<PAGE>
As filed with the Securities and Exchange Commission on April 14, 1999.
File No. 333-65437
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
A. Exact name of trust: Separate Account Two
B. Name of depositor: Royal Life Insurance Company of America
C. Complete address of depositor's principal executive offices:
P.O. Box 2999
Hartford, CT 06104-2999
D. Name and complete address of agent for service:
Thomas S. Clark, Esq.
Royal Life Insurance Company of America
P.O. Box 2999
Hartford, CT 06104-2999
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
-----
X on May 3, 1999 pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
on ___________ pursuant to paragraph (a)(1) of Rule 485
-----
this post-effective amendment designates a new effective date for
----- a previously filed post-effective amendment.
E. Title and amount of securities being registered: Pursuant to Rule 24f-2
under the Investment Company Act of 1940, the Registrant will register an
indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: Not yet determined.
G. Amount of filing fee: Not applicable.
H. Approximate date of proposed public offering: As soon as practicable after
the effective date of this registration statement.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
Item No. of
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
1. Cover page
2. Cover page
3. Not applicable
4. Royal Life Insurance Company of America; How We Sell Our
Policy
5. The Separate Account
6. The Separate Account
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Funds; Application for a Policy; Policy
Benefits and Rights; Other Matters - Voting Rights,
Dividends
11. Summary; The Funds
12. Summary; The Funds
13. Deductions and Charges; How We Sell Our Policy; Federal
Tax Considerations
14. Application
15. Allocation of Premiums
16. The Funds; Allocation of Premiums
17. Summary; Policy Benefits and Rights - Account Value and
Amount Payable on Surrender of the Policy, Cancellation
and Exchange Rights
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
18. The Funds; Deduction and Charges; Federal Tax
Considerations
19. Other Matters - Statements
20. Not applicable
21. Policy Benefits and Rights - Policy Loans
22. Not applicable
23. Safekeeping of Separate Account Assets
24. Other Matters - Assignment
25. Royal Life Insurance Company of America
26. Not applicable
27. Royal Life Insurance Company of America
28. Royal Life Insurance Company of America
29. Royal Life Insurance Company of America
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. How We Sell Our Policy
36. Not required by Form S-6
37. Not applicable
38. How We Sell Our Policy
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
39. Royal Life Insurance Company of America; How We Sell Our
Policy
40. Not applicable
41. Royal Life Insurance Company of America; How We Sell Our
Policy
42. Not applicable
43. Not applicable
44. Allocation of Premiums
45. Not applicable
46. Policy Benefits and Rights - Account Value
47. The Funds
48. Cover Page; Royal Life Insurance Company of America
49. Not applicable
50. The Separate Account
51. Summary; Royal Life Insurance Company of America; Your
Policy; Policy Benefits and Rights; Other Matters -
Beneficiary
52. The Funds, Investment Adviser
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
PART I
<PAGE>
6
ROYAL LIFE INSURANCE COMPANY OF AMERICA
SEPARATE ACCOUNT TWO
P. O. BOX 2999 Modified Single Premium
HARTFORD, CT 06104-2999 Variable Life Insurance Policies
TELEPHONE (800)862-6668
This Prospectus describes information you should know before you purchase our
variable life insurance policy. Please read it carefully.
The variable life insurance policy is a contract between you and Royal Life
Insurance Company of America where you agree to make payments to us and we
agree to pay a death benefit to your beneficiaries. It is a modified single
premium variable life insurance policy. It is:
X Modified single premium, because you pay one large single payment, and
under certain circumstances you may add payments.
X Variable, because the value of your life insurance policy will fluctuate
with the performance of the stock market.
After purchase, you allocate your payments to "Sub-Accounts" or subdivisions
of our Separate Acount, an account that keeps your life insurance policy
assets separate from our company assets. These Sub-Accounts then purchase
shares of mutual funds set up exclusively for variable annuity or variable
life insurance products. These funds are not the same mutual funds that you
buy through your stockbroker or through a retail mutual fund, but they may
have similar investment strategies and the same portfolio managers as retail
mutual funds. This life insurance policy offers you funds with investment
strategies ranging from conservative to aggressive and you may pick those
funds that meet your investment style. The Sub-Accounts and the funds are
listed below:
- - Bond Sub-Account which purchases shares of Class IA of Hartford Bond HLS
Fund, Inc.
- - High Yield Sub-Account which purchases shares of Class IA of Hartford High
Yield HLS Fund
<PAGE>
7
- - Index Sub-Account which purchases shares of Class IA of Hartford Index
HLS Fund, Inc.
- - Money Market Sub-Account which purchases shares of Class IA of Hartford
Money Market HLS Fund, Inc.
- - Mortgage Securities Sub-Account which purchases shares of Class IA of
Hartford Mortgage Securities HLS Fund, Inc.
If you decide to buy this life insurance policy, you should keep this
prospectus for your records. Although we file the Prospectus with the
Securities and Exchange Commission, the Commission doesn't approve or
disapprove these securities or determine if the information is truthful or
complete. Anyone who represents that the Securities and Exchange Commission
does these things may be guilty of a criminal offense.
This Prospectus can also be obtained from the Securities and Exchange
Commissions' website (HTTP://WWW.SEC.GOV).
This life insurance policy IS NOT:
- - a bank deposit or obligation
- - federally insured
- - endorsed by any bank or governmental agency
- - available for sale in all states
Prospectus Dated: May 3, 1999
<PAGE>
8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ABOUT US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Royal Life Insurance Company of America. . . . . . . . . . . . . . . . . . 16
The Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
YOUR POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Allocation of Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Accumulation Unit Values . . . . . . . . . . . . . . . . . . . . . . . . . 22
DEDUCTIONS AND CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Chart of Deduction and Charges . . . . . . . . . . . . . . . . . . . . . . 23
Cost of Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Administrative Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Annual Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Your Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Option 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Option 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Other Deductions or Charges. . . . . . . . . . . . . . . . . . . . . . . . 28
POLICY BENEFITS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 28
Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Account Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Transfer of Account Value. . . . . . . . . . . . . . . . . . . . . . . . . 29
Policy Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Amount Payable on Surrender of the Policy. . . . . . . . . . . . . . . . . 31
Partial Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Benefits at Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Lapse and Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . 32
Cancellation and Exchange Rights . . . . . . . . . . . . . . . . . . . . . 32
Suspension of Valuation, Payments and Transfers. . . . . . . . . . . . . . 33
LAST SURVIVOR POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . 33
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Limit on Right to Contest. . . . . . . . . . . . . . . . . . . . . . . . . 35
Misstatement as to Age and Sex . . . . . . . . . . . . . . . . . . . . . . 35
Settlement Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
<PAGE>
9
<TABLE>
<S> <C>
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
EXECUTIVE OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . . . . . 38
HOW WE SELL OUR POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS . . . . . . . . . . . . . . . 41
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 42
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Taxation of Royal and the Separate Account . . . . . . . . . . . . . . . . 42
Income Taxation of Policy Benefits . . . . . . . . . . . . . . . . . . . . 42
Last Survivor Policies . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Modified Endowment Policies. . . . . . . . . . . . . . . . . . . . . . . . 43
Estate and Generation Skipping Taxes . . . . . . . . . . . . . . . . . . . 44
Diversification Requirements . . . . . . . . . . . . . . . . . . . . . . . 44
Ownership of the Assets in the Separate Account. . . . . . . . . . . . . . 45
Life Insurance Purchased for Use in Split Dollar Arrangements. . . . . . . 46
Federal Income Tax Withholding . . . . . . . . . . . . . . . . . . . . . . 46
Non-Individual Ownership of Policies . . . . . . . . . . . . . . . . . . . 46
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Life Insurance Purchases by Nonresident Aliens and Foreign Corporations. . 46
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
YEAR 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 48
APPENDIX A -- SPECIAL INFORMATION FOR POLICIES PURCHASED IN NEW YORK . . . 49
APPENDIX B -- ILLUSTRATIONS OF BENEFITS. . . . . . . . . . . . . . . . . . 52
</TABLE>
<PAGE>
10
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The current value of the Sub-Accounts plus the value of the
Loan Account under the Policy.
ACCUMULATION UNIT: A unit of measure we use to calculate the value of a
Sub-Account.
ANNUAL WITHDRAWAL AMOUNT: The amount that can be withdrawn in any Policy
Year before we charge you a surrender charge.
ANNUITY UNIT: A unit of measure we use to calculate the amount of annuity
payments.
ATTAINED AGE: The Issue Age plus the number of fully completed Policy Years.
CASH SURRENDER VALUE: The Cash Value less all Indebtedness.
CASH VALUE: The Account Value less any Surrender Charge and any Unamortized
Tax charge due upon surrender.
CODE: The Internal Revenue Code of 1986, as amended.
COVERAGE AMOUNT: The Death Benefit less the Account Value.
DEATH BENEFIT: The greater of (1) the Face Amount specified in the Policy or
(2) the Account Value on the date of death multiplied by a stated percentage
as specified in the Policy.
DEATH PROCEEDS: The amount that Royal will pay on the death of the Insured.
This equals the Death Benefit less any Indebtedness.
DEDUCTION AMOUNT: A deduction on the Policy Date and on each Monthly
Activity Date for the cost of insurance, Tax Expense charges under Option 1,
an administrative charge and a mortality and expense risk charge.
FACE AMOUNT: On the Policy Date, the Face Amount is the amount shown on the
Policy's Specifications page. Thereafter, the Face Amount is reduced in
proportion to any partial surrenders.
FUNDS: The registered management investment companies in which assets of the
Separate Account may be invested.
GUIDELINE SINGLE PREMIUM: The "Guideline Single Premium" as defined in
Section 7702 of the Code.
<PAGE>
11
HOME OFFICE: Currently located at 200 Hopmeadow Street, Simsbury,
Connecticut; however, the mailing address is P.O. Box 2999, Hartford,
Connecticut 06104-2999.
INDEBTEDNESS: All monies owed to Royal by the Policy Owner, including all
outstanding loans on the Policy, any interest due or accrued and any unpaid
Deduction Amount or annual maintenance fee arising during a grace period.
INSURED: The person on whose life the Policy is issued.
ISSUE AGE: As of the Policy Date, the Insured's age on Insured's last
birthday.
LOAN ACCOUNT: An account in Royal's General Account, established for any
amounts transferred from the Sub-Accounts for requested loans. The Loan
Account credits a fixed rate of interest that is not based on the investment
experience of the Separate Account.
MONTHLY ACTIVITY DATE: The day of each month on which any deductions or
charges are subtracted from the Account Value of the Policy. Monthly
Activity Dates occur on the same day of the month as the Policy Date.
POLICY: The Policy is the individual Policy and any endorsements or riders.
If you are enrolled under a group Policy, the Policy is a certificate.
POLICY ANNIVERSARY: The anniversary of the Policy Date.
POLICY DATE: The date from which Policy Anniversaries and Policy Years are
measured.
POLICY LOAN RATE: The interest rate charged on Policy loans.
POLICY OWNER OR YOU: The owner of the Policy
POLICY OWNER OPTIONS: You may elect one of two options offered by Royal to
pay Mortality and Expense Risk charges and certain tax related charges. You
must elect the option at the time the Policy is issued and the option cannot
be changed once the Policy is issued. The following options are available:
OPTION 1: ASSET BASED CHARGES: Under this option you elect to pay a
Mortality and Expense Risk charge that is deducted monthly from
Account Value at an annual rate of .90% in Policy Years 1 through
10 and at an annual rate of .50% in Policy Years 11 and beyond; a
Tax Expense charge that is also deducted monthly at an annual rate
of .40% for the first 10 Policy Years and an Unamortized Tax charge
that is imposed during the first 9 Policy Years on surrenders or
partial surrenders according to the rate set forth in "Deductions
and Charges - Policy Owner Options - Unamortized Tax Charge." See
"Deductions and Charges - Policy Owner Options."
<PAGE>
12
OPTION 2: FRONTED CHARGES: Under this option you elect to pay a
Mortality and Expense Risk charge that is deducted monthly from
Account Value at an annual rate of .65% in Policy Years 1 through
10 and an annual rate of .50% in Policy Years 11 and beyond and a
Tax Expense charge that is deducted from any Premium payment in all
Policy Years at an annual rate of 4.0%. This option is not
available in all states. See "Deductions and Charges - Policy
Owner Options."
POLICY YEAR: The twelve months between Policy Anniversaries.
ROYAL OR US: Royal Life Insurance Company of America.
SEPARATE ACCOUNT: For this life insurance policy, the separate acccount is
Royal Life Insurance Company of America Separate Account Two.
SUB-ACCOUNT: The subdivisions of the Separate Account.
SURRENDER CHARGE: A charge which may be assessed upon surrender of the Policy
or partial surrenders in excess of the Annual Withdrawal Amount.
VALUATION DAY: The date on which the Sub-Account is valued. The Valuation
Day is every day the New York Stock Exchange is open for trading. The value
of the Separate Account is determined at the close of the New York Stock
Exchange (generally 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
<PAGE>
13
SUMMARY
HOW DO I PURCHASE THE LIFE INSURANCE POLICY?
You apply for life insurance by completing an application. If you are
between the age of 35 and 80, you may be eligible for simplified underwriting
without a medical examination. If you are accepted, you pay one large single
premium. Under certain circumstances you may be able to add additional
premiums.
For a limited time, at least 10 days after you receive your life insurance
policy, you may cancel it without paying a surrender charge. A longer period
is provided in certain cases.
WHAT IS THE DEATH BENEFIT?
You designate a beneficiary who will receive the death benefit if you die
while the policy is in force. The policy pays a minimum death benefit, called
the "face amount." The actual death benefit may be larger than the face
amount if the underlying investments of the policy perform well.
DOES THE POLICY HAVE CASH VALUES?
Yes. The value of your life insurance policy will fluctuate with the
performance of the underlying investments. You may transfer amounts among
your investment options, subject to restrictions.
WHAT TYPE OF SURRENDER CHARGE WILL I PAY?
You don't pay a sales charge when you purchase your policy. We may charge
you deferred sales charge when you terminate or withdraw amounts invested in
your policy. We assess a surrender charge on amounts withdrawn that exceed
10% of the total amounts you have paid into your policy if these amounts have
been in your policy for less than seven years. The surrender charge is
applied to amounts withdrawn that exceed 10% of the total amounts paid in and
will depend on the length of time the payment you made has been in your
policy. If the amount you paid has been in your policy:
X For less than three years, the charge is 7.5%.
X For more than three years and less than five years, the charge is 6%.
X For more than five years and less than seven years, the charge is 4%.
X For more than seven years and less than nine years, the charge is 2%.
You won't be charged a surrender charge on:
X Payments that have been in your policy for more than nine years.
X distributions made due to death
<PAGE>
14
X most payments we make to you as part of an annuity option
See "Surrender Charge" for a complete description of how sales charges are
assessed.
WHAT INSURANCE CHARGES ARE ASSESSED UNDER THE POLICY?
We will deduct an amount from your policy each month to cover certain
charges. These charges include a cost of insurance charge, a tax expense
charge under Option 1, an administrative charge and a mortality and expense
risk charge. If your policy is worth less than $50,000, or if you terminate
your policy, we will deduct an annual maintenance fee of $30.
You may choose to pay these charges under one of two options. Once chosen,
you cannot change your option:
UNDER OPTION 1:
X We will deduct a mortality and expense risk charge each month at an
annual rate of .90% during the first 10 years of your policy, and
thereafter at an annual rate of .50%.
X We will deduct a tax expense charge each month at an annual rate of
.40% during the first 10 years of your policy.
X We will deduct an unamortized tax charge during the first 9 years on
withdrawals, according to a schedule of rates described in
"Deductions and Charges- Policy Owner Options - Unamortized Tax
Charge."
UNDER OPTION 2: (May not be available in all states)
X We will deduct a mortality and expense risk charge each month at an
annual rate of .65% during the first 10 years of your policy, and
thereafter at an annual rate of .50%.
X We will deduct a tax expense charge from your premium at an annual
rate of 4.0%.
WHAT FEES DO I PAY TO THE UNDERLYING INVESTMENT PORTFOLIOS?
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Other
Expenses
Management (before any
Fees (before expense Total Fund
any fee reimburse Operating
waivers) -ments) Expenses (1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hartford Bond HLS Fund 0.482% 0.021% 0.503%
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
15
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Hartford Money Market Fund 0.433% 0.015% 0.448%
- -----------------------------------------------------------------------------------------------
Hartford Mortgage Securities Fund 0.432% 0.030% 0.462%
- -----------------------------------------------------------------------------------------------
Hartford Index Fund 0.382% 0.019% 0.401%
- -----------------------------------------------------------------------------------------------
Hartford High Yield Fund (2) 0.775% 0.035% 0.810%
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Management Fees generally represent the fees paid to the investment
adviser or its affiliate for investment and administrative services
provided. Other Expenses are expenses (other than Management Fees) which
are deducted from the fund including legal, accounting and custodian
fees. For a complete description of the nature of the services provided
in consideration of the operating expenses deducted, please see the Fund
prospectuses.
(2) Hartford High Yield HLS Fund is a new Fund. "Total Fund Operating
Expenses" are based on annualized estimates of such expenses to be
incurred in the current fiscal year. HL Investement Advisors, LLC has
agreed to waive its fees for these until the assets of the Fund
(excluding assets contributed by companies affiliated with HL
Investments Advisors, LLC) reach $20 million. After this waiver, the
Management Fee would be 0.487%, Other Expenses would be 0.035%, and
Total Fund Operating Expenses would be 0.522%.
CAN I TAKE OUT ANY OF MY MONEY?
X You may withdraw all or part of amounts available in your policy at
any time.
X Each year you may withdraw up to 10% of your payments without having
to pay a sales charge.
<PAGE>
16
You may have to pay tax on the money you take out and, if you take money out
before you are 59 1/2 you may have to pay a tax penalty.
You may choose to convert your surrender into one of our payment options,
without a sales charge.
MAY I TAKE A LOAN ON THE POLICY?
Yes. The policy provides for two types of cash loans. The policy secures
the loans. Loans may not exceed 90% of the policy's cash value.
IS IT POSSIBLE FOR THE POLICY TO TERMINATE?
Your policy could terminate if the value of the policy becomes too low to
support the policy's monthly charges and fees. If this occurs, Royal will
notify you in writing. You will then have a 61-day grace period in order for
you to pay additional amounts to prevent the policy from terminating.
WHAT ABOUT TAXES?
Under current tax law, your beneficiaries will receive the death benefit free
of federal income tax. However, you will subject to income tax if you receive
any loans, withdrawals or other amounts from the policy, and you may be
subject to a 10% penalty tax.
ABOUT US
--------
ROYAL LIFE INSURANCE COMPANY OF AMERICA
Royal Life Insurance Company of America ("Royal") is a stock life insurance
company engaged in the business of writing life insurance in all states of
the United States and the District of Columbia. Royal was originally
incorporated under the laws of Connecticut on September 16, 1963. Its
offices are located in Simsbury, Connecticut; however, its mailing address is
P.O. Box 5085, Hartford, CT 06104-5085. Royal is a wholly owned subsidiary
of Hartford Life Insurance Company. On December 31, 1997, all of the common
stock of Royal was purchased from Royal Maccabees Life Insurance Company.
Royal is ultimately controlled by Hartford Financial Services Group, Inc.,
one of the largest financial service providers in the United States.
THE SEPARATE ACCOUNT
Separate Account Two ("Separate Account") is a separate account of Royal
established on September 1, 1998 pursuant to the insurance laws of the State
of Connecticut and it is organized as a unit investment trust registered with
the Securities and Exchange Commission under the
<PAGE>
17
Investment Company Act of 1940. The Separate Account meets the definition of
"separate account" under federal securities law. Under Connecticut law, the
assets of the Separate Account are held exclusively for the benefit of Policy
Owners and persons entitled to payments under the Policies. The assets of
the Separate Account are not chargeable with liabilities arising out of any
other business which Royal may conduct.
THE FUNDS
All of the Funds are sponsored and administered by Royal. HL Investment
Advisors, LLC ("HL Advisors") serves as the investment adviser to each of the
Funds. The Hartford Investment Management Company ("HIMCO") serves as
sub-investment advisors and provides day to day investment services.
Each Fund, except the Hartford High Yield HLS Fund, is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. The Hartford High Yield HLS Fund is a
diversified series of Hartford Series Fund, Inc., a Maryland corporation, also
registered with the Securities and Exchange Commission as an open-end management
investment company. The shares of each Fund have been divided into Class IA and
Class IB. Only Class IA shares are available in this Annuity.
We do not guarantee the investment results of any of the underlying Funds.
Since each underlying Fund has different investment objectives, each is subject
to different risks. These risks and the Funds' expenses are more fully
described in the accompanying Funds' prospectus and Statement of Additional
Information, which may be ordered from us. The Funds' prospectus should be read
in conjunction with this Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
Hartford Bond HLS Fund
Seeks maximum current income consistent with preservation of capital by
investing primarily in investment grade fixed-income securities. Up to 20% of
the total assets of this Fund may be invested in debt securities rated in the
highest category below investment grade ("Ba" by Moody's Investor Services, Inc.
or "BB" by Standard & Poor's) or, if unrated, are determined to be of comparable
quality by the Fund's investment adviser. Securities rated below investment
grade are commonly referred to as "high yield-high risk securities" or "junk
bonds." For more information concerning the risks associated with investing in
such securities, please refer to the section in the accompanying prospectus for
the Funds entitled "Hartford Bond HLS Fund, Inc. - Investment Policies."
Hartford High Yield HLS Fund
Seeks high current income by investing in non-investment grade fixed-income
securities. Growth of capital is a secondary objective. Securities rated below
investment grade are commonly referred to as "high yield-high risk securities"
or "junk bonds." For more information concerning the risks associated
<PAGE>
18
with investing in such securities, please refer to the section in the
accompanying prospectus for the Funds entitled "Hartford High Yield HLS Fund."
