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SERVUS LIFE INSURANCE COMPANY
VARIABLE LIFE INSURANCE
SERVUS LIFE INSURANCE COMPANY
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
Servus Life Insurance Company Variable Life Insurance. Please read it
carefully.
Servus Life Insurance Company Variable Life Insurance is a contract between
you and Servus Life Insurance Company 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:
- - Hartford Bond HLS Fund Sub-Account which purchases shares of Class IA of
Hartford Bond HLS Fund, Inc.
- - Hartford High Yield HLS Fund Sub-Account which purchases shares of Class IA
of Hartford High Yield HLS Fund of Hartford Series Fund, Inc.
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- - Hartford Index HLS Sub-Account which purchases shares of Class IA of
Hartford Index HLS Fund, Inc.
- - Hartford Money Market HLS Fund Sub-Account which purchases shares of Class
IA of Hartford Money Market HLS Fund, Inc.
- - Hartford Mortgage Securities HLS Fund Sub-Account that 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 1, 2000
Revised Effective: May 11, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ABOUT US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Servus Life Insurance Company. . . . . . . . . . . . . . . . . . . . . . . 16
The Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
YOUR POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Allocation of Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Accumulation Unit Values . . . . . . . . . . . . . . . . . . . . . . . . . 20
DEDUCTIONS AND CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Chart of Deduction and Charges . . . . . . . . . . . . . . . . . . . . . . 21
Cost of Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Administrative Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Annual Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Your Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Option 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Option 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Other Deductions or Charges. . . . . . . . . . . . . . . . . . . . . . . . 26
POLICY BENEFITS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 26
Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Account Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Transfer of Account Value. . . . . . . . . . . . . . . . . . . . . . . . . 27
Policy Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Amount Payable on Surrender of the Policy. . . . . . . . . . . . . . . . . 29
Partial Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Benefits at Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Lapse and Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Cancellation and Exchange Rights . . . . . . . . . . . . . . . . . . . . . 30
Suspension of Valuation, Payments and Transfers. . . . . . . . . . . . . . 31
LAST SURVIVOR POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . 31
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Limit on Right to Contest. . . . . . . . . . . . . . . . . . . . . . . . . 33
Misstatement as to Age and Sex . . . . . . . . . . . . . . . . . . . . . . 33
Settlement Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
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<TABLE>
<S> <C>
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
EXECUTIVE OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . . . . . 36
HOW WE SELL OUR POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS . . . . . . . . . . . . . . . 39
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 40
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Taxation of Royal and the Separate Account . . . . . . . . . . . . . . . . 40
Income Taxation of Policy Benefits . . . . . . . . . . . . . . . . . . . . 40
Last Survivor Policies . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Modified Endowment Policies. . . . . . . . . . . . . . . . . . . . . . . . 41
Estate and Generation Skipping Taxes . . . . . . . . . . . . . . . . . . . 42
Diversification Requirements . . . . . . . . . . . . . . . . . . . . . . . 42
Ownership of the Assets in the Separate Account. . . . . . . . . . . . . . 43
Life Insurance Purchased for Use in Split Dollar Arrangements. . . . . . . 44
Federal Income Tax Withholding . . . . . . . . . . . . . . . . . . . . . . 44
Non-Individual Ownership of Policies . . . . . . . . . . . . . . . . . . . 45
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Life Insurance Purchases by Nonresident Aliens and Foreign Corporations. . 45
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 47
APPENDIX A -- SPECIAL INFORMATION FOR POLICIES PURCHASED IN NEW YORK . . . 48
APPENDIX B -- ILLUSTRATIONS OF BENEFITS. . . . . . . . . . . . . . . . . . 51
</TABLE>
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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 Servus 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.
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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 Servus 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 Servus'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 Servus 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."
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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.
SEPARATE ACCOUNT: For this life insurance policy, the separate acccount is
Servus Life Insurance Company Separate Account Two.
SERVUS OR US: Servus Life Insurance Company.
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.
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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
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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?
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ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
- -------------------------------------------- ------------------ -------------------- ------------
Management Other Expenses Total Fund
Fees (before any (before any expense Operating
fee waivers) reimbursements) Expenses
- -------------------------------------------- ------------------ -------------------- ------------
<S> <C> <C> <C>
Hartford Bond HLS Fund 0.49% 0.03% 0.52%
- -------------------------------------------- ------------------ -------------------- ------------
Hartford High Yield HLS Fund 0.66% 0.06% 0.72%
- -------------------------------------------- ------------------ -------------------- ------------
Hartford Index HLS Fund 0.40% 0.03% 0.43%
- -------------------------------------------- ------------------ -------------------- ------------
Hartford Money Market HLS Fund 0.45% 0.02% 0.47%
- -------------------------------------------- ------------------ -------------------- ------------
Hartford Mortgage Securities HLS Fund 0.45% 0.03% 0.48%
- -------------------------------------------- ------------------ -------------------- ------------
</TABLE>
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.
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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, Servus 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
--------
SERVUS LIFE INSURANCE COMPANY
Servus Life Insurance Company ("Servus"), (formerly known as Royal Life
Insurance Company of America) 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. Servus 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. Servus is a wholly owned subsidiary of Hartford Life Insurance
Company. On December 31, 1997, all of the common stock of Servus was
purchased from Royal Maccabees Life Insurance Company. Servus 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 Servus
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
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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 Servus may conduct.
THE FUNDS
Hartford HLS Funds are sponsored and administered by Hartford Life Insurance
Company. HL Investment Advisors, LLC ("HL Advisors") serves as the investment
adviser to each of the Hartford HLS Funds. Wellington Management Company, LLP
("Wellington Management") and Hartford Investment Management Company ("HIMCO")
serve as sub-investment advisors and provide day to day investment services.
Each Hartford HLS Fund, except for Hartford High Yield HLS Fund, is a separate
Maryland corporation registered with the Securities and Exchange Commission as
an open-end management investment company. 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 product.
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. 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." Sub-advised by HIMCO.
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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 with investing in such securities, please refer
to the section in the accompanying prospectus for the Funds entitled "Hartford
High Yield HLS Fund." Sub-advised by HIMCO.
HARTFORD INDEX HLS FUND - Seeks to provide investment results that 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.* Sub-advised by HIMCO.
HARTFORD MONEY MARKET HLS FUND - Seeks maximum current income consistent with
liquidity and preservation of capital. Sub-advised by HIMCO.
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. Sub-advised by HIMCO.
ADMINISTRATIVE SERVICES - Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides administrative services and the Funds pay
a fee to Hartford that is usually based on an annual percentage of the
average daily net assets of the Funds. These agreements may be different for
each Fund or each Fund family.
*"STANDARD & POOR'S," "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.
YOUR POLICY
APPLICATION
If you wish to purchase a Policy, you must submit an application to Servus. A
Policy will be issued only on the lives of Insureds age 90 and under who
supply evidence of insurability satisfactory to Servus. Acceptance is subject
to Servus's underwriting rules and Servus 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 SERVUS. No change
in the terms or conditions of a Policy will be made without your consent.
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19
The Policy will be effective on the Policy Date only after Servus 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 Servus, the
initial payment will not be accepted with the application. In other cases
where Servus receives the initial payment with the application, Servus will
provide fixed conditional insurance during underwriting according to the
terms of conditional receipt established by Servus. 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,
Servus 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. Servus may require
evidence of insurability for any additional premiums which increase the
Coverage Amount. Generally, the minimum initial premium Servus will accept is
$10,000. Servus 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 Servus's Home Office, Servus 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>
20
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 Servus 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>
21
The Policy Owner may elect one of two options offered by Servus 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>
22
<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 Servus'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, Servus 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 Death Benefit 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>
23
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: Servus 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 Servus 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, Servus will deduct on such date an annual
maintenance fee of $30. This fee will help reimburse Servus 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 Servus incurs in providing administrative services under the Policies.
Servus 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>
24
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 Servus 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: Servus 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 Servus 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 Servus 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. Servus 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 Servus 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. Servus
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: Servus 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 Servus 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 Servus'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, Servus does not expect to make a
profit from this deduction. The 0.15% charge helps reimburse Servus 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>
25
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, Servus 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 Servus 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. Servus 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 Servus 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. Servus 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: Servus will deduct from Premium payments a tax expense
charge equal to an annual rate of 4.0% for all Policy Years. This charge
compensates Servus 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 Servus'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,
Servus does not expect to make a profit from this deduction. The 0.15% charge
helps reimburse Servus for approximate expenses incurred under Section 848 of
the Code.
<PAGE>
26
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. Servus 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>
27
percentage of 250%). This amount less any outstanding loans constitutes the
Death Proceeds which Servus 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 Servus'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. Servus
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 Servus 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. Servus will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; otherwise, Servus may be
liable for any losses due to unauthorized or fraudulent instructions. The
procedures Servus follows for transactions initiated by telephone include
requirements that callers provide certain information for identification
purposes. All transfer instructions by telephone are tape recorded. Servus
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 SERVUS OF ANY INACCURACIES WITHIN 30 DAYS OF RECEIPT OF THE
CONFIRMATION.
Servus may modify the right to reallocate Account Value among the Sub-Accounts
if Servus
<PAGE>
28
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
Servus 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 Servus 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 Servus 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 Servus. 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 Servus 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
Servus'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, Servus will give written notice to the Policy Owner that,
unless Servus 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>
29
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 Servus 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. Servus will pay the Cash Surrender Value of the Policy
within seven days of receipt by Servus 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 Servus'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>
30
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
Servus, Servus will pay you the Cash Surrender Value. In such case, the Policy
will terminate and Servus 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.
Servus 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, Servus will require repayment
of the loan before permitting reinstatement. In addition, Servus reserves the
right to require evidence of insurability satisfactory to Servus.
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 Servus 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), Servus 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 Servus 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 Servus (or an affiliated company) on the life of
the Insured. No evidence of insurability will be required. The new Policy
<PAGE>
31
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
Servus 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>
32
OTHER MATTERS
VOTING RIGHTS
In accordance with its interpretation of presently applicable law, Servus 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. Servus will vote shares for which no
instructions have been given and shares which are not attributable to Policy
Owners (I.E., shares owned by Servus) 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 Servus's present interpretation should change and, as a result, Servus
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.
Servus 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, Servus 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 Servus 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
Servus 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
Servus will maintain all records relating to the Separate Account and the
Sub-Accounts. At least once each Policy Year, Servus 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>
33
LIMIT ON RIGHT TO CONTEST
Servus 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 Servus's payment options. The minimum
amount that may be applied under a settlement option is $5,000, unless Servus
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.
Servus 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 (Servus may offer other
payment options):
Option 1: Interest Income
This option offers payments of interest, at the rate Servus 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>
34
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 Servus.
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 Servus, 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 Servus.
Option 5 is an option that does not involve life contingencies.
Option 6: Policy Proceeds Settlement Option
Proceeds from the Death Benefit left with Servus. 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>
35
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 Servus) 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.
Servus 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>
36
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.
