the Variable Account Value will be transferred to the Fixed
Account. The Policy will then remain in force until
surrender or the Second Death.
MONTHLY DEDUCTION
There is a flat dollar Monthly Deduction of $12.50 until the
first Policy Anniversary and, currently, $5 thereafter
(guaranteed not to exceed $10 after the first Policy Year).
In addition there is a Monthly Deduction charge of $0.09 per
$1000 of Specified Amount
20
<PAGE>
for the first twenty years of the Policy and for the first
twenty years following an increase in Specified Amount. If
the No Lapse Provision is in effect there will also be a
Monthly Deduction of $0.01 per $1000 of Specified Amount.
These charges compensate LLANY for administrative expenses
associated with Policy issue and ongoing Policy maintenance
including premium billing and collection, policy value
calculation, confirmations, periodic reports and other
similar matters.
COST OF INSURANCE CHARGE
The Cost of Insurance is the portion of the Monthly
Deduction designed to compensate LLANY for the anticipated
cost of paying Death Benefits in excess of the Accumulation
Value, not including riders, supplemental benefits or
monthly expense charges.
The Cost of Insurance charge depends on the Age (the age of
the subject person at his/ her nearest birthday),
underwriting category and gender (in accordance with state
law) of both Insureds and the current Net Amount at Risk.
The Net Amount at Risk is the Death Benefit minus the
Accumulation Value. The rate on which the Monthly Deduction
for the Cost of Insurance is based will generally increase
as the Insureds age, although the Cost of Insurance charge
could decline if the Net Amount at Risk drops relatively
faster than the Cost of Insurance Rate increases.
The Cost of Insurance charge is determined by dividing the
Death Benefit at the previous Monthly Anniversary Day by
1.0032737 (the monthly equivalent of an annual rate of 4%),
subtracting the Accumulation Value at the previous Monthly
Anniversary Day, and multiplying the result (the Net Amount
at Risk) by the applicable Cost of Insurance Rate as
determined by LLANY. The Guaranteed Maximum Cost of
Insurance Rates, per $1,000 of Net Amount at Risk, for
standard risks are based on the 1980 Commissioners Standard
Ordinary Mortality Tables, Age Nearest Birthday (1980 CSO,
Male or Female); or, for unisex rates, on the 1980 CSO-B
Table.
MORTALITY AND EXPENSE RISK CHARGE
LLANY deducts a daily charge as a percentage of the assets
of the Separate Account as a mortality and expense risk
charge. The mortality risk assumed is that insureds may live
for a shorter period than estimated, and therefore, a
greater amount of death benefit will be payable. The expense
risk assumed is that expenses incurred is issuing and
administering the policies will be greater than estimated.
The mortality and expense risk charge is currently at an
annual rate of 0.80%, and is guaranteed not to exceed 0.90%
per year.
21
<PAGE>
FUND EXPENSES
The investment adviser for each of the Funds deducts a daily
charge as a percent of the net assets in each Fund. The
charge reflects asset management fees of the investment
adviser (Management Fees), and other expenses incurred by
the funds (including 12b-1 fees for Class 2 shares and Other
Expenses). The charge has the effect of reducing the
investment results credited to the Sub-Accounts.
<TABLE>
<CAPTION>
FUND PORTFOLIO ANNUAL EXPENSES
--------------------------------------------------
MANAGEMENT 12b-1 OTHER
FUND FEES FEES EXPENSES TOTAL
- ------------------------------------------------- ------------- ----- ----------- ---------
<S> <C> <C> <C> <C>
AIM V.I. Growth Fund (1)......................... 0.65% -- 0.08% 0.73%
AIM V.I. International Equity Fund (1)........... 0.75% -- 0.18% 0.93%
AIM V.I. Value Fund (1).......................... 0.62% -- 0.08% 0.70%
Baron Capital Asset Fund (2)..................... 1.00% 0.25% 0.25% 1.50%
BT EAFE Index Fund (3)........................... 0.45% -- 0.20% 0.65%
BT Equity 500 Index Fund (3)..................... 0.20% -- 0.10% 0.30%
BT Small Cap Index Fund (3)...................... 0.35% -- 0.10% 0.45%
Delaware Group Delchester Series (4)............. 0.60% -- 0.10% 0.70%
Delaware Group Devon Series (4)(5)............... 0.54% -- 0.26% 0.80%
Delaware Group Emerging Markets Series (4)(5).... 0.30% -- 1.20% 1.50%
Delaware Group REIT Series (4)................... 0.75% -- 0.10% 0.85%
Delaware Group Small Cap Value Series (4)(5)..... 0.60% -- 0.25% 0.85%
Delaware Group Trend Series (4)(5)............... 0.62% 0.23% 0.85%
Fidelity VIPII Contrafund Portfolio -- Service
Class (6)...................................... 0.60% 0.10% 0.11% 0.81%
Fidelity VIPIII Growth Opportunities Portfolio --
Service Class (6).............................. 0.60% 0.10% 0.14% 0.84%
Janus Balanced Portfolio (7)..................... 0.76% -- 0.07% 0.83%
Janus Worldwide Growth Portfolio (7)............. 0.66% -- 0.08% 0.74%
LN Bond Fund..................................... 0.46% -- 0.07% 0.53%
LN Capital Appreciation Fund (8)................. 0.75% -- 0.09% 0.84%
LN Equity Income Fund (8)........................ 0.75% -- 0.07% 0.82%
LN Global Asset Allocation Fund.................. 0.72% -- 0.17% 0.89%
LN Money Market Fund............................. 0.48% -- 0.11% 0.59%
LN Social Awareness Fund......................... 0.36% -- 0.05% 0.41%
MFS Emerging Growth Series (9)................... 0.75% -- 0.12% 0.87%
MFS Total Return Series (9)(10).................. 0.75% -- 0.25% 1.00%
MFS Utilities Series (9)(10)..................... 0.75% -- 0.25% 1.00%
AMT MidCap Growth Portfolio (11)................. 0.55% -- 0.30% 0.85%
AMT Partners Portfolio (11)...................... 0.80% -- 0.06% 0.86%
Templeton International Fund -- Class 2 (12)..... 0.69% 0.25% 0.19% 1.13%
Templeton Stock Fund -- Classs 2 (12)............ 0.69% 0.25% 0.19% 1.13%
</TABLE>
---------------------------------------------------
(1) AIM Advisors, Inc. ("AIM") may from time to time
voluntarily waive or reduce its respective fees.
Effective May 1, 1998, the Funds reimburse AIM in an
amount up to 0.25% of the average net asset value of
each Fund, for expenses incurred in providing, or
assuring that participating insurance companies
provide, certain administrative services, as described
in the accompanying prospectus for the Funds. Currently
, the fee only applies to the average net asset value
of each Fund in excess of the net asset value of each
Fund as calculated on April 30, 1998, and AIM will not
seek reimbursement of the
22
<PAGE>
cost of any service in excess of the amount charged by
a participating insurance company for providing the
services above. The amount of reimbursements that will
be paid by each Fund under this arrangement for the
year ending December 31, 1998 cannot be predicted.
(2) BAMCO, Inc. will reduce its fee to the extent required
to limit Baron Capital Asset Fund's total operating
expenses to 1.5% for the first $250 million in assets
in the Fund, 1.35% for the Fund assets over $250
million and up to $500 million, and 1.25% for Fund
assets over $500 million. Without the expense
limitations, the Fund estimates that actual expenses
would be 1.6%,
(3) Under the Advisory Agreement with the Advisor, the
Funds will pay advisory fees at the annual percentage
rate of .20% of the average daily net assets of the
EAFE Index Fund, the Equity 500 Index Fund and the
Small Cap Index Fund. These fees are accrued daily and
paid monthly. The Advisor has voluntarily undertaken to
waive the fees and to reimburse the Fund for certain
expenses so that the EAFE Index Fund, the Equity 500
Index Fund and the Small Cap Index Fund total operating
expenses will not exceed 0.65%, .30%., and 0.45%
respectively. Such expense reimbursements may be
terminated at the discretion of the Advisor. If this
reimbursement were not in place, the total operating
expenses for the year ended December 31, 1997 would
have been 2.75%, 2.78% and 3.27% respectively.
(4) The investment adviser for the Delchester Series, Devon
Series, REIT Series, Small Cap Value Series, Social
Awareness Series and Trend Series is Delaware
Management Company, Inc. ("Delaware Management"). The
investment adviser for the Emerging Markets Series is
Delaware International Advisers Ltd. ("Delaware
International"). Effective May 1, 1998 through April
30, 1999, the investment advisers for the Series of
DGPF have agreed voluntarily to waive their management
fees and reimburse each Series for expenses to the
extent that total expenses will not exceed 1.50% for
the Emerging Markets Series, 0.85% for the REIT Series,
Small Cap Value Series, Social Awareness Series and
Trend Series, and 0.80% for the Delchester Series and
Devon Series.
(5) For the fiscal year ended December 31, 1997, before
waiver and/or reimbursement by the investment adviser,
total Series expenses as a percentage of average daily
net assets were 0.91% for the Devon Series, 2.45% for
the Emerging Market Series, 0.90% for Small Cap Value
Series, 1.40% for the Social Awareness Series, and
0.88% for Trend Series. The declaration of a voluntary
expense limitation does not bind the investment
advisers to declare future expense limitations with
respect to these Funds.
(6) A portion of the brokerage commissions that certain
funds paid was used to reduce funds expenses. In
addition, certain funds have entered into arrangements
with their custodian and transfer agent whereby
interest earned on uninvested cash balances was used to
reduce custodian and transfer agent expenses. Including
these reductions, Total Fund Portfolio Annual Expenses
would have been 0.78% for the VIP II Contrafund
Portfolio and 0.83% for the VIP III Growth
Opportunities Portfolio.
(7) Management Fees for the Balanced and Worldwide Growth
Portfolios reflect a reduced fee schedule effective
July 1, 1997. The Management Fee for each of these
Portfolios reflects the new rate applied to the net
assets as of December 31, 1997. Other expenses are
based on gross expenses of the shares before expense
offset arrangements for the fiscal year ended December
31, 1997. The information for each Portfolio is net of
fee waivers or reductions from Janus Capital. Fee
reductions for the Balanced and Worldwide Growth
Portfolios reduce the management fee to the level of
the corresponding Janus retail fund. Other waivers, if
applicable, are first applied against the management
fee and then against other expenses. Without such
waivers or reductions, the Management Fee, Other
Expenses and Total Fund Expenses for the Balanced
Portfolio would have been 0.77%, 0.06% and 0.83% and
for the Worldwide Growth Portfolio would have been
0.72%, 0.09% and 0.81%. Janus Capital may modify or
terminate the waivers or reductions at any time upon at
least 90 days' notice to the Fund's Board of Trustees.
