<PAGE>
Registration Nos. 333-______
811-______
As filed with the Commission on September 18, 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 [X]
Amendment No. ___ [_]
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.
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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>
GENERATIONS/TM/
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
1-800-346-4944; 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 group deferred annuity certificates (the "Certificates") described in
this Prospectus.
You may use USL's Separate Account USL VA-R ("Separate Account") for a variable
investment return under the Certificates based on one or more of the following
mutual fund series of the Van Kampen Life Investment Trust ("Trust") and the
Morgan Stanley Universal Funds, Inc. ("Fund"):
<TABLE>
<CAPTION>
<S><C> <C> <C>
. Van Kampen Life Investment Trust . Morgan Stanley Universal Funds, Inc
. Domestic Income Portfolio . Asian Equity Portfolio
. Emerging Growth Portfolio . Emerging Markets Equity Portfolio
. Enterprise Portfolio . Equity Growth Portfolio
. Government Portfolio . Global Equity Portfolio
. Growth and Income Portfolio . International Magnum Portfolio
. Money Market Portfolio . Fixed Income Portfolio
. Morgan Stanley Real Estate Securities Portfolio . High Yield Portfolio
. Strategic Stock Portfolio . Mid Cap Value Portfolio
. Value Portfolio
</TABLE>
You may also use USL's guaranteed interest option. This option currently has
one Guarantee Period, with a guaranteed interest rate.
We have designed this Prospectus to provide 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 50 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 1-800-346-4944. You may also 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 prospectuses of the
Van Kampen Life Investment Trust and the Morgan Stanley Universal Funds, Inc.
This Prospectus is dated [ ], 1998
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Glossary................................................................................... 4
Fee Table.................................................................................. 7
Synopsis of Certificate Provisions......................................................... 10
Minimum Investment Requirements.......................................................... 10
Purchase Payment Accumulation............................................................ 10
Fixed and Variable Annuity Payments...................................................... 11
Changes in Allocations Among Divisions and Guarantee Periods............................. 11
Surrenders, Withdrawals and Cancellations................................................ 12
Death Proceeds........................................................................... 12
Limitations Imposed by Retirement Plans and Employers.................................... 12
Communications to Us..................................................................... 12
Financial and Performance Information.................................................... 13
Other Information........................................................................ 14
Financial Information...................................................................... 15
USL........................................................................................ 15
Separate Account USL VA-R.................................................................. 15
The Series................................................................................. 15
Voting Privileges........................................................................ 17
The Fixed Account.......................................................................... 18
Certificate Issuance and Purchase Payments................................................. 20
Owner Account Value........................................................................ 21
Variable Account Value................................................................... 22
Fixed Account Value...................................................................... 22
Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of Owner Account Value... 23
Transfers................................................................................ 23
Automatic Rebalancing.................................................................... 24
Surrenders and Partial Withdrawals....................................................... 24
Annuity Period and Annuity Payment Options................................................. 26
Annuity Commencement Date................................................................ 26
Application of Owner Account Value....................................................... 26
Fixed and Variable Annuity Payments...................................................... 26
Annuity Payment Options.................................................................. 27
Transfers................................................................................ 30
Death Proceeds............................................................................. 30
Death Proceeds Before the Annuity Commencement Date...................................... 30
Death Proceeds After the Annuity Commencement Date....................................... 32
Proof of Death........................................................................... 32
Charges Under the Certificates............................................................. 33
Premium Taxes............................................................................ 33
Surrender Charge......................................................................... 33
Transfer Charges......................................................................... 35
Annual Certificate Fee................................................................... 36
Charge to the Separate Account .......................................................... 36
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Miscellaneous............................................................................ 36
Systematic Withdrawal Plan............................................................... 37
One-Time Reinvestment Privilege.......................................................... 37
Reduction in Surrender Charges and Administrative Charges................................ 37
Other Aspects of the Certificates.......................................................... 37
Owners, Annuitants and Beneficiaries; Assignments........................................ 37
Reports.................................................................................. 38
Rights Reserved by Us.................................................................... 38
Payment and Deferment.................................................................... 39
Federal Income Tax Matters................................................................. 40
General.................................................................................. 40
Non-Qualified Certificates............................................................... 40
Individual Retirement Annuities ("IRAs")................................................. 42
Roth IRAs................................................................................ 44
Simplified Employee Pension Plans........................................................ 45
Simple Retirement Accounts............................................................... 45
Other Qualified Plans.................................................................... 45
Private Employer Unfunded Deferred Compensation Plans.................................... 46
Federal Income Tax Withholding and Reporting............................................. 47
Taxes Payable by USL and the Separate Account............................................ 47
Distribution Arrangements.................................................................. 47
Services Agreement......................................................................... 48
Legal Matters.............................................................................. 48
Year 2000 Considerations................................................................... 48
Other Information on File.................................................................. 49
Contents of Statement of Additional Information............................................ 50
</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 Separate Account USL VA-R 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.
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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 Separate
Account USL VA-R 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 Separate
Account USL VA-R.
GENERAL ACCOUNT - all assets of USL other than those in Separate
Account USL VA-R 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, NY 10038; 1-212-709-6000.
INVESTMENT COMPANY ACT OF 1940 ("1940 ACT") - a federal law governing the
operations of investment companies such as the Series and the Separate Account.
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.
PARTICIPANT - the Owner of a Certificate.
QUALIFIED - 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.
SEPARATE ACCOUNT - the segregated asset account of USL named Separate Account
USL VA-R which receives and 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
Van Kampen Life Investment Trust or the Morgan Stanley Universal Funds, Inc.
5
<PAGE>
SURRENDER CHARGE - a charge for sales expenses that we may assess when you
surrender a Certificate or receive payment of certain other amounts from a
Certificate.
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.
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. (See "Synopsis of Certificate Provisions -
Communications to Us.") You must use special forms we or your sales
representative provide to elect an Annuity Option or exercise your one-time
reinvestment privilege.
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%
Maximum Surrender Charge/1/...................................... 6%
(computed as a percentage of purchase payments surrendered)
Transfer Fee..................................................... $ 0/2/
Annual Certificate Fee/3/............................................. $30
- ----------------------
Separate Account Annual Expenses (as a percentage of
average daily net asset value)
Mortality and Expense Risk Charge................................ 1.25%
Administrative Expense Charge.................................... 0.15%
-----
Total Separate Account Annual Expenses............................. 1.40%
=====
- ------------------------
/1/ This charge does not apply or is reduced under certain circumstances. See
"Surrender Charge."
/2/ This charge is $25 after the 12th transfer during each Certificate Year
prior to the Annuity Commencement Date.
/3/ This charge does not apply during the Annuity Period.
7
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The Series' Annual Expenses/1,2/ (as a percentage of average net assets)
<TABLE>
<CAPTION>
Series Management Other
Fees After Expenses Total
Expense After Expense Operating
Reimbursement Reimbursement Expenses
------------- ------------- --------
<S> <C> <C> <C>
Domestic Income 0.05% 0.55% 0.60%
Emerging Growth 0.00% 0.85% 0.85%
Enterprise 0.44% 0.16% 0.60%
Government 0.36% 0.24% 0.60%
Growth and Income 0.00% 0.75% 0.75%
Money Market 0.12% 0.48% 0.60%
Morgan Stanley Real Estate Securities 1.00% 0.07% 1.07%
Strategic Stock 0.00% 0.65% 0.65%
Asian Equity 0.80% 0.40% 1.20%
Emerging Markets Equity 0.00% 0.85% 0.85%
Global Equity 0.00% 1.15% 1.15%
International Magnum 0.00% 1.15% 1.15%
Fixed Income 0.00% 0.70% 0.70%
High Yield 0.00% 0.80% 0.80%
Mid Cap Value 0.00% 1.05% 1.05%
Value 0.00% 0.85% 0.85%
- ---------------------
</TABLE>
/1/ We estimate other expenses for the current fiscal year for the Strategic
Stock and the Asian Equity Portfolios, because these Series do not have
financial statements covering a period of at least ten months.
/2/ Management fees and other expenses would have been the percentages shown
in the following table without certain voluntary expense reimbursements from the
investment adviser. We estimate such fees and expenses, absent reimbursement,
for the Strategic Stock and Asian Equity Portfolios for the current fiscal year.
<TABLE>
<CAPTION>
Management Other Total
Fees Expenses Expenses
---------- -------- --------
<S> <C> <C> <C>
Domestic Income 0.50% 0.55% 1.05%
Emerging Growth 0.70% 1.44% 2.14%
Enterprise 0.50% 0.16% 0.66%
Government 0.50% 0.24% 0.74%
Growth and Income 0.60% 1.03% 1.63%
Money Market 0.50% 0.48% 0.98%
Morgan Stanley Real Estate Securities 1.00% 0.07% 1.07%
Strategic Stock 0.05% 2.28% 2.33%
Asian Equity 0.80% 2.30% 3.10%
Emerging Markets Equity 1.25% 2.87% 4.12%
Equity Growth 0.55% 1.50% 2.05%
Global Equity 0.80% 1.63% 2.43%
International Magnum 0.80% 1.98% 2.78%
Fixed Income 0.40% 1.31% 1.71%
High Yield 0.50% 1.18% 1.68%
Mid Cap Value 0.75% 1.38% 2.13%
Value 0.55% 1.32% 1.87%
</TABLE>
8
<PAGE>
Example/3/ The following expenses would apply to a $1,000 investment at the end
of the applicable time period, if you surrender your Certificate (or if you
annuitize under circumstances where you owe a surrender charge)/4/ , and if you
assume a 5% annual return on assets:
<TABLE>
<CAPTION>
If all amounts are invested 1 year 3 years 5 years 10 years
in one of the following Series ------ ------- ------- --------
- ------------------------------
<S> <C> <C> <C> <C>
Domestic Income $75 $110 $147 $239
Emerging Growth $78 $118 $160 $265
Enterprise $75 $110 $147 $239
Government $75 $110 $147 $239
Growth and Income $77 $114 $155 $255
Money Market $75 $110 $147 $239
Morgan Stanley Real Estate Securities $80 $124 $171 $287
Strategic Stock $76 $111 N/A N/A
Asian Equity $87 $139 N/A N/A
Emerging Markets Equity $87 $144 $204 $352
Equity Growth $78 $118 $160 $265
Global Equity $81 $127 $175 $295
International Magnum $81 $127 $175 $295
Fixed Income $76 $113 $152 $250
High Yield $78 $118 $161 $268
Mid Cap Value $80 $124 $170 $285
Value $78 $118 $160 $265
</TABLE>
Example/3/ The following expenses would apply to a $1,000 investment at the end
of the applicable time period, if you do not surrender your
Certificate (or if you annuitize under circumstances where a
surrender charge is not payable)/4/, and if you assume a 5% annual
return on assets:
<TABLE>
<CAPTION>
If all amounts are invested 1 year 3 years 5 years 10 years
in one of the following Series ------ ------- ------- --------
- ------------------------------
<S> <C> <C> <C> <C>
Domestic Income $21 $65 $111 $239
Emerging Growth $24 $73 $124 $265
Enterprise $21 $65 $111 $239
Government $21 $65 $111 $239
Growth and Income $23 $69 $119 $255
Money Market $21 $65 $111 $239
Morgan Stanley Real Estate Securities $26 $79 $135 $287
Strategic Stock $22 $66 N/A N/A
Asian Equity $33 $94 N/A N/A
Emerging Markets Equity $33 $99 $168 $352
Equity Growth $24 $73 $124 $265
Global Equity $27 $82 $139 $295
International Magnum $27 $82 $139 $295
Fixed Income $22 $68 $116 $250
High Yield $24 $73 $125 $268
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Mid Cap Value $26 $79 $134 $285
Value $24 $73 $124 $265
</TABLE>
- ------------------------
/3/ In this Example, "N/A" indicates that SEC rules require that the Strategic
Stock and the Asian Equity Portfolios complete the Example for only the one and
three year periods.
/4/ See "Surrender Charge" for a description of the circumstances when you may
be required to pay the Surrender Charge under annuitization.
THE EXAMPLES ARE 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
examples assume an estimated average Account Value of $40,000 for each of the
Divisions.
SYNOPSIS OF CERTIFICATE PROVISIONS
You should read this synopsis together with the other information in this
Prospectus.
The purpose of the Certificates is to provide retirement benefits through
. the accumulation of purchase payments on a fixed or variable basis, and
. the application of such accumulations to provide Fixed or Variable
Annuity Payments.
MINIMUM INVESTMENT REQUIREMENTS
Your initial purchase payment must be at least $2,000, if you are buying a
Qualified Certificate, and $5,000, if you are buying a Non-Qualified
Certificate. The amount of any subsequent purchase payment that you make must
be at least $100. If your Account Value falls below $500, we may cancel your
Certificate and treat it as a full surrender. We also may transfer funds,
without charge, from a Division (other than the Money Market Division) or
Guarantee Period under your Certificate to the Money Market Division, if the
Account Value of that Division or Guarantee Period falls below $500. (See
"Certificate Issuance and Purchase Payments.")
PURCHASE PAYMENT ACCUMULATION
Purchase payments will accumulate on a variable or fixed basis until the Annuity
Commencement Date.
For variable accumulation, you may allocate part or all of your Account Value to
one or more of the 17 available Divisions of the Separate Account. Each
Division invests solely in shares of one of 17 corresponding Series. (See "The
Series.") The value of accumulated purchase payments allocated to a Division
increases or decreases, as the value of the investments in a Series' shares
increases or
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decreases, subject to reduction by charges and deductions. (See "Variable
Account Value.")
For fixed accumulation, you may allocate part or all of your Account Value to
one or more of the Guarantee Periods available in our Fixed Account at the time
you make your allocation. Each Guarantee Period is for a different period of
time and has a different Guaranteed Interest Rate. The value of accumulated
purchase payments increases at the Guaranteed Interest Rate applicable to that
Guarantee Period. (See "The Fixed Account.")
Over the lifetime of your Certificate, you may allocate part or all of your
Account Value to no more than 18 Divisions and Guarantee Periods. This limit
includes those Divisions and Guarantee Periods from which you have either
transferred or withdrawn all of your Account Value previously allocated to such
Divisions or Guarantee Periods.
FIXED AND VARIABLE ANNUITY PAYMENTS
You may elect to receive Fixed or Variable Annuity Payments or a combination of
Payments beginning on the Annuity Commencement Date. Fixed Annuity Payments are
periodic payments from USL in a fixed amount guaranteed by USL. The amount of
the Payments will depend on the Annuity Payment Option chosen, the age and, in
some cases, the gender of the Annuitant, and the total amount of Account Value
applied to the fixed Annuity Payment Option.
Variable Annuity Payments are similar to Fixed Annuity Payments, except that the
amount of each periodic payment from USL will vary reflecting the net investment
return of the Division or Divisions you selected under your variable Annuity
Payment Option. The payment for a given month will exceed the previous month's
payment, if the net investment return for a given month exceeds the assumed
interest rate used in the Certificate's annuity tables. The monthly payment
will be less than the previous payment, if the net investment return for a month
is less than the assumed interest rate. The assumed interest rate used in the
Certificate's annuity tables is 3.5%. USL may offer other forms of the
Certificate with a lower assumed interest rate and reserves the right to
discontinue the offering of the higher interest rate form of Certificate. (See
"Annuity Period and Annuity Payment Options.")
CHANGES IN ALLOCATIONS AMONG DIVISIONS AND GUARANTEE PERIODS
Before the Annuity Commencement Date, you may change your allocation of future
purchase payments to the various Divisions and Guarantee Periods, without
charge.
In addition, you may reallocate your Account Value among the Divisions and
Guarantee Periods before the Annuity Commencement Date. However, you are
limited in the amount that you may transfer out of a Guarantee Period. See
"Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of Owner
Account Value - Transfers," for these and other conditions of transfer.
After the Annuity Commencement Date, you may make transfers from a Division to
another Division or to a fixed Annuity Payment Option. However, you may not
make transfers from a fixed Annuity Payment Option. (See "Annuity Period and
Annuity Payment Options - Transfers.")
11
<PAGE>
SURRENDERS, WITHDRAWALS AND CANCELLATIONS
You may make a total surrender of or partial withdrawal from your Certificate at
any time prior to the Annuity Commencement Date by Written request to us. A
surrender may require you to pay a Surrender Charge, and some surrenders and
withdrawals may require you to pay tax penalties. (See "Surrenders and Partial
Withdrawals.")
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 the 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.
DEATH PROCEEDS
If the Annuitant or Owner dies before the Annuity Commencement Date, we will
pay a benefit to the Beneficiary. (See "Death Proceeds Prior to the Annuity
Commencement Date.")
LIMITATIONS IMPOSED BY RETIREMENT PLANS AND EMPLOYERS
An employer or trustee who is the Owner under a retirement plan may limit
certain rights you would otherwise have under a Certificate. These limitations
may restrict total and partial surrenders, the amount or timing of purchase
payments, the start of annuity payments, and the type of annuity options that
you may select. You should familiarize yourself with the provisions of any
retirement plan in which a Certificate is used. We are not responsible for
monitoring or assuring compliance with the provisions of any retirement plan.
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 the 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
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<PAGE>
that is not a Valuation Date.
FINANCIAL AND PERFORMANCE INFORMATION
From time to time, the Separate Account may include in advertisements and other
sales materials several types of performance information for the Divisions.