Servus 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.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS
- ------------------------------------- ------------------------------------- ------------------------------------------
OTHER BUSINESS PROFESSION, VOCATION OR
NAME POSITION WITH SERVUS, EMPLOYMENT FOR PAST FIVE YEARS; OTHER
YEAR OF ELECTION DIRECTORSHIPS
- ------------------------------------- ------------------------------------- ------------------------------------------
<S> <C> <C>
Mary Jane B. Fortin Vice President & Chief Accounting Vice President & Chief Accounting
Officer,1998 Officer, (1998 - Present), Hartford Life
Insurance Company; Vice President &
Chief Accounting Officer, (1998 -
Present), Hartford Life & Annuity
Insurance Company; Vice President &
Chief Accounting Officer, (1998 -
Present), Hart Life Insurance Company;
Chief Accounting Officer (1997 -
Present), Hartford Life, Inc.; Director,
Finance (1995 - 1997), Value Health,
Inc.; Senior Manager (1993 - 1995),
Coopers and Lybrand; Audit Manager (1993
- 1996) Arthur Andersen & Co.
- ------------------------------------- ------------------------------------- ------------------------------------------
David T. Foy Senior Vice President & Treasurer, Senior Vice President (1998-present),
1998 Vice President (1998), Assistant Vice
Director, 1999 * President (1995-1998), Hartford; Senior
Vice President (1998-Present), Hartford
Life and Accident Insurance Company;
Director, Strategic Planning Corporate
Finance (1995-1996), IA Product
Development (1994-1995), Hartford;
Various Actuarial Roles (1989-1993,
Milliman & Robertson
- ------------------------------------- ------------------------------------- ------------------------------------------
Lynda Godkin Senior Vice President, 1998 Associate General Counsel (1995-1996);
General Counsel, Assistant General Counsel and Secretary
Corporate Secretary, (1994-1995); Counsel (1990-1994),
Director 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.
<PAGE>
37
- ------------------------------------- ------------------------------------- ------------------------------------------
Thomas M. Marra 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.
- ------------------------------------- ------------------------------------- ------------------------------------------
Craig R. Raymond Senior Vice President, 1998 Vice President (1993-1997); Assistant
Chief Actuary Vice President (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.
- ------------------------------------- ------------------------------------- ------------------------------------------
Charles F. Shabunia Vice President, 1998 Assistant Vice President, Hartford
Controller (1977-1998).
- ------------------------------------- ------------------------------------- ------------------------------------------
Lowndes A. Smith President, 1998 Chief Operating Officer (1989-1997),
Director 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 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 H. Zlatkus 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>
38
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.
HOW WE SELL OUR POLICY
- ----------------------
Servus 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 Servus 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 Servus. The principal business
address of HSD is the same as that of Servus.
The following table shows officers and directors of HSD:
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION AND OFFICES
David A. Carlson Vice President
Peter W. Cummins Senior Vice President
David T. Foy Director
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
George R. Jay Controller
Robert A. Kerzner Executive Vice President
Thomas M. Marra Executive Vice President, Director
Paul E. Olson Supervising Registered Principal
Lowndes A. Smith President and Chief Executive Officer, Director
The maximum sales commission payable to Servus 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 Servus 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 Servus 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.
Servus 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>
39
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 Servus. The assets of the
Separate Account are kept physically segregated and held separate and apart
from the General Account of Servus. Servus maintains records of all purchases
and redemptions of shares of the Fund. Additional protection for the assets
of the Separate Account is afforded by Servus'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 Servus.
<PAGE>
40
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
<PAGE>
41
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.
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 policy 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
<PAGE>
42
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.
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 $675,000 (2000) from the
estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the credit
over the next six 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>
43
- 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-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
<PAGE>
44
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
<PAGE>
45
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.
<PAGE>
46
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate Account
is a party.
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 Servus, 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 Servus.
<PAGE>
47
The audited statutory financial statements included in this registration
statement, to the extent and for the periods indicated in their report, have
been audited by Arthur Andersen LLP, independent public accountants, 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 Servus Life Insurance Company, as of and for the years ended
1999 and 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 hypothetical Policy illustrations included in this Prospectus and the
registration statement with respect to the Separate Account have been
approved by Deanne Osgood, FSA, MAAA, Vice President and Director of
Individual Annuity Product Management, for Servus, and are included in
reliance upon her 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, Servus, and the
Policies.
<PAGE>
48
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 Servus 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 Servus'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>
49
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
Servus. Servus invests the assets of the General Account in accordance with
applicable laws governing the investment of insurance company general
accounts.
Servus 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. Servus reserves the right to credit a lower minimum
interest rate according to state law. Servus 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>
50
For New York Policy Owners who elect to invest in the Fixed Account, Servus
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 Servus
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
Servus 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,
Servus will pay interest at the Fixed Account Minimum Credited Interest Rate.
<PAGE>
51
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 0.52% 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 0.52% described above)
of -0.52%, 5.48%, and 11.48%, 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.
Servus 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. Servus 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,889 9,864 44,053 10,807 9,784 44,053
2 11,025 11,824 10,807 44,053 11,650 10,637 44,053
3 11,576 12,842 11,837 44,053 12,566 11,566 44,053
4 12,155 13,951 13,112 44,053 13,561 12,727 44,053
5 12,763 15,158 14,339 44,053 14,643 13,830 44,053
6 13,401 16,473 15,878 44,053 15,821 15,233 44,053
7 14,071 17,904 17,340 44,053 17,103 16,544 44,053
8 14,775 19,463 19,135 44,053 18,499 18,176 44,053
9 15,513 21,160 20,877 44,053 20,020 19,740 44,053
10 16,289 23,008 22,978 44,053 21,680 21,650 44,053
11 17,103 25,221 25,191 44,053 23,686 23,656 44,053
12 17,959 27,651 27,621 44,053 25,903 25,873 44,053
13 18,856 30,324 30,294 44,053 28,360 28,330 44,053
14 19,799 33,284 33,254 45,932 31,090 31,060 44,053
15 20,789 36,552 36,522 48,979 34,126 34,096 45,728
16 21,829 40,149 40,119 52,193 37,482 37,452 48,726
17 22,920 44,096 44,066 56,443 41,165 41,135 52,691
18 24,066 48,428 48,398 61,019 45,207 45,177 56,960
19 25,270 53,181 53,181 65,944 49,641 49,611 61,555
20 26,533 58,431 58,431 71,286 54,509 54,509 66,501
21 27,860 64,197 64,197 77,036 59,888 59,888 71,865
22 29,253 70,511 70,511 83,908 65,779 65,779 78,276
23 30,715 77,427 77,427 91,363 72,230 72,230 85,230
24 32,251 84,999 84,999 99,448 79,294 79,294 92,773
25 33,864 93,298 93,298 108,226 87,028 87,028 100,952
35 55,160 237,475 237,475 251,723 221,367 221,367 234,648
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,303 9,291 44,053 10,221 9,211 44,053
2 11,025 10,584 9,592 44,053 10,407 9,419 44,053
3 11,576 10,873 9,903 44,053 10,588 9,623 44,053
4 12,155 11,171 10,374 44,053 10,763 9,971 44,053
5 12,763 11,479 10,705 44,053 10,930 10,163 44,053
6 13,401 11,795 11,247 44,053 11,086 10,546 44,053
