<PAGE>
Registration Nos. 333-______
811-09007
As filed with the Commission on September 21, 1998
______________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. ___ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 [X]
---
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
SEPARATE ACCOUNT USL VA-R
(Exact Name of Registrant)
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
(Name of Depositor)
125 Maiden Lane
New York, NY 10038
(Address of Depositor's Principal Executive Offices) (Zip Code)
(212) 709-6000
(Depositor's Telephone Number, including Area Code)
Pauletta P. Cohn, Esq.
Associate General Counsel and Secretary
American General Life Companies
2727-A Allen Parkway
Houston, TX 77019
(Name and Address of Agent for Service)
Copies of all communications and order to Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W., Suite 825
Washington, D.C. 20036
Attention: Gary O. Cohen, Esq.
<PAGE>
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Title of Securities Being Registered:
Units of interest in The United States Life Insurance Company Separate Account
USL VA-R under variable annuity certificates.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file another
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
PROFILE OF THE SELECT RESERVE(SM)
FLEXIBLE PAYMENT VARIABLE AND FIXED GROUP DEFERRED ANNUITY
CERTIFICATES
This Profile summarizes information you should know before investing in a
Certificate. The Certificates are more fully described in the Prospectus that
accompanies this Profile. Please read the Prospectus carefully.
1. THE CERTIFICATES. The Select Reserve(SM) Certificates ("Certificates") are
flexible payment variable and fixed group deferred annuity certificates issued
by The United States Life Insurance Company in the City of New York ("USL").
They are primarily designed for investment of after-tax money in non-qualified
annuities in order to provide retirement income. Because of a minimum initial
purchase payment of $50,000, the Certificates may not be suitable for many tax-
qualified plan programs. However, you may wish to use a Certificate for
programs such as a rollover individual retirement annuity.
You may use the Divisions of The United States Life Insurance Company in the
City of New York Separate Account USL VA-R ("Separate Account") for a variable
investment return under a Certificate. Variable returns are based on one or
more series of the mutual funds listed in Section 4, below. You may also use
USL's Fixed Account, for investment in Guarantee Periods with guaranteed
principal and interest.
The Divisions of the Separate Account offer an opportunity to realize better
returns than those guaranteed under the Guarantee Periods. The Divisions
involve risk, however, and you can lose money. You may make transfers among the
Divisions and Guarantee Periods.
The Certificates have an accumulation phase and an annuity phase. During the
accumulation phase, earnings accumulate on a tax-deferred basis and are taxed as
income when you make a withdrawal. When you begin receiving regular annuity
payments, a portion of each payment is taxable. Various distribution methods
are available during the accumulation phase and the annuity phase.
2. ANNUITY PAYMENTS. Your Certificate's value may be applied to any one of the
following annuity payout options (assuming that you are the annuitant): (1)
Life Annuity - monthly payments during your life; (2) Life Annuity - Period
Certain - monthly payments, during your life, but with payments continuing to
the beneficiary for the balance of the 10, 15 or 20 years (as you choose) if you
die before the end of the chosen period; (3) Joint and Last Survivor-Life -
monthly payments during your life and the life of another payee, with payments
continuing during the lifetime of the survivor; (4) Certain Period - monthly
payments to you or another payee and on
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<PAGE>
your death or the death of the other payee to a beneficiary for a specified
period of time between 5 and 40 years, with no life contingencies; (5) Specified
Dollar Amount - monthly payments in amounts not less than $125 nor more than
$200 per year for each $1,000 of the original amount due, with the balance to a
beneficiary if the person receiving the payments dies prior to completion of the
payments.
With the exception of option 5, you may choose annuity payments under the above
options to be made on a fixed or variable basis. The dollar amount of your
payments on a variable basis will depend upon the investment performance of the
Divisions. Option 5 is available only on a fixed basis. A payee receiving
variable (but not fixed) annuity payments under option 4 may elect at any time
to terminate the option and receive the commuted (current) value of the annuity.
3. PURCHASE. You can purchase a Certificate by submitting an application. The
minimum initial purchase payment is $50,000. You may contribute additional
amounts of $5,000 or more at any time during the accumulation phase.
4. INVESTMENT OPTIONS. Through the Divisions, you may invest in one or more of
the following series of the mutual funds named below:
<TABLE>
<CAPTION>
<S> <C> <C>
AMERICAN GENERAL SERIES NAVELLIER VARIABLE INSURANCE ROYCE CAPITAL FUND
PORTFOLIO COMPANY SERIES FUND, INC. . Royce Premier
. Money Market Fund . Navellier Growth Portfolio
Portfolio . Royce Total Return
HOTCHKIS AND WILEY Portfolio
VARIABLE TRUST OFFITBANK VARIABLE
. Equity Income VIP INSURANCE FUND, INC. WRIGHT MANAGED BLUE
Portfolio . OFFITBANK VIF- CHIP SERIES TRUST
. Low Duration VIP Emerging Markets Fund . Wright International
Portfolio . OFFITBANK VIF- Blue Chip Portfolio
High Yield Fund . Wright Selected Blue
LEVCO SERIES TRUST . OFFITBANK VIF- Chip Portfolio
. LEVCO Equity Value Total Return Fund
Fund . OFFITBANK VIF-
U.S. Government
Securities Fund
</TABLE>
You may also invest in a Guarantee Period. Currently, USL offers a one-year
Guarantee Period. Other Guarantee Periods may be offered, in the future, with
different interest rates and durations.
5. EXPENSES. We deduct a daily charge for mortality and expense risks at an
annual rate of 0.62%, and a daily charge for administration expenses at an
annual rate of 0.04%, of the average daily net asset value of a Division.
Page Two
<PAGE>
There also are investment series charges, ranging from 0.57% to 2.00% of the
average annual assets of the series listed in Section 4, above, depending on the
series involved. Charges for state premium and other applicable taxes ("premium
taxes") may also apply at the time you elect to start receiving annuity
payments.
The first two columns in the following chart show the Certificate charges and
the investment series charges. The third column, "Total Annual Charges," shows
the total of the charges in the first two columns. The last two columns provide
two examples of the total annual charges, in dollars, that you would pay under a
Certificate, assuming that you invest $1,000 in a Certificate that earns 5%
annually and that you withdraw your money: (1) at the end of year 1, and (2) at
the end of year 10. The column for year 1 shows the total annual charges for
that year. The column for year 10 shows the aggregate of all the annual charges
assessed for the 10 years. The examples assume that there are no charges for
premium taxes.
<TABLE>
<CAPTION>
EXAMPLES OF
TOTAL ANNUAL TOTAL ANNUAL TOTAL ANNUAL
CERTIFICATE SERIES TOTAL ANNUAL CHARGES AT END OF:
INVESTMENT SERIES CHARGES CHARGES CHARGES 1 YEAR 10 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Income VIP 0.66% 1.15% 1.81% $18 $213
LEVCO Equity Value 0.66% 1.10% 1.76% $18 $207
Low Duration VIP 0.66% 0.58% 1.24% $13 $150
Navellier Growth 0.66% 1.50% 2.16% $22 $249
OFFITBANK VIF-Emerging Markets 0.66% 1.50% 2.16% $22 $249
OFFITBANK VIF-High Yield 0.66% 1.15% 1.81% $18 $213
OFFITBANK VIF-Total Return 0.66% 0.80% 1.46% $15 $175
OFFITBANK VIF-U.S. Government 0.66% 0.60% 1.26% $13 $152
Securities
Royce Premier 0.66% 1.35% 2.01% $20 $234
Royce Total Return 0.66% 1.35% 2.01% $20 $234
Wright International Blue Chip 0.66% 2.00% 2.66% $27 $299
Wright Selected Blue Chip 0.66% 1.30% 1.96% $20 $229
Money Market 0.66% 0.57% 1.23% $13 $149
</TABLE>
For certain recently formed series, charges have been estimated. The charges
reflect any expense reimbursement or waiver. For more information, see the Fee
Table in the Prospectus.
6. TAXES. Usually, you pay taxes on earnings only when distributions are made
from your Certificate. You may also pay a 10% penalty on the taxable portion of
distributions received prior to age 59-1/2.
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<PAGE>
7. ACCESS TO YOUR MONEY. Prior to the annuity starting date, you may receive
distributions under your Certificate through the following withdrawal options:
(1) partial withdrawals of at least $100 may be taken at any time, and (2)
systematic withdrawals paid monthly, quarterly, semiannually or annually,
subject to a $100 minimum for each payment.
You also have access to your Certificate's value by surrendering the
Certificate. You may do this at any time prior to the annuity starting date.
During the annuity payout period, a person receiving variable payments, under a
certain period option, may also surrender the Certificate. Withdrawals and
surrenders may be subject to income tax and a tax penalty.
8. PERFORMANCE. During the accumulation phase, your Certificate's value in the
Divisions may fluctuate, reflecting the investment performance of the Divisions
you have selected. The following chart shows hypothetical total returns for
Divisions whose corresponding series have at least one full calendar year of
operations. The returns shown are based on the actual historical performance of
the corresponding series. They reflect all charges and deductions of the series
and the Divisions that would have been made during the periods shown. Thus, the
chart reflects all of the charges in the third column of the chart in Section 5,
above, for the Divisions included below. If also included, premium taxes would
reduce the performance numbers shown below. Past performance is not a guarantee
of future results.
<TABLE>
<CAPTION>
CALENDAR YEAR
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DIVISION 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------------
OFFITBANK VIF- 5.77% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Emerging Markets
OFFITBANK VIF- 11.20% N/A N/A N/A N/A N/A N/A N/A N/A N/A
High Yield
Wright International 5.06% 16.62% 9.34% N/A N/A N/A N/A N/A N/A N/A
Blue Chip
Wright Selected 31.21% 21.99% 25.43% N/A N/A N/A N/A N/A N/A N/A
Blue Chip
Money Market 4.49% 4.32% 4.85% 3.11% 2.01% 2.57% 4.83% 7.18% 8.24% 6.17%
</TABLE>
9. DEATH BENEFIT. If you die before the annuity starting date, the beneficiary
will receive a death benefit. The death benefit is the Certificate value at the
time we receive proof of death and a written request specifying the manner of
payment, less premium taxes. However, if death occurs prior to age 81, and
before the annuity starting date, the death benefit is the greater of (1) the
death benefit in the preceding sentence or (2) the sum of all purchase payments
you have paid under the Certificate, less any partial withdrawals and premium
taxes.
Page Four
<PAGE>
10. OTHER INFORMATION.
TAX-QUALIFIED PLANS. Please consult your tax adviser before purchasing a
Certificate as a rollover from an existing tax-qualified retirement plan,
including another individual retirement account or annuity under Section 408 of
the Internal Revenue Code. Any discussion of taxes in this Profile does not
apply to such a Certificate.
FREE LOOK. You can examine your Certificate for a period of 10 days after you
receive it, and return it to us for a refund. Your refund will equal your
Certificate's value, reflecting any investment gain or loss in the Divisions you
have specified.
AUTOMATIC REBALANCING. You can have your money automatically rebalanced among
the Divisions quarterly, semiannually, or annually in order to retain the
proportional investments you select.
REPORTS. We will mail to Certificate owners or annuitants any reports and
communications required by law. The toll-free number for daily Division values
is 1-800-________.
11. INQUIRIES. If you need more information, please contact your registered
representative. You may also contact us at:
The United States Life Insurance Company in the City of New York
Administrative Center
P.O. Box 1401
Houston, Texas 77251-1401
Telephone 1-800-246-1924 and 1-713-________
Page Five
<PAGE>
SELECT RESERVE(SM)
FLEXIBLE PAYMENT VARIABLE AND
FIXED DEFERRED ANNUITY CERTIFICATES
OFFERED BY
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
ADMINISTRATIVE CENTER
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-800-246-1924; 1-713-[ ]
The United States Life Insurance Company in the City of New York ("USL") is
offering, under a group annuity master contract, the flexible payment variable
and fixed deferred annuity certificates (the "Certificates") described in this
Prospectus.
You may use The United States Life Insurance Company in the City of New York
Separate Account USL VA-R ("the Separate Account") for a variable investment
return under the Certificates based on one or more series of the mutual funds
named below, as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
AMERICAN GENERAL SERIES PORTFOLIO NAVELLIER VARIABLE INSURANCE SERIES ROYCE CAPITAL FUND
COMPANY FUND, INC. . Royce Premier
. Money Market Fund . Navellier Growth Portfolio Portfolio
. Royce Total Return
HOTCHKIS AND WILEY OFFITBANK VARIABLE Portfolio
VARIABLE TRUST INSURANCE FUND, INC.
. Equity Income VIP . OFFITBANK VIF- WRIGHT MANAGED BLUE
Portfolio Emerging Markets Fund CHIP SERIES TRUST
. Low Duration VIP . OFFITBANK VIF- . Wright International
Portfolio High Yield Fund Blue Chip Portfolio
. OFFITBANK VIF- . Wright Selected Blue
LEVCO SERIES TRUST Total Return Fund Chip Portfolio
. LEVCO Equity Value . OFFITBANK VIF-
Fund U.S. Government
Securities Fund
</TABLE>
You may also use USL's guaranteed interest option. This option currently has
one Guarantee Period, with a guaranteed interest rate.
This Prospectus provides you with information that you should have before
investing in the Certificates. Please read the Prospectus carefully and keep it
for future reference.
For additional information about the Certificates, you may request a copy of the
Statement of Additional Information (the "Statement"), dated [ ], 1998.
We have filed the Statement with the Securities and Exchange Commission ("SEC")
and have incorporated it by reference into this Prospectus. The "Contents" of
the Statement appears at page __ of this Prospectus. You may obtain a free copy
of the Statement if you write or call USL's Administrative Center, which is
located at 2727-A Allen Parkway, Houston, Texas 77019-2191. The telephone number
is 1-800-246-1924. You may obtain the Statement through the SEC's Web site at
http://www.sec.gov.
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense. The Certificates are not available in all states.
This Prospectus is valid only if you also receive current fund prospectuses of
the American General Series Portfolio Company, Hotchkis and Wiley Variable
Trust, Levco Series Trust, Navellier Variable Insurance Series Fund, Inc.,
Offitbank Variable Insurance Fund, Inc., Royce Capital Fund, and Wright Managed
Blue Chip Series Trust.
This Prospectus is dated [ ], 1998
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Glossary................................................................................... 4
Fee Table.................................................................................. 7
Communications to Us....................................................................... 9
Performance Information.................................................................... 9
Financial Ratings........................................................................ 11
Other Information........................................................................ 11
Financial Information...................................................................... 11
USL........................................................................................ 12
Separate Account USL VA-R.................................................................. 12
The Series................................................................................. 12
Voting Privileges........................................................................ 16
The Fixed Account.......................................................................... 17
Certificate Issuance and Purchase Payments................................................. 19
Cancellation............................................................................. 21
Owner Account Value........................................................................ 21
Variable Account Value................................................................... 21
Fixed Account Value...................................................................... 22
Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of Owner Account Value... 22
Transfers................................................................................ 22
Automatic Rebalancing.................................................................... 24
Surrenders and Partial Withdrawals....................................................... 24
Annuity Period and Annuity Payment Options................................................. 25
Annuity Commencement Date................................................................ 25
Application of Owner Account Value....................................................... 26
Fixed and Variable Annuity Payments...................................................... 26
Annuity Payment Options.................................................................. 27
Transfers................................................................................ 29
Death Proceeds............................................................................. 30
Death Proceeds Before the Annuity Commencement Date...................................... 30
Death Proceeds After the Annuity Commencement Date....................................... 31
Proof of Death........................................................................... 32
Charges Under the Certificates............................................................. 32
Premium Taxes............................................................................ 32
Transfer Charges......................................................................... 33
Charge to the Separate Account........................................................... 33
Miscellaneous............................................................................ 34
Systematic Withdrawal Plan............................................................... 34
Reduction in Administrative Expense Charge............................................... 34
Other Aspects of the Certificates.......................................................... 34
Owners, Annuitants, and Beneficiaries; Assignments....................................... 35
Reports.................................................................................. 36
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Rights Reserved by Us.................................................................... 36
Payment and Deferment.................................................................... 36
Federal Income Tax Matters................................................................. 37
General.................................................................................. 37
Non-Qualified Certificates............................................................... 38
Individual Retirement Annuities ("IRAs")................................................. 40
Roth IRAs................................................................................ 42
Simplified Employee Pension Plans........................................................ 43
Simple Retirement Accounts............................................................... 43
Other Qualified Plans.................................................................... 43
Private Employer Unfunded Deferred Compensation Plans.................................... 44
Federal Income Tax Withholding and Reporting............................................. 45
Taxes Payable by USL and the Separate Account............................................ 45
Distribution Arrangements.................................................................. 45
Services Agreement......................................................................... 46
Legal Matters.............................................................................. 46
Year 2000 Considerations................................................................... 46
Other Information on File.................................................................. 47
Contents of Statement of Additional Information............................................ 48
</TABLE>
3
<PAGE>
GLOSSARY
WE, OUR AND US - The United States Life Insurance Company in the City of New
York ("USL").
YOU AND YOUR - a reader of this Prospectus who is contemplating making purchase
payments or taking any other action in connection with a Certificate. This is
generally the Owner of a Certificate.
ACCOUNT VALUE - the sum of your Fixed Account Value and Variable Account Value
after deduction of any fees.
ACCUMULATION UNIT - a measuring unit used in calculating your interest in a
Division of the Separate Account prior to the Annuity Commencement Date.
ADMINISTRATIVE CENTER - our annuity service center to which you should direct
all purchase payments, requests, instructions and other communications. Our
Administrative Center is located at 2727-A Allen Parkway, Houston, Texas 77019-
2191. The mailing address is P.O. Box 1401, Houston, Texas 77251-1401.
ANNUITANT - the person named as annuitant in the application for a Certificate
and on whose life annuity payments may be based.
ANNUITY COMMENCEMENT DATE - the date on which we begin making payments under an
Annuity Payment Option, unless you elect a single sum payment instead.
ANNUITY PAYMENT OPTION - one of the ways in which you can request us to make
annuity payments to you. An Annuity Payment Option will control the amount of
each payment, how often we make payments, and for how long we make payments.
ANNUITY PERIOD - the period of time during which we make annuity payments under
an Annuity Payment Option.
ANNUITY UNIT - a measuring unit used to calculate the amount of Variable Annuity
Payments.
BENEFICIARY - the person who will receive any proceeds due under a Certificate
following the death of an Owner or an Annuitant.
CERTIFICATE - an individual annuity Certificate offered by this Prospectus.
CERTIFICATE ANNIVERSARY - each anniversary of the date of issue of the
Certificate.
CERTIFICATE YEAR - each year beginning with the date of issue of the
Certificate.
CODE - the Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT - a person whom you designate under a Non-Qualified
Certificate to become the Annuitant if the Annuitant dies before the Annuity
Commencement Date and the Contingent Annuitant is alive when the Annuitant dies.
4
<PAGE>
CONTINGENT BENEFICIARY - a person whom you designate to receive any proceeds due
under a Certificate following the death of an Owner or an Annuitant, if the
Beneficiary has died but the Contingent Beneficiary is alive when the proceeds
become payable.
DIVISION - one of the several different investment options into which the
Separate Account is divided. Each Division invests in shares of a Series.
FIXED ACCOUNT - the name of the investment alternative that allows you to
allocate purchase payments to USL's General Account.
FIXED ACCOUNT VALUE - the amount of your Account Value in the Fixed Account.
FIXED ANNUITY PAYMENTS - annuity payments that are fixed in amount and do not
vary with the investment experience of any Division of the Separate Account.
GENERAL ACCOUNT - all assets of USL other than those in the Separate Account or
any other legally segregated separate account established by USL.
GUARANTEED INTEREST RATE - the rate of interest we credit during any Guarantee
Period, on an effective annual basis.
GUARANTEE PERIOD - the period for which we credit a Guaranteed Interest Rate.
HOME OFFICE - our office at the following address and phone number: The United
States Life Insurance Company in the City of New York, 125 Maiden Lane, New
York, N.Y. 10038; 1-212-709-6000.
NON-QUALIFIED - not eligible for the kind of federal income tax treatment that
occurs with retirement plans allowed by Sections 401, 403, 408 or 408A of the
Code.
OWNER - the holder of record of a Certificate, except that the employer or
trustee may be the Owner of the Certificate in connection with a retirement
plan.
QUALIFIED - eligible for the kind of federal income tax treatment that occurs
with retirement plans under sections 401, 403, 408 or 408A of the Code.
SEPARATE ACCOUNT - the segregated asset account of USL named The United States
Life Insurance Company in the City of New York Separate Account USL VA-R which
invests purchase payments under the Certificates.
SERIES - an individual portfolio of a mutual fund that you may choose for
investment under the Certificates. Currently, the Series are part of either the
American General Series Portfolio Company, Hotchkis and Wiley Variable Trust,
LEVCO Series Trust, Navellier Variable Insurance Series Fund, Inc., OFFITBANK
Variable Insurance Fund, Inc., Royce Capital Fund, and Wright Managed Blue Chip
Series Trust.
VALUATION DATE - a day when we are open for business. However, a day is not a
Valuation Date, if the Series in which a Division invests does not calculate the
value of its shares on that day.
5
<PAGE>
VALUATION PERIOD - the period that starts at the close of regular trading on the
New York Stock Exchange on a Valuation Date and ends at the close of regular
trading on the Exchange on the next Valuation Date.
VARIABLE ANNUITY PAYMENTS - annuity payments that vary in amount based on the
investment earnings and losses of one or more of the Divisions.
VARIABLE ACCOUNT VALUE - the amount of your Account Value that is in the
Separate Account.
WRITTEN - signed, dated, and in a form satisfactory to us and received at our
Administrative Center. You must use special forms we or your sales
representative provide to elect an Annuity Option.
6
<PAGE>
FEE TABLE
The purpose of this Fee Table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly under a
Certificate. The table reflects expenses of the Separate Account and the
Series. We may also deduct amounts for state premium taxes or similar
assessments, where applicable.
PARTICIPANT TRANSACTION CHARGES
Front-End Sales Charge Imposed on Purchases........................ 0%
Surrender Charge................................................... 0%
(computed as a percentage of purchase payments surrendered)
Transfer Charge.................................................... $0/1/
ANNUAL CERTIFICATE FEE.................................................. $0
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average daily
net asset value)
Mortality and Expense Risk Charge............................... 0.62%
Administrative Expense Charge................................... 0.04%
-----
Total Separate Account Annual Expenses............................. 0.66%
=====
- ----------------------------------
/1/ This charge is $25 after the 12th transfer during each Certificate Year
prior to the Annuity Commencement Date. Certain exceptions apply.
7
<PAGE>
THE SERIES' ANNUAL EXPENSES/1/ (as a percentage of average net assets)
<TABLE>
<CAPTION>
Management Other
Fees After Expenses Total
Expense After Expense Series
Reimbursement Reimbursement Operating
and Waiver/3/ and Waiver/3/ Expenses
------------ ------------- --------
<S> <C> <C> <C>
Equity Income VIP 0.75% 0.40% 1.15%
LEVCO Equity Value 0.85% 0.25% 1.10%
Low Duration VIP 0.46% 0.12% 0.58%
Navellier Growth 0.85% 0.65% 1.50%
OFFITBANK VIF-Emerging Markets 0.00% 1.50% 1.50%
OFFITBANK VIF-High Yield 0.77% 0.38% 1.15%
OFFITBANK VIF-Total Return/2/ 0.00% 0.80% 0.80%
OFFITBANK VIF-U. S. Government Securities 0.00% 0.60% 0.60%
Royce Premier 0.00% 1.35% 1.35%
Royce Total Return 0.00% 1.35% 1.35%
Wright International Blue Chip 0.00% 2.00% 2.00%
Wright Selected Blue Chip 0.17% 1.13% 1.30%
Money Market 0.50% 0.07% 0.57%
- --------------------------
</TABLE>
/1/ We estimate other expenses for the current fiscal year for the Equity
Income VIP, LEVCO Equity Value, Low Duration VIP, Navellier Growth, OFFITBANK
VIF-Total Return, OFFITBANK VIF-U.S. Government Securities, Royce Premier and
Royce Total Return Series, because these Series do not have financial statements
covering a period of at least ten months.
/2/ OFFITBANK VIF-Total Return may invest a portion of its assets in shares
of OFFITBANK VIF-High Yield, OFFITBANK VIF-Emerging Markets, and OFFITBANK VIF-
U.S. Government Securities. Therefore, shareholders of OFFITBANK VIF-Total
Return will indirectly bear the expenses of the underlying funds at the rates
stated above.
/3/ The advisers to the Series have informed USL that they expect that, for
the current fiscal year, only OFFITBANK VIF-Emerging Markets, OFFITBANK VIF-High
Yield, Wright International Blue Chip and Wright Selected Blue Chip Series will
have expense reimbursements and fee waivers. Therefore, with respect to these
four Series, if expense shown and fee waivers were terminated, management fees
and other expenses would have been as shown in the following table.
Management Other Total
Fees Expenses Expenses
---------- -------- --------
OFFITBANK VIF- Emerging Markets 0.90% 1.76% 2.66%
OFFITBANK VIF- High Yield 0.85% 0.69% 1.54%
Wright International Blue Chip 0.80% 3.50% 4.30%
Wright Selected Blue Chip 0.65% 1.16% 1.81%
Example/4/ Whether or not you surrender or annuitize at the end of the
applicable time period, the following expenses would apply to a
$1,000 investment if you assume a 5% annual return on assets:
8
<PAGE>
<TABLE>
<CAPTION>
If all amounts are allocated
to a Division that invests in
one of the following Series: 1 year 3 years 5 years/4/ 10 years/4/
- ---------------------------- ------ ------- ---------- -----------
<S> <C> <C> <C> <C>
Equity Income VIP $18 $57 N/A N/A
LEVCO Equity Value $18 $55 N/A N/A
Low Duration VIP $13 $39 N/A N/A
Navellier Growth $22 $68 N/A N/A
OFFITBANK VIF-Emerging Markets $22 $68 $116 $249
OFFITBANK VIF-High Yield $18 $57 $ 98 $213
OFFITBANK VIF-Total Return $15 $46 N/A N/A
OFFITBANK VIF-U. S. Government Securities $13 $40 N/A N/A
Royce Premier $20 $63 N/A N/A
Royce Total Return $20 $63 N/A N/A
Wright International Blue Chip $27 $83 $141 $299
Wright Selected Blue Chip $20 $62 $106 $229
Money Market $13 $39 $ 68 $149
</TABLE>
- -------------------------------------------
/4/ In this Example, "N/A" reflects SEC rules that require Equity Income
VIP, LEVCO Equity Value, Low Duration VIP, Navellier Growth, OFFITBANK VIF-Total
Return, OFFITBANK VIF-U.S. Government Securities, Royce Premier and Royce Total
Return to complete the Example for only the one and three year periods.
THE EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The assumed 5% annual rate of
return is not an estimate or a guarantee of future investment performance. The
Example assumes an estimated Average Account Value of $50,000.
COMMUNICATIONS TO US
You should include, in communications to us, your Certificate number, your name,
and, if different, the Annuitant's name. You may direct communications to the
addresses and phone numbers on the first page of this Prospectus.
Unless this Prospectus states differently, we will consider purchase payments or
other communications to be received at our Administrative Center on the date we
actually receive them, if they are in proper form. However, we will consider
purchase payments to be received on the next Valuation Date if we receive them
(1) after the close of regular trading on the New York Stock Exchange or (2) on
a date that is not a Valuation Date.
PERFORMANCE INFORMATION
From time to time, we may include in advertisements and other sales materials
several types of performance information for the Divisions. This information
may include "average annual total return" and "cumulative total return." The Low
Duration VIP Division, OFFITBANK VIF-High
9
<PAGE>
Yield Division and OFFITBANK VIF-U.S. Government Securities Division may also
advertise "yield." The Money Market Division may advertise "yield" and
"effective yield."
The performance information that we may present is not an estimate or guarantee
of future investment performance and does not represent the actual investment
experience of amounts invested by a particular Owner. Additional information
concerning a Division's performance appears in the Statement.
Total Return and Yield Quotations. Average annual total return and cumulative
total return figures measure the net income of a Division and any realized or
unrealized gains or losses of the underlying investments in the Division, over
the period stated. Average annual total return figures are annualized and,
therefore, represent the average annual percentage change in the value of an
investment in a Division over the period stated. Cumulative total return figures
represent the cumulative change in value of an investment in a Division for
various periods stated.
Yield is a measure of the net dividend and interest income earned over a
specific one-month or 30-day period (seven-day period for the Money Market
Division), expressed as a percentage of the value of the Division's Accumulation
Units. Yield is an annualized figure, which means that we assume that the
Division generates the same level of net income over a one-year period and
compound that income on a semi-annual basis. We calculate the effective yield
for the Money Market Division similarly, but include the increase due to assumed
compounding. The Money Market Division's effective yield will be slightly
higher than its yield due to this compounding effect.
Average annual total return figures reflect deduction of all recurring charges
and fees applicable under the Certificate to all Owner accounts, including the
following:
. the Mortality and Expense Risk Charge, and
. the Administrative Expense Charge.
Division Performance. The investment performance for each Division that invests
in a corresponding Series of the Trust will reflect the investment performance
of that Series for the periods stated. This information appears in the
Statement. For periods before the date the Certificates became available, we
calculate the performance information for a Division on a hypothetical basis. In
so doing, we reflect deductions of current Separate Account fees and charges
under the Certificate from the historical performance of the corresponding
Series. We may waive or reimburse certain fees or charges applicable to the
Certificate. Such waivers or reimbursements will affect each Division's
performance results.
Information about the experience of the investment advisers to the Series of the
Fund appears in the prospectus for the Fund.
10
<PAGE>
FINANCIAL RATINGS
USL may also advertise or report to Owners its ratings as an insurance company
by the A. M. Best Company. Each year, A. M. Best reviews the financial status
of thousands of insurers, culminating in the assignment of Best's Ratings.
These ratings reflect A.M. Best's current opinion of the relative financial
strength and operating performance of an insurance company in comparison to the
norms of the life/health industry. Best's Ratings range from A++ to F.
USL may also advertise or report to Owners its ratings as to claims-paying
ability by the Standard & Poor's Corporation. A Standard & Poor's insurance
claims-paying ability rating is an assessment of an operating insurance
company's financial capacity to meet the obligations of its insurance policies
in accordance with their terms. Standard & Poor's ratings range from AAA to D.
USL may additionally advertise its ratings as to claims-paying ability by the
Duff & Phelps Credit Rating Co. A Duff & Phelps claims-paying ability rating is
an assessment of a company's insurance claims paying ability. Duff & Phelps
ratings range from AAA to CCC.
Current ratings from A.M. Best, Standard & Poor's, and Duff & Phelps may be used
from time to time in any advertising about the Certificates, as well as in any
reports that publish the ratings.
The ratings reflect the claims-paying ability and financial strength of USL.
They are not a rating of investment performance that purchasers of insurance
products funded through separate accounts, such as the Separate Account, have
experienced or are likely to experience in the future.
OTHER INFORMATION
USL may also advertise endorsements from organizations, individuals or other
parties that recommend USL or the Certificates. USL may occasionally include in
advertisements (1) comparisons of currently taxable and tax-deferred investment
programs, based on selected tax brackets, or (2) discussions of alternative
investment vehicles and general economic conditions.
FINANCIAL INFORMATION
The financial statements of USL appear in the Statement. Please see the first
page of this Prospectus for information on how to obtain a copy of the
Statement. You should consider the financial statements of USL only as bearing
on the ability of USL to meet its contractual obligations under the
Certificates. The financial statements do not bear on the investment
performance of the Separate Account. (See "Contents of Statement of Additional
Information.") There are no financial statements for the Separate Account as it
had not yet begun operations as of the date of this Prospectus.
11
<PAGE>
USL
USL is a stock life insurance company, which was organized under the laws of the
State of New York in 1850. USL is an indirect, wholly-owned subsidiary of
American General Corporation, a diversified financial services holding company
engaged primarily in the insurance business. The commitments under the
Certificates are USL's, and American General Corporation has no legal obligation
to back those commitments.
SEPARATE ACCOUNT USL VA-R
USL established the Separate Account on August 8, 1997. The Separate Account is
registered as a unit investment trust under the Investment Company Act of 1940
("1940 Act").
Each Division of the Separate Account is part of USL's general business, and the
assets of the Separate Account belong to USL. Under New York law and the terms
of the Certificates, the assets of the Separate Account will not be chargeable
with liabilities arising out of any other business that USL may conduct. These
assets will be held exclusively to meet USL's obligations under variable annuity
Certificates. Furthermore, USL credits or charges the Separate Account with the
income, gains, and losses from the Separate Account's assets, whether or not
realized, without regard to other income, gains, or losses of USL.
THE SERIES
The Separate Account has 13 Divisions funding the variable benefits under the
Certificates. These Divisions invest in shares of one or more series of
American General Series Portfolio Company, Hotchkis and Wiley Variable Trust,
LEVCO Series Trust, Navellier Variable Insurance Series Fund, Inc., OFFITBANK
Variable Insurance Fund, Inc., Royce Capital Fund and Wright Managed Blue Chip
Series Trust (collectively, the "Underlying Funds").
The Underlying Funds offer shares of these Series, without sales charges,
exclusively to insurance company variable annuity and variable life insurance
separate accounts and not directly to the public. The Underlying Funds also
offer shares to variable annuity and variable life insurance separate accounts
of insurers that are not affiliated with USL.
We do not foresee any disadvantage to you arising out of these arrangements.
Nevertheless, differences in treatment under tax and other laws, as well as
other considerations, could cause the interests of various owners to conflict.