This information may include "average annual total return," "total return," and
"cumulative total return." The Domestic Income Division, the Government
Division, and the Growth and Income 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, 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. Total return
figures are also annualized, but do not, as described below, reflect deduction
of any applicable Surrender Charge or Annual Certificate Fee. 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,
. the Administrative Expense Charge,
. the applicable Surrender Charge that may be charged at the end of the
period in question, and
. a pro rated portion of the Annual Certificate Fee.
Yield, effective yield, total return, and cumulative total return figures do not
reflect deduction of any Surrender Charge that we may impose upon partial
withdrawal, and thus may be higher than if such charge were deducted. Total
return and cumulative total return figures also do not reflect deduction of
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the Annual Certificate Fee.
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.
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.
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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.")
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 with the Securities and Exchange Commission as a unit investment
trust under the 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 17 Divisions funding the variable benefits under the
Certificates. These Divisions invest in shares of eight separate investment
Series of the Trust and nine separate Series of the Fund.
The Trust and the Fund 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 Trust and the Fund 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.
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For example, violation of the federal tax laws by one separate account investing
in the Trust or the Fund 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 Trust or the Fund, if a material
irreconcilable conflict arises between separate accounts. In such event, the
Trust or the Fund may have to liquidate portfolio securities at a loss to pay
for a separate account's redemption of Trust or Fund shares. At the same time,
the Trust's Board of Trustees, the Fund's Board of Directors 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.
The names of the Series of the Trust in which the available Divisions invest are
as follows:
Van Kampen Life Investment Trust
--------------------------------
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Morgan Stanley Real Estate Securities Portfolio
Strategic Stock Portfolio
Van Kampen Asset Management, Inc. is the investment adviser of each Series of
the Trust. Van Kampen Funds Inc. is the distributor of shares of each Series
of the Trust.
The names of the Series of the Fund in which the available Divisions invest are
as follows:
Morgan Stanley Universal Funds, Inc.
------------------------------------
Asian Equity Portfolio
Emerging Markets Equity Portfolio
Equity Growth Portfolio
Global Equity Portfolio
International Magnum Portfolio
Fixed Income Portfolio
High Yield Portfolio
Mid Cap Value Portfolio
Value Portfolio
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Morgan Stanley Asset Management Inc. is the investment adviser of the Asian
Equity, Emerging Markets Equity, Equity Growth, Global Equity, and International
Magnum Portfolios. Miller Anderson & Sherrerd, LLP is the investment adviser of
the Fixed Income, High Yield, Mid Cap Value and Value Portfolios. Morgan
Stanley & Co. Incorporated is the distributor of shares of each Series of the
Fund.
The investment advisers and the distributors are all wholly-owned subsidiaries
of Morgan Stanley Dean Witter & Co. Morgan Stanley Deal Witter & Co. is a
preeminent global financial services firm that maintains leading market
positions in each of its three primary businesses -- securities, asset
management and credit services.
Before selecting any Division, you should carefully read the prospectus. The
prospectus provides more complete information about the Series in which that
Division invests, including investment objectives and policies, charges and
expenses.
You can find information about the investment performance of the Series of the
Trust in the Statement. You can find information about the experience of the
investment advisers to the Series of the Fund in the prospectus for the Fund.
You may obtain additional copies of a prospectus by contacting USL's
Administrative Center at the addresses and phone numbers on the first page of
this Prospectus. When making your request, please indicate the names of the
Series in which you are interested.
High yielding fixed-income securities, such as those in which the Domestic
Income Portfolio invests, 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 about this Division in the Trust's
prospectus and related statement of additional information and consider your
ability to assume the risks of making an investment in this Division.
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.
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. 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 must receive this
Written request at least three business days before the end of the Guarantee
Period.
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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. If the
Owner elects to annuitize in this case, we may waive the Surrender Charge. (See
"Annuity Payment Options" and "Surrender Charge.")
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 prior to 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 such balance to
a Division selected by the Owner, if we have received Written instructions to
transfer such 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: (1) the current interest rate we use on the date of the
application for the Guarantee Period selected; or (2) the current interest rate
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 as of the date we receive such
proceeds. The interest rate we use to calculate such interest will remain in
effect 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.
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.
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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 applicable
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 $2,000 for a Qualified Certificate and
$5,000 for a Non-Qualified Certificate. The minimum subsequent purchase payment
is $100. 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 Van Kampen Funds, Inc., 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 information at our
Administrative Center.
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.
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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 $500, 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 such cancellation.
So long as the Account Value does not fall below $500, 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 any
material ownership rights to the master contract owner and, in particular, does
not authorize the master contract owner to surrender the master contract.
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.
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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.
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
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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.
. 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.
We may also offer certain "special automatic transfer plans" to Owners who make
new purchase payments. Under such plans, we will make equal monthly transfers
over a period of time that we will determine. We may offer a higher Guaranteed
Interest Rate under such a special automatic transfer plan than we would offer
for another Guarantee Period of the same duration that is not offered under
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such a plan. Any such higher interest rate will reflect differences in costs or
services and will not be unfairly discriminatory as to any person. Differences
in costs or services will result from such factors as reduced sales expenses or
administrative efficiencies related to transferring amounts to other Divisions
on an automatic, rather than a discretionary, basis.
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.
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.
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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 Surrender Charge,
. minus any uncollected Certificate Fee (see "Annual Certificate Fee"), and
. 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. The Owner will, however have a right to reinvest the proceeds of
the Certificate. (See "One-Time Reinvestment Privilege.")
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.
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 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
Surrender Charge and premium tax. You can also tell us to take Surrender
Charges and 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
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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.
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. In some cases, we may
deduct a Surrender Charge from the amount we apply. (See "Surrender Charge.")
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.
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. 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.
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 in connection with Qualified Certificates. (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
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. 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 any applicable
Surrender Charge, uncollected Annual Certificate Fee and premium tax.
You may elect the annuity option that will apply 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 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
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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 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 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.
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TRANSFERS
After the Annuity Commencement Date, the Annuitant or other properly designated
payee may make one transfer every 180 days 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 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.
The death proceeds, prior to deduction of any applicable premium taxes, will
equal the greatest of--
. the sum of all net purchase payments made (less any premium taxes we
deducted previously and all prior partial withdrawals);
. 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; or
. the highest anniversary value prior to the date of death, as defined below.
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The highest anniversary value prior to the date of death will be determined as
follows:
. First, we will calculate the Account Values at the end of each of the past
Certificate Anniversaries that occurred before the deceased's 81st
birthday;
. Second, we will increase each of the Account Values by the amount of net
purchase payments the Owner has made since the end of such Certificate
Years; and
. Third, we will reduce the result by the amount of any withdrawals the Owner
has made since the end of such Certificate Years.
The highest anniversary value will be an amount equal to the highest of such
values. However, we will not calculate the highest anniversary value after the
81st birthday. Net purchase payments are purchase payments less applicable
premium tax.
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--
. 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 sum
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.
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. 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
. 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 dies. 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 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.
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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
. 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.
SURRENDER CHARGE
The Surrender Charge reimburses us for part of our expenses in distributing the
Certificates. We believe, however, that the amount of our expenses will exceed
the amount of revenues generated by the Surrender Charge. We will pay for extra
expenses out of our general surplus, which might include profits from the charge
for the assumption of mortality and expense risks.
Unless a withdrawal is exempt from the Surrender Charge (as discussed below),
the Surrender Charge is a percentage of the amount of each purchase payment that
you withdraw during the first seven years after we receive that purchase
payment. The percentage declines depending on how many years have passed since
we originally credited the withdrawn purchase payment to your Account Value, as
follows:
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Surrender Charge as a
Year of Purchase Percentage of Purchase
Payment Withdrawal Payment Withdrawn
------------------ ----------------------
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
In computing the Surrender Charge, we deem withdrawals from your Account Value
to consist first of purchase payments, in order of contribution, followed by any
amounts in excess of purchase payments. The Surrender Charge will apply to the
following transactions, which we consider to be withdrawals:
. total surrender;
. partial withdrawal;
. commencement of an Annuity Payment Option; and
. termination due to insufficient Account Value.
The Surrender Charge will not apply to withdrawals in the following
circumstances:
. the amount of withdrawals that exceeds the cumulative amount of your
purchase payments;
. death of the Annuitant, at any age, after the Annuity Commencement Date;
. death of the Annuitant, at any age, prior to the Annuity Commencement
Date, provided no Contingent Annuitant survives;
. death of the Owner, including the first to die in the case of joint
Owners of a Non-Qualified Certificate;
. annuitization over at least five years, or life contingent annuitization
where the life expectancy is at least five years;
. within the 30-day window under the One-Time Reinvestment Privilege;
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. the surrender of a Certificate, or the withdrawal of Certificate Value
(limited to the Variable Account Value and the one year Guarantee
Period) of a Certificate, issued to owners who are bona fide full-time
employees of USL at the time they purchased a Certificate;
. the portion of your first withdrawal or total surrender in any
Certificate Year that does not exceed 15% of the amount of your purchase
payments that (1) have not previously been withdrawn and (2) have been
credited to the Certificate for at least one year. (If you make multiple
withdrawals during a Certificate Year, we will recalculate the amount
eligible for the free withdrawal at the time of each withdrawal. After
the first Certificate Year, you may make non-automatic and automatic
withdrawals in the same Certificate Year subject to the 15% limitation.
For withdrawals under a systematic withdrawal plan, Purchase Payments
credited for 30 days or more are eligible for the 15% free withdrawal);
and
. any amounts withdrawn that are in excess of the amount permitted by the
15% free withdrawal privilege, described above, if you are withdrawing
the amounts to obtain or retain favorable tax treatment. (For example,
under certain circumstances the income and estate tax benefits of a
charitable remainder trust may be available only if you withdraw assets
from a Certificate funding the trust more rapidly than the 15% free
withdrawal privilege permits. This exception is subject to our
approval.)
Upon selection of an annuity option that does not qualify for a Surrender Charge
exception above, we use the full amount of the Owner's Account Value to pay for
the annuity option. The amount we use will be the greater of:
. the amount payable to the Owner upon full surrender of a Certificate
(see "Surrenders and Partial Withdrawals"), or
. 95% of what the amount payable to the Owner upon full surrender of a
Certificate would be without a Surrender Charge.
We do not consider a free withdrawal under any of the foregoing Surrender Charge
exceptions to be a withdrawal of purchase payments, except for purposes of
computing the 15% free withdrawal described in the preceding paragraph. The
Code may impose a penalty on distributions if the recipient is under age 59 1/2.
(See "Penalty Tax on Premature Distributions.")
TRANSFER CHARGES
We describe the charges to pay 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 profits.
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ANNUAL CERTIFICATE FEE
We will deduct an Annual Certificate Fee of $30 from your Account Value at the
end of each Certificate Year prior to the Annuity Commencement Date. This Fee
is for administrative expenses (which do not include expenses of distributing
the Certificates). We do not expect the revenues we derive from this Fee to
exceed the expenses. Unless paid directly, the Fee will be allocated among the
Guarantee Periods and Divisions in proportion to your Account Value in each. We
will deduct the entire Fee for the year from the proceeds of any full surrender.
We reserve the right to waive the Fee.
CHARGE TO THE SEPARATE ACCOUNT
We assess Separate Account assets a daily charge at an annualized rate of 1.40%
of the average daily net asset value of the Separate Account attributable to the
Certificates. This charge (1) offsets other administrative expenses not covered
by the Annual Certificate Fee discussed above and (2) compensates us for
assuming mortality and expense risks under the Certificates. The 1.40% charge
divides into .15% for administrative expenses and 1.25% for the assumption of
mortality and expense risks.
We do not expect to earn a profit on that portion of the charge that is for
administrative expenses. However, we do expect to derive a profit from the
portion that 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.
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.
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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,
including Surrender Charges and exceptions to Surrender Charges.
ONE-TIME REINVESTMENT PRIVILEGE
If the Account Value is at least $500, you may elect to reinvest all of the
proceeds that you liquidated from the Certificate within the previous 30 days.
In this case, we will credit the Surrender Charge and the Annual Certificate
Fee, if a new Annual Certificate Fee is not then due, back to the Certificate.
We will reinvest the proceeds at the value we next compute following the date of
receipt of the proceeds. Unless you request otherwise, we will allocate the
proceeds among the Divisions and Guarantee Periods in the same proportions as
prior to surrender. You may use this privilege only once.
REDUCTION IN SURRENDER CHARGES OR ADMINISTRATIVE CHARGES
We may reduce the Surrender Charges or administrative charges 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.
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.
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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.")
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;
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. 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 payment of death proceeds within 60 days
after the death proceeds become payable. If we do not receive a Written request
specifying the manner of 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.
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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.
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 such diversification failure (and any
subsequent period). Income means the excess of the Account Value over the
Owner's investment in the Certificate (discussed below).
40
<PAGE>
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 the case of Fixed Annuity Payments, the excludible portion is found by
multiplying
. the amount paid by
. 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.
41
<PAGE>
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 reaches 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.
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:
42
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999 2000 2001 2002 2003 2004 2005 and
thereafter
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
$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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
2007 and
1999 2000 2001 2002 2003 2004 2005 2006 thereafter
- -----------------------------------------------------------------------------------------------------------------
$51,000 $52,000 $53,000 $54,000 $60,000 $65,000 $70,000 $75,000 $80,000
to to to to to to to to 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.
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<PAGE>
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:
. 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 Contract. (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.
44
<PAGE>
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.
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.
45
<PAGE>
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:
. 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 retaining 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 Contracts -
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.
46
<PAGE>
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.
FEDERAL INCOME TAX WITHHOLDING AND REPORTING
Amounts distributed from a Certificate, to the extent includible in taxable
income, are subject to federal income tax withholding. The payee may, however,
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 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, (2) Van Kampen Funds Inc. ("VK
Funds"), or (3) other broker-dealer firms. However, some individuals may be
representatives of firms that are exempt from broker-dealer regulation. AGSI, VK
Funds 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.
47
<PAGE>
USL offers the Certificates on a continuous basis. AGSI and VK Funds have
entered into certain revenue and cost-sharing arrangements in connection with
marketing the Certificates.
USL compensates VK Funds and other broker-dealers that sell the Certificates
according to one or more compensation schedules. The schedules provide for
commissions of up to 6.0% of purchase payments that Owners make. USL also has
agreed to pay VK Funds for its promotional activities, such as solicitation of
selling group agreements between broker-dealers and USL, agent appointments with
USL, printing and development of sales literature to be used by USL appointed
agents and related marketing support, and related special promotional campaigns.
From time to time, VK Funds may engage in special promotions where VK Funds pays
additional compensation to one or more of the broker-dealers that sell the
Certificates. None of these distribution expenses results 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 matter about the Separate Account that would be
considered material to the interests of Owners. Pauletta P. Cohn, 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
adverse impact on the operations of USL and its affiliates.
48
<PAGE>
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:
49
<PAGE>
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
General Information................................. 2
Regulation and Reserves............................. 2
Independent Auditors................................ 3
Services............................................ 3
Principal Underwriter............................... 4
Annuity Payments.................................... 4
Gender of Annuitant............................... 4
Misstatement of Age or Gender and Other Errors... 4
Change of Investment Adviser or Investment Policy... 5
Performance Data for the Divisions.................. 5
Average Annual Total Return Calculations.......... 5
Total Return Calculations (without Surrender
Charge or Annual Contract Fee).................. 5
Cumulative Total Return Calculations (without
Surrender Charge or Annual Contract Fee)........ 5
Hypothetical Performance.......................... 6
Yield Calculations................................ 9
Money Market Division Yield and Effective
Yield Calculations.............................. 9
Performance Comparisons........................... 10
Effect of Tax-Deferred Accumulation................. 11
Financial Statements................................ 12
Index to Financial Statements....................... 13
</TABLE>
50
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
SEPARATE ACCOUNT USL VA-R
GENERATIONS(TM)
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
1-800-346-4944; (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 Generations(TM) Certificates. The Separate Account invests in
certain Series of the Van Kampen Life Investment Trust and the Morgan Stanley
Universal Funds, Inc. 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 the
Separate Account. Terms used in this Statement have the same meanings as are
defined in the Prospectus under the heading "Glossary."
TABLE OF CONTENTS
General Information................................. 2
Regulation and Reserves............................. 2
Independent Auditors................................ 3
Services............................................ 3
Principal Underwriter............................... 4
Annuity Payments.................................... 4
Gender of Annuitant............................... 4
Misstatement of Age or Gender and Other Errors... 4
Change of Investment Adviser or Investment Policy... 5
<PAGE>
Performance Data for the Divisions.................. 5
Average Annual Total Return Calculations........... 5
Total Return Calculations (without Surrender
Charge or Annual Contract Fee).................. 5
Cumulative Total Return Calculations (without
Surrender Charge or Annual Contract Fee)........ 5
Hypothetical Performance........................... 6
Yield Calculations................................. 9
Money Market Division Yield and Effective
Yield Calculations.............................. 9
Performance Comparisons............................ 10
Effect of Tax-Deferred Accumulation................. 11
Financial Statements................................ 12
Index to Financial Statements....................... 13
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:
. 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.
2
<PAGE>
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.
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.
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
3
<PAGE>
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 and to Separate Account
E of American General Life Insurance Company of New York. All of these other
separate accounts 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.
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.
4
<PAGE>
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:
. 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 (1) any applicable Surrender Charge at the end of the period and
(2) all other recurring charges and fees applicable under the Certificate
to all Owner accounts. Other charges and fees include the Mortality and
Expense Risk Charge, the Administrative Expense Charge, and the Annual
Certificate Fee. 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.