(8) The management fee for the Capital Appreciation Fund
has been decreased from 0.80% to 0.75% effective May 1,
1998, and for the Equity-Income fund it has been
decreased from 0.95% to 0.75% effective January 1,
1998. The expense information in this table has been
restated to reflect current fees.
(9) Each Series has an expense offset arrangement which
reduces the Series' custodian fee based upon the amount
of cash maintained by the Series with its custodian and
dividend disbursing agent, and may enter into other
such arrangements and directed brokerage arrangements
(which would also have the effect of reducing the
Series' expenses). Any such fee reductions are not
reflected under "Other Expenses".
(10) The Massachusetts Financial Services Company Adviser
has agreed to bear expenses for each Series, subject
to reimbursement by each Series, such that the MFS
Total Return Series and the MFS Utilities Series'
"Other Expenses" shall not exceed 0.25% of the average
daily net assets of the Series during the
23
<PAGE>
current fiscal year. Otherwise, "Other Expenses" for
the Total Return Series and Utilities Series would be
0.27% and 0.45% respectively, and "Total Fund
Portfolio Annual Expenses" would be 1.02% and 1.20%
respectively, for these Series. See "Information
Concerning Shares of Each Series Expenses."
(11) N&B Management has voluntarily undertaken to limit the
Portfolios' expenses by reimbursing each Portfolio for
its Total Operating Expenses and its pro rata share of
its corresponding Series' Total Operating Expenses,
excluding the compensation of N&B Management (except
Mid-Cap Growth Portfolio), taxes, interest,
extraordinary expenses, brokerage commissions and
transaction costs, that exceed, in the aggregate, 1%
per annum of the Portfolio's average daily net asset
value. This undertaking is subject to termination on
60 days' prior written notice to the appropriate
Portfolio. The Mid-Cap Growth Portfolio has in turn
agreed to repay through December 31, 1999, expenses
borne by N&B Management so long as the Portfolio's
annual operating expenses during that period do not
exceed the expense limitations.
(12) Class 2 of the Fund has a distribution plan or "Rule
12b-1 plan" as described under "Distribution Plan" in
the Prospectus. Because Class 2 shares were not
offered until May 1, 1997, figures (other than 12b-1
fees) are estimates for 1998 based on the historical
expenses of the Fund's Class 1 shares for the fiscal
year ended December 31, 1997. Management Fees and
Total Operating Expenses have been restated to reflect
the management fee schedule approved by shareholders
and effective May 1, 1997. Actual Management Fees and
Total Operating Expenses before May 1, 1997 were
lower. See the section "Management Fees" under
"Portfolio Management" in the Prospectus.
SURRENDER CHARGES
A generally declining Surrender Charge will apply if the
Policy is totally surrendered or lapses during the first
fifteen years following the Date of Issue or the first
fifteen years following an increase in Specified Amount. The
Surrender Charge varies by Age of the Insureds, the number
of years since the Date of Issue, and Specified Amount. The
charge is in part a deferred sales charge and in part a
recovery of certain first year administrative costs. The
maximum Surrender Charge is included in each Policy and is
in compliance with each state's nonforfeiture law. Examples
of the Surrender Charge can be seen in Appendix 1 by
subtracting "Surrender Value" from "Total Accumulation
Value" on any chosen set of investment return assumptions.
The Surrender Charge under a Policy is proportional to the
face amount of the Policy. Expressed as a percentage of face
amount, it is higher for older than for younger issue ages.
For example, assuming issue ages 80 (the oldest possible
issue ages for a Policy), the first year Surrender Charge is
$37.40 per $1000 of face amount. At issue ages 65 it is
$25.10 per $1000 of face amount, at issue ages 55 it is
$13.68 per $1000 of face amount, and at issue ages 25 it is
$2.87 per $1000 of face amount. These calculations assume
both insureds are the same age. The Surrender Charge cannot
exceed Policy value. All Surrender Charges decline to zero
over the 15 years following issuance of the Policy. See, for
example, the illustrations in Appendix 1 for issue ages 55
and 65.
If the Specified Amount is increased, a new Surrender Charge
will be applicable, in addition to any existing Surrender
Charge. The Surrender Charge applicable to the increase
would be equal to the Surrender Charge on a new Policy whose
Specified Amount was equal to the amount of the increase.
Supplemental Policy Specifications will be sent to the Owner
upon an increase in Specified Amount reflecting the maximum
additional Surrender Charge in the Table of Surrender
Charges. The minimum allowable increase in Specified Amount
is $1,000. LLANY may change this at any time.
If the Specified Amount is decreased while the Surrender
Charge applies, the Surrender Charge will remain the same.
No Surrender Charge is imposed on a partial surrender, but
an administrative fee of $25 (not to exceed 2% of the amount
surrendered) is imposed, allocated pro-rata among the
Sub-Accounts from which the partial surrender proceeds are
taken.
Any surrenders may result in tax implications. (SEE TAX
MATTERS)
24
<PAGE>
Based on its actuarial determination, LLANY does not
anticipate that the Surrender Charge, together with the
portion of the premium load attributable to sales expense,
will cover all sales and administrative expenses which LLANY
will incur in connection with the Policy. Any such
shortfall, including but not limited to payment of sales and
distribution expenses, would be available for recovery from
the general account of LLANY, which supports insurance and
annuity obligations.
TRANSACTION FEE FOR EXCESS TRANSFERS
LLANY reserves the right to impose a charge for each
transfer request in excess of 12 in any Policy Year. A
single transfer request may consist of multiple
transactions.
DEATH BENEFITS
The Death Benefit Proceeds is the amount payable to the
Beneficiary upon the Second Death and in accordance with the
Death Benefit Option elected. Loans (if any) and overdue
deductions are deducted from the Death Benefit Proceeds
prior to payment.
The applicant must select the Specified Amount of the Death
Benefit, which may not be less than $250,000 and the Death
Benefit Option. The two Death Benefit Options are described
below. The applicant must consider a number of factors in
selecting the Specified Amount, including the amount of
proceeds required on the Second Death and the Owner's
ability to make Premium Payments. In evaluating this
decision, the applicant should consider that the greater the
Net Amount at Risk, the greater the monthly deductions for
the Cost of Insurance.
DEATH BENEFIT OPTIONS
Two different Death Benefit Options are available under the
Policy. The Death Benefit Proceeds payable under the Policy
is the greater of (a) the Corridor Death Benefit or (b) the
amount determined under the Death Benefit Option in effect
on the date of the Second Death, less (in each case) any
indebtedness under the Policy. In the case of Death Benefit
Option 1, the Specified Amount is reduced by the amount of
any partial surrender. The Corridor Death Benefit is the
applicable percentage (the Corridor Percentage) of the
Accumulation Value (rather than by reference to the
Specified Amount) required to maintain the Policy as a "life
insurance contract" for Federal income tax purposes. The
Corridor Percentage is 250% through the time the younger
Insured reaches or would have reached Age 40 and decreases
in accordance with the table in Appendix 2 of this
Prospectus to 100% when the younger Insured reaches or would
have reached Age 95.
Death Benefit Option 1 provides Death Benefit Proceeds equal
to the Specified Amount (a minimum of $250,000). If Option 1
is selected, the Policy pays level Death Benefit Proceeds
until the Minimum Death Benefit exceeds the Specified
Amount. (See DEATH BENEFITS, Federal Income Tax Definition
of Life Insurance).
Death Benefit Option 2 provides Death Benefit Proceeds equal
to the sum of the Specified Amount plus the Accumulation
Value as of the Valuation Day immediately after the second
Insured's death. If Option 2 is selected, the Death Benefit
Proceeds increase or decrease over time, depending on the
amount of premium paid and the investment performance of the
underlying Sub-Accounts.
If for any reason the applicant fails to affirmatively elect
a particular Death Benefit Option, Death Benefit Option 1
shall apply until changed as provided below. The ability of
the Owner to support the Policy is an important factor in
selecting between the Death Benefit Options, because the
greater the Net Amount at Risk at any time, the more that
will be deducted from the value of the Policy to pay the
Cost of Insurance.
25
<PAGE>
Owners who prefer insurance coverage that generally does not
vary in amount and generally has lower Cost of Insurance
Charges should elect Option 1. Owners who prefer to have
favorable investment experience reflected in increased
insurance coverage should select Option 2. Under Option 1,
any Surrender Value at the time of the Second Death will
revert to LLANY.
CHANGES IN DEATH BENEFIT OPTIONS AND SPECIFIED AMOUNT
All requests for changes between Death Benefit Options and
changes in the Specified Amount must be submitted in proper
written form to the Administrative Office. The minimum
amount of increase in Specified Amount currently permitted
is $1,000. If requested, a supplemental application and
evidence of insurability must also be submitted to LLANY.
In a change from Death Benefit Option 1 to Death Benefit
Option 2, the Specified Amount shall be reduced so it
thereafter equals (a) the amount payable under the Death
Benefit Option in effect immediately before the change,
minus (b) the Accumulation Value immediately before the
change. In a change from Death Benefit Option 2 to Death
Benefit Option 1, the Specified Amount shall be increased so
that it thereafter equals the amount payable under the Death
Benefit Option in effect immediately before the change.
Any reductions in Specified Amount will be made against the
initial Specified Amount and any later increase in the
Specified Amount on a last in, first out basis. Any increase
in the Specified Amount will increase the amount of the
Surrender Charge applicable to the Policy.
LLANY may at its discretion decline any request for a change
between Death Benefit Options or increase in the Specified
Amount. LLANY may at its discretion decline any request for
change of the Death Benefit Option or reduction of the
Specified Amount if, after the change, the Specified Amount
would be less than the minimum Specified Amount or would
reduce the Specified Amount below the level required to
maintain the Policy as life insurance for purposes of
Federal income tax law.
Any change is effective on the first Monthly Anniversary Day
on or after the date of approval of the request by LLANY,
unless the Monthly Deduction Amount would increase as a
result of the change. In that case, the change is effective
on the first Monthly Anniversary Day on which the
Accumulation Value is equal to or greater than the Monthly
Deduction Amount, as increased.