7 14,071 12,121 11,601 44,053 11,230 10,716 44,053
8 14,775 12,458 12,165 44,053 11,358 11,071 44,053
9 15,513 12,804 12,542 44,053 11,465 11,206 44,053
10 16,289 13,160 13,130 44,053 11,548 11,518 44,053
11 17,103 13,637 13,607 44,053 11,699 11,669 44,053
12 17,959 14,132 14,102 44,053 11,823 11,793 44,053
13 18,856 14,645 14,615 44,053 11,917 11,887 44,053
14 19,799 15,179 15,149 44,053 11,976 11,946 44,053
15 20,789 15,733 15,703 44,053 11,992 11,962 44,053
16 21,829 16,309 16,279 44,053 11,958 11,928 44,053
17 22,920 16,906 16,876 44,053 11,864 11,834 44,053
18 24,066 17,527 17,497 44,053 11,698 11,668 44,053
19 25,270 18,172 18,142 44,053 11,446 11,416 44,053
20 26,533 18,842 18,812 44,053 11,091 11,061 44,053
25 33,864 22,598 22,568 44,053 7,068 7,038 44,053
35 55,160 32,620 32,590 44,053 - - 44,053
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,717 8,739 44,053 9,634 8,665 44,053
2 11,025 9,412 8,488 44,053 9,233 8,326 44,053
3 11,576 9,116 8,243 44,053 8,826 7,980 44,053
4 12,155 8,829 8,137 44,053 8,412 7,751 44,053
5 12,763 8,550 7,900 44,053 7,988 7,379 44,053
6 13,401 8,278 7,834 44,053 7,553 7,146 44,053
7 14,071 8,015 7,604 44,053 7,104 6,736 44,053
8 14,775 7,758 7,534 44,053 6,636 6,440 44,053
9 15,513 7,509 7,310 44,053 6,146 5,977 44,053
10 16,289 7,267 7,237 44,053 5,629 5,599 44,053
11 17,103 7,089 7,059 44,053 5,126 5,096 44,053
12 17,959 6,914 6,884 44,053 4,583 4,553 44,053
13 18,856 6,743 6,713 44,053 3,998 3,968 44,053
14 19,799 6,575 6,545 44,053 3,364 3,334 44,053
15 20,789 6,411 6,381 44,053 2,673 2,643 44,053
16 21,829 6,250 6,220 44,053 1,917 1,887 44,053
17 22,920 6,092 6,062 44,053 1,086 1,056 44,053
18 24,066 5,938 5,908 44,053 165 135 44,053
19 25,270 5,787 5,757 44,053 - - 44,053
20 26,533 5,639 5,609 44,053 - - 44,053
21 27,860 5,494 5,464 44,053 - - 44,053
22 29,253 5,351 5,321 44,053 - - 44,053
23 30,715 5,212 5,182 44,053 - - 44,053
24 32,251 5,076 5,046 44,053 - - 44,053
25 33,864 4,942 4,912 44,053 - - 44,053
35 55,160 3,749 3,719 44,053 - - 44,053
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,522 9,742 44,053 10,435 9,655 44,053
2 11,025 11,499 10,719 44,053 11,315 10,535 44,053
3 11,576 12,570 11,790 44,053 12,277 11,497 44,053
4 12,155 13,743 13,113 44,053 13,330 12,700 44,053
5 12,763 15,030 14,400 44,053 14,483 13,853 44,053
6 13,401 16,439 16,009 44,053 15,747 15,317 44,053
7 14,071 17,985 17,555 44,053 17,134 16,704 44,053
8 14,775 19,678 19,448 44,053 18,655 18,425 44,053
9 15,513 21,534 21,304 44,053 20,326 20,096 44,053
10 16,289 23,568 23,538 44,053 22,164 22,134 44,053
11 17,103 25,837 25,807 44,053 24,226 24,196 44,053
12 17,959 28,327 28,297 44,053 26,507 26,477 44,053
13 18,856 31,074 31,044 44,124 29,035 29,005 44,053
14 19,799 34,116 34,086 47,079 31,846 31,816 44,053
15 20,789 37,466 37,436 50,204 34,966 34,936 46,854
16 21,829 41,153 41,123 53,499 38,405 38,375 49,927
17 22,920 45,201 45,171 57,856 42,180 42,150 53,990
18 24,066 49,642 49,612 62,548 46,322 46,292 58,365
19 25,270 54,515 54,515 67,598 50,867 50,867 63,075
20 26,533 59,897 59,897 73,073 55,889 55,889 68,184
21 27,860 65,807 65,807 78,968 61,404 61,404 73,684
22 29,253 72,280 72,280 86,012 67,444 67,444 80,257
23 30,715 79,368 79,368 93,654 74,058 74,058 87,388
24 32,251 87,130 87,130 101,942 81,301 81,301 95,121
25 33,864 95,638 95,638 110,940 89,230 89,230 103,507
35 55,160 243,430 243,430 258,036 226,970 226,970 240,588
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,955 9,179 44,053 9,869 9,098 44,053
2 11,025 10,293 9,513 44,053 10,106 9,326 44,053
3 11,576 10,642 9,862 44,053 10,343 9,563 44,053
4 12,155 11,005 10,375 44,053 10,577 9,947 44,053
5 12,763 11,381 10,751 44,053 10,806 10,176 44,053
6 13,401 11,771 11,341 44,053 11,030 10,600 44,053
7 14,071 12,176 11,746 44,053 11,246 10,816 44,053
8 14,775 12,595 12,365 44,053 11,449 11,219 44,053
9 15,513 13,030 12,800 44,053 11,638 11,408 44,053
10 16,289 13,481 13,451 44,053 11,807 11,777 44,053
11 17,103 13,970 13,940 44,053 11,972 11,942 44,053
12 17,959 14,477 14,447 44,053 12,112 12,082 44,053
13 18,856 15,004 14,974 44,053 12,223 12,193 44,053
14 19,799 15,552 15,522 44,053 12,300 12,270 44,053
15 20,789 16,120 16,090 44,053 12,336 12,306 44,053
16 21,829 16,711 16,681 44,053 12,323 12,293 44,053
17 22,920 17,324 17,294 44,053 12,253 12,223 44,053
18 24,066 17,961 17,931 44,053 12,113 12,083 44,053
19 25,270 18,623 18,593 44,053 11,889 11,859 44,053
20 26,533 19,310 19,280 44,053 11,566 11,536 44,053
21 27,860 20,023 19,993 44,053 11,127 11,097 44,053
22 29,253 20,764 20,734 44,053 10,553 10,523 44,053
23 30,715 21,534 21,504 44,053 9,822 9,792 44,053
24 32,251 22,333 22,303 44,053 8,907 8,877 44,053
25 33,864 23,163 23,133 44,053 7,773 7,743 44,053
35 55,160 33,445 33,415 44,053 - - 44,053
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,389 8,655 44,053 9,302 8,575 44,053
2 11,025 9,153 8,437 44,053 8,966 8,264 44,053
3 11,576 8,923 8,223 44,053 8,620 7,944 44,053
4 12,155 8,697 8,145 44,053 8,264 7,738 44,053
5 12,763 8,477 7,938 44,053 7,895 7,391 44,053
6 13,401 8,261 7,900 44,053 7,511 7,180 44,053
7 14,071 8,050 7,698 44,053 7,109 6,794 44,053
8 14,775 7,844 7,657 44,053 6,685 6,522 44,053
9 15,513 7,642 7,459 44,053 6,236 6,082 44,053
10 16,289 7,444 7,414 44,053 5,758 5,728 44,053
11 17,103 7,262 7,232 44,053 5,254 5,224 44,053
12 17,959 7,084 7,054 44,053 4,711 4,681 44,053
13 18,856 6,909 6,879 44,053 4,125 4,095 44,053
14 19,799 6,738 6,708 44,053 3,491 3,461 44,053
15 20,789 6,571 6,541 44,053 2,800 2,770 44,053
16 21,829 6,406 6,376 44,053 2,045 2,015 44,053
17 22,920 6,246 6,216 44,053 1,214 1,184 44,053
18 24,066 6,088 6,058 44,053 294 264 44,053
19 25,270 5,934 5,904 44,053 - - -
20 26,533 5,783 5,753 44,053 - - -
21 27,860 5,635 5,605 44,053 - - -
22 29,253 5,490 5,460 44,053 - - -
23 30,715 5,348 5,318 44,053 - - -
24 32,251 5,208 5,178 44,053 - - -
25 33,864 5,072 5,042 44,053 - - -
35 55,160 3,854 3,824 44,053 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,889 9,864 34,014 10,762 9,740 34,014
2 11,025 11,824 10,807 34,014 11,556 10,545 34,014
3 11,576 12,842 11,837 34,014 12,421 11,424 34,014
4 12,155 13,951 13,112 34,014 13,366 12,535 34,014
5 12,763 15,158 14,339 34,014 14,397 13,587 34,014
6 13,401 16,473 15,878 34,014 15,524 14,938 34,014
7 14,071 17,904 17,340 34,014 16,755 16,199 34,014
8 14,775 19,463 19,135 34,014 18,100 17,779 34,014
9 15,513 21,160 20,877 34,014 19,571 19,292 34,014
10 16,289 23,008 22,978 34,014 21,184 21,154 34,014
11 17,103 25,222 25,192 34,014 23,145 23,115 34,014
12 17,959 27,673 27,643 34,014 25,332 25,302 34,014
13 18,856 30,414 30,384 35,888 27,782 27,752 34,014
14 19,799 33,436 33,406 39,119 30,528 30,498 35,717
15 20,789 36,757 36,727 42,638 33,557 33,527 38,926
16 21,829 40,407 40,377 46,468 36,887 36,857 42,419
17 22,920 44,431 44,401 50,206 40,557 40,527 45,829
18 24,066 48,868 48,838 54,243 44,605 44,575 49,511
19 25,270 53,769 53,769 58,607 49,074 49,044 53,491
20 26,533 59,169 59,169 64,494 53,971 53,971 58,827
21 27,860 65,112 65,112 70,321 59,391 59,391 64,142
22 29,253 71,656 71,656 76,672 65,360 65,360 69,935
23 30,715 78,822 78,822 84,339 71,897 71,897 76,929
24 32,251 86,722 86,722 91,925 79,103 79,103 83,848
25 33,864 95,369 95,369 101,090 86,989 86,989 92,208
35 55,160 243,428 243,428 255,599 218,768 218,768 229,706
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,303 9,291 34,014 10,176 9,167 34,014
2 11,025 10,584 9,592 34,014 10,314 9,328 34,014
3 11,576 10,873 9,903 34,014 10,445 9,482 34,014
4 12,155 11,171 10,374 34,014 10,568 9,780 34,014
5 12,763 11,479 10,705 34,014 10,682 9,919 34,014
6 13,401 11,795 11,247 34,014 10,784 10,246 34,014
7 14,071 12,121 11,601 34,014 10,868 10,357 34,014
8 14,775 12,458 12,165 34,014 10,930 10,645 34,014
9 15,513 12,804 12,542 34,014 10,961 10,703 34,014
10 16,289 13,160 13,130 34,014 10,955 10,925 34,014
11 17,103 13,637 13,607 34,014 10,999 10,969 34,014
12 17,959 14,132 14,102 34,014 11,004 10,974 34,014
13 18,856 14,645 14,615 34,014 10,966 10,936 34,014
14 19,799 15,179 15,149 34,014 10,880 10,850 34,014
15 20,789 15,733 15,703 34,014 10,739 10,709 34,014
16 21,829 16,309 16,279 34,014 10,527 10,497 34,014
17 22,920 16,906 16,876 34,014 10,226 10,196 34,014
18 24,066 17,527 17,497 34,014 9,811 9,781 34,014
19 25,270 18,172 18,142 34,014 9,250 9,220 34,014
20 26,533 18,842 18,812 34,014 8,507 8,477 34,014
21 27,860 19,537 19,507 34,014 7,543 7,513 34,014
22 29,253 20,259 20,229 34,014 6,312 6,282 34,014
23 30,715 21,010 20,980 34,014 4,755 4,725 34,014
24 32,251 21,789 21,759 34,014 2,799 2,769 34,014
25 33,864 22,598 22,568 34,014 340 310 34,014
35 55,160 32,620 32,590 34,250 - - 34,014
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,717 8,739 34,014 9,590 8,625 34,014
2 11,025 9,412 8,488 34,014 9,142 8,243 34,014
3 11,576 9,116 8,243 34,014 8,686 7,852 34,014
4 12,155 8,829 8,137 34,014 8,221 7,575 34,014
5 12,763 8,550 7,900 34,014 7,746 7,155 34,014
6 13,401 8,278 7,834 34,014 7,257 6,864 34,014
7 14,071 8,015 7,604 34,014 6,749 6,398 34,014
8 14,775 7,758 7,534 34,014 6,214 6,029 34,014
9 15,513 7,509 7,310 34,014 5,644 5,487 34,014
10 16,289 7,267 7,237 34,014 5,034 5,004 34,014
11 17,103 7,089 7,059 34,014 4,415 4,385 34,014
12 17,959 6,914 6,884 34,014 3,741 3,711 34,014
13 18,856 6,743 6,713 34,014 3,007 2,977 34,014