TOTAL RETURN CALCULATIONS (WITHOUT SURRENDER CHARGE OR ANNUAL CONTRACT FEE)
Each Division may also advertise non-standardized total return. We calculate
non-standardized total return in the same manner and for the same time periods
as standardized average annual total return, which we describe immediately
above. However, in making the redeemable value calculation, we do not deduct
any applicable Surrender Charge that we may impose at the end of the period.
This is because we assume that the Certificate will continue through the end of
each period. We also do not deduct the Annual Certificate Fee. Deducting these
charges would reduce the resulting performance results.
CUMULATIVE TOTAL RETURN CALCULATIONS (WITHOUT SURRENDER CHARGE OR ANNUAL
CONTRACT FEE)
Each Division may also advertise non-standardized cumulative total return
performance. Cumulative total return performance is the compound rate of return
on a hypothetical initial investment of $1,000 in each
5
<PAGE>
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, any applicable Surrender Charge, or the Annual Certificate Fee.
Cumulative total return quotations 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 INCEPTION*
- ------------------- -------- ---------- ----------
<S> <C> <C> <C>
Domestic Income 4.26 % 7.89% 6.77 %
Emerging Growth 12.66 % N/A 18.61 %
Enterprise 21.82 % 16.38% 11.02 %
Government 1.95 % 4.00% 5.55 %
Growth and Income 16.09 % N/A 15.96 %
Money Market 2.72 % 3.22% 4.52 %
Morgan Stanley Real Estate Securities 13.69 % N/A 24.51 %
Strategic Stock N/A N/A (21.27)%
Asian Equity N/A N/A (72.81)%
Emerging Markets Equity (7.04)% N/A (7.14)%
Equity Growth N/A N/A 21.73 %
Global Equity N/A N/A 14.02 %
International Magnum N/A N/A (1.03)%
Fixed Income N/A N/A 2.29 %
High Yield N/A N/A 4.83 %
Mid Cap Value N/A N/A 28.87 %
Value N/A N/A 12.37 %
</TABLE>
Hypothetical Historical Total Returns
(Through December 31, 1997)
<TABLE>
<CAPTION>
SINCE
SERIES
INVESTMENT DIVISION ONE YEAR FIVE YEARS INCEPTION*
- ------------------- -------- ---------- ----------
<S> <C> <C> <C>
Domestic Income 10.35 % 8.50% 6.83 %
Emerging Growth 18.75 % N/A 20.36 %
Enterprise 27.93 % 16.84% 11.06 %
Government 8.04 % 4.69% 5.61 %
Growth and Income 22.18 % N/A 21.32 %
Money Market 8.80 % 3.92% 4.57 %
Morgan Stanley Real Estate Securities 19.79 % N/A 26.15 %
Strategic Stock N/A N/A 15.21 %
Asian Equity N/A N/A (66.44)%
Emerging Markets Equity (1.04)% N/A (2.70)%
Equity Growth N/A N/A 28.37 %
Global Equity N/A N/A 20.78 %
International Magnum N/A N/A 5.75 %
Fixed Income N/A N/A 8.87 %
High Yield N/A N/A 11.55 %
Mid Cap Value N/A N/A 35.72 %
Value N/A N/A 18.97 %
</TABLE>
7
<PAGE>
Hypothetical Historical Cumulative Total Returns
(Through December 31, 1997)
<TABLE>
<CAPTION>
SINCE
SERIES
INVESTMENT DIVISION ONE YEAR FIVE YEARS INCEPTION*
- ------------------- -------- ---------- ----------
<S> <C> <C> <C>
Domestic Income 10.35 % 50.32% 95.60 %
Emerging Growth 18.75 % N/A 58.84 %
Enterprise 27.93 % 117.68% 242.33 %
Government 8.04 % 25.73% 89.80 %
Growth and Income 22.18 % N/A 21.82 %
Money Market 8.80 % 21.21% 69.03 %
Morgan Stanley Real Estate Securities 19.79 % N/A 78.60 %
Strategic Stock N/A N/A 2.27 %
Asian Equity N/A N/A (45.16)%
Emerging Markets Equity (1.04)% N/A (3.36)%
Equity Growth N/A N/A 25.83 %
Global Equity N/A N/A 18.54 %
International Magnum N/A N/A 5.08 %
Fixed Income N/A N/A 8.10 %
High Yield N/A N/A 10.34 %
Mid Cap Value N/A N/A 31.67 %
Value N/A N/A 17.33 %
</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 INCEPTION*
- ------------------- -------- ---------- ----------
<S> <C> <C> <C>
Domestic Income $1,103.47 $1,503.23 $1,956.01
Emerging Growth $1,187.52 N/A $1,588.41
Enterprise $1,279.27 $2,176.83 $3,423.33
Government $1,080.38 $1,257.29 $1,897.97
Growth and Income $1,221.83 N/A $1,218.17
Money Market $1,088.04 $1,212.13 $1,690.30
Morgan Stanley Real Estate Securities $1,197.86 N/A $1,785.98
Strategic Stock N/A N/A $1,022.74
Asian Equity N/A N/A $ 548.36
Emerging Markets Equity $ 989.64 N/A $ 966.39
Equity Growth N/A N/A $1,258.25
Global Equity N/A N/A $1,185.41
International Magnum N/A N/A $1,050.83
Fixed Income N/A N/A $1,081.02
High Yield N/A N/A $1,103.45
Mid Cap Value N/A N/A $1,316.70
Value N/A N/A $1,173.29
</TABLE>
8
<PAGE>
__________________________
* The inception dates for each Series corresponding to the Divisions are:
April 7, 1986 for the Money Market, Enterprise, and Government Series; November
4, 1987 for the Domestic Income Series; July 3, 1995 for the Emerging Growth and
Morgan Stanley Real Estate Securities Series; October 1, 1996 for the Emerging
Markets Equity Series; November 23, 1996 for the Growth and Income Series;
January 2, 1997 for the Equity Growth, Global Equity, International Magnum,
Fixed Income, High Yield, Mid Cap Value, and Value Series; March 3, 1997 for the
Asian Equity Series; and November 3, 1997 for the Strategic Stock Series.
YIELD CALCULATIONS
We calculate the yields for the Domestic Income Division and the Government
Division by a standard method that the SEC prescribes. The hypothetical yields
for the Domestic Income Division and the Government Division, based upon the one
month period ended December 31, 1997, were 6.75% and 3.92%, respectively. We
calculate the yield quotation by dividing
. the net investment income per Accumulation Unit earned during the specified
one month or 30-day period by the Accumulation Unit values on the last day
of the period, according to the following formula that assumes a semi-annual
reinvestment of income:
YIELD = 2[((a-b)/cd + 1)/6/ - 1]
a = net dividends and interest earned during the period by the Series
attributable to the Division
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Accumulation Units outstanding during the period
d = the Accumulation Unit value per unit on the last day of the period
The yield of each Division reflects the deduction of all recurring fees and
charges that apply to each Division. These fees and charges include the
Mortality and Expense Risk Charge and the Administrative Expense Charge. They
do not reflect the deduction of Surrender Charges or premium taxes.
MONEY MARKET DIVISION YIELD AND EFFECTIVE YIELD CALCULATIONS
We calculate the Money Market Division's yield by 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:
. 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.
9
<PAGE>
. 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 3.71%.
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 3.78%.
Yield and effective yield do not reflect the deduction of Surrender Charges or
premium taxes that we may impose when you redeem 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;
. 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;
10
<PAGE>
. 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, whose 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 whose earnings are taxed on a current basis ("Taxable
Investment"), based on an assumed tax rate of 28%, and the assumed
earning rates specified.
5 Years 10 Years 20 Years
------- -------- --------
(7.50% earnings rate)
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
The hypothetical tables do not reflect any fees or charges under a Certificate
or Taxable Investment. However, the Certificates impose:
11
<PAGE>
. a Mortality and Expense Risk Charge of 1.25%,
. a Surrender Charge (applicable to withdrawal of earnings for the first seven
Certificate years) up to a maximum of 6%,
. an Administrative Expense Charge of 0.15%, and
. an Annual Certificate Fee of $30.
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.
12
<PAGE>
INDEX TO
FINANCIAL STATEMENTS
Page No.
--------
USL Financial Statements - Statutory Basis
Report of Ernst & Young LLP, Independent Auditors.....
Balance Sheets........................................
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..................
13
<PAGE>
PART C
OTHER INFORMATION
-----------------
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
PART A: None
PART B: Financial Statements of The United States Life
Insurance Company in the City of New York ("USL")
(To be filed by Pre-Effective Amendment)
PART C: None
(b) Exhibits
(1) The United States Life Insurance Company in the City
of New York Board of Directors resolution
authorizing the establishment of The United States
Life Insurance Company in the City of New York
Separate Account USL VA-R and among other things the
marketing of variable annuity products in New York.
(2) None
(3)(a) Master Marketing and Distribution Agreement By and
Among The United States Life Insurance Company in
the City of New York, American General Securities
Incorporated and Van Kampen Distributors, Inc. (To
be filed by Pre-Effective Amendment).
(b)(i) Form of Participation Agreement by and among The
United States Life Insurance Company in the City of
New York, American General Securities Incorporated,
Van Kampen Life Investment Trust, Van Kampen Asset
Management, Inc., and Van Kampen Distributors, Inc.
(To be filed by Pre-Effective Amendment).
(ii) Form of Participation Agreement by and among The
United States Life Insurance Company in the City of
New York, Morgan Stanley Universal Funds, Inc.,
Morgan Stanley Asset Management, Inc., and Miller
Anderson & Sherrerd LLP. (To be filed by Pre-
Effective Amendment).
C-1
<PAGE>
(c) Specimen form of Selling Group Agreement by and
among The United States Life Insurance Company in
the City of New York, American General Securities
Incorporated, and Van Kampen Funds, Inc. (To be
filed by Pre-Effective Amendment).
(4)(a) Form of Group Annuity Master Contract (Form No.
98034N).
(b) Form of Group Annuity Certificate (Form No. 98033N).
(5)(a) Form of Application for Certificate (Form No. USL
8771-33).
(b) Specimen form of Generations Service Request. (To be
filed by Pre-Effective Amendment).
(c) Specimen form of Special Request for Surrender
Charge Waiver under Certificate Form No. 98033N. (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.
(b) Copy of the Bylaws, as amended, of The United States
Life Insurance Company in the City of New York.
(7) None
(8) 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 the Emerging Growth,
Enterprise, Domestic Income, Government, and Money
Market Divisions, available under Certificate Form
No 98033N for the one and five year periods ended
December 31, 1997, and since inception. (To be filed
by Pre-Effective Amendment).
C-2
<PAGE>
(b) Computations of hypothetical historical total
returns for the Emerging Growth, Enterprise,
Domestic Income, Government, and Money Market
Divisions, available under Certificate Form No.
98033N for the one and five year periods ended
December 31, 1997, and since inception. (To be filed
by Pre-Effective Amendment).
(c) Computations of hypothetical historical cumulative
total returns for the Emerging Growth, Enterprise,
Domestic Income, Government, and Money Market
Divisions, available under Certificate Form No.
98033N for the one and five year periods ended
December 31,1997, and since inception. (To be filed
by Pre-Effective Amendment).
(d) Computations of hypothetical historical 30 day yield
for the Domestic Income Division and the Government
Division, available under Certificate Form No.
98033N for the one month period ended December 31,
1997. (To be filed by Pre-Effective Amendment).
(e) Computations of hypothetical historical seven day
yield and effective yield for the Money Market
Division, available under Certificate Form No.
98033N 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.)
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
C-3
<PAGE>
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
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
C-4
<PAGE>
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
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
C-5
<PAGE>
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
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
C-6
<PAGE>
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
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
C-7
<PAGE>
American Athletic Club, Inc. Texas
Pavilions Corporation Delaware
USLIFE Corporation New York
All American Life Insurance Company Illinois
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-8
<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.
/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.
C-9
<PAGE>
/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 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
C-10
<PAGE>
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.
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.
C-11
<PAGE>
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.
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
C-12
<PAGE>
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
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-13
<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. 98034N and the Certificates that are
identified as Certificate Form No.98033N 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-14
<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
(1) The United States Life Insurance Company in the City of New York Board
of Directors resolution authorizing the establishment of The United
States Life Insurance Company in the City of New York Separate Account
USL VA-R and among other things the marketing of variable annuity
products in New York.
(4)(a) Form of Group Annuity Master Contract (Form No. 98034N).
(b) Form of Group Annuity Certificate (Form No. 98033N).
(5)(a) Form of Application for Certificate (Form No. USL 8771-33).
(6)(a) Copy of the Charter and all amendments thereto of The United
States Life Insurance Company in the City of New York.
(b) Copy of the Bylaws, as amended, of The United States Life
Insurance Company in the City of New York.
<PAGE>
EXHIBIT 1
The United States Life Insurance Company in the City of New York (USL)
Date: August 8, 1997
Subject: Registered Separate Account for sale of variable annuity products;
Approval of
* * * * * * *
RESOLUTION FOR THE ESTABLISHMENT OF A VARIABLE
ANNUITY REGISTERED SEPARATE ACCOUNT
WHEREAS, the management of USL has determined that USL shall take
the necessary steps to (i) develop a variable annuity insurance
marketing program, (ii) obtain variable annuity certificate of
authority in every state in which USL is authorized to transact
business, and (iii) enable USL to issue variable annuity contracts and
certificates;
NOW THEREFORE BE IT RESOLVED, that USL, pursuant to the provisions
of New York Insurance Law (S) 4240 and 11 NYCRR 50.3 hereby
establishes a variable annuity registered separate account to be
designated "The United States Life Insurance Company in the City of
New York Separate Account USL VA-R," (hereinafter "the Separate
Account") for the following use and purposes, and subject to such
conditions as hereinafter set forth; and
BE IT FURTHER RESOLVED, that the Separate Account is established
for the purpose of providing for the issuance by USL of such variable
annuity or such other contracts or certificates ("Contracts") as the
Chief Executive Officer or his designated representative may designate
for such purpose and shall constitute a Separate Account into which
are allocated amounts paid to or held by USL under such Contracts; and
BE IT FURTHER RESOLVED, that pursuant to the statutes referenced
above, (a) the income, gains and losses, whether or not realized, from
assets allocated to the Separate Account shall, in accordance with the
applicable Contract, be credited to or charged against the Separate
Account without regard to other income, gains, or losses of USL, with
assets attributable to Contracts to be held and applied exclusively
for the benefit of the Contract owners; (b) the value of the
Contracts, or any portion thereof, or any unit of interest or
participation therein, either prior or subsequent to annuitization, or
both, shall vary according to the investment experience of the
Separate Account; (c) the assets of the Separate Account shall be
<PAGE>
legally segregated from the general account assets of USL, and USL
shall maintain in the Separate Account assets with a value at least
equal to the reserves and other Contract liabilities with respect to
such Separate Account; and (d) that portion of such assets having a
value equal to, or approximately equal to, such reserves and Contract
liabilities shall not be chargeable with liabilities arising out of
any other business which USL may conduct; and
BE IT FURTHER RESOLVED, that the fundamental investment policy of
the Separate Account shall be to invest or reinvest the assets of the
Separate Account in securities issued by investment companies
registered under the Investment Company Act of 1940, as amended, as
USL designates pursuant to the provisions of the Contracts; and
BE IT FURTHER RESOLVED, that multiple investment divisions be, and
hereby are, established within the Separate Account to which net
payments under the Contracts will be allocated in accordance with
instructions received from Contract owners, and that the Chief
Executive Officer or his designated representative be, and hereby is,
subject to applicable state insurance regulatory approval, authorized
to increase or decrease the number of investment divisions in the
Separate Account as deemed necessary or appropriate; and
BE IT FURTHER RESOLVED, that each such investment division shall
invest only in the shares of a single mutual fund or a single mutual
fund portfolio of an investment Corporation organized as a series fund
pursuant to the Investment Company Act of 1940; and
BE IT FURTHER RESOLVED, that the Chief Executive Officer,
President and Treasurer be, and they hereby are, authorized, subject
to applicable state insurance regulatory approval, to deposit such
amount in the Separate Account or in each investment division thereof
as may be necessary or appropriate to facilitate the commencement of
the Separate Account's operations; and
BE IT FURTHER RESOLVED, that the Chief Executive Officer of USL or
his designated representative be, and hereby is, authorized to change
the designation of the Separate Account to such other designation as
the Chief Executive Offer may deem necessary or appropriate; and
BE IT FURTHER RESOLVED, that the appropriate officers of USL, with
such assistance from USL's auditors, legal counsel and independent
consultants or others as they may require, be, and they
2
<PAGE>
hereby are, authorized and directed to take all action necessary to:
(i) register the Separate Account as a unit investment trust under the
Investment Company Act of 1940, as amended; (ii) register the
Contracts in such amounts, which may be an indefinite amount, as the
officers of USL shall from time to time deem appropriate under the
Securities Act of 1933; and (iii) take all other actions which are
necessary in connection with the offering of said Contracts for sale
and the operation of the Separate Account in order to comply with the
Investment Company Act of 1940, the Securities Exchange Act of 1934,
the Securities Act of 1933, and other applicable federal laws,
including the filings of any amendments to registration statements,
any undertakings, and any applications for exemptions from the
Investment Company Act of 1940 or other applicable federal laws as the
officers of USL shall deem necessary or appropriate; and
BE IT FURTHER RESOLVED, that the appropriate officers of USL be,
and they hereby are, authorized on behalf of the Separate Account and
on behalf of USL to take any and all action that they may deem
necessary or advisable in order to sell the Contracts, including any
registrations, filings and qualifications of USL, its officers, agents
and employees, and the entering into contracts under the insurance and
securities laws of any of the states of the United States of America
or other jurisdictions, and in connection therewith, to prepare,
execute, deliver and file all such applications, reports, covenants,
resolutions, applications for exemptions, consents to service of
process and other papers and instruments as may be required under such
laws, and to take any and all further action which said officers or
counsel of USL may deem necessary or desirable (including entering
into whatever agreements and contracts may be necessary) in order to
maintain such registrations or qualifications for as long as said
officers or counsel deem them to be in the best interests of the
Separate Account and USL; and
BE IT FURTHER RESOLVED, that the Chief Executive Officer of USL or
his designated representative be, and hereby is, authorized to
establish criteria by which USL shall institute procedures to provide
for a pass-through of voting rights to the owners of such Contracts as
required by the applicable laws with respect to securities owned by
the Separate Account; and
BE IT FURTHER RESOLVED, that the General Counsel for USL be, and
hereby is, authorized in the names of and on behalf of the Separate
Account and USL to execute and file irrevocable written consents on
the part of the Separate Account and of USL to be used in such states
wherein such consents to service of process may be requisite under the
laws therein in connection with said Contracts and
3
<PAGE>
to appoint the appropriate state official, or such other person as may
be allowed by said laws, agent of the Separate Account and of USL for
the purpose of receiving and accepting process; and
BE IT FURTHER RESOLVED, that the Chief Executive Officer of USL or
his designated representative be, and hereby is, authorized, subject
to applicable state insurance regulatory approval, to execute such
agreement or agreements on such terms and subject to such
modifications as deemed necessary or appropriate (i) with a qualified
entity that will be appointed principal underwriter and distributor
for the Contracts, and (ii) with one or more qualified banks or other
qualified entities to provide administrative and/or custodial services
in connection with the establishment and maintenance of the Separate
Account and the design, issuance, and administration of the Contracts;
and
BE IT FURTHER RESOLVED, that the appropriate officers of USL are
hereby authorized to execute whatever agreement or agreements as may
be necessary or appropriate to enable such investments on behalf of
the Separate Account to be made; and
BE IT FURTHER RESOLVED, that the Chief Executive of USL or his
designated representative be, and hereby is, subject to applicable
state insurance regulatory approval, authorized to establish and
designate additional variable annuity registered separate accounts, in
accordance with the provisions (statutory and otherwise) set forth in
these resolutions, as the Chief Executive Officer of USL or his
designated representative may deem necessary or appropriate in order
to accommodate and provide for alternative investment strategies and
policies for variable annuity registered contracts or certificates
that cannot be accommodated by or provided for through Separate
Account USL VA-R; and
BE IT FURTHER RESOLVED, that the appropriate officers of USL, and
each of them, are hereby authorized to execute and deliver all such
documents and papers and to do or cause to be done all such acts and
things as they may deem necessary or desirable to carry out the
foregoing resolutions and the intent and purposes thereof.