FEDERAL INCOME TAX DEFINITION OF LIFE INSURANCE
The amount of the Death Benefit must satisfy certain
requirements under the Code if the policy is to qualify as
insurance for federal income tax purposes. The amount of the
Death Benefit Proceeds required to be paid under the Code to
maintain the Policy as life insurance under each of the
Death Benefit Options (see INSURANCE COVERAGE PROVISIONS,
Death Benefit) is equal to the product of the Accumulation
Value and the applicable Corridor Percentage. A table of
Corridor Percentages is in Appendix 2.
NOTICE OF DEATH OF INSUREDS
Due Proof of Death must be furnished to LLANY at the
Administrative Office as soon as reasonably practicable
after the death of each Insured. Due Proof of Death must be
in proper written form and includes a certified copy of an
official death certificate, a certified copy of a decree of
a court of competent jurisdiction as to the finding of
death, or any other proof of death satisfactory to LLANY.
26
<PAGE>
PAYMENT OF DEATH BENEFIT PROCEEDS
The Death Benefit Proceeds under the Policy will ordinarily
be paid within seven days, if in a lump sum, or in
accordance with any Settlement Option selected by the Owner
or the Beneficiary after receipt at the Administrative
Office of Due Proof of Death of both Insureds. The amount of
the Death Benefit Proceeds under Option 2 will be determined
as of the date of the Second Death. Payment of the Death
Benefit Proceeds may be delayed if the Policy is contested
or if Variable Account values cannot be determined.
SETTLEMENT OPTIONS
There are several ways to which the Beneficiary may receive
the Death Benefit Proceeds or the Owner may elect to receive
payment upon the surrender of the Policy.
The Owner may elect a Settlement Option before the Second
Death; after the Second Death, if the Owner has not
irrevocably selected a Settlement Option, the Beneficiary
may elect one of the Settlement Options. If no Settlement
Option is selected, the Death Benefit Proceeds will be paid
in a lump sum.
If the Policy is assigned as collateral security, LLANY will
pay any amount due the assignee in one lump sum. Any
remaining Death Benefit Proceeds will be paid as elected.
A request to elect, change, or revoke a Settlement Option
must be received in proper written form by the
Administrative Office before payment of the lump sum or
under any Settlement Option. The first payment under the
Settlement Option selected will become payable on the date
proceeds are settled under the option. Payments after the
first payment will be made on the first day of each month.
Once payments have begun, the Policy cannot be surrendered
and neither the payee nor the Settlement Option may be
changed.
There are at least four Settlement Options:
The first Settlement Option is an annuity for the
lifetime of the payee.
The second Settlement Option is an annuity for the
lifetime of the payee, with monthly payments guaranteed
for 60, 120, 180, or 240 months.
Under the third Settlement Option, LLANY makes monthly
payments for a stated number of years, at least five but
no more than thirty.
The fourth Settlement Option, provides that LLANY pays
interest annually on the sum left with LLANY at a rate
of at least 3% per year, and pays the amount on deposit
on the payee's death.
Any other Settlement Option offered by LLANY at the time of
election may also be selected.
POLICY LIQUIDITY
The Policy provides only limited liquidity. Subject to
certain limitations, however, the Owner may borrow against
the Surrender Value of the Policy, may make a partial
surrender of some of the Surrender Value of the Policy and
may fully surrender the Policy for its Surrender Value.
27
<PAGE>
POLICY LOANS
The Owner may at any time contract for Policy Loans up to an
aggregate amount not to exceed 90% of the Surrender Value at
the time a Policy Loan is made. It is a condition to
securing a Policy Loan that the Owner execute a loan
agreement and that the Policy be assigned to LLANY free of
any other assignments. The Loan Account is the account in
which Policy indebtedness (outstanding loans and interest)
accrues once it is transferred out of the Fixed or Variable
Sub-Accounts. Interest on Policy Loans accrues at an annual
rate of 8%, and loan interest is payable to LLANY (for its
account) once a year in arrears on each Policy Anniversary,
or earlier upon full surrender or other payment of proceeds
of a Policy.
The amount of a loan, plus any accrued but unpaid interest,
is added to the outstanding Policy Loan balance. Unless paid
in advance, any loan interest due will be transferred from
the values in each Fixed and Variable Sub-Account, and
treated as an additional Policy Loan, and added to the Loan
Account Value.
During the first ten Policy Years, LLANY's current practice
is to credit interest to the Loan Account Value at an annual
rate equal to the interest rate charged on the loan minus 1%
(guaranteed not to exceed 2%). Beginning with the eleventh
Policy Year, LLANY's current practice is to credit interest
at an annual rate equal to the interest rate charged on the
loan, less 0% annually (guaranteed not to exceed 1%). In no
case will the annual credited interest rate be less than 6%
in each of the first ten Policy Years and 7% thereafter.
If the Net Accumulation Value is distributed among more than
one of the Sub-Accounts, transfers from each for loans and
loan interest will be made in proportion to the assets in
each Sub-Account at that time, unless LLANY is instructed
otherwise in proper written form at the Administrative
Office. Repayments on the loan and interest credited on the
Loan Account Value will be allocated according to the most
recent Premium Payment allocation at the time of the
repayment.
A Policy Loan, whether or not repaid, affects the proceeds
payable upon the Second Death and the Accumulation Value.
The longer a Policy Loan is outstanding, the greater the
effect is likely to be. While an outstanding Policy Loan
reduces the amount of assets invested, depending on the
investment results of the Sub-Accounts, the effect could be
favorable or unfavorable.
If at any time the total indebtedness against the Policy,
including interest accrued but not due, equals or exceeds
the then current Accumulation Value less Surrender Charges,
the Policy will terminate without value subject to the
conditions in the Grace Period Provision, unless the No
Lapse Provision is in effect. (SEE LAPSE AND REINSTATEMENT,
Lapse of a Policy)
If a Policy lapses while a loan is outstanding, adverse tax
consequences may result.
PARTIAL SURRENDER
You may make a partial surrender at any time before the
Second Death by request to the Administrative Office in
proper written form or by telephone, if you have authorized
telephone transactions. A $25 transaction fee is charged for
each partial surrender. Total partial surrenders may not
exceed 90% of the Surrender Value of the Policy. Each
partial surrender may not be less than $500. Partial
surrenders are subject to other limitations as described
below.
Partial surrenders may reduce the Specified Amount and, in
each case, reduce the Death Benefit Proceeds. To the extent
that a requested partial surrender would cause the Specified
Amount to be less than $250,000, the partial surrender will
not be permitted
28
<PAGE>
by LLANY. In addition, if following a partial surrender and
the corresponding decrease in the Specified Amount, the
Policy would not comply with the maximum premium limitations
required by federal tax law, the surrender may be limited to
the extent necessary to meet the federal tax law
requirements.
The effect of partial surrenders on the Death Benefit
Proceeds depends on the Death Benefit Option elected under
the Policy. If Death Benefit Option 1 has been elected, a
partial surrender would reduce the Accumulation Value and
the Specified Amount. The reduction in the Specified Amount,
which would reduce any past increases on a last in, first
out basis, reduces the amount of the Death Benefit Proceeds.
If Death Benefit Option 2 has been elected, a partial
surrender would reduce the Accumulation Value, but would not
reduce the Specified Amount. The reduction in the
Accumulation Value reduces the amount of the Death Benefit
Proceeds.
If the Net Accumulation Value is distributed among more than
one of the Sub-Accounts, surrenders from each will be made
in proportion to the assets in each Sub-Account at the time
of the surrender, unless LLANY is instructed otherwise in
proper written form at the Administrative Office. LLANY may
at its discretion decline any request for a partial
surrender.
SURRENDER OF THE POLICY
You may surrender the Policy at any time. On surrender of
the Policy, LLANY will pay you or your assignee, the
Surrender Value next computed after receipt of the request
in proper written form at the Administrative Office. All
coverage under the Policy will automatically terminate if
the Owner makes a full surrender.
SURRENDER VALUE
The Surrender Value of a Policy is the amount the Owner can
receive in a lump sum by surrendering the Policy. The
Surrender Value is the Net Accumulation Value less the
Surrender Charge (SEE CHARGES AND FEES, Surrender Charge).
All or part of the Surrender Value may be applied to one or
more of the Settlement Options. Surrender Values are
illustrated in Appendix 1.
DEFERRAL OF PAYMENT AND TRANSFERS
Payment of loans or of the Surrender Value from any Variable
Sub-Accounts will be made within 7 days. Payment or transfer
from the Fixed Account may be deferred up to six months at
LLANY's option. If LLANY exercises its right to defer any
payment from the Fixed Account, interest will accrue and be
paid as required by law from the date the recipient would
otherwise have been entitled to receive the payment.
ASSIGNMENT; CHANGE OF OWNERSHIP
While either Insured is living, you may assign your rights
in the Policy, including the right to change the beneficiary
designation. The assignment must be in proper written form,
signed by you and recorded at the Administrative Office. No
assignment will affect, or prejudice LLANY as to, any
payment made or action taken by LLANY before it was
recorded. LLANY is not responsible for any assignment not
submitted for recording, nor is LLANY responsible for the
sufficiency or validity of any assignment. Any assignment is
subject to any indebtedness owed to LLANY at the time the
assignment is recorded and any interest accrued on such
indebtedness after recordation of any assignment.
29
<PAGE>
Once recorded, the assignment remains effective until
released by the assignee in proper written form. So long as
an effective assignment remains outstanding, you will not be
permitted to take any action with respect to the Policy
without the consent of the assignee in proper written form.
So long as either Insured is living, you may name a new
Owner by recording a change in ownership in proper written
form at the Administrative Office. On recordation, the
change will be effective as of the date of execution of the
document of transfer or, if there is no such date, the date
of recordation. No such change of ownership will affect, or
prejudice LLANY as to, any payment made or action taken by
LLANY before it was recorded. LLANY may require that the
Policy be submitted to it for endorsement before making a
change.
LAPSE AND REINSTATEMENT
LAPSE OF A POLICY
The No Lapse Premium is the cumulative premium required to
have been paid by each Monthly Anniversary Day to prevent
the Policy from lapsing. Except as provided by the No Lapse
Provision, if at any time the Net Accumulation Value is
insufficient to pay the Monthly Deduction, the Policy is
subject to lapse and automatic termination of all coverage
under the Policy. The Net Accumulation Value may be
insufficient (1) because it has been exhausted by earlier
deductions, (2) due to poor investment performance, (3) due
to partial surrenders, (4) due to indebtedness for Policy
Loans, or (5) because of some combination of the foregoing
factors.