14 19,799 6,575 6,545 34,014 2,209 2,179 34,014
15 20,789 6,411 6,381 34,014 1,337 1,307 34,014
16 21,829 6,250 6,220 34,014 373 343 34,014
17 22,920 6,092 6,062 34,014 - - -
18 24,066 5,938 5,908 34,014 - - -
19 25,270 5,787 5,757 34,014 - - -
20 26,533 5,639 5,609 34,014 - - -
21 27,860 5,494 5,464 34,014 - - -
22 29,253 5,351 5,321 34,014 - - -
23 30,715 5,212 5,182 34,014 - - -
24 32,251 5,076 5,046 34,014 - - -
25 33,864 4,942 4,912 34,014 - - -
35 55,160 3,749 3,719 34,014 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,522 9,742 34,014 10,388 9,608 34,014
2 11,025 11,499 10,719 34,014 11,217 10,437 34,014
3 11,576 12,570 11,790 34,014 12,126 11,346 34,014
4 12,155 13,743 13,113 34,014 13,125 12,495 34,014
5 12,763 15,030 14,400 34,014 14,224 13,594 34,014
6 13,401 16,439 16,009 34,014 15,433 15,003 34,014
7 14,071 17,985 17,555 34,014 16,765 16,335 34,014
8 14,775 19,678 19,448 34,014 18,231 18,001 34,014
9 15,513 21,534 21,304 34,014 19,847 19,617 34,014
10 16,289 23,568 23,538 34,014 21,633 21,603 34,014
11 17,103 25,840 25,810 34,014 23,651 23,621 34,014
12 17,959 28,369 28,339 34,014 25,902 25,872 34,014
13 18,856 31,187 31,157 36,800 28,425 28,395 34,014
14 19,799 34,286 34,256 40,114 31,243 31,213 36,554
15 20,789 37,693 37,663 43,723 34,345 34,315 39,839
16 21,829 41,437 41,407 47,652 37,753 37,723 43,416
17 22,920 45,563 45,533 51,486 41,510 41,480 46,906
18 24,066 50,115 50,115 55,627 45,654 45,624 50,675
19 25,270 55,174 55,174 60,139 50,229 50,229 54,750
20 26,533 60,716 60,716 66,180 55,275 55,275 60,249
21 27,860 66,814 66,814 72,159 60,826 60,826 65,692
22 29,253 73,529 73,529 78,676 66,940 66,940 71,625
23 30,715 80,883 80,883 86,544 73,634 73,634 78,788
24 32,251 88,989 88,989 94,328 81,014 81,014 85,874
25 33,864 97,862 97,862 103,733 89,091 89,091 94,436
35 55,160 249,791 249,791 262,280 224,055 224,055 235,257
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,955 9,179 34,014 9,822 9,056 34,014
2 11,025 10,293 9,513 34,014 10,010 9,230 34,014
3 11,576 10,642 9,862 34,014 10,194 9,414 34,014
4 12,155 11,005 10,375 34,014 10,374 9,744 34,014
5 12,763 11,381 10,751 34,014 10,549 9,919 34,014
6 13,401 11,771 11,341 34,014 10,715 10,285 34,014
7 14,071 12,176 11,746 34,014 10,867 10,437 34,014
8 14,775 12,595 12,365 34,014 11,002 10,772 34,014
9 15,513 13,030 12,800 34,014 11,110 10,880 34,014
10 16,289 13,481 13,451 34,014 11,187 11,157 34,014
11 17,103 13,970 13,940 34,014 11,246 11,216 34,014
12 17,959 14,477 14,447 34,014 11,267 11,237 34,014
13 18,856 15,004 14,974 34,014 11,247 11,217 34,014
14 19,799 15,552 15,522 34,014 11,181 11,151 34,014
15 20,789 16,120 16,090 34,014 11,061 11,031 34,014
16 21,829 16,711 16,681 34,014 10,874 10,844 34,014
17 22,920 17,324 17,294 34,014 10,600 10,570 34,014
18 24,066 17,961 17,931 34,014 10,215 10,185 34,014
19 25,270 18,623 18,593 34,014 9,689 9,659 34,014
20 26,533 19,310 19,280 34,014 8,987 8,957 34,014
21 27,860 20,023 19,993 34,014 8,070 8,040 34,014
22 29,253 20,764 20,734 34,014 6,894 6,864 34,014
23 30,715 21,534 21,504 34,014 5,403 5,373 34,014
24 32,251 22,333 22,303 34,014 3,525 3,495 34,014
25 33,864 23,163 23,133 34,014 1,159 1,129 34,014
35 55,160 33,445 33,415 35,117 - - 34,014
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,389 8,655 34,014 9,256 8,532 34,014
2 11,025 9,153 8,437 34,014 8,871 8,176 34,014
3 11,576 8,923 8,223 34,014 8,475 7,809 34,014
4 12,155 8,697 8,145 34,014 8,067 7,553 34,014
5 12,763 8,477 7,938 34,014 7,644 7,156 34,014
6 13,401 8,261 7,900 34,014 7,204 6,886 34,014
7 14,071 8,050 7,698 34,014 6,742 6,442 34,014
8 14,775 7,844 7,657 34,014 6,249 6,094 34,014
9 15,513 7,642 7,459 34,014 5,718 5,574 34,014
10 16,289 7,444 7,414 34,014 5,142 5,112 34,014
11 17,103 7,262 7,232 34,014 4,524 4,494 34,014
12 17,959 7,084 7,054 34,014 3,850 3,820 34,014
13 18,856 6,909 6,879 34,014 3,117 3,087 34,014
14 19,799 6,738 6,708 34,014 2,320 2,290 34,014
15 20,789 6,571 6,541 34,014 1,449 1,419 34,014
16 21,829 6,406 6,376 34,014 486 456 34,014
17 22,920 6,246 6,216 34,014 - - -
18 24,066 6,088 6,058 34,014 - - -
19 25,270 5,934 5,904 34,014 - - -
20 26,533 5,783 5,753 34,014 - - -
21 27,860 5,635 5,605 34,014 - - -
22 29,253 5,490 5,460 34,014 - - -
23 30,715 5,348 5,318 34,014 - - -
24 32,251 5,208 5,178 34,014 - - -
25 33,864 5,072 5,042 34,014 - - -
35 55,160 3,854 3,824 34,014 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,889 9,864 20,001 10,676 9,656 20,001
2 11,025 11,824 10,807 20,001 11,375 10,368 20,001
3 11,576 12,842 11,837 20,001 12,137 11,145 20,001
4 12,155 13,951 13,112 20,001 12,974 12,149 20,001
5 12,763 15,158 14,339 20,001 13,898 13,095 20,001
6 13,401 16,473 15,878 20,001 14,928 14,349 20,001
7 14,071 17,904 17,340 20,231 16,085 15,534 20,001
8 14,775 19,468 19,141 21,609 17,398 17,081 20,001
9 15,513 21,184 20,901 23,090 18,901 18,623 20,601
10 16,289 23,040 23,010 25,113 20,553 20,523 22,402
11 17,103 25,264 25,234 27,285 22,534 22,504 24,336
12 17,959 27,713 27,683 29,653 24,714 24,684 26,443
13 18,856 30,386 30,356 32,513 27,093 27,063 28,989
14 19,799 33,332 33,302 35,331 29,716 29,686 31,498
15 20,789 36,554 36,524 38,746 32,577 32,547 34,531
16 21,829 40,105 40,075 42,110 35,739 35,709 37,525
17 22,920 43,988 43,958 46,187 39,188 39,158 41,147
18 24,066 48,251 48,221 50,663 42,944 42,914 45,091
19 25,270 52,929 52,929 55,575 47,029 46,999 49,380
20 26,533 58,097 58,097 61,001 51,465 51,465 54,038
21 27,860 63,770 63,770 66,958 56,309 56,309 59,124
22 29,253 69,996 69,996 73,496 61,556 61,556 64,633
23 30,715 76,831 76,831 80,672 67,232 67,232 70,593
24 32,251 84,333 84,333 88,549 73,367 73,367 77,035
25 33,864 92,568 92,568 97,196 79,989 79,989 83,988
35 55,160 235,194 235,194 237,546 197,049 197,049 199,019
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,303 9,291 20,001 10,087 9,080 20,001
2 11,025 10,584 9,592 20,001 10,118 9,135 20,001
3 11,576 10,873 9,903 20,001 10,118 9,161 20,001
4 12,155 11,171 10,374 20,001 10,082 9,301 20,001
5 12,763 11,479 10,705 20,001 10,005 9,249 20,001
6 13,401 11,795 11,247 20,001 9,875 9,351 20,001
7 14,071 12,121 11,601 20,001 9,682 9,192 20,001
8 14,775 12,458 12,165 20,001 9,409 9,144 20,001
9 15,513 12,804 12,542 20,001 9,037 8,804 20,001
10 16,289 13,160 13,130 20,001 8,543 8,513 20,001
11 17,103 13,637 13,607 20,001 7,970 7,940 20,001
12 17,959 14,132 14,102 20,001 7,217 7,187 20,001
13 18,856 14,645 14,615 20,001 6,243 6,213 20,001
14 19,799 15,179 15,149 20,001 4,990 4,960 20,001
15 20,789 15,733 15,703 20,001 3,380 3,350 20,001
16 21,829 16,309 16,279 20,001 1,300 1,270 20,001
17 22,920 16,906 16,876 20,001 - - -
18 24,066 17,527 17,497 20,001 - - -
19 25,270 18,172 18,142 20,001 - - -
20 26,533 18,842 18,812 20,001 - - -
21 27,860 19,537 19,507 20,513 - - -
22 29,253 20,259 20,229 21,272 - - -
23 30,715 21,010 20,980 22,060 - - -
24 32,251 21,789 21,759 22,878 - - -
25 33,864 22,598 22,568 23,727 - - -
35 55,160 32,647 32,617 32,973 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,717 8,739 20,001 9,499 8,543 20,001
2 11,025 9,412 8,488 20,001 8,932 8,054 20,001
3 11,576 9,116 8,243 20,001 8,325 7,525 20,001
4 12,155 8,829 8,137 20,001 7,669 7,064 20,001
5 12,763 8,550 7,900 20,001 6,954 6,420 20,001
6 13,401 8,278 7,834 20,001 6,167 5,828 20,001
7 14,071 8,015 7,604 20,001 5,290 5,009 20,001
8 14,775 7,758 7,534 20,001 4,301 4,163 20,001
9 15,513 7,509 7,310 20,001 3,171 3,069 20,001
10 16,289 7,267 7,237 20,001 1,869 1,839 20,001
11 17,103 7,089 7,059 20,001 367 337 20,001
12 17,959 6,914 6,884 20,001 - - -
13 18,856 6,743 6,713 20,001 - - -
14 19,799 6,575 6,545 20,001 - - -
15 20,789 6,411 6,381 20,001 - - -
16 21,829 6,250 6,220 20,001 - - -
17 22,920 6,092 6,062 20,001 - - -
18 24,066 5,938 5,908 20,001 - - -
19 25,270 5,787 5,757 20,001 - - -
20 26,533 5,639 5,609 20,001 - - -
21 27,860 5,494 5,464 20,001 - - -
22 29,253 5,351 5,321 20,001 - - -
23 30,715 5,212 5,182 20,001 - - -
24 32,251 5,076 5,046 20,001 - - -
25 33,864 4,942 4,912 20,001 - - -
35 55,160 3,749 3,719 20,001 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,522 9,742 20,001 10,294 9,514 20,001
2 11,025 11,499 10,719 20,001 11,017 10,237 20,001
3 11,576 12,570 11,790 20,001 11,810 11,030 20,001
4 12,155 13,743 13,113 20,001 12,686 12,056 20,001
5 12,763 15,030 14,400 20,001 13,661 13,031 20,001
6 13,401 16,439 16,009 20,001 14,755 14,325 20,001
7 14,071 17,985 17,555 20,322 15,992 15,562 20,001
8 14,775 19,684 19,454 21,849 17,407 17,177 20,001
9 15,513 21,560 21,330 23,499 19,036 18,806 20,749
10 16,289 23,602 23,572 25,725 20,835 20,805 22,710
11 17,103 25,881 25,851 27,951 22,844 22,814 24,671
12 17,959 28,391 28,361 30,377 25,055 25,025 26,808
13 18,856 31,130 31,100 33,308 27,467 27,437 29,389
14 19,799 34,149 34,119 36,197 30,127 30,097 31,934
15 20,789 37,450 37,420 39,696 33,028 32,998 35,010
16 21,829 41,090 41,060 43,144 36,234 36,204 38,046
17 22,920 45,069 45,039 47,322 39,731 39,701 41,717
18 24,066 49,436 49,406 51,908 43,540 43,510 45,717
19 25,270 54,230 54,230 56,942 47,682 47,652 50,066
20 26,533 59,526 59,526 62,501 52,181 52,181 54,789
21 27,860 65,338 65,338 68,604 57,092 57,092 59,946
22 29,253 71,718 71,718 75,303 62,411 62,411 65,531
23 30,715 78,720 78,720 82,656 68,167 68,167 71,575
24 32,251 86,407 86,407 90,727 74,387 74,387 78,106
25 33,864 94,844 94,844 99,586 81,101 81,101 85,155