Hartford Index HLS Fund
Seeks to provide investment results which approximate the price and yield
performance of publicly-traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index.*
Hartford Mortgage Securities HLS Fund
Seeks maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities,
including securities issued by the Government National Mortgage Association.
Hartford Money Market HLS Fund
Seeks maximum current income consistent with liquidity and preservation of
capital.
* "Standard & Poor's-Registered Trademark-," "S&P-Registered Trademark-,"
"S&P 500-Registered Trademark-," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for
use by Hartford. The Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in the Index Fund.
<PAGE>
19
Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in the Fund. Such shares are offered to
separate accounts, including the Separate Account, established by Royal or
one of its affiliated companies specifically to fund the Policies and other
policies or contracts issued by Royal or its affiliates, as permitted by the
Investment Company Act of 1940.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Funds simultaneously. Although neither Royal nor the Funds
currently foresee any such disadvantages either to variable life insurance
Policy Owners or variable annuity contract owners, the Funds' Board of
Directors intends to monitor events in order to identify any material
conflicts between variable life Policy Owners and variable annuity contract
owners and to determine what action, if any, should be taken in response
thereto. If the Board of Directors were to conclude that separate funds
should be established for variable life insurance and variable annuity
separate accounts, Royal will bear the attendant expenses.
All investment income of, and other distributions to, each Sub-Account
arising from the applicable Fund are reinvested in shares of that Fund at net
asset value. The income and both realized gains or losses on the assets of
each Sub-Account are therefore separate and are credited to or charged
against the Sub-Account without regard to income, gains or losses from any
other Sub-Account or from any other business of Royal. Royal will purchase
shares in the Funds in connection with premiums allocated to the applicable
Sub-Account in accordance with Policy Owners' directions and will redeem
shares in the Funds to meet Policy obligations or make adjustments in
reserves, if any. The Funds are required to redeem Fund shares at net asset
value and to make payment within seven days.
Royal reserves the right, subject to compliance with the law as then in
effect, to make additions to,
<PAGE>
20
deletions from, or substitutions for the Separate Account and its
Sub-Accounts which fund the Policies. No substitution of securities will
take place without notice to and consent of Policy Owners and without prior
approval of the Securities and Exchange Commission to the extent required by
the Investment Company Act of 1940. Subject to Policy Owner approval, Royal
also reserves the right to end the registration under the Investment Company
Act of 1940 of the Separate Account or any other separate accounts of which
it is the depositor and which may fund the Policies.
Each Fund is subject to investment restrictions which may not be changed
without the approval of a majority of the shareholders of the Fund. See the
Funds' prospectuses accompanying this Prospectus.
YOUR POLICY
APPLICATION
If you wish to purchase a Policy, you must submit an application to Royal. A
Policy will be issued only on the lives of Insureds age 90 and under who
supply evidence of insurability satisfactory to Royal. Acceptance is subject
to Royal's underwriting rules and Royal reserves the right to reject an
application for any reason. IF AN APPLICATION FOR A POLICY IS REJECTED, THEN
YOUR INITIAL PREMIUM WILL BE RETURNED ALONG WITH AN ADDITIONAL AMOUNT FOR
INTEREST, BASED ON THE CURRENT RATE BEING CREDITED BY ROYAL. No change
in the terms or conditions of a Policy will be made without your consent.
<PAGE>
21
The Policy will be effective on the Policy Date only after Royal has received
all outstanding delivery requirements and received the initial premium. The
Policy Date is the date used to determine all future cyclical transactions on
the Policy, E.G., Monthly Activity Date, Policy Months and Policy Years. The
Policy Date may be prior to, or the same as, the date the Policy is issued
("Issue Date").
If the Coverage Amount is over then current limits established by Royal, the
initial payment will not be accepted with the application. In other cases
where Royal receives the initial payment with the application, Royal will
provide fixed conditional insurance during underwriting according to the
terms of conditional receipt established by Royal. The fixed conditional
insurance will be the insurance applied for, up to a maximum that varies by
age. If no fixed conditional insurance was in effect, on Policy delivery,
Royal will require a sufficient payment to place the insurance in force.
PREMIUMS
The Policy permits you to pay a large single premium and, subject to
restrictions, additional premiums. You may choose a minimum initial premium
of 80%, 90% or 100% of the Guideline Single Premium (based on the Face
Amount). Under current underwriting rules, which are subject to change,
applicants between ages 35 and 80 may be eligible for simplified underwriting
without a medical examination if they meet simplified underwriting standards
as evidenced in their responses in the application. For applicants who are
below age 35 or above age 80, or who do not meet simplified underwriting
eligibility, full underwriting applies, except that substandard underwriting
applies only in those cases that represent substandard risks according to
customary underwriting guidelines.
Additional premiums are allowed if they do not cause the Policy to fail to
meet the definition of a life insurance Policy under Section 7702 of the
Code. The amount and frequency of additional premium payments will affect
the Cash Value and the amount and duration of insurance. Royal may require
evidence of insurability for any additional premiums which increase the
Coverage Amount. Generally, the minimum initial premium Royal will accept is
$10,000. Royal may accept less than $10,000 under certain circumstances.
Premium which does not meet the tax qualification guidelines for life
insurance under the Code will not be applied to the Policy.
ALLOCATION OF PREMIUMS
Within three business days of receipt of a completed application and the
initial premium payment at Royal's Home Office, Royal will allocate the
entire premium payment to the Hartford Money Market Sub-Account. After the
expiration of the right to cancel period, the Account Value in Hartford Money
Market Sub-Account will be allocated among the Funds in whole percentages to
purchase Accumulation Units in the applicable Sub-Accounts as you direct in
the application. Premiums received on or after the expiration of the right
to cancel period will be allocated among the Sub-Accounts to purchase
Accumulation Units in such Sub-Accounts as directed by you or, in the absence
of directions, as specified in the original application. The number of
Accumulation
<PAGE>
22
Units in each Sub-Account to be credited to a Policy (including the initial
allocation to Hartford Money Market Sub-Account) will be determined first by
multiplying the premium payment by the percentage to be allocated to each
Fund to determine the portion to be invested in the Sub-Account. Each
portion to be invested in each Sub-Account is then divided by the
Accumulation Unit Value of that particular Sub-Account next computed after
receipt of the premium payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for
that Sub-Account for the Valuation Period then ended. The Net Investment
Factor for each Sub-Account is the net asset value per share of the
corresponding Fund at the end of the Valuation Period (plus the per share
dividends or capital gains by that Fund if the ex-dividend date occurs in the
Valuation Period then ended) divided by the net asset value per share of the
corresponding Fund at the beginning of the Valuation Period. Refer to the
Funds' prospectuses accompanying this Prospectus for a description of how the
assets of each Fund are valued, since such determination has a direct bearing
on the Accumulation Unit Value of the Sub-Account and therefore the Account
Value of a Policy. See, also, "Policy Benefits and Rights -- Account Value."
All valuations in connection with a Policy, E.G., with respect to determining
Account Value and Cash Surrender Value and in connection with Policy Loans,
or calculation of Death Benefits, or with respect to determining the number
of Accumulation Units to be credited to a Policy with each premium, other
than the initial premium, will be made on the date the request or payment is
received by Royal at its Home Office if such date is a Valuation Day;
otherwise such determination will be made on the next succeeding date which
is a Valuation Day.
DEDUCTIONS AND CHARGES
The deduction or charges associated with this Policy are subtracted,
depending on the type of deduction or charge, from Premium payments as they
are made, upon surrender or partial surrender of the Policy, on the Policy
Anniversary Date or on a monthly pro rated basis from each Sub-Account
("Deduction Amount").
Deductions are taken from Premium payments before allocations to the
Sub-Accounts are made. Monthly Deduction Amounts are subtracted on the
Policy Date and on each Monthly Activity Date after the Policy Date to cover
charges and expenses incurred in connection with a Policy. Each Deduction
Amount will be subtracted pro rata from each Sub-Account such that the
proportion of Account Value of the Policy attributable to each Sub-Account
remains the same before and after the deduction. The Deduction Amount will
vary from month to month. If the Cash Surrender Value is not sufficient to
cover a Deduction Amount due on any Monthly Activity Date, the Policy may
lapse. See "Policy Benefits and Rights -- Lapse and Reinstatement."
<PAGE>
23
The Policy Owner may elect one of two options offered by Royal to pay the
Mortality and Expense Risk charge, the Tax Expense charge and any Unamortized
Tax charge. Once selected, the option may not be changed. Option 2 may not
be available in all states.
The following chart illustrates the charges and deductions associated with
this Policy. For a more detailed discussion see the descriptions below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DEDUCTION OR DEDUCTED FROM ALL WHEN DEDUCTION IS AMOUNT DEDUCTED
CHARGE POLICIES MADE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of Insurance Yes Monthly Individualized
depending on age,
sex and other
factors
- -------------------------------------------------------------------------------
Administrative Yes Monthly .25% of amounts
Charge allocated to the
Separate Account
- -------------------------------------------------------------------------------
Annual Maintenance Only Policies with On the Policy $30.00
Fee an Account Value Anniversary Date
of less than or upon surrender
$50,000 on the of the Policy
Policy Anniversary
Date or date of
surrender
- -------------------------------------------------------------------------------
Surrender Charge Yes Upon surrender or A percentage of
partial surrender the amount
of the Policy surrendered,
depending on the
Policy Year, which
is attributable to
premiums paid
- -------------------------------------------------------------------------------
Tax Expense Charge Yes Under Option 1: Under Option 1:
Monthly .40% of Account
Value for Policy
Under Option 2: Years 1-10
Receipt of premium
payment Under Option 2: 4%
of each premium
payment in all
Policy Years
- -------------------------------------------------------------------------------
Mortality and Yes Monthly Under Option 1:
Expense Risk .90% of Account
Charge Value in Policy
Years 1-10 and
.50%
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
24
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
for Policy Years
11 and beyond.
- -------------------------------------------------------------------------------
Under Option 2:
.65% of Account
Value in Policy
Years 1-10 and
.50% for Policy
years 11 and
beyond
- -------------------------------------------------------------------------------
Unamortized Tax No, only under Upon surrender or A percentage of
Charge Option 1 partial surrender the Account Value
of the Policy depending on the
Policy Year the
surrender takes
place.
- -------------------------------------------------------------------------------
</TABLE>
COST OF INSURANCE CHARGE: The cost of insurance charge covers Royal's
anticipated mortality costs for standard and substandard risks. Current cost
of insurance rates are lower after the tenth Policy Year and are based on
whether 100%, 90% or 80% of the Guideline Single Premium has been paid at
issue. The current cost of insurance charge will not exceed the guaranteed
cost of insurance charge. This charge is a guaranteed maximum monthly rate
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. For Policies eligible for simplified underwriting, standard risks have
a guaranteed cost of insurance rate is 125% of the 1980 Commissioners
Standard Ordinary Smoker/Non-Smoker Mortality Table through age 90, grading
down to 100% of the 1980 Commissioners Standard Ordinary Smoker/Non-Smoker
Mortality Table at age 100 (age last birthday). For Policies not eligible
for simplified underwriting, standard risks have a guaranteed cost of
insurance of 100% of the 1980 Commissioners Standard Ordinary
Smoker/Non-Smoker Mortality Table. (Unisex rates may be required in some
states.) A table of guaranteed cost of insurance rates per $1,000 will be
included in each Policy; however, Royal reserves the right to use rates
less than those shown in the Table. Substandard risks will be charged at a
higher cost of insurance rate that will not exceed rates based on a multiple
of the 1980 Commissioners Standard Ordinary Smoker/Non-Smoker Mortality Table
(age last birthday). The multiple will be based on the Insured's substandard
rating.
The Coverage Amount is first set on the Policy Date and then on each Monthly
Activity Date. On such days, it is the Face Amount less the Account Value
subject to a Minimum Coverage Amount. The Coverage Amount remains level
between the Monthly Activity Dates. The Coverage Amount may be adjusted to
continue to qualify the Policies as life insurance Policies under the current
federal tax law. Under that law, the Minimum Coverage Amount is a stated
percentage of the Account Value of the Policy determined on each Monthly
Activity Date. The percentages vary according to the attained age of the
Insured.
<PAGE>
25
EXAMPLE:
Face Amount = $100,000
Account Value on the Monthly Activity Date = $70,000
Insured's attained age = 60
Minimum Coverage Amount percentage for age 60 = 30%
On the Monthly Activity Date, the Coverage Amount is $30,000. This is
calculated by subtracting the Account Value on the Monthly Activity Date
($70,000) from the Face Amount ($100,000), subject to a possible Minimum
Coverage Amount adjustment. This Minimum Coverage Amount is determined by
taking a percentage of the Account Value on the Monthly Activity Date. In
this case, the Minimum Coverage Amount is $21,000 (30% of $70,000). Since
$21,000 is less than the Face Amount less the Account Value ($30,000), no
adjustment is necessary. Therefore, the Coverage Amount will be $30,000.
Assume that the Account Value in the above example was $90,000. The Minimum
Coverage Amount would be $27,000 (30% of $90,000). Since this is greater
than the Face Amount less the Account Value ($10,000), the Coverage Amount
for the Policy Month is $27,000. (For an explanation of the Death Benefit,
see "Policy Benefits and Rights -- Death Benefit.")
Because the Account Value and, as a result, the Coverage Amount under a
Policy may vary from month to month, the cost of insurance charge may also
vary on each Monthly Activity Date.
ADMINISTRATIVE CHARGE: Royal will deduct monthly from the Account Value
attributable to the Separate Account an administrative charge equal to an
annual rate of 0.25%. This charge compensates Royal for administrative
expenses incurred in the administration of the Separate Account and the
Policies.
ANNUAL MAINTENANCE FEE
If the Account Value on a Policy Anniversary or on the date the Policy is
surrendered is less than $50,000, Royal will deduct on such date an annual
maintenance fee of $30. This fee will help reimburse Royal for
administrative and maintenance costs of the Policies. The sum of the monthly
administrative charges and the annual maintenance fee will not exceed the
cost Royal incurs in providing administrative services under the Policies.
Royal reserves the right to waive the Annual Maintenance Fee under certain
conditions.
SURRENDER CHARGE
Upon surrender of the Policy or partial surrenders in excess of the Annual
Withdrawal Amount, a Surrender Charge may be assessed. In Policy Years 1
through 3, this charge is 7.5% of surrendered Account Value attributable to
premiums paid. In Policy Years 4 through 5, this charge is 6%. In Policy
Years 6 through 7, this charge is 4%. In Policy Years 8 through 9, this
charge is 2%. After the ninth Policy Year, there is no charge.
<PAGE>
26
In determining the Surrender Charge and any Unamortized Tax charge discussed
below, any surrender or partial surrender during the first ten Policy Years
will be deemed first from premiums paid and then from earnings. If an amount
equal to all premiums paid has been withdrawn, no charge will be assessed on
a surrender of the remaining Account Value.
The Surrender Charge is imposed to cover a portion of the sales expense
incurred by Royal in distributing the Policies. This expense includes agents
commissions, advertising and the printing of prospectuses. See "Policy
Benefits and Rights -- Amount Payable on Surrender of the Policy."
YOUR OPTIONS
In addition to the deductions and charges described above, you, at the time
the Policy is issued, will elect one of two options described below to pay
charges relating to certain taxes and mortality and expense risk charges.
The option you select may affect Policy Value.
OPTION 1: ASSET-BASED CHARGES: Under this payment option, you will pay:
MORTALITY AND EXPENSE RISK CHARGE: Royal will deduct monthly from the Account
Value attributable to the Separate Account for Policy Years 1 through 10 a
charge equal to an annual rate of 0.90% for the mortality risks and expense
risks Royal assumes in relation to the variable portion of the Policies. In
Policy Years 11 and beyond, the charge drops to an annual rate of 0.50% for
the mortality risks and expense risks Royal assumes in relation to the
variable portion of the Policies. The mortality risk assumed is that the
cost of insurance charges specified in the Policy will be insufficient to
meet claims. Royal also assumes a risk that the Face Amount (the minimum
Death Benefit) will exceed the Coverage Amount on the date of death plus the
Account Value on the date Royal receives written notice of death. The
expense risk assumed is that expenses incurred in issuing and administering
the Policies will exceed the administrative charges set in the Policy. Royal
may profit from the mortality and expense risk charge and may use any profits
for any proper purpose, including any difference between the cost it incurs
in distributing the Policies and the proceeds of the Surrender Charge. The
mortality and expense risk charge is deducted while the Policy is in force,
including the duration of a payment option.
TAX EXPENSE CHARGE: Royal will deduct monthly from the Account Value a
charge equal to an annual rate of 0.40% for the first ten Policy Years. This
charge compensates Royal for premium taxes imposed by various states and
local jurisdictions and for the cost of the capitalization of certain policy
acquisition expenses under Section 848 of the Code. The charge includes a
premium tax deduction of 0.25% and Section 848 costs of 0.15%. The 0.25%
premium tax deduction over ten Policy Years approximates Royal's average
expenses for state and local premium taxes (2.5%). Premium taxes vary,
ranging from zero to more than 4.0%. The premium tax deduction is made
whether or not any premium tax applies. The deduction may be higher or lower
than the premium tax imposed. However, Royal does not expect to make a
profit from this deduction. The 0.15% charge helps reimburse Royal for
approximate expenses incurred under Section 848 of the Code.
UNAMORTIZED TAX CHARGE: Under this option, during the first nine Policy
Years, an Unamortized Tax
<PAGE>
27
charge will be imposed on surrender or partial surrenders. The Unamortized
Tax charge is shown below, as a percentage of Account Value, at the end of
each Policy Year:
POLICY
YEAR RATE
------ ----
1 2.25%
2 2.00%
3 1.75%
4 1.50%
5 1.25%
6 1.00%
7 0.75%
8 0.50%
9 0.25%
10+ 0.00%
After the ninth Policy Year, no Unamortized Tax charge will be imposed.
OPTION 2: FRONTED CHARGES: Under this option, you will pay:
MORTALITY AND EXPENSE RISK CHARGE: In Policy Years 1 through 10, Royal will
deduct monthly from the Account Value attributable to the Separate Account a
charge equal to an annual rate of 0.65% for the mortality risks and expense
risks Royal assumes in relation to the variable portion of the Policies. In
Policy Years 11 and beyond, the charge drops to an annual rate of 0.50%. The
mortality risk assumed is that the cost of insurance charges specified in the
Policy will be insufficient to meet claims. Royal also assumes a risk that
the Face Amount (the minimum Death Benefit) will exceed the Coverage Amount
on the date of death plus the Account Value on the date Royal receives
written notice of death. The expense risk assumed is that expenses incurred
in issuing and administering the Policies will exceed the administrative
charges set in the Policy. Royal may profit from the mortality and expense
risk charge and may use any profits for any proper purpose, including any
difference between the cost it incurs in distributing the Policies and the
proceeds of the Surrender Charge. The mortality and expense risk charge is
deducted while the Policy is in force, including the duration of a payment
option.
TAX EXPENSE CHARGE: Royal will deduct from Premium payments a tax expense
charge equal to an annual rate of 4.0% for all Policy Years. This charge
compensates Royal for premium taxes imposed by various states and local
jurisdictions and for the cost of capitalization of certain policy
acquisition expenses under Section 848 of the Code. The charge includes a
premium tax deduction of 2.5% and a Section 848 cost of 1.5%. The premium
tax deduction approximates Royal's average expenses for state and local
premium taxes. Premium taxes vary, ranging from zero to more than 4.0%. The
premium tax deduction is made whether or not any premium tax applies. The
deduction may be higher or lower than the premium tax imposed. However,
Royal does not expect to make a profit from this deduction. The 0.15% charge
helps reimburse Royal for approximate expenses incurred under Section 848 of
the Code.
<PAGE>
28
This Option may not be available in all states.
OTHER DEDUCTIONS OR CHARGES
CHARGES AGAINST THE FUNDS
The Separate Account purchases shares of the Funds at net asset value. The
net asset value of the Fund shares reflects investment advisory fees and
administrative expenses already deducted from the assets of the Funds. These
charges are described in the Funds' prospectuses accompanying this Prospectus.
TAXES CHARGED AGAINST THE SEPARATE ACCOUNT
Currently, no charge is made to the Separate Account for federal income taxes
that may be attributable to the Separate Account. Royal may, however, make
such a charge in the future. Charges for other taxes, if any, attributable
to the Separate Account may also be made.
POLICY BENEFITS AND RIGHTS
DEATH BENEFIT
While in force, the Policy provides for the payment of the Death Proceeds to
the named beneficiary when the Insured under the Policy dies. The Death
Proceeds payable to the beneficiary equal the Death Benefit less any loans
outstanding. The Death Benefit equals the greater of (1) the Face Amount or
(2) the Account Value multiplied by a specified percentage. The percentages
vary according to the attained age of the Insured and are specified in the
Policy. Therefore, an increase in Account Value may increase the Death
Benefit. However, because the Death Benefit will never be less than the Face
Amount, a decrease in Account Value may decrease the Death Benefit but never
below the Face Amount.
EXAMPLES:
- --------------------------------------------------------------------------
A B
- --------------------------------------------------------------------------
Face Amount $100,000 $100,000
- --------------------------------------------------------------------------
Insured's Age 40 40
- --------------------------------------------------------------------------
Account Value on Date of Death $46,500 $34,000
- --------------------------------------------------------------------------
Specified Percentage 250% 250%
- --------------------------------------------------------------------------
In Example A, the Death Benefit equals $116,250, I.E., the greater of
$100,000 (the Face Amount) or $116,250 (the Account Value at the Date of
Death of $46,500, multiplied by the specified
<PAGE>
29
percentage of 250%). This amount less any outstanding loans constitutes the
Death Proceeds which Royal would pay to the beneficiary.