4
<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 with
respect to each Annuitant living on the Annuity Commencement Date. Payment will
be made in accordance with the revisions set forth in each Certificate and this
policy.
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 OWNER MAY RETURN THIS CONTRACT FOR CANCELLATION TO US
OR TO THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 1 0 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 VALUES AS OF THE END OF THE VALUATION PERIOD IN
WHICH THE CANCELLATION REQUEST IS RECEIVED; PLUS (3) ANY ADDITIONAL AMOUNTS
WITHHELD BY THE COMPANY FOR PREMIUM TAXES.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED GROUP DEFERRED ANNUITY CONTRACT.
NON-PARTICIPATING - 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 4.9% FOR THE VARIABLE ANNUITY OPTIONS BASED ON AN ANNUAL
RATE OF 3.5% AND COMBINED ANNUAL SEPARATE ACCOUNT CHARGES OF 1.4%.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE
Secretary President
READ YOUR CONTRACT CAREFULLY
Home Office: New York, New York
Maiden Lane New York, NY 10038-4992 1-800-346-4944
98034N
<PAGE>
INDEX
PAGE
----
Account Value 4
Allocation of Net Purchase Payments 8
Annuity Options 24
Annuity Tables 26
Annuity Units 24
Automatic Rebalancing 16
Beneficiary 9
Certificate Fee 20
Change of Investment Advisor or Investment Policy 6
Contingent Annuitant 4
Death Proceeds 21
Definitions 4
Division Accumulation Units 13
Divisions 13
Fixed Account Value 11
General Provisions 6
Guaranteed Interest Rates 12
Guarantee Periods 12
Investment Objectives of the Portfolio 3A
Net Investment Factor 14
One-Time Reinvestment Privilege 20
Ownership Provisions 8
Participant 5
Payment of Benefits 23
Premium Taxes 8
Purchase Payments 8
Schedule Page 3
Separate Account 13
Surrenders 16
Full Surrender 16
Partial Withdrawals 17
Surrender Charge 17
Surrender Charge Exceptions 18
15% Free Withdrawal Privilege 19
Tax Charge 20
Transfers 14
Variable Annuity Payments 24
98034N Page 2
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
SCHEDULE PAGE
INITIAL PURCHASE PAYMENT: $5,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS: $ 100
ADDITIONAL BENEFITS: NONE
MAXIMUM ASSET CHARGE FACTORS (Separate Account Only) ANNUAL RATE 1.40%
MAXIMUM ANNUAL CERTIFICATE FEE: $30
TRANSFER CHARGE (After First 12 in a Certificate Year): $25
DIVISIONS OF THE SEPARATE ACCOUNT:
[ASIAN EQUITY PORTFOLIO
DOMESTIC INCOME PORTFOLIO
EMERGING GROWTH PORTFOLIO
EMERGING MARKETS EQUITY PORTFOLIO
ENTERPRISE PORTFOLIO
EQUITY GROWTH PORTFOLIO
FIXED INCOME PORTFOLIO
GLOBAL EQUITY PORTFOLIO
GOVERNMENT PORTFOLIO
GROWTH AND INCOME PORTFOLIO
HIGH-YIELD PORTFOLIO
INTERNATIONAL MAGNUM PORTFOLIO
MID CAP VALUE PORTFOLIO
MONEY MARKET PORTFOLIO
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO
STRATEGIC STOCK PORTFOLIO
VALUE PORTFOLIO
FIXED ACCOUNT - 1 YEAR GUARANTEE PERIOD
CONTRACT NUMBER: 012345678
DATE OF ISSUE: MAY 1, 199
CONTRACT JURISDICTION: NEW YORK
CONTRACT OWNER: THE UNITED STATES LIFE GROUP VARIABLE
ANNUITY TRUST I
98034N Page 3
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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.
MORGAN STANLEY UNIVERSAL FUNDS, INC.
U.S. FIXED INCOME PORTFOLIOS
The FIXED INCOME PORTFOLIO seeks above-average total return over a market cycle
of three to five years by investing primarily in a diversified portfolio of U.S.
Governments and Agencies, Corporate Bonds, Mortgage-Backed Securities, Foreign
Bonds and other Fixed Income Securities and Derivatives.
The HIGH YIELD PORTFOLIO seeks above-average total return over a market cycle of
three to five years by investing primarily in a diversified portfolio of High
Yield Securities, including Corporate and other Fixed Income Securities and
Derivatives.
U.S. EQUITY PORTFOLIOS
The EQUITY GROWTH PORTFOLIO seeks long-term capital appreciation by investing
primarily in Equity Securities of medium and large capitalization companies
that, in the Investment Advisor's judgment, provide above-average potential for
capital growth.
The MID CAP VALUE PORTFOLIO seeks above-average total return over a market cycle
of three to five years by investing in Common Stocks and other Equity Securities
of issuers with equity capitalizations in the range of the companies represented
in the Standard & Poor's Rating Group MidCap 400 Index.
The VALUE PORTFOLIO seeks above-average total return over a market cycle of
three to five year by investing primarily in a diversified portfolio of Common
Stocks and other Equity Securities that are deemed by the Investment Advisor to
be relatively undervalued based on various measures such as price/earnings
ratios and price/book ratios.
GLOBAL PORTFOLIOS
The ASIAN EQUITY PORTFOLIO seeks long-term capital appreciation by investing
primarily in Equity Securities of Asian issuers (excluding Japan) through the
selection of individual stocks that the Investment Advisor believes are
undervalued. The Portfolio intends to invest primarily in Equity Securities
that are traded on recognized stock exchanges of countries in Asia and in Equity
Securities of companies organized under the laws of an Asian country whose
business is conducted principally in Asia.
98034N Page 3A
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The EMERGING MARKETS EQUITY PORTFOLIO seeks long-term capital appreciation by
investing primarily in Equity Securities of emerging market country issuers with
a focus on those in which the Investment Advisor believes the economies are
developing strongly and in which the markets are becoming more sophisticated.
The GLOBAL EQUITY PORTFOLIO seeks long-term capital appreciation by investing
primarily in Equity Securities of issuers throughout the world, including U.S.
issuers, through the selection of individual stocks that the Investment Advisor
believes are undervalued.
VAN KAMPEN LIFE INVESTMENT TRUST
The INTERNATIONAL MAGNUM PORTFOLIO seeks long-term capital appreciation by
investing primarily in Equity Securities of non-U.S. issuers domiciled in EAFE
countries (Australia, Japan, New Zealand, most nations located in Western Europe
and certain developed countries in Asia, such as Hong Kong and Singapore.
The DOMESTIC INCOME PORTFOLIO seeks current income as its primary investment
objective by investing in a diversified portfolio of fixed-income securities.
The Portfolio expects that at all times at least 80% of its assets will be
invested in (1) fixed-income securities rated at the time of purchase B or
higher by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group,
(2) Non-rated debt securities believed by the Investment Adviser to be of
comparable quality, and (3) U.S. Government securities.
The EMERGING GROWTH PORTFOLIO seeks capital appreciation by investing in a
portfolio of securities consisting principally of common stock of small and
medium sized companies considered by the Investment Adviser to be emerging
growth companies.
The ENTERPRISE PORTFOLIO seeks capital appreciation through investments in
securities believed by the Investment Adviser to have above average potential
for capital appreciation.
The GOVERNMENT PORTFOLIO seeks high current return consistent with preservation
of capital by investing primarily in debt securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. The Portfolio may sell and
purchase call and put options. The Portfolio ALS may purchase and sell interest
rate futures contracts and options on such contracts since such transactions are
entered into for bona fide hedging purposes. The Portfolio may purchase or sell
government Securities on a forward commitment basis.
The GROWTH AND INCOME PORTFOLIO seeks long-term growth of capital and income by
investing primarily in income-producing equity securities including common stock
and convertible securities. Investments may also be made in non-convertible
preferred stocks and debt securities.
98034N Page 3B
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The MONEY MARKET PORTFOLIO seeks protection of capital and high current income
by investing in money-market investments. Investments in the Money Market
Portfolio are neither insured nor guaranteed by the U.S. Government. Although
the Money Market Portfolio seeks to maintain a net asset value of $ 1.00 per
share, there is no assurance that it will be able to do so.
The MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO seeks long-term growth of
capital as its primary investment objective by investing principally in
companies operating in the real estate industry. Real Estate Securities include
equity securities, including common stocks an convertible securities, as well as
non-convertible preferred stocks and debt securities of real estate industry
companies.
The STRATEGIC STOCK PORTFOLIO seeks an above average total return through a
combination of potential capital appreciation and dividend income consistent
with the preservation of invested capital by investing primarily in a portfolio
of dividend paying Equity Securities included in the Dow Jones Industrial
Average or in the Morgan Stanley Capital International USA Index.
98034N Page 3C
<PAGE>
DEFINITIONS
"WE", "OUR", "US", OR "COMPANY". "We", "our", "us", or "Company" means 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 of a Certificate 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 the
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 Unites 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 77019-2191.
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 age 3 of his or her Certificate.
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 the Annuitant dies. If no named 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.
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.
98034N Page 4
<PAGE>
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.
CONTRACT YEAR. A period of 12 consecutive months beginning on the Date of Issue
or any anniversary thereof.
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.
ISSUE AGE. Age last birthday on 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 the special
federal income tax treatment applicable in connection with retirement plans.
PARTICIPANT. (Certificate Owner) The person named in the Certificate who is
entitled to exercise all rights and privileges of ownership under the
Certificate.
PARTICIPANT'S ACCOUNT. An account established for each Participant to which
Purchase Payments are credited.
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.
98034N Page 5
<PAGE>
PURCHASE PAYMENT. An amount paid to the Company as consideration for the
benefits described herein.
QUALIFIED CONTRACT. A Certificate that is qualified for the 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 in accordance with 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 dated and received at our Administrative Center.
98034N Page 5A
<PAGE>
GENERAL PROVISIONS
ENTIRE CONTRACT. The 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 Contract Owner,
Participant or the 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 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 the Certificate.
NOT 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 Participant's Certificate issued prior to the effective date of
such limitation or discontinuance.
GUARANTEES. We guarantee that the dollar amount of Variable Annuity Payments
made during the lifetime of the Payee(s) will not be adversely affected by our
actual mortality experience or by the actual expenses incurred by us in excess
of the expense deductions provided for in this Contract.
SETTLEMENT. All benefits under certificates issued under this Contract are
payable from our Administrative Office in Houston, Texas.
NONPARTICIPATING. This Contract is nonparticipating and does not share in our
surplus or earnings.
CHANGE OF INVESTMENT ADVISOR OR 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 objective will be filed with The Insurance
Department of the state where this Contract and the 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 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
thereunder.
RIGHTS RESERVED BY US. Upon notice to the Participant, the Certificate may be
modified by us, but only such modification is necessary to:
98034N Page 6
<PAGE>
(1) Operate the Separate Account in any form Company permitted under the
Investment 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 any other
applicable law, regulation or interpretation in order to continue treatment
of each 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 THIS CONTRACT. 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.
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 $500, 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.
If a Participant's Account Value in any Division (except the Money Market
Division) falls below $500, we reserve the right to transfer balance, without
charge, to the Money Market Division. This Contract will terminate when all
funds from the Certificates are withdrawn.
98034N Page 7
<PAGE>
PURCHASE PAYMENTS
MINIMUM PAYMENTS. The minimum amounts acceptable as Purchase Payments are shown
on Page 3. We reserve the right to modify these minimums or to refuse Purchase
Payment for any reason.
MAXIMUM PAYMENTS. 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 by Written notice.
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 Company
for the processing of initial Purchase Payments. Subsequent Purchase Payments
will be credited as of the end of the Valuation Period in which they are so
received. We reserve the right to limit the total number of Fixed Account
Guarantee Periods and Separate Account Divisions that may be chosen by the
Participant while the Certificate remains in force.
PREMIUM TAXES. When applicable, we will deduct an amount to cover premium
taxes. Such deduction will be made:
(1) From Purchase Payment(s) when received; or
(2) From the Participant's Account Value at the time annuity payments are to
commence, or
(3) From the amount of any partial withdrawal; or
(4) From proceeds payable upon termination of the Certificate for any other
reason, including death of the Annuitant or Participant, or surrender of
the Certificate.
If premium tax is paid, the Company may reimburse itself for such tax when
deduction is being made under paragraphs 2, 3, or 4 above calculated by
multiplying the sum of Purchase Payment being withdrawn by the applicable
premium tax percentage.
OWNERSHIP PROVISIONS
Exercise of Contract Rights. This Master Contract is owned by the Organization
named on page 3 of this Contract.
98034N Page 8
<PAGE>
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 term "Beneficiary" means the Beneficiary designated by the
Participant in the application for the Certificate, or as later changed by the
Participant. The Beneficiary will receive any proceeds that may become payable:
(1) Upon the death of the Annuitant, provided no Contingent Annuitant survives;
or
(2) Upon the death of the Participant (other than a Joint Participant) of a
Non-Qualified contract during the Accumulation Period. (See "Death of the
Participant Prior to the Annuity Date - Non-qualified Contracts Only").
Unless otherwise provided in the Beneficiary designation:
(1) If any Beneficiary dies, that Beneficiary's interest will pass to any other
Beneficiary according to the surviving Beneficiary's respective interest.
(2) If no Beneficiary survives to receive proceeds, such proceeds will be paid
in one sum to the Participant, if living; otherwise such proceeds will be
paid to the Participant's estate. If payment is made to the Participant's
estate, the estate will be required to accept payment within 5 years on
date of death.
Provisions in this contract regarding the payments to a Beneficiary upon the
death of the Annuitant will also apply to any proceeds payable to a Beneficiary
upon the death of the Participant (other than a Joint Participant - See "Death
of the Participant Prior to the Annuity Date - Non-Qualified Contracts Only").
Payment in the event of the Participant's death will be made upon receipt in our
Home Office of a written request for proceeds and due proof of the Participant's
death.
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;
98034N Page 9
<PAGE>
(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.
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 the Certificate, the term "Non-Qualified Contract" means a
Certificate Participant that does not qualify for the special federal income tax
treatment the Annuity Date 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 to the
Beneficiary either (1) within 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 Beneficiary, 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 the
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.
98034N Page 10
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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 Internal Revenue Code.
PERIODIC REPORTS. We will send to each Participant, at least once during each
Certificate Year, 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;
(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 any
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:
98034N Page 11
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(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; less
(3) The Certificate Fee allocated to that Guarantee Period.
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, more than one may be selected. The Guarantee
Period(s) 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 the
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.