35 55,160 240,978 240,978 243,387 199,788 199,788 201,785
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,955 9,179 20,001 9,726 8,966 20,001
2 11,025 10,293 9,513 20,001 9,797 9,032 20,001
3 11,576 10,642 9,862 20,001 9,839 9,071 20,001
4 12,155 11,005 10,375 20,001 9,849 9,228 20,001
5 12,763 11,381 10,751 20,001 9,819 9,200 20,001
6 13,401 11,771 11,341 20,001 9,740 9,320 20,001
7 14,071 12,176 11,746 20,001 9,600 9,186 20,001
8 14,775 12,595 12,365 20,001 9,384 9,167 20,001
9 15,513 13,030 12,800 20,001 9,073 8,861 20,001
10 16,289 13,481 13,451 20,001 8,643 8,613 20,001
11 17,103 13,970 13,940 20,001 8,083 8,053 20,001
12 17,959 14,477 14,447 20,001 7,346 7,316 20,001
13 18,856 15,004 14,974 20,001 6,391 6,361 20,001
14 19,799 15,552 15,522 20,001 5,161 5,131 20,001
15 20,789 16,120 16,090 20,001 3,580 3,550 20,001
16 21,829 16,711 16,681 20,001 1,536 1,506 20,001
17 22,920 17,324 17,294 20,001 - - -
18 24,066 17,961 17,931 20,001 - - -
19 25,270 18,623 18,593 20,001 - - -
20 26,533 19,310 19,280 20,275 - - -
21 27,860 20,023 19,993 21,024 - - -
22 29,253 20,764 20,734 21,802 - - -
23 30,715 21,534 21,504 22,610 - - -
24 32,251 22,333 22,303 23,449 - - -
25 33,864 23,163 23,133 24,321 - - -
35 55,160 33,473 33,443 33,807 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,389 8,655 20,001 9,158 8,441 20,001
2 11,025 9,153 8,437 20,001 8,646 7,968 20,001
3 11,576 8,923 8,223 20,001 8,090 7,454 20,001
4 12,155 8,697 8,145 20,001 7,482 7,003 20,001
5 12,763 8,477 7,938 20,001 6,810 6,372 20,001
6 13,401 8,261 7,900 20,001 6,062 5,790 20,001
7 14,071 8,050 7,698 20,001 5,220 4,981 20,001
8 14,775 7,844 7,657 20,001 4,259 4,144 20,001
9 15,513 7,642 7,459 20,001 3,153 3,060 20,001
10 16,289 7,444 7,414 20,001 1,867 1,837 20,001
11 17,103 7,262 7,232 20,001 365 335 20,001
12 17,959 7,084 7,054 20,001 - - -
13 18,856 6,909 6,879 20,001 - - -
14 19,799 6,738 6,708 20,001 - - -
15 20,789 6,571 6,541 20,001 - - -
16 21,829 6,406 6,376 20,001 - - -
17 22,920 6,246 6,216 20,001 - - -
18 24,066 6,088 6,058 20,001 - - -
19 25,270 5,934 5,904 20,001 - - -
20 26,533 5,783 5,753 20,001 - - -
21 27,860 5,635 5,605 20,001 - - -
22 29,253 5,490 5,460 20,001 - - -
23 30,715 5,348 5,318 20,001 - - -
24 32,251 5,208 5,178 20,001 - - -
25 33,864 5,072 5,042 20,001 - - -
35 55,160 3,854 3,824 20,001 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,957 9,930 45,872 10,957 9,930 45,872
2 11,025 11,966 10,947 45,872 11,966 10,947 45,872
3 11,576 13,064 12,055 45,872 13,064 12,055 45,872
4 12,155 14,259 13,415 45,872 14,259 13,415 45,872
5 12,763 15,558 14,734 45,872 15,558 14,734 45,872
6 13,401 16,972 16,372 45,872 16,972 16,372 45,872
7 14,071 18,509 17,940 45,872 18,509 17,940 45,872
8 14,775 20,179 19,848 45,872 20,179 19,848 45,872
9 15,513 21,995 21,710 45,872 21,995 21,710 45,872
10 16,289 23,969 23,939 45,872 23,969 23,939 45,872
11 17,103 26,328 26,298 45,872 26,328 26,298 45,872
12 17,959 28,923 28,893 45,872 28,923 28,893 45,872
13 18,856 31,784 31,754 45,872 31,784 31,754 45,872
14 19,799 34,948 34,918 45,872 34,948 34,918 45,872
15 20,789 38,459 38,429 45,872 38,459 38,429 45,872
16 21,829 42,358 42,328 48,711 42,358 42,328 48,711
17 22,920 46,659 46,629 52,724 46,659 46,629 52,724
18 24,066 51,398 51,398 57,051 51,398 51,398 57,051
19 25,270 56,656 56,656 61,754 56,656 56,656 61,754
20 26,533 62,423 62,423 68,041 62,423 62,423 68,041
21 27,860 68,767 68,767 74,268 68,767 68,767 74,268
22 29,253 75,748 75,748 81,050 75,748 75,748 81,049
23 30,715 83,394 83,394 89,231 83,394 83,394 89,231
24 32,251 91,814 91,814 97,323 91,814 91,814 97,323
25 33,864 101,030 101,030 107,091 101,030 101,030 107,091
35 55,160 260,810 260,810 273,850 254,329 254,329 267,045
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,367 9,354 45,872 10,367 9,354 45,872
2 11,025 10,710 9,716 45,872 10,710 9,716 45,872
3 11,576 11,057 10,084 45,872 11,057 10,084 45,872
4 12,155 11,408 10,607 45,872 11,408 10,607 45,872
5 12,763 11,760 10,983 45,872 11,760 10,983 45,872
6 13,401 12,111 11,560 45,872 12,111 11,560 45,872
7 14,071 12,466 11,942 45,872 12,460 11,936 45,872
8 14,775 12,832 12,537 45,872 12,801 12,507 45,872
9 15,513 13,209 12,946 45,872 13,130 12,867 45,872
10 16,289 13,598 13,568 45,872 13,441 13,411 45,872
11 17,103 14,113 14,083 45,872 13,839 13,809 45,872
12 17,959 14,648 14,618 45,872 14,215 14,185 45,872
13 18,856 15,204 15,174 45,872 14,562 14,532 45,872
14 19,799 15,783 15,753 45,872 14,871 14,841 45,872
15 20,789 16,385 16,355 45,872 15,134 15,104 45,872
16 21,829 17,012 16,982 45,872 15,335 15,305 45,872
17 22,920 17,663 17,633 45,872 15,456 15,426 45,872
18 24,066 18,341 18,311 45,872 15,474 15,444 45,872
19 25,270 19,045 19,015 45,872 15,358 15,328 45,872
20 26,533 19,778 19,748 45,872 15,072 15,042 45,872
21 27,860 20,541 20,511 45,872 14,576 14,546 45,872
22 29,253 21,334 21,304 45,872 13,822 13,792 45,872
23 30,715 22,159 22,129 45,872 12,751 12,721 45,872
24 32,251 23,016 22,986 45,872 11,289 11,259 45,872
25 33,864 23,909 23,879 45,872 9,334 9,304 45,872
35 55,160 35,059 35,029 45,872 - - 45,872
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,777 8,794 45,872 9,777 8,794 45,872
2 11,025 9,523 8,589 45,872 9,523 8,589 45,872
3 11,576 9,267 8,379 45,872 9,267 8,379 45,872
4 12,155 9,005 8,300 45,872 9,005 8,300 45,872
5 12,763 8,737 8,074 45,872 8,737 8,074 45,872
6 13,401 8,473 8,020 45,872 8,460 8,007 45,872
7 14,071 8,216 7,796 45,872 8,170 7,752 45,872
8 14,775 7,966 7,737 45,872 7,863 7,637 45,872
9 15,513 7,723 7,519 45,872 7,534 7,334 45,872
10 16,289 7,486 7,456 45,872 7,174 7,144 45,872
11 17,103 7,314 7,284 45,872 6,834 6,804 45,872
12 17,959 7,146 7,116 45,872 6,445 6,415 45,872
13 18,856 6,980 6,950 45,872 6,000 5,970 45,872
14 19,799 6,818 6,788 45,872 5,487 5,457 45,872
15 20,789 6,659 6,629 45,872 4,895 4,865 45,872
16 21,829 6,502 6,472 45,872 4,204 4,174 45,872
17 22,920 6,349 6,319 45,872 3,390 3,360 45,872
18 24,066 6,199 6,169 45,872 2,422 2,392 45,872
19 25,270 6,051 6,021 45,872 1,258 1,228 45,872
20 26,533 5,907 5,877 45,872 - - -
21 27,860 5,765 5,735 45,872 - - -
22 29,253 5,625 5,595 45,872 - - -
23 30,715 5,489 5,459 45,872 - - -
24 32,251 5,355 5,325 45,872 - - -
25 33,864 5,224 5,194 45,872 - - -
35 55,160 4,039 4,009 45,872 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,587 9,807 45,872 10,587 9,807 45,872
2 11,025 11,636 10,856 45,872 11,636 10,856 45,872
3 11,576 12,785 12,005 45,872 12,785 12,005 45,872
4 12,155 14,044 13,414 45,872 14,044 13,414 45,872
5 12,763 15,423 14,793 45,872 15,423 14,793 45,872
6 13,401 16,934 16,504 45,872 16,934 16,504 45,872
7 14,071 18,588 18,158 45,872 18,588 18,158 45,872
8 14,775 20,399 20,169 45,872 20,399 20,169 45,872
9 15,513 22,382 22,152 45,872 22,382 22,152 45,872
10 16,289 24,555 24,525 45,872 24,555 24,525 45,872
11 17,103 26,979 26,949 45,872 26,979 26,949 45,872
12 17,959 29,647 29,617 45,872 29,647 29,617 45,872
13 18,856 32,591 32,561 45,872 32,591 32,561 45,872
14 19,799 35,849 35,819 45,872 35,849 35,819 45,872
15 20,789 39,465 39,435 45,872 39,465 39,435 45,872
16 21,829 43,473 43,443 49,994 43,473 43,443 49,994
17 22,920 47,888 47,858 54,113 47,888 47,858 54,113
18 24,066 52,753 52,753 58,555 52,753 52,753 58,555
19 25,270 58,150 58,150 63,383 58,150 58,150 63,383
20 26,533 64,069 64,069 69,835 64,069 64,069 69,835
21 27,860 70,580 70,580 76,226 70,580 70,580 76,226
22 29,253 77,745 77,745 83,186 77,745 77,745 83,186
23 30,715 85,593 85,593 91,584 85,593 85,593 91,584
24 32,251 94,235 94,235 99,889 94,235 94,235 99,889
25 33,864 103,694 103,694 109,915 103,694 103,694 109,915
35 55,160 267,687 267,687 281,070 261,035 261,035 274,086
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,017 9,237 45,872 10,017 9,237 45,872
2 11,025 10,415 9,635 45,872 10,415 9,635 45,872
3 11,576 10,821 10,041 45,872 10,821 10,041 45,872
4 12,155 11,236 10,606 45,872 11,236 10,606 45,872
5 12,763 11,657 11,027 45,872 11,657 11,027 45,872
6 13,401 12,083 11,653 45,872 12,083 11,653 45,872
7 14,071 12,518 12,088 45,872 12,512 12,082 45,872
8 14,775 12,970 12,740 45,872 12,940 12,710 45,872
9 15,513 13,439 13,209 45,872 13,361 13,131 45,872
10 16,289 13,926 13,896 45,872 13,772 13,742 45,872
11 17,103 14,453 14,423 45,872 14,188 14,158 45,872
12 17,959 15,002 14,972 45,872 14,582 14,552 45,872
13 18,856 15,573 15,543 45,872 14,948 14,918 45,872
14 19,799 16,167 16,137 45,872 15,279 15,249 45,872
15 20,789 16,784 16,754 45,872 15,565 15,535 45,872
16 21,829 17,426 17,396 45,872 15,792 15,762 45,872
17 22,920 18,094 18,064 45,872 15,943 15,913 45,872
18 24,066 18,789 18,759 45,872 15,994 15,964 45,872
19 25,270 19,512 19,482 45,872 15,915 15,885 45,872
20 26,533 20,264 20,234 45,872 15,672 15,642 45,872
21 27,860 21,045 21,015 45,872 15,226 15,196 45,872
22 29,253 21,859 21,829 45,872 14,531 14,501 45,872
23 30,715 22,705 22,675 45,872 13,530 13,500 45,872
24 32,251 23,584 23,554 45,872 12,152 12,122 45,872
25 33,864 24,500 24,470 45,872 10,299 10,269 45,872
35 55,160 35,934 35,904 45,872 - - 45,872
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,447 8,709 45,872 9,447 8,709 45,872
2 11,025 9,261 8,536 45,872 9,261 8,536 45,872
3 11,576 9,068 8,358 45,872 9,068 8,358 45,872
4 12,155 8,869 8,307 45,872 8,869 8,307 45,872
5 12,763 8,660 8,111 45,872 8,660 8,111 45,872
6 13,401 8,453 8,085 45,872 8,440 8,072 45,872
