As filed with the Securities and Exchange Commission on October 16, 1998
REGISTRATION NO. ___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
PHLVIC VARIABLE UNIVERSAL LIFE ACCOUNT
(EXACT NAME OF TRUST)
PHL VARIABLE INSURANCE COMPANY
(NAME OF DEPOSITOR)
ONE AMERICAN ROW
HARTFORD, CONNECTICUT 06115
(COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DONA D. YOUNG, ESQUIRE
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
PHL VARIABLE INSURANCE COMPANY
ONE AMERICAN ROW
HARTFORD, CONNECTICUT 06115
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)
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COPIES TO:
<S> <C>
MICHAEL BERENSON, ESQ. EDWIN L. KERR, ESQ.
JORDEN BURT BOROS CICCHETTI BERENSON & JOHNSON LLP COUNSEL
1025 THOMAS JEFFERSON ST. N.W. PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
SUITE 400 EAST ONE AMERICAN ROW
WASHINGTON, DC 20007-0805 HARTFORD, CONNECTICUT 06115
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Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration
Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
N-8B-2 Item CAPTION IN PROSPECTUS
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1 The VUL Account
2 PHL Variable Insurance Company
3 Not Applicable
4 Sales of Policies
5 The VUL Account
6 The VUL Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 The Policy
11 Investments of the VUL Account
12 Investments of the VUL Account
13 Charges and Deductions; Investments of the VUL Account
14 Premium Payment; Allocation of Issue Premium; Right to Cancel Period
15 Allocation of Issue Premium; Transfer of Policy Value
16 Investments of the VUL Account
17 Surrenders
18 Allocation of Issue Premium; Transfer of Policy Value; Reinvestment and Redemption
19 Voting Rights; Reports
20 Not Applicable
21 Policy Loans
22 Not Applicable
23 Safekeeping of the VUL Account's Assets
24 Not Applicable
25 PHL Variable Insurance Company
26 Charges and Other Deductions; Investments of the VUL Account
27 PHL Variable Insurance Company
28 PHL Variable Insurance Company; The Directors and Executive Officers of
PHL Variable Insurance Company
29 Not Applicable
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 PHL Variable Insurance Company
36 Not Applicable
37 Not Applicable
38 Sales of Policies
39 Sales of Policies
40 Not Applicable
41 Sales of Policies
42 Not Applicable
43 Not Applicable
44 Determination of Subaccount Values
45 Not Applicable
46 Determination of Subaccount Values
47 Allocation of Issue Premium; Determination of Subaccount Values
48 Not Applicable
49 Not Applicable
50 Not Applicable
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N-8B-2 Item CAPTION IN PROSPECTUS
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51 PHL Variable Insurance Company; The Policy; Charges and Deductions
52 Investments of the VUL Account
53 Federal Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Not Applicable
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PHL VARIABLE INSURANCE COMPANY
HOME OFFICE: VARIABLE PRODUCTS
One American Row MAIL OPERATIONS (VPMO):
Hartford, CT 06115 PO Box 8027
Boston, MA 02266-8027
VARIABLE LIFE INSURANCE POLICY
PROSPECTUS
October 16, 1998
This Prospectus describes a flexible premium variable life insurance policy
(the "Policy" or "Policies"), offered by PHL Variable Insurance Company ("PHL
Variable"). The Policy provides lifetime insurance protection, with a death
benefit, on the life of the Insured. If the Policy is surrendered during the
Insured's lifetime, it also may provide Cash Surrender Value and loan privilege
benefits similar to those in a traditional fixed benefit whole life policy.
You choose the amount of Issue Premium desired which will be shown on your
Policy's Schedule Page. Generally, the minimum Issue Premium is 1/6 of the
Planned Annual Premium. Subsequent premium payment amounts and frequency also
will appear on your Policy's Schedule Page. You may allocate premium payments
and Policy Value to the Guaranteed Interest Account ("GIA") and one or more
Subaccounts of the PHLVIC Variable Universal Life Account (the "VUL Account").
For certain Policyowners, the Issue Premium is initially assigned to the Money
Market Subaccount and may then be reallocated according to the Policyowner's
further instructions. The assets of the Subaccounts are used to purchase, at Net
Asset Value, shares of a designated underlying mutual fund (collectively, the
"Funds") in the following series of VUL Account Fund options:
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SERIES ADVISER
============================================================================================================
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THE PHOENIX EDGE SERIES FUND
[bullet] Money Market [square] Phoenix Investment Counsel, Inc.
[bullet] Growth [square] Phoenix Investment Counsel, Inc.
[bullet] Multi-Sector Fixed Income [square] Phoenix Investment Counsel, Inc.
[bullet] Strategic Allocation [square] Phoenix Investment Counsel, Inc.
[bullet] International [square] Phoenix Investment Counsel, Inc.
[bullet] Balanced [square] Phoenix Investment Counsel, Inc.
[bullet] Strategic Theme [square] Phoenix Investment Counsel, Inc.
[bullet] Research Enhanced Index [square] Phoenix Investment Counsel, Inc.
[bullet] Engemann Nifty Fifty [square] Phoenix Investment Counsel, Inc.
[bullet] Seneca Mid-Cap Growth [square] Phoenix Investment Counsel, Inc.
[bullet] Phoenix Growth and Income [square] Phoenix Investment Counsel, Inc.
[bullet] Phoenix Value Equity [square] Phoenix Investment Counsel, Inc.
[bullet] Schafer Mid-Cap Value [square] Phoenix Investment Counsel, Inc.
[bullet] Real Estate Securities [square] Duff & Phelps Investment Management Co.
[bullet] Aberdeen New Asia [square] Phoenix-Aberdeen International Advisors, LLC
WANGER ADVISORS TRUST
[bullet] U.S. Small Cap [square] Wanger Asset Management, L.P.
[bullet] International Small Cap [square] Wanger Asset Management, L.P.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
[bullet] Stock [square] Templeton Investment Counsel, Inc.
[bullet] Asset Allocation [square] Templeton Investment Counsel, Inc.
[bullet] International [square] Templeton Investment Counsel, Inc.
[bullet] Developing Markets [square] Templeton Asset Management, LTD.
[bullet] Mutual Shares Investments [square] Franklin Mutual Advisers, Inc.
</TABLE>
There is no guaranteed minimum Policy Value except for that portion of
Policy Value invested in the GIA, which has a 4% minimum interest rate
guarantee. The Policy Value not invested in the GIA will vary to reflect the
investment experience of the Subaccounts of the VUL Account to which premiums
have been allocated. You bear the investment risk for all amounts so allocated.
The Policy will remain in effect as long as the Policy Value or Cash Surrender
Value is sufficient to pay certain monthly charges imposed in connection with
the Policy.
1
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The death benefit under the Policy equals the Policy's face amount on the
date of the Insured's death or, if greater, the Policy Value on the date of
death increased by the applicable percentage set forth in the Policy. Other
death benefit options also are available.
You may cancel the Policy (1) within 10 days (or longer in some states),
after you receive it, (2) or 10 days after PHL Variable mails or delivers a
written notice of withdrawal right to you, (3) or within 45 days of completing
the application, whichever is latest.
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE A POLICY AS A REPLACEMENT FOR AN
EXISTING LIFE INSURANCE POLICY OR ANNUITY CONTRACT. YOU SHOULD RECOGNIZE THAT A
POLICY THAT HAS BEEN IN EXISTENCE FOR A PERIOD OF TIME MIGHT HAVE CERTAIN
ADVANTAGES TO YOU OVER A NEW POLICY. ON THE OTHER HAND, THE PROPOSED POLICY MAY
OFFER NEW FEATURES THAT ARE MORE IMPORTANT TO YOU.
IT IS IN YOUR BEST INTEREST TO HAVE ADEQUATE INFORMATION BEFORE A DECISION
TO REPLACE YOUR PRESENT LIFE INSURANCE COVERAGE BECOMES FINAL SO THAT YOU MAY
UNDERSTAND THE BASIC FEATURES OF BOTH THE PROPOSED POLICY AND YOUR EXISTING
COVERAGE.