If LLANY has not received a Premium Payment or payment of
indebtedness on Policy Loans necessary so that the Net
Accumulation Value is sufficient to pay the Monthly
Deduction Amount on a Monthly Anniversary Day, LLANY will
send a written notice to the Owner and any assignee of
record. The notice will state the amount of the Premium
Payment or payment of indebtedness on Policy Loans necessary
such that the Net Accumulation Value is at least equal to
two times the Monthly Deduction Amount. If the minimum
required amount set forth in the notice is not paid to LLANY
on or before the day that is the later of (a) 31 days after
the date of mailing of the notice, and (b) 61 days after the
date of the Monthly Anniversary Day with respect to which
such notice was sent (together, the Grace Period), then the
policy shall terminate and all coverage under the policy
shall lapse without value. If the Second Death occurs during
the Grace Period, Death Benefit Proceeds will be paid, but
will be reduced, in addition to any other reductions, by any
unpaid Monthly Deductions. If the Second Death occurs after
the Policy has lapsed, no Death Benefit Proceeds will be
paid.
NO LAPSE PROVISION
The applicant may elect the No Lapse Provision at issue of
the Policy. If this provision is elected and if at each
Monthly Anniversary Day the sum of all Premium Payments less
any policy loans (including any accrued loan interest) and
partial surrenders is at least equal to the sum of the No
Lapse Premiums (as indicated in the Policy Specifications)
due since the Date of Issue of the Policy, the Policy will
not lapse. A Grace Period will be allotted after each
Monthly Anniversary Day on which insufficient premiums have
been paid (see preceding paragraph). The payment of
sufficient additional premiums during the Grace Period will
keep the No Lapse Provision in force.
The No Lapse Provision will terminate if you fail to meet
the premium requirements, if there is an increase in
Specified Amount or if you change the Death Benefit Option.
Once the No Lapse Provision terminates, it cannot be
reinstated.
30
<PAGE>
REINSTATEMENT OF A LAPSED POLICY
After the Policy has lapsed due to the failure to make a
necessary payment before the end of an applicable Grace
Period, it may be reinstated provided (a) it has not been
surrendered, (b) there is an application for reinstatement
in proper written form, (c) evidence of insurability of both
insureds is furnished to LLANY and it agrees to accept the
risk, (d) LLANY receives a payment sufficient to keep the
Policy in force for at least two months, and (e) any accrued
loan interest is paid. The effective date of the reinstated
Policy shall be the Monthly Anniversary Day after the date
on which LLANY approves the application for reinstatement.
Surrender Charges will be reinstated as of the Policy Year
in which the Policy lapsed.
If the Policy is reinstated, such reinstatement is effective
on the Monthly Anniversary Day following LLANY approval. The
Accumulation Value at reinstatement will be the Net Premium
Payment then made less all Monthly Deductions due.
If the Surrender Value is not sufficient to cover the full
Surrender Charge at the time of lapse, the remaining portion
of the Surrender Charge will also be reinstated at the time
of Policy reinstatement.
COMMUNICATIONS WITH LLANY
PROPER WRITTEN FORM
When ever this Prospectus refers to a communication "in
proper written form," it means a writing, in form and
substance reasonably satisfactory to LLANY, received at the
Administrative Office.
OTHER POLICY PROVISIONS
ISSUANCE
A Policy may only be issued upon receipt of satisfactory
evidence of insurability, and generally only when both
Insureds are at least Age 18 but are less than Age 80.
DATE OF COVERAGE
The date of coverage will be the Date of Issue, provided
both Insureds are alive and prior to any change in the
health and insurability of the Insureds as represented in
the application.
RIGHT TO EXCHANGE THE POLICY
The Owner may, within the first two Policy Years, exchange
the Policy for a permanent life insurance policy then being
offered by LLANY. The benefits for the new policy will not
vary with the investment experience of the Variable Account.
The exchange must be elected within 24 months from the Date
of Issue. No evidence of insurability will be required.
The Owner, the Insureds and the Beneficiary under the new
policy will be the same as those under the exchanged Policy
on the date of the exchange. The Accumulation Value under
the new Policy will be equal to the Accumulation Value under
the old Policy on the date the exchange request is received.
The new policy will have a Death Benefit on the exchange
date not more than the Death Benefit of the original Policy
immediately prior to the exchange date. If the Accumulation
Value is insufficient to support the Death Benefit, the
Owner will be required to make additional Premium Payments
in order to effect the exchange. The new Policy will have a
Date of Issue and issue Ages as of the
31
<PAGE>
date of exchange. The initial Specified Amount and any
increases in Specified Amount will have the same rate class
as those of the original Policy. Any indebtedness may be
transferred to the new policy.
The exchange may be subject to an equitable adjustment in
rates and values to reflect variances, if any, in the rates
and values between the two Policies. After adjustment, if
any excess is owed the Owner, LLANY will pay the excess to
the Owner in cash. The exchange may be subject to federal
income tax withholding.
If at any time while both Insureds are alive, a change in
the Internal Revenue Code would result in a less favorable
tax treatment of the Insurance provided under the policy or
if the Insureds are legally divorced while the policy is in
force, the Owner may exchange the policy for separate single
life policies on each of the Insureds subject to the
following conditions: (a) evidence of insurability
satisfactory to LLANY is furnished, (b) the amount of
insurance of each new Policy is not larger than one half of
the amount of insurance then in force under the policy, (c)
the premium for each new policy is determined according to
LLANY's rates then in effect for that policy based on each
Insured's then attained age and sex, and (d) any other
requirements as determined by LLANY are met. The new policy
will not take effect until the date all such requirements
are met.
INCONTESTABILITY
LLANY will not contest payment of the Death Benefit Proceeds
based on the initial Specified Amount after the Policy has
been in force for two years from the Date of Issue so long
as both Insureds were alive during those two years. For any
increase in Specified Amount requiring evidence of
insurability, LLANY will not contest payment of the Death
Benefit Proceeds based on such an increase after it has been
in force for two years from its effective date so long as
both Insureds were alive during those two years.
MISSTATEMENT OF AGE OR GENDER
If the Age or gender of either of the Insureds has been
misstated, the affected benefits will be adjusted. The
amount of the Death Benefit Proceeds will be 1. multiplied
by 2. and then the result added to 3. where:
1. is the Net Amount at Risk at the time of the Second
Death;
2. is the ratio of the monthly Cost of Insurance applied
in the Policy month of death to the monthly Cost of
Insurance that should have been applied at the true
Age and gender in the Policy month of death; and
3. is the Accumulation Value at the time of the Second
Death.
SUICIDE
If the Second Death is by suicide, while sane or insane,
within two years from the Date of Issue, LLANY will upon the
Second Death pay no more than the sum of the premiums paid,
less any indebtedness and the amount of any partial
surrenders. If the Second Death is by suicide, while sane or
insane, within two years from the date an application is
accepted for an increase in the Specified Amount, LLANY will
upon the Second Death pay no more than a refund of the
monthly charges for the cost of such additional benefit.
32
<PAGE>
NONPARTICIPATING POLICIES
These are nonparticipating Policies on which no dividends
are payable. These Policies do not share in the profits or
surplus earnings of LLANY.
TAX ISSUES
Section 7702 of the Code provides that if certain tests are
met, a Policy will be treated as a life insurance policy for
federal tax purposes. LLANY will monitor compliance with
these tests. The Policy should thus receive the same federal
income tax treatment as fixed benefit life insurance.
TAX TREATMENT OF DEATH BENEFIT
The death proceeds payable under a Policy are excludable
from gross income of the Beneficiary under Section 101 of
the Code.
FEDERAL INCOME TAX CONSIDERATIONS
Section 7702A of the Code defines modified endowment
contracts as those policies issued or materially changed on
or after June 21, 1988 on which the total premiums paid
during the first seven years exceed the amount that would
have been paid if the policy provided for paid up benefits
after seven level annual premiums. The Code provides for
taxation of surrenders, partial surrenders, loans,
collateral assignments and other pre-death distributions
from modified endowment contracts in the same way annuities
are taxed. Modified endowment contract distributions are
defined by the Code as amounts not received as an annuity
and are taxable to the extent the cash value of the policy
exceeds, at the time of distribution, the premiums paid into
the policy. A 10% tax penalty generally applies to the
taxable portion of such distributions unless the Owner is
over 59 1/2 years of Age or disabled.
The Policies offered by this Prospectus may or may not be
issued as modified endowment contracts. LLANY will monitor
premiums paid and will notify the Owner when the Policy is
in jeopardy of becoming a modified endowment contract. If a
Policy is not a modified endowment contract, a cash
distribution during the first 15 years after a Policy is
issued which causes a reduction in death benefits may still
become fully or partially taxable to the Owner pursuant to
Section 7702(f)(7) of the Code. The Owner should carefully
consider this potential effect and seek further information
before initiating any changes in the terms of the Policy.
Under certain conditions, a Policy may become a modified
endowment contract as a result of a material change or a
reduction in benefits as defined by Section 7702A(c) of the
Code. LLANY will monitor compliance with these tests.
In addition to meeting the tests required under Section 7702
and Section 7702A, Section 817(h) of the Code requires that
the investments of separate accounts such as the Variable
Account be adequately diversified. Regulations issued by the
Secretary of the Treasury set the standards for measuring
the adequacy of this diversification. A variable life
insurance policy that is not adequately diversified under
these regulations would not be treated as life insurance
under Section 7702 of the Code. To be adequately
diversified, each Variable Sub-Account must meet certain
tests. LLANY believes the Variable Account investments meet
the applicable diversification standards.
Should the Secretary of the Treasury issue additional rules
or regulations limiting the number of funds, transfers
between funds, exchanges of funds or changes in investment
objectives of funds such that the Policy would no longer
qualify as life insurance under Section 7702 of the Code,
LLANY reserves the right to steps required to remain in
compliance.
33
<PAGE>
LLANY will monitor compliance with these regulations and, to
the extent necessary, will change the objectives or assets
of the Variable Sub-Account investments to remain in
compliance. LLANY also reserves the right to make changes in
this Policy or to make distributions from the Policy to the
extent it deems necessary, in its sole discretion, to
continue to qualify this Policy as life insurance.
A total surrender or termination of the Policy by lapse may
have adverse tax consequences. If the amount received by the
Owner plus total Policy indebtedness exceeds the premiums
paid into the Policy, the excess will generally be treated
as taxable income, whether or not the Policy is a modified
endowment contract.
Federal estate and state and local estate, inheritance and
other tax consequences of ownership or receipt of Policy
proceeds depend on the circumstances of each Owner or
Beneficiary.
TAXATION OF LLANY
LLANY is taxed as a life insurance company under the Code.