In Example B, the death benefit is $100,000, I.E., the greater of $100,000
(the Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).
All or part of the Death Proceeds may be paid in cash or applied under a
"Payment Option." See "Other Matters -- Settlement Provisions."
ACCOUNT VALUE
The Account Value of a Policy will be computed on each Valuation Day. The
Account Value will vary to reflect the investment experience of the Funds,
the value of the Loan Account and the monthly Deduction Amounts. There is no
minimum guaranteed Account Value.
The Account Value of a particular Policy is related to the net asset value of
the Funds to which premiums on the Policy have been allocated. The Account
Value on any Valuation Day is calculated by multiplying the number of
Accumulation Units credited to the Policy in each Sub-Account as of the
Valuation Day by the Accumulation Unit Value of that Sub-Account, and then
summing the result for all the Sub-Accounts credited to the Policy and the
value of the Loan Account. See "The Policy -- Accumulation Unit Values."
TRANSFER OF ACCOUNT VALUE
While the Policy remains in force, and subject to Royal's transfer rules then
in effect, the Policy Owner may request that part or all of the Account Value
of a particular Sub-Account be transferred to other Sub-Accounts. Royal
reserves the right to restrict the number of such transfers to no more than
12 per Policy Year, with no two transfers being made on consecutive Valuation
Days. However, there are no restrictions on the number of transfers at the
present time. Transfers may be made by written request or by calling toll
free 1-800-862-6668 Transfers by telephone may be made by the agent of
record or by the attorney-in-fact pursuant to a power of attorney. Telephone
transfers may not be permitted in some states. The policy of Royal and its
agents and affiliates is that they will not be responsible for losses
resulting from acting upon telephone requests reasonably believed to be
genuine. Royal will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; otherwise, Royal may be
liable for any losses due to unauthorized or fraudulent instructions. The
procedures Royal follows for transactions initiated by telephone include
requirements that callers provide certain information for identification
purposes. All transfer instructions by telephone are tape recorded. Royal
will send the Policy Owner a confirmation of the transfer within five days
from the date of any instruction. IT IS THE RESPONSIBILITY OF THE POLICY
OWNER TO VERIFY THE ACCURACY OF ALL CONFIRMATIONS OF TRANSFERS AND TO
PROMPTLY ADVISE ROYAL OF ANY INACCURACIES WITHIN 30 DAYS OF RECEIPT OF THE
CONFIRMATION.
Royal may modify the right to reallocate Account Value among the Sub-Accounts
if Royal
<PAGE>
30
determines, in its sole discretion, that the exercise of that right by one or
more Policy Owners is, or would be, to the disadvantage of other Policy
Owners. Any modification could be applied to transfers to or from some or
all of the Sub-Accounts and could include, but not be limited to, the
requirement of a minimum period between each transfer, not accepting transfer
requests of an agent acting under the power of attorney on behalf of more
than one Policy Owner, or limiting the dollar amount that may be transferred
among the Sub-Accounts at one time. These restrictions may be applied in any
manner reasonably designed to prevent any use of the transfer right that
Royal considers to be disadvantageous to other Policy Owners.
As a result of a transfer, the number of Accumulation Units credited to the
Sub-Account from which the transfer is made will be reduced by the number
obtained by dividing the amount transferred by the Accumulation Unit Value of
that Sub-Account on the Valuation Day Royal receives the transfer request.
The number of Accumulation Units credited to the Sub-Account to which the
transfer is made will be increased by the number obtained by dividing the
amount transferred by the Accumulation Unit Value of that Sub-Account on the
Valuation Day Royal receives the transfer request.
POLICY LOANS
While the Policy is in effect, a Policy Owner may obtain, without the consent
of the beneficiary (provided the designation of beneficiary is not
irrevocable), one or both of two types of cash loans from Royal. Both types
of loans are secured by the Policy. The aggregate loans (including the
currently applied for loan) may not exceed, at the time a loan is requested,
90% of the Cash Value.
The loan amount will be transferred pro rata from each Sub-Account
attributable to the Policy (unless the Policy Owner specifies otherwise) to
the Loan Account. The amounts allocated to the Loan Account will earn
interest at a rate of 4% per annum (6% for "Preferred Loans"). The amount of
the Loan Account that equals the difference between the Cash Value and the
total of all premiums paid under the Policy is considered a "Preferred Loan."
For exchanges which take place according to IRC Section 1035(a) that have an
outstanding loan at the time of transfer, the difference between the Account
Value and the total of all premiums paid under the Policy is considered a
Preferred Loan. The loan interest rate that Royal will charge on all loans
is 6% per annum. The difference between the value of the Loan Account and
the Indebtedness will be transferred on a pro-rata basis from the
Sub-Accounts to the Loan Account on each Monthly Activity Date. The proceeds
of a loan will be delivered to the Policy Owner within seven business days of
Royal's receipt of the loan request.
If the aggregate outstanding loan(s) secured by the Policy exceeds the
Account Value of the Policy less any Surrender Charges and due and unpaid
Deduction Amount, Royal will give written notice to the Policy Owner that,
unless Royal receives an additional payment within 61 days to reduce the
aggregate outstanding loan(s) secured by the Policy, the Policy may lapse.
All or any part of any loan secured by a Policy may be repaid while the
Policy is still in effect.
<PAGE>
31
When loan repayments or interest payments are made, they will be allocated
among the Sub-Account(s) in the same percentage as premiums are allocated
(unless the Policy Owner requests a different allocation) and an amount equal
to the payment will be deducted from the Loan Account. Any outstanding loan
at the end of a grace period must be repaid before the Policy will be
reinstated. See "Policy Benefits and Rights -- Lapse and Reinstatement."
A loan, whether or not repaid, will have a permanent effect on the Account
Value because the investment results of each Sub-Account will apply only to
the amount remaining in such Sub-Accounts. The longer a loan is outstanding,
the greater the effect is likely to be. The effect could be favorable or
unfavorable. If the Sub-Accounts earn more than the annual interest rate for
amounts held in the Loan Account, a Policy Owner's Account Value will not
increase as rapidly as it would have had no loan been made. If the
Sub-Accounts earn less than the annual interest rate for amounts held in the
Loan Account, the Policy Owner's Account Value will be greater than it would
have been had no loan been made. Also, if not repaid, the aggregate
outstanding loan(s) will reduce the Death Proceeds and Cash Surrender Value
otherwise payable.
AMOUNT PAYABLE ON SURRENDER OF THE POLICY
While the Policy is in force, you may elect, without the consent of the
beneficiary (provided the designation of beneficiary is not irrevocable), to
fully surrender the Policy. Upon surrender, you will receive the Cash
Surrender Value determined as of the day Royal receives your written request
or the date you request whichever is later. The Cash Surrender Value equals
the Account Value less any Surrender Charges and any Unamortized Tax charge
and all Indebtedness. Royal will pay the Cash Surrender Value of the Policy
within seven days of receipt by Royal of the written request or on the
effective surrender date you request, whichever is later. The Policy will
terminate on the date of receipt of the written request, or the date you
request the surrender to be effective, whichever is later. For a discussion
of the tax consequences of surrendering the Policy, see "Federal Tax
Considerations."
If you choose to apply the surrender proceeds to a payment option (see "Other
Matters -- Settlement Provisions."), the Surrender Charge will not be
imposed to the surrender proceeds applied to the option. In other words, the
surrender proceeds will equal the Cash Surrender Value without reduction for
the Surrender Charge. However, any Unamortized Tax charge, if applicable,
will be deducted from the surrender proceeds to be applied. In addition,
amounts withdrawn from payment Option 1, Option 5 or Option 6 will be
subject to any applicable Surrender Charge.
PARTIAL SURRENDERS
While the Policy is in force, you may elect, by written request, to make
partial surrenders from the Cash Surrender Value. The Cash Surrender Value,
after partial surrender, must at least equal Royal's minimum amount rules
then in effect; otherwise, the request will be treated as a request for full
surrender. The partial surrender will be deducted pro rata from each
Sub-Account, unless you instruct otherwise. The Face Amount will be reduced
proportionate to the reduction in the Account
<PAGE>
32
Value due to the partial surrender. Partial surrenders in excess of the
Annual Withdrawal Amount will be subject to the Surrender Charge and any
Unamortized Tax charges. See "Deductions and Charges --Surrender Charge,"
and "Deductions and Charges -- Policy Owner Option 1." For a discussion of
the tax consequences of partial surrenders, see "Federal Tax Considerations."
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (the anniversary of the
Policy Date on which the Insured is age 100), on surrender of the Policy to
Royal, Royal will pay you the Cash Surrender Value. In such case, the Policy
will terminate and Royal will have no further obligations under the Policy.
(The Maturity Date may be extended by rider where approved, but see "Federal
Tax Considerations -- Income Taxation of Policy Benefits.")
LAPSE AND REINSTATEMENT
The Policy will remain in force until the Cash Surrender Value is
insufficient to cover the Deduction Amount due on a Monthly Activity Date.
Royal will notify you of the deficiency in writing and will provide a 61-day
grace period to pay an amount sufficient to cover the Deduction Amounts due
as well as three. The notice will indicate the amount that must be paid.
The Policy will continue through the grace period, but if no additional
premium payment is made, it will terminate at the end of the grace period.
If the person insured under the Policy dies during the grace period, the
Death Proceeds payable under the Policy will be reduced by the Deduction
Amount(s) due and unpaid. See "Policy Benefits and Rights -- Death Benefit."
If the Policy lapses, you may apply for reinstatement of the Policy by
payment of the reinstatement premium shown in the Policy and any applicable
charges. A request for reinstatement may be made within five years of lapse.
If a loan was outstanding at the time of lapse, Royal will require repayment
of the loan before permitting reinstatement. In addition, Royal reserves the
right to require evidence of insurability satisfactory to Royal.
CANCELLATION AND EXCHANGE RIGHTS
You have a limited right to return a Policy for cancellation. If the Policy
is returned, by mail or personal delivery to Royal or to the agent who sold
the Policy, to be canceled within ten days after delivery of the Policy to
you (a longer free-look period is provided in certain cases), Royal will
return to you, within seven days, the greater of premiums paid for the Policy
less Indebtedness or the sum of (1) the Account Value less any Indebtedness
on the date the returned Policy is received by Royal or its agent and (2) any
deductions under Policy or by the Funds for taxes, charges or fees.
Once the Policy is in effect, it may be exchanged, during the first 24 months
after its issuance, for a non-variable flexible premium adjustable life
insurance Policy offered by Royal (or an affiliated company) on the life of
the Insured. No evidence of insurability will be required. The new Policy
<PAGE>
33
will have, at your election, either the same Coverage Amount as under the
exchanged Policy on the date of exchange or the same Death Benefit. The
effective date, issue date and issue age will be the same as existed under
the exchanged Policy. If a Policy loan was outstanding, the entire loan must
be repaid. There may be a cash adjustment required on the exchange.
SUSPENSION OF VALUATION, PAYMENTS AND TRANSFERS
Royal will suspend all procedures requiring valuation (including transfers,
surrenders and loans) on any day a national stock exchange is closed or
trading is restricted due to an existing emergency, as defined by the
Securities and Exchange Commission, or on any day the Securities and Exchange
Commission has ordered that the right of surrender of the Policies be
suspended for the protection of Policy Owners, until such condition has ended.
LAST SURVIVOR POLICIES
The Policies are offered on both a single life and a "last survivor" basis.
Policies sold on a last survivor basis operate in a manner almost identical
to the single life version. The most important difference is that the last
survivor version involves two Insureds and the Death Proceeds are paid on the
death of the last surviving Insured. The other significant differences
between the last survivor and single life versions are listed below.
1. The cost of insurance charges under the last survivor Policies are
determined in a manner that reflects the anticipated mortality of the two
Insureds and the fact that the Death Benefit is not payable until the death
of the second Insured. See the last survivor illustrations in "Appendix B."
2. To qualify for simplified underwriting under a last survivor
Policy, both Insureds must meet the simplified underwriting standards.
3. For a last survivor Policy to be reinstated, both Insureds must be
alive on the date of reinstatement.
4. The Policy provisions regarding misstatement of age or sex, suicide
and incontestability apply to either Insured.
5. Additional tax disclosures applicable to last survivor Policies are
provided in "Federal Tax Considerations."
<PAGE>
34
OTHER MATTERS
VOTING RIGHTS
In accordance with its interpretation of presently applicable law, Royal will
vote the shares of the Funds at regular and special meetings of the
shareholders of the Funds in accordance with instructions from Policy Owners
(or the assignee of the Policy, as the case may be) having a voting interest
in the Separate Account. The number of shares held in the Separate Account
which are attributable to each Policy Owner is determined by dividing the
Policy Owner's interest in each Sub-Account by the net asset value of the
applicable shares of the Funds. Royal will vote shares for which no
instructions have been given and shares which are not attributable to Policy
Owners (I.E., shares owned by Royal) in the same proportion as it votes
shares for which it has received instructions. However, if the Investment
Company Act of 1940 or any rule promulgated thereunder should be amended, or
if Royal's present interpretation should change and, as a result, Royal
determines it is permitted to vote the shares of the Funds in its own right,
it may elect to do so.
The voting interests of the Policy Owner (or the assignee) in the Funds will
be determined as follows: Policy Owners may cast one vote for each full or
fractional Accumulation Unit owned under the Policy and allocated to a
Sub-Account, the assets of which are invested in the particular Fund on the
record date for the shareholder meeting for that Fund. If, however, a Policy
Owner has taken a loan secured by the Policy, amounts transferred from the
Sub-Account(s) to the Loan Account in connection with the loan (see "Policy
Benefits and Rights -- Policy Loans.") will not be considered in determining
the voting interests of the Policy Owner. Policy Owners should review the
Funds prospectus accompanying this Prospectus to determine matters on which
shareholders may vote.
Royal may, when required by state insurance regulatory authorities, disregard
Policy Owners' voting instructions if such instructions require that the
shares be voted so as to cause a change in the sub-classification or
investment objective of one or more of the Funds or to approve or disapprove
an investment advisory Policy for the Funds.
In addition, Royal itself may disregard Policy Owners' voting instructions in
favor of changes initiated by a Policy Owner in the investment policy or the
investment adviser of the Funds if Royal reasonably disapproves of such
changes. A change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities. If
Royal does disregard voting instructions, a summary of that action and the
reasons for such action will be included in the next periodic report to
Policy Owners.
STATEMENTS
Royal will maintain all records relating to the Separate Account and the
Sub-Accounts. At least once each Policy Year, Royal will send you a
statement showing the Coverage Amount and the Account Value of the Policy
(indicating the number of Accumulation Units credited to the Policy in each
Sub-Account and the corresponding Accumulation Unit Value) and any
outstanding loan secured by the Policy as of the date of the statement. The
statement will also show premium paid, and Deduction Amounts under the Policy
since the last statement, and any other information required by any
applicable law or regulation.
<PAGE>
35
LIMIT ON RIGHT TO CONTEST
Royal may not contest the validity of the Policy after it has been in force
during the Insured's lifetime for two years from the Issue Date. If the
Policy is reinstated, the two-year period is measured from the date of
reinstatement. Any increase in the Coverage Amount as a result of a premium
payment is contestable for two years from its effective date. In addition,
if the Insured commits suicide in the two year period, or such period as
specified in state law, the benefit payable will be limited to the Account
Value less any Indebtedness.
MISSTATEMENT AS TO AGE AND SEX
If the age or sex of the Insured is incorrectly stated, the Death Benefit
will be appropriately adjusted as specified in the Policy.
SETTLEMENT PROVISIONS
The surrender proceeds or Death Proceeds under the Policies may be paid in a
lump sum or may be applied to one of Royal's payment options. The minimum
amount that may be applied under a settlement option is $5,000, unless Royal
consents to a lesser amount. UNDER PAYMENT OPTIONS 2, 3 AND 4, NO SURRENDER
OR PARTIAL SURRENDERS ARE PERMITTED AFTER PAYMENTS COMMENCE. FULL SURRENDER
OR PARTIAL SURRENDERS MAY BE MADE FROM PAYMENT OPTION 1, OPTION 5, OR
OPTION 6.
Royal will pay interest of at least 3 1/2% per year on the Death Proceeds
from the date of the Insured's death to the date payment is made or a payment
option is elected. At such times, the proceeds are not subject to the
investment experience of the Separate Account.
The following options are available under the Policies (Royal may offer other
payment options):
Option 1: Interest Income
This option offers payments of interest, at the rate Royal declares, on the
amount applied under his option. The interest rate will never be less than 3
1/2% per year.
Option 2: Life Annuity
A life annuity is an annuity payable during the lifetime of the payee and
terminating with the last payment preceding the death of the payee. This
option offers the largest payment amount of any of the life annuity options,
since there is no guarantee of a minimum number of payments nor a provision
for a death benefit payable to a beneficiary.
<PAGE>
36
It would be possible under this option for a payee to receive only one
annuity payment if he died prior to the due date of the second annuity
payment, two annuity payments if he died before the date of the third annuity
payment, etc.
Option 3: Life Annuity with 120, 180 or 240 Monthly Payments Certain
This annuity option is an annuity payable monthly during the lifetime of the
payee with the provision that payments will be made for a minimum of 120, 180
or 240 months, as elected. If, at the death of the payee, payments have been
made for less than the minimum elected number of months, then the present
value (as of the date of the payee's death) of any remaining guaranteed
payments will be paid in one sum to the beneficiary or beneficiaries
designated, unless other provisions have been made and approved by Royal.
Option 4: Joint and Last Survivor Annuity
An annuity payable monthly during the joint lifetime of the payee and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Royal, the payee may elect that the
payment to the survivor be less than the payment made during the joint
lifetime of the payee and a designated second person.
It would be possible under this option for a payee and designated second
person to receive only one payment in the event of the common or simultaneous
death of the parties prior to the due date for the second payment and so on.
Option 5: Payments for a Designated Period
An amount payable monthly for the number of years selected, which may be from
five to 30 years.
In the event of the payee's death prior to the end of the designated period,
the present value (as of the date of the payee's death) of any remaining
guaranteed payments will be paid in one sum to the beneficiary or
beneficiaries designated unless other provisions have been made and approved
by Royal.
Option 5 is an option that does not involve life contingencies.
Option 6: Policy Proceeds Settlement Option
Proceeds from the Death Benefit left with Royal. These proceeds will remain
in the Sub-Accounts to which they were allocated at the time of death, unless
the beneficiary elects to reallocate them.
<PAGE>
37
Full or partial surrenders may be made at any time.
VARIABLE AND FIXED ANNUITY PAYMENTS: When an Annuity is effected, unless
otherwise specified, the surrender proceeds or Death Proceeds held in the
Sub-Accounts will be applied to provide a variable annuity based on the pro
rata amount in the various Sub-Accounts. Fixed annuities options are also
available. YOU SHOULD CONSIDER WHETHER THE ALLOCATION OF PROCEEDS AMONG
SUB-ACCOUNTS OF THE SEPARATE ACCOUNT FOR YOUR ANNUITY PAYMENTS ARE BASED ON
THE INVESTMENT ALTERNATIVE BEST SUITED TO YOUR RETIREMENT NEEDS.
VARIABLE ANNUITY: The Policy contains tables indicating the minimum dollar
amount of the first monthly payment under the optional variable forms of
annuity for each $1,000 of value of a Sub-Account. The first monthly payment
varies according to the form and type of variable payment annuity selected.
The Policy contains variable payment annuity tables derived from the 1983(a)
Individual Annuity Mortality Table, with ages set back one year and with an
assumed investment rate ("A.I.R.") of 5% per annum. The total first monthly
variable annuity payment is determined by multiplying the proceeds value
(expressed in thousands of dollars) of a Sub-Account by the amount of the
first monthly payment per $1,000 of value obtained from the tables in the
Policy.
The amount of the first monthly variable annuity payment is divided by the
value of an annuity unit (an accounting unit of measure used to calculate the
value of annuity payments) for the appropriate Sub-Account no earlier than
the close of business on the fifth Valuation Day preceding the day on which
the payment is due in order to determine the number of annuity units
represented by the first payment. This number of annuity units remains fixed
during the annuity payment period and in each subsequent month the dollar
amount of the variable annuity payment is determined by multiplying this
fixed number of annuity units by the current annuity unit value.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR
DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN RELATIVE TO THE A.I.R.
FIXED ANNUITY: Fixed annuity payments are determined by multiplying the
amount applied to the annuity by a rate (to be determined by Royal) which is
no less than the rate specified in the fixed payment annuity tables in the
Policy. The annuity payment will remain level for the duration of the
annuity.
Royal will make any other arrangements for income payments as may be agreed
on.
BENEFICIARY
You name the beneficiary in the application for the Policy. You may change
the beneficiary (unless irrevocably named) during the Insured's lifetime by
written request to us. If no beneficiary is living
<PAGE>
38
when the Insured dies, the Death Proceeds will be paid to you if living;
otherwise to your estate.
ASSIGNMENT
The Policy may be assigned as collateral for a loan or other obligation.
Royal is not responsible for any payment made or action taken before receipt
of written notice of such assignment. Proof of interest must be filed with
any claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Policies.