IF YOU ARE REPLACING AN ANNUITY CONTRACT, UNDERSTANDING THE FUNDAMENTAL
DIFFERENCES BETWEEN ANNUITIES AND LIFE INSURANCE AND HOW THEY ARE TREATED
DIFFERENTLY UNDER THE TAX LAWS IS IMPORTANT.
IN ALL CASES, IT IS IMPORTANT TO KNOW IF THE REPLACEMENT WILL RESULT IN
CURRENT TAX LIABILITY.
This Prospectus provides information about the Policy that you should know
before investing and is valid only if accompanied by or preceded by current
prospectuses for the Funds. This Prospectus and the prospectuses for the Funds
should be read and retained for future reference.
THE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION OR CREDIT UNION AND ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY. INVESTMENTS IN
THE POLICIES ARE SUBJECT TO INVESTMENT RISK AND MAY EXPERIENCE FLUCTUATION OF
POLICY VALUES AND THE POSSIBLE LOSS OF INVESTED PRINCIPAL.
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES NOR HAS THE SEC VALIDATED THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
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TABLE OF CONTENTS
Heading Page
- ----------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICY ........................... 1
TABLE OF CONTENTS ........................................ 3
SPECIAL TERMS ............................................ 4
SUMMARY .................................................. 5
PERFORMANCE HISTORY....................................... 6
PHL VARIABLE AND THE VUL ACCOUNT ......................... 8
PHL Variable .......................................... 8
The VUL Account ....................................... 8
The GIA................................................ 8
THE POLICY ............................................... 8
Introduction .......................................... 8
Eligible Purchasers ................................... 8
Premium Payment ....................................... 9
Allocation of Issue Premium ........................... 9
Right to Cancel Period ................................ 9
Temporary Insurance Coverage .......................... 9
Transfer of Policy Value .............................. 10
Determination of Subaccount Values .................... 10
Death Benefit ......................................... 11
Surrenders ............................................ 11
Policy Loans .......................................... 12
Lapse ................................................. 13
Payment of Premiums During Period of Disability ....... 13
Additional Insurance Options .......................... 13
Additional Rider Benefits ............................. 13
INVESTMENTS OF THE VUL ACCOUNT ........................... 14
Participating Mutual Funds ............................ 14
Investment Advisers.................................... 16
Services of the Advisers............................... 16
Reinvestment and Redemption ........................... 16
Substitution of Investments ........................... 16
CHARGES AND DEDUCTIONS ................................... 16
Monthly Deduction ..................................... 16
Premium Taxes ......................................... 17
Federal Tax Charge..................................... 17
Mortality and Expense Risk Charge ..................... 17
Investment Management Charge .......................... 17
Other Charges ......................................... 17
GENERAL PROVISIONS ....................................... 19
Postponement of Payments .............................. 19
Payment by Check ................................... 19
The Contract .......................................... 19
Suicide ............................................... 19
Incontestability ...................................... 19
Change of Owner or Beneficiary ........................ 19
Assignment ............................................ 19
Misstatement of Age or Sex ............................ 19
Surplus ............................................... 19
PAYMENT OF PROCEEDS ...................................... 19
Surrender and Death Benefit Proceeds .................. 19
Payment Options ....................................... 20
FEDERAL TAX CONSIDERATIONS ............................... 20
Introduction .......................................... 20
PHL Variable's Tax Status ............................. 20
Policy Benefits ....................................... 20
Business-Owned Policies................................ 21
Modified Endowment Contracts .......................... 21
Limitations on Unreasonable Mortality
and Expense Charges ................................ 22
Qualified Plans ....................................... 22
Diversification Standards ............................. 22
Change of Ownership or Insured or Assignment .......... 22
Other Taxes ........................................... 22
VOTING RIGHTS ............................................ 23
The Funds ............................................. 23
THE DIRECTORS AND EXECUTIVE OFFICERS OF PHL
VARIABLE .............................................. 23
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS .................. 23
SALES OF POLICIES ........................................ 23
STATE REGULATION ......................................... 24
REPORTS .................................................. 24
LEGAL PROCEEDINGS ........................................ 24
LEGAL MATTERS ............................................ 24
REGISTRATION STATEMENT ................................... 24
YEAR 2000 ISSUE........................................... 24
FINANCIAL STATEMENTS ..................................... 25
APPENDIX A ............................................... 28
APPENDIX B ............................................... 29
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS CONCERNING
THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
3
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SPECIAL TERMS
- --------------------------------------------------------------------------------
As used in this Prospectus, the following terms have the indicated meanings:
ATTAINED AGE: The age of the Insured on the birthday nearest the most recent
Policy Anniversary.
BENEFICIARY: The person or persons specified by the Policyowner as entitled to
receive the death benefits under a Policy.
CASH SURRENDER VALUE: The Policy Value less any surrender charge that would
apply on the date of surrender and less any Debt.
DEATH BENEFIT GUARANTEE: An additional benefit rider available with the Policy
that guarantees a death benefit equal to the initial face amount or the face
amount as later increased or decreased, provided that Minimum Required Premiums
are paid. See "Additional Rider Benefits."
DEBT: Outstanding loans against a Policy, plus accrued interest.
FUND: The Phoenix Edge Series Fund, Wanger Advisors Trust and Templeton Variable
Products Series Fund.
GENERAL ACCOUNT: The general asset account of PHL Variable.
GIA: The Guaranteed Interest Account is an allocation option under which amounts
deposited are guaranteed to earn a fixed rate of interest. Excess interest also
may be credited, in the sole discretion of PHL Variable.
IN FORCE: Conditions under which the coverage under a Policy is in effect and
the Insured's life remains insured.
INSURED: The person upon whose life we issue the Policy.
IN WRITING (WRITTEN REQUEST): In a written form satisfactory to PHL Variable and
delivered to VPMO.
ISSUE PREMIUM: The premium payment made in connection with the issue of the
Policy.
MINIMUM REQUIRED PREMIUM: The required premium as specified in the Policy. An
increase or decrease in the face amount of the Policy will change the Minimum
Required Premium amount.
MONTHLY CALCULATION DAY: The first Monthly Calculation Day is the same day as
the Policy Date. Subsequent Monthly Calculation Days are the same day of each
month thereafter or, if such day does not fall within a given month, the last
day of that month will be the Monthly Calculation Day.
PAYMENT DATE: The Valuation Date on which we receive a premium payment or loan
repayment at PHL Variable, unless we receive it after the close of the New York
Stock Exchange ("NYSE"), in which case it will be the next Valuation Date.
PHL VARIABLE: PHL Variable Insurance Company, Hartford, Connecticut.
PLANNED ANNUAL PREMIUM: The premium amount that the Policyowner agrees to pay
each Policy Year. It must be at least equal to the Minimum Required Premium
essential for the face amount of insurance selected and no greater than the
maximum premium allowed for the face amount selected.
POLICY ANNIVERSARY: Each anniversary of the Policy Date.
POLICY DATE: The Policy Date as shown on the Schedule Page of the Policy. This
is the date from which we measure Policy Years and Policy Anniversaries.
POLICY MONTH: The period from one Monthly Calculation Day up to, but not
including, the next Monthly Calculation Day.
POLICYOWNER (OWNER): The Owner of a Policy.
POLICY VALUE: The sum of a Policy's share in the values of each Subaccount of
the VUL Account plus the Policy's share in the values of the GIA.
POLICY YEAR: The first Policy Year is the one-year period from the Policy Date
up to, but not including, the first Policy Anniversary. Each succeeding Policy
Year is the one-year period from the Policy Anniversary up to, but not
including, the next Policy Anniversary.
PROPORTIONATE (PRORATED): Amounts allocated to Subaccounts on a proportionate
basis are allocated by increasing (or decreasing) a Policy's share in the value
of the affected Subaccounts so that such shares maintain the same ratio to each
other before and after the allocation.
SERIES: A separate investment portfolio of the Fund.
SUBACCOUNTS: Accounts within the VUL Account to which non-loaned assets under a
Policy are allocated.