Since the Variable Account is not a separate entity from
LLANY and its operations form a part of LLANY, it will not
be taxed separately as a "regulated investment company"
under Sub-chapter M of the Code. Investment income and
realized capital gains on the assets of the Separate Account
are reinvested and taken into account in determining the
value of Variable Accumulation Units.
LLANY does not initially expect to incur any Federal income
tax liability that would be chargeable to the Variable
Account. Based upon these expectations, no charge is
currently being made against the Variable Account for
federal income taxes. If, however, LLANY determines that on
a separate company basis such taxes may be incurred, it
reserves the right to assess a charge for such taxes against
the Variable Account.
LLANY may also incur state and local taxes in addition to
premium taxes. At present, these taxes are not significant.
If they increase, however, additional charges for such taxes
may be made.
OTHER CONSIDERATIONS
The foregoing discussion is general and is not intended as
tax advice. Counsel and other competent advisers should be
consulted for more complete information. This discussion is
based on LLANY's understanding of 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.
FAIR VALUE OF THE POLICY
It is sometimes necessary for tax and other reasons to
determine the "fair value" of the Policy. The fair value of
the Policy is measured differently for different purposes.
It is not necessarily the same as the Accumulation Value or
the Net Accumulation Value, although the amount of the Net
Accumulation Value will typically be important in valuing
the Policy for this purpose. For some but not all purposes,
the fair value of the Policy may be the Surrender Value of
the Policy. The fair value of the Policy may be impacted by
developments other than the performance of the underlying
investments. For example, without regard to any other
factor, it increases as the Insureds grow older. Moreover,
on the death of the first of the Insureds to die, it tends
to increase significantly. The Owner should consult with his
or her advisors for guidance as to the appropriate
methodology for determining the fair value of the Policy for
a particular purpose.
34
<PAGE>
DIRECTORS AND OFFICERS OF LLANY
The following persons are Directors and Officers of LLANY.
Except as indicated below, the address of each is 120
Madison Street, Suite 1700, Syracuse, New York 13202 and
each has been employed by LLANY or its affiliates for more
than five years.
<TABLE>
<CAPTION>
NAME, ADDRESS AND
POSITION(S) WITH REGISTRANT PRINCIPAL OCCUPATIONS LAST FIVE YEARS
- ---------------------------------- ----------------------------------------------------
<S> <C>
ROLAND C. BAKER President [1/95-present], First Penn-Pacific Life
DIRECTOR Insurance Co. Formerly: Chairman and CEO
1801 S. Meyers Road [7/88-1/95], Baker, Rakish, Shipley & Politzer, Inc.
Oakbrook Terrace, IL 60181
J. PATRICK BARRETT Chairman and Chief Executive Officer, CARPAT
DIRECTOR Investments
4605 Watergap
Manlius, NY 13104
DAVID N. BECKER Vice President and Chief Actuarial Officer, The
SECOND VICE PRESIDENT AND Lincoln National Life Insurance Company
APPOINTED ACTUARY
1300 South Clinton Street
Fort Wayne, IN 46802
THOMAS D. BELL, JR. President and Chief Executive Officer
DIRECTOR [4/95-present], Burson-Marstellar. Formerly: Vice
230 Park Avenue, South Chairman [3/94-5/95], Gulfstream Aerospace Corp.;
New York, NY 10003 Vice Chairman and Chief Executive Officer
[6/89-3/94], Burson-Marstellar
JON A. BOSCIA President, Lincoln National Corp. [1/98-present],
DIRECTOR Formerly: President and Chief Executive Officer
1300 South Clinton Street [10/96-1/98], and Chief Operating Officer
Fort Wayne, IN 46802 [5/94-10/96], The Lincoln National Life Insurance
Co. Formerly: President [7/91-5/94] Lincoln
Investment Management Inc.
JOHN H. GOTTA Senior Vice President and General Manager
SECOND VICE PRESIDENT [1/98-present], The Lincoln National Life Insurance
350 Church Street Co. Formerly: Senior Vice President, Connecticut
Hartford, CT 06103 General Life Insurance Company [3/96-12/97]; Vice
President, Connecticut Mutual Life Insurance Company
[8/94-3/96]; Vice President, Connecticut General
Life Insurance Company [3/93-8/94]
PHILIP L. HOLSTEIN President and Treasurer, Lincoln Life & Annuity
PRESIDENT AND DIRECTOR Company of New York [7/96-Present] Formerly:
President, [1/82-7/96] The Holstein Company, Inc.
HARRY L. KAVETAS Executive Vice President and Chief Financial Officer
DIRECTOR [2/94-present], Eastman Kodak Company. Formerly:
343 State Street Vice President [9/61-12/93], IBM Corporation
Rochester, NY 14650-0235
BARBARA S. KOWALCZYK Senior Vice President, Corporation Planning
DIRECTOR [5/94-present], Lincoln National Corp.; Formerly:
200 East Berry Street Senior Vice President [7/92-5/94], Lincoln
Fort Wayne, IN 46802 Investment Management Co.
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS AND
POSITION(S) WITH REGISTRANT PRINCIPAL OCCUPATIONS LAST FIVE YEARS
- ---------------------------------- ----------------------------------------------------
<S> <C>
MARGEURITE L. LACHMAN Managing Director, Schroder Real Estate Associates
DIRECTOR
437 Madison Avenue, 18th Floor
New York, NY 10022
LOUIS G. MARCOCCIA Senior Vice President, Business, Finance and
DIRECTOR Administrative Services, Syracuse University
Skytop Office Building
Skytop Road
Syracuse, NY 13244-5300
TROY D. PANNING Second Vice President and Chief Financial Officer
SECOND VICE PRESIDENT AND [11/96-present], Lincoln Life & Annuity Company of
CHIEF FINANCIAL OFFICER New York; Formerly: Accountant [9/90-11/96], Ernst &
Young LLP
JOHN M. PIETRUSKI Chairman of Board, Texas Biotechnology Corp.
DIRECTOR
One Penn Plaza
Suite 3408
New York, NY 10119
LAWRENCE T. ROWLAND President [97-present] Lincoln Reinsurance,
DIRECTOR Formerly: Senior Vice President (96), Vice President
One Reinsurance Place [94-95] Lincoln Reinsurance.
1700 Magnavox Way
Fort Wayne, IN 46804
GABRIEL L. SHAHEEN President, Chief Executive Officer and Director
DIRECTOR [1/98-present], The Lincoln National Life Insurance
1300 South Clinton Street Co. Formerly: Managing Director, Lincoln National
Fort Wayne, IN 46802 (UK) PLC [12/96-1/98]; President, Lincoln National
Reinsurance Company [7/94-12/96]; Senior Vice
President, Lincoln National Life Reinsurance Company
[1/93-7/95]
ROBERT O. SHEPPARD, ESQ. Assistant Vice President, Lincoln Life & Annuity
ASSISTANT VICE PRESIDENT Company of New York [7/97-present]; Second Vice
President, Unity Mutual Life Insurance Company
[2/86-7/97]
RICHARD C. VAUGHAN Executive Vice President and Chief Financial Officer
DIRECTOR [1/95-present] Formerly: Senior Vice President
200 East Berry Street [5/92-1/95], Lincoln National Corp.
Fort Wayne, IN 46802
C. SUZANNE WOMACK Secretary, Lincoln Life & Annuity Company of New
SECRETARY York [7/96-present]; Second Vice President and
200 East Berry Street Secretary, Lincoln National Corporation
Fort Wayne, IN 46802 [5/97-present]; Second Vice President and Secretary,
The Lincoln National Life Insurance Company
[5/97-present]; Secretary, Lincoln Financial
Advisors Corporation [6/87-present].
</TABLE>
DISTRIBUTION OF POLICIES
LLANY intends to offer the Policy in New York. Lincoln
Financial Advisors Corporation ("LFA"), the principal
underwriter for the Policies, is registered with the
Securities and
36
<PAGE>
Exchange Commission under the Securities Exchange Act of
1934 as a broker-dealer and is a member of the National
Association of Securities Dealers ("NASD"). The principal
business address of LFA is 350 Church Street, Hartford, CT
06103.
The Policy will be sold by individuals, who in addition to
being licensed as life insurance agents for LLANY, are also
registered representatives LFA. These representatives
ordinarily receive commission and service fees up to 95% of
the first year premium, plus up to 10% of all other premiums
paid. In lieu of premium-based commission, LLANY may pay
equivalent amounts based on Accumulation Value. The selling
office receives additional compensation on the first year
premium and all additional premiums. In some situations, the
selling office may elect to share its commission with the
registered representative. Selling representatives are also
eligible for bonuses and non-cash compensation if certain
production levels are reached. All compensation is paid from
LLANY's resources, which include sales charges made under
this Policy.
CHANGES OF INVESTMENT POLICY
LLANY may materially change the investment policy of the
Variable Account. LLANY must inform the Owners and obtain
all necessary regulatory approvals. Any change must be
submitted to the various state insurance departments which
shall disapprove it if deemed detrimental to the interests
of the Owners or if it renders LLANY's operations hazardous
to the public. If an Owner objects, the Policy may be
converted to a substantially comparable fixed benefit life
insurance policy offered by LLANY on the life of the
Insureds. The Owner has the later of 60 days from the date
of the investment policy change or 60 days from being
informed of such change to make this conversion. LLANY will
not require evidence of insurability for this conversion.
The new policy will not be affected by the investment
experience of any separate account. The new policy will be
for an amount of insurance not exceeding the Death Benefit
of the Policy converted on the date of such conversion.
OTHER CONTRACTS ISSUED BY LLANY
LLANY from time to time offers other variable annuity
contracts and variable life insurance policies with benefits
which vary in accordance with the investment experience of a
separate account of LLANY.
STATE REGULATION
LLANY is subject to the laws of New York governing insurance
companies and to regulation by the New York Insurance
Department. An annual statement in a prescribed form is
filed with the New York Insurance Department each year
covering the operation of LLANY for the preceding year and
its financial condition as of the end of such year.
Regulation by the Insurance Department includes periodic
examination to determine LLANY's contract liabilities and
reserves so that the Insurance Department may certify the
items are correct. LLANY's books and accounts are subject to
review by the Insurance Department at all times and a full
examination of its operations is conducted periodically by
the New York Department of Insurance. Such regulation does
not, however, involve any supervision of management or
investment practices or policies.
A blanket bond with a per event limit of $25 million and an
annual policy aggregate limit of $50 million covers all of
the officers and employees of the Company.
REPORTS TO OWNERS
LLANY maintains Policy records and will mail to each Owner,
at the last known address of record, an annual statement
showing the amount of the current Death Benefit, the
37
<PAGE>
Accumulation Value, and Surrender Value, premiums paid and
monthly charges deducted since the last report, the amounts
invested in each Sub-Account and any Loan Account Value.