7 14,071 8,250 7,890 45,872 8,204 7,846 45,872
8 14,775 8,052 7,861 45,872 7,948 7,759 45,872
9 15,513 7,857 7,670 45,872 7,667 7,484 45,872
10 16,289 7,667 7,637 45,872 7,354 7,324 45,872
11 17,103 7,491 7,461 45,872 7,012 6,982 45,872
12 17,959 7,319 7,289 45,872 6,622 6,592 45,872
13 18,856 7,150 7,120 45,872 6,175 6,145 45,872
14 19,799 6,985 6,955 45,872 5,662 5,632 45,872
15 20,789 6,822 6,792 45,872 5,069 5,039 45,872
16 21,829 6,663 6,633 45,872 4,378 4,348 45,872
17 22,920 6,507 6,477 45,872 3,565 3,535 45,872
18 24,066 6,353 6,323 45,872 2,598 2,568 45,872
19 25,270 6,203 6,173 45,872 1,436 1,406 45,872
20 26,533 6,055 6,025 45,872 31 1 45,872
21 27,860 5,911 5,881 45,872 - - -
22 29,253 5,769 5,739 45,872 - - -
23 30,715 5,629 5,599 45,872 - - -
24 32,251 5,493 5,463 45,872 - - -
25 33,864 5,359 5,329 45,872 - - -
35 55,160 4,151 4,121 45,872 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,951 9,924 28,491 10,951 9,924 28,491
2 11,025 11,939 10,920 28,491 11,939 10,920 28,491
3 11,576 13,001 11,993 28,491 13,001 11,993 28,491
4 12,155 14,145 13,303 28,491 14,142 13,299 28,491
5 12,763 15,393 14,570 28,491 15,369 14,547 28,491
6 13,401 16,753 16,156 28,491 16,692 16,095 28,491
7 14,071 18,237 17,670 28,491 18,121 17,556 28,491
8 14,775 19,855 19,526 28,491 19,671 19,343 28,491
9 15,513 21,620 21,336 28,491 21,359 21,076 28,491
10 16,289 23,544 23,514 28,491 23,212 23,182 28,491
11 17,103 25,861 25,831 28,491 25,472 25,442 28,491
12 17,959 28,456 28,426 30,448 28,021 27,991 29,982
13 18,856 31,307 31,277 33,498 30,827 30,797 32,984
14 19,799 34,445 34,415 36,511 33,916 33,886 35,951
15 20,789 37,879 37,849 40,151 37,297 37,267 39,535
16 21,829 41,663 41,633 43,746 41,023 40,993 43,074
17 22,920 45,801 45,771 48,091 45,097 45,067 47,351
18 24,066 50,319 50,319 52,835 49,545 49,515 52,022
19 25,270 55,316 55,316 58,081 54,393 54,393 57,113
20 26,533 60,808 60,808 63,848 59,702 59,702 62,687
21 27,860 66,846 66,846 70,188 65,470 65,470 68,743
22 29,253 73,483 73,483 77,157 71,726 71,726 75,312
23 30,715 80,780 80,780 84,818 78,502 78,502 82,427
24 32,251 88,801 88,801 93,240 85,830 85,830 90,121
25 33,864 97,618 97,618 102,498 93,741 93,741 98,428
35 55,160 251,572 251,572 254,087 232,000 232,000 234,319
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,361 9,348 28,491 10,361 9,348 28,491
2 11,025 10,683 9,689 28,491 10,683 9,689 28,491
3 11,576 10,992 10,020 28,491 10,992 10,020 28,491
4 12,155 11,311 10,511 28,491 11,284 10,485 28,491
5 12,763 11,640 10,865 28,491 11,554 10,780 28,491
6 13,401 11,980 11,430 28,491 11,795 11,247 28,491
7 14,071 12,330 11,807 28,491 11,998 11,478 28,491
8 14,775 12,691 12,398 28,491 12,153 11,862 28,491
9 15,513 13,064 12,801 28,491 12,244 11,984 28,491
10 16,289 13,449 13,419 28,491 12,256 12,226 28,491
11 17,103 13,957 13,927 28,491 12,270 12,240 28,491
12 17,959 14,486 14,456 28,491 12,171 12,141 28,491
13 18,856 15,036 15,006 28,491 11,934 11,904 28,491
14 19,799 15,608 15,578 28,491 11,530 11,500 28,491
15 20,789 16,203 16,173 28,491 10,915 10,885 28,491
16 21,829 16,822 16,792 28,491 10,032 10,002 28,491
17 22,920 17,466 17,436 28,491 8,797 8,767 28,491
18 24,066 18,136 18,106 28,491 7,094 7,064 28,491
19 25,270 18,832 18,802 28,491 4,760 4,730 28,491
20 26,533 19,557 19,527 28,491 1,571 1,541 28,491
21 27,860 20,310 20,280 28,491 - - -
22 29,253 21,094 21,064 28,491 - - -
23 30,715 21,909 21,879 28,491 - - -
24 32,251 22,757 22,727 28,491 - - -
25 33,864 23,639 23,609 28,491 - - -
35 55,160 34,659 34,629 35,005 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,771 8,788 28,491 9,771 8,788 28,491
2 11,025 9,496 8,564 28,491 9,496 8,564 28,491
3 11,576 9,212 8,330 28,491 9,200 8,319 28,491
4 12,155 8,935 8,235 28,491 8,878 8,182 28,491
5 12,763 8,666 8,008 28,491 8,523 7,875 28,491
6 13,401 8,404 7,954 28,491 8,126 7,690 28,491
7 14,071 8,149 7,732 28,491 7,676 7,281 28,491
8 14,775 7,901 7,673 28,491 7,157 6,948 28,491
9 15,513 7,659 7,457 28,491 6,550 6,372 28,491
10 16,289 7,424 7,394 28,491 5,831 5,801 28,491
11 17,103 7,253 7,223 28,491 5,018 4,988 28,491
12 17,959 7,086 7,056 28,491 4,028 3,998 28,491
13 18,856 6,921 6,891 28,491 2,826 2,796 28,491
14 19,799 6,760 6,730 28,491 1,363 1,333 28,491
15 20,789 6,602 6,572 28,491 - - -
16 21,829 6,447 6,417 28,491 - - -
17 22,920 6,295 6,265 28,491 - - -
18 24,066 6,145 6,115 28,491 - - -
19 25,270 5,999 5,969 28,491 - - -
20 26,533 5,855 5,825 28,491 - - -
21 27,860 5,714 5,684 28,491 - - -
22 29,253 5,576 5,546 28,491 - - -
23 30,715 5,440 5,410 28,491 - - -
24 32,251 5,307 5,277 28,491 - - -
25 33,864 5,177 5,147 28,491 - - -
35 55,160 4,001 3,971 28,491 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% ( 11.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,581 9,801 28,491 10,581 9,801 28,491
2 11,025 11,609 10,829 28,491 11,609 10,829 28,491
3 11,576 12,720 11,940 28,491 12,720 11,940 28,491
4 12,155 13,929 13,299 28,491 13,923 13,293 28,491
5 12,763 15,256 14,626 28,491 15,228 14,598 28,491
6 13,401 16,713 16,283 28,491 16,645 16,215 28,491
7 14,071 18,312 17,882 28,491 18,188 17,758 28,491
8 14,775 20,067 19,837 28,491 19,875 19,645 28,491
9 15,513 21,993 21,763 28,491 21,730 21,500 28,491
10 16,289 24,109 24,079 28,491 23,785 23,755 28,491
11 17,103 26,496 26,466 28,615 26,125 26,095 28,491
12 17,959 29,163 29,133 31,204 28,752 28,722 30,764
13 18,856 32,085 32,055 34,330 31,632 31,602 33,846
14 19,799 35,301 35,271 37,419 34,803 34,773 36,890
15 20,789 38,822 38,792 41,151 38,273 38,243 40,569
16 21,829 42,701 42,671 44,836 42,097 42,067 44,202
17 22,920 46,944 46,914 49,290 46,279 46,249 48,592
18 24,066 51,575 51,575 54,153 50,844 50,844 53,386
19 25,270 56,696 56,696 59,530 55,854 55,854 58,646
20 26,533 62,326 62,326 65,441 61,305 61,305 64,369
21 27,860 68,514 68,514 71,939 67,227 67,227 70,588
22 29,253 75,317 75,317 79,082 73,651 73,651 77,333
23 30,715 82,795 82,795 86,935 80,609 80,609 84,639
24 32,251 91,016 91,016 95,567 88,134 88,134 92,540
25 33,864 100,054 100,054 105,056 96,258 96,258 101,070
35 55,160 257,849 257,849 260,427 238,227 238,227 240,608
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% ( 5.48% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 10,011 9,231 28,491 10,011 9,231 28,491
2 11,025 10,387 9,607 28,491 10,387 9,607 28,491
3 11,576 10,756 9,976 28,491 10,754 9,974 28,491
4 12,155 11,140 10,510 28,491 11,109 10,479 28,491
5 12,763 11,538 10,908 28,491 11,446 10,816 28,491
6 13,401 11,952 11,522 28,491 11,759 11,329 28,491
7 14,071 12,382 11,952 28,491 12,040 11,610 28,491
8 14,775 12,828 12,598 28,491 12,278 12,048 28,491
9 15,513 13,292 13,062 28,491 12,459 12,229 28,491
10 16,289 13,773 13,743 28,491 12,568 12,538 28,491
11 17,103 14,294 14,264 28,491 12,606 12,576 28,491
12 17,959 14,837 14,807 28,491 12,536 12,506 28,491
13 18,856 15,401 15,371 28,491 12,333 12,303 28,491
14 19,799 15,988 15,958 28,491 11,970 11,940 28,491
15 20,789 16,598 16,568 28,491 11,405 11,375 28,491
16 21,829 17,233 17,203 28,491 10,582 10,552 28,491
17 22,920 17,893 17,863 28,491 9,423 9,393 28,491
18 24,066 18,580 18,550 28,491 7,816 7,786 28,491
19 25,270 19,294 19,264 28,491 5,607 5,577 28,491
20 26,533 20,037 20,007 28,491 2,579 2,549 28,491
21 27,860 20,810 20,780 28,491 - - -
22 29,253 21,614 21,584 28,491 - - -
23 30,715 22,450 22,420 28,491 - - -
24 32,251 23,319 23,289 28,491 - - -
25 33,864 24,224 24,194 28,491 - - -
35 55,160 35,526 35,496 35,881 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE (VERS. 3)
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% ( -0.52% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUM --------------- ------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 9,441 8,703 28,491 9,441 8,703 28,491
2 11,025 9,233 8,510 28,491 9,233 8,510 28,491
3 11,576 9,014 8,308 28,491 9,001 8,296 28,491
4 12,155 8,800 8,242 28,491 8,739 8,185 28,491
5 12,763 8,590 8,044 28,491 8,442 7,905 28,491
6 13,401 8,384 8,019 28,491 8,099 7,745 28,491
7 14,071 8,183 7,826 28,491 7,700 7,362 28,491
8 14,775 7,986 7,796 28,491 7,229 7,055 28,491
9 15,513 7,792 7,607 28,491 6,667 6,504 28,491
10 16,289 7,603 7,573 28,491 5,990 5,960 28,491
11 17,103 7,429 7,399 28,491 5,179 5,149 28,491
12 17,959 7,258 7,228 28,491 4,194 4,164 28,491
13 18,856 7,090 7,060 28,491 2,997 2,967 28,491
14 19,799 6,926 6,896 28,491 1,541 1,511 28,491
15 20,789 6,765 6,735 28,491 - - -
16 21,829 6,606 6,576 28,491 - - -
17 22,920 6,451 6,421 28,491 - - -
18 24,066 6,299 6,269 28,491 - - -
19 25,270 6,149 6,119 28,491 - - -
20 26,533 6,003 5,973 28,491 - - -
21 27,860 5,859 5,829 28,491 - - -
22 29,253 5,718 5,688 28,491 - - -
23 30,715 5,580 5,550 28,491 - - -
24 32,251 5,444 5,414 28,491 - - -
25 33,864 5,311 5,281 28,491 - - -
35 55,160 4,112 4,082 28,491 - - -
</TABLE>
*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.
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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT 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 CONTRACT 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
Servus Life Insurance Company:
We have audited the accompanying statutory balance sheets of Servus Life
Insurance Company (a Connecticut Corporation and wholly owned subsidiary of
Hartford Life Insurance Company) (the Company) as of December 31, 1999 and 1998,