UNIT: A standard of measurement used in determining the value of a Policy. The
value of a Unit for each Subaccount will reflect the investment performance of
that Subaccount and will vary in dollar amounts.
VALUATION DATE: For any Subaccount, each date on which we set the net asset
value of the Fund.
VALUATION PERIOD: For any Subaccount, the period in days from the end of one
Valuation Date through the next.
VPMO: The Variable Products Mail Operation division of PHL Variable that
receives and processes incoming mail for VULA.
VUL ACCOUNT: PHLVIC Variable Universal Life Account.
VULA: Variable and Universal Life Administration division of PHL Variable.
WE (OUR, US): PHL Variable Insurance Company.
YOU (YOUR): Policyowner of the Policy.
4
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SUMMARY
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1. WHAT IS THE DIFFERENCE BETWEEN THE POLICY AND A CONVENTIONAL FIXED BENEFIT
LIFE INSURANCE POLICY?
Like conventional fixed benefit life insurance, while the Policy remains In
Force, the Policy provides for: (1) the payment of a death benefit to a
Beneficiary upon the Insured's death; (2) the accumulation of Cash Value; and
(3) surrender rights and Policy loan privileges.
The Policy differs from conventional fixed benefit life insurance because
you may allocate premiums to one or more Subaccounts of the VUL Account or to
the GIA. Each Subaccount invests exclusively in a designated portfolio of the
Funds. Depending on the investment experience of the Subaccounts of the VUL
Account, the Policy Value invested in the VUL Account may increase or decrease.
Accordingly, you sustain the investment risk of any depreciation in value of the
underlying assets; likewise you earn the benefits of any appreciation in value.
See "Policy Value."
In addition, unlike conventional fixed benefit life insurance, you also have
the flexibility to make additional premium payments to increase the Policy
Value. Unlike conventional fixed benefit life insurance, however, the Policy
does not require you to follow a fixed premium payment schedule. After payment
of the Issue Premium, failure to make additional premium payments will not in
itself cause the Policy to lapse and, conversely, the payment of additional
premiums will not guarantee that the Policy will remain In Force. Generally, a
lapse will occur when the Cash Surrender Value is insufficient to pay certain
charges deducted on the Monthly Calculation Day and a grace period expires
without payment of the additional amount required. See "Lapse."
If a Whole Life Exchange Option Rider is attached to the Policy, you may
exchange the Policy for a fixed benefit whole life policy. See "Additional Rider
Benefits."
2. IS THERE A GUARANTEED ACCOUNT OPTION?
Yes. You may elect to have premium payments allocated to the GIA. Such
amounts earn a fixed rate of interest. At our sole discretion, we may credit
excess interest. See Appendix A.
3. WHAT IS THE DEATH BENEFIT UNDER THE POLICY?
The Policy provides for the payment of a benefit upon the death of the
Insured. Upon application for a Policy, an applicant designates an Issue
Premium. The Policy shows the face amount of insurance. On the date of the
Insured's death, the death benefit will equal the face amount of the Policy or,
if greater, the Policy Value increased by the applicable percentage set forth in
the Policy. If the increased death benefit option is selected, on the date of
the Insured's death, the death benefit will equal the face amount plus the
Policy Value or, if greater, the Policy Value increased by the applicable
percentage set forth in the Policy. Guaranteed death benefit and living benefits
riders also are available. See "Death Benefit."
4. HOW LONG WILL THE POLICY REMAIN IN FORCE?
The Policy will lapse only when the Cash Surrender Value is insufficient to
pay the monthly deduction (see "Charges and Deductions--Monthly Deductions"),
and the grace period expires without payment of such additional amounts. In this
respect, the Policy differs in two important aspects from a conventional life
insurance policy. First, the failure to pay additional premiums will not
automatically cause the Policy to lapse. Second, the payment of premiums of any
prespecified amount does not guarantee that the Policy will remain In Force. A
rider is available to ensure that premium payments will continue during a period
of disability.
5. WHAT CHARGES ARE THERE IN CONNECTION WITH THE POLICY?
MONTHLY DEDUCTION: During each Policy Month, we make a deduction from the
Policy Value (excluding the value of the loaned portion of the GIA) to pay the
cost of insurance provided under the Policy; the cost of any rider benefits
provided; any unpaid balance of the issue expense charge and an administrative
charge as shown on the Schedule Page of the Policy. The administrative charge
may vary but in no event will it exceed $10 per month. Currently, the
administrative charge is $5 per month. See "Charges and Deductions."
OTHER CHARGES: A fee equal to the lesser of $25 or 2% of the partial
surrender amount paid is deducted from the Policy Value for each partial
surrender. A partial surrender charge equal to a prorated portion of the
applicable surrender charge that would apply to a full surrender, determined by
applying a formula, also is assessed against the VUL Account Subaccounts or the
GIA when a partial surrender is made.
We do not currently deduct charges from the VUL Account or the GIA for
federal or state income taxes. If we determine that such taxes may be imposed,
we may make deductions from the VUL Account to pay these taxes.
PHL Variable charges each Subaccount of the VUL Account the daily equivalent
of 0.80% for the first 15 years and then 0.25% annually of the current value of
the Subaccount's net assets for its assumption of certain mortality and expense
risks.
Premium amounts also are reduced by a premium tax charge of 2.25%, a federal
tax charge of 1.50% and, for payments made during a grace period, by the amount
needed to cover any monthly deductions during the grace period.
In addition, certain charges are deducted from the assets of the Funds. For
investment advisory services, each Series of a Fund pays the adviser a separate
monthly fee based on its average daily net assets during the year. See "Charges
and Deductions--Other Charges."
6. IS THERE A RIGHT TO CANCEL PERIOD?
Yes. You may cancel the Policy within 10 days (or longer in some states)
after you receive it, or 10 days after we mail or deliver a written notice of
withdrawal to you, or within 45 days of completing the application, whichever is
latest.
7. HOW ARE PREMIUMS ALLOCATED?
If you elect the Temporary Money Market Allocation Amendment in the
application, we will allocate the entire Issue Premium, less applicable charges,
to the Money Market Subaccount of the VUL Account. We require this election for
all applicants in certain states and also for those applicants who indicate on
their application that they are replacing existing insurance. At the expiration
of the Right to Cancel Period for such Policyowners, we will allocate the Policy
Value among the Subaccounts of the VUL Account or to the GIA according
5
<PAGE>
to the Policyowner's allocation instructions in the application for insurance.
All other Policyowners will have their Issue Premium less applicable charges
allocated according to the instructions in the application on the date we
receive it without first having the premium placed in the Money Market
Subaccount. The Policy Value may be allocated among the available Subaccounts of
the VUL Account, each of which invests in shares of a designated portfolio of
the Funds, or to the GIA.
8. AFTER THE INITIAL ALLOCATION, MAY I CHANGE THE ALLOCATION OF POLICY VALUE?
Yes. You may transfer amounts among the Subaccounts of the VUL Account or
the GIA. We permit only one transfer per Policy Year from the unloaned portion
of the GIA. The amount of that transfer is limited to the higher of $1,000 or
25% of the value of the Policy in the unloaned portion of the GIA. Also, we
reserve the right to require that transfers be made by Written Request. We
further reserve the right to permit transfers of less than $500 only if the
entire balance in the Subaccount of the VUL Account or the GIA is transferred. A
systematic transfer program is available. See "Transfer of Policy Value."
9. MAY THE POLICY BE SURRENDERED?
Yes. You may totally surrender the Policy at any time and receive the Cash
Surrender Value. Subject to certain limitations, you also may partially
surrender the Policy anytime before the Maturity Date. In the future, PHL
Variable may set a minimum partial surrender amount, not to exceed $500. See
"Surrenders--Partial Surrenders." A partial surrender will result in a decrease
in the death benefit under the Policy. See "Death Benefit." If the Policy is
totally or partially surrendered during the first 10 Policy Years, a surrender
charge will apply. See "Surrender Charge." In addition, there may be certain tax
consequences as the result of a surrender. For example, a Policy may be a
modified endowment contract if the amount of premiums paid during the first
seven Policy Years is more than the amount that would have been paid if the
Policy had provided for paid-up benefits after the payment of seven level annual
premiums. Distributions such as loans and full or partial surrenders under a
modified endowment contract may be taxable income to the extent they exceed the
premiums paid. If such income is distributed before you attain age 59 1/2, a 10%
penalty tax may be imposed. See "Federal Tax Considerations."