Owners will also be sent annual reports containing financial
statements for the Variable Account and annual and
semi-annual reports of the Funds as required by the 1940
Act.
In addition, Owners will receive statements of significant
transactions, such as changes in Specified Amount, changes
in Death Benefit Option, transfers among Sub-Accounts,
Premium Payments, loans, loan repayments, reinstatement and
termination.
ADVERTISING
LLANY is also ranked and rated by independent financial
rating services, including Moody's, Standard & Poor's, Duff
& Phelps and A.M. Best Company. The purpose of these ratings
is to reflect the financial strength or claims-paying
ability of LLANY. The ratings are not intended to reflect
the investment experience or financial strength of the
Separate Account. LLANY may advertise these ratings from
time to time. In addition, LLANY may include in certain
advertisements, endorsements in the form of a list of
organizations, individuals or other parties which recommend
LLANY or the Policies. Furthermore, LLANY may occasionally
include in advertisements comparisons of currently taxable
and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles
and general economic conditions.
PREPARING FOR YEAR 2000
Many existing computer programs use only two digits to
identify a year in the date field. These programs were
designed and developed without considering the impact of the
upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results
by or at the year 2000. The year 2000 issue affects
virtually all companies and organizations.
LLANY, as part of its year 2000 updating process and in
conjunction with its parent company The Lincoln National
Life Insurance Company, is responsible for the updating of
the its Account R-related computer systems. An affiliate of
LLANY, Delaware Service Company (Delaware), provides
substantially all of the necessary accounting and valuation
services for Account R. Delaware, for its part, is
responsible for updating all of its internal computer
systems, including those which service Account R, to
accommodate the year 2000. LLANY, Lincoln Life and Delaware
(the "Companies") have each been redirecting a large portion
of their internal information technology efforts and
contracting with outside consultants as part of this
updating process. Meanwhile, they have been coordinating
with each other as part of the the process.
The year 2000 issue is pervasive and complex and affects
virtually every aspect of the businesses of the Companies.
The computer systems of the Companies and their interfaces
with the computer systems of vendors, suppliers, customers
and other business partners are particularly vulnerable. The
inability to properly recognize date-sensitive electronic
information and to transfer data between systems could cause
errors or even complete failure of systems, which would
result in a temporary inability to process transactions
correctly and engage in normal business activities for
Account R. The Companies respectively are redirecting
significant portions of their internal information
technology efforts and are contracting, as needed, with
outside consultants to help update their systems to
accommodate the year 2000. The Companies have respectively
initiated formal discussions with other critical parties
that interface with their systems to gain an understanding
of the progress by those parties in addressing year 2000
issues. While the Companies are making substantial efforts
to address their own systems and the systems with which they
interface, it is not possible to provide
38
<PAGE>
assurance that operational problems will not occur. The
Companies presently believe that, assuming the modification
of existing computer systems, updates by vendors and
conversion to new software and hardware, the year 2000 issue
will not pose significant operations problems for their
respective computer systems. In addition, the Companies are
incorporating potential issues surrounding year 2000 into
their contingency planning process, in the event that,
despite these substantial efforts, there are unresolved year
2000 problems. If the remediation efforts noted above are
not completed timely or properly, the year 2000 issue could
have a material adverse impact on the operation of the
businesses of the Companies.
The cost of addressing year 2000 issues and the timeliness
of completion is being monitored by management of the
respective Companies. Nevertheless, there can be no
guarantee either by LLANY, Lincoln Life or by Delaware that
estimated costs will be achieved, and actual results could
differ significantly from those anticipated. Specific
factors that might cause such differences include, but are
not limited to, the availability and cost of personnel
trained in this area, the ability to locate and correct all
relevant computer problems, and other uncertainties.
EXPERTS
Actuarial matters included in this prospectus have been
examined by Vaughn W. Robbins, FSA as stated in the Opinion
filed as an Exhibit to the Registration Statement.
Legal matters in connection with the Policies described
herein are being passed upon by Robert O. Sheppard, Esq., as
stated in the Opinion filed as an Exhibit to the
Registration Statement.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities
and Exchange Commission under the Securities Act of 1933, as
amended, with respect to the Policies offered hereby. This
Prospectus does not contain all the information set forth in
the Registration Statement and amendments thereto and
exhibits filed as a part thereof, to all of which reference
is hereby made for further information concerning the
Variable Account, LLANY, and the Policies offered hereby.
Statements contained in this Prospectus as to the content of
Policies and other legal instruments are summaries. For a
complete statement of the terms thereof, reference is made
to such instruments as filed.
39
<PAGE>
APPENDIX 1
ILLUSTRATIONS OF ACCUMULATION VALUES, SURRENDER VALUES, AND
DEATH BENEFIT PROCEEDS
The illustrations in this Prospectus have been prepared to
help show how values under the Policies change with
investment performance. The illustrations illustrate how
Accumulation Values, Surrender Values and Death Benefit
Proceeds under a Policy would vary over time if the
hypothetical gross investment rates of return were a uniform
annual effective rate of either 0%, 6% or 12%. If the
hypothetical gross investment rate of return averages 0%,
6%, or 12% over a period of years, but fluctuates above or
below those averages for individual years, the Accumulation
Values, Surrender Values and Death Benefit Proceeds may be
different. The illustrations also assume there are no Policy
Loans or Partial Surrenders, no additional Premium Payments
are made other than shown, no Accumulation Values are
allocated to the Fixed Account, and there are no changes in
the Specified Amount or Death Benefit Option, and that the
No-Lapse Provision is not selected.
The amounts shown for the Accumulation Value, Surrender
Value and Death Benefit Proceeds as of each Policy
Anniversary reflect the fact that charges are made and
expenses applied which lower investment return on the assets
held in the Sub-Accounts. Daily charges are made against the
assets of the Sub-Accounts for assuming mortality and
expense risks. The current mortality and expense risk
charges are equivalent to an annual effective rate of 0.80%
of the daily net asset value of the Variable Account. The
mortality and expense risk charge is guaranteed never to
exceed an annual effective rate of 0.90% of the daily net
asset value of the Variable Account. In addition, the
amounts shown also reflect the deduction of Fund investment
advisory fees and other expenses which will vary depending
on which funding vehicle is chosen but which are assumed for
purposes of these illustrations to be equivalent to an
annual effective rate of 0.83% of the daily net asset value
of the Variable Account. This rate reflects an arithmetic
average of total Fund portfolio annual expenses for the year
ending December 31, 1997.
Considering guaranteed charges for mortality and expense
risks and the assumed Fund expenses, gross annual rates of
0%, 6% and 12% correspond to net investment experience at
constant annual rates of -1.71%, 4.29% and 10.29%.
The illustrations also reflect the fact that LLANY makes
monthly charges for providing insurance protection. Current
values reflect current Cost of Insurance charges and
guaranteed values reflect the maximum Cost of Insurance
charges guaranteed in the Policy. The values shown are for
Policies which are issued as preferred and standard.
Policies issued on a substandard basis would result in lower
Accumulation Values and Death Benefit Proceeds than those
illustrated.
The illustrations also reflect the fact that LLANY deducts a
premium load of 8.0% from each Premium Payment.
The Surrender Values shown in the illustrations reflect the
fact that LLANY will deduct a Surrender Charge from the
Policy's Accumulation Value for any Policy surrendered in
full during the first fifteen Policy Years. Surrender
Charges reflect, in part, age and Specified Amount, and are
shown in the illustrations.
In addition, the illustrations reflect the fact that LLANY
deducts a monthly administrative charge at the beginning of
each Policy Month. This monthly administrative expense
charge is a flat dollar charge of $12.50 per month in the
first year. Current values reflect a current flat dollar
monthly administrative expense charge of $5 (and guaranteed
values, $10) in subsequent Policy Years. The charge also
includes $0.09 per $1,000 of Specified Amount during the
first twenty Policy Years.
Upon request, LLANY will furnish a comparable illustration
based on the proposed insureds' ages, gender classification,
smoking classification, risk classification and premium
payment requested.
40
<PAGE>
MALE AGE 55/FEMALE AGE 55 NONSMOKER
STANDARD -- $13,807 ANNUAL PREMIUM
FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION 1
GUARANTEED BASIS
<TABLE>
<CAPTION>
PREMIUMS
ACCUMULATED
END OF AT DEATH BENEFIT PROCEEDS TOTAL ACCUMULATION VALUE
POLICY 5% INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR PER YEAR GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
- ------ ----------- --------- --------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,497 1,000,000 1,000,000 1,000,000 11,194 11,907 12,622
2 29,720 1,000,000 1,000,000 1,000,000 22,062 24,181 26,386
3 45,703 1,000,000 1,000,000 1,000,000 32,552 38,777 41,350
4 62,485 1,000,000 1,000,000 1,000,000 42,642 49,681 57,608
5 80,107 1,000,000 1,000,000 1,000,000 52,304 62,874 75,261
6 98,610 1,000,000 1,000,000 1,000,000 61,508 76,329 94,417
7 118,038 1,000,000 1,000,000 1,000,000 70,206 90,008 115,183
8 138,437 1,000,000 1,000,000 1,000,000 78,337 103,856 137,668
9 159,856 1,000,000 1,000,000 1,000,000 85,819 117,792 161,975
10 182,346 1,000,000 1,000,000 1,000,000 92,555 131,727 188,216
11 205,961 1,000,000 1,000,000 1,000,000 98,446 145,561 216,520
12 230,756 1,000,000 1,000,000 1,000,000 103,386 159,192 247,045
13 256,791 1,000,000 1,000,000 1,000,000 107,270 172,516 279,983
14 284,128 1,000,000 1,000,000 1,000,000 109,995 185,432 315,571
15 312,832 1,000,000 1,000,000 1,000,000 111,419 197,801 354,070
20 479,369 1,000,000 1,000,000 1,000,000 88,836 241,962 601,682
25 691,916 0 1,000,000 1,066,315 0 216,457 1,015,538
30 963,187 0 0 1,789,114 0 0 1,703,918
<CAPTION>
END OF SURRENDER VALUE
POLICY ANNUAL INVESTMENT RETURN OF SURRENDER
YEAR GROSS 0% GROSS 6% GROSS 12% CHARGE
- ------ -------- -------- ---------- ---------
<S> <C> <C> <C> <C>
1 0 0 0 13,676
2 8,796 10,915 13,120 13,266
3 19,799 24,024 28,597 12,753
4 30,435 37,475 45,402 12,206
5 40,577 51,146 63,534 11,728
6 50,395 65,217 83,305 11,112
7 60,328 80,131 105,306 9,877
8 69,694 95,213 129,025 8,643
9 78,411 110,384 154,567 7,408
10 86,382 125,554 182,042 6,173
11 93,507 140,623 211,581 4,939
12 99,682 155,488 243,341 3,704
13 104,801 170,047 277,513 2,469
14 108,761 184,197 314,336 1,235
15 111,419 197,801 354,070 0
20 88,836 241,962 601,682 0
25 0 216,457 1,015,538 0
30 0 0 1,703,918 0
</TABLE>
All Amounts are in Dollars
If Premiums are paid more frequently than
annually, the Death Benefit Proceeds,
Accumulation Values and Surrender Values would
be less than those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates assumed. Current mortality and expense
risk charges, administrative fees and premium
load assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The amounts shown in these illustrations
reflect (1) the deduction of current mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.83% per year.