If the amount of a 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:
98034N Page 12
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(1) Proceeds are being transferred to us under Internal Revenue Code Rollovers
and Transfers (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 for the Guarantee Period selected on the date of the application; or
(2) the current interest rate being used by the Company on the date of receipt
of such 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 in the Certificate, unless the
Participant changes the allocation. A list of the Divisions of the Separate
Account appear on page 3. A brief description of each Division will be found on
pages 3A and 3B.
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 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 as of which the transaction is credited. The value of each
Division Accumulation Unit was arbitrarily set as of the date the Division first
purchased Variable Fund shares. Subsequent 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.
98034N Page 13
<PAGE>
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 or 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 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 a factor representing the mortality risk, expense risk, and
administrative expense charge. We will determine the daily asset charge
factor annually, but in no event may it exceed the Maximum Asset Charge
Factor as specified on Page 3.
SEPARATE ACCOUNT VALUE. The Separate Account Value for any Valuation Period is
the total of the values in each Division credited to the 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.
TRANSFERS
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 the
Participant's Written request for a transfer. Transfers will be subject to the
following restrictions:
98034N Page 14
<PAGE>
(1) Prior to the Annuity Commencement Date, the Participant 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 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
$25.00 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 $25.00
charge and may count towards the 12 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, the Participant may make one transfer
during any 180 day period; such transfer is without charge. The Participant
may not make transfers from the fixed annuity account.
98034N Page 15
<PAGE>
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 the Participant's Account Value is equal to or greater than $25,000; and
(2) If selected by the Participant.
The Participant may select Automatic Rebalancing when applying for the
Certificate, or it may be selected at a later date. The Company reserves 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 periodic
transfer of funds in accordance with the "Transfers" provision and instructions
from the Participant.
SURRENDERS
GENERAL SURRENDER PROVISIONS. The amount surrendered will normally be paid to
the 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.
We reserve the right to defer payment of surrenders from the Fixed Account for
up to 6 months from the date we receive the request.
FULL SURRENDER. At any time prior to the Annuity Commencement Date and during
the lifetime of the Annuitant, the 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 Surrender Charge;
(3) Minus any applicable Certificate Fee; and
(4) Minus any applicable premium tax.
98034N Page 16
<PAGE>
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 be terminated and
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 pro rata 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) We will surrender Division Accumulation Units from the Separate Account or
interests in a Guarantee Period so that the total amount withdrawn will be
the sum of:
(a) The amount payable to the Participant;
(b) Plus any Surrender Charge and any applicable premium tax;
(3) If the Participant's Account Value in any Division or Guarantee Period
(except the Money Market Division) falls below $500, We reserve the right
to transfer the remaining balance without charge to the Money Market
Division.
(4) If a Partial Withdrawal would cause the Participant's Account Value to fall
below $500, We may cancel the Certificate upon 60 days' notice to the
Participant. Such cancellation would be considered a full surrender of
Certificate.
SURRENDER CHARGE FOR PARTIAL WITHDRAWALS AND FULL SURRENDERS. Except as noted
under "Surrender Charge Exceptions", a Surrender Charge for Partial will be
applied to the amount of any Purchase Payment withdrawn during the first 7 years
after it was first credited, as follows:
98034N Page 17
<PAGE>
Surrender Charge
Year of As a Percentage
Purchase Payment of Purchase
Withdrawn Payment Withdrawn
--------- -----------------
1st and 2nd 6%
3rd and 4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
For purposes of computing the Surrender Charge, the oldest Purchase Payments are
deemed to be withdrawn first, and before any amounts in excess of Purchase
Payments are withdrawn from a Participant's Account. The following transactions
will be considered as withdrawals for purposes of computing the Surrender
Charge: total surrender, partial withdrawal, commencement of an annuity payment
option and termination due to insufficient Participant Account Value.
SURRENDER CHARGE EXCEPTIONS. The Surrender Charge will not apply:
(1) To any amounts in excess of Purchase Payments that are withdrawn from a
Participant's Account; or
(2) To any amounts in excess of the amount permitted by the 15% Free Withdrawal
Privilege if such amounts are required to be withdrawn to obtain or retain
favorable federal tax treatment; (The granting of this exception is subject
to Our approval);
(3) Upon the death of the Annuitant at any age during the Payout Period;
(4) Upon the death of the Annuitant at any age during the Accumulation Period
if no Contingent Annuitant survives;
(5) Upon the death of the Participant of a Non-Qualified Contract unless the
Certificate is being continued under the special rule for a surviving
spouse as defined under Internal Revenue Code Section 72(s);
(6) Upon selection of an annuity payment option over a period of at least 5
years;
(7) Upon selection of an annuity payment option based on life contingencies if
life expectancy is at least 5 years.
98034N Page 18
<PAGE>
Upon selection of an annuity payment option that does not qualify for a
Surrender Charge Exception, the amount applied will be the greater of the cash
surrender benefit, or 95 percent of what the cash surrender benefit would be if
there were no Surrender Charge.
15% FREE WITHDRAWAL PRIVILEGE. The Surrender Charge in any Certificate year
will not apply to that Privilege portion of each withdrawal or a total surrender
that is equal to or less than:
(1) Fifteen Percent (15%) of the amount of Purchase Payments not previously
withdrawn that have been credited to the Certificate for at least one year
but not more than 7 years; less
(2) The amount of any previous withdrawals made during such Certificate Year.
For withdrawals under a systematic withdrawal plan, Purchase Payments credited
for 30 days or more are eligible for the 15% Free Withdrawal Privilege.
If multiple withdrawals are made during a Certificate Year, the amount eligible
for the free withdrawal will be recalculated at the time of each Partial
Withdrawal. After the first Certificate Year, non-automatic and automatic
withdrawals may be made in the same Certificate Year subject to the 15%
limitation.
A free withdrawal pursuant to any of the foregoing Surrender Charge Exceptions
is not deemed a withdrawal of Purchase Payments except for purposes of computing
the 15% free withdrawal privilege.
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.
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;
98034N Page 19
<PAGE>
(3) The Participant may request distributions to be made on an annual,
semi-annual, quarterly or monthly basis;
(4) We will waive surrender charges on multiple installments, the total of
which does not exceed the amount eligible for free withdrawal under the 10%
Free Withdrawal Privilege in a Certificate Year;
(5) 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 the
Certificate must annuitize.
CERTIFICATE FEE
MANNER OF DEDUCTING. An annual Certificate Fee not to exceed $30.00 will be
deducted at the end of each Certificate Year prior to the Annuity Commencement
Date. Unless paid directly, the fee will be allocated among the Guarantee
Periods and Divisions in proportion to the Participant's Account Value in each.
The entire fee for the year will be deducted from the proceeds of any full
surrender of the certificate.
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 Certificates.
ONE-TIME REINVESTMENT PRIVILEGE
REINVESTMENT OF ACCOUNT VALUE. If the Participant has made a full surrender of
the Account Value, the Participant may reinvest the Account Value if We receive
the Written reinvestment request and the net surrender proceeds not more than 30
days after the date of surrender. In such a case, the Participant's Account
Value will be restored to what it was at the time of the surrender (less any
annual Certificate maintenance charge that has since become payable). Any
subsequent Surrender Charge will be computed as if the Certificate had been
issued at the date of reinvestment in consideration of a Purchase Payment in the
amount of such net surrender proceeds. This one-time reinvestment privilege is
available only if the Participant's Account Value following the reinvestment
would be at least $500. Unless the Participant requests otherwise in Writing,
the Account Value following the reinvestment will be allocated among the
Divisions and Guarantee Periods in the same proportion as those prior to
surrender.
98034N Page 20
<PAGE>
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, the 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:
(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 Qualified Contracts Only" provision, death
Beneficiary continued under the "Death of the Participant proceeds will be
paid to the Prior to the Annuity Date - Non-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. If the surviving Joint Participant is the
spouse of the deceased then the surviving Joint Participant may continue
the Certificate under the "Death of the Participant Prior to the Annuity
Date - Non-Qualified Contracts Only" provision, as if he or she had been
designated as Beneficiary. Otherwise death proceeds will be paid to the
person designated as Beneficiary unless Joint Participants have specified
in writing that death proceeds are to be paid in a different manner;
If the Annuitant or such Participant dies, the amount of the death proceed will
be the greatest of the following amounts, less any applicable Premium Tax:
(1) The sum of all Net Purchase Payments less any prior Partial Withdrawals;
(2) The Participant's Account Value as of the end of the Valuation Period 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; or
(3) The Highest Anniversary Value prior to the date of death, determined as
foIlows:
(a) We will calculate the Account Values at the end of each of the past
Certificate Anniversaries that occurred prior to the deceased's 81st
birthday;
(b) Each of the Account Values will be increased by the amount of Net
Purchase Payments made since the end of such Certificate Years;
98034N Page 21
<PAGE>
(c) The result will be reduced by the amount of any withdrawals made since
the end of such Certificate Years;
(d) The Highest Anniversary Value will be an amount equal to the highest
of such values.
NOTE: IN DETERMINING THE "HIGHEST ANNIVERSARY VALUE", WE ARE COMPARING THE TOTAL
OF THE ACCOUNT VALUES - THE SUM OF THE FIXED ACCOUNT VALUES AND SEPARATE ACCOUNT
VALUES. THEREFORE, THE HIGHEST ANNIVERSARY VALUE WILL NOT NECESSARILY INCLUDE
EITHER THE HIGHEST SEPARATE ACCOUNT VALUE OR THE HIGHEST FIXED ACCOUNT VALUE.
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 any Annuity Option.
If the Annuitant dies, and a Contingent Annuitant was named but predecease 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 ON OR AFTER THE ANNUITY COMMENCEMENT DATE. If the Annuitant dies
on or after the Annuity Commencement Date, there After the Beneficiary will
receive the death proceeds, if any, as provided by the annuity form in effect.
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.
98034N Page 22
<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 the Certificate. We will notify the Participant 60
to 90 days prior to the scheduled Annuity Date that the Certificate is scheduled
to mature, an 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:
If the scheduled Annuity Commencement Date is any date prior to the Annuitant's
90th birthday, we will extend the Annuity Commencement Date Annuitant's 90th
birthday.
If the scheduled Annuity Commencement Date is the Annuitant's 90th birthday, the
Account Value less any applicable charges and premium taxes will be paid in one
sum to the Participant.
OPTIONS AVAILABLE TO BENEFICIARY. The 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 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, the
Certificate shall be surrendered to the Company in exchange for a payment
contract providing for the option elected.
98034N Page 23
<PAGE>
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 selected.
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 described
above. (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 no changed.
Each Division Annuity Unit Value was arbitrarily set when the Division first
converted Division Accumulation Units into Division Annuity Units. Subsequent
values on any Valuation Date are equal to the previous Division Annuity Unit
Value times the Net Investment Factor for that Division for the Valuation Period
ending on that Valuation Date, with an offset for the 3 1/2% assumed interest
rate used in the annuity tables of the Certificate.
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 form 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 form 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.
We guarantee that the amount of each payment will not be affected by variations
in expense or mortality experience.
ANNUITY OPTIONS
FIRST OPTION - LIFE ANNUITY - An annuity payable monthly during the lifetime of
the Annuitant.
98034N Page 24
<PAGE>
SECOND OPTION - LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENT 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 (a 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 statements.
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 Surrender Charge, uncollected annual Maintenance Charge
and 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).
In the event the age or sex of the Annuitant has been misstated, (age of the
Annuitant if issued on a unisex basis), 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 payment to
the next payment due. Interest at an effective annual rate of 3.5% will be added
to any such adjustment.
98034N Page 25
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ANNUITY TABLES. The tables that follow show the dollar amount of the first
monthly payment for each $1,000 applied under the options. The first two pages
are based on the 1983a Male or Female Tables adjusted by projection scale G for
9 years. The table on the last page is 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 sex of the
Annuitant (unless issued on a unisex basis) 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 (unless issued on a unisex
basis) and their adjusted ages at the time the first payment is due.
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 85 life Annuity Option 2 rates are also used for ages above 85.
ALTERNATE AMOUNT OF INSTALLMENTS UNDER FIXED LIFE INCOME OPTIONS. When annuity
payments are to begin, the Company will provide life income payments based on
fixed single premium immediate annuity rates then offered by the Company to the
same class of annuitants if:
(1) A fixed life income option is elected; and
(2) Such rates are more favorable than those guaranteed in the Certificate.
98034N Page 26
<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 2
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
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
*Not available above Adjusted Age 70.
98034N Page 27
<PAGE>
Adjusted Age Monthly Payments Guaranteed
of Female Option l* Option 2 Option 2 Option 2
None 120 180 240
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.
Option 3 - Joint and Last Survivor Life Annuity (Available only if one person is
Adjusted Age 70 or less)
Adjusted Age
of Annuitant Adjusted Age of Secondary Annuitant
Female
Female 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
Male 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
98034N Page 28
<PAGE>
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
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
98034N Page 29
<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
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.
98034N Page 27
<PAGE>
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
98034N Page 28
<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.
NON-PARTICIPATING - 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 your 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
1-800-346-4944
98034N
<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 each Certificate and the Master
Policy.
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 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,
the values in the Separate Account must earn a minimum annual aggregate
investment return of 4.9% for the variable annuity options based on an annual
rate of 3.5% and combined annual Separate Account charges of 1.4%.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE
Secretary President
READ YOUR CERTIFICATE CAREFULLY
Home Office: New York, New York
Maiden Lane New York, NY 10038-4992
98033N
<PAGE>
INDEX
PAGE
----
Account Value....................................... 4
Allocation of Net Purchase Payments................. 7
Annuity Options..................................... 19
Annuity Tables...................................... 20
Annuity Units....................................... 18
Automatic Rebalancing............................... 12
Beneficiary......................................... 8
Certificate Fee..................................... 16
Change of Investment Advisor or Investment Policy... 6
Contingent Annuitant................................ 4
Death Proceeds...................................... 16
Definitions......................................... 4
Division Accumulation Units......................... 11
Divisions........................................... 11
Fixed Account Value................................. 10
General Provisions.................................. 6
Guaranteed Interest Rates........................... 10
Guarantee Periods................................... 10
Investment Objectives of the Portfolios............. 3A/3B
Net Investment Factor............................... 11
One-Time Reinvestment Privilege..................... 16
Ownership Provisions................................ 7
Participant......................................... 5
Payment of Benefits................................. 17
Premium Taxes....................................... 7
Purchase Payments................................... 7
Schedule Page....................................... 3
Separate Account.................................... 11
Surrenders.......................................... 13
Full Surrender.................................. 13
Partial Withdrawals............................. 13
Surrender Charge................................ 14
Surrender Charge Exceptions..................... 14
15% Free Withdrawal Privilege................... 15
Tax Charge.......................................... 16
Transfers........................................... 12
Variable Annuity Payments........................... 18
98033N Page 2
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
SCHEDULE PAGE
<TABLE>
<S> <C> <C> <C>
INITIAL PURCHASE PAYMENT: $ 5,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS: $ 100
ADDITIONAL BENEFITS: NONE
MAXIMUM ASSET CHARGE FACTORS (Separate Account Only) ANNUAL RATE 1.40%
MAXIMUM ANNUAL CERTIFICATE FEE: $ 30
TRANSFER CHARGE (After First 12 in a Certificate Year): $ 25
ISSUE AGE: 35
ANNUITY COMMENCEMENT DATE: October 1, 2028
INITIAL ALLOCATION:
DIVISIONS OF THE SEPARATE ACCOUNT:
NET DOLLAR
AMOUNT OF
PERCENTAGE ALLOCATIONS
---------- -----------
[ASIAN EQUITY PORTFOLIO 100% $ 5,000
DOMESTIC INCOME PORTFOLIO 0% 00
EMERGING GROWTH PORTFOLIO 0% 00
EMERGING MARKETS EQUITY PORTFOLIO 0% 00
EQUITY GROWTH PORTFOLIO 0% 00
FIXED-INCOME PORTFOLIO 0% 00
GLOBAL EQUITY PORTFOLIO 0% 00
GOVERNMENT PORTFOLIO 0% 00
GROWTH AND INCOME PORTFOLIO 0% 00
HIGH-YIELD PORTFOLIO 0% 00
INTERNATIONAL MAGNUM PORTFOLIO 0% 00
MID CAP VALUE PORTFOLIO 0% 00
MONEY MARKET PORTFOLIO 0% 00
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIOS 0% 00
STRATEGIC STOCK PORTFOLIO 0% 00
VALUE PORTFOLIO 0% 00
FIXED ACCOUNT - 1 YEAR GUARANTEE PERIOD 0% 00
--- -------
TOTAL ALLOCATIONS 100% $5,000]
ANNUITANT: JOE DOE CERTIFICATE NUMBER: 123456
PARTICIPANT: JOE DOE DATE OF ISSUE: OCTOBER 1, 1998
JURISDICTION: NEW YORK THIS IS A (SEX DISTINCT) CERTIFICATE
MASTER CONTRACT OWNER: THE UNITED STATES LIFE GROUP VARIABLE ANNUITY TRUST I
</TABLE>
98033N 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.
MORGAN STANLEY UNIVERSAL FUNDS, INC.
U.S. FIXED INCOME PORTFOLIOS
The FIXED INCOME PORTFOLIO seeks above-average total return over a market cycle
of three to five years by investing primarily in a diversified portfolio of U.S.
Governments and Agencies, Corporate Bonds, Mortgage-Backed Securities, Foreign
Bonds and other Fixed Income Securities and derivatives.