For example, violation of the federal tax laws by one separate account investing
in one of the Underlying Funds could cause the contracts or certificates funded
through another separate account to lose their tax deferred status. Such a
result might require us to take remedial action. A separate account may have to
withdraw its participation in the Underlying Fund, if a material irreconcilable
conflict arises between separate accounts. In that event, the Underlying Fund
may have to liquidate portfolio securities at a loss to pay for a separate
account's redemption of Trust
12
<PAGE>
or Fund shares. At the same time, the Boards of Trustees and the Boards of
Directors of the Underlying Funds, and we, will monitor events for any material
irreconcilable conflicts that may possibly arise and determine what action, if
any, to take to remedy or eliminate the conflict.
We automatically reinvest any dividends or capital gain distributions that we
receive on shares of the Series held under Certificates. We reinvest at the
Series' net asset value on the date payable. Dividends and distributions will
reduce the net asset value of each share of the corresponding Series and
increase the number of shares outstanding of the Series by an equivalent value.
However, these dividends and distributions do not change your Account Value.
13
<PAGE>
The Series of the Underlying Funds and their management are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY SERIES ADVISER/MANAGER
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
American General Series Portfolio Company Money Market Fund The Variable Annuity Life Insurance
Company
- ----------------------------------------------------------------------------------------------------------------------------------
Hotchkis and Wiley Variable Trust Equity Income VIP Hotchkis and Wiley
Portfolio
Low Duration VIP
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
LEVCO Series Trust LEVCO Equity Value John A. Levin and Co., Inc.
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Navellier Variable Insurance Series Fund, Navellier Growth Navellier & Associates, Inc.
Inc. Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
OFFITBANK Variable Insurance Fund, Inc. OFFITBANK VIF-Emerging OFFITBANK
Markets Fund
OFFITBANK VIF-High Yield
Fund
OFFITBANK VIF-Total
Return Fund
OFFITBANK VIF- U.S.
Government Securities
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Royce Capital Fund Royce Premier Portfolio Royce & Associates, Inc.
Royce Total Return
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Wright Managed Blue Chip Series Trust Wright International Blue Wright Investors' Service, Inc.
Chip Portfolio
Wright Selected Blue Chip
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
The investment objective of each Series is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
SERIES INVESTMENT OBJECTIVE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Money Market Fund Liquidity, protection of capital and current income through investments in short-term
money market instruments. Shares of the Money Market Fund are neither insured
nor guaranteed by the U.S. Government. There is no assurance that this Fund will be able to
maintain a stable net asset value of $1.00 per share.
- ----------------------------------------------------------------------------------------------------------------------------
Equity Income VIP Provide current income and long term growth of income, accompanied by growth of capital.
Portfolio Invests in domestic equity securities.
- ----------------------------------------------------------------------------------------------------------------------------
Low Duration VIP Maximize total return, consistent with preservation of capital. Invests in a
Portfolio diversified portfolio of fixed-income securities of varying maturities with a
portfolio duration of one to three years.
- ----------------------------------------------------------------------------------------------------------------------------
LEVCO Equity Value Achieve long term growth of capital by emphasizing the preservation of capital
Fund and control of volatility. A research intensive, value oriented stock
selection process is used in constructing a diversified portfolio.
- ----------------------------------------------------------------------------------------------------------------------------
Navellier Growth Achieve long-term growth of capital primarily through investment in companies
Portfolio with appreciation potential.
- ----------------------------------------------------------------------------------------------------------------------------
OFFITBANK VIF- Provide investors with a competitive total investment return by focusing on
Emerging Markets current yield and opportunities for capital appreciation primarily by investing
Fund in corporate and sovereign debt securities of emerging market countries.
- ----------------------------------------------------------------------------------------------------------------------------
OFFITBANK VIF- High current income, with capital appreciation as a secondary objective.
High Yield Fund Invests primarily in U.S. corporate fixed income securities which are rated
below investment grade or unrated at the time of investment.
- ----------------------------------------------------------------------------------------------------------------------------
OFFITBANK VIF- Maximize total return from a combination of capital appreciation and current
Total Return Fund income by investing in a diversified portfolio of fixed income securities,
including U.S. Government or agencies' obligations, investment grade fixed
income, high yield and fixed income securities and securities of other
investment companies. An SEC exemptive order permits this Fund to purchase
shares of any of the existing or any new Series of the OFFITBANK Variable
Insurance Fund, Inc.
- ----------------------------------------------------------------------------------------------------------------------------
OFFITBANK VIF- Current income consistent with preservation of capital. Invests at least 80%
U.S. Government of its assets in U.S. Government obligations.
Securities Fund
- ----------------------------------------------------------------------------------------------------------------------------
Royce Premier Long-term growth and, as a secondary objective, current income. Invests in a
Portfolio limited portfolio of common stocks and convertible securities of companies
viewed by Royce & Associates, Inc. as having superior financial characteristics
and/or unusually attractive business prospects.
- ----------------------------------------------------------------------------------------------------------------------------
Royce Total Return Equal focus on both long-term growth of capital and current income. Invests in
Portfolio a broadly diversified portfolio of dividend-paying common stocks of companies
selected on a value basis.
- ----------------------------------------------------------------------------------------------------------------------------
Wright International Long-term capital appreciation by investing primarily in equity securities of
Blue Chip Portfolio well-established, non-U.S. companies that meet the advisor's quality standards.
- ----------------------------------------------------------------------------------------------------------------------------
Wright Selected Blue Long-term capital appreciation and, as a secondary objective, reasonable
Chip Portfolio current income, by investing primarily in equity securities of well-established
U.S. companies that meet the Advisor's quality standards.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
We automatically reinvest any dividends or capital gain distributions that we
receive on shares of the Series held under Certificates. We reinvest at the
Series' net asset value on the date payable. Dividends and distributions will
reduce the net asset value of each share of the corresponding Series and
increase the number of shares outstanding of the Series by an equivalent value.
However, the value of your interest in the corresponding Division will not
change as a result of any such dividends and distributions.
Before selecting any Division, you should carefully read the Underlying Fund
Prospectus. The Prospectus provides more complete information about the Series
in which the Division invests, including investment objectives and policies,
charges and expenses. An Underlying Fund may accompany its Prospectus with a
summary of the Prospectus called a "Profile."
You can find information about the investment performance of a Series of the
Underlying Funds and information about the business experience of the investment
advisers to the Series in the Profiles and Prospectuses. You may obtain
additional copies of a Prospectus, including a Profile, by contacting USL's
Administrative Center at the addresses and phone numbers on the first page of
this Prospectus. When making your request, please specify the Series of the
Underlying Fund in which you are interested.
High yielding fixed-income securities such as those in which the OFFITBANK VIF-
High Yield, Emerging Markets and Total Return Divisions invest are subject to
greater market fluctuations and risk of loss of income and principal than
investments in lower yielding fixed-income securities. You should carefully
read the Underlying Fund Profiles and Prospectuses for each Series in which
these Divisions invest and consider your ability to assume the risks of making
an investment in these Divisions.
VOTING PRIVILEGES
The following people may give us voting instructions for Series shares held in
the Separate Account Divisions attributable to their Certificate:
. You, as the Owner, prior to the Annuity Commencement Date, and
. The Annuitant or other payee, during the Annuity Period.
We will vote according to your instructions at meetings of shareholders of the
Series.
We will determine who is entitled to give voting instructions and the number of
votes for which they may give directions as of the record date for a meeting.
We will calculate the number of votes in fractions. We will calculate the
number of votes for any Series as follows:
. For each Owner prior to the Annuity Commencement Date, we will divide (1)
the Owner's Variable Account Value by (2) the net asset value of one share
of that Series.
16
<PAGE>
. For each Annuitant or payee during the Annuity Period, we will divide (1)
our liability for future Variable Annuity Payments to the Annuitant or
payee by (2) the value of an Annuity Unit. We will calculate our liability
for future Variable Annuity Payments based on the mortality assumptions and
the assumed interest rate that we use in determining the number of Annuity
Units under a Certificate and the value of an Annuity Unit.
We will vote all shares of each Series owned by the Separate Account as follows:
. Shares for which we receive instructions, in accordance with those
instructions, and
. Shares for which we receive no instructions, in the same proportion as the
shares for which we receive instructions.
Shares of each Series may be owned by separate accounts of insurance companies
other than us. We understand that each Series will see that all insurance
companies vote shares uniformly.
We believe that our voting instruction procedures comply with current federal
securities law requirements. However, we reserve the right to modify these
procedures to conform with legal requirements and interpretations that are put
in effect or modified from time to time.
THE FIXED ACCOUNT
AMOUNTS IN THE FIXED ACCOUNT OR SUPPORTING FIXED ANNUITY PAYMENTS BECOME PART OF
OUR GENERAL ACCOUNT. WE HAVE NOT REGISTERED INTERESTS IN THE GENERAL ACCOUNT
UNDER THE SECURITIES ACT OF 1933, AND WE HAVE NOT REGISTERED THE GENERAL ACCOUNT
AS AN INVESTMENT COMPANY UNDER THE 1940 ACT BASED ON FEDERAL LAW EXCLUSION AND
EXEMPTION. THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS ADVISED US
THAT IT HAS NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS THAT RELATE TO THE
FIXED ACCOUNT OR FIXED ANNUITY PAYMENTS. AT THE SAME TIME, WE HAVE LEGAL
RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THIS PROSPECTUS.
Our obligations for the Fixed Account are legal obligations of USL. Our General
Account assets support these obligations. These General Account assets also
support our obligations under other insurance and annuity contracts.
Investments purchased with amounts allocated to the Fixed Account are the
property of USL. Owners have no legal rights in such investments.
Account Value that the Owner allocates to the Fixed Account earns a Guaranteed
Interest Rate beginning with the date of the allocation. This Guaranteed
Interest Rate continues for the number of years that the Owner selects from
among the Guarantee Periods that we then offer.
At the end of a Guarantee Period, we will allocate your Account Value in that
Guarantee Period, including interest you have earned, to a new Guarantee Period
of the same length. In the alternative, the Owner may submit a Written request
to us to allocate this amount to a different Guarantee Period or Periods or to
one or more of the Divisions of the Separate Account. We
17
<PAGE>
must receive this Written request at least three business days before the end of
the Guarantee Period.
We will contact the Owner regarding the scheduled Annuity Commencement Date, if
the Owner has not provided the necessary Written request and the renewed
Guarantee Period extends beyond the scheduled Annuity Commencement Date.
The first day of the new Guarantee Period (or other reallocation) will be the
day after the end of the prior Guarantee Period. We will notify the Owner in
writing at least 15 days and not more than 45 days before the end of any
Guarantee Period.
If the Owner's Account Value in a Guarantee Period is less than $500, we reserve
the right to transfer, without charge, the balance to the Money Market Division
at the end of that Guarantee Period. However, we will transfer the balance to a
Division selected by the Owner, if we have received Written instructions to
transfer the balance to that Division.
We declare the Guaranteed Interest Rates from time to time as market conditions
dictate. We tell an Owner the Guaranteed Interest Rate for a chosen Guarantee
Period at the time we receive a purchase payment, make a transfer, or renew a
Guarantee Period. We may credit a different interest rate to one Guarantee
Period than to another Guarantee Period that is the same length but that began
on a different date. The minimum Guaranteed Interest Rate is an effective
annual rate of 3%.
Proceeds from an exchange, rollover or transfer will accrue interest if you
allocate them to the Fixed Account within 60 days following the date of
application for a Certificate. We will credit the interest to the Fixed Account
during the Guarantee Period. We will calculate the interest at a rate that is
the higher of:
. the current interest rate we use on the date of the application for the
Guarantee Period selected; or
. the current interest rate that we use on the date we receive the proceeds.
Proceeds that we receive more than 60 days after the date the application is
signed will receive interest at the rate in effect on the date we receive the
proceeds.
We will credit interest to the Fixed Account starting with the date we receive
the proceeds. The interest rate we use to calculate such interest will remain
the same for the duration of the Guarantee Period.
Each allocation or transfer of an amount to a Guarantee Period starts the
running of a new Guarantee Period for that amount. That new Guarantee Period
will earn a Guaranteed Interest Rate that will continue unchanged until the end
of that Period. The Guaranteed Interest Rate will never be less than the
minimum Guaranteed Interest Rate stated in your Certificate.
18
<PAGE>
We may offer one or more Guarantee Periods with a required dollar cost averaging
feature. (See "Transfers.") Currently, we make available a one-year Guarantee
Period and no others. However, we reserve the right to change the Guarantee
Periods that we are making available at any time, except that we will always
make available a one-year Guarantee Period.
USL'S MANAGEMENT MAKES THE FINAL DETERMINATION OF THE GUARANTEED INTEREST RATES
TO BE DECLARED. USL CANNOT PREDICT OR ASSURE THE LEVEL OF ANY FUTURE GUARANTEED
INTEREST RATES IN EXCESS OF THE MINIMUM GUARANTEED INTEREST RATE STATED IN YOUR
CERTIFICATE.
You may obtain information concerning the Guaranteed Interest Rates that apply
to the various Guarantee Periods at any time from your sales representative or
from the addresses or telephone numbers on the first page of this Prospectus.
CERTIFICATE ISSUANCE AND PURCHASE PAYMENTS
The minimum initial purchase payment is $50,000. The minimum subsequent
purchase payment is $5,000. We reserve the right to modify these minimums at our
discretion.
Your application to purchase a Certificate must be on a Written application that
we provide and that you sign. USL and American General Securities Incorporated,
as distributor of the Certificates, may agree on a different medium or format
for the application. When a purchase payment accompanies an application to
purchase a Certificate and you have properly completed the application, we will
either--
. process the application, credit the purchase payment, and issue the
Certificate, or
. reject the application and return the purchase payment within two Valuation
Dates after receipt of the application at our Administrative Center.
If you have not completed the application or have not completed it correctly, we
will request additional documents or information within five Valuation Dates
after receipt of the application at our Administrative Center.
If we have not received a correctly completed application within five Valuation
Dates after receipt of the purchase payment at our Administrative Center, we
will return the purchase payment immediately. However, you may specifically
consent to our retaining the purchase payment until you complete the
application. In that case, we will credit the initial purchase payment as of
the end of the Valuation Period in which we receive, at our Administrative
Center, the last information required to process the application.
We will credit subsequent purchase payments as of the end of the Valuation
Period in which we receive them and any required Written identifying information
at our Administrative Center.
19
<PAGE>
We reserve the right to reject any application or purchase payment for any
reason.
If your Account Value in any Division falls below $500 because of a partial
withdrawal from the Certificate, we reserve the right to transfer, without
charge, the remaining balance to the Money Market Division.
If your Account Value in any Division falls below $500 because of a transfer to
another Division or to the Fixed Account, we reserve the right to transfer the
remaining balance in that Division, without charge and pro rata, to the
Division, Divisions or Fixed Account to which the transfer was made.
We will waive these minimum requirements for transfers under the Automatic
Rebalancing program. (See "Automatic Rebalancing.")
If your total Account Value falls below $10,000, we may cancel the Certificate.
We consider such a cancellation a full surrender of the Certificate. We will
provide you with 60 days advance notice of any cancellation in these
circumstances.
So long as the Account Value does not fall below $10,000, you do not have to
make further purchase payments. You may, however, elect to make subsequent
purchase payments at any time prior to the Annuity Commencement Date, if the
Owner and Annuitant are still living.
You should make checks for subsequent purchase payments payable to The United
States Life Insurance Company in the City of New York and forward them directly
to our Administrative Center. We also accept purchase payments by wire or by
exchange from another insurance company. You may obtain further information
about how to make purchase payments by either of these methods from your sales
representative or from us at the addresses and telephone numbers on the first
page of this Prospectus.
You may make purchase payments pursuant to employer sponsored plans only with
our agreement.
Your purchase payments begin to earn a return in the Divisions of the Separate
Account or the Guarantee Periods of the Fixed Account as of the date we credit
the purchase payments to your Certificate. In your application form, you select
(in whole percentages) the amount of each purchase payment that you are
allocating to each Division and Guarantee Period. You can change these
allocation percentages at any time by Written notice to us.
We issue the Certificates under a group annuity master contract that we have
issued to the trustee of a group trust. We established the group trust under
Delaware law. The master contract provides for rights under the Certificates
and further provides that nothing in the master contract will invalidate or
impair any right granted to an Owner. The master contract does not provide
20
<PAGE>
any material ownership rights to the master contract owner and, in particular,
does not authorize the master contract owner to surrender the master contract.
CANCELLATION
You may cancel your Certificate by delivering it or mailing it with a Written
cancellation request to our Administrative Center or to your sales
representative, before the close of business on the 10th day after you receive
the Certificate. If you send these items by mail, properly addressed and
postage prepaid, we will consider them received at our Administrative Center on
the date we actually receive them.
We will refund to you the sum of:
. any purchase payments allocated to a Guarantee Period of the Fixed Account,
. your Account Value allocated to the Divisions of the Separate Account, and
. any additional amount deducted for premium taxes.
OWNER ACCOUNT VALUE
Before the Annuity Commencement Date, your Account Value under a Certificate is
the sum of your Variable Account Value and Fixed Account Value, as discussed
below.
VARIABLE ACCOUNT VALUE
As of any Valuation Date before the Annuity Commencement Date--
. Your Variable Account Value is the sum of your Variable Account Values in
each Division of the Separate Account.
. Your Variable Account Value in a Division is the product of the number of
your Accumulation Units in that Division multiplied by the value of one
such Accumulation Unit as of that Valuation Date.
There is no guaranteed minimum Variable Account Value. To the extent that your
Account Value is allocated to the Separate Account, you bear the entire
investment risk.
We credit to you Accumulation Units in a Division when you allocate purchase
payments or transfer amounts to that Division. Similarly, we redeem
Accumulation Units when you transfer or withdraw amounts from a Division or when
we pay certain charges under the Certificate. We determine the value of these
Accumulation Units at the end of the Valuation Date on which we make the credit
or charge.
21
<PAGE>
The value of an Accumulation Unit for a Division on any Valuation Date is equal
to the previous value of that Division's Accumulation Unit multiplied by that
Division's net investment factor for the Valuation Period ending on that
Valuation Date.
The net investment factor for a Division is determined by dividing (1) the net
asset value per share of the Series shares held by the Division, determined at
the end of the current Valuation Period, plus the per share amount of any
dividend or capital gains distribution made for the Series shares held by the
Division during the current Valuation Period, by (2) the net asset value per
share of the Series shares held in the Division determined at the end of the
previous Valuation Period. We then subtract from that result a factor
representing the mortality risk, expense risk and administrative expense charge.
FIXED ACCOUNT VALUE
As of any Valuation Date before the Annuity Commencement Date--
. Your Fixed Account Value is the sum of your Fixed Account Value in each
Guarantee Period.
. Your Fixed Account Value in any Guarantee Period is equal to the following
amounts, in each case increased by accrued interest at the applicable
Guaranteed Interest Rate: (1) the amount of net purchase payments, renewals
and transferred amounts allocated to the Guarantee Period, less (2) the
amount of any transfers or withdrawals out of the Guarantee Period,
including withdrawals to pay applicable charges.
USL guarantees the Fixed Account Value. Therefore, USL bears the investment
risk for amounts allocated to the Fixed Account, except to the extent that USL
may vary the Guaranteed Interest Rate for future Guarantee Periods (subject to
the minimum Guaranteed Interest Rate stated in your Certificate).
TRANSFER, AUTOMATIC REBALANCING, SURRENDER AND PARTIAL
WITHDRAWAL OF OWNER ACCOUNT VALUE
TRANSFERS
You can transfer your Account Value beginning 30 days after we issue your
Certificate and before the Annuity Commencement Date. The following rules
apply.
. You may transfer your Account Value at any time among the available
Divisions of the Separate Account and Guarantee Periods. Transfers will be
effective at the end of the Valuation Period in which we receive your
Written transfer request.
22
<PAGE>
. If a transfer causes your Account Value in any Division or Guarantee Period
to fall below $500, we reserve the right to transfer the remaining balance
in that Division or Guarantee Period in the same proportions as the
transfer request.
. You may make up to 12 transfers each Certificate Year without charge. We
will charge you $25 for each additional transfer.
. You may transfer no more than 25% of the Account Value you allocated to a
Guarantee Period at its inception during any Certificate Year. This 25%
limitation does not apply to transfers (1) within 15 days before or after
the end of the Guarantee Period in which you held the transferred amounts,
or (2) a renewal at the end of the Guarantee Period to the same Guarantee
Period.
You may establish an automatic transfer plan. (We also refer to this plan as a
dollar cost averaging plan.) The rules about transfers, which we describe above,
will apply to this plan. Under this plan, we will automatically transfer
amounts from the Money Market Division or the one-year Guarantee Period (or any
other Guarantee Period that is available at that time) to one or more other
Divisions. You will select--
. the amount we are to transfer under the plan;
. the frequency of the transfers--either monthly, quarterly, semi-annually,
or annually; and
. the duration of the plan.
Transfers under any automatic transfer plan will--
. not count towards the 12 free transfers each Certificate Year,
. not incur a $25 charge,
. not be subject to the 25% limitation on transfers from a Guarantee Period,
and
. not be subject to the Account Value minimum requirement described above.
You may obtain additional information about how to establish an automatic
transfer plan from your sales representative or from us at the telephone numbers
and addresses on the first page of this Prospectus.
We have not designed the Certificates for professional market timing
organizations or other entities using programmed and frequent transfers. We may
not unilaterally terminate or discontinue transfer privileges. However, we
reserve the right to suspend such privileges for a reasonable period.
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AUTOMATIC REBALANCING
You may arrange for Automatic Rebalancing within the Separate Account if your
Certificate has an Account Value of $25,000 and larger at the time we receive
the application for Automatic Rebalancing. You may apply for Automatic
Rebalancing either at issue or after issue, and you may subsequently discontinue
it.
Under Automatic Rebalancing, we transfer funds among the Separate Account
Divisions to maintain the percentage allocation you have selected among these
Divisions. At your election, we will make these transfers on a quarterly, semi-
annual or annual basis, measured from the Certificate Anniversary date. A
Certificate Anniversary date that falls on the 29th, 30th, or 31st of the month
will result in Automatic Rebalancing starting with the 1st of the next month.
Automatic Rebalancing does not permit transfers to or from any Guarantee Period.
Transfers under Automatic Rebalancing will not count towards the 12 free
transfers each Certificate Year and will not incur a $25 charge.
SURRENDERS AND PARTIAL WITHDRAWALS
At any time before the Annuity Commencement Date and while the Annuitant is
still living, the Owner may make a full surrender from a Certificate, or make a
partial withdrawal from a Certificate.
We will pay you the following upon full surrender:
. your Account Value at the end of the Valuation Period in which we receive a
Written surrender request,
. minus any applicable premium tax.
Our current practice is to require that you return the Certificate with any
request for a full surrender.
After a full surrender, or if the Owner's Account Value falls to zero, all
rights of the Owner, Annuitant or any other person under the Certificate will
terminate.
All collateral assignees of record must consent to any full surrender or partial
withdrawal.
Your Written request for a partial withdrawal should specify the Divisions of
the Separate Account, or the Guarantee Periods of the Fixed Account, from which
you wish to make the partial withdrawal. We will take the withdrawal pro rata
from the Divisions and Guarantee Periods, if (1) you do not tell us how to make
the withdrawal, or (2) we cannot make the withdrawal as you requested.
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Partial withdrawal requests must be for at least $100 or, if less, all of your
Account Value. If your remaining Account Value in a Division or Guarantee
Period would be less than $500 as a result of the withdrawal (except for the
Money Market Division), we reserve the right to transfer the remaining balance
to the Money Market Division. We will do this without charge. We may deny your
request for a partial withdrawal if it would reduce your Account Value below
$10,000.
We will always pay you the amount of your partial withdrawal request.
Therefore, the value of your Accumulation Units and Fixed Account interests that
we redeem will equal the amount of the withdrawal request, plus any applicable
premium tax. You can also tell us to take premium tax from the amount you want
withdrawn.
We also make available a systematic withdrawal plan. Under this plan, you may
make automatic partial withdrawals in amounts and at periodic intervals that you
specify. The terms and conditions that apply to other partial withdrawals will
also apply to this plan. You may obtain additional information about how to
establish a systematic withdrawal plan from your sales representative or from us
at the addresses and telephone numbers on the first page of this Prospectus. We
reserve the right to modify or terminate the systematic withdrawal plan at any
time.
The Code imposes a penalty tax on certain premature surrenders or withdrawals.
See the "Federal Income Tax Matters" section for a discussion of this and other
tax implications of total surrenders and systematic and other partial
withdrawals. The section also discusses tax withholding requirements.
ANNUITY PERIOD AND ANNUITY PAYMENT OPTIONS
ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date may be any day of any month between the
Annuitant's 50th and 90th birthday. You may select the Annuity Commencement
Date in the Certificate application. You may also change a previously selected
date any time before that date by submitting a Written request, subject to our
approval.
See "Federal Income Tax Matters" for a discussion of the penalties that may
result from distributions prior to the Annuitant's reaching age 59 1/2 under
any Certificate or after April 1 of the year following the calendar year in
which the Annuitant reaches age 70 1/2 under certain Qualified Certificates.
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APPLICATION OF OWNER ACCOUNT VALUE
We will automatically apply your Variable Account Value in any Division to
provide Variable Annuity Payments based on that Division and your Fixed Account
Value to provide Fixed Annuity Payments. However, we will apply your Account
Value in different proportions, if you give us Written instructions at least 30
days before the Annuity Commencement Date.
We deduct any applicable state and local premium taxes from the amount of
Account Value that we apply to an Annuity Payment Option. Subject to any such
adjustments, we apply your Variable and Fixed Account Values to an Annuity
Payment Option, as discussed below, as of the end of the Valuation Period that
contains the 10th day before the Annuity Commencement Date.
FIXED AND VARIABLE ANNUITY PAYMENTS
We will determine your first monthly Fixed or Variable Annuity Payment using the
annuity tables in the Certificate and the amount of your Account Value that is
applied to provide the Fixed or Variable Annuity Payments.
We determine the amount of each monthly Fixed Annuity Payment thereafter based
on the terms of the Annuity Payment Option selected.
We determine the amount of each monthly Variable Annuity Payment thereafter as
follows:
. We convert the Account Value that we apply to provide Variable Annuity
Payments to a number of Annuity Units. We do this by dividing the amount of
the first Variable Annuity Payment by the value of an Annuity Unit of a
Division as of the end of the Valuation Period that includes the 10th day
prior to the Annuity Commencement Date. This number of Annuity Units
remains constant for any Annuitant.
. We determine the amount of each subsequent Variable Annuity Payment by
multiplying the number of Annuity Units by the value of an Annuity Unit as
of the end of the Valuation Period that contains the 10th day prior to the
date of each payment.
. If we base the Variable Annuity Payments on more than one Division, we
perform these calculations separately for each Division.
. The value of an Annuity Unit at the end of a Valuation Period is the value
of the Annuity Unit at the end of the previous Valuation Period, multiplied
by the net investment factor (see "Variable Account Value") for the
Valuation Period, with an offset for the 3.5% assumed interest rate used in
the Certificate's annuity tables.
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The Certificate's annuity tables use a 3.5% assumed interest rate. A Variable
Annuity Payment based on a Division will be greater than the previous month, if
the Division's investment return for the month is at an annual rate greater than
3.5%. Conversely, a Variable Annuity Payment will be less than the previous
month, if the Division's investment return is at an annual rate less than 3.5%.
ANNUITY PAYMENT OPTIONS
Sixty to 90 days before the scheduled Annuity Commencement Date, we will (1)
notify you that the Certificate is scheduled to mature, and (2) request that you
select an Annuity Payment Option.
If you have not selected an Annuity Payment Option ten days prior to the Annuity
Commencement Date, we will proceed as follows--
. we will extend the Annuity Commencement Date to the Annuitant's 90th
birthday, if the scheduled Annuity Commencement Date is any date prior to
the Annuitant's 90th birthday; or
. we will pay the Account Value, less any applicable charges and premium
taxes, in one sum to you, if the scheduled Annuity Commencement Date is the
Annuitant's 90th birthday.
The Code imposes minimum distribution requirements on the Annuity Payment Option
you choose for a Qualified Certificate. (See "Federal Income Tax Matters.") We
are not responsible for monitoring or advising Owners whether they are meeting
the minimum distribution requirements, unless we have received a specific
Written request to do so.
You may elect an Annuity Payment Option only if the initial annuity payment
meets the following minimum requirements--
. where you elect only Fixed or Variable Annuity Payments, the initial
payment must be at least $20; or
. where you elect a combination of Variable and Fixed Annuity Payments, the
initial payment must be at least $10 on each basis.
If the initial annuity payment falls below these amounts, we will reduce the
frequency of annuity payments. If the initial payment still falls below these
amounts, we will make a single payment to the Annuitant or other properly-
designated payee equal to your Account Value. We will deduct premium tax from
such payment.
You may elect the annuity option for payments to a Beneficiary, if you or the
Annuitant dies. If you have not made this election, the Beneficiary may do so
within 60 days after your or the
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Annuitant's death. (See "Death Proceeds.") Thereafter, the Beneficiary will have
all the remaining rights and powers under the Certificate and be subject to all
of its terms and conditions. We will make the first annuity payment at the
beginning of the second month following the month in which we approve the
settlement request. We will credit Annuity Units based on Annuity Unit Values at
the end of the Valuation Period that contains the 10th day prior to the
beginning of that second month.
When an Annuity Payment Option becomes effective, you must deliver the
Certificate to our Administrative Center, in exchange for a payment contract
providing for the option elected.
We provide information about the relationship between the Annuitant's gender and
the amount of annuity payments, including any requirements for gender-neutral
annuity rates and in connection with certain employee benefit plans under
"Gender of Annuitant" in the Statement. (See "Contents of Statement of
Additional Information.")
OPTION 1 - LIFE ANNUITY - We make annuity payments monthly during the lifetime
of the Annuitant. These payments stop with the last payment due before the
death of the Annuitant. We do not guarantee a minimum number of payments under
this arrangement. For example, the Annuitant or other payee might receive only
one annuity payment, if the Annuitant dies before the second annuity payment.
OPTION 2 - LIFE ANNUITY WITH 120, 180, OR 240 MONTHLY PAYMENTS CERTAIN - We make
annuity payments monthly during the lifetime of an Annuitant. In addition, we
guarantee that the Beneficiary will receive monthly payments for the remainder
of the period certain, if the Annuitant dies during that period.
OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY - We make annuity payments
monthly during the lifetime of the Annuitant and another payee and during the
lifetime of the survivor of the two. We stop making payments with the last
payment before the death of the survivor. We do not guarantee a minimum number
of payments under this arrangement. For example, the Annuitant or other payee
might receive only one annuity payment if both die before the second annuity
payment. The election of this option is ineffective if either one dies before
the Annuity Commencement Date. In that case, the survivor becomes the sole
Annuitant, and we do not pay death proceeds because of the death of the other
Annuitant.
OPTION 4 - PAYMENTS FOR A DESIGNATED PERIOD - We make annuity payments monthly
to an Annuitant or other properly designated payee, or at his or her death, to
the Beneficiary, for a selected number of years ranging from five to 40. If this
option is selected on a variable basis, the designated period may not exceed the
life expectancy of the Annuitant or other properly designated payee.
OPTION 5 - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - We pay the amount due in equal
monthly installments of a designated dollar amount until the remaining balance
is less than the amount of one installment. The amount of each installment may
not be less than $125 or more than $200 each year per $1,000 of the original
amount due. If the person receiving these payments dies, we
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continue to make the remaining payments to the Beneficiary. Payments under this
option are available on a fixed basis only. To determine the remaining balance
at the end of any month, we decrease the balance at the end of the previous
month by the amount of any installment paid during the month. We then apply, to
the remainder, interest at a rate not less than 3.5% compounded annually. If the
remaining balance at any time is less than the amount of one installment, we
will pay the balance as the final payment under the option.
We make no mortality guarantee under Option 4. However, we reduce Variable
Annuity Payments as a result of a charge to the Separate Account that is
partially for mortality risks. (See "Charge to the Separate Account.")
A payee receiving Variable (but not Fixed) Annuity Payments under Option 4 can
elect at any time to commute (terminate) the option and receive the current
value of the annuity option in a single sum. The current value of an annuity
under Option 4 is the value of all remaining annuity payments, assumed to be
level, discounted to present value at an annual rate of 3.5%. We calculate that
value the next time we determine values after receiving your Written request for
payment. The election of a single sum payment under Option 4 is the only way
you may terminate any Annuity Payment Option once annuity payments have started.
The Code may treat the election of Option 4 or Option 5 in the same manner as a
surrender of the total account. For tax consequences of such treatment, see
"Federal Income Tax Matters." In addition, the Code may not give tax-deferred
treatment to subsequent earnings.
ALTERNATIVE AMOUNT UNDER FIXED LIFE ANNUITY OPTIONS - In the case of Fixed
Annuity Payments under one of the first three Annuity Payment Options described
above, we make a special election available. In that case, the Owner (or the
Beneficiary, if the Owner has not elected a payment option) may elect monthly
payments based on single payment immediate fixed annuity rates we offer at that
time. This provision allows the Annuitant or other properly-designated payee to
receive the fixed annuity purchase rate in effect for new single payment
immediate annuity certificates, if it is more favorable.
In place of monthly payments, you may elect payments on a quarterly, semi-annual
or annual basis. In that case, we determine the amount of each annuity payment
on a basis consistent with that described above for monthly payments.
TRANSFERS
After the Annuity Commencement Date, the Annuitant or other properly designated
payee may make six transfers every Contract Year among the available Divisions
of the Separate Account or from the Divisions to a Fixed Annuity Payment Option.