and the related statutory statements of operations, changes in capital and
surplus, and cash flows for the years then ended. These statutory 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 audits. These statutory financial statements of the Company as of
December 31, 1997, were audited by other auditors whose report dated February 6,
1998, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 audits provide a reasonable basis for our
opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 2 of notes to statutory financial
statements. When financial statements are presented for purposes other than for
filing with a regulatory agency, auditing standards generally accepted in the
United States require that an auditors' report on them state whether they are
presented in conformity with accounting principles generally accepted in the
United States. The accounting practices used by the Company vary from accounting
principles generally accepted in the United States as explained in Note 2.
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 accounting principles generally accepted in the
United States, the financial position of the Company as of December 31, 1999 and
1998, or the results of its operations or its cash flows for the years then
ended.
<PAGE>
-2-
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, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with statutory accounting practices as
described in Note 2.
Hartford, Connecticut ARTHUR ANDERSEN LLP
January 31, 2000
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
BALANCE SHEETS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------
1999 1998
-------------------- --------------------
ASSETS
<S> <C> <C>
Bonds $ 6,136 $ 5,717
Cash and Short-Term Investments 4,751 4,740
- -------------------------------------------------------------------------------------------------------
TOTAL CASH AND INVESTED ASSETS 10,887 10,457
- -------------------------------------------------------------------------------------------------------
Investment Income Due and Accrued 58 36
Receivable from Guaranty Funds 134 104
- -------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 11,079 $ 10,597
- -------------------------------------------------------------------------------------------------------
LIABILITIES
Taxes, Licenses and Fees Due and Accrued $ 16 $ 11
Federal Income Taxes Accrued 337 172
Remittances and Items Not Allocated 3 4
Asset Valuation Reserve 6 3
Payables to Affiliates 31 23
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 393 213
- -------------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS
Common Stock 2,500 2,500
Gross Paid-In and Contributed Surplus 7,569 7,569
Unassigned Funds 617 315
- -------------------------------------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS 10,686 10,384
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES, CAPITAL AND SURPLUS $ 11,079 $ 10,597
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these
statutory basis financial statements.
3
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------
1999 1998 1997
----------------- ----------------- -----------------
(Predecessor)
REVENUES
<S> <C> <C> <C>
Premiums and Annuity Considerations $ - $ - $ 19,492
Net Investment Income 563 570 22,209
Amortization of Interest Maintenance Reserve - - 127
Commissions and Expense Allowances on Reinsurance Ceded 12 17 -
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES 575 587 41,828
- ------------------------------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Decrease in Aggregate Reserves for Future Benefits - - (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 12 17 373
General Insurance Expenses 13 - 1,671
Taxes, Licenses and Fees 80 80 (1,116)
Other Expenses - - 65
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 105 97 37,760
- ------------------------------------------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS BEFORE FEDERAL INCOME TAX EXPENSE 470 490 4,068
Federal Income Tax Expense 165 172 1,390
- ------------------------------------------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 305 318 2,678
- ------------------------------------------------------------------------------------------------------------------------------
Net Realized Capital Losses, after tax - - (566)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 305 $ 318 $ 2,112
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these
statutory basis financial statements.
4
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997
------------------ ----------------- --------------------
(Predecessor)
COMMON STOCK,
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning and End of Year $ 2,500 $ 2,500 $ 2,500
- ----------------------------------------------------------------------------------------------------------------------------------
GROSS PAID-IN AND CONTRIBUTED SURPLUS
Balance, Beginning of Year 7,569 7,500 54,350
Net Transfer from (to) Parent 0 69 (46,850)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, End of Year 7,569 7,569 7,500
- ----------------------------------------------------------------------------------------------------------------------------------
UNASSIGNED FUNDS
Balance, Beginning of Year 315 - 9,029
Net Income 305 318 2,112
Change in Net Unrealized Capital Losses - - (10,452)
Change in Asset Valuation Reserve (3) (3) 3,037
Change in Non-Admitted Assets - - 51
Net Transfer to Parent - - (3,777)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, End of Year 617 315 -
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS,
- ----------------------------------------------------------------------------------------------------------------------------------
End of Year $ 10,686 $ 10,384 $ 10,000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
5
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1999 1998 1997
------------------ ----------------- -----------------
(Predecessor)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Premiums and Annuity Considerations $ 19 $ 17 $ 19,910
Net Investment Income 616 675 26,814
------------------ ----------------- -----------------
------------------ ----------------- -----------------
TOTAL INCOME 635 692 46,724
------------------ ----------------- -----------------
------------------ ----------------- -----------------
Policy Claims - - 49,832
Commissions and Other Expenses 99 86 2,172
Federal Income Tax Payments - - 1,155
Reserves Ceded - - 267,772
------------------ ----------------- -----------------
------------------ ----------------- -----------------
TOTAL BENEFITS AND EXPENSES 99 86 320,931
------------------ ----------------- -----------------
------------------ ----------------- -----------------
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) OPERATING
ACTIVITIES 536 606 (274,207)
- --------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD
Bonds 2,900 2,159 290,444
Common Stocks - - 29,001
Mortgage Loans - - 206
Other - - 1,187
------------------ ----------------- -----------------
NET INVESTMENT PROCEEDS 2,900 2,159 320,838
------------------ ----------------- -----------------
TAX REFUND ON CAPITAL LOSSES - - 5
COST OF INVESTMENTS ACQUIRED
Bonds 3,395 2,328 4,845
Other - - (3,802)
------------------ ----------------- -----------------
TOTAL INVESTMENTS ACQUIRED 3,395 2,328 1,043
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES (495) (169) 319,800
- --------------------------------------------------------------------------------------------------------------------------------
FINANCING AND MISCELLANEOUS ACTIVITIES
Net other cash used (30) (8) (44,188)
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH USED FOR FINANCING AND MISCELLANEOUS ACTIVITIES (30) (8) (44,188)
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND SHORT-TERM INVESTMENTS 11 429 1,405
CASH AND SHORT-TERM INVESTMENTS, Beginning of Year 4,740 4,311 2,906
- --------------------------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, End of Year $ 4,751 $ 4,740 $ 4,311
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
6
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. ORGANIZATION AND DESCRIPTION OF BUSINESS:
Servus Life Insurance Company (formerly Royal Life Insurance Company of
America) ("Servus", the "Successor" or the "Company") is a wholly owned
subsidiary of Hartford Life Insurance Company ("HLIC"), an indirect
subsidiary of Hartford Life, Inc. ("HLI"). HLI is indirectly majority owned
by The Hartford Financial Services Group, Inc. ("The Hartford"). 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
approximately 18.6% of the equity ownership of HLI. In 1999, Servus Life
Insurance Company changed its name from Royal Life Insurance Company of
America.
Effective December 31, 1997, all of the common stock of the Company was
purchased by HLIC from Royal Maccabees Life Insurance Company (Royal
Maccabees). Hereafter the Company, with respect to information for the year
ended 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 ceased writing any new business. Servus is licensed in several
states to sponsor variable and fixed annuities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying Servus 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. Certain reclassifications have been
made to prior year financial information to conform to the current year
presentation.