The HIGH YIELD PORTFOLIO seeks above-average total return over a market cycle of
three to five years by investing primarily in a diversified portfolio of High
Yield Securities, including Corporate Bonds and other Fixed Income Securities
and Derivatives.
U.S. EQUITY PORTFOLIOS
The EQUITY GROWTH PORTFOLIO seeks long-term capital appreciation by investing
primarily in Equity Securities of medium and large capitalization companies
that, in the Investment Advisor's judgment, provide above-average potential for
capital growth.
The MID CAP VALUE PORTFOLIO seeks above-average total return over a market cycle
of three to five years by investing in Common Stocks and other Equity Securities
of issuers with equity capitalizations in the range of the companies represented
in the Standard & Poor's Ratings Group MidCap 400 Index.
The VALUE PORTFOLIO seeks above-average total return over a market cycle of
three to five years by investing primarily in a diversified portfolio of Common
Stocks and other Equity Securities that are deemed by the Investment Advisor to
be relatively undervalued based on various measures such as price/earnings ratio
and price/book ratios.
GLOBAL PORTFOLIOS
The ASIAN EQUITY PORTFOLIO seeks long-term capital appreciation by investing
primarily in Equity Securities of Asian issuers (excluding Japan) through the
selection of individual stocks that the Investment Advisor believes are
undervalued. The Portfolio intends to invest primarily in Equity Securities
that are traded on recognized stock exchanges of countries in Asia and in Equity
Securities of companies organized under the laws of an Asian country whose
business is conducted principally in Asia.
The EMERGING MARKETS EQUITY Portfolio seeks long-term capital appreciation by
investing primarily in Equity Securities of emerging market country issuers with
a focus on those in which the Investment Advisor believes the economies are
developing strongly and in which the markets are becoming more sophisticated.
98033N Page 3A
<PAGE>
The GLOBAL EQUITY PORTFOLIO seeks long-term capital appreciation by investing
primarily in Equity Securities of issuers throughout the world, including U.S.
issuers, through the selection of individual stocks that the Investment Advisor
believes are undervalued.
VAN KAMPEN LIFE INVESTMENT TRUST
The INTERNATIONAL MAGNUM PORTFOLIO seeks long-term capital appreciation by
investing primarily in Equity Securities of non-U.S. issuers domiciled in EAFE
countries (Australia, Japan, New Zealand, most nations located in Western Europe
and certain developed countries in Asia, such as Hong Kong and Singapore.
The DOMESTIC INCOME PORTFOLIO seeks current income as its primary investment
objective by investing in a diversified portfolio of fixed-income securities.
The Portfolio expects that at all times at least 80% of its assets will be
Invested in (1) fixed-income securities rated at the time of purchase B or
higher by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group,
(2) nonrated debt securities believed by the Investment Adviser to be of
comparable quality, and (3) U.S. Government securities.
THE EMERGING GROWTH PORTFOLIO seeks capital appreciation by investing in a
portfolio of securities consisting principally of common stock of small and
medium sized companies considered by the Investment Adviser to be emerging
growth companies.
The ENTERPRISE PORTFOLIO seeks capital appreciation through investments in
securities believed by the Investment Adviser to have above average potential
for capital appreciation.
The GOVERNMENT PORTFOLIO seeks high current return consistent with preservation
of capital by investing primarily in debt securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. The Portfolio may sell and
purchase call and put options. The Portfolio also may purchase and sell
interest rate futures contracts and options on such contracts since such
transactions entered into for bona fide hedging purposes. The Portfolio may
Purchase or sell US Government Securities on a forward commitment basis.
The GROWTH AND INCOME PORTFOLIO seeks long-term growth of capital and income by
investing primarily in income-producing equity securities including common stock
and convertible securities. Investments may also be made in non-convertible
preferred stocks and debt securities.
The MONEY MARKET PORTFOLIO seeks protection of capital and high current income
by investing in money-market investments. Investments in the Money Market
Portfolio are neither insured no guaranteed by the U.S. Government. Although
the Money Market Portfolio seeks to maintain a stable net asset value of $1.00
per share, there is no assurance that it will be able to do so.
The MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO seeks long-term growth of
capital as its primary investment objective by investing principally in
companies operating in the real estate industry. Real Estate Securities include
equity securities, including common stocks and convertible securities, as well
as non-convertible preferred stocks and debt securities of real estate industry
companies.
STRATEGIC STOCK Portfolio seeks an above average total return through a
combination of potential capital appreciation and dividend income consistent
with the preservation of invested capital by investing primarily in a portfolio
of dividend paying Equity Securities included in the Dow Jones Industrial
Average or in the Morgan Stanley Capital International USA Index.
98033N Page 3B
<PAGE>
DEFINITIONS
"WE", "OUR , US", OR "COMPANY". "We" ," our" , us", or "Company" means 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 fixed Account or the Separate Account and held under the
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 (US) Annuity
Service Center to which all Purchase Payments, requests, directions and other
communications should be directed. The US Annuity Service Center is located at
2727-A Allen Parkway, Houston, Texas 77019-2191.
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 a page 3 of this Certificate.
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 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 YEAR. A period of 12 consecutive months beginning on the Date of
Issue of the certificate or an anniversary thereof.
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.
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.
98033N Page 4
<PAGE>
FIXED ANNUITY OPTION. An Account which provides interest at a guaranteed fixed
rate for a guaranteed period.
ISSUE AGE. Age last birthday on 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 the special
federal income tax treatment applicable in connection with retirement plans.
PARTICIPANT. (Certificate Owner) The person named in the Certificate who is
entitled to exercise all rights and privileges of ownership under the
Certificate.
PARTICIPANT'S ACCOUNT. An account established for each Participant to which
Purchase Payments are credited.
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 Payment Certificate Values.
PURCHASE PAYMENT. An amount paid to the Company as consideration for the
benefits describe herein.
QUALIFIED CONTRACT. A Certificate that is qualified for the 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 asset 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 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.
98033N Page 5
<PAGE>
GENERAL PROVISIONS
ENTIRE CONTRACT. The Certificate will be attached to and made a part of the
Contract. The 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 Contract Owner, Participant or
Annuitant will be deemed representations and not warranties. No statement will
be used to reduce a claim under the Certificate unless it is in writing and made
a part of the Certificate. Nothing in the group annuity Contract invalidates or
impairs any right granted to the Certificate holder chapter 28, Article 32,
Section 3219 of New York Insurance Laws, or the 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 to the effective date of such
limitation or discontinuance.
GUARANTEES. We guarantee that the dollar amount of Variable Annuity Payments
made during the lifetime of the Payee(s) will not be adversely affected by our
actual mortality experience or by the actual expenses incurred by us in excess
of the expense deductions provided for in this Certificate.
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 objective 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 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 share 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 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.
98033N Page 6
<PAGE>
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.
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 $500
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.
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.
The Master Contract will terminate when all funds from all Certificates are
withdrawn.
PURCHASE PAYMENTS
MINIMUM PAYMENTS. The minimum amounts acceptable as Purchase Payments are shown
on page 3. We reserve the right to modify these minimums or to refuse a Purchase
Payment for any reason.
MAXIMUM PAYMENTS. 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 by Written notice.
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 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 so received.
We reserve the right to limit the total number of Fixed Account Guarantee
Periods and Separate Account Divisions that may be chosen while the Certificate
remains in force.
PREMIUM TAXES. When applicable, we will deduct an amount to cover premium
taxes. Such deduction will be made:
1. From Purchase Payment(s) when received; or
2. From Your Account Value at the time annuity payments are to commence; or
3. From the amount of any partial withdrawal; or
4. From proceeds payable upon termination of the Certificate for any other
reason, including death of the Annuitant or Participant, or surrender of the
Certificate.
If premium tax is paid, the Company may reimburse itself for such tax when
deduction is being made under paragraphs 2, 3 or 4 above calculated by
multiplying the sum of Purchase Payments begin withdrawn by the applicable
premium tax percentage.
OWNERSHIP PROVISIONS
The Master Contract is owned by the Organization named on page 3 of this
Certificate.
98033N Page 7
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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 term "Beneficiary", as used in this Certificate, means the
Beneficiary designated by the Participant in the application for this
Certificate, or as later changed by the Participant. The Beneficiary will
receive any proceeds that may become payable:
1. Upon the death of the Annuitant, provided no Contingent Annuitant survives;
or
2. Upon the death of the Participant (other than a Joint Participant) of a Non-
Qualified contract during the Accumulation Period. (See "Death of the
Participant Prior to the Annuity Date - Non-Qualified Contracts Only".)
Unless otherwise provided in the Beneficiary designation:
1. If any Beneficiary dies, that Beneficiary's interest will pass to any other
Beneficiary according to the surviving Beneficiary's respective interest.
2. If no Beneficiary survives to receive proceeds, such proceeds will be paid in
one sum to the Participant, if living; otherwise such proceeds will be paid
to the Participant's estate. If payment is made to the Participant's estate,
the estate will be required to accept payment within 5 years of the date of
death.
Provisions in this Certificate regarding the payments to a Beneficiary upon the
death of the Annuitant will also apply to any proceeds payable to a Beneficiary
upon the death of the Participant (other than a Joint Participant - See "Death
of the Participant Prior to the Annuity Date Non-Qualified Contracts Only").
Payment in the event of the Participant's death will be made upon receipt in our
Home Office of a written request for proceeds and due proof of the Participant's
death.
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 of
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.
98033N Page 8
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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.
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 CONTRACT
ONLY. AS used in the 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 prior to the Annuitant and before the Annuity
Commencement Date, the death proceeds must be distributed to the Beneficiary
either (1) within 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
Beneficiary, 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 the
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. 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;
(4) The Cash Surrender Value of the Participant's Account; and
(5) The Death Benefit.
98033N Page 9
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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; less
(3) The Certificate Fee allocated to that Guarantee Period.
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 s 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 an 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 $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 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.
98033N Page 10
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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 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 of 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 in the Certificate, 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 found on pages 3A and 3B.
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 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 was
arbitrarily set as of the date the Division first purchased Variable Fund
shares. Subsequent 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 or 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 a factor representing the mortality risk, expense risk, and
administrative expense charge. We will determine the daily asset charge
factor annually, but in no event may it exceed the Maximum Asset Charge
Factor as specified on Page 3.
98033N Page 11
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SEPARATE ACCOUNT VALUE. The 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.
TRANSFERS. Transfers may be made at any time during the Accumulation Period
after the first 30 day 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 a 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 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 transfer 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, You may make one transfer during any 180
day period; such transfer is without charge. You may not make transfers from the
fixed annuity 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:
98033N Page 12
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(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 the 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 periodic
transfer of funds in accordance with the "Transfers" provision and instructions
from the Participant.
SURRENDERS
GENERAL SURRENDER PROVISIONS. The amount surrendered will normally be paid to
You within 5 Valuation Dates following Our receipt of:
(1) Your Written request on a form acceptable to us; and
(2) The Certificate, if required.
We reserve the right to defer payment of surrenders from the Fixed Account for
up to 6 months from date We receive the request.
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
form acceptable to Us;
(2) Minus any applicable Surrender Charge;
(3) Minus any applicable Certificate Fee; and
(4) 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 be
terminated 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 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 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, Your
entire Account Value;
98033N Page 13
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(2) We will surrender Division Accumulation Units from the Separate Account, or
interests in Guarantee Period so that the total amount withdrawn will be the
sum of:
(a) The amount payable to You;
(b) Plus any Surrender Charge and any applicable premium tax;
(3) If the Account Value in any Division or Guarantee Period (except the Money
Market Division falls below $600, We reserve the right to transfer the
remaining balance without charge to the Money Market Division;
(4) If a Partial withdrawal would cause Your Account Value to fall below $500,
We may cancel this Certificate upon 60 days' notice. Such cancellation
would be considered a full surrender of this Certificate.
SURRENDER CHARGE FOR PARTIAL WITHDRAWALS AND FULL SURRENDERS. Except as noted
under "Surrender Charge Exceptions", a Surrender Charge will be applied to the
amount of any Purchase Payment withdrawn during the first 7 years after it was
first credited, as follows:
YEAR OF PURCHASE SURRENDER CHARGE AS A PERCENTAGE
PAYMENT WITHDRAWAL OF PURCHASE PAYMENT WITHDRAWN
1st and 2nd 6%
3rd and 4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
For purposes of computing the Surrender Charge, the oldest Purchase Payments are
deemed to be withdrawn first, and before any amounts in excess of Purchase
Payments are withdrawn from a Participant's Account. The following transactions
will be considered as withdrawals for purposes of computing the Surrender
Charge: total surrender, partial withdrawal, commencement of an annuity payment
option and termination due to insufficient Participant Account Value.
SURRENDER CHARGE EXCEPTIONS. The Surrender Charge will not apply:
(1) To any amounts in excess of Purchase Payments that are withdrawn from a
Participant's Account;
(2) To any amounts in excess of the amount permitted by the 15% Free Withdrawal
Privilege if such amounts are required to be withdrawn to obtain or retain
favorable federal tax treatment; (The granting of this exception is subject
to Our approval);
(3) Upon the death of the Annuitant at any age during the Payout Period;
(4) Upon the death of the Annuitant at any age during the Accumulation Period
if no Contingent annuitant survives;
(5) Upon the death of the Participant of a Nonqualified Contract unless this
Certificate is being continued under the special rule for a surviving
spouse as defined under Internal Revenue Code Section 72(s);
(6) Upon selection of an annuity payment option over a period of at least 5
years;
(7) Upon selection of an annuity payment option based on life contingencies if
life expectancy is at least 5 years.
98033N Page 14
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Upon selection of an annuity payment option that does not qualify for a
Surrender Charge Exception the amount applied will be the greater of the cash
surrender benefit, or 95 percent of what the cash surrender benefit would be if
there were no Surrender Charge.
15% FREE WITHDRAWAL PRIVILEGE. The Surrender Charge in any Certificate year
will not apply to the portion of each withdrawal or a total surrender that is
equal to or less than:
(1) Fifteen Percent (15%) of the amount of Purchase Payments not previously
withdrawn that have been credited to the Certificate for at least one year,
but not more than 7 years; less
(2) The amount of any previous withdrawals made during such Certificate year.
For withdrawals under a systematic withdrawal plan, Purchase Payments credited
for 30 days or more are eligible for the 15% Free Withdrawal Privilege.
If multiple withdrawals are made during a Certificate Year, the amount eligible
for the free withdrawal will be recalculated at the time of each Partial
Withdrawal. After the first Certificate Year non-automatic and automatic
withdrawals may be made in the same Certificate Year subject to the 15%
limitation.
A free withdrawal pursuant to any of the foregoing Surrender Charge Exceptions
is not deemed a withdrawal of Purchase Payments except for purposes of computing
the 15% free withdrawals privilege.
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) We will waive surrender charges on multiple installments, the total of which
does not exceed the amount eligible for free withdrawal under the 10% Free
Withdrawal Privilege in a Certificate Year;
(5) 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.
98033N Page 15
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CERTIFICATE FEE
MANNER OF DEDUCTING. An annual Certificate Fee not to exceed $30.00 will be
deducted at the end of each Certificate Year prior to the Annuity Commencement
Date. Unless paid directly, the fee will be allocated among the Guarantee
Periods and Divisions in proportion to the Participant's Account Value in each.
The entire fee for the year will be deducted from the proceeds of any full
surrender certificate.
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.
ONE-TIME REINVESTMENT PRIVILEGE
REINVESTMENT OF ACCOUNT VALUE. If the Participant has made a full surrender of
the Account Value, the Participant may reinvest the Account Value if We receive
the Written reinvestment request and the net surrender proceeds not more than 30
days after the date of surrender. In such a case, the Participant's Account
Value will be restored to what it was at the time of the surrender (less any
annual Certificate maintenance charge that has since become payable). Any
subsequent Surrender Charge will be computed as if the Certificate had been
issued at the date of reinvestment in consideration of a Purchase Payment in the
amount of such net surrender proceeds. This one-time reinvestment privilege is
available only if the Participant's Account Value following the reinvestment
would be at least $500. Unless the Participant requests otherwise in Writing,
the Account Value following the reinvestment will be allocated among the
Divisions and Guarantee Periods in the same proportions as those prior to
surrender.
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 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:
(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. If the surviving Joint Participant is the
spouse of the deceased Joint Participant, then the surviving Joint
Participant may continue the Certificate under the "Death of the Participant
Prior to the Annuity Date - Non-Qualified Contracts Only" provision as if he
or she had been designated as Beneficiary. Otherwise death proceeds will be
paid to the person designated as Beneficiary unless Joint Participants have
specified in writing that death proceeds are to be aid in a different
manner.
If the Annuitant or such Participant dies, the amount of the death proceeds will
be the greatest of the following amounts, less any applicable Premium Tax:
(1) The sum of all Net Purchase Payments less any prior Partial Withdrawals;
98033N Page 16
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(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; or
(3) The Highest Anniversary Value prior to the date of death, determined as
follows:
(a) We will calculate the Account Values at the end of each of the past
Certificate anniversaries that occurred prior to the deceased's 81st
birthday;
(b) Each of the Account Values will be increased by the amount of Net
Purchase Payments made since the end of such Certificate Years;
(c) The result will be reduced by the amount of any withdrawals made since
the end of such Certificate Years;
(d) The Highest Anniversary Value will be an amount equal to the highest of
such values.