We will assess no charge for the transfer. We do not permit transfers from a
Fixed to a Variable Annuity Payment Option. If a transfer causes the value in
any Division to fall below $500, we reserve the right to transfer the remaining
balance in that Division in the same proportion as the transfer request. We
make
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transfers effective at the end of the Valuation Period in which we receive the
Written transfer request at our Administrative Center. We reserve the right to
terminate or restrict transfers at any time.
DEATH PROCEEDS
DEATH PROCEEDS BEFORE THE ANNUITY COMMENCEMENT DATE
The death proceeds described below are payable to the Beneficiary under the
Certificate if any of the following events occurs before the Annuity
Commencement Date:
. the Annuitant dies, and no Contingent Annuitant has been named under a Non-
Qualified Certificate;
. the Annuitant dies, and we also receive proof of death of any named
Contingent Annuitant; or
. the Owner (including the first to die in the case of joint Owners) of a
Non-Qualified Certificate dies, regardless of whether the deceased Owner
was also the Annuitant. (However, if the Beneficiary is the Owner's
surviving spouse, or the Owner's surviving spouse is a joint Owner, the
surviving spouse may elect to continue the Certificate as described later
in this section.)
If the deceased Owner was a joint Owner, we will pay the death proceeds to the
surviving joint Owner. In this case, we will treat the surviving joint Owner as
the Beneficiary, and we will not recognize any other designation of Beneficiary.
However, joint Owners may provide written instructions to pay death proceeds in
a different manner.
Prior to age 81, the death proceeds will equal the greater of --
. the sum of all net purchase payments made (less any premium taxes we
deducted previously and all prior partial withdrawals); or
. the Owner's Account Value as of the end of the Valuation Period in which we
receive, at our Administrative Center, proof of death and the Written
request as to the manner of payment.
At age 81 and afterward, the death proceeds will equal the Account Value.
In all cases, we will deduct any applicable premium taxes.
We will pay the death proceeds to the Beneficiary as of the date the proceeds
become payable. Such date is the end of the Valuation Period in which we
receive--
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. proof of the Owner's or Annuitant's death, and
. a Written request from the Beneficiary specifying the manner of payment.
If the Owner has not already done so, the Beneficiary may, within 60 days after
the date the death proceeds become payable, elect to receive the death proceeds
as (1) a single sum or (2) in the form of one of the Annuity Payment Options
provided in the Certificate. (See "Annuity Payment Options.") If we do not
receive a request specifying the manner of payment, we will make a single
payment, based on values we determine at that time.
If the Owner under a Non-Qualified Certificate dies before the Annuity
Commencement Date, we will distribute all amounts payable under the Certificate
in accordance with the following rules:
. We will distribute all amounts--
(a) within five years of the date of death, or
(b) if the Beneficiary elects, as annuity payments, beginning within one
year of the date of death and continuing over a period not extending
beyond the life or life expectancy of the Beneficiary.
. If the Beneficiary is the Owner's surviving spouse, the spouse may elect to
continue the Certificate as the new Owner. If the original Owner was the
Annuitant, the surviving spouse may also elect to become the new Annuitant.
This election is also available to the surviving spouse who is a joint
Owner, even if the surviving spouse is not the Beneficiary. In this case,
we will treat the surviving spouse as the Beneficiary, and we will not
recognize any other designation of Beneficiary.
. If the Owner is not a natural person, these distribution requirements apply
at the death of the primary Annuitant, within the meaning of the Code.
Under a parallel section of the Code, similar requirements apply to
retirement plans for which we issue Qualified Certificates.
Failure to satisfy the requirements described in this section may result in
serious adverse tax consequences.
DEATH PROCEEDS AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies after the Annuity Commencement Date, the amounts payable
to the Beneficiary or other properly designated payee are any continuing
payments under the Annuity Payment Option in effect. (See "Annuity Payment
Options.") In such case, the payee will:
. have all the remaining rights and powers under a Certificate, and
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. be subject to all the terms and conditions of the Certificate.
Also, if the Annuitant dies after the Annuity Commencement Date, no previously
named Contingent Annuitant can become the Annuitant.
If the payee under a Non-Qualified Certificate dies after the Annuity
Commencement Date, we will distribute any remaining amounts payable under the
terms of the Annuity Payment Option at least as rapidly as under the method of
distribution in effect when the payee died. If the payee is not a natural
person, this requirement applies upon the death of the primary Annuitant, within
the meaning of the Code.
Under a parallel section of the Code, similar requirements apply to retirement
plans for which we issue Qualified Certificates.
Failure to satisfy the requirements described in this section may result in
serious adverse tax consequences.
PROOF OF DEATH
We accept the following as proof of any person's death:
. a certified death certificate;
. a certified decree of a court of competent jurisdiction as to the finding
of death;
. a written statement by a medical doctor who attended the deceased at the
time of death; or
. any other proof satisfactory to us.
Once we have paid the death proceeds, the Certificate terminates, and our
obligations are complete.
CHARGES UNDER THE CERTIFICATES
PREMIUM TAXES
When applicable, we will deduct premium taxes imposed by certain states. We may
deduct such amount either at the time the tax is imposed or later. We may
deduct the amount as follows:
. from purchase payment(s) when received;
. from the Owner's Account Value at the time annuity payments begin;
. from the amount of any partial withdrawal; or
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. from proceeds payable upon termination of the Certificate for any other
reason, including death of the Owner or Annuitant, or surrender of the
Certificate.
If premium tax is paid, USL may reimburse itself for the tax when making the
deduction under the second, third, and fourth items on the list, immediately
above, by multiplying the sum of Purchase Payments being withdrawn by the
applicable premium tax percentage.
Applicable premium tax rates depend upon the Owner's then-current place of
residence. Applicable rates currently range from 0% to 3.5%. The rates are
subject to change by legislation, administrative interpretations, or judicial
acts. We will not make a profit on this charge.
TRANSFER CHARGES
We describe the charges to pay for the expense of making transfers under
"Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of Owner
Account Value - Transfers" and "Annuity Period and Annuity Payment Options -
Transfers." These charges are not designed to yield a profit.
CHARGE TO THE SEPARATE ACCOUNT
We assess Separate Account assets a daily charge at an annualized rate of 0.66%
of the average daily net asset value of the Separate Account attributable to the
Certificates. Of this amount, 0.04% is for administrative expenses and 0.62% is
for the assumption of mortality and expense risks. We may change the daily
charge, but it will never exceed 0.66% on an annual basis.
We do not expect to earn a profit on that portion of the charge which is for
administrative expenses (the "Administrative Expense Charge"), but we do expect
to derive a profit from the portion which is for the assumption of mortality and
expense risks. There is no necessary relationship between the amount of
administrative charges deducted for a given Certificate and the amount of
expenses actually attributable to that Certificate.
In assuming the mortality risk, we incur the risks that
. our actuarial estimate of mortality rates may prove erroneous,
. Annuitants will live longer than expected, and
. more Owners or Annuitants than expected will die at a time when the death
benefit we guarantee is higher than the net surrender value of their
interests in the Certificates.
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In assuming the expense risk, we incur the risk that the revenues from the
expense charges under the Certificates (charges that we guarantee will not
increase) will not cover our expense of administering the Certificates.
MISCELLANEOUS
Each Series pays charges and expenses out of its assets. The prospectus for
each Series describes the charges and expenses.
We reserve the right to impose charges or establish reserves for any federal or
local taxes that we incur today or may incur in the future and that we deem
attributable to the Certificates.
Each of the investment advisers or managers listed in "The Series" of this
Prospectus reimburses us, on a quarterly basis, for certain administrative,
Certificate and Certificate Owner support expenses, up to an annual rate of
0.25% of the average daily net asset value of shares of the Series purchased by
the Divisions. These reimbursements are paid by the investment advisers or
managers, and will not be paid by the Series, the Divisions or the Owners.
SYSTEMATIC WITHDRAWAL PLAN
You may make automatic partial withdrawals, at periodic intervals, through a
systematic withdrawal program. Minimum payments are $100. You may choose from
payment schedules of monthly, quarterly, semi-annual, or annual payments. You
may start, stop, increase, or decrease payments. You may elect to (1) start
withdrawals as early as 30 days after the issue date of the Certificate and (2)
take withdrawals from the Fixed Account or any Division. Systematic withdrawals
are subject to the terms and conditions applicable to other partial withdrawals.
REDUCTION IN ADMINISTRATIVE EXPENSE CHARGE
We may reduce the Administrative Expense Charge imposed under certain Qualified
Certificates for employer sponsored plans. Any such reductions will reflect
differences in costs or services and will not be unfairly discriminatory as to
any person. Differences in costs and services result from factors such as
reduced sales expenses or administrative efficiencies relating to serving a
large number of employees of a single employer and functions assumed by the
employer that we otherwise would have to perform.
OTHER ASPECTS OF THE CERTIFICATES
Only an officer of USL can agree to change or waive the provisions of any
Certificate. The Certificates are non-participating, which means they are not
entitled to share in any dividends, profits or surplus of USL.
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OWNERS, ANNUITANTS, AND BENEFICIARIES; ASSIGNMENTS
You, as the Owner of a Certificate, will be the same as the Annuitant, unless
you choose a different Annuitant when you purchase a Certificate. In the case
of joint ownership, both Owners must join in the exercise of any rights or
privileges under the Certificate. You choose the Annuitant and any Contingent
Annuitant in the application for a Certificate and may not change that choice.
You choose the Beneficiary and any Contingent Beneficiary when you purchase a
Certificate. You may change a Beneficiary or Contingent Beneficiary prior to the
Annuity Commencement Date, while the Annuitant is still alive. The payee may
make this change after the Annuity Commencement Date.
We will make any designation of a new Beneficiary or Contingent Beneficiary
effective as of the date it is signed. However, the change in designation will
not affect any payments we make or action we take before we receive the Written
request. We also need the Written consent of any irrevocably-named Beneficiary
or Contingent Beneficiary before we make a change. Under certain retirement
programs, the law may require spousal consent to name or change a Beneficiary to
a person other than the spouse. We are not responsible for the validity of any
designation of a Beneficiary or Contingent Beneficiary.
If the Beneficiary or Contingent Beneficiary is not living at the time we are to
make any payment, you as the Owner will be the Beneficiary. If you are not then
living, your estate will be the Beneficiary.
In the case of joint ownership, we will treat the surviving joint Owner as the
Beneficiary upon the death of a joint Owner. We will not recognize any other
designation of Beneficiary, unless joint Owners provide written instructions to
pay death proceeds in a different manner.
Owners and other payees may assign their rights under Qualified Certificates
only in certain narrow circumstances referred to in the Certificates. Owners and
other payees may assign their rights under Non-Qualified Certificates, including
their ownership rights. We take no responsibility for the validity of any
assignment. Owners must make a change in ownership rights in Writing and send a
copy to our Administrative Center. We will make the change effective on the date
it was made. However, we are not bound by a change until the date we record it.
The rights under a Certificate are subject to any assignment of record at our
Administrative Center. An assignment or pledge of a Certificate may have adverse
tax consequences. (See "Federal Income Tax Matters.")
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REPORTS
We will mail to Owners (or anyone receiving payments following the Annuity
Commencement Date), any reports and communications required by applicable law.
We will mail to the last known address of record. You should, therefore, give
us prompt written notice of any address change.
RIGHTS RESERVED BY US
Upon notice to the Owner, we may modify a Certificate to the extent necessary in
order to:
. operate the Separate Account in any form permitted under the 1940 Act or in
any other form permitted by law;
. transfer any assets in any Division to another Division, or to one or more
separate accounts, or the Fixed Account;
. add, combine or remove Divisions in the Separate Account, or combine the
Separate Account with another separate account;
. add, restrict or remove Guarantee Periods of the Fixed Account;
. make any new Division available to you on a basis we determine;
. substitute, for the shares held in any Division, the shares of another
Series or the shares of another investment company or any other investment
permitted by law;
. make any changes required by the Code or by any other law, regulation or
interpretation in order to continue treatment of the Certificate as an
annuity;
. commence deducting premium taxes or adjust the amount of premium taxes
deducted in accordance with state law that applies; or
. make any changes required to comply with the rules of any Series.
When required by law, we will obtain (1) your approval of changes and (2) the
approval of any appropriate regulatory authority.
PAYMENT AND DEFERMENT
We will normally pay amounts surrendered or withdrawn from a Certificate within
seven calendar days after the end of the Valuation Period in which we receive
the Written surrender or withdrawal request at our Administrative Center. A
Beneficiary may request the manner of
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payment of death proceeds within 60 days after the death proceeds become
payable. If we do not receive a Written request specifying payment, we will pay
the death benefit as a single sum, normally within seven calendar days after the
end of the Valuation Period that contains the last day of the 60 day period. We
reserve the right, however, to defer payments or transfers out of the Fixed
Account Value for up to six months. Also, we reserve the right to defer payment
of that portion of your Account Value that is attributable to a purchase payment
made by check for a reasonable period of time (not to exceed 15 days) to allow
the check to clear the banking system.
Finally, we reserve the right to defer payment of any surrender, annuity
payment, or death proceeds out of the Variable Account Value if:
. the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted;
. an emergency exists, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to fairly
determine the Variable Account Value; or
. the Securities and Exchange Commission by order permits the delay for the
protection of Owners.
We may also postpone transfers and allocations of Account Value among the
Divisions and the Fixed Account under these circumstances.
FEDERAL INCOME TAX MATTERS
GENERAL
We cannot comment on all of the federal income tax consequences associated with
the Certificates. Federal income tax law is complex. Its application to a
particular person may vary according to facts peculiar to the person.
Consequently, we do not intend for you to take this discussion as tax advice.
You should consult with a competent tax adviser before purchasing a Certificate.
We base this discussion on our understanding of the law, regulations and
interpretations existing on the date of this Prospectus. Congress, in the past,
has enacted legislation changing the tax treatment of annuities in both the
Qualified and the Non-Qualified markets and may do so again in the future. The
Treasury Department may issue new or amended regulations or other
interpretations of existing tax law. The courts may also interpret the tax law
in ways that affect the tax treatment of annuities. Any such change could have
a retroactive effect. We suggest that you consult your legal or tax adviser on
these issues.
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<PAGE>
The discussion does not address state or local tax, estate and gift tax, or
social security tax consequences associated with the Certificates.
NON-QUALIFIED CERTIFICATES
Purchase Payments. Purchasers of a Certificate that does not qualify for
special tax treatment and is therefore "Non-Qualified" may not deduct from their
gross income the amount of purchase payments made.
Tax Deferral Prior to Annuity Commencement Date. Owners who are natural persons
are not taxed currently on (1) increases in their Account Value resulting from
interest earned in the Fixed Account, or (2) the investment experience of the
Separate Account so long as the Separate Account complies with certain
diversification requirements. These requirements mean that the Separate Account
must invest in Series that are "adequately diversified" in accordance with
Treasury Department regulations. We do not control the Series, but we have
received commitments from the investment advisers to the Series to use their
best efforts to operate the Series in compliance with these diversification
requirements. A Certificate investing in a Series that failed to meet the
diversification requirements would subject Owners to current taxation of income
in the Certificate for the period of the diversification failure (and any
subsequent period). Income means the excess of the Account Value over the
Owner's investment in the Certificate (discussed below).
Control over allocation of values among different investment alternatives may
cause Owners or persons receiving annuity payments to be treated as the owners
of the Separate Account's assets for tax purposes. However, current regulations
do not provide guidance as to how to avoid this result. We reserve the right to
amend the Certificates in any way necessary to avoid this result. The Treasury
Department has stated that it may establish standards through regulations or
rulings. These standards may apply only prospectively, although they could
apply retroactively if the Treasury Department considers the standards not to
reflect a new position.
Owners that are not natural persons -- that is, Owners such as corporations --
are taxed currently on annual increases in their Account Value, unless an
exception applies. Exceptions apply for, among other things, Owners that are
not natural persons but that hold a Certificate as an agent for a natural
person.
Taxation of Annuity Payments. Part of each annuity payment received after the
Annuity Commencement Date is excludible from gross income in part.
In the case of Fixed Annuity Payments, the excludible portion is found by
multiplying
. the amount paid by
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<PAGE>
. the ratio of the investment in the Certificate (discussed below) to the
expected return under the Fixed Annuity Payment Option.
In the case of Variable Annuity Payments, the excludible portion is the
investment in the Certificate divided by the number of expected payments.
In both cases, the remaining portion of each annuity payment, and all payments
made after the investment in the Certificate has been reduced to zero, are
included in the payee's income. Should annuity payments stop on account of the
death of the Annuitant before the investment in the Certificate has been fully
paid out, the payee is allowed a deduction for the unpaid amount. If the payee
is the Annuitant, the deduction is taken on the final tax return. If the payee
is a Beneficiary, that Beneficiary may receive the balance of the total
investment as payments are made or on the Beneficiary's final tax return. An
Owner's "investment in the Certificate" is the amount equal to the portions of
purchase payments made by or on behalf of the Owner that have not been excluded
or deducted from the individual's gross income, less amounts previously received
under the Certificate that were not included in income.
Taxation of Partial Withdrawals and Total Surrenders. Partial withdrawals from
a Certificate are includible in income to the extent that the Owner's Account
Value exceeds the investment in the Certificate. In the event you surrender a
Certificate in its entirety, any amount you receive in excess of the investment
in the Certificate is includible in income, and any remaining amount received is
excludible from income. All annuity contracts or certificates we issue to the
same Owner during any calendar year are aggregated for purposes of determining
the amount of any distribution that is includible in gross income.
Penalty Tax on Premature Distributions. A penalty tax is imposed on
distributions under a Certificate equal to 10% of the amount includible in
income. The penalty tax will not apply, however, to distributions:
. made on or after the recipient attains age 59-1/2,
. on account of the recipient's becoming disabled,
. that are made after the death of the Owner prior to the Annuity
Commencement Date or the payee after the Annuity Commencement Date (or if
such person is not a natural person, that are made after the death of the
primary Annuitant, as defined in the Code), or
. that are part of a series of substantially equal periodic payments made
over the life (or life expectancy) of the Annuitant or the joint life (or
joint life expectancies) of the Annuitant and the Beneficiary.
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Premature distributions may result, for example, from an early Annuity
Commencement Date, an early surrender, partial withdrawal from a Certificate or
assignment of a Certificate, or the early death of an Annuitant, unless the
third clause listed above applies.
Payment of Death Proceeds. Special rules apply to the distribution of any death
proceeds payable under the Certificate. (See "Death Proceeds.")
Assignments and Loans. An assignment, loan, or pledge under a Non-Qualified
Certificate is taxed in the same manner as a partial withdrawal, as described
above. Repayment of a loan or release of an assignment or pledge is treated as
a new purchase payment.
INDIVIDUAL RETIREMENT ANNUITIES ("IRAS")
Purchase Payments. Individuals who are not active participants in a tax
qualified retirement plan may, in any year, deduct from their taxable income
purchase payments for an IRA equal to the lesser of $2,000 or 100% of the
individual's earned income. In the case of married individuals filing a joint
return, the deduction will, in general, be the lesser of $4,000 or 100% of the
combined earned income of both spouses, reduced by any deduction for an IRA
purchase payment allowed to the spouse. Single persons who participate in a tax-
qualified retirement plan and who have adjusted gross income not in excess of
$30,000 may fully deduct their IRA purchase payments. Those who have adjusted
gross income in excess of $40,000 will not be able to deduct purchase payments.
For those with adjusted gross income in the range between $30,000 and $40,000,
the deduction decreases to zero, based on the amount of income. Beginning in
1999, that income range will increase, as follows:
<TABLE>
<CAPTION>
2005 and
1999 2000 2001 2002 2003 2004 thereafter
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$31,000 to $32,000 to $33,000 to $34,000 to $40,000 to $45,000 to $50,000 to
$41,000 $42,000 $43,000 $44,000 $50,000 $55,000 $60,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Similarly, the otherwise deductible portion of an IRA purchase payment will be
phased out, in the case of married individuals filing joint tax returns, with
adjusted gross income between $50,000 and $60,000, and in the case of married
individuals filing separately, with adjusted gross income between $0 and
$10,000. Beginning in 1999, the income range over which the otherwise
deductible portion of an IRA purchase payment will be phased out for married
individuals filing joint tax returns will increase as follows:
40
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
2007 and
1999 2000 2001 2002 2003 2004 2005 2006 thereafter
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$51,000 to $52,000 to $53,000 to $54,000 to $60,000 to $65,000 to $70,000 to $75,000 to $80,000 to
$61,000 $62,000 $63,000 $64,000 $70,000 $75,000 $80,000 $85,000 $100,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A married individual filing a joint tax return, who is not an active participant
in a tax-qualified retirement plan, but whose spouse is an active participant in
such a plan, may, in any year, deduct from his or her taxable income purchase
payments for an IRA equal to the lesser of $2,000 or 100% of the individual's
earned income. For the individual, the adjusted gross income range over which
the otherwise deductible portion of an IRA purchase payment will be phased out
is $150,000 to $160,000.
Tax Free Rollovers. Amounts may be transferred, in a tax-free rollover, from
(1) a tax-qualified plan to an IRA or (2) from one IRA to another IRA, if the
transfer meets certain conditions. All taxable distributions ("eligible
rollover distributions") from tax qualified plans are eligible to be rolled over
with the exception of:
. annuities paid over a life or life expectancy,
. installments for a period of ten years or more, and
. required minimum distributions under section 401(a)(9) of the Code.
Rollovers may be accomplished in two ways. First, we may pay an eligible
rollover distribution directly to an IRA (a "direct rollover"). Second, we may
pay the distribution directly to the Annuitant and then, within 60 days of
receipt, the Annuitant may roll the amount over to an IRA. However, any amount
that was not distributed as a direct rollover will be subject to 20% income tax
withholding.
Distributions from an IRA. Amounts received under an IRA as annuity payments,
upon partial withdrawal or total surrender, or on the death of the Annuitant,
are included in the Annuitant's or other recipients' income. If nondeductible
purchase payments have been made, a pro rata portion of such distributions may
not be included in income. A 10% penalty tax is imposed on the amount
includible in gross income from distributions that occur before the Annuitant
reaches age 59 1/2 and that are not made on account of death or disability, with
certain exceptions. These exceptions include:
41
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. distributions that are part of a series of substantially equal periodic
payments made over the life (or life expectancy) of the Annuitant or the
joint lives (or joint life expectancies) of the Annuitant and the
Beneficiary;
. distributions for qualified first-time home purchases for the individual, a
spouse, children, grandchildren, or ancestor, subject to a $10,000 lifetime
maximum; and
. distributions for higher education expenses for the individual, a spouse,
children, or grandchildren.
Distributions of minimum amounts required by the Code must commence by April 1
of the calendar year following the calendar year in which the Annuitant reaches
age 70-1/2. Additional distribution rules apply after the death of the
Annuitant. These rules are similar to those governing distributions on the
death of an Owner (or other payee during the Annuity Period) under a Non-
Qualified Certificate. (See "Death Proceeds.") Failure to comply with the
minimum distribution rules will result in a penalty tax of 50% of the amount by
which the minimum distribution required exceeds the actual distribution.
ROTH IRAs
Beginning in 1998, individuals may purchase a new type of non-deductible IRA,
known as a Roth IRA. Purchase payments for a Roth IRA are limited to $2,000 per
year. This permitted contribution is phased out for adjusted gross income
between $95,000 and $110,000 in the case of single taxpayers, between $150,000
and $160,000 in the case of married taxpayers filing joint returns, and between
$0 and $15,000 in the case of married taxpayers filing separately. An overall
$2,000 annual limitation continues to apply to all of a taxpayer's IRA
contributions, including Roth IRAs and non-Roth IRAs.
An individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. For rollovers in 1998, the individual
may pay that tax ratably in 1998 and over the succeeding three years. There are
no similar limitations on rollovers from a Roth IRA to another Roth IRA.
Qualified distributions from Roth IRAs are entirely tax free. A qualified
distribution requires that (1) the individual has held the Roth IRA for at least
five years and (2) the distribution is made either after the individual reaches
age 59 1/2, on the individual's death or disability, or as qualified first-time
home purchase. Qualified Distributions are subject to a $10,000 lifetime
maximum for the individual, a spouse, child, grandchild, or ancestor.
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SIMPLIFIED EMPLOYEE PENSION PLANS
Employees and employers may establish an IRA plan known as a simplified employee
pension plan ("SEP"), if they meet certain requirements. An employee may make
contributions to a SEP in accordance with the rules applicable to IRAs discussed
above. Employer contributions to an employee's SEP are deductible by the
employer and are not currently includible in the taxable income of the employee.
However, total employer contributions are limited to 15% of an employee's
compensation or $30,000, whichever is less.
SIMPLE RETIREMENT ACCOUNTS
Employees and employers may establish an IRA plan known as a simple retirement
account ("SRA"), if they meet certain requirements. Under an SRA, the employer
contributes elective employee compensation deferrals up to a maximum of $6,000 a
year. The employer must, in general, make a fully vested matching contribution
for employee deferrals up to 3% of compensation.
OTHER QUALIFIED PLANS
Purchase Payments. Purchase payments made by an employer under a pension,
profit-sharing, or annuity plan qualified under section 401 or 403(a) of the
Code, not in excess of certain limits, are deductible by the employer. The
purchase payments are also excluded from the current income of the employee.
Distributions Prior to the Annuity Commencement Date. Purchase payments
includible in an employee's taxable income (less any amounts previously received
that were not includible in the employee's taxable income) represent the
employee's "investment in the Certificate." Amounts received prior to the
Annuity Commencement Date under a Certificate in connection with a section 401
or 403(a) plan are generally allocated on a pro-rata basis between the
employee's investment in the Certificate and other amounts. A lump-sum
distribution will not be includible in income in the year of distribution, if
the employee transfers, within 60 days of receipt, all amounts received (less
the employee's investment in the Certificate), to another tax-qualified plan, to
an individual retirement account or an IRA in accordance with the rollover rules
under the Code. However, any amount that is not distributed as a direct
rollover will be subject to 20% income tax withholding. (See "Tax Free
Rollovers.") Special tax treatment may be available in the case of certain
lump-sum distributions that are not rolled over to another plan or IRA.
A 10% penalty tax is imposed on the amount includible in gross income from
distributions that occur before the employee reaches age 59 1/2 and that are not
made on account of death or disability, with certain exceptions. These
exceptions include distributions that are:
43
<PAGE>
. part of a series of substantially equal periodic payments beginning after
the employee separates from service and made over the life (or life
expectancy) of the employee or the joint lives (or joint life expectancies)
of the employee and the Beneficiary;
. made after the employee's separation from service on account of early
retirement after reaching age 55; or
. made to an alternate payee pursuant to a qualified domestic relations
order.
Annuity Payments. A portion of annuity payments received under Certificates for
section 401 and 403(a) plans after the Annuity Commencement Date may be
excludible from the employee's income, in the manner discussed above, in
connection with Variable Annuity Payments, under "Non-Qualified Certificates -
Taxation of Annuity Payments." The difference is that, here, the number of
expected payments is determined under a provision in the Code. Distributions of
minimum amounts required by the Code generally must commence by April 1 of the
calendar year following the calendar year in which the employee reaches age
70 1/2 (or retires, if later). Failure to comply with the minimum distribution
rules will result in a penalty tax of 50% of the amount by which the minimum
distribution required exceeds the actual distribution.
Self-Employed Individuals. Various special rules apply to tax-qualified plans
established by self-employed individuals.
PRIVATE EMPLOYER UNFUNDED DEFERRED COMPENSATION PLANS
Purchase Payments. Private taxable employers may establish unfunded, Non-
Qualified deferred compensation plans for a select group of management or highly
compensated employees and/or for independent contractors.
These types of programs allow individuals to defer (1) receipt of up to 100% of
compensation that would otherwise be includible in income and, therefore, (2)
payment of federal income taxes on the amounts, as well as the earnings on those
amounts. Purchase payments made by the employer, however, are not immediately
deductible by the employer, and the employer is currently taxed on any increase
in Account Value.
Deferred compensation plans represent a contractual promise on the part of the
employer to pay current compensation at some future time. The Certificate is
owned by the employer and is subject to the claims of the employer's creditors.
The individual has no right or interest in the Certificate and is entitled only
to payment from the employer's general assets in accordance with plan
provisions.
Taxation of Distributions. Amounts that an individual receives from a private
employer deferred compensation plan are includible in gross income for the
taxable year in which such amounts are paid or otherwise made available.
44
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FEDERAL INCOME TAX WITHHOLDING AND REPORTING
Amounts distributed from a Certificate, to the extent they are to be included in
taxable income, are subject to federal income tax withholding. The payee may
elect to have no income tax withheld by submitting a withholding exemption
certificate to us.
In some cases, if you own more than one Qualified annuity contract or
certificate, the contracts or certificates may be considered together to
determine whether to apply the federal tax law requirement for minimum
distributions after age 70-1/2, or retirement in appropriate circumstances, has
been satisfied. You may rely on distributions from another annuity contract or
certificate to satisfy the minimum distribution requirement under a Qualified
Certificate we issued. However, you must sign a waiver releasing us from any
liability to you for not calculating and reporting the amount of taxes and
penalties payable for failure to make required minimum distributions under the
Certificate.
TAXES PAYABLE BY USL AND THE SEPARATE ACCOUNT
USL is taxed as a life insurance company under the Code. The operations of the
Separate Account are part of the total operations of USL and are not taxed
separately. Under existing federal income tax laws, USL is not taxed on
investment income derived by the Separate Account (including realized and
unrealized capital gains) with respect to the Certificates. USL reserves the
right to allocate to the Certificates any federal, state or other tax liability
that may result in the future from maintenance of the Separate Account or the
Certificates.
Certain Series may elect to pass through to USL any taxes withheld by foreign
taxing jurisdictions on foreign source income. Such an election will result in
additional taxable income and income tax to USL. The amount of additional income
tax, however, may be more than offset by credits for the foreign taxes withheld
that the Series also pass through. These credits may provide a benefit to USL.
DISTRIBUTION ARRANGEMENTS
Individuals who sell the Certificates will be licensed by state insurance
authorities as agents of USL. The individuals will also be registered
representatives of (1) American General Securities Incorporated ("AGSI"), the
principal underwriter of the Certificates, or (2) other broker-dealer firms.
However, some individuals may be representatives of firms that are exempt from
broker-dealer regulation. AGSI and any non-exempt broker-dealer firms are
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as broker-dealers and are members of the National
Association of Securities Dealers, Inc.
AGSI is an affiliate of USL. AGSI's principal business address is 2727 Allen
Parkway, Houston, Texas 77019-2191.
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USL offers the Certificates on a continuous basis. AGSI and Independent
Advantage Financial have entered into certain revenue and cost-sharing
arrangements in connection with marketing the Certificates.
USL compensates AGSI and other broker-dealers that sell the Certificates
according to one or more compensation schedules. The Schedules provide for
commissions of up to 2% of purchase payments that Owners make. In addition,
depending on the schedule selected, USL may pay continuing annual commissions of
up to 0.40% of Certificate Account Value. These distribution expenses do not
result in any additional charges under the Certificates that are not described
under "Charges under the Certificates."
SERVICES AGREEMENT
American General Life Companies ("AGLC") is party to a general services
agreement with USL. AGLC, an affiliate of USL, is a corporation incorporated in
Delaware on November 24, 1997. Its address is 2727-A Allen Parkway, Houston,
Texas 77019-2191. Under this agreement, AGLC provides services to USL,
including most of the administrative, data processing, systems, customer
services, product development, actuarial, auditing, accounting and legal
services for USL and the Certificates.
LEGAL MATTERS
We are not involved in any legal matters about the Separate Account that would
be considered material to the interests of Owners. Pauletta P. Cohn, Esquire,
Associate General Counsel of AGLC has passed upon the legality of the
Certificates described in this Prospectus. Freedman, Levy, Kroll & Simonds,
Washington, D.C., has advised USL on certain federal securities law matters.
YEAR 2000 CONSIDERATIONS
USL and its affiliates are in the process of modifying its computer systems to
be Year 2000 compliant. During 1997, USL and its affiliates incurred and
expensed $15 million (pretax) related to this project. USL and its affiliates
estimate that it will incur future costs in excess of $45 million (pretax) for
additional internal staff, third-party vendors, and other expenses to render its
systems Year 2000 compliant.
USL and its affiliates expect to substantially complete this project during
1998. However, risks and uncertainties exist in most significant systems
development projects. If conversion of USL and its affiliates' systems is not
completed on a timely basis, due to non-performance by third-party vendors or
other unforeseen circumstances, the Year 2000 issue could have a material
46
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adverse impact on the operations of USL and its affiliates.
OTHER INFORMATION ON FILE
We have filed a Registration Statement with the Securities and Exchange
Commission under the Securities Act of 1933 for the Certificates described in
this Prospectus. We have not included all of the information in the
Registration Statement and its exhibits. Statements contained in this
Prospectus concerning the group master contract, Certificates and other legal
instruments are intended to be summaries. For a complete statement of their
terms, you should refer to the documents that we filed with the Securities and
Exchange Commission.