10. WHAT IS THE POLICY'S LOAN PRIVILEGE?
You may obtain Policy loans in an amount up to 90% of the result of
subtracting the remaining surrender charge from the Policy Value. The interest
rate on a loan is at an effective annual rate as stated in the Policy,
compounded daily and payable on each Policy Anniversary in arrears. The
requested loan amount is transferred from the VUL Account to the loaned portion
of the GIA and is credited with interest at an effective annual rate as stated
in the Policy. PHL Variable reserves the right not to allow loans of less than
$500 unless the loans are to pay premiums on another policy issued by PHL
Variable. See "The Policy--Policy Loans."
The proceeds of Policy loans may be subject to federal income tax under
certain circumstances. See "Federal Tax Considerations."
11. HOW ARE INSURANCE BENEFITS PAID?
Surrender and death benefits under the Policy may be paid in a lump sum or
under one of the payment options set forth in the Policy. See "Payment Options."
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
From time to time, the VUL Account may include the performance history of
any or all Subaccounts, in advertisements, sales literature or reports.
Performance information about each Subaccount is based on past performance only
and is not an indication of future performance. THESE RATES OF RETURN ARE NOT AN
ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE. THEY DO NOT ILLUSTRATE HOW ACTUAL
PERFORMANCE WILL AFFECT THE BENEFITS UNDER A POLICY BECAUSE THEY DO NOT REFLECT
COST OF INSURANCE AND PREMIUM TAX CHARGES AND SURRENDER CHARGES, IF APPLICABLE.
FOR THIS INFORMATION, SEE APPENDIX B "ILLUSTRATIONS OF DEATH BENEFITS, POLICY
VALUES AND CASH SURRENDER VALUES." Performance information may be expressed as
yield and effective yield of the Money Market Subaccount, as yield of the
Multi-Sector Subaccount and as total return of any Subaccount. Current yield for
the Money Market Subaccount will be based on the income earned by the Subaccount
over a given seven-day period (less a hypothetical charge reflecting deductions
for expenses taken during the period) and then annualized, i.e., the income
earned in the period is assumed to be earned every seven days over a 52-week
period and is stated in terms of an annual percentage return on the investment.
Effective yield is calculated similarly but reflects the compounding effect of
earnings on reinvested dividends. Yield and effective yield reflect the
Mortality and Expense Risk charge on the VUL Account level.
Yield calculations of the Money Market Subaccount used for illustration
purposes are based on the consideration of a hypothetical participant's account
having a balance of exactly one Unit at the beginning of a seven-day period,
which period will end on the date of the most recent financial statements. The
yield for the Subaccount during this seven-day period will be the change in the
value of the hypothetical participant's account's original Unit. The following
is an example of this yield calculation for the Money Market Subaccount based on
a seven-day period ending December 31, 1997.
Example:
Assumptions:
Value of hypothetical pre-existing account with
exactly one Unit at the beginning of the period:................ 1.439995
Value of the same account (excluding capital
changes) at the end of the seven-day period:.................... 1.441014
Calculation:
Ending account value ........................................... 1.441014
Less beginning account value ................................... 1.439995
Net change in account value .................................... 0.001019
Base period return:
(adjusted change/beginning account value) ...................... 0.000708
Current yield = return x (365/7) = ............................... 3.69%
Effective yield = [(1 + return)(365/7)] - 1 = .................... 3.76
6
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The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time or other investment companies, due to charges which will
be deducted on the Account level.
For the Multi-Sector Subaccount, quotations of yield will be based on all
investment income per Unit earned during a given 30-day period (including
dividends and interest), less expenses accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
maximum offering price per Unit on the last day of the period.
When a Subaccount advertises its total return, it usually will be calculated
for one year, five years and ten years or since inception if the Subaccount has
not been in existence for at least ten years. Total return is measured by
comparing the value of a hypothetical $10,000 investment in the Subaccount at
the beginning of the relevant period to the value of the investment at the end
of the period, assuming the reinvestment of all distributions at net asset value
and the deduction of the Mortality and Expense Risk, Issue Expense and Monthly
Administrative charges.
For those Subaccounts within the VUL Account that have not been available to
policyholders for one of the quoted periods, the average annual total return
quotations will show the investment performance such Subaccount would have
achieved (reduced by the applicable charges) had it been available to invest in
shares of the Fund for the period quoted.
Below are quotations of average annual total return calculated as described
above. POLICY CHARGES (INCLUDING COST OF INSURANCE, PREMIUM TAX CHARGES, PREMIUM
SALES CHARGES AND SURRENDER CHARGES) ARE NOT REFLECTED.
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED 12/31/97
-----------------------------
COMMENCE- 10 LIFE OF
SUBACCOUNT MENT DATE 1 YEAR 5 YEARS YEARS FUND
- ---------- --------- ------ ------- ----- ----
Multi-Sector..... 1/1/83 7.92% 9.31% 9.32% 9.66%
Balanced......... 5/1/92 14.61% 9.38% N/A 9.86%
Allocation....... 9/17/84 17.34% 9.46% 10.70% 11.80%
Growth........... 1/1/83 17.67% 14.94% 15.99% 17.20%
International.... 5/1/90 8.87% 13.34% N/A 7.32%
Money Market..... 10/10/82 2.17% 2.79% 4.17% 5.04%
Real Estate...... 5/1/95 18.61% N/A N/A 25.23%
Theme............ 1/29/96 13.86% N/A N/A 11.87%
Asia............. 9/17/96 (34.41%) N/A N/A (28.08%)
Enhanced Index... 7/15/97 N/A N/A N/A 3.57%
U.S. Small Cap... 5/1/95 25.80% N/A N/A 32.34%
Int'l. Small Cap. 5/1/95 (4.27%) N/A N/A 21.28%
TPT Allocation...
Stock............
TPT Int'l........ [To Be Filed By Amendment]
Dev. Mkts........
ANNUAL TOTAL RETURN(1)
-------------------
MULTI- ALLO- INTER- MONEY
YEAR SECTOR BALANCED CATION GROWTH NATIONAL MARKET
- ---- ------ -------- ------ ------ -------- ------
1983.... 5.16% N/A N/A 31.84% N/A 7.51%
1984.... 10.45% N/A (1.31%) 9.79% N/A 9.34%
1985.... 19.65% N/A 26.33% 33.85% N/A 7.17%
1986.... 18.34% N/A 14.77% 19.51% N/A 5.66%
1987.... 0.28% N/A 11.66% 6.08% N/A 5.67%
1988.... 9.61% N/A 1.53% 3.09% N/A 6.60%
1989.... 6.92% N/A 18.53% 34.53% N/A 8.03%
1990.... 4.54% N/A 5.15% 3.32% (8.59%) 7.51%
1991.... 18.66% N/A 28.27% 41.60% 18.79% 5.14%
1992.... 9.23% 9.06% 9.79% 9.41% (13.52%) 2.75%
1993.... 14.99% 7.75% 10.12% 18.75% 37.33% 2.06%
1994.... (6.21%) (3.61%) (2.19%) 0.66% (0.73%) 3.01%
1995.... 22.56% 22.37% 17.27% 29.85% 8.72% 4.86%
1996.... 11.52% 9.68% 8.18% 11.69% 17.71% 4.19%
1997.... 10.21% 17.00% 19.78% 20.12% 11.16% 4.35%
REAL ENHANCED U.S. INT'L
YEAR ESTATE THEME ASIA INDEX SMALL CAP SMALL CAP
- ---- ------ ----- ---- ----- --------- ---------
1995.... 17.19%(3) N/A N/A N/A 16.01%(3) 33.96%(3)
1996.... 32.06% 9.55%(3) (0.06%)(3) N/A 45.64% 31.15%
1997.... 21.09% 16.25% (32.94%) 5.46%(3) 28.41% (2.24%)
TPT TPT
YEAR ALLOCATION(2) STOCK(2) INT'L(2) DEV. MKTS.(2)
- ---- ---------- ----- ----- ----------
[To Be Filed By Amendment]
1989....