NOTE: IN DETERMINING THE "HIGHEST ANNIVERSARY VALUE", WE ARE COMPARING THE
TOTAL OF THE ACCOUNT VALUES - THE SUM OF THE FIXED ACCOUNT VALUES AND SEPARATE
ACCOUNT VALUES. THEREFORE, THE HIGHEST ANNIVERSARY VALUE WILL NOT NECESSARILY
INCLUDE EITHER THE HIGHEST SEPARATE ACCOUNT VALUE OR THE HIGHEST FIXED ACCOUNT
VALUE.
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 ON OR 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 annuity form in effect.
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.
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.
98033N Page 17
<PAGE>
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 Options described in this 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 an applicable charges and 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 the Certificate be
applied under any of the options 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 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, 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 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 described
above. (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 was arbitrarily set when the Division first
converted Division Accumulation Units into Division Annuity Units. Subsequent
values on any Valuation Date are equal to the previous Division Annuity Unit
Value times the Net Investment Factor for that Division for the
98033N Page 18
<PAGE>
Valuation Period ending on that Valuation Date, with an offset for the 3 1/2%
assumed interest rate used in the annuity tables of the Certificate.
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 form 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 form 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.
We guarantee that the amount of each payment will not be affected by variations
in expense or mortality experience.
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 at 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 Surrender Charge, uncollected annual Maintenance Charge
and applicable premium tax) to the Annuitant or other properly-designated Payee.
98033N Page 19
<PAGE>
MISSTATEMENT OF AGE OR SEX (MISSTATEMENT OF AGE IF ISSUED on A UNISEX BASIS).
In the event the age or sex of the Annuitant has been misstated, (age of the
Annuitant if issued on a unisex basis), 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 underpayments to
the next payment due. Interest at an effective annual rate of 3.5% 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. The first two pages
of tables are based on the 1983a Male or Female Tables adjusted by projection
scale G for 9 years. The table on the last page is 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 sex
of the Annuitant (unless issued on a unisex basis) 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 (unless issued on a
unisex basis) and their adjusted ages at the time the first payment is due.
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 85 life annuity Option 2 rate also used for ages above 85.
ALTERNATE AMOUNT OF INSTALLMENTS UNDER FIXED LIFE INCOME OPTIONS. When annuity
payments are to begin, the Company will provide life income payments based on
fixed single premium immediate annuity rates then offered the Company to the
same class of Annuitants if:
(1) A fixed life income option is elected; and
(2) Such rates are more favorable than those guaranteed in the Certificate.
98033N Page 20
<PAGE>
ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH $1,000 OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
<TABLE>
<CAPTION>
Adjusted Age Monthly Payments Guaranteed
of Male Option l* Option 2 Option 2 Option 2
None 120 180 240
<S> <C> <C> <C> <C>
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
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
</TABLE>
*Not available above Adjusted Age 70.
98033N Page 21
<PAGE>
Adjusted Age Monthly Payments Guaranteed
of Female Option l* Option 2 Option 2 Option 2
None 120 180 240
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.
0ption 3 - Joint and Last Survivor Life Annuity (Available only if one person
is Adjusted Age 70 or less)
<TABLE>
<CAPTION>
Adjusted Age
of Annuitant Adjusted Age of Secondary Annuitant
Female
Male F50 F55 F60 F65 F70
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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
98033N Page 22
<PAGE>
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
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
98033N Page 23
<PAGE>
ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH 1,000 OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
<TABLE>
<CAPTION>
Adjusted Unisex Monthly Payments Guaranteed
Age
Option 1* Option 2 Option 2 Option 2
None 120 180 240
<S> <C> <C> <C> <C>
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
</TABLE>
0ption 3 - Joint and Last Survivor Life Annuity (Available only if one person
is Adjusted Age 70 or less)
<TABLE>
<CAPTION>
Adjusted Age Adjusted Age of Secondary Annuitant
of Annuitant
Unisex 50 55 60 65 70
<S> <C> <C> <C> <C> <C>
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
</TABLE>
*Not available above Adjusted Unisex Age 70.
98033N Page 21
<PAGE>
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
98033N Page 22
<PAGE>
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
This is a FLEXIBLE PAYMENT VARIABLE and FIXED GROUP DEFERRED ANNUITY
CERTIFICATE. NON-PARTICIPATING - 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 your 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
1-800-346-4944
98033N
<PAGE>
EXHIBIT 5(a)
<TABLE>
<CAPTION>
THE UNITED STATES LIFE INSURANCE COMPANY
[LOGO APPEARS HERE] In the City of New York GENERATIONS(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) JOINT PARTICIPANT (optional)
Name:________________________________________ Name:________________________________________
Address:_____________________________________ Address:_____________________________________
Phone:_____________ DOB:________ (Max Age 85) Phone:____________ DOB:_________ (Max Age 85)
Sex: [_] M [_] F SS#:_____________________ Sex: [_] M [_] F SS#:______________________
- ---------------------------------------------------------------------------------------------------------------------
4. BENEFICIARY DESIGNATION (if more space is needed, use Section 10):
PRIMARY (if more than one, indicate percentages) CONTINGENT (if more than one, indicate percentages)
Name/Relationship Name/Relationship
- ---------------------------------------------------------------------------------------------------------------------
5. PAYMENT INFORMATION
Initial Purchase Payment $____________ If [_]1035X OR [_] Transfer, estimated amount $____________
[_] Non-Qualified: (minimum $5,000) [_] Qualified: (minimum $2,000) (check appropriate boxes in sections A and B)
A. [_] Rollover [_] Transfer
B. Type of Plan: [_] IRA [_] SEP-IRA [_] 401(k) [_] 401(a) [_] 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.
- ---------------------------------------------------------------------------------------------------------------------
6. INVESTMENT OPTIONS Total allocation must equal 100%. Use whole percentages only.
Asian Equity (95) ________% Global Equity (85) ________% Morgan Stanley
Domestic Income (80) ________% Government (86) ________% Real Estate Securities (93) ________%
Emerging Growth (81) ________% Growth and Income (88) ________% Strategic Stock (96) ________%
Emerging Markets Equity (82) ________% High Yield (89) ________% Value (94) ________%
Enterprise (83) ________% International Magnum (90) ________% 1-Year Guarantee Period ________%
Equity Growth (87) ________% Mid Cap Value (91) ________% Other ______________________ ________%
Fixed Income (84) ________% Money Market (92) ________%
- ---------------------------------------------------------------------------------------------------------------------
7. AUTOMATIC REBALANCING ($25,000 minimum) Total allocation must equal 100%. Use whole percentages only.
[_] Check here for Automatic Rebalancing of investments, based on certificate anniversary, to the VARIABLE
ALLOCATIONS ONLY indicated below or then in effect.
FREQUENCY: [_] Quarterly [_] Semiannually [_] Annually
Asian Equity (95) ________% Global Equity (85) ________% Morgan Stanley
Domestic Income (80) ________% Government (86) ________% Real Estate Securities (93) ________%
Emerging Growth (81) ________% Growth and Income (88) ________% Strategic Stock (96) ________%
Emerging Markets Equity (82) ________% High Yield (89) ________% Value (94) ________%
Enterprise (83) ________% International Magnum (90) ________% Other ______________________ ________%
Equity Growth (87) ________% Mid Cap Value (91) ________%
Fixed Income (84) ________% Money Market (92) ________%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
8. DOLLAR COST AVERAGING
DOLLAR COST AVERAGE: [_]$__________ OR [_]____% taken from the [_] Money Market OR [_] 1-Year Guarantee Period
FREQUENCY: [_] Monthly [_] Quarterly [_] Semiannually [_] Annually
DURATION: [_] 12 months [_] 24 months [_] 36 months [_] 48 months [_] 60 months to be allocated to
the following Variable Division(s) as indicated: (When furnishing the allocations below, you must only use EITHER
dollars OR percentages throughout the request.)
Asian Equity (95) ________ Global Equity (85) ________ Morgan Stanley
Domestic Income (80) ________ Government (86) ________ Real Estate Securities (93) ________
Emerging Growth (81) ________ Growth and Income (88) ________ Strategic Stock (96) ________
Emerging Markets Equity (82) ________ High Yield (89) ________ Value (94) ________
Enterprise (83) ________ International Magnum (90) ________ Other ______________________ ________
Equity Growth (87) ________ Mid Cap Value (91) ________
Fixed Income (84) ________ Money Market (92) ________
- -----------------------------------------------------------------------------------------------------------------------
9. 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.)
- -----------------------------------------------------------------------------------------------------------------------
10. SPECIAL INSTRUCTIONS
- -----------------------------------------------------------------------------------------------------------------------
11. 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 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 current prospectuses for the The United StateS Life Insurance Company In the City of
New York Separate Account USL VA-R, Van Kampen Life Investment Trust, and Morgan Stanley Universal Funds, Inc. 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 prospectuses.
--------------------------------------------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------------------------------------------
Signed at_____________________________________________________________________ Date:____________________________
CITY STATE
_______________________________________________________ _________________________________________________________
SIGNATURE OF ANNUITANT SIGNATURE OF PARTICIPANT (if different than Annuitant)
_______________________________________________________ _________________________________________________________
SIGNATURE OF CONTINGENT ANNUITANT (if applicable) SIGNATURE OF JOINT PARTICIPANT (if applicable)
- -------------------------------------------------------------------------------------------------------------------------
12. DEALER/LICENSED AGENT INFORMATION AND SIGNATURES
Licensed Agent: ___________________________________________ _______________________________________________
PRINT NAME AGENT NUMBER/LOCATION
___________________________________________ _______________________________________________
PHONE STATE LICENSE NUMBER
Will the proposed variable annuity replace any existing annuity or insurance contract? [_] No [_] Yes
The agent hereby certifies he/she witnessed the signature(s) contained in this application and that all information
contained in this application is true to the best of his/her knowledge and belief.
Signature of Licensed Agent: _____________________________________________________
Broker Dealer: ___________________________________________________________________
PRINT NAME
Branch Office: _____________________________________________________________________________________________________
STREET ADDRESS CITY STATE ZIP
- ------------------------------------------------------------------------------------------------------------------------
FOR AGENT USE ONLY--CONTACT YOUR HOME OFFICE FOR DETAILS. [_] PROFILE A [_] PROFILE B [_] PROFILE C
ONCE SELECTED, PROFILE CANNOT BE CHANGED ON THIS CERTIFICATE.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 6(a)
RESTATED CHARTER
OF
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
Under Section 807 of the Business Corporation Law and Section 1206 of the
Insurance Law.
We, the undersigned, Gordon E. Crosby, Jr., and Walter A. Denby, being
respectively the Chairman of the Board and the Corporate Secretary of The United
States Life Insurance Company in the City of New York, hereby certify
1. The name of the corporation is The United States Life Insurance
Company in the City of New York.
2. The corporation was incorporated pursuant to the Act of April 10,
1849, being Chapter 308 of the Laws of the State of New York. The Charter of
this corporation was filed with the Secretary of State on January 26, 1850.
3. The text of the Charter, as amended theretofore is hereby restated
without further amendment or change to read as herein set forth in full as
follows:
ARTICLE I
NAME
The name of the Company shall be The United States Life Insurance Company
in the City of New York.
ARTICLE II
PRINCIPAL OFFICE
The Company shall be located and have its principal place of business in
the City and State of New York.
ARTICLE III
NATURE OF BUSINESS
Section 1. The kinds of insurance to be transacted by the Company shall be
"Life insurance", "Annuities", "Accident and Health insurance", as specified in
paragraphs 1, 2 and 3 of Section 46 of the Insurance Law of the State of New
York, as now or hereafter amended,
<PAGE>
together with any other kind or kinds of business necessarily or properly
incidental to the kinds of insurance business which the Company is authorized to
do.
Section 2. The Company shall also have the general rights, powers and
privileges of a corporation, as the same now or hereafter are declared by the
laws of the State of New York, and any and all other rights, powers and
privileges now or hereafter granted by the laws of the State of New York to
stock life insurance companies having power to do the kinds of business
hereinabove referred to.
ARTICLE IV
EXERCISE OF CORPORATE POWERS
The corporate powers of the Company shall be exercised by a Board of
Directors and such committees, officers and agents as the Board of Directors may
appoint, authorize or elect.
ARTICLE V
BY-LAWS
The Board of Directors shall have power to make such by-laws, rules and
regulations as it may deem necessary or proper for the regulation of the
business affairs of the Company not inconsistent with this Charter or the laws
of the State of New York, and to alter, amend, rescind or suspend any by-laws,
rules and regulations of the Company by a majority vote of the entire Board of
Directors.
ARTICLE VI
DIRECTORS
Section 1. The full Board of Directors shall be elected annually by the
stockholders at their annual meeting held on the third Tuesday in May of each
year unless such day be a legal holiday in which event it shall be held on the
next succeeding business day not a legal holiday. Every stockholder possessing
the right to vote shall be entitled to one vote, in person or by proxy duly
authorized in writing, for each share of Capital Stock standing in his name on
the books of the Company.
Section 2. The Board of Directors of the Company shall consist of such
number of directors as may be fixed from time to time by the By-Laws, provided
that in no event shall the number be less than thirteen nor more than twenty-
five.
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Section 3. At all times the majority of the directors shall be citizens
and residents of the State of New York or of the adjoining states, and at least
three directors shall be residents of this State.
Section 4. A director need not be a stockholder or a policyholder of the
Company.
Section 5. Vacancies in the Board of Directors shall be filled as provided
in the By-Laws.
Section 6. Members of the Board of Directors shall continue in office
until the election or appointment of their successors.
ARTICLE VII
OFFICERS
The Board of Directors shall elect the officers of the Company at the times
and in the manner provided in the By-Laws. Vacancies may be filled at any
meeting of the Board of Directors.
ARTICLE VIII
CAPITAL STOCK
Section 1. The authorized Capital of the Company shall be Three Million
Nine Hundred Sixty-One Thousand Three Hundred Sixteen Dollars ($3,961,316),
represented by One Million Nine Hundred Eighty Thousand Six Hundred Fifty Eight
(1,980,658) shares of Capital Stock of the par value of Two Dollars ($2.00) per
share, which shall be personal property transferable on the books of the
Company, according to law and the By-Laws of the Company.
Section 2. The holders of the Capital Stock shall be entitled to receive
dividends on the amount of stock held by them respectively in such amounts and
at such times as the same may be declared by the Board of Directors out of the
surplus of the Company, applicable thereto under and pursuant to the laws of the
State of New York.
ARTICLE IX
INDEMNIFICATION
The Company will provide indemnity to its directors and officers to the
fullest extent allowed by law as set forth in the By-Laws, as such By-Laws may
be amended from time to time. The Board of Directors in its discretion shall
have power on behalf of the Company to indemnify any person, other than a
director or officer, made a party to any action, suit or proceeding by reason of
the fact that he, his testator or intestate is or was an employee of the
Company.
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ARTICLE X
LIMITATION OF DIRECTORS' LIABILITY
No Director of the Company shall be personally liable to the Company or any
of its shareholders for damages for any breach of duty as a Director; provided,
however, that the foregoing provision shall not eliminate or limit (i) the
liability of a Director if a judgment or other final adjudication adverse to the
Director establishes that the Director's acts or omissions were in bad faith or
involved intentional misconduct or were acts or omissions which (a) the Director
knew or reasonably should have known violated the Insurance Law or (b) violated
a specific standard of care imposed on Directors directly, and not by reference,
by a provision of the Insurance Law, or a regulation promulgated thereunder, or
constituted a knowing violation of any other law or that the Director personally
gained in fact a financial profit or other advantage to which the Director was
not legally entitled; or (ii) the liability of a Director for any act or
omission prior to the adoption of this amendment by the shareholders of the
Company.
ARTICLE XI
DURATION OF THE COMPANY
The duration of the Company shall be perpetual.
4. This Restatement of the Charter was authorized by the shareholder.
IN WITNESS WHEREOF, the undersigned hereby affirm that the statements made
herein are true under the penalties of perjury this 11th day of January, 1990.
/s/ Gordon E. Crosby, Jr.
-------------------------------------------------
Gordon E. Crosby, Jr.
Chairman of the Board
/s/ Walter A. Denby
-------------------------------------------------
Walter A. Denby
Secretary
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EXHIBIT 6(b)
BY-LAWS OF
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
(As Amended, May 24, 1994)
ARTICLE I
SHAREHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS. Meetings of the shareholders shall be held at
the principal place of business of the Company in the City and State of New
York, or at such other place within or without the State of New York as may be
determined by the Board of Directors and stated in the notice of the meeting.
Section 2. ANNUAL MEETING. The annual meeting of the shareholders for the
election of Directors and transaction of other business shall be held on the
fourth Tuesday in April of each year unless such day be a legal holiday in which
event it shall be held on the next succeeding business day not a legal holiday.
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the Chairman of Board, the President, or the Board of Directors. No
business shall be considered at such special meetings except such as may be
specified in the written notice thereof.
Section 4. NOTICE. Notice of each annual or special meeting of the
shareholders shall be given as provided in Section 605 of the New York Business
Corporation Law and a copy of every such notice shall be mailed to the
Superintendent of Insurance of the State of New York at least ten days before
the day set for such meeting. Any shareholder may waive notice of any annual or
special meeting. Attendance at any meeting in person or by proxy shall
constitute a waiver of notice of such meeting.
Section 5. VOTING. Each shareholder may vote at any meeting of the
shareholders either in person or by proxy filed with the Secretary at or before
such meeting. Each shareholder shall be entitled to one vote for each share
standing in his or her name on the records of the Company. All questions, unless
otherwise provided by law, shall be decided by a majority of the votes thus
cast.