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
OTHER BUSINESS PROFESSION,
POSITION WITH ROYAL, VOCATION OR EMPLOYMENT FOR
NAME, AGE YEAR OF ELECTION PAST FIVE YEARS; OTHER
DIRECTORSHIPS
- -------------------------------------------------------------------------------
<S> <C> <C>
Gregory A. Boyko, 47 Senior Vice President, Vice President and
1998 Controller (1995-1997),
Treasurer Hartford Life Insurance
Director Company ("Hartford");
Director (1997-Present);
Senior Vice President
(1997-Present), Chief
Financial Officer &
Treasurer (1997-1998); Vice
President & Controller
(1995-1997), Hartford Life
and Accident Insurance
Company; Senior Vice
President, Chief Financial
Officer & Treasurer (1997-
Present), Hartford Life,
Inc.; Chief Financial
Officer (1994-1995), IMG
American Life; Senior Vice
President (1992-1994),
Connecticut Mutual Life
Insurance Company.
- -------------------------------------------------------------------------------
Lynda Godkin, 44 Senior Vice President, Associate General Counsel
1998 (1995-1996); Assistant
Corporate Secretary General Counsel and
Director Secretary (1994-1995);
Counsel (1990-1994),
Hartford; Director (1997-
Present); Senior Vice
President (1997-Present);
General Counsel (1996-
Present); Corporate
Secretary (1995-Present);
Associate General Counsel
(1995-1996); Assistant
General Counsel and
Secretary (1994-1995);
Counsel (1990-1994),
Hartford Life and Accident
Insurance Company; Vice
President and General
Counsel (1997 - Present),
Hartford Life, Inc.
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
39
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------
Thomas M. Marra, 39 Director, 1998 Senior Vice President
(1994-1995); Vice President
(1989-1994); Actuary (1987-
1995), Hartford; Director
(1994-Present); Executive
Vice President (1995-
Present); Senior Vice
President (1994-1995);
Director, Individual Life
and Annuity Division (1994-
Present); Actuary (1987-
1997), Hartford Life and
Accident Insurance Company;
Executive Vice President,
Individual Life and
Annuities (1997-Present),
Hartford Life, Inc.
- -------------------------------------------------------------------------------
Charles F. Shabunia, 51 Vice President, 1998 Assistant Vice President,
Controller Hartford (1987-Present)
- -------------------------------------------------------------------------------
Lowndes A. Smith, 58 President, 1998 Chief Operating Officer
Director (1989-1997), Hartford;
Director (1981-Present);
President (1989-Present);
Chief Executive Officer
(1997-Present); Chief
Operating Officer (1989-
1997), Hartford Life and
Accident Insurance Company;
Chief Executive Officer and
President and Director
(1997-Present), Hartford
Life, Inc.
- -------------------------------------------------------------------------------
Raymond P. Welnicki, 49 Director, 1998 Vice President (1993-1994),
Hartford; Director (1994-
Present); Senior Vice
President (1995-Present);
Director, Employee Benefit
Division (1997-Present);
Vice President (1993-1995),
Hartford Life and Accident
Insurance Company; Senior
Vice President, Employee
Benefits (1997-Present),
Hartford Life, Inc.; Board
of Directors, Ethix Corp.
- -------------------------------------------------------------------------------
Lizabeth Zlatkus, 39 Director, 1998 Vice President (1994-1997);
Assistant Vice President
(1992-1994), Hartford;
Director (1994-Present);
Senior Vice President
(1997-Present); Vice
President (1994-1997);
Assistant Vice President
(1992-1994), Hartford Life
and Accident Insurance
Company; Vice President,
Group Life and Disability
(1997-Present), Hartford
Life, Inc.
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
40
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------
Craig R. Raymond, 37 Senior Vice President, Vice President (1993-1997);
1998 Assistant Vice President
Chief Actuary (1992-1993); Actuary (1990-
1994), Hartford; Senior
Vice President (1997-
Present); Chief Actuary
(1995-Present); Vice
President (1993-1997);
Actuary (1990-1995),
Hartford Life and Accident
Insurance Company; Vice
President and Chief Actuary
(1997-Present), Hartford
Life, Inc.
- -------------------------------------------------------------------------------
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
- ------------------------------
* Denotes date of election to Board of Directors.
** The Hartford Financial Services Group, Inc. Affiliated Company
HOW WE SELL OUR POLICY
- ----------------------
Royal intends to sell the Policies in all jurisdictions where it is licensed
to do business. The Policies will be sold by life insurance sales
representatives who represent Royal and who are registered representatives of
Hartford Securities Distribution Company, Inc. ("HSD") or certain other
independent, registered broker-dealers. Any sales representative or employee
will have been qualified to sell variable life insurance Policies under
applicable federal and state laws. Each broker-dealer is registered with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
and all are members of the National Association of Securities Dealers, Inc.
HSD serves as Principal Underwriter for the securities issued with respect to
the Separate Account. HSD is an affiliate of Royal. The principal business
address of HSD is the same as that of Royal.
<TABLE>
<CAPTION>
The following table shows officers and directors of HSD:
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION AND OFFICES
<S> <C>
Lowndes A. Smith President and Chief Executive Officer, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
</TABLE>
The maximum sales commission payable to Royal agents, independent registered
insurance brokers, and other registered broker-dealers is 7.0% of initial and
subsequent premiums.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for
variable insurance compensation. Compensation is generally based on premium
payments made by policyholders or contract owners. This compensation is
usually paid from the sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Royal may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance
products. These payments, which may be different for different broker-dealers
or financial institutions, will be made by HSD, its affiliates or Royal out
of their own assets and will not effect the amounts paid by the policyholders
or contract owners to purchase, hold or surrender variable insurance products.
Royal may provide information on various topics to you and prospective Policy
Owners in advertising, sales literature or other materials. These topics may
include the relationship between sectors of the economy and the economy as a
whole and its effect on various securities markets,
<PAGE>
41
investment strategies and techniques (such as value investing, dollar cost
averaging and asset allocation), the advantages and disadvantages of
investing in tax-advantaged and taxable instruments, customer profiles and
hypothetical purchase scenarios, financial management and tax and retirement
planning, and variable annuities and other investment alternatives, including
comparisons between the Policies and the characteristics of, and market for,
such alternatives.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
- --------------------------------------------
The assets of the Separate Account are held by Royal. The assets of the
Separate Account are kept physically segregated and held separate and apart
from the General Account of Royal. Royal maintains records of all purchases
and redemptions of shares of the Fund. Additional protection for the assets
of the Separate Account is afforded by Royal's blanket fidelity bond, issued
by Aetna Casualty and Surety Company, in the aggregate of $50 million,
covering all of the officers and employees of Royal.
<PAGE>
42
FEDERAL TAX CONSIDERATIONS
GENERAL
Since federal tax law is complex, the tax consequences of purchasing this policy
will vary depending on your situation. You may need tax or legal advice to help
you determine whether purchasing this policy is right for you.
Our general discussion of the tax treatment of this policy is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this policy cannot be made in the prospectus. We also do not discuss
state, municipal or other tax laws that may apply to this policy. For detailed
information, you should consult with a qualified tax adviser familiar with your
situation.
TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment
income and realized capital gains on the assets of the Separate Account (the
underlying Funds) are reinvested and are taken into account in determining the
value of the Accumulation Units (see "Policy Benefits and Right - Account
Value"). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Policy.
Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
federal income taxes. If Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.
INCOME TAXATION OF POLICY BENEFITS
For federal income tax purposes, the Policies should be treated as life
insurance contracts under Section 7702 of the Code. The death benefit under a
life insurance contract is generally excluded from the gross income of the
beneficiary. Also, a life insurance Policy Owner is generally not taxed on
increments in the contract value until the Policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a Policy that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.
<PAGE>
43
During the first fifteen Policy Years, an "income first" rule generally applies
to distributions of cash required to be made under Code Section 7702 because of
a reduction in benefits under the Policy.
The Maturity Date Extension Rider allows a Policy Owner to extend the Maturity
Date to the date of the Insured's death. If the Maturity Date of the Policy is
extended by rider, Hartford believes that the Policy will continue to be treated
as a life insurance contract for federal income tax purposes after the scheduled
Maturity Date. However, due to the lack of specific guidance on this issue, the
result is not certain. If the Policy is not treated as a life insurance
contract for federal income tax purposes after the scheduled Maturity Date,
among other things, the Death Proceeds may be taxable to the recipient. The
Policy Owner should consult a qualified tax adviser regarding the possible
adverse tax consequences resulting from an extension of the scheduled Maturity
Date.
LAST SURVIVOR POLICIES
Although Hartford believes that the last survivor Policies are in compliance
with Section 7702 of the Code, the manner in which Section 7702 should be
applied to certain features of a joint survivorship life insurance contract is
not directly addressed by Section 7702. In the absence of final regulations or
other guidance issued under Section 7702, there is necessarily some uncertainty
whether a last survivor Policy will meet the Section 7702 definition of a life
insurance contract.
MODIFIED ENDOWMENT CONTRACTS
A life insurance contract is treated as a "modified endowment contract" under
Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay
test provides that premiums cannot be paid at a rate more rapidly than that
allowed by the payment of seven annual premiums using specified computational
rules provided in Section 7702A(c). The large single premium permitted under
the Policy does not meet the specified computational rules for the "seven-pay
test" under Section 7702A(c). Therefore, the Policy will generally be treated
as a modified endowment contract for federal income tax purposes. However, an
exchange under Section 1035 of the Code of a life insurance contract issued
before June 21, 1988 will not cause the new Policy to be treated as a modified
endowment contract if no additional premiums are paid.
A contract that is classified as modified endowment contract is eligible for
certain aspects of the beneficial tax treatment accorded to life insurance.
That is, the death benefit is excluded from income and increments in value are
not subject to current taxation. However, loans, distributions or other amounts
received from a modified endowment contract during the life of the Insured will
be taxed to the extent of any accumulated income in the policy (generally, the
excess of account value over premiums paid). Amounts that are taxable
withdrawals will be subject to a 10% additional tax, with certain exceptions.
<PAGE>
44
All modified endowment contracts that are issued within any calendar year to the
same Policy Owner by one company or its affiliates shall be treated as one
modified endowment contract in determining the taxable portion of any loan or
distributions.
ESTATE AND GENERATION SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in the
Policy Owner's estate for purposes of federal estate tax if the last surviving
Insured owned the Policy. If the Policy Owner was not the last surviving
Insured, the fair market value of the Policy would be included in the Policy
Owner's estate upon the Policy Owner's death. Nothing would be includible in
the last surviving Insured's estate if he or she neither retained incidents of
ownership at death nor had given up ownership within three years before death.
The federal estate tax is integrated with the federal gift tax under a unified
rate schedule and unified credit which shelters up to $650,000 (1999) from the
estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the
credit over the next seven years to $1,000,000. In addition, an unlimited
marital deduction may be available for federal estate and gift tax purposes.
The unlimited marital deduction permits the deferral of taxes until the death of
the surviving spouse (when the Death Proceeds would be available to pay taxes
due and other expenses incurred).
If the Policy Owner (whether or not he or she is an Insured) transfers ownership
of the Policy to someone two or more generations younger, the transfer may be
subject to the generation-skipping transfer tax, the taxable amount being the
value of the Policy. The generation-skipping transfer tax provisions generally
apply to transfers which would be subject to the gift and estate tax rules.
Individuals are generally allowed an aggregate generation skipping transfer
exemption of $1 million, as adjusted for inflation. Because these rules are
complex, the Policy Owner should consult with a qualified tax adviser for
specific information if ownership is passing to younger generations.
DIVERSIFICATION REQUIREMENTS
The Code requires that investments supporting your policy be adequately
diversified. Code Section 817 provides that a variable life insurance contract
will not be treated as a life insurance contract for any period during which the
investments made by the separate account or underlying fund are not adequately
diversified. If a contract is not treated as a life insurance contract, the
policy owner will be subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
<PAGE>
45
- no more than 55% of the value of the total assets of the segregated
asset account underlying a variable contract is represented by any one
investment,
- no more than 70% is represented by any two investments,
- no more than 80% is represented by any three investments and
- no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the
company or the policy owner must agree to pay the tax due for the period during
which the diversification requirements were not met.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend to administer all
policies subject to the diversification requirements in a manner that will
maintain adequate diversification.
OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable life insurance contract to qualify for tax deferral,
assets in the separate accounts supporting the contract must be considered to be
owned by the insurance company and not by the policy owner. It is unclear under
what circumstances an investor is considered to have enough control over the
assets in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain incidents of ownership by the policy owner, such as the ability
to select and control investments in a separate account, will cause the policy
owner to be treated as the owner of the assets for tax purposes.
In its explanation of the diversification regulations, the Treasury Department
recognized that the temporary regulations "do not provide guidance concerning
the circumstances in which investor control of the investments of a segregated
asset account may cause the investor, rather than the insurance company, to be
treated as the owner of the assets in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate cases a
segregated asset account may include multiple sub-
<PAGE>
46
accounts, but do not specify the extent to which policyholders may direct their
investments to particular sub-accounts without being treated as the owners of
the underlying assets. Guidance on this and other issues will be provided in
regulations or revenue rulings under Section 817(d), relating to the definition
of variable contract."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a policy owner is considered the owner of the assets for
tax purposes. We reserve the right to modify the policy, as necessary, to
prevent you from being considered the owner of assets in the separate account.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any increase
in an Owner's Investment Value is generally not taxable to the Policy Owner
unless amounts are received (or are deemed to be received) under the Policy
prior to the Insured's death. If the Policy is surrendered or matures, the
amount received will be includable in the Policy Owner's income to the extent
that it exceeds the Policy Owner's "investment in the contract." (If there is
any debt at the time of a surrender, then such debt will be treated as an amount
distributed to the Owner.) The "investment in the contract" is the aggregate
amount of premium payments and other consideration paid for the Policy, less the
aggregate amount received previously under the Policy to the extent such amounts
received were excluded from gross income. Since this Policy is a modified
endowment contract, partial withdrawals (or other such amounts deemed to be
distributed) from the Policy constitute income to the Policy Owner for Federal
income tax purposes.
LIFE INSURANCE PURCHASED FOR USE IN SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM") on
the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Policy Owner, such
amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP OF POLICIES
In certain circumstances, the Code limits the application of specific tax
advantages to individual owners of life insurance contracts. Prospective Policy
Owners which are not individuals should consult a qualified tax adviser to
determine the potential impact on the purchaser.
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policy Owner or beneficiary. A tax adviser should be
consulted to determine the impact of these taxes.
LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
LEGAL PROCEEDINGS
-----------------
There are no material legal proceedings pending to which the Separate Account
is a party.
<PAGE>
47
LEGAL MATTERS
-------------
Legal matters in connection with the issue and sale of flexible premium
variable life insurance Policies described in this Prospectus and the
organization of Royal, its authority to issue the Policies under Connecticut
law and the validity of the forms of the Policies under Connecticut law and
legal matters relating to the federal securities and income tax laws have
been passed on by Lynda Godkin, Senior Vice President, General Counsel and
Corporate Secretary of Royal.
Year 2000 Compliance
IN GENERAL The Year 2000 issue relates to the ability or inability of computer
hardware, software and other information technology (IT) systems, as well as
non-IT systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition,
Year 2000 problems that occur with third parties with which a company does
business, such as suppliers, computer vendors, distributors and others, may also
adversely affect any given company.
The integrity and reliability of Royal's IT systems, as well as the reliability
of its non-IT systems, are integral aspects of Royal's business. Royal issues
insurance policies and annuities to individual and business customers, nearly
all of which contain date sensitive data, such as policy expiration dates, birth
dates and premium payment dates. In addition, various IT systems support
communications and other systems. Royal also has business relationships with
numerous third parties that affect virtually all aspects of Royal's business,
including, without limitation, suppliers, computer hardware and software
vendors, insurance agents and brokers, securities broker-dealers and other
distributors of financial products, many of which provide date sensitive data to
Royal, and whose operations are important to Royal's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE Beginning in 1990, Hartford Financial
Services Group, Inc. ("Hartford"), Royal's ultimate controlling parent, began
working on making its IT systems Year 2000 ready, either through installing new
programs or replacing systems. Since January 1998, Royal's Year 2000 efforts
have focused on the remaining Year 2000 issues related to IT and non-IT systems
in all of Royal's business segments. These Year 2000 efforts include the
following five main initiatives: (1) identifying and assessing Year 2000 issues;
(2) taking actions to remediate IT and non-IT systems so that they are Year 2000
ready; (3) testing IT and non-IT systems for Year 2000 readiness; (4) deploying
such remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. As of December 31, 1998, Royal substantially completed
initiatives (1) through (4) of its internal Year 2000 efforts. Royal has begun
initiative (5) and management currently anticipates that such activity will
continue into the fourth quarter of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE Royal's Year 2000 efforts include
assessing the potential impact on Royal of third parties' Year 2000 readiness.
Royal's third party Year 2000 efforts include the following three main
initiatives: (1) identifying third parties which have significant business
relationships with Royal, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Royal's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Royal has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Royal has begun conducting the additional activities
described in initiative (3) and management currently anticipates that it will
continue to do so through the end of 1999. However, notwithstanding these third
party Year 2000 efforts, Royal does not have control over these third parties
and, as a result, Royal cannot currently determine to what extent future
operating results may be adversely affected by the failure of these third
parties to adequately address their Year 2000 issues.
YEAR 2000 COSTS The costs of Hartford's Year 2000 program that were incurred
through the year ended December 31, 1997 were not material to Hartford's
financial condition or results of operations. The after-tax costs of Hartford's
Year 2000 efforts for the year ended December 31, 1998 were approximately $3
million. Management currently estimates that after-tax costs related to the Year
2000 program to be incurred in 1999 will be less than $10 million. These costs
are being expensed as incurred.
RISKS AND CONTINGENCY PLANS If significant Year 2000 problems arise, including
problems arising with third parties, failures of IT and non-IT systems could
occur, which in turn could result in substantial interruptions in Royal's
business. In addition, Royal's investing activities are an important aspect of
its business and Royal may be exposed to the risk that issuers of investments
held by it will be adversely impacted by Year 2000 issues. Given the uncertain
nature of Year 2000 problems that may arise, especially those related to the
readiness of third parties discussed above, management cannot determine at this
time whether the consequences of Year 2000 related problems that could arise
will have a material impact on Royal's financial condition or results of
operations.
Royal is in the process of developing certain contingency plans so that if,
despite its Year 2000 efforts, Year 2000 problems ultimately arise, the
impact of such problems may be avoided or minimized. These contingency plans
are being developed based on, among other things, known or reasonably
anticipated circumstances and potential vulnerabilities. The contingency
planning also includes assessing the dependency of Royal's business on third
parties and their Year 2000 readiness. Royal currently anticipates that
internal and external contingency plans will be substantially complete by the
end of the second quarter of 1999. However, in many contexts, Year 2000
issues are dynamic, and ongoing assessments of business functions,
vulnerabilities and risks must be made. As such, new contingency plans may
be needed in the future and/or existing plans may need to be modified as
circumstances warrant.
<PAGE>
48
EXPERTS
-------
The audited statutory financial statements included in this registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said report. Reference is made to the report on the statutory
financial statements of Royal Life Insurance Company of America, as of and
for the year ended December 31, 1998, which states the statutory financial
statements are presented in accordance with statutory accounting practices
prescribed or permitted by the National Association of Insurance
Commissioners and the State of Connecticut Insurance Department, and are not
presented in accordance with generally accepted accounting principles. The
principal business address of Arthur Andersen LLP is One Financial Plaza,
Hartford, Connecticut 06103.
The audited financial statements with respect to 1997 included in this
registration statement have been audited by PricewaterhouseCoopers LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in giving said reports. The principal business address of
PricewaterhouseCoopers LLP is 400 Renaissance Center, Detroit, Michigan
48243-1507.
The hypothetical Policy illustrations included in this Prospectus and the
registration statement with respect to the Separate Account have been
approved by Michael Winterfield, FSA, MAAA, Assistant Vice President and
Director, Individual Annuity Product Management, for ROYAL, and are included
in reliance upon his opinion as to their reasonableness.
REGISTRATION STATEMENT
----------------------
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended. This Prospectus does
not contain all information set forth in the registration statement, its
amendments and exhibits, to all of which reference is made for further
information concerning the Separate Account, the Funds, Royal, and the
Policies.
<PAGE>
49
APPENDIX A
SPECIAL INFORMATION FOR POLICIES PURCHASED IN NEW YORK
If the Policy is purchased in the State of New York, the following provisions
of the Prospectus are amended as follows:
In the Special Terms subsection of the Prospectus, the definition of Account
Value is deleted and the following definition is substituted:
Account Value: The current value of Accumulation Units plus the value
of the Loan Account under the Policy. In the case of a Policy Owner who
purchases the Policy in the State of New York (the "New York Policy Owner")
and who elects to transfer into the Fixed Account, Account Value is the
current value of the Fixed Account plus the value of the Loan Account under
the Policy.
The following definition is added:
Fixed Account: Part of the General Account of Royal to which a New York
Policy Owner may allocate the entire Account Value.
The definition of Loan Account is deleted and the following definition is
substituted:
Loan Account: An account in Royal's General Account, established for
any amounts transferred from the Sub-Accounts or, if a New York Policy Owner,
from the Fixed Account for requested loans. The Loan Account credits a fixed
rate of interest of 4% per annum that is not based on the investment
experience of the Separate Account.
The following is added to the Prospectus as a separate section following the
section entitled "The Separate Account":
THE FIXED ACCOUNT
THAT PORTION OF THE POLICY RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE
1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN
REVIEWED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE
FOLLOWING DISCLOSURE ABOUT THE
<PAGE>
50
FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF
THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF
DISCLOSURE.
Under the circumstances described under the heading "Transfer of Entire
Account Value to the Fixed Account," New York Policy Owners may transfer no
less than the entire Account Value to the Fixed Account. Account Value
transferred to the Fixed Account becomes part of the general assets of Royal.
Royal invests the assets of the General Account in accordance with
applicable laws governing the investment of insurance company general
accounts.