We will send you a Statement on request without charge. Its contents are as
follows:
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CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
General Information.................................................... 2
Regulation and Reserves................................................ 2
Independent Auditors................................................... 4
Services............................................................... 4
Principal Underwriter.................................................. 4
Annuity Payments....................................................... 5
Gender of Annuitant.................................................. 5
Misstatement of Age or Gender and Other Errors...................... 5
Change of Investment Adviser or Investment Policy...................... 5
Performance Data for the Divisions..................................... 5
Average Annual Total Return Calculations.............................. 5
Cumulative Total Return Calculations.................................. 6
Hypothetical Performance.............................................. 6
Money Market Division Yield and Effective
Yield Calculations................................................. 7
Performance Comparisons............................................... 8
Effect of Tax-Deferred Accumulation.................................... 9
Financial Statements................................................... 10
Index to Financial Statements.......................................... 11
48
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
SEPARATE ACCOUNT USL VA-R
SELECT RESERVE(SM)
FLEXIBLE PAYMENT VARIABLE AND
FIXED GROUP DEFERRED ANNUITY CERTIFICATES
OFFERED BY
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
ADMINISTRATIVE CENTER
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-800-246-1924; (713) [ ]
STATEMENT OF ADDITIONAL INFORMATION
Dated December ___, 1998
This Statement of Additional Information ("Statement") is not a prospectus. You
should read it with the Prospectus for The United States Life Insurance Company
in the City of New York Separate Account USL VA-R (the "Separate Account"),
dated December ___, 1998, concerning flexible payment variable and fixed group
deferred annuity Select Reserve(SM) certificates (the "Certificates"). The
Separate Account invests in certain Series of the--
. American General Series Portfolio Company,
. Hotchkis and Wiley Variable Trust,
. LEVCO Series Trust,
. Navellier Variable Insurance Series Fund, Inc.,
. OFFITBANK Variable Insurance Fund, Inc.,
. Royce Capital Fund, and
. Wright Managed Blue Chip Series Trust.
<PAGE>
You can obtain a copy of the Prospectus for the Certificates and any Prospectus
supplements by contacting The United States Life Insurance Company in the City
of New York ("USL") at the address or telephone numbers given above. You have
the option of receiving benefits on a fixed basis through USL's Fixed Account or
on a variable basis through USL's Separate Account. Terms have the same meaning
in this Statement that they do in the Prospectus under the heading "Glossary."
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
General Information................................. 2
Regulation and Reserves............................. 2
Independent Auditors................................ 4
Services............................................ 4
Principal Underwriter............................... 4
Annuity Payments.................................... 5
Gender of Annuitant............................... 5
Misstatement of Age or Gender and Other Errors... 5
Change of Investment Adviser or Investment Policy... 5
Performance Data for the Divisions.................. 5
Average Annual Total Return Calculations........... 5
Cumulative Total Return Calculations............... 6
Hypothetical Performance........................... 6
Money Market Division Yield and Effective
Yield Calculations.............................. 7
Performance Comparisons............................ 8
Effect of Tax-Deferred Accumulation................. 9
Financial Statements................................ 10
Index to Financial Statements....................... 11
</TABLE>
GENERAL INFORMATION
USL is a stock life insurance company established under the laws of the state
of New York. The Company is a wholly-owned subsidiary of USLIFE Corporation,
which in turn is a wholly-owned subsidiary of AGC Life Insurance Company, a
Missouri corporation ("AG Missouri") engaged primarily in the life insurance
business and annuity business. AG Missouri, in turn, is a wholly-owned
subsidiary of American General Corporation, a Texas holding corporation engaged
primarily in the insurance business.
REGULATION AND RESERVES
USL is subject to regulation and supervision by the State of New York, where it
is licensed to do business. This regulation covers a variety of areas,
including:
2
<PAGE>
. benefit reserve requirements,
. adequacy of insurance company capital and surplus,
. various operational standards, and
. accounting and financial reporting procedures.
USL's operations and accounts are subject to periodic examination by insurance
regulatory authorities.
Under most insurance guaranty fund laws, a state can assess insurers doing
business in the state for covered insurance contract losses incurred by
insolvent companies. State laws set limits for these assessments. However, USL
cannot reasonably estimate the amount of any future assessments of USL under
these laws. Most states have the authority to excuse or defer an assessment, if
it would threaten an insurer's own financial strength.
The federal government generally has not directly regulated the business of
insurance. However, federal initiatives often have an impact on the business in
a variety of ways. Federal measures that may adversely affect the insurance
business include:
. employee benefit regulation,
. tax law changes affecting the taxation of insurance companies or of
insurance products,
. changes in the relative desirability of various personal investment
vehicles, and
. removal of impediments on the entry of banking institutions into the
business of insurance.
Also, both the executive and legislative branches of the federal government are
considering various insurance regulatory matters. This could ultimately result
in direct federal regulation of some aspects of the insurance business. USL
cannot predict whether this will occur or, if it does, what the effect on USL
would be.
State insurance law requires USL to carry reserves on its books, as liabilities,
to meet its obligations under outstanding insurance contracts. USL bases these
reserves on assumptions about future claims experience and investment returns,
among other things.
Neither the reserve requirements nor the other aspects of state insurance
regulation provide absolute protection to holders of insurance contracts,
including the Contracts, if USL were to incur claims or expenses at rates
significantly higher than expected. This might happen, for example, due to a
spread of acquired immune deficiency syndrome or other infectious diseases or
catastrophes, or significant unexpected losses on its investments.
3
<PAGE>
INDEPENDENT AUDITORS
The 1997 consolidated financial statements of USL included in this Statement
were audited by Ernst & Young LLP, independent auditors, as set forth in their
report. We include these financial statements in this Statement in reliance
upon the report of Ernst & Young LLP that appears later on in this Statement.
Ernst & Young LLP gives its report upon their authority as experts in accounting
and auditing. Ernst & Young LLP is located at 99 Wood Avenue South, P.O. Box
751, Iselin, New Jersey 08830-0471. The statutory-based financial statements of
USL for the nine months ended September 30, 1998, included in this Statement,
have not been audited. The statutory-based financial statements of USL for the
nine months ended September 30, 1998, included in this Statement, have not been
audited.
SERVICES
USL and American General Life Companies ("AGLC") are parties to a services
agreement. Most of the affiliated companies within the American General
Corporation holding company system, including certain life insurance companies,
are also parties to a similar agreement. AGLC is a corporation incorporated in
Delaware on November 24, 1997, with its home office located at 2727-A Allen
Parkway, Houston, Texas 77019. AGLC provides shared services to USL and certain
other life insurance companies at cost. These services include data processing,
systems, customer services, product development, actuarial, auditing,
accounting, and legal. USL did not pay any fees to AGLC in 1997, because AGLC
performed no services under the agreement.
PRINCIPAL UNDERWRITER
American General Securities Incorporated ("AGSI") is the principal underwriter
for the Contracts. AGSI also serves as principal underwriter to AGL's Separate
Account A, Separate Account D, and Separate Account VL-R, which are unit
investment trusts registered under the Investment Company Act of 1940. AGSI, a
Texas corporation, is a wholly-owned subsidiary of AGL and a member of the
National Association of Securities Dealers, Inc.
As principal underwriter for the Separate Account, AGSI expects to receive less
than $1,000 of compensation from USL for each of the next three fiscal years.
USL offers the securities under the Certificates on a continuous basis.
4
<PAGE>
ANNUITY PAYMENTS
GENDER OF ANNUITANT
When annuity payments are based on life expectancy, the amount of each annuity
payment ordinarily will be higher if the Annuitant or other measuring life is a
male, as compared with a female, under an otherwise identical Certificate. This
is because, statistically, females tend to have longer life expectancies than
males.
However, Montana, and certain other jurisdictions, do not permit differences in
annuity payment rates between males and females.
In addition, employers should be aware that, under most employer-sponsored
plans, the law prohibits Certificates that make distinctions based on gender.
Under these plans, USL will make available Certificates with no such
differences.
MISSTATEMENT OF AGE OR GENDER AND OTHER ERRORS
If the age or gender of an Annuitant has been misstated to us, any amount
payable will be the amount that the purchase payments paid would have purchased
at the correct age and gender. If we made any overpayments because of incorrect
information about age or gender or any error or miscalculation, we will deduct
the overpayment from the next payment or payments due. We will add any
underpayments to the next payment. We will credit or charge the amount of any
adjustment with interest at the assumed interest rate used in the Certificate's
annuity tables.
CHANGE OF INVESTMENT ADVISER OR INVESTMENT POLICY
Unless otherwise permitted by law or regulation, no Series may change the
investment adviser to any Series or any investment policy without the consent of
the shareholders. If required, we will file approval of or change of any
investment objective with the insurance department of each state where a
Certificate has been delivered. We will notify you (or, after annuity payments
start, the payee) of any material investment policy change that we have
approved. We will also notify you of any investment policy change before its
implementation by the Separate Account, if the change requires your comment or
vote.
PERFORMANCE DATA FOR THE DIVISIONS
AVERAGE ANNUAL TOTAL RETURN CALCULATIONS
Each Division may advertise its average annual total return. We calculate each
Division's average annual total return quotation under the following standard
method that the SEC prescribes:
5
<PAGE>
. We take a hypothetical $1,000 investment in the Division's Accumulation
Units on the first day of the period at the maximum offering price. This
figure is the Accumulation Unit Value per unit ("initial investment").
. We calculate the ending redeemable value ("redeemable value") of that
investment at the end of the period. The redeemable value reflects the
effect of all recurring charges and fees applicable under the Certificate
to all Owner accounts. Recurring charges and fees include the Mortality
and Expense Risk Charge and the Administrative Expense Charge. We do not
reflect any premium taxes in the calculation.
. We divide the redeemable value by the initial investment.
. We take this quotient to the Nth root (N representing the number of years
in the period), subtract 1 from the result, and express the result as a
percentage.
CUMULATIVE TOTAL RETURN CALCULATIONS
Each Division may also advertise cumulative total return performance.
Cumulative total return performance is the compound rate of return on a
hypothetical initial investment of $1,000 in each Division's Accumulation Units
on the first day of the period at the maximum offering price. This figure is
the Accumulation Unit value per unit ("initial investment"). Cumulative total
return figures (and the related "Growth of a $1,000 Investment" figures set
forth below) do not include the effect of any premium taxes. Cumulative total
return figures reflect changes in Accumulation Unit value. We calculate these
quotations by finding the cumulative rates of return of the hypothetical initial
investment over various periods, according to the following formula, and then
expressing those rates as a percentage:
C = (ERV/P) - 1
Where:
C = cumulative total return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value at the end of the applicable period of a
hypothetical $1,000 investment made at the beginning of the applicable
period.
HYPOTHETICAL PERFORMANCE
Each Division may advertise hypothetical performance, based on the calculations
described above, where all or a portion of the actual historical performance of
the corresponding Series in which the Division invests pre-dates the effective
date of the Division. The tables below provide hypothetical performance
information for the available Divisions of the Separate Account based on the
actual historical performance of the corresponding Series in which each of these
Divisions invests. This information reflects all actual charges and deductions
of these Series and the Separate Account that hypothetically would have been
made if the Separate Account invested assets under the Certificates in these
Series for the periods indicated.
6
<PAGE>
Hypothetical Historical Average Annual Total Returns
(Through December 31, 1997)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Ten Years Inception*
- ------------------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C>
OFFITBANK VIF-Emerging Markets 5.77% N/A N/A 8.32%
OFFITBANK VIF-High Yield 11.20% N/A N/A 12.49%
Wright International Blue Chip 5.06% N/A N/A 5.07%
Wright Selected Blue Chip 31.21% N/A N/A 17.01%
Money Market 4.49% 3.76% 4.77% 4.76%
</TABLE>
Hypothetical Historical Cumulative Total Returns
(Through December 31,1997)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Ten Years Inception*
- ------------------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C>
OFFITBANK VIF-Emerging Markets 5.77% N/A N/A 11.32%
OFFITBANK VIF-High Yield 11.20% N/A N/A 22.75%
Wright International Blue Chip 5.06% N/A N/A 21.81%
Wright Selected Blue Chip 31.21% N/A N/A 87.12%
Money Market 4.49% 20.22% 59.23% N/A
</TABLE>
Hypothetical Historical Growth of a $1,000 Investment in the Divisions
(Through December 31, 1997)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Ten Years Inception*
- ------------------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C>
OFFITBANK VIF-Emerging Markets $1,058 N/A N/A $1,113
OFFITBANK VIF-High Yield $1,112 N/A N/A $1,228
Wright International Blue Chip $1,051 N/A N/A $1,218
Wright Selected Blue Chip $1,312 N/A N/A $1,871
Money Market $1,045 $1,202 $1,592 N/A
</TABLE>
__________________________
* The inception dates for each Series funding the Divisions listed above are:
OFFITBANK -VIF Emerging Markets, August 26, 1996; OFFITBANK VIF-High Yield,
April 1,1996; Wright International Blue Chip - January 5, 1994; Wright
Selected Blue Chip - January 5, 1994; Money Market - January 16, 1986.
MONEY MARKET DIVISION YIELD AND EFFECTIVE YIELD CALCULATIONS
We calculate the Money Market Division's yield for which we use a standard
method that the SEC prescribes. Under that method, we base the current yield
quotation on a seven-day period and calculate that yield as follows:
7
<PAGE>
. We take the net change in the Accumulation Unit value during the period.
. We divide that net change by the Accumulation Unit value at the beginning
of the period to obtain the base period return.
. We multiply the base period return by the fraction 365/7 to obtain the
current yield figure.
. We carry the current yield figure to the nearest one-hundredth of one
percent.
We do not include realized capital gains or losses and unrealized appreciation
or depreciation of the Division's Portfolio in the calculation. The Money
Market Division's hypothetical historical yield for the seven-day period ended
December 31, 1997 was 3.84%.
We determine the Money Market Division's effective yield by taking the base
period return (computed as described above) and calculating the effect of
assumed compounding. The formula for the effective yield is: (base period
return +1)365/7 -1. The Money Market Division's hypothetical historical
effective yield for the seven day period ended December 31, 1997 was 3.91%.
Yield and effective yield do not reflect the deduction of premium taxes that
may be imposed upon the redemption of Accumulation Units.
PERFORMANCE COMPARISONS
In our advertising and sales literature, we may compare the performance of each
or all of the available Divisions of the Separate Account to the performance of
(1) other variable annuities in general or (2) particular types of variable
annuities that invest in mutual funds, or series of mutual funds, with
investment objectives similar to each of the Divisions of the Separate Account.
Lipper Analytical Services, Inc. ("Lipper") and the Variable Annuity Research
and Data Service ("VARDS(R)") are independent services that monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis. Lipper's rankings include
variable life insurance issuers as well as variable annuity issuers. VARDS(R)
rankings compare only variable annuity issuers. The performance analyses
prepared by Lipper and VARDS(R) rank such issuers on the basis of total return.
Total return assumes the reinvestment of dividends and distributions, but does
not take into consideration sales charges, redemption fees or certain expense
deductions at the separate account level. In addition, VARDS(R) prepares risk-
adjusted rankings, which consider the effects of market risk on total return
performance.
In addition, we may compare each Division's performance in advertisements and
sales literature to the following benchmarks:
. the Standard & Poor's 500 Composite Stock Price Index, an unmanaged
weighted index of 500 leading domestic companies that represents
approximately 80% of the market capitalization of the United States
equity market;
8
<PAGE>
. the Dow Jones Industrial Average, an unmanaged unweighted average of 30
blue chip industrial corporations listed on the New York Stock Exchange
and generally considered representative of the United States stock
market;
. the Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, a statistical measure of change, over time, in the prices of
goods and services in major spending groups and generally is considered
to be a measure of inflation;
. the Lehman Brothers Government and Domestic Strategic Income Index, the
Salomon Brothers High Grade Domestic Strategic Income Index, and the
Merrill Lynch Government/Corporate Master Index, unmanaged indices that
are generally considered to represent the performance of intermediate
and long term bonds during various market cycles; and
. the Morgan Stanley Capital International Europe Australia Far East
Index, an unmanaged index that is considered to be generally
representative of major non-United States stock markets.
EFFECT OF TAX-DEFERRED ACCUMULATION
The Certificates qualify for tax-deferred treatment on earnings. This tax-
deferred treatment increases the amount available for accumulation by deferring
taxes on any earnings until the earnings are withdrawn. The longer the taxes are
deferred, the more the potential you have for the assets under your Certificate
to grow over the term of the Certificates.
The hypothetical tables set out below illustrate this potential. The tables
compare accumulations based on a single initial purchase payment of $100,000
compounded annually under:
. a Certificate, under which earnings are not taxed until withdrawn in
connection with a full surrender, partial withdrawal, or annuitization,
or termination due to insufficient Account Value ("withdrawal of
earnings") and
. an investment under which earnings are taxed on a current basis
("Taxable Investment"), based on an assumed tax rate of 28%, and the
assumed earning rates specified.
9
<PAGE>
<TABLE>
<CAPTION>
5 Years 10 Years 20 Years
------- -------- --------
(7.50% earnings rate)
<S> <C> <C> <C>
Certificate $143,563 $206,103 $424,785
Certificate (after Taxes) $131,365 $176,394 $333,845
Taxable Investment $130,078 $169,202 $286,294
(10.00% earnings rate)
Certificate $161,051 $259,374 $672,750
Certificate (after Taxes) $143,957 $214,749 $512,380
Taxable Investment $141,571 $200,423 $401,694
</TABLE>
The hypothetical tables do not reflect any fees or charges under a Certificate
or Taxable Investment. However, the Certificates impose:
. a Mortality and Expense Risk Charge of 0.62%, and
. an Administrative Expense Charge of 0.04%.
A Taxable Investment could incur comparable fees or charges. Fees and charges
would reduce the return from a Certificate or Taxable Investment.
Under the Certificates, a withdrawal of earnings is subject to tax, and may be
subject to an additional 10% tax penalty before age 59 1/2.
These tables are only illustrations of the effect of tax-deferred accumulations
and are not a guarantee of future performance.
FINANCIAL STATEMENTS
There are no current financial statements for the Separate Account included in
this Statement, because, as of the date of this Statement, the Separate Account
had funded no Certificates and held no assets.
You should consider the financial statements of USL that we include in this
Statement primarily as bearing on the ability of USL to meet its obligations
under the Certificates.
10
<PAGE>
INDEX TO
FINANCIAL STATEMENTS
Page No.
--------
USL Financial Statements - Statutory Basis
Report of Ernst & Young LLP, Independent Auditors.............
Balance Sheet.................................................
Statements of Operations......................................
Statements of Changes in Capital and Surplus..................
Statements of Cash Flows......................................
Notes to Financial Statements.................................
Financial Statements Statutory Basis (Unaudited)
Nine Months Ended September 30, 1998..........................
11
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
PART A: None
PART B:
(1) Consolidated Financial Statements of The United States
Life Insurance Company in the City of New York:
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets as of December 31,
1997 and 1996
Consolidated Income Statements for the years ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years
ended December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
(2) Combined Financial Statements - Statutory Basis
(Unaudited) Nine Months Ended September 30, 1998
(To be filed by Pre-Effective Amendment.)
PART C: None
(b) Exhibits
(1) Resolution of the Board of Directors of The United States
Life Insurance Company in the City of New York authorizing
the establishment of The United States Life Insurance
Company in the City of New York Separate Account USL
VA-R./1/
C-1
<PAGE>
(2) None
(3)(a) Form of Distribution Agreement between The United
States Life Insurance Company in the City of New York
and American General Securities Incorporated. (To be
filed by Pre-Effective Amendment.)
(b)(i) Form of Participation Agreement between The United
States Life Insurance Company in the City of New York
and American General Series Portfolio Company. (To be
filed by Pre-Effective Amendment.)
(ii) Form of fund Participation Agreement between The United
States Life Insurance Company in the City of New York
and Hotchkis and Wiley Variable Trust. (To be filed by
Pre-Effective Amendment.)
(iii) Form of fund Participation Agreement between The United
States Life Insurance Company in the City of New York
and LEVCO Series Trust. (To be filed by Pre-Effective
Amendment.)
(iv) Form of fund Participation Agreement between The United
States Life Insurance Company in the City of New York
and Navellier Variable Insurance Series Fund, Inc. (To
be filed by Pre-Effective Amendment.)
(v) Form of fund Participation Agreement between The United
States Life Insurance Company in the City of New York
and OFFITBANK Variable Insurance Fund, Inc. (To be
filed by Pre-Effective Amendment.)
(vi) Form of fund Participation Agreement between The United
States Life Insurance Company in the City of New York
and Royce Capital Fund. (To be filed by Pre-Effective
Amendment.)
(vii) Form of fund Participation Agreement between The United
States Life Insurance Company in the City of New York
and Wright Managed Blue Chip Serie Trust. (To be filed
by Pre-Effective Amendment.)
(4)(a) Form of Group Annuity Master Contract (Form No. 98506N).
(b) Form of Group Annuity Certificate (Form No. 98505N).
C-2
<PAGE>
(5)(a) Form of Application for Certificate
(Form No. USL 8986-33).
(b) Specimen form of Select Reserve(SM) Service Request.
(To be filed by Pre-Effective Amendment.)
(c) Specimen form of Special Request for Surrender Charge
Waiver under Certificate Form No. 98505N. (To be
filed by Pre-Effective Amendment.)
(6)(a) Copy of the Charter and all amendments thereto of The
United States Life Insurance Company in the City of
New York./1/
(b) Copy of the Bylaws, as amended, of The United States Life
Insurance Company in the City of New York./1/
(7) None
(8)(a) Form of Revenue Sharing Agreement between American General
Series Portfolio Company and The United States Life
Insurance Company in the City of New York. (To be filed by
Pre-Effective Amendment.)
(b) Form of Revenue Sharing Agreement between Hotchkis and
Wiley and The United States Life Insurance Company in the
City of New York. (To be filed by Pre-Effective
Amendment.)
(c) Form of Revenue Sharing Agreement between John A. Levin
and Co., Inc. and The United States Life Insurance Company
in the City of New York. (To be filed by Pre-Effective
Amendment.)
(d) Form of Revenue Sharing Agreement between Navellier
Variable Insurance Series Fund, Inc. and The United States
Life Insurance Company in the City of New York. (To be
filed by Pre-Effective Amendment.)
(e) Form of Revenue Sharing Agreement between OFFITBANK
Variable Insurance Fund, Inc. and The United States Life
Insurance Company in the City of New York. (To be filed by
Pre-Effective Amendment.)
(f) Form of Revenue Sharing Agreement between Royce Capital
Fund and The United States Life Insurance Company in the
City of New York. (To be filed by Pre-Effective
Amendment.)
C-3
<PAGE>
(g) Form of Revenue Sharing Agreement between Wright Managed
Blue Chip Series Trust and The United States Life
Insurance Company in the City of New York. (To be filed by
Pre-Effective Amendment.)
(h) Form of Administrative Services Agreement, between The
United States Life Insurance Company in the City of New
York and American General Life Companies. (To be filed by
Pre-Effective Amendment).
(9) Opinion and Consent of Counsel. (To be filed by Pre-
Effective Amendment.)
(10) Consent of Independent Auditors. (To be filed by Pre-
Effective Amendment.)
(11) None
(12) None
(13)(a) Computations of hypothetical historical average annual
total returns for each Division available under
Certificate Form No. 98505N for the one, five and ten year
periods ended December 31, 1997, and since inception. (To
be filed by Pre-Effective Amendment.)
(b) Computations of hypothetical historical cumulative total
returns for each Division available under Certificate Form
No. 98505N for the one, five and ten year periods ended
December 31, 1997, and since inception. (To be filed by
Pre-Effective Amendment.)
(c) Computations of hypothetical historical seven day yield
and effective yield for the Money Market Division
available under Certificate Form No. 98505N for the seven
day period ended December 31, 1997. (To be filed by Pre-
Effective Amendment.)
(14) Financial Data Schedule. (See Exhibit 27 below.)
(27) (Inapplicable, because, notwithstanding Item 24.(b) as to
Exhibits, the Commission staff has advised that no such
Schedule is required.)
___________
(1) Incorporated herein by reference to the initial filing of Registrant's
Form N-4 Registration Statement (File No. 333-63673) on September 18,
1998.
C-4
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The directors, executive officers, and, to the extent responsible for variable
annuity operations, other officers of the depositor are listed below.
Positions and Offices
Name and Principal with the
Business Address Depositor
------------------ ---------------------
Jon P. Newton Senior Chairman
2929 Allen Parkway
Houston, TX 77019
Rodney O. Martin, Jr. Chairman
2727-A Allen Parkway
Houston, TX 77019
James S. D'Agostino, Jr. Vice Chairman
2929 Allen Parkway
Houston, TX 77019
David J. Dietz Director, President
125 Maiden Lane and Chief Executive Officer -
New York, NY 10018 Individual Insurance Options
William M. Keeler Director, President and
3600 Route 66 Chief Executive Officer -
Neptune, NJ 07784 Group Insurance Operations
David N. Dunn Director and Executive
3600 Route 66 Vice President - Group
Neptune, NJ 07784
David A. Fravel Director and Executive
2727-A Allen Parkway Vice President
Houston, Texas 77019
Philip K. Polkinghorn Director and Executive
2727-A Allen Parkway Vice President
Houston, Texas 77019
Robert F. Herbert, Jr. Director and Senior
2727-A Allen Parkway Vice President
Houston, TX 77019
C-5
<PAGE>
R. Stephen Watson Director, Senior Vice President
125 Maiden Lane and Chief Administrative Officer
New York, NY 10038
William A. Bacas Director
182 Ridge Street
Glens Falls, NY 12801
John R. Corcoran Director
12 Hawthorne Drive
Sudbury, MA 01776
Dr. Patricia O. Ewers Director
Pace University
Pace Plaza
New York, NY 10038
Thomas H. Fox Director
1016 East Bay Drive
Northport, MI 49670
William J. O'Hara, Jr. Director
AJ Tech
2590 Pioneer Avenue
Vista, CA 92083
George B. Trotta Director
541 East 20th Street
Apartment 14F
New York, NY 10010
John V. LaGrasse Exeucitve Vice President and
2727-A Allen Parkway Chief Technology Officer
Houston, TX 77019
Gary D. Reddick Executive Vice President
2727-A Allen Parkway
Houston, TX 77019
Wayne A. Barnard Senior Vice President
2727-A Allen Parkway and Chief Actuary
Houston, TX 77019
C-6
<PAGE>
Simon J. Leech Senior Vice President -
2727-A Allen Parkway Houston Service Center
Houston, TX 77019
Angelo C. LiRosi Senior Vice President -
125 Maiden Lane Marketing
New York, NY 10038
Randy J. Marash Senior Vice President and Actuary
3600 Rt. 66
Neptune, NJ 07754
Terry Freeman Vice President-
125 Maiden Lane Marketing Support
New York, NY 10038
Althea R. Johnson Vice President, Assistant Controller
2727-A Allen Parkway and Assistant Secretary
Houston, TX 77019
Richard W. Scott Vice President and
2929 Allen Parkway Chief Investment Officer
Houston, TX 77019
Larry M. Robinson Vice President
2727-A Allen Parkway
Houston, TX 77019
Don M. Ward Vice President
2727 Allen Parkway
Houston, TX 77019
Pauletta P. Cohn Secretary
2727-A Allen Parkway
Houston, TX 77019
Jane K. Rushton Associate General Counsel and
125 Maiden Lane Assistant Secretary
New York, NY 10038
Sandra M. Smith Associate General Counsel and
300 South State Street Assistant Secretary
Syracuse, NY 13202
C-7
<PAGE>
Joyce Bilski Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
Laura Milazzo Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
Kenneth D. Nunley Assistant Tax Officer
2727-A Allen Parkway
Houston, TX 77019
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The following is a list of subsidiaries of American General
Corporation/1,2,3,4,5/ as of July 31, 1998. All subsidiaries listed are
corporations, unless otherwise indicated. Subsidiaries of subsidiaries are
indicated by indentations and unless otherwise indicated, all subsidiaries are
wholly owned. Inactive subsidiaries are denoted by an asterisk (*).
Jurisdiction of
Name Incorporation
- ---- -------------
AGC Life Insurance Company Missouri
American General Life and Accident Insurance Company/6/ Tennessee
American General Exchange, Inc. Tennessee
Independent Fire Insurance Company Florida
American General Property Insurance Company of Florida Florida
Old Faithful General Agency, Inc. Texas
American General Life Insurance Company/7/ Texas
American General Annuity Service Corporation Texas
American General Life Companies Delaware
American General Life Insurance Company of New York New York
The Winchester Agency Ltd. New York
The Variable Annuity Life Insurance Company Texas
The Variable Annuity Marketing Company Texas
VALIC Investment Services Company Texas
VALIC Retirement Services Company Texas
VALIC Trust Company Texas
The Franklin Life Insurance Company Illinois
The American Franklin Life Insurance Company Illinois
Franklin Financial Services Corporation Delaware
HBC Development Corporation Virginia
C-8
<PAGE>
Western National Corporation Delaware
WNL Holding Corp. Delaware
American General Annuity Insurance Company/8/ Texas
American General Assignment Corporation Texas
American General Brokerage Services, Inc. Delaware
American General Investment Advisory Services, Inc. Delaware
Independent Advantage Financial and Insurance Services, Inc. California
Western National Financial Institution Group, Inc. Delaware
WNL Insurance Services, Inc. Delaware
American General Corporation* Delaware
American General Delaware Management Corporation/1/ Delaware
American General Finance, Inc. Indiana
AGF Investment Corp. Indiana
American General Auto Finance, Inc. . Delaware
American General Finance Corporation/9/ Indiana
American General Finance Group, Inc. Delaware
American General Financial Services, Inc./10/ Delaware
The National Life and Accident Insurance Company Texas
Merit Life Insurance Co. Indiana
Yosemite Insurance Company California
American General Finance, Inc. Alabama
American General Financial Center Utah
American General Financial Center, Inc.* Indiana
American General Financial Center, Incorporated* Indiana
American General Financial Center Thrift Company* California
Thrift, Incorporated* Indiana
American General Investment Advisory Services, Inc.* Texas
American General Investment Holding Corporation/11/ Delaware
American General Investment Management Corporation/11/ Delaware
American General Realty Advisors, Inc. Delaware
American General Realty Investment Corporation Texas
AGLL Corporation/12/ Delaware
American General Land Holding Company Delaware
AG Land Associates, LLC/12/ California
GDI Holding, Inc.*/13/ California
Pebble Creek Service Corporation Florida
SR/HP/CM Corporation Texas
American General Property Insurance Company Tennessee
Green Hills Corporation Delaware
Knickerbocker Corporation Texas
American Athletic Club, Inc. Texas
Pavilions Corporation Delaware
USLIFE Corporation New York
All American Life Insurance Company Illinois
C-9
<PAGE>
1149 Investment Corp. Delaware
American General Assurance Company Illinois
American General Indemnity Company Nebraska
USLIFE Credit Life Insurance Company of Arizona Arizona
American General Life Insurance Company of Pennsylvania Pennsylvania
I.C. Cal* California
The Old Line Life Insurance Company of America Wisconsin
The United States Life Insurance Company in the City of New York New York
USLIFE Agency Services, Inc. Illinois
USMRP, Ltd. Turks&Caicos
USLIFE Financial Institution Marketing Group, Inc. California
USLIFE Insurance Services Corporation Texas
USLIFE Realty Corporation Texas
USLIFE Real Estate Services Corporation Texas
USLIFE Systems Corporation Delaware
American General Finance Foundation, Inc. is not included on this list. It is a
non-profit corporation.
NOTES
/1/
The following limited liability companies were formed in the State of Delaware
on March 28, 1995. The limited liability interests of each are jointly owned
by AGC and AGDMC and the business and affairs of each are managed by AGDMC:
American General Capital, L.L.C.
American General Delaware, L.L.C.
/2/
On November 26, 1996, American General Institutional Capital A ("AG Cap Trust
A"), a Delaware business trust, was created. On March 10, 1997, American
General Institutional Capital B ("AG Cap Trust B"), also a Delaware business
trust, was created. Both AG Cap Trust A's and AG Cap Trust B's business and
affairs are conducted through their trustees: Bankers Trust Company and
Bankers Trust (Delaware). Capital securities of each are held by non-
affiliated third party investors and common securities of AG Cap Trust A and
AG Cap Trust B are held by AGC.
/3/
On November 14, 1997, American General Capital I, American General Capital II,
American General Capital III, and American General Capital IV (collectively,
the "Trusts"), all Delaware business trusts, were created. Each of the Trusts'
business and affairs are conducted through its trustees: Bankers Trust
(Delaware) and James L. Gleaves (not in his individual capacity but solely as
Trustee).
C-10
<PAGE>
/4/
On July 10, 1997, the following insurance subsidiaries of AGC became the direct
owners of the parenthetically indicated percentages of membership units of
SBIL B, L.L.C. ("SBIL B"), a U.S. limited liability company: VALIC (22.6%), FL
(8.1%), AGLA (4.8%) and AGL (4.8%).
Through its aggregate 40.3% interest in SBIL B, VALIC, FL, AGLA and AGL
indirectly own approximately 28% of the securities of SBI, an English company,
and 14% of the securities of ESBL, an English company, SBP, an English
company, and SBFL, a Cayman Islands company. These interests are held for
investment purposes only.
/5/
Effective December 5, 1997, AGC and Grupo Nacional Provincial, S.A. ("GNP")
completed the purchase by AGC of a 40% interest in Grupo Nacional Provincial
Pensions S.A. de C.V., a new holding company formed by GNP, one of Mexico's
largest financial services companies.
/6/
AGLA owns approximately 11% of Whirlpool Financial Corp. ("Whirlpool") on a
fully diluted basis. The total investment of AGLA in Whirlpool represents
approximately 3% of the voting power of the capital stock of Whirlpool, but
approximately 11% of the Whirlpool stock which has voting rights. The
interests in Whirlpool (which is a corporations that is not associated with
AGC) are held for investment purposes only.
/7/
AGL owns 100% of the common stock of American General Securities Incorporated
("AGSI"), a full-service NASD broker-dealer. AGSI, in turn, owns 100% of the
stock of the following insurance agencies:
American General Insurance Agency, Inc. (Missouri)
American General Insurance Agency of Hawaii, Inc. (Hawaii)
American General Insurance Agency of Massachusetts, Inc. (Massachusetts)
In addition, the following agencies are indirectly related to AGSI, but not
owned or controlled by AGSI:
American General Insurance Agency of Ohio, Inc. (Ohio)
American General Insurance Agency of Texas, Inc. (Texas)
American General Insurance Agency of Oklahoma, Inc. (Oklahoma)
Insurance Masters Agency, Inc. (Texas)
AGSI and the foregoing agencies are not affiliates or subsidiaries of AGL
under applicable holding company laws, but they are part of the AGC group of
companies under other laws.