1990....
1991....
1992....
1993....
1994....
1995....
1996....
1997....
(1) Sales charges have not been deducted from the Annual Total Returns.
(2) Returns shown prior to 1997, the inception year of the Class 2 shares, are
derived from the historical performance of Class 1 shares. These returns
have been adjusted to reflect the higher operating expenses for Class 2
shares, which includes a 12b-1 fee of .25% annually. Past fee waivers by the
Investment Manager of the Templeton Developing Markets Fund increased total
returns.
(3) Since inception.
Advertisements, sales literature and other communications may contain
information about any Series' or Advisers' current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the Series may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the Series may separate their
cumulative and average annual returns into income results and capital gains or
losses; or cite separately as a return figure the equity or bond portion of a
Series' portfolio; or compare a Series' equity or bond return figure to
well-known indices of market performance including, but not limited to, Standard
& Poor's 500 Composite Stock Price Index (the "S&P 500"), Dow Jones Industrial
Average, First Boston High Yield Index and Solomon Brothers Corporate and
Government Bond Indices.
The VUL Account may, from time to time, include in advertisements containing
total returns, the ranking of those performance figures relative to such figures
for groups of Subaccounts having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc. ("Lipper"), CDA
Investment Technologies, Inc. ("CDA"), Weisenberger Financial Services, Inc. and
Morningstar, Inc. Additionally, the Funds may compare a Series performance
results to other investment or savings vehicles (such as certificates of
deposit) and may refer to results published in various publications such as
Changing Times, Forbes, Fortune, Money, Barrons, Business Week, Investor's
Business Daily, The Stanger Register, Stanger's Investment Adviser, The Wall
Street Journal, The New York Times, Consumer Reports, Registered
7
<PAGE>
Representative, Financial Planning, Financial Services Weekly, Financial World,
U.S. News and World Report, Standard & Poor's, The Outlook and Personal
Investor. The Funds may, from time to time, illustrate the benefits of tax
deferral by comparing taxable investments to investments made through
tax-deferred retirement plans. The total return also may be used to compare the
performance of a Series against certain widely acknowledged outside standards or
indices for stock and bond market performance, such as the S&P 500, Dow Jones
Industrial Average, Europe Australia Far East Index (EAFE), Consumer Price
Index, Lehman Brothers Corporate Index and Lehman Brothers T-Bond Index. The S&P
500 is a commonly quoted measure of stock market performance and represents
common stocks of companies of varying sizes segmented across 90 different
industries which are listed on the NYSE, the American Stock Exchange and traded
over the NASDAQ National Market System.
The Funds' Annual Reports, available upon request and without charge,
contain a discussion of the performance of the Funds and a comparison of that
performance to a securities market index.
PHL VARIABLE AND THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PHL VARIABLE
PHL Variable is a wholly-owned indirect subsidiary of Phoenix Home Life
Mutual Insurance Company ("Phoenix"). Its executive office is located at One
American Row, Hartford, Connecticut 06102 and its main administrative office is
located at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. PHL
Variable is a Connecticut stock company formed on April 24, 1981. On December
31, 1997, it had assets of $428 million. PHL Variable offers flexible premium
variable universal life policies, term life insurance policies and variable
annuities through its own field force of agents and through brokers. Its
operations are currently conducted in 47 states.
THE VUL ACCOUNT
On September 10, 1998, PHL Variable established the VUL Account, a separate
account created under the insurance laws of Connecticut. The VUL Account is
registered with the SEC as a unit investment trust under the Investment Company
Act of 1940 (the "1940 Act") and it meets the definition of a "separate account"
under the 1940 Act. Registration under the 1940 Act does not involve supervision
of the management or investment practices or policies of the VUL Account or PHL
Variable.
Under Connecticut law, all income, gains or losses of the VUL Account,
whether realized or not, must be credited to or charged against the amounts
placed in the VUL Account without regard to the other income, gains and losses
of PHL Variable. The assets of these accounts may not be charged with
liabilities arising out of any other business that PHL Variable may conduct.
Obligations under the Policies are obligations of PHL Variable.
Contributions to the GIA are not invested in the VUL Account; rather, they
become part of the general account of PHL Variable (the "General Account"). The
General Account supports all insurance and annuity obligations of PHL Variable
and is made up of all of its general assets other than those allocated to any
separate account such as the VUL Account. For more complete information
concerning the GIA, see Appendix A.
The VUL Account is divided into Subaccounts, each of which is available for
allocation of Policy Value. In the future, if PHL Variable determines that
marketing needs and investment conditions warrant, PHL Variable may establish
additional Subaccounts, which will be made available to existing Policyowners to
the extent and on a basis determined by PHL Variable. Each Subaccount will
invest solely in shares of the Funds allocable to one of the available Series,
each having the specified investment objective set forth under "Investments of
the VUL Account--Participating Mutual Funds."
PHL Variable does not guarantee the investment performance of the VUL
Account or any of its Subaccounts. The Policy Value allocated to the VUL Account
depends on the investment performance of the Fund. Thus, the Policyowner bears
the full investment risk for all monies invested in the VUL Account.
THE GIA
The GIA is not part of the VUL Account. It is accounted for as part of the
General Account. PHL Variable reserves the right to limit cumulative deposits,
including transfers, to the unloaned portion of the GIA to no more than $250,000
during any one-week period. PHL Variable will credit interest daily on the
amounts allocated under the Policy to the GIA. The credited rate will be uniform
by class. The loaned portion of the GIA will be credited interest at an
effective annual fixed rate of 2%. Interest on the unloaned portion of the GIA
will be credited at an effective annual rate of not less than 4%.
Biweekly, PHL Variable sets the interest rate that will apply to any net
premium or transferred amounts deposited to the unloaned portion of the GIA.
That rate will remain in effect for such deposits for an initial guarantee
period of one full year from the date of deposit. Upon expiration of the initial
one-year guarantee period (and each subsequent one-year guarantee period
thereafter), the rate to be applied to any deposits whose guarantee period has
just ended shall be the same rate as is applied to new deposits allocated to the
GIA at the time that the guarantee period expired. This rate will likewise
remain in effect for a guarantee period of one full year from the date the new
rate is applied. For more complete information concerning the GIA, see Appendix
A.
THE POLICY
- --------------------------------------------------------------------------------
INTRODUCTION
The Policy is a flexible premium variable life insurance policy. It has a
death benefit, Cash Surrender Value and loan privilege such as is associated
with a traditional fixed benefit whole life policy. The Policy differs from a
fixed benefit whole life policy, however, because you specify into which of
several Subaccounts of the VUL Account or GIA the net premium is to be
allocated. Each Subaccount of the VUL Account, in turn, invests its assets
exclusively in a portfolio of the Funds. The Policy Value varies according to
the investment performance of the Series to which Policy Value has been
allocated.
ELIGIBLE PURCHASERS
Any person up to the age of 75 is eligible to be insured under a newly
purchased Policy after providing acceptable evidence of insurability. A person
can purchase a Policy to insure the life of another person provided that the
Policyowner has an insurable interest in the life of the Insured, and the
Insured consents.
8
<PAGE>
PREMIUM PAYMENT
The minimum Issue Premium for a Policy is generally 1/6 of the Planned
Annual Premium. The Issue Premium is due on the Policy Date. The Insured must be
alive when the Issue Premium is paid. Thereafter, the amount and payment
frequency of planned premiums are as shown on the Schedule Page of the Policy.
All premiums are payable at VPMO, except that the Issue Premium may be paid to
an authorized agent of PHL Variable for forwarding to the Underwriting
Department of PHL Variable.