Royal currently credits interest to the Account Value transferred to the
Fixed Account under the Policy at the Minimum Credited Rate of 3% per year,
compounded annually. Royal reserves the right to credit a lower minimum
interest rate according to state law. Royal may also credit interest at
rates greater than the minimum Fixed Account interest rate. There is no
specific formula for determining the interest credited to the Account Value
in the Fixed Account.
The following language is added to the section of the Prospectus entitled
"Deductions and Charges -- Administrative Charges":
No Administrative Charge is deducted from Account Value in the Fixed
Account.
The following language is added to the section of the Prospectus entitled
"Deductions and Charges -- Mortality and Expense Risk Charge":
No Mortality and Expense Risk Charge is deducted from Account Value in
the Fixed Account.
The following separate sections are added to the section of the Prospectus
entitled "Policy Benefits":
TRANSFER OF ENTIRE ACCOUNT VALUE TO THE FIXED ACCOUNT
New York Policy Owners may transfer no less than the entire Account Value
into the Fixed Account under the following circumstances: (i) during the
first 18 months following the Date of Issue, (ii) within 30 days following a
Policy Anniversary, or (iii) within 60 days following the effective date of a
material change in the investment policy of the Separate Account which the
New York Policy Owner objects to.
A TRANSFER TO THE FIXED ACCOUNT MUST BE FOR THE ENTIRE ACCOUNT VALUE AND ONCE
THE ACCOUNT VALUE HAS BEEN TRANSFERRED TO THE FIXED ACCOUNT, IT MAY NOT,
UNDER ANY CIRCUMSTANCES, BE TRANSFERRED BACK TO THE SEPARATE ACCOUNT.
<PAGE>
51
For New York Policy Owners who elect to invest in the Fixed Account, Royal
will transfer the entire Account Value from the Separate Account to the Fixed
Account on the Monthly Activity Date next following the date on which Royal
received the transfer request. The Account Value in the Fixed Account on the
date of transfer equals the entire Account Value; plus the value of the Loan
Account; minus the Monthly Deduction Amount applicable to the Fixed Account
and minus the Annual Maintenance Fee, if applicable. On each subsequent
Monthly Activity Date, the Account Value in the Fixed Account equals the
Account Value on the previous Monthly Activity Date; plus any premiums
received since the last Monthly Activity Date; plus interest credited since
the last Monthly Activity Date; minus the Monthly Deduction Amount applicable
to the Fixed Account; minus any partial surrenders taken since the last
Monthly Activity Date and minus any Surrender Charges deducted since the last
Monthly Deduction Date. On each Valuation Date (other than a Monthly
Activity Date), the Account Value of the Fixed Account equals the Account
Value on the previous Monthly Activity Date; plus any premiums received since
the last Monthly Activity Date; plus any interest credited since the last
Monthly Activity Date; minus any partial surrenders taken since the last
Monthly Activity Date and minus any Surrender Charges deducted since the last
Monthly Activity Date.
DEFERRED PAYMENTS
Royal reserves the right to defer payment of any Cash Surrender Values and
loan amounts which are attributable to the Fixed Account for up to six months
from the date of request. If payment is deferred for more than ten days,
Royal will pay interest at the Fixed Account Minimum Credited Interest Rate.
<PAGE>
52
APPENDIX B
ILLUSTRATIONS OF BENEFITS
The tables in Appendix B illustrate the way in which a Policy operates. They
show how the death benefit and surrender value could vary over an extended
period of time assuming hypothetical gross rates of return equal to constant
after tax annual rates of 0%, 6% and 12%. The tables are based on an initial
premium of $10,000. A male age 45, a female age 55 and a male age 65 with
Face Amounts of $44,053, $34,014 and $20,001, respectively, are illustrated
for the single life preferred Policy for both Policy Owner Option 1 and
Policy Owner Option 2. The illustrations for the last survivor preferred
Policy assume male and female of equal ages, including age 55 and 65 for Face
Amounts of $45,872 and $28,491.
The death benefit and surrender value for a Policy would be different from
those shown if the rates of return averaged 0%, 6% and 12% over a period of
years, but also fluctuated above or below those averages for individual
Policy Years. They would also differ if any Policy loan were made during the
period of time illustrated.
The tables reflect the deductions of current Policy charges for Policy Owner
Option 1 and Policy Owner Option 2 and guaranteed Policy charges for a single
gross interest rate. The death benefits and surrender values would change if
the current cost of insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Policy Year take into account an average daily charge equal to an annual
charge of 0.47% of the average daily net assets of the Funds for investment
advisory and administrative services fees. The gross annual investment
return rates of 0%, 6% and 12% on the Fund's assets are equal to net annual
investment return rates (net of the annual charge of 0.47% described above)
of -0.47%, 5.53%, and 11.53%, respectively.
The hypothetical returns shown in the tables are without any tax charges that
may be attributable to the Separate Account in the future. In order to
produce after tax returns of 0%, 6%, and 12%, the Separate Account would have
to earn a sufficient amount in excess of 0% or 6% or 12% to cover any tax
charges (see "Deductions and Charges -- Taxes Charged Against the Separate
Account").
The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
Royal will furnish upon request, a comparable illustration reflecting the
proposed Insureds age, risk classification, Face Amount or initial premium
requested, and reflecting guaranteed cost of insurance rates. Royal will
also furnish an additional similar illustration reflecting current cost of
insurance rates which may be less than, but never greater than, the
guaranteed cost of insurance rates.
<PAGE>
53
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,910 9,885 44,053 10,828 9,805 44,053
2 11,025 11,870 10,853 44,053 11,696 10,683 44,053
3 11,576 12,918 11,912 44,053 12,642 11,640 44,053
4 12,155 14,061 13,220 44,053 13,671 12,836 44,053
5 12,763 15,307 14,486 44,053 14,794 13,979 44,053
6 13,401 16,668 16,071 44,053 16,019 15,429 44,053
7 14,071 18,152 17,586 44,053 17,355 16,795 44,053
8 14,775 19,771 19,442 44,053 18,815 18,491 44,053
9 15,513 21,538 21,254 44,053 20,410 20,129 44,053
10 16,289 23,465 23,435 44,053 22,155 22,125 44,053
11 17,103 25,773 25,743 44,053 24,263 24,233 44,053
12 17,959 28,312 28,282 44,053 26,601 26,571 44,053
13 18,856 31,119 31,089 44,188 29,198 29,168 44,053
14 19,799 34,232 34,202 47,240 32,091 32,061 44,285
15 20,789 37,667 37,637 50,474 35,306 35,276 47,310
16 21,829 41,456 41,426 53,892 38,855 38,825 50,511
17 22,920 45,622 45,592 58,395 42,758 42,728 54,729
18 24,066 50,202 50,202 63,254 47,048 47,018 59,280
19 25,270 55,271 55,271 68,536 51,766 51,766 64,190
20 26,533 60,847 60,847 74,232 56,988 56,988 69,525
25 33,864 98,107 98,107 113,804 91,876 91,876 106,576
35 55,160 254,632 254,632 269,910 238,302 238,302 252,599
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
54
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,323 9,311 44,053 10,241 9,230 44,053
2 11,025 10,626 9,633 44,053 10,449 9,460 44,053
3 11,576 10,938 9,967 44,053 10,653 9,687 44,053
4 12,155 11,261 10,462 44,053 10,852 10,060 44,053
5 12,763 11,593 10,818 44,053 11,045 10,277 44,053
6 13,401 11,937 11,388 44,053 11,229 10,687 44,053
7 14,071 12,292 11,770 44,053 11,402 10,887 44,053
8 14,775 12,658 12,365 44,053 11,561 11,273 44,053
9 15,513 13,036 12,773 44,053 11,701 11,442 44,053
10 16,289 13,426 13,396 44,053 11,819 11,789 44,053
11 17,103 13,940 13,910 44,053 12,009 11,979 44,053
12 17,959 14,475 14,445 44,053 12,175 12,145 44,053
13 18,856 15,032 15,002 44,053 12,315 12,285 44,053
14 19,799 15,611 15,581 44,053 12,422 12,392 44,053
15 20,789 16,214 16,184 44,053 12,491 12,461 44,053
16 21,829 16,842 16,812 44,053 12,514 12,484 44,053
17 22,920 17,495 17,465 44,053 12,482 12,452 44,053
18 24,066 18,174 18,144 44,053 12,382 12,352 44,053
19 25,270 18,881 18,851 44,053 12,202 12,172 44,053
20 26,533 19,617 19,587 44,053 11,926 11,896 44,053
25 33,864 23,768 23,738 44,053 8,435 8,405 44,053
35 55,160 35,017 34,987 44,053 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
55
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,736 8,757 44,053 9,654 8,682 44,053
2 11,025 9,450 8,522 44,053 9,271 8,360 44,053
3 11,576 9,172 8,293 44,053 8,882 8,030 44,053
4 12,155 8,900 8,203 44,053 8,484 7,817 44,053
5 12,763 8,636 7,980 44,053 8,075 7,460 44,053
6 13,401 8,379 7,930 44,053 7,654 7,242 44,053
7 14,071 8,129 7,713 44,053 7,218 6,845 44,053
8 14,775 7,885 7,658 44,053 6,762 6,563 44,053
9 15,513 7,648 7,446 44,053 6,283 6,112 44,053
10 16,289 7,417 7,387 44,053 5,778 5,748 44,053
11 17,103 7,250 7,220 44,053 5,284 5,254 44,053
12 17,959 7,086 7,056 44,053 4,751 4,721 44,053
13 18,856 6,925 6,895 44,053 4,175 4,145 44,053
14 19,799 6,767 6,737 44,053 3,548 3,518 44,053
15 20,789 6,612 6,582 44,053 2,864 2,834 44,053
16 21,829 6,460 6,430 44,053 2,113 2,083 44,053
17 22,920 6,311 6,281 44,053 1,286 1,256 44,053
18 24,066 6,164 6,134 44,053 368 338 44,053
19 25,270 6,021 5,991 44,053 - - -
20 26,533 5,880 5,850 44,053 - - -
25 33,864 5,212 5,182 44,053 - - -
35 55,160 4,051 4,021 44,053 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
56
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,542 9,762 44,053 10,456 9,676 44,053
2 11,025 11,544 10,764 44,053 11,360 10,580 44,053
3 11,576 12,644 11,864 44,053 12,351 11,571 44,053
4 12,155 13,851 13,221 44,053 13,438 12,808 44,053
5 12,763 15,178 14,548 44,053 14,633 14,003 44,053
6 13,401 16,634 16,204 44,053 15,945 15,515 44,053
7 14,071 18,233 17,803 44,053 17,387 16,957 44,053
8 14,775 19,990 19,760 44,053 18,974 18,744 44,053
9 15,513 21,919 21,689 44,053 20,722 20,492 44,053
10 16,289 24,037 24,007 44,053 22,649 22,619 44,053
11 17,103 26,402 26,372 44,053 24,816 24,786 44,053
12 17,959 29,006 28,976 44,053 27,220 27,190 44,053
13 18,856 31,893 31,863 45,287 29,892 29,862 44,053
14 19,799 35,088 35,058 48,421 32,868 32,838 45,357
15 20,789 38,609 38,579 51,736 36,164 36,134 48,460
16 21,829 42,493 42,463 55,241 39,800 39,770 51,740
17 22,920 46,764 46,734 59,858 43,799 43,769 56,062
18 24,066 51,460 51,460 64,839 48,195 48,165 60,725
19 25,270 56,657 56,657 70,254 53,028 53,028 65,755
20 26,533 62,372 62,372 76,093 58,377 58,377 71,220
25 33,864 100,566 100,566 116,656 94,116 94,116 109,174
35 55,160 261,014 261,014 276,674 244,112 244,112 258,758
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
57
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,975 9,197 44,053 9,888 9,117 44,053
2 11,025 10,333 9,553 44,053 10,147 9,367 44,053
3 11,576 10,706 9,926 44,053 10,406 9,626 44,053
4 12,155 11,093 10,463 44,053 10,665 10,035 44,053
5 12,763 11,495 10,865 44,053 10,921 10,291 44,053
6 13,401 11,912 11,482 44,053 11,173 10,743 44,053
7 14,071 12,347 11,917 44,053 11,418 10,988 44,053
8 14,775 12,798 12,568 44,053 11,654 11,424 44,053
9 15,513 13,266 13,036 44,053 11,877 11,647 44,053
10 16,289 13,753 13,723 44,053 12,083 12,053 44,053
11 17,103 14,281 14,251 44,053 12,289 12,259 44,053
12 17,959 14,829 14,799 44,053 12,472 12,442 44,053
13 18,856 15,401 15,371 44,053 12,629 12,599 44,053
14 19,799 15,995 15,965 44,053 12,756 12,726 44,053
15 20,789 16,613 16,583 44,053 12,846 12,816 44,053
16 21,829 17,257 17,227 44,053 12,892 12,862 44,053
17 22,920 17,927 17,897 44,053 12,885 12,855 44,053
18 24,066 18,624 18,594 44,053 12,813 12,783 44,053
19 25,270 19,349 19,319 44,053 12,664 12,634 44,053
20 26,533 20,103 20,073 44,053 12,422 12,392 44,053
25 33,864 24,362 24,332 44,053 9,177 9,147 44,053
35 55,160 35,902 35,872 44,053 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
58
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,408 8,672 44,053 9,321 8,592 44,053
2 11,025 9,190 8,471 44,053 9,003 8,298 44,053
3 11,576 8,977 8,273 44,053 8,674 7,994 44,053
4 12,155 8,768 8,211 44,053 8,334 7,804 44,053
5 12,763 8,563 8,019 44,053 7,981 7,472 44,053
6 13,401 8,362 7,997 44,053 7,611 7,277 44,053
7 14,071 8,165 7,808 44,053 7,223 6,904 44,053
8 14,775 7,972 7,783 44,053 6,813 6,647 44,053
9 15,513 7,783 7,597 44,053 6,376 6,219 44,053
10 16,289 7,598 7,568 44,053 5,909 5,879 44,053
11 17,103 7,427 7,397 44,053 5,416 5,386 44,053
12 17,959 7,260 7,230 44,053 4,882 4,852 44,053
13 18,856 7,096 7,066 44,053 4,306 4,276 44,053
14 19,799 6,935 6,905 44,053 3,679 3,649 44,053
15 20,789 6,777 6,747 44,053 2,996 2,966 44,053
16 21,829 6,622 6,592 44,053 2,246 2,216 44,053
17 22,920 6,469 6,439 44,053 1,420 1,390 44,053
18 24,066 6,320 6,290 44,053 503 473 44,053
19 25,270 6,173 6,143 44,053 - - -
20 26,533 6,029 5,999 44,053 - - -
25 33,864 5,349 5,319 44,053 - - -
35 55,160 4,164 4,134 44,053 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
59
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,910 9,885 34,014 10,783 9,760 34,014
2 11,025 11,870 10,853 34,014 11,603 10,591 34,014
3 11,576 12,918 11,912 34,014 12,497 11,499 34,014
4 12,155 14,061 13,220 34,014 13,476 12,644 34,014
5 12,763 15,307 14,486 34,014 14,548 13,736 34,014
6 13,401 16,668 16,071 34,014 15,722 15,135 34,014
7 14,071 18,152 17,586 34,014 17,009 16,451 34,014
8 14,775 19,771 19,442 34,014 18,418 18,096 34,014
9 15,513 21,538 21,254 34,014 19,964 19,684 34,014
10 16,289 23,465 23,435 34,014 21,664 21,634 34,014
11 17,103 25,776 25,746 34,014 23,733 23,703 34,014
12 17,959 28,353 28,323 34,014 26,046 26,016 34,014
13 18,856 31,230 31,200 36,850 28,643 28,613 34,014
14 19,799 34,400 34,370 40,248 31,547 31,517 36,909
15 20,789 37,892 37,862 43,955 34,747 34,717 40,306
16 21,829 41,737 41,707 47,998 38,270 38,240 44,010
17 22,920 45,984 45,954 51,961 42,161 42,131 47,641
18 24,066 50,677 50,677 56,251 46,461 46,431 51,571
19 25,270 55,901 55,901 60,932 51,217 51,217 55,826
20 26,533 61,636 61,636 67,183 56,472 56,472 61,554
25 33,864 100,318 100,318 106,337 91,913 91,913 97,427
35 55,160 261,104 261,104 274,159 235,703 235,703 247,487
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
60
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,323 9,311 34,014 10,196 9,187 34,014
2 11,025 10,626 9,633 34,014 10,356 9,369 34,014
3 11,576 10,938 9,967 34,014 10,510 9,546 34,014
4 12,155 11,261 10,462 34,014 10,658 9,868 34,014
5 12,763 11,593 10,818 34,014 10,798 10,033 34,014
6 13,401 11,937 11,388 34,014 10,927 10,388 34,014
7 14,071 12,292 11,770 34,014 11,041 10,528 34,014
8 14,775 12,658 12,365 34,014 11,133 10,847 34,014
9 15,513 13,036 12,773 34,014 11,197 10,939 34,014
10 16,289 13,426 13,396 34,014 11,227 11,197 34,014
11 17,103 13,940 13,910 34,014 11,312 11,282 34,014
12 17,959 14,475 14,445 34,014 11,360 11,330 34,014
13 18,856 15,032 15,002 34,014 11,370 11,340 34,014
14 19,799 15,611 15,581 34,014 11,335 11,305 34,014
15 20,789 16,214 16,184 34,014 11,249 11,219 34,014
16 21,829 16,842 16,812 34,014 11,099 11,069 34,014
17 22,920 17,495 17,465 34,014 10,866 10,836 34,014
18 24,066 18,174 18,144 34,014 10,525 10,495 34,014
19 25,270 18,881 18,851 34,014 10,046 10,016 34,014
20 26,533 19,617 19,587 34,014 9,397 9,367 34,014
25 33,864 23,768 23,738 34,014 1,949 1,919 34,014
35 55,160 35,017 34,987 36,767 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
61
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,736 8,757 34,014 9,609 8,642 34,014
2 11,025 9,450 8,522 34,014 9,180 8,278 34,014
3 11,576 9,172 8,293 34,014 8,741 7,902 34,014
4 12,155 8,900 8,203 34,014 8,293 7,641 34,014
5 12,763 8,636 7,980 34,014 7,833 7,235 34,014
6 13,401 8,379 7,930 34,014 7,358 6,960 34,014
7 14,071 8,129 7,713 34,014 6,863 6,507 34,014
8 14,775 7,885 7,658 34,014 6,340 6,151 34,014
9 15,513 7,648 7,446 34,014 5,782 5,622 34,014
10 16,289 7,417 7,387 34,014 5,181 5,151 34,014
11 17,103 7,250 7,220 34,014 4,573 4,543 34,014
12 17,959 7,086 7,056 34,014 3,908 3,878 34,014
13 18,856 6,925 6,895 34,014 3,182 3,152 34,014
14 19,799 6,767 6,737 34,014 2,392 2,362 34,014
15 20,789 6,612 6,582 34,014 1,525 1,495 34,014
16 21,829 6,460 6,430 34,014 566 536 34,014
17 22,920 6,311 6,281 34,014 - - -
18 24,066 6,164 6,134 34,014 - - -
19 25,270 6,021 5,991 34,014 - - -
20 26,533 5,880 5,850 34,014 - - -
25 33,864 5,212 5,182 34,014 - - -
35 55,160 4,051 4,021 34,014 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
62
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,542 9,762 34,014 10,409 9,629 34,014
2 11,025 11,544 10,764 34,014 11,262 10,482 34,014
3 11,576 12,644 11,864 34,014 12,200 11,420 34,014
4 12,155 13,851 13,221 34,014 13,234 12,604 34,014
5 12,763 15,178 14,548 34,014 14,374 13,744 34,014
6 13,401 16,634 16,204 34,014 15,631 15,201 34,014
7 14,071 18,233 17,803 34,014 17,019 16,589 34,014
8 14,775 19,990 19,760 34,014 18,552 18,322 34,014
9 15,513 21,919 21,689 34,014 20,246 20,016 34,014
10 16,289 24,037 24,007 34,014 22,124 22,094 34,014
11 17,103 26,412 26,382 34,014 24,251 24,221 34,014
12 17,959 29,069 29,039 34,592 26,630 26,600 34,014
13 18,856 32,022 31,992 37,785 29,304 29,274 34,578
14 19,799 35,274 35,244 41,270 32,277 32,247 37,764
15 20,789 38,855 38,825 45,071 35,552 35,522 41,240
16 21,829 42,799 42,769 49,218 39,157 39,127 45,030
17 22,920 47,154 47,124 53,284 43,139 43,109 48,747
18 24,066 51,967 51,967 57,683 47,540 47,510 52,769
19 25,270 57,325 57,325 62,483 52,408 52,408 57,124
20 26,533 63,206 63,206 68,894 57,784 57,784 62,985
25 33,864 102,873 102,873 109,045 94,049 94,049 99,691
35 55,160 267,754 267,754 281,141 241,180 241,180 253,239
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
63
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,975 9,197 34,014 9,842 9,074 34,014
2 11,025 10,333 9,553 34,014 10,051 9,271 34,014
3 11,576 10,706 9,926 34,014 10,258 9,478 34,014
4 12,155 11,093 10,463 34,014 10,462 9,832 34,014
5 12,763 11,495 10,865 34,014 10,663 10,033 34,014
6 13,401 11,912 11,482 34,014 10,857 10,427 34,014
7 14,071 12,347 11,917 34,014 11,040 10,610 34,014
8 14,775 12,798 12,568 34,014 11,207 10,977 34,014
9 15,513 13,266 13,036 34,014 11,350 11,120 34,014
10 16,289 13,753 13,723 34,014 11,465 11,435 34,014
11 17,103 14,281 14,251 34,014 11,565 11,535 34,014
12 17,959 14,829 14,799 34,014 11,631 11,601 34,014
13 18,856 15,401 15,371 34,014 11,659 11,629 34,014
14 19,799 15,995 15,965 34,014 11,646 11,616 34,014
15 20,789 16,613 16,583 34,014 11,583 11,553 34,014
16 21,829 17,257 17,227 34,014 11,458 11,428 34,014
17 22,920 17,927 17,897 34,014 11,254 11,224 34,014
18 24,066 18,624 18,594 34,014 10,945 10,915 34,014
19 25,270 19,349 19,319 34,014 10,504 10,474 34,014
20 26,533 20,103 20,073 34,014 9,899 9,869 34,014
25 33,864 24,362 24,332 34,014 2,813 2,783 34,014
35 55,160 35,902 35,872 37,696 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
64