41
<PAGE>
MALE AGE 55/FEMALE AGE 55 NONSMOKER
STANDARD -- $13,807 ANNUAL PREMIUM
FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION 1
CURRENT BASIS
<TABLE>
<CAPTION>
PREMIUMS
ACCUMULATED
END OF AT DEATH BENEFIT PROCEEDS TOTAL ACCUMULATION VALUE
POLICY 5% INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR PER YEAR GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
- ------ ----------- --------- --------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,497 1,000,000 1,000,000 1,000,000 11,267 11,983 12,700
2 29,720 1,000,000 1,000,000 1,000,000 22,418 24,554 26,778
3 45,703 1,000,000 1,000,000 1,000,000 33,362 37,643 42,275
4 62,485 1,000,000 1,000,000 1,000,000 44,099 51,269 59,336
5 80,107 1,000,000 1,000,000 1,000,000 54,629 65,452 78,118
6 98,610 1,000,000 1,000,000 1,000,000 64,951 80,211 98,795
7 118,038 1,000,000 1,000,000 1,000,000 75,063 95,568 121,557
8 138,437 1,000,000 1,000,000 1,000,000 84,964 111,544 146,617
9 159,856 1,000,000 1,000,000 1,000,000 94,652 128,162 174,207
10 182,346 1,000,000 1,000,000 1,000,000 104,123 145,443 204,586
11 205,961 1,000,000 1,000,000 1,000,000 113,375 163,413 238,040
12 230,756 1,000,000 1,000,000 1,000,000 122,331 182,025 274,817
13 256,791 1,000,000 1,000,000 1,000,000 130,956 201,273 315,241
14 284,128 1,000,000 1,000,000 1,000,000 139,181 221,121 359,644
15 312,832 1,000,000 1,000,000 1,000,000 146,973 241,569 408,439
20 479,369 1,000,000 1,000,000 1,000,000 175,799 350,746 735,656
25 691,916 1,000,000 1,000,000 1,343,962 180,989 472,353 1,279,963
30 963,187 1,000,000 1,000,000 2,269,194 122,028 590,992 2,161,138
<CAPTION>
END OF SURRENDER VALUE
POLICY ANNUAL INVESTMENT RETURN OF SURRENDER
YEAR GROSS 0% GROSS 6% GROSS 12% CHARGE
- ------ -------- -------- ---------- ---------
<S> <C> <C> <C> <C>
1 0 0 0 13,676
2 9,152 11,288 13,511 13,266
3 20,609 24,890 29,522 12,753
4 31,893 39,063 47,130 12,206
5 42,902 53,724 66,391 11,728
6 53,839 69,099 87,683 11,112
7 65,186 85,691 111,679 9,877
8 76,322 102,901 137,974 8,643
9 87,244 120,754 166,799 7,408
10 97,950 139,270 198,413 6,173
11 108,437 158,474 233,101 4,939
12 118,627 178,321 271,113 3,704
13 128,487 198,804 312,772 2,469
14 137,946 219,887 358,410 1,235
15 146,973 241,569 408,439 0
20 175,799 350,746 735,656 0
25 180,989 472,353 1,279,963 0
30 122,028 590,992 2,161,138 0
</TABLE>
All Amounts are in Dollars
If Premiums are paid more frequently than
annually, the Death Benefit Proceeds,
Accumulation Values and Surrender Values would
be less than those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates assumed. Current mortality and expense
risk charges, administrative fees and premium
load assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The amounts shown in these illustrations
reflect (1) the deduction of current mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.83% per year.
42
<PAGE>
MALE AGE 65/FEMALE AGE 65 NONSMOKER
STANDARD -- $21,742 ANNUAL PREMIUM
FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION 1
GUARANTEED BASIS
<TABLE>
<CAPTION>
PREMIUMS
ACCUMULATED
END OF AT DEATH BENEFIT PROCEEDS TOTAL ACCUMULATION VALUE
POLICY 5% INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR PER YEAR GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
- ------ ----------- ---------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 22,829 1,000,000 1,000,000 1,000,000 18,082 19,220 20,360
2 46,800 1,000,000 1,000,000 1,000,000 35,077 38,455 41,971
3 71,969 1,000,000 1,000,000 1,000,000 50,838 57,539 64,797
4 98,396 1,000,000 1,000,000 1,000,000 65,251 76,337 88,842
5 126,145 1,000,000 1,000,000 1,000,000 78,187 94,698 114,108
6 155,282 1,000,000 1,000,000 1,000,000 89,475 112,427 140,574
7 185,975 1,000,000 1,000,000 1,000,000 98,885 129,266 168,178
8 217,998 1,000,000 1,000,000 1,000,000 106,095 144,866 196,800
9 251,727 1,000,000 1,000,000 1,000,000 110,683 158,776 226,257
10 287,142 1,000,000 1,000,000 1,000,000 112,153 170,468 256,350
11 324,328 1,000,000 1,000,000 1,000,000 109,958 179,358 286,896
12 363,374 1,000,000 1,000,000 1,000,000 103,497 184,808 317,753
13 404,371 1,000,000 1,000,000 1,000,000 92,118 186,117 348,852
14 447,419 1,000,000 1,000,000 1,000,000 75,083 182,489 380,187
15 492,619 1,000,000 1,000,000 1,000,000 51,422 172,887 411,760
20 754,866 0 0 1,000,000 0 0 571,700
25 1,089,567 0 0 1,000,000 0 0 775,466
30 1,516,739 0 0 1,300,230 0 0 1,287,357
<CAPTION>
END OF SURRENDER VALUE
POLICY ANNUAL INVESTMENT RETURN OF SURRENDER
YEAR GROSS 0% GROSS 6% GROSS 12% CHARGE
- ------ -------- -------- ---------- ---------
<S> <C> <C> <C> <C>
1 0 0 0 25,098
2 11,017 14,395 17,911 24,060
3 27,848 34,548 41,806 22,991
4 43,298 54,385 66,889 21,953
5 57,303 73,815 93,224 20,883
6 69,630 92,581 120,728 19,845
7 81,245 111,626 150,538 17,640
8 90,660 129,431 181,364 15,435
9 97,453 145,546 213,027 13,230
10 101,128 159,443 245,325 11,025
11 101,138 170,538 278,075 8,820
12 96,881 178,192 311,138 6,615
13 87,708 181,707 344,442 4,410
14 72,878 180,283 377,982 2,205
15 51,422 172,887 411,760 0
20 0 0 571,700 0
25 0 0 775,466 0
30 0 0 1,287,357 0
</TABLE>
All Amounts are in Dollars
If Premiums are paid more frequently than
annually, the Death Benefit Proceeds,
Accumulation Values and Surrender Values would
be less than those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates assumed. Current mortality and expense
risk charges, administrative fees and premium
load assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The amounts shown in these illustrations
reflect (1) the deduction of current mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.83% per year.
43
<PAGE>
MALE AGE 65/FEMALE AGE 65 NONSMOKER
STANDARD -- $21,742 ANNUAL PREMIUM
FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION 1
CURRENT BASIS
<TABLE>
<CAPTION>
PREMIUMS
ACCUMULATED
END OF AT DEATH BENEFIT PROCEEDS TOTAL ACCUMULATION VALUE
POLICY 5% INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR PER YEAR GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
- ------ ----------- ---------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 22,829 1,000,000 1,000,000 1,000,000 18,389 19,537 20,687
2 46,800 1,000,000 1,000,000 1,000,000 36,417 39,858 43,437
3 71,969 1,000,000 1,000,000 1,000,000 54,013 60,915 68,380
4 98,396 1,000,000 1,000,000 1,000,000 71,161 82,720 95,723
5 126,145 1,000,000 1,000,000 1,000,000 87,854 105,292 125,703
6 155,282 1,000,000 1,000,000 1,000,000 104,082 128,652 158,583
7 195,875 1,000,000 1,000,000 1,000,000 119,835 152,821 194,658
8 217,998 1,000,000 1,000,000 1,000,000 135,103 177,824 234,255
9 251,727 1,000,000 1,000,000 1,000,000 149,875 203,685 277,743
10 287,142 1,000,000 1,000,000 1,000,000 164,137 230,433 325,533
11 324,328 1,000,000 1,000,000 1,000,000 177,875 258,098 378,088
12 363,374 1,000,000 1,000,000 1,000,000 190,613 286,290 435,577
13 404,371 1,000,000 1,000,000 1,000,000 202,229 314,951 498,539
14 447,419 1,000,000 1,000,000 1,000,000 212,364 343,824 567,477
15 492,619 1,000,000 1,000,000 1,000,000 220,567 372,603 643,040
20 754,866 1,000,000 1,000,000 1,218,121 216,090 506,543 1,160,115
25 1,089,567 1,000,000 1,000,000 2,107,440 115,553 636,447 2,007,086
30 1,516,739 0 1,000,000 3,410,360 0 773,094 3,376,594
<CAPTION>
END OF SURRENDER VALUE
POLICY ANNUAL INVESTMENT RETURN OF SURRENDER
YEAR GROSS 0% GROSS 6% GROSS 12% CHARGE
- ------ -------- -------- ---------- ---------
<S> <C> <C> <C> <C>
1 0 0 0 25,098
2 12,357 15,798 19,377 24,060
3 31,023 37,924 45,390 22,991
4 49,209 60,767 73,770 21,953
5 66,971 84,409 104,820 20,883
6 84,236 108,806 138,738 19,845
7 102,195 135,181 177,017 17,640
8 119,668 162,388 218,820 15,435
9 136,645 190,455 264,512 13,230
10 153,112 219,407 314,507 11,025
11 169,054 249,277 369,268 8,820
12 183,997 279,675 428,962 6,615
13 197,819 310,541 494,129 4,410
14 210,159 341,619 565,272 2,205
15 220,567 372,603 643,040 0
20 216,090 506,543 1,160,115 0
25 115,553 636,447 2,007,086 0
30 0 773,094 3,376,594 0
</TABLE>
All Amounts are in Dollars
If Premiums are paid more frequently than
annually, the Death Benefit Proceeds,
Accumulation Values and Surrender Values would
be less than those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates assumed. Current mortality and expense
risk charges, administrative fees and premium
load assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The amounts shown in these illustrations
reflect (1) the deduction of current mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.83% per year.