Any premium payments will be reduced by a premium tax charge of 2.25% and a
federal tax charge of 1.50%. The Issue Premium also will be reduced by the issue
expense charge on a prorated basis in equal monthly installments over a 12-month
period. Any unpaid balance of the issue expense charge will be paid to PHL
Variable upon Policy lapse or termination.
Premium payments received during a grace period also will be reduced by the
amount needed to cover any monthly deductions during the grace period. The
remainder will be applied on the Payment Date to the various Subaccounts of the
VUL Account or to the GIA, based on the premium allocation schedule elected in
the application for the Policy or as later changed. The allocation schedule for
premium payments may be changed by calling VULA or writing to VPMO. Allocations
to the VUL Account Subaccounts or to the GIA must be expressed in terms of whole
percentages.
The number of Units credited to a Subaccount of the VUL Account will be
determined by dividing the portion of the net premium applied to that Subaccount
by the Unit value of the Subaccount on the Payment Date.
You may increase or decrease the planned premium amount or payment frequency
at any time by Written Request to VPMO. PHL Variable reserves the right to limit
increases to such maximums as may be established from time to time. Additional
premium payments may be made at any time. Each premium payment must at least
equal $25 or, if made during a grace period, the payment must equal the amount
needed to prevent lapse of the Policy.
You also may elect a Waiver of Premium Rider. This rider provides for the
waiver of certain premium payments under the Policy under certain conditions
during a period of total disability of the Insured. Under its terms, the
specified premium will be waived upon PHL Variable's receipt of proof that the
Insured is totally disabled and that the disability occurred while the rider was
In Force.
The Policy contains a total premium limit as shown on the Schedule Page.
This limit is applied to the sum of all premiums paid under the Policy. If the
total premium limit is exceeded, you will receive the excess, with interest at
an annual rate of not less than 4%, not later than 60 days after the end of the
Policy Year in which the limit was exceeded. The Policy Value then will be
adjusted to reflect the refund. The amount to be taken from each Subaccount or
the GIA will be allocated in the same manner as provided for monthly deductions
unless you request otherwise In Writing. The total premium limit may be exceeded
if additional premium is needed to prevent lapse or if PHL Variable determines
that additional premium would be permitted by federal laws or regulations.
You may authorize your bank to draw $25 or more from your personal checking
account monthly to purchase Units in any available Subaccount. The amount
designated by you will be automatically invested in the Subaccount of your
choice on the date the bank draws on your account.
Policies sold to officers, directors and employees of PHL Variable (and
their spouses and children) will be credited with an amount equal to the
first-year commission that would apply on the amount of premium contributed.
This option also is available to career agents of PHL Variable (and their
spouses and children).
ALLOCATION OF ISSUE PREMIUM
PHL Variable will generally allocate the Issue Premium less applicable
charges to the VUL Account or to the GIA upon receipt of a completed
application, in accordance with the allocation instructions in the application
for a Policy. However, Policies issued in certain states, and Policies issued in
certain states pursuant to applications which state the Policy is intended to
replace existing insurance, are issued with a Temporary Money Market Allocation
Amendment. Under this Amendment, PHL Variable temporarily allocates the entire
Issue Premium paid less applicable charges (along with any other premiums paid
during the Right to Cancel Period) to the Money Market Subaccount of the VUL
Account, and, at the expiration of the Right to Cancel Period, the Policy Value
of the Money Market Subaccount is allocated among the Subaccounts of the VUL
Account or to the GIA in accordance with the applicant's allocation instructions
in the application for insurance.
RIGHT TO CANCEL PERIOD
A Policy may be returned by mailing or delivering it to PHL Variable within
10 days after the Policyowner receives it (or longer in some states); within 10
days after PHL Variable mails or delivers a written notice of withdrawal right
to the Policyowner; or within 45 days after the applicant signs the application
for insurance, whichever occurs latest (the "Right to Cancel Period"). The
returned Policy is treated as if PHL Variable never issued the Policy and,
except for Policies issued with a Temporary Money Market Allocation Amendment,
PHL Variable will return the sum of the following as of the date PHL Variable
receives the returned Policy: (i) the then current Policy Value less any unpaid
loans and loan interest; plus (ii) any monthly deductions, partial surrender
fees, other charges made under the Policy, including investment advisory fees,
or any Fund expenses deducted. The amount returned for Policies issued with the
Amendment will equal any premiums paid less any unrepaid loans and loan
interest, and less any partial surrender amounts paid.
PHL Variable reserves the right to disapprove an application for processing
within 7 days of receipt at PHL Variable of the completed application for
insurance, in which event PHL Variable will return the premium paid. Even after
approval of the application for processing, PHL Variable reserves the right to
decline issuance of the Policy, in which event PHL Variable will refund the
applicant the same amount as would have been refunded under the Policy had it
been issued but returned for refund during the Right to Cancel Period.
TEMPORARY INSURANCE COVERAGE
On the date the application for a Policy is signed and submitted with the
Issue Premium, PHL Variable issues a Temporary Insurance
9
<PAGE>
Receipt in connection with the application. Under the Temporary Insurance
Receipt, the insurance protection applied for (subject to the limits of
liability and in accordance with the terms set forth in the Policy and in the
Receipt) takes effect on the date of the application.
TRANSFER OF POLICY VALUE
SYSTEMATIC TRANSFER PROGRAM
You may elect to transfer funds automatically among the Subaccounts or the
unloaned portion of the GIA on a monthly, quarterly, semiannual or annual basis
under the Systematic Transfer Program for Dollar Cost Averaging ("Systematic
Transfer Program"). Under this Systematic Transfer Program, the minimum initial
and subsequent transfer amounts are $25 monthly, $75 quarterly, $150
semiannually or $300 annually. You must have an initial value of $1,000 in the
GIA or the Subaccount that funds will be transferred from ("Sending Subaccount")
and if the value in that Subaccount or the GIA drops below the elected transfer
amount, the entire remaining balance will be transferred and no more systematic
transfers will be processed. Funds may be transferred from only one Sending
Subaccount or the GIA, but may be allocated to multiple Subaccounts ("Receiving
Subaccount"). Under the Systematic Transfer Program, you may make more than one
transfer per Policy Year from the GIA, in approximately equal amounts over a
minimum 18-month period.
Only one Systematic Transfer Program can be active per Policy. After the
completion of the Systematic Transfer Program, you can call VULA at (800)
892-4885 or send a written request to VPMO to begin a new Systematic Transfer
Program.
All transfers under the Systematic Transfer Program will be executed on the
basis of the respective values as of the first of the month following receipt of
the transfer request. If the first of the month falls on a holiday or weekend,
then the transfer will be processed on the next business day.
NONSYSTEMATIC TRANSFERS
Transfers among available Subaccounts or the GIA and changes in premium
payment allocations may be requested In Writing or by calling (800) 892-4885,
between the hours of 8:30 a.m. and 4:00 p.m. Eastern Time and will be executed
on the date the request is received at VPMO, except as noted below. Telephone
transfer orders and allocation changes also will be accepted on your behalf from
your registered representative unless you elect In Writing not to authorize such
changes. PHL Variable and Phoenix Equity Planning Corporation ("PEPCO") will
employ reasonable procedures to confirm that telephone instructions are genuine.
They will require verification of account information and will record telephone
instructions on tape. All telephone transfers will be confirmed In Writing to
you. PHL Variable and PEPCO may be liable for following telephone instructions
for transfers that prove to be fraudulent to the extent that procedures
reasonably designed to prevent unauthorized transfers are not followed. However,
you would assume the risk of loss resulting from instructions entered by an
unauthorized third party that PHL Variable and PEPCO reasonably believe to be
genuine. These telephone transfer privileges may be modified or terminated at
any time and during times of extreme market volatility, may be difficult to
exercise. In such cases, you should submit a Written Request.
PHL Variable reserves the right to permit transfers of less than $500 only
if the entire balance in the Subaccount or the GIA is transferred or if the
Systematic Transfer Program has been elected.
PHL Variable reserves the right to prohibit a transfer to any Subaccount of
the VUL Account where the resultant value of the Policy's share in that
Subaccount immediately after the transfer would be less than $500. It further
reserves the right to require that the entire balance of a Subaccount or the GIA
be transferred if the value of the Policy's share in the Subaccount would,
immediately after the transfer, be less than $500.