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,408 8,672 34,014 9,275 8,550 34,014
2 11,025 9,190 8,471 34,014 8,908 8,210 34,014
3 11,576 8,977 8,273 34,014 8,529 7,859 34,014
4 12,155 8,768 8,211 34,014 8,137 7,619 34,014
5 12,763 8,563 8,019 34,014 7,730 7,236 34,014
6 13,401 8,362 7,997 34,014 7,305 6,983 34,014
7 14,071 8,165 7,808 34,014 6,856 6,551 34,014
8 14,775 7,972 7,783 34,014 6,376 6,218 34,014
9 15,513 7,783 7,597 34,014 5,857 5,710 34,014
10 16,289 7,598 7,568 34,014 5,292 5,262 34,014
11 17,103 7,427 7,397 34,014 4,684 4,654 34,014
12 17,959 7,260 7,230 34,014 4,020 3,990 34,014
13 18,856 7,096 7,066 34,014 3,296 3,266 34,014
14 19,799 6,935 6,905 34,014 2,507 2,477 34,014
15 20,789 6,777 6,747 34,014 1,641 1,611 34,014
16 21,829 6,622 6,592 34,014 684 654 34,014
17 22,920 6,469 6,439 34,014 - - -
18 24,066 6,320 6,290 34,014 - - -
19 25,270 6,173 6,143 34,014 - - -
20 26,533 6,029 5,999 34,014 - - -
25 33,864 5,349 5,319 34,014 - - -
35 55,160 4,164 4,134 34,014 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
65
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,910 9,885 20,001 10,697 9,677 20,001
2 11,025 11,870 10,853 20,001 11,422 10,414 20,001
3 11,576 12,918 11,912 20,001 12,215 11,221 20,001
4 12,155 14,061 13,220 20,001 13,089 12,262 20,001
5 12,763 15,307 14,486 20,001 14,058 13,252 20,001
6 13,401 16,668 16,071 20,001 15,141 14,560 20,001
7 14,071 18,152 17,586 20,511 16,363 15,811 20,001
8 14,775 19,777 19,449 21,952 17,756 17,437 20,001
9 15,513 21,563 21,279 23,503 19,345 19,067 21,086
10 16,289 23,498 23,468 25,613 21,078 21,048 22,974
11 17,103 25,818 25,788 27,883 23,155 23,125 25,007
12 17,959 28,377 28,347 30,362 25,446 25,416 27,227
13 18,856 31,175 31,145 33,357 27,951 27,921 29,907
14 19,799 34,265 34,235 36,320 30,718 30,688 32,560
15 20,789 37,651 37,621 39,910 33,743 33,713 35,767
16 21,829 41,391 41,361 43,460 37,091 37,061 38,945
17 22,920 45,488 45,458 47,762 40,751 40,721 42,788
18 24,066 49,994 49,964 52,494 44,746 44,716 46,982
19 25,270 54,950 54,950 57,697 49,099 49,069 51,554
20 26,533 60,433 60,433 63,454 53,837 53,837 56,528
25 33,864 97,233 97,233 102,095 84,495 84,495 88,719
35 55,160 251,914 251,914 254,433 212,249 212,249 214,371
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
66
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,323 9,311 20,001 10,108 9,100 20,001
2 11,025 10,626 9,633 20,001 10,160 9,177 20,001
3 11,576 10,938 9,967 20,001 10,184 9,226 20,001
4 12,155 11,261 10,462 20,001 10,175 9,392 20,001
5 12,763 11,593 10,818 20,001 10,125 9,369 20,001
6 13,401 11,937 11,388 20,001 10,027 9,497 20,001
7 14,071 12,292 11,770 20,001 9,868 9,369 20,001
8 14,775 12,658 12,365 20,001 9,633 9,363 20,001
9 15,513 13,036 12,773 20,001 9,304 9,065 20,001
10 16,289 13,426 13,396 20,001 8,859 8,829 20,001
11 17,103 13,940 13,910 20,001 8,344 8,314 20,001
12 17,959 14,475 14,445 20,001 7,660 7,630 20,001
13 18,856 15,032 15,002 20,001 6,767 6,737 20,001
14 19,799 15,611 15,581 20,001 5,609 5,579 20,001
15 20,789 16,214 16,184 20,001 4,114 4,084 20,001
16 21,829 16,842 16,812 20,001 2,174 2,144 20,001
17 22,920 17,495 17,465 20,001 - - -
18 24,066 18,174 18,144 20,001 - - -
19 25,270 18,881 18,851 20,001 - - -
20 26,533 19,617 19,587 20,597 - - -
25 33,864 23,768 23,738 24,956 - - -
35 55,160 35,046 35,016 35,396 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
67
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,736 8,757 20,001 9,518 8,560 20,001
2 11,025 9,450 8,522 20,001 8,971 8,088 20,001
3 11,576 9,172 8,293 20,001 8,381 7,576 20,001
4 12,155 8,900 8,203 20,001 7,742 7,132 20,001
5 12,763 8,636 7,980 20,001 7,044 6,503 20,001
6 13,401 8,379 7,930 20,001 6,272 5,929 20,001
7 14,071 8,129 7,713 20,001 5,410 5,123 20,001
8 14,775 7,885 7,658 20,001 4,435 4,294 20,001
9 15,513 7,648 7,446 20,001 3,319 3,214 20,001
10 16,289 7,417 7,387 20,001 2,029 1,999 20,001
11 17,103 7,250 7,220 20,001 541 511 20,001
12 17,959 7,086 7,056 20,001 - - -
13 18,856 6,925 6,895 20,001 - - -
14 19,799 6,767 6,737 20,001 - - -
15 20,789 6,612 6,582 20,001 - - -
16 21,829 6,460 6,430 20,001 - - -
17 22,920 6,311 6,281 20,001 - - -
18 24,066 6,164 6,134 20,001 - - -
19 25,270 6,021 5,991 20,001 - - -
20 26,533 5,880 5,850 20,001 - - -
25 33,864 5,212 5,182 20,001 - - -
35 55,160 4,051 4,021 20,001 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
68
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,542 9,762 20,001 10,314 9,534 20,001
2 11,025 11,544 10,764 20,001 11,062 10,282 20,001
3 11,576 12,644 11,864 20,001 11,886 11,106 20,001
4 12,155 13,851 13,221 20,001 12,799 12,169 20,001
5 12,763 15,178 14,548 20,001 13,818 13,188 20,001
6 13,401 16,634 16,204 20,001 14,966 14,536 20,001
7 14,071 18,233 17,803 20,603 16,270 15,840 20,001
8 14,775 19,996 19,766 22,195 17,767 17,537 20,001
9 15,513 21,945 21,715 23,919 19,484 19,254 21,237
10 16,289 24,071 24,041 26,236 21,368 21,338 23,290
11 17,103 26,448 26,418 28,563 23,474 23,444 25,352
12 17,959 29,069 29,039 31,104 25,798 25,768 27,603
13 18,856 31,937 31,907 34,172 28,337 28,307 30,320
14 19,799 35,103 35,073 37,209 31,143 31,113 33,011
15 20,789 38,573 38,543 40,887 34,210 34,180 36,262
16 21,829 42,405 42,375 44,525 37,605 37,575 39,485
17 22,920 46,604 46,574 48,934 41,316 41,286 43,382
18 24,066 51,221 51,221 53,782 45,367 45,337 47,635
19 25,270 56,332 56,332 59,148 49,781 49,751 52,270
20 26,533 61,954 61,954 65,051 54,585 54,585 57,314
25 33,864 99,680 99,680 104,663 85,670 85,670 89,953
35 55,160 258,252 258,252 260,834 215,199 215,199 217,351
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
69
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,975 9,197 20,001 9,745 8,984 20,001
2 11,025 10,333 9,553 20,001 9,838 9,070 20,001
3 11,576 10,706 9,926 20,001 9,904 9,131 20,001
4 12,155 11,093 10,463 20,001 9,940 9,313 20,001
5 12,763 11,495 10,865 20,001 9,938 9,312 20,001
6 13,401 11,912 11,482 20,001 9,890 9,465 20,001
7 14,071 12,347 11,917 20,001 9,786 9,364 20,001
8 14,775 12,798 12,568 20,001 9,609 9,387 20,001
9 15,513 13,266 13,036 20,001 9,342 9,125 20,001
10 16,289 13,753 13,723 20,001 8,964 8,934 20,001
11 17,103 14,281 14,251 20,001 8,463 8,433 20,001
12 17,959 14,829 14,799 20,001 7,796 7,766 20,001
13 18,856 15,401 15,371 20,001 6,923 6,893 20,001
14 19,799 15,995 15,965 20,001 5,791 5,761 20,001
15 20,789 16,613 16,583 20,001 4,326 4,296 20,001
16 21,829 17,257 17,227 20,001 2,425 2,395 20,001
17 22,920 17,927 17,897 20,001 - - -
18 24,066 18,624 18,594 20,001 - - -
19 25,270 19,349 19,319 20,316 - - -
20 26,533 20,103 20,073 21,108 - - -
25 33,864 24,362 24,332 25,580 - - -
35 55,160 35,932 35,902 36,290 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
70
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,408 8,672 20,001 9,177 8,458 20,001
2 11,025 9,190 8,471 20,001 8,684 8,002 20,001
3 11,576 8,977 8,273 20,001 8,145 7,504 20,001
4 12,155 8,768 8,211 20,001 7,554 7,071 20,001
5 12,763 8,563 8,019 20,001 6,899 6,455 20,001
6 13,401 8,362 7,997 20,001 6,167 5,890 20,001
7 14,071 8,165 7,808 20,001 5,339 5,096 20,001
8 14,775 7,972 7,783 20,001 4,394 4,276 20,001
9 15,513 7,783 7,597 20,001 3,302 3,206 20,001
10 16,289 7,598 7,568 20,001 2,029 1,999 20,001
11 17,103 7,427 7,397 20,001 541 511 20,001
12 17,959 7,260 7,230 20,001 - - -
13 18,856 7,096 7,066 20,001 - - -
14 19,799 6,935 6,905 20,001 - - -
15 20,789 6,777 6,747 20,001 - - -
16 21,829 6,622 6,592 20,001 - - -
17 22,920 6,469 6,439 20,001 - - -
18 24,066 6,320 6,290 20,001 - - -
19 25,270 6,173 6,143 20,001 - - -
20 26,533 6,029 5,999 20,001 - - -
25 33,864 5,349 5,319 20,001 - - -
35 55,160 4,164 4,134 20,001 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
71
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED / 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,978 9,951 45,872 10,978 9,951 45,872
2 11,025 12,013 10,993 45,872 12,013 10,993 45,872
3 11,576 13,141 12,131 45,872 13,141 12,131 45,872
4 12,155 14,371 13,526 45,872 14,371 13,526 45,872
5 12,763 15,713 14,886 45,872 15,713 14,886 45,872
6 13,401 17,175 16,573 45,872 17,175 16,573 45,872
7 14,071 18,768 18,197 45,872 18,768 18,197 45,872
8 14,775 20,504 20,172 45,872 20,504 20,172 45,872
9 15,513 22,396 22,110 45,872 22,396 22,110 45,872
10 16,289 24,458 24,428 45,872 24,458 24,428 45,872
11 17,103 26,924 26,894 45,872 26,924 26,894 45,872
12 17,959 29,644 29,614 45,872 29,644 29,614 45,872
13 18,856 32,652 32,622 45,872 32,652 32,622 45,872
14 19,799 35,987 35,957 45,872 35,987 35,957 45,872
15 20,789 39,698 39,668 46,049 39,698 39,668 46,049
16 21,829 43,815 43,785 50,387 43,815 43,785 50,387
17 22,920 48,360 48,330 54,646 48,360 48,330 54,646
18 24,066 53,376 53,376 59,247 53,376 53,376 59,247
19 25,270 58,952 58,952 64,257 58,952 58,952 64,257
20 26,533 65,080 65,080 70,937 65,080 65,080 70,937
25 33,864 106,361 106,361 112,742 106,361 106,361 112,742
35 55,160 279,979 279,979 293,978 273,023 273,023 286,674
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
72
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED / 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,388 9,374 45,872 10,388 9,374 45,872
2 11,025 10,752 9,757 45,872 10,752 9,757 45,872
3 11,576 11,123 10,149 45,872 11,123 10,149 45,872
4 12,155 11,499 10,696 45,872 11,499 10,696 45,872
5 12,763 11,878 11,100 45,872 11,878 11,100 45,872
6 13,401 12,259 11,706 45,872 12,259 11,706 45,872
7 14,071 12,643 12,118 45,872 12,638 12,113 45,872
8 14,775 13,040 12,745 45,872 13,012 12,717 45,872
9 15,513 13,450 13,187 45,872 13,376 13,112 45,872
10 16,289 13,875 13,845 45,872 13,724 13,694 45,872
11 17,103 14,429 14,399 45,872 14,166 14,136 45,872
12 17,959 15,006 14,976 45,872 14,588 14,558 45,872
13 18,856 15,608 15,578 45,872 14,984 14,954 45,872
14 19,799 16,235 16,205 45,872 15,348 15,318 45,872
15 20,789 16,889 16,859 45,872 15,669 15,639 45,872
16 21,829 17,570 17,540 45,872 15,935 15,905 45,872
17 22,920 18,280 18,250 45,872 16,127 16,097 45,872
18 24,066 19,019 18,989 45,872 16,223 16,193 45,872
19 25,270 19,790 19,760 45,872 16,194 16,164 45,872
20 26,533 20,594 20,564 45,872 16,006 15,976 45,872
25 33,864 25,150 25,120 45,872 11,021 10,991 45,872
35 55,160 37,637 37,607 45,872 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
73
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED / 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,797 8,812 45,872 9,797 8,812 45,872
2 11,025 9,562 8,623 45,872 9,562 8,623 45,872
3 11,576 9,323 8,430 45,872 9,323 8,430 45,872
4 12,155 9,078 8,368 45,872 9,078 8,368 45,872
5 12,763 8,827 8,157 45,872 8,827 8,157 45,872
6 13,401 8,578 8,119 45,872 8,565 8,107 45,872
7 14,071 8,335 7,909 45,872 8,290 7,866 45,872
8 14,775 8,098 7,865 45,872 7,997 7,767 45,872
9 15,513 7,867 7,660 45,872 7,680 7,477 45,872
10 16,289 7,641 7,611 45,872 7,333 7,303 45,872
11 17,103 7,481 7,451 45,872 7,005 6,975 45,872
12 17,959 7,324 7,294 45,872 6,629 6,599 45,872
13 18,856 7,170 7,140 45,872 6,195 6,165 45,872
14 19,799 7,018 6,988 45,872 5,694 5,664 45,872
15 20,789 6,868 6,838 45,872 5,111 5,081 45,872
16 21,829 6,722 6,692 45,872 4,430 4,400 45,872
17 22,920 6,577 6,547 45,872 3,626 3,596 45,872
18 24,066 6,436 6,406 45,872 2,665 2,635 45,872
19 25,270 6,296 6,266 45,872 1,508 1,478 45,872
20 26,533 6,159 6,129 45,872 106 76 45,872
25 33,864 5,508 5,478 45,872 - - -
35 55,160 4,364 4,334 45,872 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
74
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED / 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,608 9,828 45,872 10,608 9,828 45,872
2 11,025 11,682 10,902 45,872 11,682 10,902 45,872
3 11,576 12,861 12,081 45,872 12,861 12,081 45,872
4 12,155 14,155 13,525 45,872 14,155 13,525 45,872
5 12,763 15,576 14,946 45,872 15,576 14,946 45,872
6 13,401 17,136 16,706 45,872 17,136 16,706 45,872
7 14,071 18,848 18,418 45,872 18,848 18,418 45,872
8 14,775 20,727 20,497 45,872 20,727 20,497 45,872
9 15,513 22,790 22,560 45,872 22,790 22,560 45,872
10 16,289 25,056 25,026 45,872 25,056 25,026 45,872
11 17,103 27,590 27,560 45,872 27,590 27,560 45,872
12 17,959 30,386 30,356 45,872 30,386 30,356 45,872
13 18,856 33,480 33,450 45,872 33,480 33,450 45,872
14 19,799 36,912 36,882 45,872 36,912 36,882 45,872
15 20,789 40,733 40,703 47,250 40,733 40,703 47,250
16 21,829 44,959 44,929 51,702 44,959 44,929 51,702
17 22,920 49,623 49,593 56,073 49,623 49,593 56,073
18 24,066 54,771 54,771 60,796 54,771 54,771 60,796
19 25,270 60,492 60,492 65,936 60,492 60,492 65,936
20 26,533 66,781 66,781 72,790 66,781 66,781 72,790
25 33,864 109,141 109,141 115,689 109,141 109,141 115,689
35 55,160 287,296 287,296 301,661 280,158 280,158 294,165
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
75
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED / 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,037 9,257 45,872 10,037 9,257 45,872
2 11,025 10,456 9,676 45,872 10,456 9,676 45,872
3 11,576 10,886 10,106 45,872 10,886 10,106 45,872
4 12,155 11,326 10,696 45,872 11,326 10,696 45,872
5 12,763 11,774 11,144 45,872 11,774 11,144 45,872
6 13,401 12,230 11,800 45,872 12,230 11,800 45,872
7 14,071 12,696 12,266 45,872 12,691 12,261 45,872
8 14,775 13,180 12,950 45,872 13,153 12,923 45,872
9 15,513 13,684 13,454 45,872 13,611 13,381 45,872
10 16,289 14,209 14,179 45,872 14,062 14,032 45,872
11 17,103 14,777 14,747 45,872 14,521 14,491 45,872
12 17,959 15,369 15,339 45,872 14,963 14,933 45,872
13 18,856 15,986 15,956 45,872 15,381 15,351 45,872
14 19,799 16,629 16,599 45,872 15,767 15,737 45,872
15 20,789 17,299 17,269 45,872 16,114 16,084 45,872
16 21,829 17,998 17,968 45,872 16,407 16,377 45,872
17 22,920 18,726 18,696 45,872 16,631 16,601 45,872
18 24,066 19,484 19,454 45,872 16,762 16,732 45,872
19 25,270 20,275 20,245 45,872 16,773 16,743 45,872
20 26,533 21,099 21,069 45,872 16,631 16,601 45,872
25 33,864 25,770 25,740 45,872 12,035 12,005 45,872
35 55,160 38,575 38,545 45,872 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
76
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED / 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,466 8,726 45,872 9,466 8,726 45,872
2 11,025 9,298 8,571 45,872 9,298 8,571 45,872
3 11,576 9,123 8,409 45,872 9,123 8,409 45,872
4 12,155 8,941 8,375 45,872 8,941 8,375 45,872
5 12,763 8,749 8,194 45,872 8,749 8,194 45,872
6 13,401 8,557 8,185 45,872 8,544 8,172 45,872
7 14,071 8,369 8,004 45,872 8,324 7,961 45,872
8 14,775 8,184 7,991 45,872 8,083 7,891 45,872
9 15,513 8,003 7,813 45,872 7,816 7,630 45,872
10 16,289 7,825 7,795 45,872 7,516 7,486 45,872
11 17,103 7,662 7,632 45,872 7,188 7,158 45,872
12 17,959 7,502 7,472 45,872 6,810 6,780 45,872
13 18,856 7,344 7,314 45,872 6,376 6,346 45,872
14 19,799 7,189 7,159 45,872 5,874 5,844 45,872
15 20,789 7,037 7,007 45,872 5,291 5,261 45,872
16 21,829 6,887 6,857 45,872 4,611 4,581 45,872
17 22,920 6,740 6,710 45,872 3,807 3,777 45,872
18 24,066 6,596 6,566 45,872 2,848 2,818 45,872
19 25,270 6,454 6,424 45,872 1,693 1,663 45,872
20 26,533 6,314 6,284 45,872 295 265 45,872
25 33,864 5,651 5,621 45,872 - - -
35 55,160 4,483 4,453 45,872 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
77
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED / 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,972 9,945 28,491 10,972 9,945 28,491
2 11,025 11,986 10,966 28,491 11,986 10,966 28,491
3 11,576 13,078 12,069 28,491 13,078 12,069 28,491
4 12,155 14,257 13,413 28,491 14,254 13,411 28,491
5 12,763 15,545 14,721 28,491 15,524 14,700 28,491
6 13,401 16,953 16,353 28,491 16,897 16,298 28,491
7 14,071 18,491 17,922 28,491 18,385 17,817 28,491
8 14,775 20,171 19,840 28,491 20,003 19,673 28,491
9 15,513 22,007 21,722 28,491 21,773 21,489 28,491
10 16,289 24,014 23,984 28,491 23,724 23,694 28,491
11 17,103 26,441 26,411 28,556 26,107 26,077 28,491
12 17,959 29,159 29,129 31,199 28,788 28,758 30,802
13 18,856 32,143 32,113 34,393 31,734 31,704 33,955
14 19,799 35,435 35,405 37,560 34,983 34,953 37,081
15 20,789 39,045 39,015 41,387 38,546 38,516 40,859
16 21,829 43,030 43,000 45,181 42,481 42,451 44,604
17 22,920 47,398 47,368 49,767 46,792 46,762 49,131
18 24,066 52,176 52,176 54,784 51,509 51,509 54,084
19 25,270 57,469 57,469 60,342 56,694 56,694 59,528
20 26,533 63,298 63,298 66,463 62,348 62,348 65,465
25 33,864 102,611 102,611 107,741 98,856 98,856 103,798
35 55,160 269,646 269,646 272,342 249,476 249,476 251,971
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
78
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED / 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,381 9,368 28,491 10,381 9,368 28,491
2 11,025 10,725 9,731 28,491 10,725 9,731 28,491
3 11,576 11,058 10,085 28,491 11,058 10,085 28,491
4 12,155 11,402 10,601 28,491 11,376 10,575 28,491
5 12,763 11,757 10,980 28,491 11,673 10,897 28,491
6 13,401 12,124 11,573 28,491 11,943 11,394 28,491
7 14,071 12,504 11,980 28,491 12,178 11,657 28,491
8 14,775 12,896 12,601 28,491 12,367 12,075 28,491
9 15,513 13,302 13,038 28,491 12,496 12,235 28,491
10 16,289 13,721 13,691 28,491 12,549 12,519 28,491
11 17,103 14,269 14,239 28,491 12,611 12,581 28,491
12 17,959 14,839 14,809 28,491 12,567 12,537 28,491
13 18,856 15,434 15,404 28,491 12,394 12,364 28,491
14 19,799 16,054 16,024 28,491 12,062 12,032 28,491
15 20,789 16,700 16,670 28,491 11,531 11,501 28,491
16 21,829 17,373 17,343 28,491 10,748 10,718 28,491
17 22,920 18,074 18,044 28,491 9,633 9,603 28,491
18 24,066 18,805 18,775 28,491 8,077 8,047 28,491
19 25,270 19,567 19,537 28,491 5,928 5,898 28,491
20 26,533 20,362 20,332 28,491 2,971 2,941 28,491
25 33,864 24,864 24,834 28,491 - - -
35 55,160 37,205 37,175 37,577 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
79
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED / 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,791 8,806 28,491 9,791 8,806 28,491
2 11,025 9,535 8,599 28,491 9,535 8,599 28,491
3 11,576 9,268 8,380 28,491 9,257 8,370 28,491
4 12,155 9,008 8,302 28,491 8,952 8,250 28,491
5 12,763 8,754 8,089 28,491 8,613 7,958 28,491
6 13,401 8,506 8,051 28,491 8,231 7,790 28,491
7 14,071 8,265 7,843 28,491 7,796 7,396 28,491
8 14,775 8,030 7,799 28,491 7,291 7,079 28,491
9 15,513 7,801 7,595 28,491 6,698 6,517 28,491
10 16,289 7,577 7,547 28,491 5,992 5,962 28,491
11 17,103 7,418 7,388 28,491 5,193 5,163 28,491
12 17,959 7,262 7,232 28,491 4,217 4,187 28,491
13 18,856 7,109 7,079 28,491 3,028 2,998 28,491
14 19,799 6,958 6,928 28,491 1,578 1,548 28,491
15 20,789 6,809 6,779 28,491 - - -
16 21,829 6,664 6,634 28,491 - - -
17 22,920 6,520 6,490 28,491 - - -
18 24,066 6,380 6,350 28,491 - - -
19 25,270 6,241 6,211 28,491 - - -
20 26,533 6,105 6,075 28,491 - - -
25 33,864 5,459 5,429 28,491 - - -
35 55,160 4,322 4,292 28,491 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
80
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED / 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,601 9,821 28,491 10,601 9,821 28,491
2 11,025 11,654 10,874 28,491 11,654 10,874 28,491
3 11,576 12,796 12,016 28,491 12,796 12,016 28,491
4 12,155 14,039 13,409 28,491 14,034 13,404 28,491