Current prescribed statutory accounting practices include accounting
publications of the 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.
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
periods. 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 VERSUS GAAP
Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences
principally involve:
7
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, etc.) which are charged to expense when incurred for
statutory purposes rather than on a pro-rata basis over the expected
life and gross profit stream 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 only consist of charges
assessed to policy account balances for cost of insurance, policy
administration and surrenders. When policy charges received relate to
coverage or services to be provided in the future, the charges are
recognized as revenue on a pro-rata basis over the expected life and
gross profit stream of the policy. Also, for GAAP purposes, premiums for
traditional life insurance policies are recognized as revenues when they
are due from policyholders;
(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 under GAAP;
(4) providing for income taxes based on current taxable income 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 or required under GAAP;
(5) excluding certain assets designated as non-admitted assets (e.g.,
negative Interest Maintenance Reserve and past due agents' balances)
from the balance sheet for statutory purposes by directly changing
surplus;
(6) the calculation of post retirement benefits obligation which, for
statutory accounting, excludes non-vested employees whereas GAAP
liabilities include a provision for such employees; statutory and GAAP
accounting permit either immediate recognition of the liability or
straight-line amortization of the liability over a period not to exceed
20 years. For GAAP, The Hartford's obligation was immediately
recognized, whereas for statutory accounting, the obligation is being
recognized ratably over a 20-year period;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve) for statutory purposes; as well as the deferral and
amortization of realized gains and losses, caused 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) for statutory purposes; 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 for
statutory purposes; whereas on a GAAP basis, reserves are reported gross
of reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost for statutory
purposes, 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 separate component of
Stockholder's Equity; as well as the change in the basis of
8
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
the Company's other invested assets, which consist primarily of limited
partnership investments, which is recognized as income under GAAP and as
a change in surplus under statutory accounting; and
(10) statutory accounting calculates separate account liabilities using
prescribed actuarial methodologies, which approximate the market value
of separate account assets, less applicable surrender charges. The
separate account surplus generated by these reserving methods is
recorded as an amount due to or from the separate account on the
statutory basis balance sheet, with changes reflected in the statutory
basis results of operations. On a GAAP basis, separate account assets
and liabilities are held at fair value.
There were no significant differences in net income or capital and surplus
as of and for the years ended December 31, 1999 and 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 LIABILITIES FOR PREMIUM AND OTHER
DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with applicable 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 ceased writing any new
business.
As part of the sales agreement of the Predecessor to HLIC, 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 that 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
reduction in the value of a security is deemed to be unrecoverable, the
decline in value 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.
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 AVR reserve balances were
$6 and $3 in 1999 and 1998, respectively. 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 life of the bond or
mortgage loan sold. Realized capital gains and losses, net of taxes not
included in the IMR are reported in the statutory basis statements of
operations. Realized investment gains and losses are determined on a
specific identification basis.
9
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
CODIFICATION
The NAIC adopted the Codification of Statutory Accounting principles in
March 1998. The proposed effective date for this statutory accounting
guidance is January 1, 2001. It is expected that Connecticut, the Company's
domiciliary state, will adopt these accounting standards and, therefore, the
Company will make the necessary accounting and reporting changes required
for implementation. The Company has not yet determined the impact that these
new accounting standards will have on its statutory basis financial
statements.
3. INVESTMENTS:
<TABLE>
<CAPTION>
(a) COMPONENTS OF NET INVESTMENT INCOME
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
(Predecessor)
<S> <C> <C> <C>
Interest income from bonds and short-term investments $ 563 $ 564 $ 21,653
Interest income from policy loans - - 328
Interest and dividends from other investments - 6 603
- --------------------------------------------------------------------------------------------------------------------------
Gross investment income 563 570 22,584
Less: Investment expenses - - 375
- --------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 563 $ 570 $ 22,209
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(b) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND SHORT-TERM INVESTMENTS
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
(Predecessor)
<S> <C> <C> <C>
Gross unrealized capital gains $ - $ 98 $ 74
Gross unrealized capital losses (98) - -
- --------------------------------------------------------------------------------------------------------------------------------
Net unrealized capital (losses) gains (98) 98 74
Balance, beginning of year 98 74 6,435
- --------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized capital (losses) gains
on bonds and short-term investments $ (196) $ 24 $ (6,361)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(c) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
(Predecessor)
<S> <C> <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)
Less: transferred to the IMR - - 122
- --------------------------------------------------------------------------------------------------------------------------------
Net realized capital loses $ - $ - $ (566)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Sales and maturities of investments in bonds and short-term investments for
the years ended December 31, 1999, 1998, and 1997 resulted in proceeds of
$25,600, $154,099, and $365,397, respectively. No gross realized capital
gains or losses were realized in 1999 and 1998.
10
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
Gross realized gains of $215 and losses of $28 were realized in 1997, before
transfers to the IMR.
(d) DERIVATIVE INVESTMENTS
The Company had no significant derivative holdings as of December 31, 1999,
1998 or 1997.
(e) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company had
no significant concentration of credit risk in fixed maturities of a single
issuer greater than 10% of capital and surplus as of December 31, 1999.
<TABLE>
<CAPTION>
(f) BONDS AND SHORT-TERM INVESTMENTS
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
1999 COST GAINS LOSSES VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S government and government agencies and authorities:
-Guaranteed and sponsored 6,136 - (98) 6,038
Short-term investments 4,748 - - 4,748
- --------------------------------------------------------------------------------------------------------------------------
Total bonds and short-term investments 10,884 - (98) 10,786
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
1998 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
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term investments
as of December 31, 1999 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
MATURITY COST VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
One year or less $ 4,960 $ 4,916
Over one year through five years 5,924 5,870
--------------------------------------------------------------------------------
Total $ 10,884 $ 10,786
--------------------------------------------------------------------------------
</TABLE>
Bonds with a carrying value of $6,136 were on deposit as of December 31, 1999
with various regulatory authorities as required.
11
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
(g) FAIR VALUE OF FINANCIAL INSTRUMENTS BALANCE SHEET ITEMS
<TABLE>
<CAPTION>
1999 1998
------------------------------------------------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------
Assets
<S> <C> <C> <C> <C>
Bonds and short-term investments $ 10,884 $ 10,786 $ 10,546 $10,644
</TABLE>
The estimated fair value of bonds and short-term investments was determined by
the Company primarily using NAIC market values.
4. AGGREGATE RESERVES FOR FUTURE BENEFITS AND REINSURANCE:
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 the Company of its primary liability. Failure of reinsurers
to honor their obligations could result in losses to the Company. The
company reduces this risk through evaluating reinsurers financial condition
and monitoring for possible concentrations of credit risk. The Company has
no significant reinsurance related concentrations of credit risk.
The effect of reinsurance as of and for the years ended December 31, is
summarized as follows:
<TABLE>
<CAPTION>
1999 DIRECT CEDED NET
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate Reserves for Future Benefits $ 12,045 $(12,045) $ -
Policy and Contract Claim Liabilities $ 100 $ (100) $ -
Premiums and Annuity Considerations $ 556 $ (556) $ -
Death, Annuity, Surrender and Other Benefits $ 152 $ (152) $ -
1998 DIRECT CEDED NET
- -----------------------------------------------------------------------------------------------------------
Aggregate Reserves for Future Benefits $ 19,426 $(19,426) $ -
Policy and Contract Claim Liabilities $ 400 $ (400) $ -
Premiums and Annuity Considerations $ 1,937 $ (1,937) $ -
Death, Annuity, Surrender and Other Benefits $ 1,450 $ (1,450) $ -
1997 DIRECT CEDED NET
- -----------------------------------------------------------------------------------------------------------
(Predecessor)
Aggregate Reserves for Future Benefits $ 86,749 $(86,749) $ -
Policy and Contract Claim Liabilities $ 5 $ (5) $ -
Premiums and Annuity Considerations $ 20,253 $ (761) $ 19,492
Death, Annuity, Surrender and Other Benefits $ 50,755 $ (1,283) $ 49,472
</TABLE>
12
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
An analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1999 is as follows:
<TABLE>
<CAPTION>
% OF
AMOUNT TOTAL
------------------------------------------------------------------------------------------------------
<S> <C> <C>
At book value less current surrender charge of 5% or more $ 466 4.1%
Total with adjustment or at market value $ 466 4.1%
At book value without adjustment (minimal or
no charge or adjustment) $ 10,540 92.8%
Not subject to discretionary withdrawal $ 352 3.1%
--------------------------------------------------------------------------------------------------
Total, gross $ 11,358 100.0%
Reinsurance Ceded $ 11,358
-----------------------------------------------------------------------------------
Total, net $ -
-----------------------------------------------------------------------------------
</TABLE>
5. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates relate principally to
tax settlements, rental and service fees, capital contributions and payments
of dividends. Amounts incurred for related party transactions were
insignificant for 1999 and 1998. Approximately $1,196 of general expenses
incurred by the Predecessor in 1997 represents direct and indirect expenses
allocated from Royal Maccabees and related entities. Direct expenses were
based on bills specifically paid for expenses of the Predecessor. The
indirect expenses were costs incurred by Royal Maccabees and affiliates for
the benefit of the Predecessor and were billed based on internal time
studies or studies of other services provided. Also, $703 of the 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 represents charges from Royal
Investment Management Company.
6. PREDECESSOR INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES:
On December 31, 1997, the Predecessor sold its investment in subsidiaries to
Royal Maccabees. The results of operations for the year ended December 31,
1997 of the Predecessor's unconsolidated subsidiaries are summarized as
follows:
<TABLE>
<CAPTION>
1997
------------------
<S> <C>
(PREDECESSOR)
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)
------------------
Decrease in capital and surplus for the year, net $ (40,296)
==================
</TABLE>
13
<PAGE>
SERVUS LIFE INSURANCE COMPANY
(FORMERLY ROYAL LIFE INSURANCE COMPANY OF AMERICA)
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
7. 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 affiliated
group of which The Hartford is the common parent. The Hartford and its
non-life subsidiaries filed a single consolidated Federal income tax return
for 1998, and intend to file a separate consolidated Federal income tax
return for 1999. The life insurance companies filed a separate consolidated
Federal income tax return for 1998, and intend to file a separate
consolidated Federal income tax return for 1999.
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.
The effective tax rate was 35% in 1999 and 1998, as there were no
reconciling items between the tax provision at the U.S. Federal Statutory
rate to Federal income tax expense for the years ended December 31, 1999 and
1998.
8. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid to shareholders by
Connecticut domiciled insurance companies, without prior approval, 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 1999 or 1998. The amount available for
dividend in 2000 is approximately $819.
9. COMMITMENTS AND CONTINGENT LIABILITIES:
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 the capital and surplus 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. In the
opinion of management, guaranty fund assessments are not considered to be
material in relation to the capital and surplus of the Company as of
December 31, 1999 and 1998.
14