Unless PHL Variable agrees otherwise or the Systematic Transfer Program has
been elected, you may make only one transfer per Policy Year from the unloaned
portion of the GIA and the amount that may be transferred cannot exceed the
greater of $1,000 or 25% of the value of the Policy in the unloaned portion of
the GIA at the time of the transfer. Non-systematic transfers from the unloaned
portion of the GIA will be effectuated on the date of receipt by VPMO.
PHL Variable reserves the right to limit the number of Subaccounts you may
elect to a total of 18 at any one time and/or over the life of the Policy unless
required to be less to comply with changes in federal and/or state regulation,
including tax, securities and insurance law.
For policies issued with the Temporary Money Market Allocation Amendment,
transfers may not be made until termination of the Right to Cancel Period.
Because excessive trading can hurt Fund performance and harm Policyowners,
PHL Variable reserves the right to temporarily or permanently terminate exchange
privileges or reject any specific order from anyone whose transactions seem to
follow a timing pattern, including those who request more than one exchange out
of a Subaccount within any 30-day period. PHL Variable will not accept batch
transfer instructions from registered representatives (acting under powers of
attorney for multiple Policyowners), unless the registered representative's
broker-dealer firm and PHL Variable have entered into a third party transfer
service agreement.
DETERMINATION OF SUBACCOUNT VALUES
The Unit value of each Subaccount of the VUL Account was set by PHL Variable
on the first Valuation Date of each such Subaccount. The Unit value of a
Subaccount of the VUL Account on any other Valuation Date is determined by
multiplying the Unit value of that Subaccount on the just prior Valuation Date
by the Net Investment Factor for that Subaccount for the then current Valuation
Period. The Unit value of each Subaccount of the VUL Account on a day other than
a Valuation Date is the Unit value on the next Valuation Date. Unit values are
carried to 6 decimal places. The Unit value of each Subaccount of the VUL
Account on a Valuation Date is determined at the end of that day.
The Net Investment Factor for each Subaccount of the VUL Account is
determined by the investment performance of the assets held by the Subaccount
during the Valuation Period. Each valuation will follow applicable law and
accepted procedures. The Net Investment Factor is equal to item (D) below
subtracted from the result of dividing the sum of items (A) and (B) by item (C).
10
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(A) The value of the assets in the Subaccount on the current Valuation
Date, including accrued net investment income and realized and
unrealized capital gains and losses, but excluding the net value of any
transactions during the current Valuation Period.
(B) The amount of any dividend (or, if applicable, any capital gain
distribution) received by the Subaccount if the "ex-dividend" date for
shares of the Fund occurs during the current Valuation Period.
(C) The value of the assets in the Subaccount as of the just prior
Valuation Date, including accrued net investment income and realized
and unrealized capital gains and losses, and including the net value of
all transactions during the Valuation Period ending on that date.
(D) The sum of the following daily charges multiplied by the number of days
in the current Valuation Period:
1. the mortality and expense risk charge; and
2. the charge, if any, for taxes and reserves for taxes on investment
income, and realized and unrealized capital gains.
DEATH BENEFIT
GENERAL
The death benefit (under Option 1) equals the Policy's face amount on the
date of the Insured's death or, if greater, the minimum death benefit on the
date of death. Under Option 2, the death benefit equals the Policy's face amount
on the date of the Insured's death plus the Policy Value. Under either Option,
the minimum death benefit is the Policy Value on the date of death of the
Insured increased by the applicable percentage from the table contained in the
Policy, based on the Insured's Attained Age at the beginning of the Policy Year
in which the death occurs. If no option is elected, Option 1 will apply.
GUARANTEED DEATH BENEFIT OPTION
For Policies with a face amount of at least $50,000, a guaranteed death
benefit rider may be purchased. Under this Policy rider, if you pay the required
premium each year as specified in the rider, the death benefit selected will be
guaranteed for a certain specified number of years, regardless of the investment
performance of the Policy, and will equal either the initial face amount or the
face amount as later changed by increases or decreases. In order to keep this
guaranteed death benefit In Force, there may be limitations on the amount of
partial surrenders or decreases in face amount permitted.
LIVING BENEFITS OPTION
In the event of a terminal illness of the Insured, an accelerated payment of
up to 75% of the Policy's death benefit (up to a maximum of $250,000) is
available if a Living Benefits Rider has been purchased. The minimum face amount
of the Policy after any such accelerated benefit payment is $10,000.
REQUESTS FOR INCREASE IN FACE AMOUNT
Any time after the first Policy Anniversary, you may request an increase in
the face amount of insurance provided under the Policy. Requests for face amount
increases must be made In Writing, and PHL Variable requires additional evidence
of insurability. The effective date of the increase generally will be the Policy
Anniversary following approval of the increase. The increase may not be less
than $25,000 and no increase will be permitted after the Insured's age 75. The
charge for the increase is $1.50 per thousand of face amount increase requested
subject to a maximum of $600. No additional monthly administration charge will
be assessed for face amount increases. PHL Variable will deduct any charges
associated with the increase (the increases in cost of insurance charges), from
the Policy Value, whether or not you pay an additional premium in connection
with the increase. The surrender charge applicable to the Policy also will
increase. At the time of the increase, the Cash Surrender Value must be
sufficient to pay the monthly deduction on that date, or additional premiums
will be required to be paid on or before the effective date. Also, a new Right
to Cancel Period (see "The Policy--Right to Cancel Period") will be established
for the amount of the increase. For a discussion of possible implications of a
material change in the Policy resulting from the increase, see "Material Change
Rules."
PARTIAL SURRENDER AND DECREASES IN FACE AMOUNT: EFFECT ON
DEATH BENEFIT
A partial surrender or a decrease in face amount generally decreases the
death benefit. Upon a decrease in face amount or partial surrender, a partial
surrender charge will be deducted from Policy Value based on the amount of the
decrease or partial surrender. With a decrease in face amount, the death benefit
under a Policy would be reduced on the next Monthly Calculation Day. With a
partial surrender, the death benefit under a Policy would be reduced
immediately. A decrease in the death benefit may have certain tax consequences.
See "Federal Tax Considerations."
REQUESTS FOR DECREASE IN FACE AMOUNT
You may request a decrease in face amount at any time after the first Policy
Year. Unless PHL Variable agrees otherwise, the decrease must at least equal
$10,000 and the face amount remaining after the decrease must at least equal
$25,000. All face amount decrease requests must be In Writing and will be
effective on the first Monthly Calculation Day following the date PHL Variable
approves the request. A partial surrender charge will be deducted from the
Policy Value based on the amount of the decrease. The charge will equal the
applicable surrender charge that would apply to a full surrender multiplied by a
fraction (the decrease in face amount divided by the face amount of the Policy
before the decrease).
SURRENDERS
GENERAL
At any time during the lifetime of the Insured(s) and while the Policy is In
Force, you may partially or fully surrender the Policy by sending a Written
Request in a form satisfactory to PHL Variable to VPMO, along with the Policy if
PHL Variable so requires. The amount available for surrender is the Cash
Surrender Value at the end of the Valuation Period during which the surrender
request is received at VPMO.
Upon partial or full surrender, PHL Variable generally will pay the amount
surrendered to the Policyowner within seven days after PHL Variable receives the
Written Request for the surrender. Under certain circumstances, the surrender
payment may be postponed. See "General Provisions--Postponement of Payments."
For the federal tax effects of partial and full surrenders, see "Federal Tax
Considerations."
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FULL SURRENDERS
If the Policy is being fully surrendered, the Policy itself must be returned
to VPMO, along with the Written Request and Surrender of all claims in a form
satisfactory to PHL Variable. You may elect to have the amount paid in a lump
sum or under a payment option. See "Surrender Charge" and "Payment Options."