5 12,763 15,407 14,777 28,491 15,381 14,751 28,491
6 13,401 16,912 16,482 28,491 16,849 16,419 28,491
7 14,071 18,566 18,136 28,491 18,452 18,022 28,491
8 14,775 20,386 20,156 28,491 20,211 19,981 28,491
9 15,513 22,387 22,157 28,491 22,151 21,921 28,491
10 16,289 24,592 24,562 28,491 24,310 24,280 28,491
11 17,103 27,096 27,066 29,263 26,775 26,745 28,917
12 17,959 29,882 29,852 31,974 29,528 29,498 31,595
13 18,856 32,942 32,912 35,247 32,551 32,521 34,829
14 19,799 36,316 36,286 38,494 35,885 35,855 38,037
15 20,789 40,017 39,987 42,417 39,541 39,511 41,913
16 21,829 44,102 44,072 46,307 43,578 43,548 45,756
17 22,920 48,579 48,549 51,008 48,001 47,971 50,401
18 24,066 53,477 53,477 56,151 52,841 52,841 55,482
19 25,270 58,902 58,902 61,847 58,160 58,160 61,068
20 26,533 64,877 64,877 68,120 63,961 63,961 67,159
25 33,864 105,170 105,170 110,428 101,413 101,413 106,483
35 55,160 276,372 276,372 279,135 255,928 255,928 258,487
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
81
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED / 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.53% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,031 9,251 28,491 10,031 9,251 28,491
2 11,025 10,428 9,648 28,491 10,428 9,648 28,491
3 11,576 10,820 10,040 28,491 10,819 10,039 28,491
4 12,155 11,229 10,599 28,491 11,199 10,569 28,491
5 12,763 11,654 11,024 28,491 11,564 10,934 28,491
6 13,401 12,096 11,666 28,491 11,907 11,477 28,491
7 14,071 12,556 12,126 28,491 12,220 11,790 28,491
8 14,775 13,035 12,805 28,491 12,494 12,264 28,491
9 15,513 13,533 13,303 28,491 12,715 12,485 28,491
10 16,289 14,051 14,021 28,491 12,868 12,838 28,491
11 17,103 14,613 14,583 28,491 12,956 12,926 28,491
12 17,959 15,198 15,168 28,491 12,942 12,912 28,491
13 18,856 15,808 15,778 28,491 12,804 12,774 28,491
14 19,799 16,443 16,413 28,491 12,515 12,485 28,491
15 20,789 17,105 17,075 28,491 12,037 12,007 28,491
16 21,829 17,796 17,766 28,491 11,317 11,287 28,491
17 22,920 18,515 18,485 28,491 10,282 10,252 28,491
18 24,066 19,265 19,235 28,491 8,828 8,798 28,491
19 25,270 20,046 20,016 28,491 6,808 6,778 28,491
20 26,533 20,861 20,831 28,491 4,021 3,991 28,491
25 33,864 25,477 25,447 28,491 - - -
35 55,160 38,133 38,103 38,514 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
82
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED / 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.47% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,460 8,720 28,491 9,460 8,720 28,491
2 11,025 9,270 8,545 28,491 9,270 8,545 28,491
3 11,576 9,069 8,359 28,491 9,056 8,347 28,491
4 12,155 8,871 8,309 28,491 8,812 8,253 28,491
5 12,763 8,677 8,126 28,491 8,530 7,989 28,491
6 13,401 8,487 8,117 28,491 8,204 7,846 28,491
7 14,071 8,300 7,938 28,491 7,821 7,478 28,491
8 14,775 8,116 7,924 28,491 7,365 7,188 28,491
9 15,513 7,936 7,748 28,491 6,818 6,651 28,491
10 16,289 7,760 7,730 28,491 6,155 6,125 28,491
11 17,103 7,598 7,568 28,491 5,358 5,328 28,491
12 17,959 7,439 7,409 28,491 4,387 4,357 28,491
13 18,856 7,282 7,252 28,491 3,204 3,174 28,491
14 19,799 7,128 7,098 28,491 1,761 1,731 28,491
15 20,789 6,977 6,947 28,491 - - -
16 21,829 6,828 6,798 28,491 - - -
17 22,920 6,682 6,652 28,491 - - -
18 24,066 6,539 6,509 28,491 - - -
19 25,270 6,398 6,368 28,491 - - -
20 26,533 6,259 6,229 28,491 - - -
25 33,864 5,600 5,570 28,491 - - -
35 55,160 4,441 4,411 28,491 - - -
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Royal Life Insurance Company of America:
We have audited the accompanying statutory balance sheet of Royal Life Insurance
Company of America (a Connecticut Corporation and wholly owned subsidiary of
Hartford Life Insurance Company) (the Company) as of December 31, 1998, and the
related statutory statements of operations, changes in capital and surplus, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these statutory financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained in Note 1.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of the Company as of December 31, 1998, and the results of
its operations and its cash flows for the year then ended.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1998, and the results of its operations and its cash flows
for the year ended December 31, 1998 in conformity with statutory accounting
practices as described in Note 1.
/s/ Arthur Andersen LLP
Hartford, Connecticut
January 26, 1999
F-1
<PAGE>
[Letterhead of PricewaterhouseCoopers LLP]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Royal Life Insurance Company of America:
We have audited the accompanying statement of admitted assets, liabilities,
capital and surplus (statutory basis of accounting) of Royal Life Insurance
Company of America and Subsidiaries as of December 31, 1997, and the related
statements of operations, capital and surplus and cash flows (statutory basis
of accounting) for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described more fully in Note A to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Department of the State of Connecticut, which
practices differ from generally accepted accounting principles. The effects
on the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles, although not
reasonably determinable, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above do not
present fairly, in conformity with generally accepted accounting principles,
the financial position of Royal Life Insurance Company of America and
Subsidiaries as of December 31, 1997, or the results of its operations or its
cash flows for the year then ended.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities, capital and surplus
of Royal Life Insurance Company of America and Subsidiaries as of December
31, 1997, and the results of its operations and its cash flows for the year
then ended, on the basis of accounting described in Note A.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 6, 1998
F-2
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
BALANCE SHEETS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------
1998 1997
----------- -------------
(Successor) (Predecessor)
<S> <C> <C>
ASSETS
Bonds $ 5,717 $ 5,583
Cash and Short-Term Investments 4,740 4,311
----------- -------------
TOTAL CASH AND INVESTED ASSETS 10,457 9,894
----------- -------------
Investment Income Due and Accrued 36 106
Guaranty Funds Receivable on Deposit 104 -
----------- -------------
TOTAL ASSETS $ 10,597 $ 10,000
----------- -------------
----------- -------------
LIABILITIES
Agrregate Reserves for Future Benefits
Annuity $ - $ -
Life - -
Policy and Contract Claims - -
Taxes, Licenses and Fee Due and Accrued 11 -
Federal Income Taxes Accrued 172 -
Remittances and Items Not Allocated 4 -
Asset Valuation Reserve 3 -
Payable to Parents, Subsidiaries and Affiliates 23 -
----------- -------------
TOTAL LIABILITIES 213 0
----------- -------------
CAPITAL AND SURPLUS
Common Stock 2,500 2,500
Gross Paid-In and Contributed Surplus 7,569 7,500
Unassigned Funds 315 -
----------- -------------
TOTAL CAPITAL AND SURPLUS 10,384 10,000
----------- -------------
TOTAL LIABILITIES, CAPITAL AND SURPLUS $ 10,597 $ 10,000
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
F-3
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997
----------- -------------
(Successor) (Predecessor)
<S> <C> <C>
REVENUES
Premiums and annuity considerations $ - $ 19,492
Net investment income 570 22,209
Amortization of interest maintenance reserve - 127
Commissions and expense allowances on reinsurance ceded 17 -
----------- -------------
TOTAL REVENUES 587 41,828
----------- -------------
BENEFITS AND EXPENSES
Decrease in future policy benefit reserves - (280,477)
Reserves transferred - 267,772
Annuity benefits - 5,516
Surrender benefits - 43,049
Death benefits - 846
Other benefits to policyholders and beneficiaries - 61
Commissions, net 17 373
General and administrative expenses - 1,671
Taxes, licenses and fees 80 (1,116)
Other expense (income), net - 65
----------- -------------
TOTAL BENEFITS AND EXPENSES 97 37,760
----------- -------------
NET GAIN FROM OPERATIONS
BEFORE FEDERAL INCOME TAX EXPENSE 490 4,068
Federal Income Tax Expense 172 1,390
----------- -------------
NET GAIN FROM OPERATIONS 318 2,678
Net Realized Capital Losses, after tax - (566)
----------- -------------
NET INCOME $ 318 $ 2,112
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
F-4
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997
----------- -------------
(Successor) (Predecessor)
<S> <C> <C>
COMMON STOCK,
Beginning and End of Year $ 2,500 $ 2,500
----------- -------------
GROSS PAID-IN AND CONTRIBUTED SURPLUS
Balance, Beginning of Year $ 7,500 $ 54,350
Net Transfer (to) from Parent 69 (46,850)
----------- -------------
BALANCE, END OF YEAR $ 7,569 $ 7,500
----------- -------------
UNNASSIGNED FUNDS
Balance, Beginning of Year $ - $ 9,029
Net Income 318 2,112
Net Unrealized Capital (Losses)
Gains - (10,452)
Decrease (Increase) in Asset
Valuation Reserve (3) 3,037
Decrease in Nonadmitted Assets - 51
Net Transfer to Parent - (3,777)
----------- -------------
Balance, End of Year $ 315 $ -
----------- -------------
TOTAL CAPITAL AND SURPLUS,
End of Year $ 10,384 $ 10,000
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
F-5
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997
----------- -------------
(Successor) (Predecessor)
<S> <C> <C>
OPERATIONS
Premiums and Annuity Considerations $ 17 $ 19,910
Investment Income 675 26,814
----------- -------------
Total Income 692 46,724
----------- -------------
Policy Claims - 49,832
Commissions and Other Expenses 86 2,172
Federal Income Tax Payments - 1,155
Reserves Ceded - 267,772
----------- -------------
Total Benefits and Expenses 86 320,931
NET CASH FROM (USED in) OPERATIONS 606 (274,207)
----------- -------------
PROCEEDS FROM INVESTMENTS
Bonds 2,159 290,444
Stocks - 29,001
Mortgage Loans - 206
Real Estate - 1,187
----------- -------------
NET INVESTMENT PROCEEDS 2,159 320,838
----------- -------------
TAX REFUND ON CAPITAL LOSSES - 5
----------- -------------
TOTAL PROCEEDS 2,765 46,636
----------- -------------
COST OF INVESTMENTS ACQUIRED
Bonds 2,328 4,845
Mortgage Loans - -
Real Estate - -
Net (Decrease) Increase in Policy Loans - (3,802)
----------- -------------
TOTAL INVESTMENTS ACQUIRED 2,328 1,043
----------- -------------
OTHER CASH APPLIED (PROVIDED)
Net Transfer to Parent (69) 50,627
Other 77 (6,439)
----------- -------------
TOTAL OTHER CASH APPLIED (PROVIDED) 8 44,188
----------- -------------
TOTAL APPLICATIONS (PROVIDED) 2,336 45,231
----------- -------------
NET CHANGE IN CASH AND SHORT-TERM INVESTMENTS 429 1,405
CASH AND SHORT-TERM INVESTMENTS, BEGINNING OF YEAR 4,311 2,906
----------- -------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 4,740 $ 4,311
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
F-6
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Royal Life Insurance Company of America ("Royal", the "Successor"
or the "Company"), is a wholly owned subsidiary of Hartford Life
Insurance Company ("HLIC"), which is an indirect subsidiary of
Hartford Life, Inc. ("HLI"), which is majority owned by The
Hartford Financial Services Group, Inc. ("The Hartford"),
formerly a wholly owned subsidiary of ITT Corporation ("ITT").
On February 10, 1997, HLI filed a registration statement, as
amended, with the Securities and Exchange Commission relating to
the initial public offering of HLI Class A Common Stock (the
"Offering"). Pursuant to the Offering on May 22, 1997, HLI sold
to the public 26 million shares, representing 18.6% of the equity
ownership of HLI. On December 19, 1995, ITT Corporation
distributed all the outstanding shares of The Hartford to ITT
shareholders of record in an action known herein as the
"Distribution". As a result of the Distribution, The Hartford
became an independent, publicly traded company.
Effective December 31, 1997, all of the common stock of the
Company was purchased from Royal Maccabees Life Insurance Company
(Royal Maccabees). Hereafter the Company with respect to
information as of and prior to December 31, 1997, will be defined
as the Predecessor. Prior to the sale, the insurance business of
the Predecessor was transferred to Royal Maccabees as part of a
coinsurance/assumption reinsurance agreement. The Predecessor
offered individual annuities contracts, as well as, a complete
line of ordinary and universal life insurance. As of December
31, 1997, the Company is not writing any new business. Royal is
licensed in several states and sales are planned to commence in
1999.
BASIS OF PRESENTATION
The accompanying Royal statutory basis financial statements were
prepared in conformity with statutory accounting practices
prescribed or permitted by the National Association of Insurance
Commissioners ("NAIC") and the State of Connecticut Department of
Insurance.
Current prescribed statutory accounting practices include
accounting publications of the National Association of Insurance
Commissioners ("NAIC"), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting
practices encompass accounting practices approved by State
Insurance Departments. The Company does not follow any permitted
statutory accounting practices that have a material effect on
statutory surplus, statutory net income or risk-based capital.
Final approval of the NAIC's proposed "Comprehensive Guide" or
statutory accounting principles was distributed in 1998. The
requirements are effective January 1, 2001, and are not expected
to have a material impact on statutory surplus of the Company.
The preparation of financial statements in conformity with
statutory accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates. The
most significant estimates include those used in determining the
liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some
variability is inherent in these estimates, management believes
the amounts provided are adequate.
Statutory accounting practices and generally accepted accounting
principles ("GAAP") differ in certain significant respects.
These differences principally involve:
F-7
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, premium taxes, etc.) which are charged to expense when
incurred for statutory purposes rather than on a pro-rata basis over the
expected life of the policy for GAAP purposes;
(2) recognition of premium revenues, which for statutory purposes are generally
recorded as collected or when due during the premium paying period of
the contract and which for GAAP purposes, for universal life policies and
investment products, generally, are only recorded for policy charges for
the cost of insurance, policy administration and surrender charges assessed
to policy account balances. Also, for GAAP purposes, premiums for
traditional life insurance policies are recognized as revenues when they
are due from policyholders and the retrospective deposit method is used in
accounting for universal life and other types of contracts where the
payment pattern is irregular or surrender charges are a significant source
of profit. The prospective deposit method is used for GAAP purposes where
investment margins are the primary source of profit;
(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return)
only for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
negative interest maintenance reserve, past due agents' balances and
furniture and equipment) from the balance sheet for statutory purposes by
directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health care
benefits currently, or using a twenty year phase-in approach, whereas GAAP
liabilities are recorded upon adoption of the applicable standard;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where
risk transfer has taken place; whereas on a GAAP basis, reserves are
reported gross of reinsurance with reserve credits presented as recoverable
assets, as well as, the accounting for retroactive reinsurance which is
immediately charged to surplus for statutory accounting purposes whereas
GAAP precludes immediate gain recognition unless the ceding enterprise's
liability to its policyholders is extinguished;
F-8
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
(9) the reporting of fixed maturities at amortized cost, whereas GAAP requires
that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's bonds were classified on a GAAP
basis as "available-for-sale" and accordingly, those investments and common
stocks were reflected at fair value with the corresponding impact included
as a component of Stockholder's Equity designated as "Net unrealized
capital gains (losses) on securities net of tax". For statutory reporting
purposes, Change in Net Unrealized Capital Gains (Losses) on Common Stocks
and Other Invested Assets includes the change in unrealized gains (losses)
on common stock reported at fair value; and
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as
a liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.
There were no significant differences in net income or capital and surplus
as of and for the year ended December 31, 1998 between GAAP and statutory
accounting practices. The effects on the Predecessor financial statements
as of and for the year ended December 31, 1997, of the variances between
GAAP and statutory accounting principles, although not reasonably
determinable, are presumed to be material.
AGGREGATE RESERVES FOR FUTURE BENEFITS AND CONTRACT CLAIMS
Aggregate reserves for payment of future life, health and annuity
benefits were computed in accordance with actuarial standards.
Reserves for life insurance policies are generally based on the 1958
and 1980 Commissioner's Standard Mortality Tables and various
valuation rates ranging from 3% to 6%.
The Predecessor reinsured portions of certain policies that were
underwritten to limit disproportionate risks. The Predecessor had
standard coinsurance and yearly renewable term reinsurance agreements
with several companies. As of December 31, 1997, the Company is not
writing any new business.
As part of the sales agreement of the Predecessor to Hartford Life
Insurance Company, the Predecessor ceded 100% of all business to Royal
Maccabees which was not otherwise ceded through a standard coinsurance
agreement. This coinsurance/assumption agreement will remain in
effect until all existing business is novated to Royal Maccabees.
The Predecessor is contingently liable with respect to reinsurance in
the event assuming reinsurers are unable to meet their obligations.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds which are
deemed ineligible to be held at amortized cost by the NAIC Securities
Valuation Office ("SVO") are carried at the appropriate SVO published
value. When a permanent reduction in the value of publicly traded
securities occurs, the decrease is reported as a realized loss and the
carrying value is adjusted accordingly. Short-term investments
consist of money market funds and are stated at cost, which
approximates fair value. Common stocks are carried at fair value with
the current year change in the difference from cost reflected in
surplus. Other invested assets are generally recorded at fair value.