C-11
<PAGE>
/8/
WNL Series Trust is a Massachusetts business trust, all of the shares of which
are held in the separate account of American General Annuity Insurance Company
("AGAIC") for the benefit of AGAIC variable annuity policyholders.
/9/
American General Finance Corporation is the parent of an additional 48 wholly
owned subsidiaries incorporated in 30 states and Puerto Rico for the purpose
of conducting its consumer finance operations, including those noted in
footnote 7 below.
/10/
American General Financial Services, Inc. is the parent of an additional 7
wholly owned subsidiaries incorporated in 4 states and Puerto Rico for the
purpose of conducting its consumer finance operations.
/11/
American General Investment Management, L.P. is jointly owned by AGIHC and
AGIMC. AGIHC holds a 99% limited partnership interest, and AGIMC owns a 1%
general partnership interest.
/12/
AG Land Associates, LLC is jointly owned by AGLH and AGLL. AGLH holds a 98.75%
managing interest and AGLL owns a 1.25% managing interest.
/13/
AGRI owns only a 75% interest in GDI Holding, Inc.
All of the subsidiaries of USL are included in its consolidated financial
statements, which are filed in Part B of this Registration Statement.
ITEM 27. NUMBER OF CERTIFICATE OWNERS
As of August 31, 1998, there were no owners of Certificates offered by this
Registration Statement.
ITEM 28. INDEMNIFICATION
USL's By-Laws, as amended, include provisions concerning the
indemnification of its officers and directors, and certain other persons, which
provide in substance as follows:
Article XI of USL's By-Laws provide, in part, that USL, except to the
extent expressly prohibited by the New York Business Corporation law or New York
Insurance law, shall have the power to indemnity each person made or threatened
to be made a party to or called as a witness in or asked to provide information
in connection with any pending or threatened action, proceeding, hearing or
investigation, whether civil or criminal, and whether judicial, quasi-judicial,
administrative, or
C-12
<PAGE>
legislative, and whether or not for or in the right of USL or any other
enterprise, by reason of the fact that such person or such person's testator or
intestate is or was a director or officer of USL, or is or was a director or
officer of USL who also serves or served at the request of USL, any other
corporation, partnership, joint venture, trust, employee benefit plan or
otherwise enterprise in any capacity, against judgments, fines, penalties,
amounts paid in settlement and reasonable expenses, including attorneys' fees,
incurred in connection with such action or proceeding, or any appeal therein,
provided that no such indemnification shall be made if a judgment or other final
adjudication adverse to such person establishes that his or her acts were
committed in a bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that he or she
personally gained in fact a financial profit or other advantages to which he or
she was not legally entitled, and provided further that no such indemnification
shall be required with respect to any settlement or other nonadjudicated
disposition of any threatened or pending action or proceeding unless USL has
given its prior consent to such settlement or other disposition.
Under Article XI, USL shall advance or promptly reimburse, upon request of
any person entitled to indemnification, all expenses, including attorneys' fees,
reasonably incurred in defending any action or proceeding in advance of its
final disposition upon receipt of a written undertaking by or on behalf of such
person to repay such amount if such person is ultimately found not to be
entitled to indemnification or, where indemnification is granted, to the extent
the expenses so advanced or reimbursed exceed the amount to which such person is
entitled, provided, however, that such person shall cooperate in good faith with
any request by USL that common counsel be utilized by the parties to an action
or proceeding who are similarly situated unless to do so would be inappropriate
due to a actual or potential differing interests between or amount such parties.
USL agrees under Article XI that it shall not, except by elimination or
amendment of the By-Laws, take any corporate action or enter into any agreement
which prohibits, or otherwise limits the rights of any person to,
indemnification in accordance with the provisions of the By-Laws. The
indemnification of any person provided by the By-Laws shall continue after such
person has ceased to be a director or officer of USL and shall inure to the
benefit of such person's heirs, executors, administrators and legal
representatives.
USL is authorized to enter into agreements with any of its directors,
officers or employees extending rights to indemnification and advancement of
expenses to such person to the fullest extent permitted by applicable law, but
the failure to enter into any such agreement shall not affect or limit the
rights of such person pursuant to the By-Laws.
C-13
<PAGE>
A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Article XI of USL's By-Laws shall be entitled to indemnification as
authorized by Article XI. Except as provided in the preceding sentence and
unless ordered by a court, any indemnification under Article XI shall be made by
USL if, and only if, authorized in the specific case:
(1) By the Board of Directors acting by a quorum consisting of
directors who are not parties to such action or proceeding upon a
finding that the director or officer has met the standard of conduct
set forth in the first paragraph of Article XI (and which is
described in the first paragraph of this Item 28); or
(2) If such a quorum is not obtainable or, even if obtainable, a quorum
of disinterested directors so directs;
(a) By the Board of Directors upon the opinion in writing of
independent legal counsel that indemnification is proper in the
circumstances because the standard of conduct set forth in the
first paragraph of Article XI has been met by such director or
officer; or
(b) By the shareholders upon a finding that the directors or
officer has met the applicable standard of conduct set forth in
such paragraph.
USL shall make no payments under Article XI until it shall have complied
with all provisions then in force of New York Insurance law with respect to
indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to Directors, Officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
C-14
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter, American General Securities
Incorporated, also acts as principal underwriter for American General Life
Insurance Company Separate Account A, American General Life Insurance
Company Separate Account D, American General Life Insurance Company
Separate Account VL-R, and American General Life Insurance Company of New
York Separate Account E.
(b) The directors and principal officers of the principal underwriter are:
Position and Offices
with Underwriter,
Name and Principal American General
Business Address Securities Incorporated
F. Paul Kovach, Jr. Director and President
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
Royce G. Imhoff, II Director
American General Life
Companies
2727-A Allen Parkway
Houston, Texas 77019
Rodney O. Martin, Jr. Director
American General Life
Companies
2727-A Allen Parkway
Houston, TX 77019
Robert F. Herbert Senior Vice President and Treasurer
American General Life
Companies
2727-A Allen Parkway
Houston, Texas 77019
John A. Kalbaugh Vice President - Marketing
American General Life
Companies
2727-A Allen Parkway
Houston, TX 77019
C-15
<PAGE>
Pauletta P. Cohn Secretary
American General Life
Companies
2727-A Allen Parkway
Houston, TX 77019
Carole D. Hlozek Administrative Officer
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
Kenneth D. Nunley Associate Tax Officer
2727-A Allen Parkway
Houston, TX 77019
(c) Not Applicable.
ITEM 30. LOCATION OF RECORDS
All records referenced under Section 31(a) of the 1940 Act, and Rules
31a-1 through 31a-3 thereunder, are maintained and in the custody of American
General Life Companies at its principal executive office located at 2727-A Allen
Parkway, Houston, Texas 77019.
C-16
<PAGE>
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
The Registrant undertakes: A) to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the Certificates may be accepted; B) to
include either (1) as part of any application to purchase a Certificate offered
by a prospectus, a space that an applicant can check to request a Statement of
Additional Information, or (2) a toll-free number or a post card or similar
written communication affixed to or included in the applicable prospectus that
the applicant can remove to send for a Statement of Additional Information; C)
to deliver any Statement of Additional Information and any financial statements
required to be made available under this form promptly upon written or oral
request.
REPRESENTATION REGARDING THE REASONABLENESS OF AGGREGATE FEES AND CHARGES
DEDUCTED UNDER THE CONTRACTS PURSUANT TO SECTION 26(e)(2)(A) OF THE INVESTMENT
COMPANY ACT OF 1940
USL represents that the fees and charges deducted under the Contract that
is identified as Contract Form No. 98506N and the Certificates that are
identified as Certificate Form No.98505N and comprehended by this Registration
Statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by USL
under the Contract and Certificates. USL bases its representation on its
assessment of all of the facts and circumstances, including such relevant
factors, as: the nature and extent of such services, expenses and risks; the
need for USL to earn a profit; the degree to which the Contract and Certificates
include innovative features; and the regulatory standards for exemptive relief
under the Investment Company Act of 1940 used prior to October 1996, including
the range of industry practice. This representation applies to all Contracts
or Certificates sold pursuant to this Registration Statement, including those
sold on the terms specifically described in the prospectus contained herein, or
any variations therein, based on supplements, endorsements, or riders to any
Contracts, Certificates or prospectuses, or otherwise.
C-17
<PAGE>
POWERS OF ATTORNEY
Each person whose signature appears below hereby appoints Robert F.
Herbert, Jr., Gary D. Reddick and Pauletta P. Cohn and each of them, any one of
whom may act without the joinder of the others, as his/her attorney-in-fact to
sign on his/her behalf and in the capacity stated below and to file all
amendments to this Registration Statement, which amendment or amendments may
make such changes and additions to this Registration Statement as such
attorney-in-fact may deem necessary or appropriate.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, The United States Life Insurance Company in the City of
New York Separate Account USL VA-R, has duly caused this Registration Statement
to be signed on its behalf, in the City of Houston, and State of Texas on this
16th day of September, 1998.
THE UNITED STATES LIFE INSURANCE
COMPANY IN THE CITY OF NEW YORK
SEPARATE ACCOUNT USL VA-R
(Registrant)
BY: THE UNITED STATES LIFE
INSURANCE COMPANY IN THE CITY
OF NEW YORK
(On behalf of the Registrant and itself)
BY: /s/ Robert F. Herbert, Jr.
-----------------------------------
Robert F. Herbert, Jr.
Senior Vice President
[SEAL]
ATTEST: /s/ Pauletta P. Cohn
---------------------
Pauletta P. Cohn
Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following officers and directors
of The United States Life Insurance Company in the City of New York in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ David J. Dietz Principal Executive Officer September 17, 1998
- --------------------------
David J. Dietz
/s/ Robert F. Herbert, Jr. Principal Financial and September 16, 1998
- -------------------------- Accounting Officer
Robert F. Herbert, Jr.
Directors
/s/ William A. Bacas September 16, 1998
- --------------------------
William A. Bacas
/s/ John R. Corcoran September 16, 1998
- --------------------------
John R. Corcoran
September , 1998
- -------------------------- --
James S. D'Agostino, Jr.
/s/ David J. Dietz September 17, 1998
- --------------------------
David J. Dietz
/s/ David N. Dunn September 16, 1998
- --------------------------
David N. Dunn
/s/ Patricia O. Ewers September 17, 1998
- --------------------------
Patricia O. Ewers
<PAGE>
/s/ Thomas H. Fox September 17, 1998
- --------------------------
Thomas H. Fox
/s/ David A. Fravel September 17, 1998
- --------------------------
David A. Fravel
/s/ Robert F. Herbert. Jr. September 16, 1998
- --------------------------
Robert F. Herbert, Jr.
/s/ William M. Keeler September 17, 1998
- --------------------------
William M. Keeler
/s/ Rodney O. Martin, Jr. September 16, 1998
- --------------------------
Rodney O. Martin, Jr.
September __, 1998
- --------------------------
Jon P. Newton
/s/ William J. O'Hara, Jr. September 16, 1998
- --------------------------
William J. O'Hara, Jr.
/s/ George B. Trotta September 18, 1998
- --------------------------
George B. Trotta
/s/ R. Stephen Watson September 17, 1998
- --------------------------
R. Stephen Watson
<PAGE>
EXHIBIT INDEX
(4)(a) Form of Group Annuity Master Contract (Form No. 98506N).
(b) Form of Group Annuity Certificate (Form No. 98505N).
(5)(a) Form of Application for Certificate (Form No. USL 8986-33).
<PAGE>
EXHIBIT 4(a)
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
GROUP ANNUITY MASTER CONTRACT
Unless otherwise directed by a Participant, We will pay a monthly income to each
Annuitant if living on the Annuity Commencement Date. Payment will be made in
accordance with the revisions set forth in each Certificate and this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY EACH CERTIFICATE, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE, MAY INCREASE OR
DECREASE, AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" REVISIONS IN THE CERTIFICATE.
CANCELLATION RIGHT. THE CONTRACT OWNER MAY RETURN THIS CONTRACT FOR
CANCELLATION TO US OR TO THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED,
WITHIN 10 DAYS AFTER DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10
DAY PERIOD, WE WILL REFUND THE SUM OF (1) ANY PURCHASE PAYMENTS ALLOCATED TO A
FIXED ACCOUNT; PLUS (2) ANY SEPARATE ACCOUNT VALUE AS OF THE END OF THE
VALUATION PERIOD IN WHICH THE CANCELLATION REQUEST IS RECEIVED; PLUS (3) ANY
ADDITIONAL AMOUNT DEDUCTED FOR PREMIUM TAXES.
This is a FLEXIBLE PAYMENT VARIABLE AND FIXED GROUP DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS.
To ensure that the dollar amount of variable annuity payments do not decrease,
the values in the Separate Account must earn a minimum annual aggregate
investment return of 4.16% for the variable annuity options based on an annual
rate of 3.5% and combined annual Separate Account charges of .66%.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
READ YOUR CONTRACT CAREFULLY
Home Office: New York, New York
125 Maiden Lane New York, NY 10038-4992 1-800-246-1924
98506N
<PAGE>
INDEX
Account Value 4
Allocation of Net Purchase Payments 8
Annuity Options 20
Annuity Tables 21
Annuity Units 19
Automatic Rebalancing 14
Beneficiary 9
Change of Investment Advisor or Investment Policy 7
Contingent Annuitant 5 Death Proceeds 17
Definitions 4
Division Accumulation Units 12
Divisions 12
Fixed Account 11
General Provisions 6
Guaranteed Interest Rates 12
Guarantee Periods 11
Investment Objectives of the Portfolios 3
Misstatement of Age or Sex (Misstatement of Age if Issued on a Unisex Basis) 21
Net Investment Factor 13
Ownership Provisions 8
Participant 5
Payment and Deferment 15
Payment of Benefits 18
Premium Taxes 9
Purchase Payments 7
Schedule Page 3
Separate Account 12
Surrenders 16
Full Surrender 6
Partial Withdrawals 16
Systematic Withdrawal Plan 16
Tax Charge 17
Transfers 13
Variable Annuity Payments 19
98506N Page 2
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY
SCHEDULE PAGE
INITIAL PURCHASE PAYMENT: $50,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS: $5,000
ADDITIONAL BENEFITS: NONE
MAXIMUM ASSET CHARGE FACTORS (Separate Account Only) ANNUAL RATE: 0.66%
TRANSFER CHARGE After First 12 in a Certificate Year): $ 25
DIVISIONS OF THE SEPARATE ACCOUNT:
Equity Income VIP
Low Duration VIP
LEVCO Equity Value
Navellier Growth
OFFITBANK VIF-Emerging Markets
OFFITBANK VIF-High Yield
OFFITBANK VIF-Total Return
OFFITBANK VIF-U.S. Govt Secur
Royce Premier
Royce Total Return
Wright lnt'l. Blue Chip
Wright Selected Blue Chip
Money Market
Fixed Account - 1 Year Guarantee Period
GROUP CONTRACT NUMBER: 12345
DATE OF ISSUE: JANUARY 1,1998
JURISDICTION STATE: (STATE NAME)
CONTRACT OWNER: UNITED STATES LIFE GROUP VARIABLE ANNUITY TRUST II
98506N Page 3
<PAGE>
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
A brief description of each Portfolio's investment objective follows. However,
no investment allocation should be made without referring to the appropriate
prospectus which describes each portfolio in detail.
THE EQUITY INCOME VIP PORTFOLIO seeks to provide current income and long-term
growth of income accompanied by growth of capital by investing in domestic
equity securities.
THE LOW DURATION VIP PORTFOLIO seeks to maximize total return consistent with
preservation of capital by investing in a diversified portfolio of fixed-income
securities of varying maturities with a portfolio duration of one to three
years.
THE LEVCO EQUITY VALUE FUND seeks long-term growth of capital through an
emphasis on the preservation of capital and an attempt to control volatility as
measured against the Standard Poor's Composite 500 Stock Index. It invests
primarily in common stocks and other securities having equity characteristics.
THE NAVELLIER GROWTH PORTFOLIO seeks long-term growth of capital primarily
through investment in companies with appreciation potential, including equity
securities traded in all U.S. markets and dollar denominated foreign securities
traded in U.S. markets.
THE OFFITBANK VIF - EMERGING MARKETS FUND seeks to provide investors with a
competitive total investment return by focusing on current yield and
opportunities for capital appreciation primarily by investing in corporate and
sovereign debt securities of emerging market countries.
THE OFFITBANK VIF - HIGH YIELD FUND seeks high current income with capital
appreciation as a secondary objective. It invests at least 65% of its total
assets in U.S. Corporate fixed-income securities rated below investment grade
offering potential returns that are sufficiently high to justify the greater
investment risks.
THE OFFITBANK VIF - TOTAL RETURN FUND seeks total return from a combination of
capital appreciation and current income by investing primarily in a portfolio of
fixed-income securities of varying maturities.
THE OFFITBANK VIF - U.S. GOVERNMENT SECURITIES FUND seeks current income
consistent with preservation of capital by investing at least 80% of its total
assets of U.S. Government obligations.
THE ROYCE PREMIER PORTFOLIO seeks primarily long-term growth and secondarily
current income by investing in a limited portfolio of common stocks and
convertible securities of small-cap companies believed to have superior
financial characteristics and/or unusually attractive business prospects.
THE ROYCE TOTAL RETURN PORTFOLIO seeks long-term growth of capital and current
income by investing primarily in a broadly diversified portfolio of dividend-
paying common stocks of small-cap companies selected on a risk averse value
basis.
THE WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO seeks long-term capital
appreciation by investing primarily in equity securities of well-established,
non-U.S. companies.
98506N Page 3A
<PAGE>
THE WRIGHT SELECTED BLUE CHIP PORTFOLIO seeks long-term capital appreciation
and, as a secondary objective, reasonable current income by investing primarily
in equity securities of well-established U.S. companies.
THE MONEY MARKET FUND seeks protection of capital and high current income by
investing in money-market investments. Investments in the Money Market Fund are
neither insured nor guaranteed by the U.S. Government.
DEFINITIONS
WE, OUR, US, OR COMPANY. The United States Life Insurance Company In the City
of New York.
ACCOUNT. Any of the Divisions of the Separate Account or the Fixed Account.
ACCOUNT VALUE. The sum of the Fixed Account Value and the Separate Account Value
after deduction of any fees.
ACCUMULATION PERIOD. The period during which Net Purchase Payments are allocated
to either the Fixed Account or the Separate Account and held under a
Certificate.
ACCUMULATION UNIT. An accounting unit of measure used to calculate the value of
a Division of a Certificate before annuity payments begin.
ADMINISTRATIVE CENTER. The United States Life Insurance Company (USL) Annuity
Service Center, to which all Purchase Payments, requests, directions and other
communications should be directed. The USL Annuity Service Center is located at
2727-A Allen Parkway, Houston, Texas. (Mailing address P. O. Box 1401, Houston,
Texas 77251-1401.)
AGE. Age of an Annuitant as of his or her last birthday, unless otherwise
stated.
ANNUITANT. The person upon whose date of birth and sex income payments are
based. (Upon whose date of birth income payments are based if issued on a Unisex
basis). The Annuitant's name will be found on page 3 of his or her Certificate.
ANNUITY COMMENCEMENT DATE. The date annuity payments are scheduled to commence.
ANNUITY UNIT. A unit of measure used to calculate variable annuity payments.
BENEFICIARY. The person entitled to receive benefits in the event the
Participant or Annuitant dies. If no named Beneficiary or Contingent Beneficiary
is living at the time any payment is to be made, the Participant shall be the
Beneficiary, or if the Participant is not living, the Participant's estate shall
be the Beneficiary.
CERTIFICATE DATE OF ISSUE. The date on which a Certificate becomes effective as
shown on Page 3 of the Certificate.
CERTIFICATE YEAR. A period of 12 consecutive months beginning on the Certificate
Date of Issue or any anniversary thereof before the Annuity Commencement Date.
98506N Page 4
<PAGE>
CONTINGENT ANNUITANT. A person named by the Owner of a Non-Qualified Contract to
become the Annuitant if: (1) the Annuitant dies before the Annuity Commencement
Date; and (2) the Contingent Annuitant is then living. A Contingent Annuitant
may not be named except at the time of application. Once named, the choice may
not be revoked or replaced. If a Contingent Annuitant dies, a new Contingent
Annuitant may not be named. After Annuity Payments start, a Contingent Annuitant
may not become the Annuitant.
CONTINGENT BENEFICIARY. A person named by the Participant to receive benefits in
the event designated Beneficiary is not living at the time of the Owner's or
Annuitant's death.
CONTRACT OWNER. The organization named on page 3 as Owner of this Contract.
DATE OF ISSUE. The date on which this Contract becomes effective as shown on
Page 3.
DIVISION. A subdivision of the Separate Account.
FIXED ACCOUNT. An Account which provides interest at a guaranteed fixed rate
for a guaranteed period.
FIXED ANNUITY OPTION. An Annuity Option with payments which do not vary with
investment performance.
GUARANTEED INTEREST RATE. The minimum rate we may use to credit interest on an
effective annual basis during any Guarantee Period.
GUARANTEE PERIOD. The period for which a Guaranteed Interest Rate is credited.
HOME OFFICE. Our office at 125 Maiden Lane, New York, N.Y. 10038-4992;
1-800-246-1924.
ISSUE AGE. Age of the Annuitant on the Annuitant's last birthday before the
Certificate Date of Issue. (If the Certificate Date of Issue occurs on the
Annuitant's birthday, "last birthday" will mean the birthday occurring on the
Certificate Date of Issue).
NET ASSET VALUE PER SHARE. The value of the net assets of a Variable Fund
divided by the number of shares in the Variable Fund.
NET PURCHASE PAYMENT. The gross amount of a Purchase Payment less any Premium
Taxes deducted at the time a Purchase Payment is made.
NON-QUALIFIED CONTRACT. A Certificate that does not qualify for special federal
income tax treatment.
PARTICIPANT. (Certificate Owner) The person named in a Certificate who is
entitled to exercise all rights and privileges of ownership under that
Certificate.
PARTICIPANT'S ACCOUNT. An account established for each Participant to which
Purchase Payments are credited.
98506N Page 5
<PAGE>
PAYEE. A person who is to receive annuity payments, surrender proceeds or death
proceeds under a Certificate.
PAYOUT PERIOD. The period, starting with the Annuity Commencement Date, during
which Annuity Payments are made by the Company.
PREMIUM TAX. The amount of tax, if any, charged by a state or municipality on
Purchase Payments or Certificate Values.
PURCHASE PAYMENT. An amount paid to the Company as consideration for the
benefits described herein.
QUALIFIED CONTRACT. A Certificate that qualifies for special federal income tax
treatment applicable in connection with certain retirement plans.
SEPARATE ACCOUNT. A segregated investment account entitled "Separate Account
USL VA-R" established by the Company to separate the assets funding variable
benefits from the other assets of the Company. That portion of the assets of
the Separate Account equal to the reserves and other liabilities with respect to
the Separate Account shall not be chargeable with liabilities arising out of any
other business We may conduct. Income, gains and losses, whether or not
realized from assets allocable to the Separate Account, are credited to or
charged against such account without regard to our other income gains or losses.
UNIT VALUE. The value of: (1) an Accumulation Unit as described in the
"Division Accumulation Units" provision; or (2) an Annuity Unit as described in
the "Annuity Units" provision.
VALUATION DATE. Any day on which we are open for business except, with respect
to any Division, a day on which the related Variable Fund does not value its
shares.
VALUATION PERIOD. The period that starts at the close of regular trading on the
New York Stock Exchange on a Valuation Date and ends at the close of regular
trading on the Exchange on the next Valuation Date.
VARIABLE ANNUITY OPTION. An Annuity Option under which we promise to pay the
Annuitant or other properly-designated Payee one or more payments which vary in
amount based on the net investment experience of the applicable Divisions
selected to measure the value of a Certificate.
VARIABLE FUND. An individual investment fund or series in which a Division
invests.
WRITTEN, IN WRITING. A written request or notice in acceptable form and
content, which is signed and dated, and received at our Administrative Center.
GENERAL PROVISIONS
ENTIRE CONTRACT. Each Certificate will be attached to and made a part of this
Contract. This Contract, including the Certificate, endorsements if any, and a
copy of the application, if attached, constitute the entire Contract between the
Contract Owner and us. All statements made by the
98506N Page 6
<PAGE>
Contract Owner, Participant or Annuitant will be deemed representations and not
warranties. No statement will be used to reduce a claim under this Contract
unless it is in writing and made a part of this Contract. Nothing in this
Contract invalidates or impairs any right granted to the Certificate holder by
Chapter 28, Article 32, Section 3219 of New York Insurance Laws, or the
Certificate.
CONTESTABLE. This Contract is not contestable.
DISCONTINUANCE OF ACCEPTANCE OF NEW PARTICIPANTS. By giving 30 days prior
written notice, we may limit or discontinue the acceptance of new Participants'
applications and the issuance of new Certificates under this Contract. Such
limitation or discontinuance shall have no effect on rights or benefits with
respect to any Certificate issued prior to effective date of such limitation or
discontinuance.
GUARANTEES. Regardless of Our actual mortality experience or the actual
expenses incurred by Us, the Asset Charge Factor will not be increased above the
maximum shown on page 3. Otherwise, Our actual mortality experience and actual
expenses incurred will not affect the dollar amount of variable benefits paid.
SETTLEMENT. All benefits under Certificates issued under this Contract are
payable from our Administrative Center in Houston, Texas.
NONPARTICIPATING. This Contract is nonparticipating and does not share in our
surplus or earnings.
CHANGE OF INVESTMENT ADVISOR OR INVESTMENT POLICY Unless otherwise required by
law or regulation, the investment advisor or any investment policy may not be
changed without our consent. If required, approval of or change of any
investment policy will be filed with the Insurance Department of the state where
this Contract and the Certificate are delivered. A Participant will be notified
of any material investment policy change which has been approved. Notification
of an investment policy change will be given in advance to those Contract Owners
who have the right to comment on or vote on such change.
Any substitution of the underlying investments of any Division will comply with
all applicable requirements of the Investment Company Act of 1940 and rules
thereunder.
RIGHTS RESERVED BY US. Upon notice to a Participant, a Certificate may be
modified by us, but only if such modification is necessary to:
(1) Operate the Separate Account in any form permitted under the Investment
Company Act of 1940 or in any other form permitted by law;
(2) Transfer any assets in any Division to another Division, or to one or more
other separate accounts, or to the Fixed Account;
(3) Add, combine or remove Divisions in the Separate Account, or combine the
Separate Account with another separate account;
(4) Add, restrict or remove Guarantee Periods of the Fixed Account;
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(5) Make any new Division available to a Participant on a basis to be
determined by Us;
(6) Substitute for the shares held in any Division, the shares of another
Variable Fund or the shares of another investment company or any other
investment permitted by law;
(7) Make any changes as required by the Internal Revenue Code or by any other
applicable law, regulation or interpretation in order to continue treatment
of a Certificate as an annuity; or
(8) Make any changes required to comply with rules of any Variable Fund.
When required by law, we will obtain a Participant's approval of changes and we
will gain approval from any appropriate regulatory authority.
CHANGING THE TERMS OF THIS CONTRACT OR A CERTIFICATE. Any change in this
Contract or a Certificate must be approved by one of Our officers. No agent has
the authority to make any changes or waive any of the terms of this Contract or
a Certificate.
TERMINATION. Each Certificate will remain in force until surrendered for its
full value, or all annuity payments have been made, or the death proceeds have
been paid, except as follows: If a Participant's Account Value falls below
$10,000 due to Partial Withdrawals, we may cancel the Certificate upon 60 days'
notice to the Participant. Such cancellation would be considered a full
surrender of the Certificate.
This Contract will terminate when all funds from all Certificates are withdrawn.
PURCHASE PAYMENTS
MINIMUM AND MAXIMUM PAYMENTS. The minimum amount acceptable as a Purchase
Payment (after the initial Purchase Payment) is shown on page 3. We reserve the
right to modify the minimum Purchase Payment, but such minimum will never be
greater than $5,000. The maximum amount We will accept during the life of a
Certificate without approval of an officer of the Company is $1,000,000.
ALLOCATION OF NET PURCHASE PAYMENTS. The initial allocation of Net Purchase
Payments is shown on Page 3 of each Certificate and will remain in effect until
changed. The percentage allocation for future Net Purchase Payments may be
changed at any time by written notice provided by the Participant.
Changes in the allocation will be effective on the date We receive the
Participant's notice. The allocation may be 100% to any available Division or
Guarantee Period, or may be divided among the options in whole percentage points
totaling 100%.
An initial Purchase Payment will be credited to the Participant's Account no
more than two Valuation Periods after we receive it, together with all other
required documentation, in good order at the office designated by the Company
for processing of initial Purchase Payments. Subsequent Purchase Payments will
be credited as of the end of the Valuation Period in which they are received. We
reserve the right to limit the total number of Fixed Account Guarantee Periods
and Separate Account Divisions that may be chosen while a certificate remains in
force.
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PREMIUM TAXES. When applicable, we will deduct an amount to cover premium
taxes. Such education will be made from Purchase Payment(s) when received, or:
(1) From the Participant's Account Value at the time annuity payments are to
commence, or
(2) From the amount of any partial withdrawal; and
(3) From proceeds payable upon termination of a Certificate for any other
reason, including surrender of such Certificate.
If premium tax is paid, the Company may reimburse itself for such tax when
deduction is being made under paragraphs 1, 2 or 3 above calculated by
multiplying the sum of Purchase Payments withdrawn by the applicable premium tax
percentage.
OWNERSHIP PROVISIONS
This Contract is owned by the Organization named on page 3 of this Contract.
The Participant will have the right to exercise all rights and privileges in
connection with such Participant's Certificate. If a Certificate is jointly
owned by more than one Participant, all Participants must join in any request to
exercise the rights or privileges of a Participant.
In any case, such rights and privileges may be exercised without the consent of
the Beneficiary (other than an irrevocably designated Beneficiary) or any other
person. Such rights and privileges may be exercised only during the lifetime of
the Annuitant and prior to the Annuity Commencement Date, except as otherwise
provided in this Contract and the Certificate.
A Payee entitled to benefits upon the death of the Participant or the Annuitant
may thereafter exercise such rights and privileges, if any, of ownership which
continue.
BENEFICIARY. The Participant named the Beneficiary and any Contingent
Beneficiary when applying for the Certificate. By Written notice to Us, a non-
irrevocable Beneficiary or Contingent Beneficiary may be changed by the
Participant prior to the Annuity Commencement Date. The Annuitant or other
properly-designated Payee may change the Beneficiary after the Annuity
Commencement Date by giving Written notice to Us.
CHANGE OF OWNERSHIP. Ownership of a Qualified Contract may not be transferred
except to: (1) the Annuitant; (2) a trustee or successor trustee of a pension or
profit sharing trust which is qualified under Section 401 of the Internal
Revenue Code; (3) the employer of the Annuitant, provided that the Qualified
Contract after transfer is maintained under the terms of a retirement plan
qualified under Section 403(a) of the Internal Revenue Code for the benefit of
the Annuitant; (4) the trustee of an individual retirement account plan
qualified under Section 408 of the Internal Revenue Code; or (5) as otherwise
permitted from time to time by laws and regulations governing the retirement or
deferred compensation plans for which a Qualified Contract may be issued. In no
other case may a Qualified Contract be sold, assigned, transferred, discounted
or pledged as collateral.
The Owner of a Non-Qualified Contract may change the ownership of such Contract.
During the lifetime of the Annuitant and prior to the Annuity Commencement Date,
the Participant may change the ownership interest in the Non-Qualified Contract
as evidenced by the Certificate.
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A change of ownership will not be binding upon us until we receive Written
notification at Our Administrative Center. When such notification is so
received, the change will be effective as of the date of the signed request for
change, but the change will be without prejudice to Us on account of any payment
made, or any action taken by Us prior to receiving the change, or on account of
any tax consequence.
DEATH OF THE PARTICIPANT PRIOR TO THE ANNUITY DATE NON-QUALIFIED CONTRACTS ONLY.
As used in a Certificate, the term "Non-Qualified Contract" means a Certificate
that does not qualify for the special federal income tax treatment applicable in
connection with retirement plans.
If a Participant (including the first to die in the case of Joint Participants)
under a Non-Qualified Contract dies prior to the Annuitant and before the
Annuity Commencement Date, the death proceeds must be distributed either (1)
with in five years after the date of death of the Participant, or (2) over the
life of or a period not greater than the life or expected life of the Payee,
with annuity payments beginning within one year after the date of death of the
Participant.
The Beneficiary of a Participant (other than a Joint Participant) will be the
person or persons designated as Beneficiary in the application for a
Certificate, or as later changed prior to the death of such Participant. If a
Joint Participant dies, death proceeds will be paid to the surviving Joint
Participant, if living; otherwise death proceeds will be paid to the person
designated as Beneficiary.
These mandatory distribution requirements will not apply upon the death of a
Participant if the spouse of a deceased Participant elects to continue the
Certificate in the spouse's own name, as Participant. The spouse may make such
election if: (1) the spouse is the designated Beneficiary of a deceased
Participant (other than a Joint Participant); or (2) the spouse is the sole
surviving Joint Participant.
The Beneficiary (including a Joint Participant receiving death proceeds) will be
considered the designated beneficiary for the purposes of Section 72(s) of the
Internal Revenue Code. In all cases, any such designated beneficiary will not
be entitled to exercise any rights prohibited by applicable federal income tax
law.