Section 6. QUORUM. A majority of the outstanding shares entitled to be voted,
represented either in person or by proxy, shall be necessary to constitute a
quorum, but less than a quorum may adjourn from time to time without notice
other than by announcement at the meeting until the holders of the number of
shares requisite to constitute a quorum shall be present in person or by proxy.
At such adjourned meeting, at which a quorum shall be present, any business may
be transacted which might have been transacted at the meeting as originally
noticed.
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Section 7. INSPECTORS OF ELECTION. The Executive Committee of the Board of
Directors may at any meeting prior to the annual election of Directors, appoint
one or more inspectors of election to serve at said election.
ARTICLE II
DIRECTORS
Section 1. NUMBER. The number of Directors constituting the entire Board shall
be such number, not less than 13 nor more than 25, as shall be designated by
resolution adopted by vote of a majority of the entire Board of Directors prior
to the annual meeting of shareholders. In the absence of such resolution the
number of Directors to be elected at such annual meeting shall be 13.
Section 2. INDEPENDENT DIRECTORS. Not less than one-third of the entire Board
of Directors shall be Independent Directors. For the purpose of these By-Laws,
Independent Directors shall be defined as persons who are not officers or
employees of the Company or of any entity controlling, controlled by, or under
common control with the Company, and who are not beneficial owners of a
controlling interest in the voting stock of any such entity or the Company.
Section 3. TERM. Each Director shall hold office until the annual meeting of
the shareholders next succeeding his or her election or until his or her
successor is elected subject to the provisions in Section 4 of this Article II.
Section 4. REMOVAL OF DIRECTORS. As provided in Section 706 of the New York
Business Corporation Law, any or all Directors may be removed with or without
cause by vote of the shareholders notwithstanding any term or provision
contained in these By-Laws.
Section 5. VACANCIES. Vacancies in the Board of Directors may be filled by a
majority vote of the Directors then in office at any meeting of the Board of
Directors.
ARTICLE III
DIRECTORS' MEETING
Section 1. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be
held at such times, as may from time to time be designated by resolution of the
Board of Directors. Such meeting shall be held at the principal place of
business of the Company in the City and State of New York, or at such other
place as may be designated by the Board of Directors. The first meeting of the
Board of Directors following the annual election of Directors shall be the
annual meeting of the Board of Directors at which there shall be elected
officers of the Company and members of the Executive Committee and the Audit and
Review Committee.
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Section 2. SPECIAL MEETINGS. The Chairman of the Board of Directors or the
President may in his or her discretion call a special meeting of the Board of
Directors at any time. The Secretary shall call such meeting upon request of
five members of the Board of Directors or upon resolution of the Executive
Committee. All meetings shall be called by a written or printed notice mailed
to each Director at least three days before the meeting.
Section 3. VOTING. Each Director present shall be entitled to cast one vote on
all matters coming before a meeting of the Board of Directors and all matters
unless otherwise provided herein shall be decided by the vote of a majority of
the Directors present at the time of the vote, if a quorum is present at such
time.
Section 4. QUORUM. A majority of the entire Board of Directors shall
constitute a quorum for the transaction of business; but less than a quorum may
adjourn from time to time without notice other than by announcement at the
meeting until a quorum shall be present. At least one Independent Director must
be included in any quorum. Any one or more members of the Board of Directors
may participate in a regular or special meeting of the Board by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time and
participation by such means shall constitute presence in person at such meeting.
Section 5. FEES. The compensation to be paid to Directors for service as Board
members, including any annual retainer and the fees for attending committee
meetings or meetings of the Board shall be fixed by the Board of Directors from
time to time.
ARTICLE IV
COMMITTEES
Section 1. FORMATION. At the annual meeting of the Board of Directors there
shall be elected members of the Executive and the Audit and Review committees.
At any meeting of the Board of Directors there may be elected such special
committees as the Board of Directors may deem necessary. The members of all
committees of the Board shall hold office for such period as the Board of
Directors may determine or until their successors shall be elected. In electing
special committees the Board shall specify the purpose for which they are
established with appropriate names for each, the number of members thereof, and
the limitations within which the powers vested in them may be exercised. The
action of each committee shall be recorded and a report shall be submitted to
the Board of Directors at its meeting next succeeding such action.
Section 2. EXECUTIVE COMMITTEE. The Executive committee of the Board of
Directors shall consist of such numbers as the Board of Directors may determine,
but not less than five Directors, elected from the membership of the Board of
Directors. The Board of Directors may also elect from its membership alternate
members of the Executive Committee and state the succession in which the
alternates shall act in the absence or disability of any member. During the
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intervals between meetings of the Board of Directors, the Executive Committee
shall have all the authority of the Board except as limited by law. The
Executive Committee shall be the investment committee and, subject to the
direction and control of the Board of Directors, it shall be charged with the
duty and responsibility of supervising the Company's investments and loans,
including but not limited to the power to invest, acquire, exchange and dispose
of any of the assets of the Company in such manner and in such amounts as the
committee may determine. All investments shall be made in the name of "The
United States Life Insurance Company in the City of New York" and shall be
authorized or approved by the Board of Directors or by the Executive Committee.
Section 3. AUDIT AND REVIEW COMMITTEE. The Audit and Review Committee of the
Board of Directors shall consist of such number as the Board of Directors may
determine, but not less than five Directors. All members of the Audit and
Review Committee shall be Independent Directors as defined in Article II,
Section 2, herein. Responsibilities of the Audit and Review Committee shall
include recommending the selection of independent certified public accountants,
reviewing the Company's financial condition, reviewing the scope and results of
any independent or internal audit, nominating candidates for director for
election by shareholders, recommending to the Board of Directors director
assignments to Board committees, evaluating the performance of officers deemed
by the Committee to be principal officers of the Company, recommending to the
Board of Directors the selection, promotion, succession, removal and
compensation of such principal officers, and such other duties and
responsibilities with which it may be charged from time to time by the Board of
Directors.
Section 4. VACANCIES. If a vacancy shall occur in the membership of the
Executive Committee, the Audit and Review Committee or any other Committee of
the Board, the Board of Directors shall elect a successor from its membership
and the person thus elected shall become a committee member for the remainder of
the term of his predecessor.
Section 5. QUORUM. A majority of the membership of any Committee of the Board
of Directors shall constitute a quorum to transact business. At least one
Independent Director must be included in any such quorum. Any one or more
members of any Committee may participate in a meeting of the Committee by means
of a telephone conference or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time and
participation by such means shall constitute presence in person at the meeting.
Section 6. VOTING. All matters coming before a meeting of the Executive
Committee, the Audit and Review Committee, or any special committee appointed by
the Board of Directors, unless otherwise specifically provided, shall be decided
by the vote of a majority of the members of such committee present at the time
of the vote, if a quorum is present at such time.
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ARTICLE V
OFFICERS
Section 1. ELECTION AND TERM. The following officers of the Company shall be
elected by the Board of Directors at its annual meeting: The Chairman of the
Board of Directors, the President, one or more Vice Presidents, the Secretary
and the Treasurer. The Board of Directors or the Executive Committee may elect
from time to time other officers as it may deem necessary or proper for the
dispatch of the Company's business. The Chairman of the Board of Directors and
the President shall be elected from the membership of the Board of Directors.
All officers of the Company shall hold office at the discretion of the Board of
Directors. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of two-thirds of the entire Board of Directors or
the Executive Committee. Vacancies may be filled at any meeting of the Board of
Directors or the Executive Committee.
Section 2. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of
Directors shall preside at all meetings of the shareholders and of the Board of
Directors and shall perform such other duties as may be assigned to him or her
from time to time by the Board of Directors.
Section 3. PRESIDENT. In the absence of the Chairman of the Board, the
President shall preside at all meetings of the shareholders and of the Board of
Directors and subject to the direction of the Board of Directors, shall have the
general care and supervision of the affairs of the Company and the direction of
its officers. The President, unless otherwise directed by the Board of
Directors or the Executive Committee, may from time to time designate one of the
Vice Presidents to perform the duties of the President during the latter's
absence.
Section 4. VICE PRESIDENTS. It shall be the duty of the Vice Presidents to
assist the President in the performance of his or her duties ands to perform
such other duties as may be assigned to them by the Board of Directors, the
Executive Committee or the President.
Section 5. SECRETARY. The Secretary shall keep, or cause to be kept, a
complete record of the proceedings of all meeting of the shareholders, Board of
Directors and Executive Committee and the Audit and Review Committee and shall
be the custodian of all corporate books and records and the corporate seal. He
or she shall perform such other duties as may be assigned to him or her by the
Board of Directors, the Executive Committee, the Audit and Review Committee or
the President.
Section 6. TREASURER. Subject to the supervision of the Executive Committee,
the Treasurer shall be the chief investment officer of the Company and shall
administer the investment of its funds. He or she shall also perform such other
duties as may be assigned to him or her by the Board of Directors, the Executive
Committee, the Audit and Review Committee or the President.
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Section 7. OTHER OFFICERS. All other officers shall perform such duties as are
assigned to them by the President and comply with such orders and rules as the
Board of Directors or the Executive Committee may require from time to time.
ARTICLE VI
EXECUTION OF INSTRUMENTS
Section 1. EXECUTION. The Chairman of the Board, the President, or a Vice
President jointly with the Secretary or an Assistant Secretary shall have the
power to execute all contracts, agreements or other instruments necessary or
desirable in the management of the Company's business and such execution shall
be deemed to be the act of the Company, except that the Chairman of the Board or
the President alone shall have the power to execute all contracts or agreements
for or in connection with insurance or annuities. The Board of Directors may
from time to time authorize other officers or employees, or agents of the
Company to execute instruments on behalf of the Company. When authorized by the
Board of Directors, signatures may be engraved or printed facsimiles. Where a
signature on any contract or agreement for or in connection with insurance or
annuities is in facsimile there shall be in addition, a holographic
countersignature of an officer or employee so empowered by the Board.
Section 2. FACSIMILES. Where engraved or printed facsimile signatures are used
on policy forms, checks, receipts or other instruments or documents issued or
delivered by the Company, such policy forms, checks, receipts, instruments or
documents bearing the facsimile signature of a deceased, retired or disabled
officer may nevertheless be issued and delivered during a period not exceeding
six months after the death, retirement or disablement of such officer.
ARTICLE VII
CERTIFICATES FOR SHARES
Certificates representing shares of Capital Stock of the Company shall be in
such form, consistent with the law and the Charter, as shall be approved by the
Board of Directors. They shall be consecutively numbered in thes order of their
issue and shall be signed by the Chairman of the Board, the President or a Vice
President and by the Secretary or an Assistant Secretary, and shall be sealed
with the corporate seal of the Company. Such seal and the signatures of such
officers of the Company, or any of them, may be engraved or printed facsimiles,
if such certificates are signed by a Transfer Agent and registered by a
Registrar appointed by the Board of Directors, otherwise only one such signature
may be engraved or printed facsimile.
In case any officer who shall have signed any such certificate, or whose
facsimile signature shall have been used thereon, shall cease to be such officer
before such certificate shall have been issued by the Company, such certificate
may, nevertheless, be used by the Company with the same
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effect as if such officer had not ceased to be such at the date of issuance of
such certificate. The Board of Directors may appoint a Transfer Agent by whom
the shares of the Company may be transferred and also a Registrar, by whom the
shares may be registered, and in the event of such appointments, no certificate
for shares of the Company shall be valid unless countersigned by such Transfer
Agent and registered by such Registrar.
ARTICLE VIII
TRANSFER OF SHARES
Section 1. TRANSFERS. Certificates for shares may be transferred only by
assignment endorsed thereon, or an instrument of assignment attached thereto,
and executed by the person named in the certificate or by an attorney lawfully
constituted in writing. Except as provided below, transfer of shares shall be
made on the books of the Company only upon a surrender of the certificate
properly assigned and upon such surrender a new certificate shall be issued to
the assignee signed as provided in Article VII. The surrendered certificate
shall be cancelled and delivered to the Secretary who shall preserve the same.
In the event that a certificates has been lost, mislaid, stolen or destroyed,
upon written request of the holder thereof, a replacement certificate may
nevertheless be issued in lieu thereof, in the exercise of the Company's
discretion, which shall be evidenced by a letter signed by the President or any
Vice President, provided that prior to such issue a surety bond, in form
approved by counsel, be furnished for the protection of the Company, its
Transfer Agent, if any, and its Registrar.
Section 2. RECORD DATE. The Board of Directors may, in its discretion, fix in
advance a date not exceeding 50 days nor less than ten days preceding any annual
or special meeting of the shareholders or preceding the day appointed for the
payment of a dividend as the record date for the determination of shareholders
entitled to notice of, and to vote at any such meeting or entitled to receive
any such dividend.
Section 3. HOLDERS OF RECORD. The Company shall be entitled to treat the
holders of record of any share or shares as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person whether or not
it shall have express or other notice thereof.
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ARTICLE IX
ACTION BY WRITTEN CONSENT
Any action required or permitted to be taken at any meeting of the Board of
Directors or any Committee thereof may be taken without a meeting if all members
of the Board or Committee, as the case may be, consent thereto in writing, to
the adoption of a resolution or resolutions authorizing the action and such
resolution or resolutions and the written consents thereto are filed with the
minutes of the proceedings of the Board of Directors or the Committee.
ARTICLE X
COMPLIANCE WITH STATUTORY REQUIREMENTS
The Chairman of the Board of Directors, the President or a Vice President
jointly with the Secretary or an Assistant Secretary are authorized to execute
any and all instruments, agreements and other documents, to appoint attorneys in
fact, and to do any and all other things necessary and proper in order to comply
with the laws and statutory requirements of any state, territory, district,
country or jurisdiction in which the Company is authorized to do, or is doing,
business in which it desires to obtain such authorization.
ARTICLE XI
INDEMNIFICATION
Except to the extent expressly prohibited by the New York Business Corporation
Law or New York Insurance law, the Company shall indemnify 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 legislative, and whether or not for or in the
right of the Company or any other enterprise, by reason of the fact that such
person or such person's testator or interstate is or was a director or officer
of the Company, or is or was a director or officer of the Company who also
serves or served at the request of the Company any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity, against judgements, 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 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
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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 the Company
has given its prior consent to such settlement or other disposition.
The Company shall advance or promptly reimburse, upon request of any person
entitled to indemnification hereunder, all expenses, including attorneys' fees,
reasonably incurred in defending any action or proceeding in advance of the
final disposition thereof 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 the Company 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 actual or potential differing interests between or among
such parties.
Nothing herein shall limit or affect any right of any person otherwise than
hereunder to indemnification or advancement or reimbursement of expenses,
including attorneys' fees, under any statute, rule, regulation, certificate of
incorporation, by-law, insurance policy, contract or otherwise.
No elimination of this by-law, and no amendment of this by-law adversely
affecting the right of any person to indemnification or advancement of expenses
hereunder shall be effective until the 60th day following notice to such person
of such action, and no elimination of or amendment to this by-law shall deprive
any person of his or her rights hereunder arising out of alleged or actual
occurrences, acts or failures to act prior to such 60th day. The provisions of
this paragraph shall supersede anything to the contrary in these By-laws.
The Company shall not, except by elimination or amendment of this by-law in a
manner consistent with the preceding paragraph, 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 this by-law.
The indemnification of any person provided by this by-law shall continue after
such person has ceased to be a director or officer of the Company and shall
inure to the benefit of such person's heirs, executors, administrators and legal
representatives.
The Company 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 this by-law. It is hereby expressly
recognized that all directors and officers of the Company, by serving as such
after the adoption hereof, are acting in reliance hereon and that the Company is
estopped to contend otherwise.
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In case any provisions in this by-law shall be determined at any time to be
unenforceable in any respect, the other provisions shall not in any way be
affected or impaired thereby, and the affected provision shall be given the
fullest possible enforcement in the circumstances, it being the intention of the
Company to afford indemnification and advancement of expenses to its directors
and officers, acting in such capacities or in the other capacities mentioned
herein, to the fullest extent permitted by law.
For purposes of this by-law, the Company shall be deemed to have requested a
director or officer of the Company to serve an employee benefit plan where the
performance by such person of his or her duties to the Company also imposes
duties on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan, and excise taxes assessed on a person
with respect to an employee benefit plan pursuant to applicable law shall be
considered indemnifiable expenses. For purposes of this by-law, the term
"Company" shall include any legal successor to the Company, including any
corporation which acquires all or substantially all of the assets of the Company
in one or more transactions.
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 the first
paragraph of this by-law shall be entitled to indemnification as authorized in
such paragraph. Except as provided in the preceding sentence and unless ordered
by a court, any indemnification under this by-law shall be made by the Company
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 mset the standard of conduct set forth in the first
paragraph of this by-law; 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 this by-law 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 paragraphs.
If any action with respect to indemnification of directors and officers is taken
by way of amendment of these By-laws, resolution of directors, or by agreement,
the Company shall, not later than the next annual meeting of shareholders,
unless such meeting is held within three months from the date of such action,
and in any event, within fifteen months from the date of such action, mail to
its shareholders of record at the time entitled to vote for the election of
directors a statement specifying the action taken.
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The Company shall make no payments under this by-law until the Company shall
have complied with all provisions then in force of New York Insurance law with
respect to indemnification.
ARTICLE XII
AMENDMENTS
These By-laws may be altered, amended, rescinded or suspended at any meeting of
the Board of Directors by a majority vote of the entire Board of Directors.
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