F-9
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and
equity risks associated with invested assets. The reserve increased by $
(3) in 1998 and decreased by $3,037 in 1997. Additionally, the Interest
Maintenance Reserve ("IMR") captures net realized capital gains and losses,
net of applicable income taxes, resulting from changes in interest rates
and amortizes these gains or losses into income over the remaining life of
the mortgage loan or bond sold. Realized capital gains and losses, net of
taxes not included in IMR are reported in the statutory basis statements of
operations. Realized investment gains and losses are determined on a
specific identification basis.
MORTGAGE LOANS
Mortgage loans are carried at their aggregate unpaid balances, which
approximates fair value. The maximum percentage of any one mortgage loan
to the value of collateral at the time of the loan is 75 percent. Property
insurance is required on all properties covered by mortgage loans.
Mortgage loans are collateralized by real estate located primarily in the
Midwestern United States. From time to time, the Company acquires real
estate holdings through foreclosures of commercial mortgages. Real estate
held for sale is recorded at the lower of cost or its market value at the
date of foreclosure.
Unrealized losses on real estate at the date of foreclosure are recorded
directly to surplus, as permitted by the Insurance Department of the State
of Connecticut.
2. INVESTMENTS:
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1998 1997
----------- -------------
(SUCCESSOR) (PREDECESSOR)
<S> <C> <C>
Interest income from bonds and short-term $ 564 $ 21,653
investments
Interest income from policy loans - 328
Interest and dividends from other investments 6 603
----------- -------------
Gross investment income 570 22,584
Investment expenses - 375
----------- -------------
Net investment income $ 570 $ 22,209
----------- -------------
----------- -------------
</TABLE>
(b) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1998 1997
----------- -------------
(SUCCESSOR) (PREDECESSOR)
<S> <C> <C>
Gross unrealized capital gains $ 98 $ 74
Gross unrealized capital losses - -
----------- -------------
Net unrealized capital gains 98 74
Balance at beginning of year 74 6,435
----------- -------------
Change in net unrealized capital gains
(losses) on bonds and short-term investments $ 24 $ (6,361)
----------- -------------
----------- -------------
</TABLE>
F-10
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
(c) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1998 1997
----------- -------------
(SUCCESSOR) (PREDECESSOR)
<S> <C> <C>
Bonds and short-term investments $ - $ 187
Real estate and other - (871)
----------- -------------
Realized capital losses - (684)
Capital gains benefit - (240)
----------- -------------
Net realized capital losses - (444)
Amounts transferred to IMR - 122
----------- -------------
Net realized capital losses $ - $ (566)
----------- -------------
----------- -------------
</TABLE>
(d) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1998.
(e) CONCENTRATION OF CREDIT RISK
The Company has invested in the short-term securities of a single issuer,
TRW, Inc., in an amount greater than 10% of Company capital and surplus.
The statement value of this investment was $4,829 as of December 31, 1998.
The NAIC rating on this holding was 1. Excluding this and U.S. government
and government agency investments, the Company had no other significant
concentration of credit risk as of December 31, 1998.
(f) BONDS AND SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
1998 (SUCCESSOR) COST GAINS LOSSES VALUE
- ------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
-Guaranteed and sponsored $ 5,717 $ 98 $ - $ 5,815
Short-term investments 4,829 - - 4,829
-----------------------------------------------------
Total bonds and short-term investments $10,546 $ 98 $ - $10,644
-----------------------------------------------------
-----------------------------------------------------
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 (PREDECESSOR) COST GAINS LOSSES VALUE
- ------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
-Guaranteed and sponsored $ 5,583 $ 74 - $ 5,657
-----------------------------------------------------
Total bonds and short-term investments $ 5,583 $ 74 - $ 5,657
-----------------------------------------------------
-----------------------------------------------------
</TABLE>
F-11
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
The amortized cost and estimated fair value of bonds and short-term
investments as of December 31, 1998 by estimated maturity year are shown below.
Expected maturities differ from contractual maturities due to call or repayment
provisions.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
--------- ---------
Maturity
--------
<S> <C> <C>
One year or less $ 7,736 $ 7,808
Over one year through five years 2,810 2,836
--------- ---------
Total $ 10,546 $ 10,644
--------- ---------
--------- ---------
</TABLE>
Proceeds from sales and maturities of investments in bonds during 1998 and
1997, were $2,159 and $290,444, respectively, resulting in gross realized
gains of $0 and $215, respectively, and gross realized losses of $0 and $28,
respectively, before transfers to IMR.
Bonds with a carrying value of $5,717 were on deposit as of December 31, 1998
with various regulatory authorities as required.
(g) FAIR VALUE OF FINANCIAL INSTRUMENTS BALANCE SHEET ITEMS:
<TABLE>
<CAPTION>
1998 1997
---- ----
(Successor) (Predecessor)
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------------------------------------------
<S> <C> <C> <C> <C>
Assets
Bonds $5,717 $5,815 $5,583 $5,657
Cash and short-term $4,740 $4,740 $4,311 $4,311
investments
</TABLE>
The estimated fair value of bonds and short-term investments was determined by
the Company and Predecessor primarily using NAIC market values.
3. AGGREGATE RESERVES FOR FUTURE BENEFITS
The Company's existing reserves consist of life deferred fixed annuities
and supplementary contracts. The Company cedes 100% of its insurance to
non-affiliated insurers in order to limit its maximum loss. Such transfer
does not relieve Royal of its primary liability. There were no material
reinsurance recoverables from reinsurers outstanding as of, and for the
years ended, December 31, 1998 and 1997.
A summary of reinsurance information as of and for the years ended
December 31, follows:
<TABLE>
<CAPTION>
1998 (SUCCESSOR) DIRECT CEDED NET
- ---------------- -------- ------- -----
<S> <C> <C> <C>
Premiums and Annuity Considerations $ 1,937 $ (1,937) $ -
Death, Annuity, Surrender and Other Benefits 1,450 (1,450) -
Aggregate Reserves for Future Benefits 19,426 (19,426) -
Policy and Contract Claims 400 (400) -
</TABLE>
F-12
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
<TABLE>
<CAPTION>
1997 (PREDECESSOR) DIRECT CEDED NET
- ------------------ -------- --------- -------
<S> <C> <C> <C>
Premiums and Annuity Considerations $ 20,253 $ (761) $19,492
Death, Annuity, Surrender and Other Benefits 50,755 (1,283) 49,472
Aggregate Reserves for Future Benefits 86,749 (86,749) -
Policy and Contract Claims 5 (5) -
</TABLE>
Analysis of Annuity Actuarial Reserves and Deposit Liabilities by
Withdrawal Characteristics as of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
% OF
Subject to discretionary withdrawal: AMOUNT TOTAL
------------------------------------ -------- ------
<S> <C> <C>
At book value less current surrender charge of 5% or more $ 738 4.1%
-------- ------
Total with adjustment or at market value 738 4.1%
At book value without adjustment (minimal or no charge or adjustment) 16,792 92.8%
Not subject to discretionary withdrawal 553 3.1%
-------- ------
18,083 100.0%
Reinsurance ceded (18,083)
--------
Total, net $ -
--------
--------
</TABLE>
4. RELATED PARTY TRANSACTIONS:
There were no significant related party transactions as of and for the
year ended December 31, 1998. Approximately $1,196 of general
expenses incurred by the Predecessor in 1997 represent direct and
indirect expenses allocated from Royal Maccabees and related entities.
Direct expenses are based on bills specifically paid for expenses of
the Predecessor. The indirect expenses are costs incurred by Royal
Maccabees and affiliates for the benefit of the Predecessor and are
billed based on internal time studies or studies of other services
provided. Also, $703 of IMR was transferred to Royal Maccabees in
1997 concurrent with the coinsurance/assumption reinsurance agreement.
Additionally, $150 of the Predecessor's investment expenses in 1997
represent charges from Royal Investment Management Company.
5. PREDECESSOR INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES:
On December 31, 1997, the Predecessor sold its investment in
subsidiaries to Royal Maccabees. The financial position as of
December 31, 1997, and the results of operations for the year then
ended of the Predecessor's unconsolidated subsidiaries are summarized
as follows:
F-13
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
<TABLE>
<CAPTION>
1997
(PREDECESSOR)
-------------
<S> <C>
Cash and invested assets $ -
Other admitted assets -
-------------
$ -
-------------
-------------
Liabilities $ -
Capital and surplus -
-------------
$ -
-------------
-------------
Premium and annuity considerations $ 90,424
Investment income, net 53,103
Benefit and reserve changes 130,370
Other expenses 9,884
-------------
Net income 3,273
Other charges to surplus, net (43,569)
-------------
Increase/(decrease) in capital and surplus for the year $ (40,296)
-------------
-------------
</TABLE>
6. FEDERAL INCOME TAXES:
The Company and The Hartford have entered into a tax sharing agreement
under which each member in the consolidated U.S. Federal income tax
return will make payments between them such that, with respect to any
period, the amount of taxes to be paid by the Company, subject to
certain adjustments, generally will be determined as though the
Company were filing separate Federal, state and local income tax
returns.
As long as The Hartford continues to own at least 80% of the combined
voting power and 80% of the value of the outstanding capital stock of HLI,
the Company will be included for Federal income tax purposes in the
consolidated group of which The Hartford is the common parent. It is the
intention of The Hartford and its non-life subsidiaries to file a single
consolidated Federal income tax return. The life insurance companies will
file a separate consolidated Federal income tax return.
The Predecessor filed a consolidated federal income tax return with
Royal Maccabees and other subsidiaries for the period through the date
of sale, December 31, 1997. Income tax expense or benefit was
allocated to the Predecessor on a separate return basis. The
Predecessor paid or recovered from Royal Maccabees the amount of the
expense or benefit.
Federal income taxes (received) paid by the Company and Predecessor
were $0 and $1,150 in 1998 and 1997, respectively. The effective tax
rate was 35% and 34% in 1998 and 1997, respectively. Reconciliations
of the tax provision at the U.S. Federal Statutory rate to Federal
income tax (benefit) expense for each of the years ended December 31,
1998 and 1997 were not significant.
7. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior
approval, by State of Connecticut insurance companies to shareholders
is generally restricted to the greater of 10% of surplus as of the
preceding December 31st or the net gain from operations for the
previous year. Dividends are paid as determined by the Board of
Directors and are not cumulative. No dividends were paid in 1998 and
1997. The amount available for dividend in 1999 is $788.
F-14
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(Amounts in thousands unless otherwise stated)
8. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
HLI's employees are included in The Hartford's non-contributory defined
benefit pension plans. These plans provide pension benefits that are based
on years of service and the employee's compensation during the last ten
years of employment. HLI's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, as amended, and the maximum amount
that can be deducted for U.S. Federal income tax purposes. Generally,
pension costs are funded through the purchase of affiliated group pension
contracts. The cost to HLI was approximately $9,000 in 1998 and $7,000 in
1997.
HLI also provides, through The Hartford, certain health care and life
insurance benefits for eligible retired employees. A substantial portion
of HLI's employees may become eligible for these benefits upon retirement.
HLI's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a
defined dollar cap which limits average company contributions. HLI has
prefunded a portion of the health care and life insurance obligations
through trust funds where such prefunding can be accomplished on a tax
effective basis. Postretirement health care and life insurance benefits
expense, allocated by The Hartford, was immaterial to the results of
operations for 1998 and 1997.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003.
Increasing the health care trend rates by one percent per year would have
an immaterial impact on the accumulated postretirement benefit obligation
and the annual expense. To the extent that the actual experience differs
from the inherent assumptions, the effect will be amortized over the
average future service of covered employees.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1998, the Company had no material contingent
liabilities, nor had the Company committed any surplus funds for any
contingent liabilities or arrangements. The Company is involved in various
legal actions which have arisen in the normal course of its business. In
the opinion of management, the ultimate liability with respect to such
lawsuits as well as other contingencies is not considered to be material in
relation to capital and surplus, operations and liquidity of the Company.
For business previously written, the Predecessor was involved in litigation
from time to time with claimants, beneficiaries and others, and a number of
lawsuits were pending as of December 31, 1997. There are pending legal
proceedings within the ordinary course of business which, under the terms
of the coinsurance/assumption reinsurance agreement, are now the
responsibility of Royal Maccabees.
The Predecessor participated in the various guaranty funds existing in
the states in which the Predecessor wrote business. The Predecessor
is not aware of any liabilities for future assessments as of December
31, 1997. As the Company is not writing any new business as of
December 31, 1997, guaranty funds were not assessed for the year ended
December 31, 1998.
F-15
<PAGE>
PART II
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 82 pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of Royal Life Insurance Company of
America ("Royal") authorizing the establishment of the Separate
Account.(1)
(A2) Not applicable.
(A3a) Principal Underwriting Agreement.(1)
(A3b) Form of Selling Agreement.(1)
(A3c) Not applicable.
(A4) Not applicable.
(A5) Form of Modified Single Premium Variable Life Insurance Policy. (2)
(A6a) Charter of Royal. (2)
(A6b) Bylaws of Royal. (2)
(A7) Not applicable.
(A8) Not applicable.
(A9) Not applicable.
(A10) Form of Application for Modified Single Premium Variable Life
Insurance Policies. (2)
- -------------------------
(1) Incorporated by reference to the Pre-Effective Amendment No. 1 of
the Registration Statement No. 333-65437 filed on February 5, 1999.
(2) Incorporated by reference to the initial filing of Registration
No. 333-65437 filed on October 8, 1998.
<PAGE>
(A11) Memorandum describing transfer and redemption procedures.(1)
(2) Opinion and consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1 (b) or (c) of Part I.
(4) Not Applicable.
(5) Opinion and Consent of Michael Winterfield, FSA, MAAA.
(6) Consent of Arthur Anderson LLP, Independent Public Accountants.
(7) Consent of PricewaterhouseCoopers LLP, Independent Public Accountants.
(8) Power of Attorney.
(9) Not applicable.
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
Royal Life Insurance Company of America ("Royal") hereby represents that the
aggregate fees and charges under the Policy are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed by Royal.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKINGS AND REPRESENTATIONS AS REQUIRED BY RULE 6e-3(T)
1. Separate Account Two meets the definition of "Separate Account" under
Rule 6e-3(T).
2. Royal undertakes to keep and make available to the Commission upon
request any documents used to support any representation as to the
reasonableness of fees.
UNDERTAKING ON INDEMNIFICATION
Under Section 33-772 of the Connecticut General Statutes, unless limited by
its certificate of incorporation, the Registrant must indemnify a director
who was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with
the proceeding.
The Registrant may indemnify an individual made a party to a proceeding
because he is or was a director against liability incurred in the proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Registrant, and, with respect to any
criminal proceeding, had no reason to believe his conduct was unlawful. Conn.
Gen. Stat. 33-771(a). Additionally, pursuant to Conn. Gen. Stat. 33-776, the
Registrant may indemnify officers and employees or agents for liability
incurred and for any expenses to which they become subject by reason of being
or having been an employee or officer of the Registrant. Connecticut law
does not prescribe standards for the indemnification of officers, employees
and agents and expressly states that their indemnification may be broader
than the right of indemnification granted to directors.
The foregoing statements are specifically made subject to the detailed
provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the Registrant to
indemnify only a director that was successful on the merits in a suit, the
Registrant's bylaws, provide under Article X:
"The Company shall indemnify to the full extent authorized or
permitted by law any
<PAGE>
person made, or threatened to be made a party to an action, suit or
proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that he, his testator or
intestate is or was a Director, Officer or employee of the company
or serves or served any other enterprise at the request of the
corporation. The foregoing right of indemnification shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any By-Laws, agreement, vote
of Shareholders or disinterested Directors or otherwise, and shall
continue as to a person who has ceased to be a Director, Officer,
employee or agent shall inure to the benefit or the heirs,
executors and administrators of such a person."
Additionally, the directors and officers of Royal and Hartford Securities
Distribution Company, Inc. ("HSD") are covered under a directors and officers
liability insurance policy issued to The Hartford Financial Services Group,
Inc. and its subsidiaries. Such policy will reimburse the Registrant for any
payments that it shall make to directors and officers pursuant to law and
will, subject to certain exclusions contained in the policy, further pay any
other costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in his
past or present capacity as such, and for which he may be liable, except as
to any liabilities arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the 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.
INFORMATION REGARDING CERTAIN SALES LOADS, ADMINISTRATIVE,
MANAGEMENT AND OTHER FEES
Not applicable.
<PAGE>
OFFICERS AND DIRECTORS
The principal underwriter for Royal Life Insurance Company of America Separate
Account Two is Hartford Securities Distribution Company, Inc. The following is
a list of Officers and Directors:
Name and Principal Positions and Offices
Business Address With Underwriter
Lowndes A. Smith President and Chief Executive Officer, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address of each the
above individuals is P.O. Box 2999, Hartford, Connecticut 06104-2999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and attested, all in the
Town of Simsbury, and State of Connecticut, on the 12th day of April, 1999.
SEPARATE ACCOUNT TWO
(Registrant)
By: Lynda Godkin
-------------------------
Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary* *By: /s/ Thomas S. Clark
----------------------
Thomas S. Clark
Attorney-in-Fact
ROYAL LIFE INSURANCE COMPANY OF AMERICA
(Depositor)
By: Lynda Godkin
-------------------------
Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary*
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in
the capacity and on the date indicated.
<TABLE>
<S> <C>
Gregory A. Boyko, Senior Vice President,
& Treasurer, Director*
Lynda Godkin, Senior Vice President,
General Counsel & Corporate Secretary, Director* *By: /s/ Thomas S. Clark
Thomas M. Marra, Director* ----------------------
Lowndes A. Smith, President, Director Thomas S. Clark
Raymond P. Welnicki, Director* Attorney-In-Fact
Lizabeth H. Zlatkus, Senior Vice President,
Director* Dated: April 12, 1999
</TABLE>
<PAGE>
EXHIBIT INDEX
(2) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel, and Corporate Secretary.
(5) Opinion and Consent of Michael Winterfield, FSA, MAAA.
(6) Consent of Arthur Anderson LLP, Independent Public Accountants.
(7) Consent of PricewaterhouseCoopers LLP, Independent Public
Accountants.
(8) Power of Attorney.
<PAGE>
EXHIBIT 2
[LOGO]
April 9, 1999 LYNDA GODKIN
Senior Vice President, General Counsel
Corporate Secretary
Board of Directors
Royal Life Insurance Company of America
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT TWO ("Separate Account")
ROYAL LIFE INSURANCE COMPANY OF AMERICA ("Company")
File No. 333-65437
Dear Sir/Madam:
In my capacity as General Counsel of the Company, I have supervised the
establishment of the Separate Account by the Board of Directors of the
Company as a separate account for assets applicable to Policies offered by
the Company pursuant to Connecticut Law. I have participated in the
preparation of the registration statement for the Separate Account on Form
S-6 under the Securities Act of 1933 with respect to the Policies.
I am of the following opinion:
1. The Separate Account is a duly authorized and existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
2. To the extent so provided under the Policiess, that portion of the assets
of the Separate Account equal to the reserves and other contract
liabilities with respect to the Separate Account will not be chargeable
with liabilities arising out of any other business that the Company may
conduct.
3. The Policies, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations
of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
registration statement for the Policies and the Separate Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
MICHAEL R. WINTERFIELD, FSA, MAAA
Assistant Vice President
Individual Annuity Product Management
April 12, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
This opinion is furnished in connection with the Form S-6 Registration Statement
under the Securities Act of 1933, as amended ("Securities Act"), of a certain
modified single premium variable life insurance policy (the "Policy") that will
be offered and sold by Hartford Life Insurance Company and certain units of
interest to be issued in connection with the Policy.
The hypothetical illustrations of the Policy used in the Form S-6 Registration
Statement accurately reflect reasonable estimates of projected performance of
the Policy under the stipulated rates of investment return, the contractual
expense deductions and guaranteed cost-of-insurance rates, and utilizing a
reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Statement of Additional Information included as a part of such
Form S-6 Registration Statement.
Very truly yours,
/s/ Michael Winterfield
Michael Winterfield, FSA, MAAA
Director Individual Annuity Product Management
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 333-65437 for Royal Life Insurance Company of
America Separate Account Two on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 12, 1999
<PAGE>
PRICEWATERHOUSECOOPERS [LOGO]
- --------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
333 Bridge Streeet, N.W.
Suite 105
Grand Rapids MI 49504-5356
Telephone (616) 458 7700
Facsimile (616) 454 6375
CONSENT OF INDEPENDENT AUDITOR
------------------------------
We agree to the inclusion in this registration statement of Form S-6 (File No.
333-65437) of our report, dated February 6, 1998, on our audit of the statutory
basis financial statements of Royal Life Insurance Company of America and
Subsidiaries as of and for the year ended December 31, 1997. We also consent to
the reference to us under the heading "Experts" in this registration statement.
/s/ PricewaterhouseCoopers LLP
April 14, 1999
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
David T. Foy
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
do hereby jointly and severally authorize Lynda Godkin, Christine Repasy,
Marianne O'Doherty, Thomas S. Clark and Brian Lord to sign as their agent,
any Registration Statement, pre-effective amendment, post-effective amendment
and any application for exemptive relief of the Royal Life Insurance Company
of America under the Securities Act of 1933 and/or the Investment Company Act
of 1940, and do hereby ratify any such signatures heretofore made by such
persons.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of January 15, 1999
- ------------------------------
Gregory A. Boyko
/s/ David T. Foy Dated as of January 15, 1999
- ------------------------------
David T. Foy
/s/ Lynda Godkin Dated as of January 15, 1999
- ------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of January 15, 1999
- ------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of January 15, 1999
- ------------------------------
Lowndes A. Smith
/s/ Raymond P. Welnicki Dated as of January 15, 1999
- ------------------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated as of January 15, 1999
- ------------------------------
Lizabeth H. Zlatkus