If the Payee under a Non-Qualified Contract dies after the Annuity Commencement
Date and before all of the payments under the Annuity Option have been
distributed, the remaining amount payable must be distributed at least as
rapidly as under the method of distribution then in effect.
If the Participant prior to the Annuity Commencement Date, or the Payee
thereafter, is not a natural person, then the foregoing distribution
requirements shall apply upon the death of the primary Annuitant within the
meaning of the Internal Revenue Code.
PERIODIC REPORTS. During the Accumulation Period We will send to each
Participant, at least once during each Certificate Year, a statement showing the
following amounts as of a date not more than two months prior to the date of
mailing:
(1) The number of Accumulation Units credited to the Participant's Account; and
(2) The dollar value of each Accumulation Unit;
(3) The total value of the Participant's Account;
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(4) The Cash Surrender Value of the Participant's Account; and
(5) The Death Benefit.
We will also send such statements as may be required by applicable state and
federal laws, rules and regulations.
PARTICIPANT'S ACCOUNT. We will establish a Participant's Account for the
Participant under a Certificate and will maintain such account during the
Accumulation Period. The Participant's Account Value for any Valuation Period
will be equal to the Participant's Separate Account Value, if any, plus the
Participant's Fixed Account Value, if any, for that Valuation Period.
FIXED ACCOUNT
FIXED ACCOUNT VALUE. We will credit to the Guarantee Period(s) selected that
portion of each Net Purchase Payment allocated to the Fixed Account. The value
in any one Guarantee Period on a Valuation Date is:
(1) The accumulated value of the Net Purchase Payments, renewals or transfers
allocated to the Guarantee Period at the Guaranteed Interest Rate; less
(2) The Accumulated Value of surrenders and transfers out of that Guarantee
Period at the Guaranteed Interest Rate.
GUARANTEE PERIODS. A one year Guarantee Period will always be available, and
additional Guarantee Periods may be added from time to time. If more than one
Guarantee Period is available, the Participant may select more than one. The
Guarantee Period selected will determine the Guaranteed Interest Rate(s).
The Net Purchase Payment or the portion thereof (or amount transferred in
accordance with the transfer privilege provision described below) allocated to a
particular Guarantee Period will earn interest at the Guaranteed Interest Rate
during the Guarantee Period. Guarantee Periods begin on the date as of which we
credit a Participant's Account Value to that Guarantee Period or, in the case of
a transfer, on the effective date of the transfer. The Guarantee Period is the
number of years We credit the Guaranteed Interest Rate. The expiration date of
any Guarantee Period is the last day of the Guarantee Period. Subsequent
Guarantee Periods begin on the first day following the expiration date. As a
result of Guarantee Period renewals, additional Purchase Payments and transfers
of portions of the Participant's Account Value, Guarantee Periods of the same
duration may have different expiration dates and Guaranteed Interest Rates.
We will notify the Participant in writing at least 15, and not more than 45 days
prior to the expiration date of any Guarantee Period. A new Guarantee Period of
the same duration as the previous Guarantee Period will begin automatically
unless we receive Written notice to the contrary from the Participant at least 3
Valuation Dates prior to the end of such Guarantee Period. The Participant may
elect to change to another Guarantee Period or Division which We offer at such
time.
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If the amount of the Participant's Account Value in a Guarantee Period is less
than $500 at the end of such Guarantee Period, We reserve the right to transfer
such amount, without charge, to the Money Market Division of the Separate
Account. However, We will transfer such amount to another available Division at
the Participant's request.
GUARANTEED INTEREST RATES. We will periodically establish an applicable
Guaranteed Interest Rate for each Guarantee Period We offer. These rates will
be guaranteed for the duration of the respective Guarantee Periods. The
Guarantee Periods that We make available at any time will be determined at Our
discretion. No Guaranteed Interest Rate shall be less than an effective annual
rate of 3.0%.
INTEREST RATE LOCK ON 1035 EXCHANGES OR OTHER QUALIFIED ROLLOVERS AND TRANSFERS.
This provision will apply if:
(1) Proceeds are being transferred to us under Internal Revenue Code (IRC
Section 1035 (a 1035 Exchange), or under another rollover of values
qualified for special tax treatment under the IRC; and
(2) All, or a part of the resulting Net Purchase Payments are to be allocated
to the Fixed Account.
If proceeds from such Exchange, Rollover or Transfer are received by the Company
within 60 days following the date of application for a Certificate, interest to
be credited to the Fixed Account during the Guarantee Period will be calculated
at a rate which is the higher of: (1) the current interest rate being used by
the Company on the date of the application for the Guarantee Period selected; or
(2) the current interest rate being used by the Company on the date of receipt
of proceeds. Proceeds received more than 60 days after the date the application
is signed will receive interest at the rate in effect on the date of receipt of
such proceeds.
Interest will be credited to the Fixed Account as of the date of receipt of such
proceeds, and the interest rate used to calculate such interest will remain in
effect for the duration of the Guarantee Period.
SEPARATE ACCOUNT
DIVISIONS. The Separate Account has several Divisions, each investing in a
corresponding Variable Fund. Net Purchase Payments will be allocated to the
Divisions and the Fixed Account as shown on page 3 of the Certificate unless the
Participant changes the allocation. A list of the Divisions of the Separate
Account and the Initial Allocation of Purchase Payments appear on page 3 of each
Certificate. A brief description of each Division will be found on page 3A.
We will use the Net Purchase Payments and any transferred amounts to purchase
Variable Fund shares applicable to the Divisions at their net asset value. We
will be the owner of all Variable Fund shares purchased with the Net Purchase
Payments or transferred amounts.
DIVISION ACCUMULATION UNITS. Net Purchase Payments and transferred amounts
allocated to the Separate Account will be credited to the Participant's account
in the form of Division Accumulation Units. The number of Division Accumulation
Units will be determined by dividing the amount allocated to a Division by the
Division Accumulation Unit value as of the end of the Valuation Period
98506N Page 12
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as of which the transaction is credited. The value of each Division
Accumulation Unit is arbitrarily set as of the date the Division first purchases
Variable Fund shares. Subsequent Accumulation Unit values on any Valuation Date
are equal to the previous Division Accumulation Unit value times the Net
Investment Factor for the Valuation Period ending on that Valuation Date.
NET INVESTMENT FACTOR. The Net Investment Factor is an index applied to measure
the investment performance of a Division from one Valuation Period to the next.
The Net Investment Factor may be greater than, less than or equal to one;
therefore, the value of an Accumulation Unit may increase, decrease or remain
the same.
The Net Investment Factor for a Division is determined by dividing (1) by (2),
and then subtracting (3) from the result, where:
(1) Is the sum of:
(a) The Net Asset Value Per Share of the Variable Fund shares held in the
Division, determined at the end of the current Valuation Period; plus
(b) The per share amount of any dividend or capital gain distributions
made on the Variable Fund shares held in the Division during the
current Valuation Period;
(2) Is the Net Asset Value Per Share of the Variable Fund shares held in the
Division, determined at the beginning of the current Valuation Period; and
(3) Is the daily asset charge factor representing the mortality and expense
risks, and administrative expense charge. We may change the daily asset
charge factor, but in no event may it exceed the Maximum Asset Charge
Factor as specified on Page 3.
SEPARATE ACCOUNT VALUE. Separate Account Value for any Valuation Period is the
total of the values in each Division credited to a Participant's account for
such Valuation Period. The value for each Division will be equal to:
(1) The number of Division Accumulation Units; multiplied by
(2) The Division Accumulation Unit Value for the Valuation Period.
The Separate Account value will vary from Valuation Date to Valuation Date
reflecting the total value in the Divisions.
If a Participant's Account Value in any Division (except the Money Market
Division) falls below $500, we reserve the right to transfer the remaining
balance without charge to the Money Market Division.
TRANSFERS
Transfers may be made at any time during the Accumulation Period after the first
30 days following the Certificate Date of Issue. A transfer will be effective
at the end of the Valuation Period in which We receive a Participant's Written
request for a transfer. Transfers will be subject to the following
restrictions:
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(1) Prior to the Annuity Commencement Date, the Participant may make up 12
transfers each Certificate Year without charge.
(2) There will be a charge of $25.00 for each transfer in excess of 12 in a
Certificate Year.
(3) Transfers under the Automatic Rebalancing or Dollar Cost Averaging programs
will not count towards the 12 free transfers each Certificate Year. The $25
charge will not apply to transfers made through Automatic Rebalancing or
Dollar Cost Averaging. Transfers under any other asset management
arrangement approved by the Company may be subject to the $25 charge and
may count towards the 12 free transfers.
(4) The amount of Account Value that may be transferred each year from a Fixed
Account Guarantee Period to a Separate Account Division is limited. The
limit will be based on the Guarantee Period account balance at the
beginning of the Guarantee Period. Not more than 25% of such account
balance may be transferred to a Separate Account Division during each
Certificate Year. The 25% limit does not apply to:
(a) Funds transferred from a Guarantee Period as a result of Dollar Cost
Averaging; or
(b) Transfers within 15 days before or after the end of the applicable
Guarantee Period; or
(c) A renewal at the end of a Guarantee Period to the same Guarantee
Period.
(5) If a transfer would cause the Account Value in any Division or Guarantee
Period to fall below $500, We reserve the right to also transfer the
remaining balance in that Division or Guarantee Period in the same
proportions as the transfer request.
(6) We reserve the right to defer any transfer from the Fixed Account to the
Variable Divisions for up to 6 months.
We may not unilaterally terminate or discontinue transfer privileges. However,
We reserve the right to suspend such privileges for a reasonable period. Any
such suspension will be administered in a nondiscriminatory manner.
After the Annuity Commencement Date, a Participant may make six transfers during
any Certificate Year. There will be no charge for such transfers. After the
Annuity Commencement Date, a Participant may not make transfers from the Fixed
Account.
AUTOMATIC REBALANCING. "Automatic Rebalancing" occurs when funds are
transferred by the Company between the Separate Account Divisions so that the
values in each Division match the percentage allocation then in effect.
Automatic Rebalancing of the Separate Account Divisions will occur periodically:
(1) If a Participant's Account Value is equal to or greater than $25,000; and
(2) If such Participant has selected Automatic Rebalancing.
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A Participant may select Automatic Rebalancing when applying for a Certificate,
or it may be selected at a later date. We reserve the right to increase or
lower the Minimum Account Value required for Automatic Rebalancing. Automatic
Rebalancing is only available prior to the Annuity Commencement Date.
DOLLAR COST AVERAGING. Dollar Cost Averaging is an automatic transfer of funds
over a stated period prior to the Annuity Commencement Date in accordance with
the Transfers provision and instructions from a Participant. The periods
available for automatic transfers will be determined by the Company. There will
always be at least one period of 12 months or more during which Dollar Cost
Averaging may be made. The minimum automatic transfer which may be made will be
$1,000, or a lesser amount as determined by the Company.
PAYMENT AND DEFERMENT
SURRENDERS. The amount surrendered will normally be paid to a Participant within
5 Valuation Dates following Our receipt of:
(1) The Participant's Written request on a form acceptable to Us; and
(2) The Certificate, if required.
DEATH PROCEEDS. If we do not receive a Written request as to the manner of
payment within 60 days after death proceeds become payable, any death benefit
proceeds will be paid as a lump sum, normally within 7 calendar days after the
end of the Valuation Period that contains the last day of said 60 day period.
FIXED ACCOUNT. We reserve the right to defer payment or transfers of amounts out
of the Fixed Account for up to 6 months from the date We receive the request.
ACCOUNT VALUE BASED ON PURCHASE PAYMENT MADE BY CHECK. We reserve the right to
defer payment of that portion of a Participant's Account Value that is based on
a Purchase Payment made by check for a period not to exceed 15 days.
OTHER. We may defer payment of any portion of the variable account value if:
(1) The New York Stock Exchange is closed (other than customary weekend and
holiday closings) or trading on the New York Stock Exchange is restricted.
(2) An emergency exists, as a result of which disposal of securities is not
practicable, or it is not reasonably practicable to fairly determine the
variable account value.
(3) The Securities and Exchange Commission by order permits delay for the
protection of Participants. Transfer and allocations of Account Value among
the Divisions and the Fixed Account may also be postponed under these
circumstances.
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SURRENDERS
FULL SURRENDER. At any time prior to the Annuity Commencement Date, and during
the lifetime of the Annuitant, a Participant may surrender his or her
Certificate by sending us a Written request. The amount payable on surrender is:
(1) The Participant's Account Value at the end of the Valuation Period in which
We receive the Participant's request on a form acceptable to Us;
(2) Minus any applicable premium tax.
The amount payable upon surrender will not be less than the amount required by
state law.
Upon payment of the surrender amount, the Certificate will terminate and We will
have no further obligation to the Participant.
All collateral assignees must consent to any surrender or partial withdrawal.
We may require that the Certificate be returned to Our Administrative Center
prior to making payment.
PARTIAL WITHDRAWALS. A portion of the Participant's Account Value may be
withdrawn at any time prior to the Annuity Commencement Date. The Participant
must send us a Written request specifying the Divisions or Guarantee Periods
from which the Partial Withdrawal is to be made. However, in cases where the
Participant does not so specify, or the withdrawal cannot be made in accordance
with the Participant's specifications, We reserve the right to implement the
withdrawal prorata from each Division and Guarantee Period based on the Account
Value in each. Partial Withdrawals will be made effective at the end of the
Valuation Period in which We receive the Written request. Partial Withdrawals
will be subject to the following guidelines:
(1) The Partial Withdrawal amount must be at least $ 100 or, if less, the
Participant's entire Account Value;
(2) If a Partial Withdrawal would cause the Participant's Account Value in any
Division or Guarantee Period (except the Money Market Division) to fall
below $500, We reserve the right to transfer the remaining balance without
charge to the Money Market Division.
(3) A request for a Partial Withdrawal may not be honored if it would reduce
the Participant's Account Value to an amount less than $ 10,000.
SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan (the "Plan") allows Partial Withdrawals to be
made at periodic intervals while the Certificate remains in force. The Plan is
available immediately after the Date of Issue of the Certificate with
withdrawals beginning as early as 30 days after the Date of Issue. Additional
Purchase Payments will be accepted by the Company while withdrawals are being
made under the Plan. Withdrawals are automatic. Once Withdrawals have been
started under the Plan, the Company will continue distribution unless the
Participant has provided otherwise. The Participant under a Certificate may
stop withdrawals under the Plan at any time.
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The Plan is subject to the following guidelines:
(1) The Annuity Date of a Certificate must be at least one year later than the
date of the first withdrawal;
(2) Each withdrawal must be $100.00 or more;
(3) The Participant may request distributions to be made on an annual, semi-
annual, quarterly or monthly basis;
(4) After withdrawals are stopped under the Plan, withdrawals may be started
again at a later date subject to the same guidelines that applied to the
initial series of withdrawals.
The Systematic Withdrawal Plan will terminate at the Annuity Date at which time
the Certificate must annuitize.
TAX CHARGE
RIGHT TO IMPOSE. We reserve the right to impose additional charges or establish
reserves for any federal or local taxes incurred or that may be incurred by us,
and that may be deemed attributable to a Certificate.
DEATH PROCEEDS
DEATH PROCEEDS BEFORE THE ANNUITY COMMENCEMENT DATE. If the Annuitant dies
before the Annuity Commencement Date, and is survived by a Contingent Annuitant,
the Certificate will be continued with the Contingent Annuitant being named the
Annuitant. If the Certificate is a Non-Qualified Contract, it may qualify for
continuation under the "Death of the Participant Prior to the Annuity Date -
Non-Qualified Contracts Only" provision Otherwise, death proceeds will be paid
as follows (unless the Participant has specified in writing the death proceeds
are to be paid in a different manner):
(1) If the Annuitant dies, and no Contingent Annuitant survives, death proceeds
will be paid to the Beneficiary designated by the Participant to receive
proceeds.
(2) If a Participant (other than a Joint Participant) dies, and the Certificate
is not being continued under the "Death of the Participant Prior to the
Annuity Date - Non-Qualified Contracts Only" provision, death proceed will
be paid to the Beneficiary designated by the Participant to receive
proceeds.
(3) If a Joint Participant dies, death proceeds will be paid to the surviving
Joint Participant, if living; otherwise death proceeds will be paid to the
person designated as Beneficiary if:
(a) The Certificate is not being continued under the "Death of the
Participant Prior to the Annuity Date - Non-Qualified Contracts Only"
provision; and
(b) Joint Participants have not specified in writing the death proceed are
to be paid in a different manner.
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If the Annuitant or a Participant dies before the deceased's Age 81, the amount
of the death proceeds will be the greater of the following amounts less any
applicable Premium Tax:
(1) The sum of all Net Purchase Payments less any prior Partial Withdrawals; or
(2) The Participant's Account Value as of the end of the Valuation Period in
which We receive proof of the Annuitant's or such Participant's death and a
Written request from the Beneficiary as to the form of payment.
If the Annuitant or Participant dies on or after the deceased's attainment of
Age 81, the amount of the death proceeds will be the Participant's Account Value
as of the end of the Valuation Period in which We receive proof of the
Annuitant's or such Participant's death and a Written request from the
Beneficiary as to the form of payment.
The death proceeds will not be less than the amount payable on a full surrender
at the date used to value the death benefit. The death proceeds will become
payable when We receive:
(1) Proof of the Participant's or Annuitant's Death; and
(2) A Written request from the Beneficiary for either a single sum or payment
under an Annuity Option.
If the Annuitant dies, and a Contingent Annuitant was named but pre deceased the
Annuitant, We will require proof of the Contingent Annuitant's death in addition
to proof of the death of the Annuitant. We will pay a single sum to the
Beneficiary unless an Annuity Option is chosen.
DEATH PROCEEDS AFTER THE ANNUITY COMMENCEMENT DATE. If the Annuitant dies on or
after the Annuity Commencement Date, the Beneficiary will receive the death
proceeds, if any, as provided by the payment contract.
PROOF OF DEATH. We accept any of the following as proof of the Annuitant's or
Participant's death:
(1) A copy of a certified death Certificate;
(2) A copy of a certified decree of a court of competent jurisdiction as to the
finding of death;
(3) A written statement by a medical doctor who attended the deceased a the
time of death; or
(4) Any other proof satisfactory to Us.
PAYMENT OF BENEFITS
APPLICATION OF ACCOUNT VALUE. Unless directed otherwise, We will apply the
Fixed Account Value to provide a Fixed Annuity, and the Separate Account Value
to provide a Variable Annuity. A Participant must tell us in Writing at least
30 days prior to the Annuity Commencement Date if Fixed and Separate Account
values are to be applied in different proportions. Transfers and partial
withdrawals will be permitted within the 30-day period.
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ANNUITY COMMENCEMENT DATE. The Annuity Commencement Date (Annuity Date) is
shown on page 3 of the Certificate. The Participant of a Qualified Contract may
be required to receive distributions after the Annuitant's 70th birthday to
comply with certain federal tax requirements. The Annuity Date may be changed
by Written notice from the Participant, subject to our approval.
OPTIONS AVAILABLE TO A PARTICIPANT. A Participant may elect to have annuity
payments made beginning on the Annuity Commencement Date under any one of the
Annuity Options described in his or her Certificate. We will notify the
Participant 60 to 90 days prior to the scheduled Annuity Date that the
Certificate is scheduled to mature, and request that an Annuity Option be
selected. If the Participant has not selected an Annuity Option ten days prior
to the Annuity Commencement Date, We will proceed as follows:
(1) If the scheduled Annuity Commencement Date is any date prior to the
Annuitant's 90th birthday, We will extend the Annuity Commencement Date to
the Annuitant's 90th birthday.
(2) If the scheduled Annuity Commencement Date is the Annuitant's 90th
birthday, the Account Value less any premium taxes will be paid in one sum
to the Participant.
OPTIONS AVAILABLE TO A BENEFICIARY. A Participant may elect, in lieu of payment
in one sum, that any amount or part thereof due under the Certificate be applied
under any of the options described in the Certificate. Within 60 days after the
death of the Annuitant or Participant, the Beneficiary may make such election if
the Participant has not done so. In such case, the Beneficiary thereafter shall
have all the rights and options of the Participant.
The first annuity payment under any option shall be made on the first day of the
second month after approval of the claim for settlement. Subsequent payments
shall be made periodically in accordance with the manner of payment elected.
PAYMENT CONTRACT. At such time as one of these options becomes effective, the
Certificate shall be surrendered to the Company in exchange for a payment
contract providing for the option elected.
FIXED ANNUITY PAYMENTS. Fixed Annuity Payments start on the Annuity
Commencement Date. The amount of the first monthly payment for the annuity
selected will be at least as favorable as that produced by the applicable
annuity table of the Certificate.
The dollar amount of any payments after the first payment is specified during
the entire period of annuity payments according to the provisions of the Annuity
Option elected.
VARIABLE ANNUITY PAYMENTS
ANNUITY UNITS. We convert the Division Accumulation Units into Division Annuity
Units at the values determined at the end of the Valuation Period which contains
the tenth day prior to the Annuity Commencement Date. The number of Division
Annuity Units is obtained by dividing the first monthly payment by the Division
Annuity Unit Value determined at the end of the Valuation Period. (See following
paragraph). The first monthly payment is determined by applying the dollar
value of the Division Accumulation Units to the applicable Annuity Table. The
number of Division Annuity Units remains constant as long as an annuity remains
in force and allocation among the Divisions has not changed.
98506N Page 19
<PAGE>
Each Division Annuity Unit Value is arbitrarily set when the Division first
converts Division Accumulation Units into Division Annuity Units. Subsequent
values on any Valuation Date are equal to (1) times (2) divided by (3) where:
(1) is the previous Division Annuity Unit Value (2) is the Net Investment Factor
for that Division for the Valuation Period ending on that Valuation Date; and
(3) is the value of $1.00 accumulated with interest at the effective annual rate
of 3 1/2% from the end of the previous Valuation Date to the end of the current
Valuation Date.
Variable Annuity Payments start on the Annuity Commencement Date. Payments will
vary in amount and are determined at the end of the Valuation Period that
contains the tenth day prior to each payment. If the monthly payment under the
annuity option selected is based on a single Division, the monthly payment is
found by multiplying the Division Annuity Unit Value on said date by the number
of Division Annuity Units.
If the monthly payment under the annuity option selected is based upon more than
one Division, the above procedure is repeated for each applicable Division. The
sum of these payments is the Variable Annuity Payment.
ANNUITY OPTIONS
FIRST OPTION - LIFE ANNUITY - An annuity payable monthly during the lifetime of
the Annuitant.
SECOND OPTION - LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS GUARANTEED -
An annuity payable monthly during the lifetime of the Annuitant, including the
guarantee that if, at the death of the Annuitant, payments have been made for
less than 120 months, 180 months or 240 months (as selected), payments shall be
continued during the remainder of the selected period.
THIRD OPTION - JOINT AND LAST SURVIVOR LIFE ANNUITY - An annuity payable monthly
during the joint lifetime of the Annuitant, and a secondary Annuitant and
thereafter during the remaining lifetime of the survivor, ceasing with the last
payment prior to the death of the survivor. This option is available only if
one person is Adjusted Age 70 or less.
FOURTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD - An amount payable monthly for
the number of years selected which may be from 5 to 40 years. If this option is
selected on a variable basis, the number of years may not exceed the life
expectancy of the Annuitant or other properly-designated Payee.
FIFTH OPTION - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - The amount due may be paid
in equal monthly installments of a designated dollar amount until the remaining
balance is less than the amount of one installment. Payments under this option
are available on a fixed basis only. To determine the remaining balance at the
end of any month, such balance at the end of the previous month is decreased by
the amount of any installment paid during the month and the result will be
accumulated at an interest rate not less than 3.5% compounded annually. If the
remaining balance at any time is less than the amount of one installment, such
balance will be paid and will be the final payment under the option.
In lieu of monthly payments, payments may be elected on a quarterly, semi-annual
or annual basis, in which cases the amount of each annuity payment will be
determined on a basis consistent with that described in the Certificate for
monthly payments.
98506N Page 20
<PAGE>
No election of any Annuity Option may be made if the accumulated value is less
than $2,000, or if the initial annuity payment will be less than $20 per month.
If the minimum is not met, the Company will make a lump-sum payment of the
Account Value (less any applicable premium tax) to the Annuitant or other
properly-designated Payee.
MISSTATEMENT OF AGE OR SEX (MISSTATEMENT OF AGE IF ISSUED ON A UNISEX BASIS).
If the: (1) age or sex of the Annuitant (if the Certificate was issued on a Sex
Distinct basis); or (2) age of the Annuitant (if the Certificate was issued on a
Unisex basis) has been misstated to Us, any amount payable will be that which
would have been payable had the misstatement not occurred. We will deduct any
overpayment from the next payment or payments due and add any under payments to
the next payment due. Interest at an effective annual rate of 3 1/2% will be
added to any such adjustment.
ANNUITY TABLES. The tables that follow show the dollar amount of the first
monthly payment for each $1,000 applied under the options. If issued on a Sex
Distinct basis, tables are based on the 1983a Male or Female Tables adjusted by
projection scale G for 9 years, with interest at the rate of 3 1/2% per year.
Under the First or Second Options, the amount of each payment will depend upon
the sex of the Annuitant and the Annuitant's adjusted age at the time the first
payment is due. Under the Third Option, the amount of each payment will depend
upon the sex of both Annuitants and their adjusted ages at the time the first
payment is due. If issued on a Unisex basis, tables are based on the 1983a Male
or Female Tables, adjusted by projection scale G for 9 years, with unisex rates
based on 60% female and 40% male, and interest at the rate of 3 1/2% per year.
Under the First or Second Options, the amount of each payment will depend upon
the Annuitant's adjusted age at the time the first payment is due. Under the
Third Option, the amount of each payment will depend upon both Annuitant's
adjusted ages at the time the first payment is due.
ADJUSTED AGE. In using the table of annuity payment rates, the ages of the
Annuitants must be reduced by one year for Annuity Commencement Dates occurring
during the decade 2000-2009, reduced two years for Annuity Commencement Dates
occurring during the decade 2010-2019, and reduced an additional year for each
decade that follows. The age 70 rate is also used for ages above 70.
ALTERNATE AMOUNT OF INSTALLMENT UNDER FIXED LIFE INCOME OPTIONS. If a fixed
life income option is elected, the Participant (or, if the Participant has not
elected a payment option, the Beneficiary) may elect life income payment equal
to those provided by those fixed single premium immediate annuity option rates
offered to the same class of annuitants by the Company when annuity payments
begin.
98506N Page 21
<PAGE>
ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH $1,000 OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
Adjusted Age Monthly Payments Guaranteed
of Male Option l* Option 2 Option 2 Option
None 120 180 240
50 4.37 4.33 4.28 4.21
51 4.44 4.40 4.34 4.26
52 4.52 4.47 4.40 4.32
53 4.59 4.54 4.47 4.37
54 4.68 4.62 4.54 4.43
55 4.77 4.70 4.61 4.49
56 4.86 4.78 4.69 4.55
57 4.96 4.87 4.76 4.61
58 5.06 4.97 4.84 4.67
59 5.18 5.07 4.93 4.73
60 5.30 5.17 5.01 4.79
61 5.42 5.28 5.10 4.86
62 5.56 5.40 5.20 4.92
63 5.71 5.52 5.29 4.98
64 5.87 5.65 5.38 5.04
65 6.04 5.79 5.48 5.10
66 6.22 5.92 5.58 5.15
67 6.41 6.07 5.68 5.21
68 6.62 6.22 5.77 5.26
69 6.84 6.37 5.87 5.30
70 7.07 6.53 5.96 5.35
71 N/A 6.70 6.07 5.40
72 N/A 6.87 6.16 5.44
73 N/A 7.04 6.24 5.47
74 N/A 7.21 6.32 5.50
75 N/A 7.38 6.40 5.52
76 N/A 7.55 6.47 5.55
77 N/A 7.72 6.54 5.57
78 N/A 7.89 6.60 5.58
79 N/A 8.05 6.66 5.60
80 N/A 8.21 6.71 5.61
81 N/A 8.36 6.75 5.62
82 N/A 8.50 6.79 5.62
83 N/A 8.64 6.82 5.63
84 N/A 8.76 6.85 5.63
85 N/A 8.88 6.88 5.64
PAGE 22
98506N
<PAGE>
Adjusted Age Monthly Payments Guaranteed
of Female Option l* Option 2 Option 2 Option 2
None 120 180 240
50 4.05 4.03 4.01 3.97
51 4.10 4.09 4.06 4.02
52 4.17 4.14 4.12 4.07
53 4.23 4.21 4.17 4.12
54 4.30 4.27 4.23 4.18
55 4.37 4.34 4.30 4.23
56 4.44 4.41 4.36 4.29
57 4.52 4.48 4.43 4.35
58 4.61 4.56 4.50 4.41
59 4.70 4.65 4.58 4.48
60 4.79 4.74 4.66 4.54
61 4.89 4.83 4.74 4.61
62 5.00 4.93 4.83 4.67
63 5.12 5.03 4.92 4.74
64 5.24 5.14 5.01 4.81
65 5.38 5.26 5.11 4.88
66 5.52 5.38 5.20 4.95
67 5.67 5.51 5.31 5.01
68 5.83 5.65 5.41 5.08
69 6.01 5.79 5.52 5.14
70 6.20 5.94 5.62 5.20
71 N/A 6.11 5.74 5.27
72 N/A 6.27 5.85 5.32
73 N/A 6.45 5.96 5.37
74 N/A 6.63 6.06 5.41
75 N/A 6.81 6.16 5.45
76 N/A 7.00 6.26 5.49
77 N/A 7.20 6.35 5.52
78 N/A 7.39 6.44 5.54
79 N/A 7.59 6.52 5.56
80 N/A 7.78 6.59 5.58
81 N/A 7.97 6.65 5.60
82 N/A 8.15 6.70 5.61
83 N/A 8.32 6.75 5.62
84 N/A 8.49 6.79 5.62
85 N/A 8.64 6.83 5.63
* Not available above Adjusted Age 70.
98506N Page 23
<PAGE>
Option 3 - Joint and Last Survivor Life Annuity (Available only if one person is
Adjusted Age 70 or less)
Adjusted Age Adjusted Age of Secondary Annuitant
of Annuitant Female
Male F50 F55 F60 F65 F70
50 3.76 3.89 4.01 4.11 4.19
55 3.84 4.01 4.18 4.33 4.46
60 3.90 4.11 4.33 4.56 4.77
65 3.95 4.19 4.47 4.78 5.09
70 3.99 4.25 4.58 4.96 5.39
Adjusted Age
of Annuitant Adjusted Age of Secondary Annuitant
Male
Female M50 M55 M60 M65 M70
50 3.76 3.84 3.90 3.95 3.99
55 3.89 4.01 4.11 4.19 4.25
60 4.01 4.18 4.33 4.47 4.58
65 4.11 4.33 4.56 4.78 4.96
70 4.19 4.46 4.77 5.09 5.39
Option 4 - Payments for a Designated Period
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
5 $18.12 23 $5.24
6 15.35 24 5.09
7 13.38 25 4.96
8 11.90 26 4.84
9 10.75 27 4.73
10 9.83 28 4.63
11 9.09 29 4.53
12 8.46 30 4.45
13 7.94 31 4.37
14 7.49 32 4.29
15 7.10 33 4.22
16 6.76 34 4.15
17 6.47 35 4.09
18 6.20 36 4.03
19 5.97 37 3.98
20 5.75 38 3.92
21 5.56 39 3.88
22 5.39 40 3.83
98506N Page 24
<PAGE>
ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH 1,000 OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
Adjusted Unisex Monthly Payments Guaranteed
Age
Option 1* Option 2 Option 2 Option 2
None 120 180 240
50 4.18 4.15 4.12 4.07
51 4.24 4.21 4.18 4.12
52 4.31 4.28 4.24 4.17
53 4.38 4.34 4.30 4.23
54 4.45 4.41 4.36 4.28
55 4.53 4.48 4.43 4.34
56 4.61 4.56 4.50 4.40
57 4.70 4.64 4.57 4.46
58 4.79 4.73 4.65 4.52
59 4.89 4.82 4.72 4.59
60 5.00 4.91 4.81 4.65
61 5.11 5.02 4.89 4.71
62 5.23 5.12 4.98 4.78
63 5.36 5.23 5.07 4.85
64 5.49 5.35 5.17 4.91
65 5.64 5.48 5.26 4.98
66 5.80 5.61 5.36 5.04
67 5.96 5.74 5.46 5.10
68 6.14 5.88 5.57 5.16
69 6.34 6.03 5.67 5.21
70 6.54 6.19 5.77 5.27
71 N/A 6.36 5.88 5.33
72 N/A 6.52 5.98 5.37
73 N/A 6.69 6.08 5.41
74 N/A 6.87 6.18 5.45
75 N/A 7.05 6.27 5.49
76 N/A 7.23 6.35 5.51
77 N/A 7.42 6.44 5.54
78 N/A 7.60 6.51 5.56
79 N/A 7.78 6.58 5.58
80 N/A 7.96 6.64 5.59
81 N/A 8.13 6.69 5.61
82 N/A 8.30 6.74 5.62
83 N/A 8.46 6.78 5.62
84 N/A 8.60 6.82 5.63
85 N/A 8.74 6.85 5.63
98506UN Page 25
<PAGE>
Option 3 - Joint and Last Survivor Life Annuity (Available only if one person
is Adjusted Age 70 or less)
Adjusted Age Adjusted Age of Secondary Annuitant
of Annuitant
Unisex 50 55 60 65 70
50 3.75 3.85 3.94 4.01 4.07
55 3.85 4.00 4.13 4.24 4.33
60 3.94 4.13 4.32 4.49 4.65
65 4.01 4.24 4.49 4.75 5.00
70 4.07 4.33 4.65 5.00 5.36
*Not available above Adjusted Unisex Age 70.