44
<PAGE>
APPENDIX 2
CORRIDOR PERCENTAGES
<TABLE>
<CAPTION>
ATTAINED AGE OF THE
YOUNGER
INSURED (NEAREST
BIRTHDAY) CORRIDOR PERCENTAGE
- ------------------------ ---------------------
<S> <C>
0-40 250%
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
51 178
52 171
53 164
54 157
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
67 118
68 117
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95-99 100
</TABLE>
45
<PAGE>
Lincoln Life & Annuity Company of New York
SEPARATE ACCOUNT AND COMPANY FINANCIALS TO BE FILED BY AMENDMENT
S-1
<PAGE>
PART II
FEES AND CHARGES REPRESENTATION
Lincoln Life & Annuity Company of New York represents that the fees and
charges deducted under the Contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by Lincoln Life & Annuity Company of New York.
UNDERTAKING
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.
INDEMNIFICATION
(a) Brief description of indemnification provisions.
In general, Article VII of the By-Laws of Lincoln Life & Annuity
Company of New York (LLANY) provides that LLANY will indemnify
certain persons against expenses, judgments and certain other
specified costs incurred by any such person if he/she is made a party
or is threatened to be made a party to a suit or proceeding because
he/she was a director, officer, or employee of LLANY, as long as
he/she acted in good faith and in a manner he/she reasonably believed
to be in the best interests of, or not opposed to the best interests
of, LLANY. Certain additional conditions apply to indemnification in
criminal proceedings.
In particular, separate conditions govern indemnification of
directors, officers, and employees of LLANY in connection with suits
by, or in the right of, LLANY.
Please refer to Article VII of the By-Laws of LLANY (Exhibit No. 6(b)
hereto) for the full text of the indemnification provisions.
Indemnification is permitted by, and is subject to the requirements
of, New York law.
(b) Undertaking pursuant to Rule 484 of Regulation C under the Securities
Act of 1933.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions
described in Item 28(a) above 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 such 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.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
A cross-reference sheet (reconciliation and tie);
The prospectus, (Prospectus 2) consisting of 46 pages;
The undertaking to file reports;
The fees and charges representation;
Statements regarding indemnification;
The signatures.
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
(1) Resolution of the Board of Directors of Lincoln Life & Annuity
Company of New York and related documents authorizing establishment
of the Account incorporated herein by reference to Registration
Statement on Form N-8B-2 (File No. 811-08651) filed on February 11,
1998.
(2) Not applicable.
(3) (a) Principal Underwriting Agreement between Lincoln Financial
Advisors Corporation and Lincoln Life & Annuity Company of New
York incorporated herein by reference to Post-Effective
Amendment No. 1 to Registration Statement on Form S-6 (File No.
333-42507) filed on February 25, 1999.
(b) Form of Selling Group Agreement.*
(c) Commission Schedule for Variable Life Policies.*
(4) Not applicable.
(5) (a) Form of Policy and Application incorporated herein by reference
to Registration Statement on Form N-8B-2 (File No. 811-08651)
filed on February 11, 1998.
<PAGE>
(b) Riders incorporated herein by reference to Registration Statement
on Form N-8B-2 (File No. 811-08651) filed on February 11, 1998.
(6) (a) Articles of Incorporation of Lincoln Life & Annuity Company of
New York are incorporated herein by reference to Registration
Statement on Form N-4 (File No. 333-38007) filed on October 16,
1997.
(b) Bylaws of Lincoln Life & Annuity Company of New York are
incorporated herein by reference to Registration Statement on
Form N-4 (File No. 333-38007) filed on October 16, 1997.
(7) Not applicable.
(8) Fund Participation Agreements incorporated herein by reference to
Post-Effective Amendment No. 1 to Registration Statement on Form S-6
(File No. 333-42507) filed on February 26, 1999.
Agreements between Lincoln Life & Annuity Company of New York and:
(a) AIM Variable Insurance Funds, Inc.
(b) Baron Capital Funds Trust.*
(c) BT Insurance Funds Trust.
(d) Delaware Group Premium Fund, Inc.*
(e) Fidelity Variable Insurance Products Fund.
(f) Fidelity Variable Insurance Products Fund II.
(g) James Aspen Series.*
(h) Lincoln National Money Market Fund, Inc.
(i) MFS-Registered Trademark- Variable Insurance Trust.
(j) Neuberger & Berman Advisors Management Trust.*
(k) Templeton Variable Products Series Fund.
(l) OCC Accumulation Trust.
(9) (a) Not applicable.
(b) *
(10) See Exhibit 1(5).
2. See Exhibit 1(5).
3. Opinion and Consent of Robert O. Sheppard, Esq.
4. Not applicable.
5. Not applicable.
6. Opinion and Consent of Vaughn W. Robbins, F.S.A.
7. Consent of Ernst & Young LLP, Independent Auditors*
8. Not applicable.
* To be filed by amendment
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Lincoln Life & Annuity Company of New York, has duly caused this Post-Effective
Amendment No. 1 to this Registration Statement on Form S-6 (File Number
333-46113) to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Syracuse and State of New York, on the 24th day of
February, 1999.
LLANY SEPARATE ACCOUNT R FOR FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE
(Name of Registrant)
By: /s/ TROY D. PANNING
------------------------------------------
Troy D. Panning
SECOND VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(Name of Depositor)
By: /s/ TROY D. PANNING
------------------------------------------
TROY D. PANNING
SECOND VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to its Registration Statement has been signed
below on February 25, 1999 by the following persons, as officers and directors
of the Depositor, in the capacities indicated:
SIGNATURE TITLE
- -------------------------------------------------- -------------------------
/s/ PHILIP L. HOLSTEIN President, Treasurer and
------------------------------------------- Director (Principal
Philip L. Holstein Executive Officer)
/s/ JON A. BOSCIA
------------------------------------------- Director
Jon A. Boscia
/s/ RICHARD C. VAUGHAN
------------------------------------------- Director
Richard C. Vaughan
Second Vice President and
/s/ TROY D. PANNING Chief Financial Officer
------------------------------------------- (Principal Financial
Troy D. Panning Officer and Principal
Accounting Officer)
/S/ THOMAS D. BELL, JR.
------------------------------------------- Director
Thomas D. Bell, Jr.
/s/ ROLAND C. BAKER
------------------------------------------- Director
Roland C. Baker
/s/ HARRY L. KAVETAS
------------------------------------------- Director
Harry L. Kavetas
/s/ BARBARA STEURY KOWALCZYK
------------------------------------------- Director
Barbara Steury Kowalczyk
/s/ MARGUERITE LEANNE LACHMAN
------------------------------------------- Director
Marguerite Leanne Lachman
/s/ JOHN M. PIETRUSKI
------------------------------------------- Director
John M. Pietruski
/s/ LAWRENCE T. ROLAND
------------------------------------------- Director
Lawrence T. Roland
<PAGE>
SIGNATURE TITLE
- -------------------------------------------------- -------------------------
/s/ J. PATRICK BARRETT
------------------------------------------- Director
J. Patrick Barrett
/s/ LOUIS G. MARCOCCIA
------------------------------------------- Director
Louis G. Marcoccia
/s/ GABRIEL L. SHAHEEN
------------------------------------------- Director
Gabriel L. Shaheen
(A majority of the Directors)
by /s/ Troy D. Panning
--------------------------------------
Troy D. Panning
Attorney-in-Fact
<PAGE>
Robert O. Sheppard Lincoln Financial Group
Corporate Counsel Lincoln Life & Annuity
Company of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202-2802
Telephone: (315)428-8420
Facsimile: (315)428-8419
February 24, 1999
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Re: LLANY Separate Account R for Flexible Premium Variable Life Insurance
Lincoln Life & Annuity Company of New York
Post-Effective Amendment No. 1: 333-46113
Dear Sirs:
As Corporate Counsel of Lincoln Life & Annuity Company of New York ("LLANY"),
I am familiar with the actions of the Board of Directors of LLANY,
establishing the Account and its method of operation and authorizing the
filing of a Registration Statement under the Securities Act of 1933, (and
amendments thereto) for the securities to be issued by the Account and the
Investment Company Act of 1940 for the Account itself.
In the course of preparing this opinion, I have reviewed the Charter and the
By-Laws of the Company, the Board actions with respect to the Account, and
such other matters as I deemed necessary or appropriate. Based on such
review, I am of the opinion that the variable life insurance policies (and
interests therein) which are the subject of the Registration Statement under
the Securities Act of 1933, as amended, for the Account will, when issued, be
legally issued and will represent binding obligations of the Company, the
depositor for the Account.
I further consent to the use of this opinion as an Exhibit to Post-Effective
Amendment No. 1 to said Registration Statement and to the reference to me
under the heading "Experts" in said Registration Statement, as amended.
Very truly yours,
/s/ Robert O. Sheppard
Robert O. Sheppard
Corporate Counsel
<PAGE>
[LETTERHEAD]
February 24, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: LLANY Separate Account R for Flexible Premium
Variable Life Insurance
Post-Effective Amendment Number 1, SEC File No. 333-46113
Commissioners:
This opinion is furnished in connection with Post-Effective Amendment No. 1
to the Registration Statement on Form S-6 filed by Lincoln Life & Annuity
Company of New York under the Securities Act of 1993 recorded as File No.
333-46113. The prospectus included in said Post-Effective Amendment
describes flexible premium variable universal life insurance policies (the
"Policies"). The forms of Policies were prepared under my direction.
In my opinion, the illustrations of benefits under the Policies included in the
Section entitled "Illustrations" in the prospectus, based on assumptions stated
in illustrations, are consistent with the provisions of the forms of the
Policies. The ages selected in the illustrations are representative of the
manner in which the Policies operate.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to me under the heading "Experts" in the
prospectus.
Very truly yours,
/s/ Vaughn W. Robbins
Vaughn W. Robbins, FSA, MAAA
VWR:ao