Option 4 - Payments for a Designated Period
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
5 $18.12 23 $5.24
6 15.35 24 5.09
7 13.38 25 4.96
8 11.90 26 4.84
9 10.75 27 4.73
10 9.83 28 4.63
11 9.09 29 4.53
12 8.46 30 4.45
13 7.94 31 4.37
14 7.49 32 4.29
15 7.10 33 4.22
16 6.76 34 4.15
17 6.47 35 4.09
18 6.20 36 4.03
19 5.97 37 3.98
20 5.75 38 3.92
21 5.56 39 3.88
22 5.39 40 3.83
98506UN Page 26
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
This is a FLEXIBLE PAYMENT VARIABLE and FIXED GROUP DEFERRED ANNUITY CONTRACT
NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS.
ALL PAYMENTS AND VALUES PROVIDED BY EACH CERTIFICATE, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE, AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THE CERTIFICATE.
For Information, Service or to make a Complaint
Contact our Registered Representative or The United States Life Annuity Service
Center
THE UNITED STATES LIFE INSURANCE COMPANY
ANNUITY SERVICE CENTER
2727-A ALLEN PARKWAY
P. 0. BOX 1401
HOUSTON, TEXAS 77251-1401
1-800-246-1924
98506N
<PAGE>
EXHIBIT 4(b)
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
CERTIFICATE
Unless You have directed otherwise, We will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. Payment will be made in
accordance with the revisions set forth in this Certificate and the Master
Policy.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CERTIFICATE, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE, MAY INCREASE OR
DECREASE, AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CERTIFICATE.
CANCELLATION RIGHT. YOU MAY RETURN THIS CERTIFICATE FOR CANCELLATION TO US OR
TO THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CERTIFICATE WITHIN THE 10 DAY PERIOD, WE WILL
REFUND THE SUM OF (1) ANY PURCHASE PAYMENTS ALLOCATED TO A FIXED ACCOUNT; PLUS
(2) YOUR SEPARATE ACCOUNT VALUE AT THE END OF THE VALUATION PERIOD IN WHICH YOUR
REQUEST IS RECEIVED; PLUS (3) ANY ADDITIONAL AMOUNT DEDUCTED FOR PREMIUM TAXES.
This is a FLEXIBLE PAYMENT VARIABLE AND FIXED GROUP DEFERRED ANNUITY
CERTIFICATE. NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS.
TO ENSURE THAT THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS DO NOT DECREASE,
YOUR VALUES IN THE SEPARATE ACCOUNT MUST EARN A MINIMUM ANNUAL AGGREGATE
INVESTMENT RETURN OF 4.16% FOR THE VARIABLE ANNUITY OPTIONS BASED ON AN ANNUAL
RATE OF 3.5% AND COMBINED ANNUAL SEPARATE ACCOUNT CHARGES OF .66%.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
READ YOUR CERTIFICATE CAREFULLY
Home Office: New York, New York
125 Maiden Lane New York, NY 10038-4992 1-800-246-1924
98505N
<PAGE>
INDEX
<TABLE>
<S> <C>
Account Value 4
Allocation of Net Purchase Payments 8
Annuity Options 19
Annuity Tables 20
Annuity Units 18
Automatic Rebalancing 14
Beneficiary 9
Change of Investment Advisor or Investment Policy 7
Contingent Annuitant 4
Death Proceeds 16
Definitions 4
Division Accumulation Units 12
Divisions 12
Fixed Account 10
General Provisions 6
Guaranteed Interest Rates 11
Guarantee Periods 11
Investment Objectives of the Portfolios 3A
Misstatement of Age or Sex (Misstatement of Age if Issued on a Unisex Basis) 20
Net Investment Factor 12
Ownership Provisions 8
Participant 5
Payment and Deferment 14
Payment of Benefits 18
Premium Taxes 8
Purchase Payments 8
Schedule Page 3
Separate Account 12
Surrenders 15
Full Surrender 15
Partial Withdrawals 16
Systematic Withdrawal Plan 16
Tax Charge 16
Transfer 13
Variable Annuity Payments 18
98505N Page 2
</TABLE>
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY
SCHEDULE PAGE
INITIAL PURCHASE PAYMENT: $50,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS: $5,000
ADDITIONAL BENEFITS: NONE
MAXIMUM ASSET CHARGE FACTORS (Separate Account Only) ANNUAL RATE: 0.66%
TRANSFER CHARGE (After First 12 in a Certificate Year): $ 25
ISSUE AGE: 35
ANNUITY COMMENCEMENT DATE: JANUARY 1, 2028
INITIAL ALLOCATION:
DIVISIONS OF THE SEPARATE ACCOUNT:
Equity Income VIP
Low Duration VIP
LEVCO Equity Value
Navellier Growth
OFFITBANK VIF-Emerging Markets
OFFITBANK VIF-High Yield
OFFITBANK VIF-Total Return
OFFITBANK VIF-U.S. Govt Secur
Royce Premier
Royce Total Return
Wright lnt'l. Blue Chip
Wright Selected Blue Chip
Money Market
Fixed Account - 1 Year Guarantee Period
Total Allocation
ANNUITANT: JOHN DOE CERTIFICATE NUMBER: 123456
PARTICIPANT: JOHN DOE DATE OF ISSUE: JANUARY 1, 1998
JURISDICTION STATE: (STATE NAME) THIS IS A (SEX DISTINCT) CERTIFICATE
MASTER CONTRACT OWNER: UNITED STATES LIFE GROUP VARIABLE ANNUITY
TRUST II
98505N Page 3
<PAGE>
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
A brief description of each Portfolio's investment objective follows. However,
no investment allocation should be made without referring to the appropriate
prospectus which describes each portfolio in detail.
THE EQUITY INCOME VIP PORTFOLIO seeks to provide current income and long-term
growth income accompanied by growth of capital by investing in domestic equity
securities.
THE LOW DURATION VIP PORTFOLIO seeks to maximize total return consistent with
preservation of capital by investing in a diversified portfolio of fixed-income
securities of varying maturities with a portfolio duration of one to three
years.
THE LEVCO EQUITY VALUE FUND seeks long-term growth of capital through an
emphasis on the preservation of capital and an attempt to control volatility as
measured against the Standard Poor's Composite 500 Stock Index. It invests
primarily in common stocks and other securities having equity characteristics.
THE NAVELLIER GROWTH PORTFOLIO seeks long-term growth of capital primarily
through investment in companies with appreciation potential, including equity
securities traded in all U.S. market and dollar denominated foreign securities
traded in U.S. markets.
THE OFFITBANK VIF - EMERGING MARKETS FUND seeks to provide investors with a
competitive total investment return by focusing on current yield and
opportunities for capital appreciation primarily by investing in corporate and
sovereign debt securities of emerging market countries.
THE OFFITBANK VIF - HIGH YIELD FUND seeks high current income with capital
appreciation as a secondary objective. It invests at least 65% of its total
assets in U.S. Corporate fixed-income securities rated below investment grade
offering potential returns that are sufficiently high to justify the greater
investment risks.
THE OFFITBANK VIF - TOTAL RETURN FUND seeks total return from a combination of
capital appreciation and current income by investing primarily in a portfolio of
fixed-income securities of varying maturities.
THE OFFITBANK VIF - U.S. GOVERNMENT SECURITIES FUND seeks current income
consistent with preservation of capital by investing at least 80% of its total
assets of U.S. Government obligations.
THE ROYCE PREMIER PORTFOLIO seeks primarily long-term growth and secondarily
current income by investing in a limited portfolio of common stocks and
convertible securities of small-cap companies believed to have superior
financial characteristics and/or unusually attractive business prospects.
THE ROYCE TOTAL RETURN PORTFOLIO seeks long-term growth of capital and current
income by investing primarily in a broadly diversified portfolio of dividend-
paying common stocks of small-cap companies selected on a risk averse value
basis.
THE WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO seeks long-term capital
appreciation by investing primarily in equity securities of well-established,
non-U.S. companies.
98505N Page 3A
<PAGE>
THE WRIGHT SELECTED BLUE CHIP PORTFOLIO seeks long-term capital appreciation
and, as a secondary objective, reasonable current income by investing primarily
in equity securities of well-established U.S. companies.
THE MONEY MARKET FUND seeks protection of capital and high current income by
investing in money-market investments. Investments in the Money Market Fund are
neither insured nor guaranteed by the U.S. Government.
98505N Page 3A (cont.)
<PAGE>
DEFINITIONS
WE, OUR, US, OR COMPANY. The United States Life Insurance Company In the City of
New York.
YOU, YOUR, PARTICIPANT. The Owner of this Certificate.
ACCOUNT. Any of the Divisions of the Separate Account or the Fixed Account.
ACCOUNT VALUE. The sum of the Fixed Account Value and the Separate Account
Value after deduction of any fees.
ACCUMULATION PERIOD. The period during which Net Purchase Payments are
allocated to either the fixed Account or the Separate Account and held under
this Certificate.
ACCUMULATION UNIT. An accounting unit of measure used to calculate the value of
a Division of a Certificate before annuity payments begin.
ADMINISTRATIVE CENTER. The United States Life Insurance Company (USL) Annuity
Service Center, to which all Purchase Payments, requests, directions and other
communications should be directed. The USL Annuity Service Center is located at
2727-A Allen Parkway, Houston Texas. (Mailing address P. O. Box 1401, Houston,
Texas 77251-1401.)
AGE. Age of an Annuitant as of his or her last birthday, unless otherwise
stated.
ANNUITANT. The person upon whose date of birth and sex income payments are
based. (Upon whose date of birth income payments are based if issued on a Unisex
basis). The Annuitant's name will be found on page 3 of this Certificate.
ANNUITY COMMENCEMENT DATE. The date annuity payments are scheduled to commence.
ANNUITY UNIT. A unit of measure used to calculate variable annuity payments.
BENEFICIARY. The person entitled to receive benefits in the event the
Participant or Annuitant dies. If no named Beneficiary or Contingent
Beneficiary is living at the time any payment is to be made, the Participant
shall be the Beneficiary, or if the Participant is not living, the Participant's
estate shall be the Beneficiary.
CERTIFICATE ANNIVERSARY. Each anniversary of the Date of Issue of this
Certificate.
CERTIFICATE YEAR. A period of 12 consecutive months beginning on the Date of
Issue of this Certificate or an anniversary thereof before the Annuity
Commencement Date.
CONTINGENT ANNUITANT. A person named by the Participant of a Non-Qualified
Contract to become the Annuitant if: (1) the Annuitant dies before the Annuity
Commencement Date; and (2 the Contingent Annuitant is then living. A Contingent
Annuitant may not be named except at the time of application. Once named, the
choice may not be revoked or replaced. If a Contingent Annuitant dies, a new
Contingent Annuitant may not be named. After Annuity Payments start, a
Contingent Annuitant may not become the Annuitant.
98505 Page 4
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CONTINGENT BENEFICIARY. A person named by the Participant to receive benefits
in the event a designated Beneficiary is not living at the time of the
Participant's or Annuitant's death.
CONTRACT OWNER. The organization named on page 3 as Owner of the Master
Contract.
DATE OF ISSUE. The date on which this Certificate becomes effective as shown on
Page 3.
DIVISION. A subdivision of the Separate Account.
FIXED ACCOUNT. An Account which provides interest at a guaranteed fixed rate
for a guaranteed period.
FIXED ANNUITY OPTION. An Annuity Option with payments which do not vary with
investment performance.
GUARANTEED INTEREST RATE. The minimum rate we may use to credit interest on an
effective annual basis during any Guarantee Period.
GUARANTEE PERIOD. The period for which a Guaranteed Interest Rate is credited.
HOME OFFICE. Our office at 125 Maiden Lane, New York, N.Y. 10038-4992;
1-800-246-1924.
ISSUE AGE. Age of the Annuitant on the Annuitant's last birthday before the
Date of Issue. (If the Date of Issue occurs on the Annuitant's birthday, "last
birthday" will mean the birthday occurring on the Date of Issue).
NET ASSET VALUE PER SHARE. The value of the net assets of a Variable Fund
divided by the number of shares in the Variable Fund.
NET PURCHASE PAYMENT. The gross amount of a Purchase Payment less any Premium
Taxes deducted at the time a Purchase Payment is made.
NON-QUALIFIED CONTRACT. A Certificate that does not qualify for special federal
income tax treatment.
PARTICIPANT. (Certificate Owner) The person named in this Certificate who is
entitled to exercise all rights and privileges of ownership under this
Certificate.
PARTICIPANT'S ACCOUNT. An account established for each Participant to which
Purchase Payment are credited.
PAYEE. A person who is to receive annuity payments, surrender proceeds or death
proceed this Certificate.
PAYOUT PERIOD. The period, starting with the Annuity Commencement Date, during
which Annuity Payments are made by the Company.
PREMIUM TAX. The amount of tax, if any, charged by a state or municipality on
Purchase Payments or Certificate Values.
PURCHASE PAYMENT. An amount paid to the Company as consideration for the
benefits described herein.
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QUALIFIED CONTRACT. A Certificate that qualifies for special federal income tax
treatment applicable in connection with certain retirement plans.
SEPARATE ACCOUNT. A segregated investment account entitled "Separate Account
USL VA-R" established by the Company to separate the assets funding variable
benefits from the other assets of the Company. That portion of the assets of the
Separate Account equal to the reserves and other liabilities with respect to the
Separate Account shall not be chargeable with liabilities arising out of any
other business We may conduct. Income, gains and losses, whether or not
realized from assets allocable to the Separate Account, are credited to or
charged against such account without regard to our other income gains or losses.
UNIT VALUE. The value of: (1) an Accumulation Unit as described in the
"Division Accumulation Units" provision; or (2) an Annuity Unit as described in
the "Annuity Units" provision.
VALUATION DATE. Any day on which we are open for business except, with respect
to any Division, a day on which the related Variable Fund does not value its
shares.
VALUATION PERIOD. The period that starts at the close of regular trading on the
New York Stock Exchange on a Valuation Date and ends at the close of regular
trading on the Exchange on the next Valuation Date.
VARIABLE ANNUITY OPTION. An Annuity Option under which we promise to pay the
Annuitant or other properly-designated Payee one or more payments which vary in
amount based on the investment experience of the applicable Divisions selected
to measure the value of a Certificate.
VARIABLE FUND. An individual investment fund or series in which a Division
invests.
WRITTEN, IN WRITING. A written request or notice in acceptable form and
content, which is signed and dated and received at our Administrative Center.
GENERAL PROVISIONS
ENTIRE CONTRACT. This Certificate will be attached to and made a part of the
Contract. The Contract, including this Certificate, endorsements if any, and a
copy of the application, if attached, constitute the entire Contract between the
Contract Owner and us. All statements made by the Contract Owner, Participant
or Annuitant will be deemed representations and not warranties. No statement
will be used to reduce a claim under this Certificate unless it is in writing
and made a part of this Certificate. Nothing in the group annuity Contract
invalidates or impairs any right granted to the Certificate holder by Chapter
28, Article 32, Section 3219 of New York Insurance Laws, or this Certificate.
NOT CONTESTABLE. This Certificate is not contestable.
DISCONTINUANCE OF ACCEPTANCE OF NEW PARTICIPANTS. By giving 30 days prior
written notice, we may limit or discontinue the acceptance of new Participants'
applications and the issuance of new Certificates under the Master Contract.
Such limitation or discontinuance shall have no effect on rights or benefits
with respect to any Certificate issued prior the effective date of such
limitation or discontinuance.
GUARANTEES. Regardless of Our actual mortality experience or the actual expenses
incurred by Us, the Asset Charge Factor will not be increased above the maximum
shown on page 3. Otherwise, Our actual mortality experience and actual expenses
incurred will not affect the dollar amount of variable benefits paid.
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SETTLEMENT. All benefits under this Certificate are payable from our
Administrative Center in Houston, Texas.
NONPARTICIPATING. This Certificate is nonparticipating and does not share in
our surplus or earnings.
CHANGE OF INVESTMENT ADVISOR OR INVESTMENT POLICY. Unless otherwise required by
law or regulation, the investment advisor or any investment policy may not be
changed without our consent. If required, approval of or change of any
investment policy will be filed with the Insurance Department of the state where
the Contract and this Certificate are delivered. You will be notified of any
material investment policy change which has been approved. Notification of an
investment policy change will be given in advance to those Master Contract
Owners who have the right to comment on or vote on such change.
Any substitution of the underlying investments of any Division will comply with
all applicable requirements of the Investment Company Act of 1940 and rules
thereunder.
RIGHTS RESERVED BY US. Upon notice to you, this Certificate may be modified by
us, but only if such modification is necessary to:
(1) Operate the Separate Account in any form permitted under the investment
Company Act of 1940 or in any other form permitted by law;
(2) Transfer any assets in any Division to another Division, or to one or more
other separate accounts, or to the Fixed Account;
(3) Add, combine or remove Divisions in the Separate Account, or combine the
Separate Account with another separate account;
(4) Add, restrict or remove Guarantee Periods of the Fixed Account;
(5) Make any new Division available to You on a basis to be determined by Us;
(6) Substitute for the shares held in any Division, the shares of another
Variable Fund or the shares of another investment company or any other
investment permitted by law;
(7) Make any changes as required by the Internal Revenue Code or by an other
applicable law, regulation or interpretation in order to continue treatment
of this Certificate as an annuity; or
(8) Make any changes required to comply with rules of any Variable Fund.
When required by law, we will obtain Your approval of changes and we will gain
approval from any appropriate regulatory authority.
CHANGING THE TERMS OF THE CONTRACT OR THIS CERTIFICATE. Any change in the Master
Contract or this Certificate must be approved by one of Our officers. No agent
has the authority to make any changes or waive any of the terms of this
Certificate.
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TERMINATION. Each Certificate will remain in force until surrendered for its
full value, or all annuity payments have been made, or the death proceeds have
been paid, except as follows: If a Participant's Account Value falls below
$10,000 due to Partial Withdrawals, we may cancel the Certificate upon 60 days'
notice to the Participant. Such cancellation would be considered a full
surrender of the Certificate.
The Master Contract will terminate when all funds from all Certificates are
withdrawn.
PURCHASE PAYMENT
MINIMUM AND MAXIMUM PAYMENTS. The minimum amount acceptable as a Purchase
Payment (after the initial Purchase Payment) is shown on page 3. We reserve the
right to modify the minimum Purchase Payment, but such minimum will never be
greater than $5,000. The maximum amount We will accept during the life of a
Certificate without approval of an officer of the Company is $1,000,000.
ALLOCATION OF NET PURCHASE PAYMENTS. The initial allocation of Net Purchase
Payments is shown on Page 3, and will remain in effect until changed. The
percentage allocation for future Net Purchase Payments may be changed at any
time by written notice provided by the Participant.
Changes in the allocation will be effective on the date We receive the
Participant's notice. The allocation may be 100% to any available Division or
Guarantee Period, or may be divided among the options in whole percentage points
totaling 100%.
An initial Purchase Payment will be credited to the Participant's Account not
more than two Valuation Periods after we receive it, together with all other
required documentation, in good order at the office designated by the Com an for
processing of initial Purchase Payments. Subsequent Purchase Payments will be
credited as of the end of the Valuation Period in which they are received. We
reserve the right to limit the total number of Fixed Account Guarantee Periods
and Separate Account Divisions that may be chosen while Certificate remains in
force.
PREMIUM TAXES. When applicable, we will deduct an amount to cover premium taxes.
Such deduction will be made from Purchase Payment(s) when received, or:
(1) From Your Account Value at the time annuity payments are to commence; or
(2) From the amount of any partial withdrawal; and
(3) From proceeds payable upon termination of this Certificate for any other
reason, including surrender of this Certificate.
If premium tax is paid, the Company may reimburse itself for such tax when
deduction is being made under paragraphs 1, 2 or 3 above calculated by
multiplying the sum of Purchase Payments withdrawn by the applicable premium tax
percentage.
OWNERSHIP PROVISIONS
The Master Contract is owned by the Organization named on page 3 of this
Certificate.
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The Participant will have the right to exercise all rights and privileges in
connection with this Certificate. If this Certificate is jointly owned by more
than one Participant, all Participants must join in any request to exercise the
rights or privileges of a Participant.
In any case, such rights and privileges may be exercised without the consent of
the Beneficiary (other than an irrevocably designated Beneficiary) or any other
person. Such rights and privileges may be exercised only during the lifetime of
the Annuitant and prior to the Annuity Commencement Date, except as otherwise
provided in this Certificate.
A Payee entitled to benefits upon the death of the Participant or the Annuitant
may thereafter exercise such rights and privileges, if any, of ownership which
continue.
BENEFICIARY. The Participant named the Beneficiary and any Contingent
Beneficiary when applying for this Certificate. By Written notice to Us, a
non-irrevocable Beneficiary or Contingent Beneficiary may be changed by the
Participant prior to the Annuity Commencement Date. The Annuitant or other
properly-designated Payee may change the Beneficiary after the Annuity
Commencement Date by giving Written notice to Us.
CHANGE OF OWNERSHIP. Ownership of a Qualified Contract may not be transferred
except to: (1) the Annuitant; (2) a trustee or successor trustee of a pension or
profit sharing trust which is qualified under Section 401 of the Internal
Revenue Code; (3) the employer of the Annuitant, provided that the Qualified
Contract after transfer is maintained under the terms of a retirement plan
qualified under Section 403(a) of the Internal Revenue Code for the benefit of
the Annuitant; (4) the trustee of an individual retirement account plan
qualified under Section 408 of the Internal Revenue Code; or (5) as otherwise
permitted from time to time by laws and regulations governing the retirement or
deferred compensation plans for which a Qualified Contract may be issued. In no
other case may a Qualified Contract be sold, assigned, transferred, discounted
or pledged as collateral.
The Owner of a Non-Qualified Contract may change the ownership of such Contract.
During the lifetime of the Annuitant and prior to the Annuity Commencement Date,
the Participant may change the ownership interest in the Non-Qualified Contract
as evidenced by this Certificate.
A change of ownership will not be binding upon us until we receive Written
notification at Our Administrative Center. When such notification is so
received, the change will be effective as of the date of the signed request for
change, but the change will be without prejudice to Us on account of any payment
made, or any action taken by Us prior to receiving the change, or on account of
an tax consequence.
DEATH OF THE PARTICIPANT PRIOR TO THE ANNUITY DATE NON-QUALIFIED CONTRACTS ONLY.
As used in this Certificate, the term "Non-Qualified Contract" means a
Certificate that does not qualify for the special federal income tax treatment
applicable in connection with retirement plans.
If a Participant (including the first to die in the case of Joint Participants)
under a Non-Qualified Contract dies prior to the Annuitant and before the
Annuity Commencement Date, the death proceeds must be distributed either (1)
with in five years after the date of death of the Participant, or (2) over the
life of or a period not greater than the life or expected life of the Payee,
with annuity payments beginning within one year after the date of death of the
Participant.
98505N Page 9
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The Beneficiary of a Participant (other than a Joint Participant) will be the
person or persons designated as Beneficiary in the application for this
Certificate, or as later changed prior to the death of such Participant. If a
Joint Participant dies, death proceeds will be paid to the surviving Joint
Participant if living; otherwise death proceeds will be paid to the person
designated as Beneficiary.
These mandatory distribution requirements will not apply upon the death of a
Participant if the spouse of a deceased Participant elects to continue this
Certificate in the spouse's own name, as Participant. The spouse may make such
election if: (1) the spouse is the designated Beneficiary of a deceased
Participant (other than a Joint Participant); or (2) the spouse is the sole
surviving Joint Participant.
The Beneficiary (including a Joint Participant receiving death proceeds) will be
considered the designated beneficiary for the purposes of Section 72(s) of the
Internal Revenue Code. In all cases, any such designated beneficiary will not
be entitled to exercise any rights prohibited by applicable federal income tax
law.
If the Payee under a Non-Qualified Contract dies after the Annuity Commencement
Date and before all of the payments under the Annuity Option have been
distributed, the remaining amount payable must be distributed at least as
rapidly as under the method of distribution then in effect.
If the Participant prior to the Annuity Commencement Date, or the Payee
thereafter, is not a natural person, then the foregoing distribution
requirements shall apply upon the death of the primary Annuitant within the
meaning of the Internal Revenue Code.
PERIODIC REPORTS. During the Accumulation Period We will send to each
Participant, at least once during each Certificate Year, a statement showing the
following amounts as of a date not more than two months prior to the date of
mailing:
(1) The number of Accumulation Units credited to the Participant's Account;
(2) The dollar value of each Accumulation Unit;
(3) The total value of the Participant's Account;
(4) The Cash Surrender Value of the Participant's Account; and
(5) The Death Benefit.
We will also send such statements as may be required by applicable states and
federal laws, rules and regulations.
PARTICIPANT'S ACCOUNT. We will establish a Participant's Account for the
Participant under a Certificate, and will maintain such account during the
Accumulation Period. The Participant's Account Value for any Valuation Period
will be equal to the Participant's Separate Account Value, if any, plus the
Participant's Fixed Account Value, if any, for that Valuation Period.
FIXED ACCOUNT
FIXED ACCOUNT VALUE. We will credit to the Guarantee Period(s) selected that
portion of each Net Purchase Payment allocated to the Fixed Account. The value
in any one Guarantee Period on a Valuation Date is:
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(1) The accumulated value of the Net Purchase Payments, renewals of transfers
allocated to the Guarantee Period at the Guaranteed Interest Rate; less
(2) The Accumulated Value of surrenders and transfers out of that Guarantee
Period at the Guaranteed Interest Rate.
GUARANTEE PERIODS. A one year Guarantee Period will always be available, and
additional Guarantee Periods may be added from time to time. If more than one
Guarantee Period is available, you may select more than one. The Guarantee
Period selected will determine the Guaranteed Interest Rate(s).
The Net Purchase Payment or the portion thereof (or amount transferred in
accordance with the transfer privilege provision described below) allocated to a
particular Guarantee Period will earn interest at the Guaranteed Interest Rate
during the Guarantee Period. Guarantee Periods begin on the date as of which we
credit your Account Value to that Guarantee Period or, in the case of a
transfer, on the effective date of the transfer. The Guarantee Period is the
number of years We credit the Guaranteed Interest Rate. The expiration date of
any Guarantee Period is the last day of the Guarantee Period. Subsequent
Guarantee Periods begin on the first day following the expiration date. As a
result of Guarantee Period renewals, additional Purchase Payments and transfers
of portions of the Participant's Account Value, Guarantee Periods of the same
duration may have different expiration dates and Guaranteed Interest Rates.
We will notify You in writing at least 15, and not more than 45 days prior to
the expiration date of any Guarantee Period. A new Guarantee Period of the same
duration as the previous Guarantee Period will begin automatically unless we
receive Written notice to the contrary from You at least 3 Valuation Dates prior
to the end of such Guarantee Period. You may elect to change to another
Guarantee Period or Division which We offer at such time.
If the amount of Your Account Value in a Guarantee Period is less than $50 at
the end of such Guarantee Period, We reserve the right to transfer such amount,
without charge, to the Money Market Division of the Separate Account. However,
We will transfer such amount to another available Division at Your request.
GUARANTEED INTEREST RATES. We will periodically establish an applicable
Guaranteed Interest Rate for each Guarantee Period We offer. These rates will
be guaranteed for the duration of the respective Guarantee Periods. The
Guarantee Periods that We make available at any time will be determined at Our
discretion. No Guaranteed Interest Rate shall be less than an effective annual
rate of 3.0%.
INTEREST RATE LOCK ON 1035 EXCHANGES OR OTHER QUALIFIED ROLLOVERS AND TRANSFERS.
This provision will apply if:
(1) Proceeds are being transferred to us under Internal Revenue Code (IRC)
Section 1035 (a 1035 Exchange), or under another rollover of values
qualified for special tax treatment under the IRC; and
(2) All, or a part of the resulting Net Purchase Payments are to be allocated
to the Fixed Account.
If proceeds from such Exchange, Rollover or Transfer are received by the Company
within 60 days following the date of application for this Certificate interest
to be credited to the Fixed Account during the Guarantee Period will be
calculated at a rate which is the higher of: (1) the current interest rate being
used by the Company on the date of the application for the Guarantee Period
selected; or (2) the current interest
98505N Page 11
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rate being used by the Company on the date of receipt of proceeds. Proceeds
received more than 60 days after the date the application is signed will receive
Interest at the rate in effect on the date of receipt of such proceeds.
Interest will be credited to the Fixed Account as of the date of receipt of such
proceeds, and the interest rate used to calculate such interest will remain in
effect for the duration of the Guarantee Period.
SEPARATE ACCOUNT
DIVISIONS. The Separate Account has several Divisions, each investing in a
corresponding Variable Fund. Net Purchase Payments will be allocated to the
Divisions and the Fixed Account as shown on page 3 unless You change the
allocation. A list of the Divisions of the Separate Account and the Initial
Allocation of Purchase Payments appear on page 3. A brief description of each
Division will be found on page 3A.
We will use the Net Purchase Payments and any transferred amounts to purchase
Variable Fund shares applicable to the Divisions at their net asset value. We
will be the owner of all Variable Fund shares purchased with the Net Purchase
Payments or transferred amounts.
DIVISION ACCUMULATION UNITS. Net Purchase Payments and transferred amounts
allocated to the Separate Accumulation Units Account will be credited to Your
account in the form of Division Accumulation Units. The number of Division
Accumulation Units will be determined by dividing the amount allocated to a
Division by the Division Accumulation Unit value as of the end of the Valuation
Period as of which the transaction is credited. The value of each Division
Accumulation Unit is arbitrarily set as of the date the Division first purchases
Variable Fund shares. Subsequent Accumulation Unit values on any Valuation Date
are equal to the previous Division Accumulation Unit value times the Net
Investment Factor for the Valuation Period ending on that Valuation Date.
NET INVESTMENT FACTOR. The Net Investment Factor is an index applied to measure
the investment performance of a Division from one Valuation Period to the next.
The Net Investment Factor may be greater than, less than or equal to one;
therefore the value of an Accumulation Unit may increase, decrease or remain the
same.
The Net Investment Factor for a Division is determined by dividing (1) by (2)
and then subtracting (3) from the result, where:
(1) Is the sum of:
(a) The Net Asset Value Per Share of the Variable Fund shares held in the
Division, determined at the end of the current Valuation Period; plus
(b) The per share amount of any dividend or capital gain distribution made
on the Variable Fund shares held in the Division during the Valuation
Period;
(2) Is the Net Asset Value Per Share of the Variable Fund shares held in the
Division, determined at the beginning of the current Valuation Period;
(3) Is the daily asset charge factor representing the mortality and expense
risks, and administrative expense charge. We may change the daily asset
charge factor, but in no event may it exceed the Maximum Asset Charge
Factor as specified on Page 3.
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SEPARATE ACCOUNT VALUE. Separate Account Value for any Valuation Period is the
total of the values in each Division credited to Your account for such Valuation
Period. The value for each Division will be equal to:
(1) The number of Division Accumulation Units; multiplied by
(2) The Division Accumulation Unit Value for the Valuation Period.
The Separate Account value will vary from Valuation Date to Valuation Date
reflecting the total value in the Divisions.
If the Participant's Account Value in any Division (except the Money Market
Division) falls below $500, we reserve the right to transfer the remaining
balance without charge to the Money Market Division.
TRANSFERS
Transfers may be made at any time during the Accumulation Period after the first
30 days following the Date of Issue. A transfer will be effective at the end of
the Valuation Period in which We receive Your Written request for transfer.
Transfers will be subject to the following restrictions:
(1) Prior to the Annuity Commencement Date, You may make up to 12 transfers
each Certificate Year without charge.
(2) There will be a charge of $25.00 for each transfer in excess of 12 in
Certificate Year.
(3) Transfers under the Automatic Rebalancing or Dollar Cost Averaging programs
will not count towards the 12 free transfers each Certificate Year. The $25
charge will not apply to transfers made through Automatic Rebalancing or
Dollar Cost Averaging. Transfers under any other asset management
arrangement approved by the Company may be subject to the $25 charge and
may count towards the 12 free transfers.
(4) The amount of Account Value that may be transferred each year from a Fixed
Account Guarantee Period to a Separate Account Division is limited. The
limit will be based on the Guarantee Period account balance at the
beginning of the Guarantee Period. Not more than 25% of such account
balance may be transferred to a Separate Account Division during each
Certificate year. The 25% limit does not apply to:
(a) Funds transferred from a Guarantee Period as a result of Dollar Cost
Averaging; or
(b) Transfers within 15 days before or after the end of the applicable
Guarantee Period; or
(c) A renewal at the end of a Guarantee Period to the same Guarantee
Period.
(5) If a transfer would cause the Account Value in any Division or Guarantee
Period to fall below $500, We reserve the right to also transfer the
remaining balance in that Division or Guarantee Period in the same
proportions as the transfer request.
(6) We reserve the right to defer any transfer from the Fixed Account to the
Variable Divisions for up to 6 months.
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We may not unilaterally terminate or discontinue transfer privileges. However,
We reserve the right to suspend such privileges for a reasonable period. Any
such suspension will be administered in a nondiscriminatory manner.
After the Annuity Commencement Date, You may make six transfers during any
Certificate year. There will be no charge for such transfers. After the
Annuity Commencement Date, You may not make transfers from the Fixed Account.
AUTOMATIC REBALANCING. "Automatic Rebalancing" occurs when funds are
transferred by the Company between the Separate Account Divisions so that the
values in each Division match the percentage allocation then in effect.
Automatic Rebalancing of the Separate Account Divisions will occur periodically:
(1) If Your Account Value is equal to or greater than $25,000; and
(2) If You have selected Automatic Rebalancing.
You may select Automatic Rebalancing when applying for this Certificate, or it
may be selected at a later date. We reserve the right to increase or lower the
Minimum Account Value required for Automatic Rebalancing. Automatic Rebalancing
is only available prior to the Annuity Commencement Date.
DOLLAR COST AVERAGING. Dollar Cost Averaging is an automatic transfer of funds
over a stated period prior to the Annuity Commencement Date in accordance with
the Transfers provision and instructions from the Participant. The periods
available for automatic transfers will be determined by the Company. There will
always be at least one period of 12 months or more during which Dollar Cost
Averaging may be made. The minimum automatic transfer which may be made will be
$1,000, or a lesser amount as determined by the Company.
PAYMENT AND DEFERMENT
SURRENDERS. The amount surrendered will normally be paid to You within 5
Valuation Date following Our receipt of:
(1) Your Written request on a form acceptable to Us; and
(2) This Certificate, if required.
DEATH PROCEEDS. If we do not receive a Written request as to the manner of
payment within 60 days after death proceeds become payable, any death benefit
proceeds will be paid as a lump sum, normally within 7 calendar days after the
end of the Valuation Period that contains the last day of said 60 day period.
FIXED ACCOUNT. We reserve the right to defer payment or transfers of amounts
out of the Fixed Account for up to 6 months from the date We receive the
request.
ACCOUNT VALUE BASED ON PURCHASE PAYMENTS MADE BY CHECK. We reserve the right to
defer payment of that portion of Your Account Value that is based on a Purchase
Payment made by check for a period not to exceed 15 days.
OTHER. We may defer payment of any portion of the variable account value if:
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(1) The New York Stock Exchange is closed (other than customary weekend and
holiday closings) or trading on the New York Stock Exchange is restricted.
(2) An emergency exists, as a result of which disposal of securities is not
practicable, or it is not reasonably practicable to fairly determine the
variable account value.
(3) The Securities and Exchange Commission by order permits delay for the
protection of Participants. Transfer and allocations of Account Value among
the Divisions and the Fixed Account may also be postponed under these
circumstances.
SURRENDERS
FULL SURRENDER. At any time prior to the Annuity Commencement Date, and during
the lifetime of the Annuitant, You may surrender this Certificate by sending us
a Written request. The amount payable on surrender is:
(1) Your Account Value at the end of the Valuation Period in which We receive
Your request on a form acceptable to Us;
(2) Minus any applicable premium tax.
The amount payable upon surrender will not be less than the amount required by
state law.
Upon payment of the surrender amount, this Certificate will terminate and We
will have no further obligation to the Participant.
All collateral assignees must consent to any surrender or partial withdrawal.
We may require that this Certificate be returned to Our Administrative Center
prior to making payment.
PARTIAL WITHDRAWALS. A portion of Your Account Value may be withdrawn at any
time prior to the Annuity Commencement Date. You must send us a Written request
specifying the Divisions or Guarantee Periods from which the Partial Withdrawal
is to be made. However, in cases where You do not so specify, or the withdrawal
cannot be made in accordance with Your specifications, We reserve the right to
implement the withdrawal prorata from each Division and Guarantee Period based
on the Account Value in each. Partial Withdrawals will be made effective at the
end of the Valuation Period in which We receive the Written request. Partial
Withdrawals will be subject to the following guidelines:
(1) The Partial Withdrawal amount must be at least $ 100 or, if less, You
entire Account Value;
(2) If a Partial Withdrawal would cause Your Account Value in any Division or
Guarantee Period (except the Money Market Division) to fall below $500, We
reserve the right to transfer the remaining balance without charge to the
Money Market Division.
(3) A request for a Partial Withdrawal may not be honored if it would reduce
your Account Value to an amount less than $10,000.
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SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan (the "Plan") allows Partial Withdrawals to be
made at periodic intervals while this Certificate remains in force. The Plan is
available immediately after the Date of Issue of this Certificate with
withdrawals beginning as early as 30 days after the Date of Issue. Additional
Purchase Payments will be accepted by the Company while withdrawals are being
made under the Plan. Withdrawals are automatic. Once Withdrawals have been
started under the Plan, the Company will continue distributions unless the
Participant has provided otherwise. The Participant under this Certificate may
stop withdrawals under the Plan at any time.
The Plan is subject to the following guidelines:
(1) The Annuity Date of this Certificate must be at least one year later than
the date of the first withdrawal;
(2) Each withdrawal must be $100.00 or more;
(3) The Participant may request distributions to be made on an annual,
semi-annual, quarterly or monthly basis;
(4) After withdrawals are stopped under the Plan, withdrawals may be started
again at a later date subject to the same guidelines that applied to the
initial series of withdrawals.
The Systematic Withdrawal Plan will terminate at the Annuity Date at which time
this Certificate must annuitize.
TAX CHARGE
RIGHT TO IMPOSE. We reserve the right to impose additional charges or establish
reserves for any federal or local taxes incurred or that may be incurred by us,
and that may be deemed attributable to this Certificate.
DEATH PROCEEDS
DEATH PROCEEDS BEFORE THE ANNUITY COMMENCEMENT DATE. If the Annuitant dies
before the Annuity Commencement Date, and is survived by a Contingent Annuitant,
this Certificate will be continued with the Contingent Annuitant being named the
Annuitant. If this Certificate is a Non-Qualified Contract, this Certificate
may qualify for continuation under the "Death of the Participant Prior to the
Annuity Date - Non-Qualified Contract Only" provision. Otherwise, death proceeds
will be paid as follows (unless the Participant has specified in writing the
death proceeds are to be paid in a different manner):
(1) If the Annuitant dies, and no Contingent Annuitant survives, death proceeds
will be paid to the Beneficiary designated by the Participant to receive
proceeds.
(2) If a Participant (other than a Joint Participant) dies, and this
Certificate is not being continued under the "Death of the Participant
Prior to the Annuity Date - Non-Qualified Contracts Only" provision, death
proceeds will be paid to the Beneficiary designated by the Participant to
receive proceeds.
(3) If a Joint Participant dies, death proceeds will be paid to the surviving
Joint Participant, if living; otherwise death proceeds will be paid to the
person designated as Beneficiary if:
98505N Page 16
<PAGE>
(a) This Certificate is not being continued under the "Death of the
Participant Prior to the Annuity Date - Non-Qualified Contracts Only"
provision; and
(b) Joint Participants have not specified in writing the death proceeds
are to be paid in a different manner.
If the Annuitant or a Participant dies before the deceased's Age 81, the amount
of the death proceeds will be the greater of the following amounts less any
applicable Premium Tax:
(1) The sum of all Net Purchase Payments less any prior Partial Withdrawals; or
(2) The Participant's Account Value as of the end of the Valuation Period in
which We receive proof of the Annuitant's or such Participant's death and a
Written request from the Beneficiary as to the form of payment.
If the Annuitant or Participant dies on or after the deceased's attainment of
Age 81, the amount of the death proceeds will be the Participant's Account Value
as of the end of the Valuation Period in which We receive proof of the
Annuitant's or such Participant's death and a Written request from the
Beneficiary as to the form of payment.
The death proceeds will not be less than the amount payable on a full surrender
at the date used to value the death benefit. The death proceeds will become
payable when We receive:
(1) Proof of the Participant's or Annuitant's Death; and
(2) A Written request from the Beneficiary for either a single sum or payment
under an Annuity Option.
If the Annuitant dies, and a Contingent Annuitant was named but predeceased the
Annuitant, We will require proof of the Contingent Annuitant's death in addition
to proof of the death of the Annuitant. We will pay a single sum to the
Beneficiary unless an Annuity Option is chosen.
DEATH PROCEEDS AFTER THE ANNUITY COMMENCEMENT DATE. If the Annuitant dies on or
after the Annuity Commencement Date, the Beneficiary will receive the death
proceeds, if any, as provided by the payment contract.
PROOF OF DEATH. We accept any of the following as proof of the Annuitant's or
Participant's death:
(1) A copy of a certified death certificate:
(2) A copy of a certified decree of a court of competent jurisdiction as to the
finding of death;
(3) A written statement by a medical doctor who attended the deceased at the
time of death; or
(4) Any other proof satisfactory to Us.
98505N Page 17
<PAGE>
PAYMENT OF BENEFITS
APPLICATION OF ACCOUNT VALUE. Unless directed otherwise, We will apply the
Fixed Account Value to provide a Fixed Annuity, and the Separate Account Value
to provide a Variable Annuity. The Participant must tell us in Writing at least
30 days prior to the Annuity Commencement Date if Fixed and Separate Account
values are to be applied in different proportions. Transfers and partial
withdrawals will be permitted within the 30-day period.
ANNUITY COMMENCEMENT DATE. The Annuity Commencement Date (Annuity Date) is
shown on page 3. The Participant of a Qualified Contract may be required to
receive distributions after the Annuitant's 70th birthday to comply with certain
federal tax requirements. The Annuity Date may be changed by Written notice
from the Participant, subject to our approval.
OPTIONS AVAILABLE TO A PARTICIPANT. The Participant may elect to have annuity
payments made beginning on the Annuity Commencement Date under any one of the
Annuity Option described in this Certificate. We will notify the Participant 60
to 90 days prior to the scheduled Annuity Date that this Certificate is
scheduled to mature, and request that an Annuity Option be selected. If the
Participant has not selected an Annuity Option ten days prior to the Annuity
Commencement Date, We will proceed as follows:
(1) If the scheduled Annuity Commencement Date is any date prior to the
Annuitant's 90th birthday, We will extend the Annuity Commencement Date to
the Annuitant's 90th birthday.
(2) If the scheduled Annuity Commencement Date is the Annuitant's 90th
birthday, the Account Value less any premium taxes will be paid in one sum
to the Participant.
OPTIONS AVAILABLE TO A BENEFICIARY. The Participant may elect, in lieu of
payment in one sum, that any amount or part thereof due under this Certificate
be applied under any of the option described in this Certificate. Within 60
days after the death of the Annuitant or Participant, the Beneficiary may make
such election if the Participant has no done so. In such case, the Beneficiary
thereafter shall have all the rights and options of the Participant.
The first annuity payment under any option shall be made on the first day of the
second month after approval of the claim for settlement. Subsequent payments
shall be made periodically in accordance with the manner of payment elected.
PAYMENT CONTRACT. At such time as one of these options becomes effective, this
Certificate shall be surrendered to the Company in exchange for a payment
contract providing for the option elected.
FIXED ANNUITY PAYMENTS. Fixed Annuity Payments start on the Annuity
Commencement Date. The amount of the first monthly payment for the annuity
selected will be at least as favorable as that produced by the applicable
annuity table of the Certificate.
The dollar amount of any payments after the first payment is specified during
the entire period of annuity payments according to the provisions of the Annuity
Option elected.
VARIABLE ANNUITY PAYMENTS
ANNUITY UNITS. We convert the Division Accumulation Units into Division Annuity
Units at the values determined at the end of the Valuation Period which contains
the tenth day prior to the Annuity
98505N Page 18
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Commencement Date. The number of Division Annuity Units is obtained by dividing
the first monthly payment by the Division Annuity Unit Value determined at the
end of the Valuation Period. (See following paragraph). The first monthly
payment is determined by applying the dollar value of the Division Accumulation
Units to the applicable Annuity Table. The number of Division Annuity Units
remains constant as long as an annuity remains in force and allocation among the
Divisions has not changed.
Each Division Annuity Unit Value is arbitrarily set when the Division first
converts Division Accumulation Units into Division Annuity Units. Subsequent
values on any Valuation Date are equal to (1) times (2) divided by (3) where:
(1) is the previous Division Annuity Unit Value (2) is the Net Investment Factor
for that Division for the Valuation Period ending on that Valuation Date; and
(3) is the value of $1.00 accumulated with interest at the effective annual rate
of 3 1/2% from the end of the previous Valuation Date to the end of the current
Valuation Date.
Variable Annuity Payments start on the Annuity Commencement Date. Payments will
vary in amount and are determined at the end of the Valuation Period that
contains the tenth day prior to each payment. If the monthly payment under the
annuity option selected is based on a single Division, the monthly payment is
found by multiplying the Division Annuity Unit Value on said date by the number
of Division Annuity Units.
If the monthly payment under the annuity option selected is based upon more than
one Division, the above procedure is repeated for each applicable Division. The
sum of these payments is the Variable Annuity Payment.
ANNUITY OPTIONS
FIRST OPTION - LIFE ANNUITY - An annuity payable monthly during the lifetime of
the Annuitant.
SECOND OPTION - LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS GUARANTEED -
An annuity payable monthly during the lifetime of the Annuitant, including the
guarantee that if, at the death of the Annuitant, payments have been made for
less than 120 months, 180 months or 240 months (as selected), payments shall be
continued during the remainder of the selected period.
THIRD OPTION - JOINT AND LAST SURVIVOR LIFE ANNUITY - An annuity payable monthly
during the joint lifetime of the Annuitant, and a secondary Annuitant, and
thereafter during the remaining lifetime of the survivor, ceasing with the last
payment prior to the death of the survivor. This option is available only if
one person is Adjusted Age 70 or less.
FOURTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD - An amount payable monthly for
the number of years selected which may be from 5 to 40 years. If this option is
selected on a variable basis, the number of years may not exceed the life
expectancy of the Annuitant or other properly-designated Payee.
FIFTH OPTION - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - The amount due may be paid
in equal monthly installments of a designated dollar amount until the remaining
balance is less than the amount of one installment. Payments under this option
are available on a fixed basis only. To determine the remaining balance at the
end of any month, such balance at the end of the previous month is decreased by
the amount of any installment paid during the month and the result will be
accumulated at an interest rate not less than 3.5% compounded annually. If the
remaining balance at any time is less than the amount of one installment, such
balance will be paid and will be the final payment under the option.
98505N Page 19
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In lieu of monthly payments, payments may be elected on a quarterly, semi-annual
or annual basis, in which cases the amount of each annuity payment will be
determined on a basis consistent with that described in this Certificate for
monthly payments.
No election of any Annuity Option may be made if the accumulated value is less
than $2,000, or if the initial annuity payment will be less than $20 per month.
If the minimum is not met, the Company will make a lump-sum payment of the
Account Value (less any applicable premium tax) to the Annuitant or other
properly-designated Payee.
MISSTATEMENT OF AGE OR SEX (MISSTATEMENT OF AGE IF ISSUED ON A UNISEX BASIS).
If the: (1) age or sex of the Annuitant (if this Certificate was issued on a Sex
Distinct basis); or (2) age of the Annuitant (if this Certificate was issued on
a Unisex basis) has been misstated to Us, any amount payable will be that which
would have been payable had the misstatement not occurred. We will deduct any
overpayment from the next payment or payments due and add any under payments to
the next payment due. Interest at an effective annual rate of 3 1/2% will be
added to any such adjustment.
ANNUITY TABLES. The tables that follow show the dollar amount of the first
monthly payment for each $1,000 applied under the options. If issued on a Sex
Distinct basis, tables are based on the 1983a Male or Female Tables adjusted by
projection scale G for 9 years, with interest at the rate of 3 1/2% per year.
Under the First or Second Options, the amount of each payment will depend upon
the sex of the Annuitant and the Annuitant's adjusted age at the time the first
payment is due. Under the Third Option, the amount of each payment will depend
upon the sex of both Annuitants and their adjusted ages at the time the first
payment is due. If issued on a Unisex basis, tables are based on the 1983a Male
or Female Tables, adjusted by projection scale G for 9 years, with unisex rates
based on 60% female and 40% male, and interest at the rate of 3 1/2% per year.
Under the First or Second Options, the amount of each payment will depend upon
the Annuitant's adjusted age at the time the first payment is due. Under the
Third Option, the amount of each payment will depend upon both Annuitant's
adjusted ages at the time the first payment is due.
ADJUSTED AGE. In using the table of annuity payment rates, the ages of the
Annuitants must be reduced by one year for Annuity Commencement Dates occurring
during the decade 2000-2009, reduced two years for Annuity Commencement Dates
occurring during the decade 2010-2019, and reduced an additional year for each
decade that follows. The age 70 rate is also used for ages above 70.
ALTERNATE AMOUNT OF INSTALLMENTS UNDER FIXED LIFE INCOME OPTIONS. If a fixed
life income option is elected, the Participant (or, if the Participant has not
elected a payment option, the Beneficiary) may elect life income payment equal
to those provided by those fixed single premium immediate annuity option rates
offered to the same class of annuitants by the Company when annuity payments
begin.
98505N Page 20
<PAGE>
ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH $1,000 OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
Adjusted Age Monthly Payments Guaranteed
of Male Option l* Option 2 Option 2 Option
None 120 180 240
50 4.37 4.33 4.28 4.21
51 4.44 4.40 4.34 4.26
52 4.52 4.47 4.40 4.32
53 4.59 4.54 4.47 4.37
54 4.68 4.62 4.54 4.43
55 4.77 4.70 4.61 4.49
56 4.86 4.78 4.69 4.55
57 4.96 4.87 4.76 4.61
58 5.06 4.97 4.84 4.67
59 5.18 5.07 4.93 4.73
60 5.30 5.17 5.01 4.79
61 5.42 5.28 5.10 4.86
62 5.56 5.40 5.20 4.92
63 5.71 5.52 5.29 4.98
64 5.87 5.65 5.38 5.04
65 6.04 5.79 5.48 5.10
66 6.22 5.92 5.58 5.15
67 6.41 6.07 5.68 5.21
68 6.62 6.22 5.77 5.26
69 6.84 6.37 5.87 5.30
70 7.07 6.53 5.96 5.35
71 N/A 6.70 6.07 5.40
72 N/A 6.87 6.16 5.44
73 N/A 7.04 6.24 5.47
74 N/A 7.21 6.32 5.50
75 N/A 7.38 6.40 5.52
76 N/A 7.55 6.47 5.55
77 N/A 7.72 6.54 5.57
78 N/A 7.89 6.60 5.58
79 N/A 8.05 6.66 5.60
80 N/A 8.21 6.71 5.61
81 N/A 8.36 6.75 5.62
82 N/A 8.50 6.79 5.62
83 N/A 8.64 6.82 5.63
84 N/A 8.76 6.85 5.63
85 N/A 8.88 6.88 5.64
PAGE 21
98505N
<PAGE>
Adjusted Age Monthly Payments Guaranteed
of Female
Option l* Option 2 Option 2 Option 2
None 120 180 240
50 4.05 4.03 4.01 3.97
51 4.10 4.09 4.06 4.02
52 4.17 4.14 4.12 4.07
53 4.23 4.21 4.17 4.12
54 4.30 4.27 4.23 4.18
55 4.37 4.34 4.30 4.23
56 4.44 4.41 4.36 4.29
57 4.52 4.48 4.43 4.35
58 4.61 4.56 4.50 4.41
59 4.70 4.65 4.58 4.48
60 4.79 4.74 4.66 4.54
61 4.89 4.83 4.74 4.61
62 5.00 4.93 4.83 4.67
63 5.12 5.03 4.92 4.74
64 5.24 5.14 5.01 4.81
65 5.38 5.26 5.11 4.88
66 5.52 5.38 5.20 4.95
67 5.67 5.51 5.31 5.01
68 5.83 5.65 5.41 5.08
69 6.01 5.79 5.52 5.14
70 6.20 5.94 5.62 5.20
71 N/A 6.11 5.74 5.27
72 N/A 6.27 5.85 5.32
73 N/A 6.45 5.96 5.37
74 N/A 6.63 6.06 5.41
75 N/A 6.81 6.16 5.45
76 N/A 7.00 6.26 5.49
77 N/A 7.20 6.35 5.52
78 N/A 7.39 6.44 5.54
79 N/A 7.59 6.52 5.56
80 N/A 7.78 6.59 5.58
81 N/A 7.97 6.65 5.60
82 N/A 8.15 6.70 5.61
83 N/A 8.32 6.75 5.62
84 N/A 8.49 6.79 5.62
85 N/A 8.64 6.83 5.63
*Not available above Adjusted Age 70.
98505N Page 22
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Option 3 - Joint and Last Survivor Life Annuity (Available only if one person is
Adjusted Age 70 or less)
Adjusted Age Adjusted Age of Secondary Annuitant
of Annuitant Female
Male F50 F55 F60 F65 F70
50 3.76 3.89 4.01 4.11 4.19
55 3.84 4.01 4.18 4.33 4.46
60 3.90 4.11 4.33 4.56 4.77
65 3.95 4.19 4.47 4.78 5.09
70 3.99 4.25 4.58 4.96 5.39
Adjusted Age
of Annuitant Adjusted Age of Secondary Annuitant
Male
Female M50 M55 M60 M65 M70
50 3.76 3.84 3.90 3.95 3.99
55 3.89 4.01 4.11 4.19 4.25
60 4.01 4.18 4.33 4.47 4.58
65 4.11 4.33 4.56 4.78 4.96
70 4.19 4.46 4.77 5.09 5.39
Option 4 - Payments for a Designated Period
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
5 $18.12 23 $5.24
6 15.35 24 5.09
7 13.38 25 4.96
8 11.90 26 4.84
9 10.75 27 4.73
10 9.83 28 4.63
11 9.09 29 4.53
12 8.46 30 4.45
13 7.94 31 4.37
14 7.49 32 4.29
15 7.10 33 4.22
16 6.76 34 4.15
17 6.47 35 4.09
18 6.20 36 4.03
19 5.97 37 3.98
20 5.75 38 3.92
21 5.56 39 3.88
22 5.39 40 3.83
98505N Page 23
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ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH 1,000 OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
Adjusted Unisex Monthly Payments Guaranteed
Age
Option 1* Option 2 Option 2 Option 2
None 120 180 240
50 4.18 4.15 4.12 4.07
51 4.24 4.21 4.18 4.12
52 4.31 4.28 4.24 4.17
53 4.38 4.34 4.30 4.23
54 4.45 4.41 4.36 4.28
55 4.53 4.48 4.43 4.34
56 4.61 4.56 4.50 4.40
57 4.70 4.64 4.57 4.46
58 4.79 4.73 4.65 4.52
59 4.89 4.82 4.72 4.59
60 5.00 4.91 4.81 4.65
61 5.11 5.02 4.89 4.71
62 5.23 5.12 4.98 4.78
63 5.36 5.23 5.07 4.85
64 5.49 5.35 5.17 4.91
65 5.64 5.48 5.26 4.98
66 5.80 5.61 5.36 5.04
67 5.96 5.74 5.46 5.10
68 6.14 5.88 5.57 5.16
69 6.34 6.03 5.67 5.21
70 6.54 6.19 5.77 5.27
71 N/A 6.36 5.88 5.33
72 N/A 6.52 5.98 5.37
73 N/A 6.69 6.08 5.41
74 N/A 6.87 6.18 5.45
75 N/A 7.05 6.27 5.49
76 N/A 7.23 6.35 5.51
77 N/A 7.42 6.44 5.54
78 N/A 7.60 6.51 5.56
79 N/A 7.78 6.58 5.58
80 N/A 7.96 6.64 5.59
81 N/A 8.13 6.69 5.61
82 N/A 8.30 6.74 5.62
83 N/A 8.46 6.78 5.62
84 N/A 8.60 6.82 5.63
85 N/A 8.74 6.85 5.63
98505UN Page 24
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0ption 3 - Joint and Last Survivor Life Annuity (Available only if one person
is Adjusted Age 70 or less)
Adjusted Age Adjusted Age of Secondary Annuitant
of Annuitant
Unisex 50 55 60 65 70
50 3.75 3.85 3.94 4.01 4.07
55 3.85 4.00 4.13 4.24 4.33
60 3.94 4.13 4.32 4.49 4.65
65 4.01 4.24 4.49 4.75 5.00
70 4.07 4.33 4.65 5.00 5.36
*Not available above Adjusted Unisex Age 70.
Option 4 - Payments for a Designated Period
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
5 $18.12 23 $5.24
6 15.35 24 5.09
7 13.38 25 4.96
8 11.90 26 4.84
9 10.75 27 4.73
10 9.83 28 4.63
11 9.09 29 4.53
12 8.46 30 4.45
13 7.94 31 4.37
14 7.49 32 4.29
15 7.10 33 4.22
16 6.76 34 4.15
17 6.47 35 4.09
18 6.20 36 4.03
19 5.97 37 3.98
20 5.75 38 3.92
21 5.56 39 3.88
22 5.39 40 3.83
98505UN Page 25
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THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
This is a FLEXIBLE PAYMENT VARIABLE and FIXED GROUP DEFERRED ANNUITY CERTIFICATE
NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Certificate, when based on the
investment experience of a Separate Account are variable, may increase or
decrease, and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Certificate.
For Information, Service or to make a Complaint
Contact our Registered Representative or The United States Life Annuity Service
Center
THE UNITED STATES LIFE INSURANCE COMPANY
ANNUITY SERVICE CENTER
2727-A ALLEN PARKWAY
P. O. BOX 1401
HOUSTON, TEXAS 77251-1401
1-800-264-1924
98505N
<PAGE>
EXHIBIT 5(a)
<TABLE>
<CAPTION>
THE UNITED STATES LIFE INSURANCE COMPANY
[LOGO APPEARS HERE] In the City of New York SELECT RESERVE(TM)
125 Maiden Lane New York, New York 10038 ================
VARIABLE ANNUITY
-VARIABLE ANNUITY CERTIFICATE APPLICATION-
INSTRUCTIONS: PLEASE TYPE OR PRINT IN PERMANENT BLACK INK.
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. ANNUITANT 2. CONTINGENT ANNUITANT (optional)
Name:________________________________________ Name:________________________________________
Address:_____________________________________ Address:_____________________________________
Phone:_____________ DOB:________ (max age 85) Phone:____________ DOB:_________ (max age 85)
Sex: [_] M [_] F SS#:_____________________ Sex: [_] M [_] F SS#:______________________
- ----------------------------------------------------------------------------------------------------------------------------
3. PARTICIPANT (Complete only if different than Annuitant.) 4. JOINT PARTICIPANT (optional)
Name:________________________________________ Name:________________________________________
Address:_____________________________________ Address:_____________________________________
Phone:_____________ DOB:________ (max age 85) Phone:____________ DOB:_________ (max age 85)
Sex: [_] M [_] F Tax I.D. or SS#:____________________ Sex: [_] M [_] F Tax I.D. or SS#:__________________
- ----------------------------------------------------------------------------------------------------------------------------
5. BENEFICIARY DESIGNATION (if more space is needed, please use Section 11 on page 2.)
PRIMARY (if more than one, indicate percentages) SECONDARY (if more than one, indicate percentages)
NAME/RELATIONSHIP: NAME/RELATIONSHIP
- ----------------------------------------------------------------------------------------------------------------------------
6. PAYMENT INFORMATION (Please make checks payable to United States Life.)
Initial Purchase Payment $____________ If [_]1035X OR [_] Transfer then estimated amount $____________
[_] Non-Qualified [_] Qualified: (Check appropriate boxes in A and B)
A. [_] Rollover [_] Transfer
B. Type of Plan: [_] IRA [_] SEP-IRA [_] 401(k) [_] Other
If any portion of the initial purchase payment is allocated to a Fixed Account, refer to the prospectus and to your
annuity certificate regarding eligibility for an interest rate lock on 1035 Exchanges or other rollovers and transfers
that qualify for special tax treatment under the Internal Revenue Code.
- ----------------------------------------------------------------------------------------------------------------------------
7. INVESTMENT OPTIONS (Total allocations must equal 100%; use whole percentages)
AMERICAN GENERAL SERIES PORTFOLIO COMPANY OFFITBANK VIF-Total Return (7) ______%
Money Market (13) ______% OFFITBANK VIF-U.S. Government Securities (8) ______%
HOTCHKIS AND WILEY VARIABLE TRUST ROYCE CAPITAL FUND
Equity Income VIP (1) ______% Royce Premier (9) ______%
Low Duration VIP (3) ______% Royce Total Return (10) ______%
LEVCO SERIES TRUST WRIGHT MANAGED BLUE CHIP SERIES TRUST
LEVCO Equity Value (2) ______% Wright International Blue Chip (11) ______%
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. Wright Selected Blue Chip (12) ______%
Navellier Growth (4) ______% OTHER ______%
OFFITBANK VARIABLE INSURANCE FUND, INC. ------------------------------------------- ------%
OFFITBANK VIF-Emerging Markets ( 5) ______% FIXED ACCOUNT
OFFITBANK VIF-High Yield ( 6) ______% 1-Year Guarantee Period (20) ______%
- ----------------------------------------------------------------------------------------------------------------------------
8. DOLLAR COST AVERAGING
Dollar cost average: $____________________ (per transfer) taken from the: [_] Money Market OR [_] 1-Year Guarantee Period.
Frequency: [_] Monthly [_] Quarterly [_] Semiannually [_] Annually
Duration: [_] 12 months [_] 24 months [_] 36 months to be allocated to the Variable Division(s) as indicated below.
AMERICAN GENERAL SERIES PORTFOLIO COMPANY OFFITBANK VIF-Total Return (7) $______
Money Market (13) $______ OFFITBANK VIF-U.S. Government Securities (8) $______
HOTCHKIS AND WILEY VARIABLE TRUST ROYCE CAPITAL FUND
Equity Income VIP (1) $______ Royce Premier (9) $______
Low Duration VIP (3) $______ Royce Total Return (10) $______
LEVCO SERIES TRUST WRIGHT MANAGED BLUE CHIP SERIES TRUST
LEVCO Equity Value (2) $______ Wright International Blue Chip (11) $______
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. Wright Selected Blue Chip (12) $______
Navellier Growth (4) $______ OTHER
OFFITBANK VARIABLE INSURANCE FUND, INC. --------------------------------------------- $______
OFFITBANK VIF-Emerging Markets (5) $______ _____________________________________________ $______
OFFITBANK VIF-High Yield (6) $______
- ----------------------------------------------------------------------------------------------------------------------------
USL 8986-33
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
9. AUTOMATIC REBALANCING ($25,000 minimum) Total allocation must equal 100%. Use whole percentages only.
[_] Check here for Automatic Rebalancing of investment, based on certificate anniversary, to the VARIABLE ALLOCATIONS ONLY
indicated below or then in effect.
FREQUENCY: [_] Quarterly [_] Semiannually [_] Annually
AMERICAN GENERAL SERIES PORTFOLIO COMPANY OFFITBANK VIF-Total Return (7) ______%
Money Market (13) ______% OFFITBANK VIF-U.S. Government Securities (8) ______%
HOTCHKIS AND WILEY VARIABLE TRUST ROYCE CAPITAL FUND
Equity Income VIP (1) ______% Royce Premier (9) ______%
Low Duration VIP (3) ______% Royce Total Return (10) ______%
LEVCO SERIES TRUST WRIGHT MANAGED BLUE CHIP SERIES TRUST
LEVCO Equity Value (2) ______% Wright International Blue Chip (11) ______%
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. Wright Selected Blue Chip (12) ______%
Navellier Growth (4) ______% OTHER
OFFITBANK VARIABLE INSURANCE FUND, INC. ____________________________________________ ______%
OFFITBANK VIF-Emerging Markets (5) ______% ____________________________________________ ______%
OFFITBANK VIF-High Yield (6) ______%
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10. REPLACEMENT Will the proposed variable annuity replace any existing annuity or insurance contract? [_] No [_] Yes
(If "yes," list company name, plan, and year of issue, and complete appropriate replacement documents.)
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11. SPECIAL INSTRUCTIONS
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12. SIGNATURES
All statements made in this application are true to the best of our knowledge and belief, and we agree to all terms and
conditions as shown.
We further agree that this application, if attached, shall be a part of the proposed annuity, and we verify our understanding
that ALL PAYMENTS AND VALUES PROVIDED BY THE PROPOSED ANNUITY, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE
VARIABLE, MAY INCREASE OR DECREASE, AND ARE NOT GUARANTEED AS TO THE DOLLAR AMOUNT.
We acknowledge receipt of the prospectuses for The United States Life Insurance Company In the City of New York Separate
Account USL VA-R and the summary prospectus for each of the investment options listed in Section 7 of this application. If
this application is for an IRA or a Simplified Employee Pension, we acknowledge receipt of the Individual Retirement Annuity
Disclosure Statement provided to us in conjunction with the current prospectus for Separate Account USL VA-R.
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Under penalties of perjury, I certify: (1) that the Social Security (or taxpayer identification) number is correct as it
appears in this application; and (2) that I am not subject to backup withholding under Section 3406 (a)(1)(C) of the Internal
Revenue Code. The Internal Revenue Service does not require your consent to any provision of this document other than the
certifications required to avoid backup withholding.
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Signed at ________________________________________________________ Date _______________________________________
CITY STATE
X__________________________________________________________________ X___________________________________________________
SIGNATURE OF ANNUITANT SIGNATURE OF PARTICIPANT (IF DIFFERENT THAN ANNUITANT)
X__________________________________________________________________ X___________________________________________________
SIGNATURE OF CONTINGENT ANNUITANT (IF APPLICABLE) SIGNATURE OF JOINT PARTICIPANT (IF APPLICABLE)
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13. DEALER/LICENSED AGENT INFORMATION AND SIGNATURES
Licensed Agent:________________________________________________ ____________________________________________________
PRINT AGENT NAME AGENT NUMBER/LOCATION
________________________________________________
PHONE NUMBER
Will the proposed variable annuity replace any existing annuity or insurance contract? [_] No [_] Yes
The agent hereby certifies that all information contained in this application is true to the best of his/her knowledge
and belief.
X__________________________________________________________________ X___________________________________________________
SIGNATURE OF LICENSED AGENT PRINT NAME OF BROKER/DEALER
X__________________________________________________________________ X___________________________________________________
SIGNATURE OF LICENSED PRINCIPAL OF BROKER/DEALER ADDRESS OF BRANCH OFFICE
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USL 8986-33
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