PARTIAL SURRENDERS
You may obtain a partial surrender of the Policy by requesting a partial
Cash Surrender Value payment. You may do this during the lifetime of the Insured
while the Policy is In Force with a Written Request to VPMO. PHL Variable
reserves the right to require that the Policy be returned before payment is
made. A partial surrender will be effective on the date the Written Request is
received or, if required, the date the Policy is received. Surrender proceeds
may be applied under any of the payment options described under "Payment of
Proceeds--Payment Options."
PHL Variable reserves the right not to allow partial surrenders of less than
$500. In addition, if the share of the Policy Value in any Subaccount or in the
GIA that would be reduced as a result of a partial surrender would, immediately
after the partial surrender, be less than $500, PHL Variable reserves the right
to require that as part of any partial surrender, the entire remaining balance
in that Subaccount or the GIA be surrendered.
Upon a partial surrender the Policy Value will be reduced by the sum of the
following:
(i) The Partial Surrender Amount Paid. This amount comes from a reduction
in the Policy's share in the value of each Subaccount or the GIA
based on the allocation requested at the time of the partial
surrender. If no allocation request is made, the assessment to each
Subaccount will be made in the same manner as that provided for
monthly deductions.
(ii) The Partial Surrender Fee. This fee is the lesser of $25 or 2% of the
partial surrender amount paid. The assessment to each Subaccount or
the GIA will be made in the same manner as provided for the partial
surrender amount paid.
(iii) A Partial Surrender Charge. This charge is equal to a prorated
portion of the applicable surrender charge that would apply to a full
surrender, determined by multiplying the applicable surrender charge
by a fraction (equal to the partial surrender amount payable divided
by the result of subtracting the applicable surrender charge from the
Policy Value). This amount is assessed against the Subaccount or the
GIA in the same manner as provided for the partial surrender amount
paid.
The Cash Surrender Value will be reduced by the partial surrender amount
paid plus the partial surrender fee. The face amount of the Policy also will be
reduced by the same amount as the Policy Value is reduced as described above.
POLICY LOANS
While the Policy is In Force, a loan may be obtained against the Policy up
to the available loan value. The loan value on any day is 90% of the result of
subtracting the then remaining surrender charge from the Policy Value. The
available loan value is the loan value on the current day less any outstanding
Debt.
The amount of any loan will be added to the loaned portion of the GIA and
subtracted from the Policy's share of the Subaccounts or the unloaned portion of
the GIA, based on the allocation requested at the time of the loan. The total
reduction will equal the amount added to the loaned portion of the GIA.
Allocations generally must be expressed in terms of whole percentages. If no
allocation request is made, the amount subtracted from the share of each
Subaccount or the unloaned portion of the GIA will be determined in the same
manner as provided for monthly deductions. Interest will be credited and the
loaned portion of the GIA will increase at an effective annual rate of 2%,
compounded daily and payable in arrears. At the end of each Policy Year and at
the time of any Debt repayment, interest credited to the loaned portion of the
GIA will be transferred to the unloaned portion of the GIA.
Debt may be repaid at any time during the lifetime of the Insured while the
Policy is In Force. Any Debt repayment received by PHL Variable during a grace
period will be reduced to cover any overdue monthly deductions and only the
balance will be applied to reduce the Debt. Such balance, in excess of any
outstanding accrued loan interest, will be applied to reduce the loaned portion
of the GIA and will be transferred to the unloaned portion of the GIA to the
extent that loaned amounts taken from such Account have not been previously
repaid. Otherwise, such balance will be transferred among the Subaccounts as the
Policyowner requests upon repayment and, if no allocation request is made,
according to the most recent premium allocation schedule on file.
While there is outstanding Debt on the Policy, any payments received by PHL
Variable for the Policy will be applied directly to reduce the Debt unless
specified as a premium payment by the Policyowner. Until the Debt is fully
repaid, additional Debt repayments may be made at any time during the lifetime
of the Insured while the Policy is In Force.
Failure to repay a Policy loan or to pay loan interest will not terminate
the Policy except as otherwise provided under the terms of the Policy concerning
the grace period and lapse.
The proceeds of Policy loans may be subject to federal income tax under
certain circumstances. See "Federal Tax Considerations."
In the future, PHL Variable may not allow Policy loans of less than $500,
unless such loan is used to pay a premium on another PHL Variable or Phoenix
policy.
You will pay interest on the loan at an effective annual rate, compounded
daily and payable in arrears. The loan interest rates in effect are as follows:
4% for Policy Years 1 through 10 (or the Insured's age 65 if earlier)
3% through Policy Year 15
2 1/2% for Policy Years 16 and thereafter
At the end of each Policy Year, any interest due on the Debt will be treated
as a loan and will be offset by a transfer from the Policyowner's values to the
value of the loaned portion of the GIA.
A Policy loan, whether or not repaid, has a permanent effect on the Policy
Value because the investment results of the Subaccounts or
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unloaned portion of the GIA will apply only to the amount remaining in the
Subaccounts or the unloaned portion of the GIA. The longer a loan is
outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the Subaccounts or the unloaned portion of the GIA
earn more than the annual interest rate for funds held in the loaned portion of
the GIA, Policy Value does not increase as rapidly as it would have had no loan
been made. If the Subaccounts or the GIA earn less than the annual interest rate
for funds held in the loaned portion of the GIA, Policy Value is greater than it
would have been had no loan been made. A Policy loan, whether or not repaid,
also has an effect on the Policy's Death Benefit due to any resulting
differences in Cash Surrender Value.
LAPSE
Unlike conventional life insurance policies, the payment of the Issue
Premium, no matter how large, or the payment of additional premiums will not
necessarily continue the Policy In Force to its Maturity Date.
If on any Monthly Calculation Day during the first three Policy Years, the
Policy Value is insufficient to cover the monthly deduction, a grace period of
61 days will be allowed for the payment of an amount equal to three times the
monthly deduction. If on any Monthly Calculation Day during any subsequent
Policy Year, the Cash Surrender Value (which has become positive) is less than
the required monthly deduction, a grace period of 61 days will be allowed for
the payment of an amount equal to three times the required monthly deduction.
However, during the first five Policy Years or until the Cash Surrender Value
becomes positive for the first time, the Policy will not lapse as long as all
premiums planned at issue have been paid.
The Policy will continue In Force during any such grace period, although
Subaccount transfers, loans, partial or full surrenders will not be permitted.
Failure to pay the additional amount within the grace period will result in
lapse of the Policy, but not before 30 days have elapsed since PHL Variable
mailed written notice to you. If a premium payment for the additional amount is
received by PHL Variable during the grace period, any amount of premium over
what is required to prevent lapse will be allocated among the Subaccounts of the
VUL Account or to the GIA in accordance with the then current premium allocation
schedule. In determining the amount of "excess" premium to be applied to the
Subaccounts or the GIA, PHL Variable will deduct the premium tax and the amount
needed to cover any monthly deductions made during the grace period. If the
Insured dies during the grace period, the death benefit will equal the amount of
the death benefit immediately prior to the commencement of the grace period.
PAYMENT OF PREMIUMS DURING PERIOD OF DISABILITY
You also may elect a Waiver of Premium Rider. This rider provides for the
waiver of certain premium payments under the Policy under certain conditions
during a period of total disability of the Insured. Under its terms, the
specified premium will be waived upon PHL Variable's receipt of proof that the
Insured is totally disabled and that the disability occurred while the rider was
In Force. The terms of this rider may vary by state.
ADDITIONAL INSURANCE OPTIONS
While the Policy is In Force and you are insurable, you will have the option
to purchase additional insurance on the same Insured with the same guaranteed
rates as the Policy without being assessed an issue expense charge. PHL Variable
will require evidence of insurability. Charges will be adjusted for the
Insured's new Attained Age and any change in risk classification. However, if
elected on the application, you may, at predetermined future dates, purchase
additional insurance protection on the same Insured without evidence of
insurability.
In addition, once each Policy Year, you may request an increase in face
amount. This request should be made within 90 days prior to the Policy
Anniversary and is subject to an issue expense charge of $1.50 per $1,000 of
increase in face amount, up to a maximum of $600, and to PHL Variable's receipt
of adequate evidence of insurability. A Right to Cancel Period as described in
"The Policy" section of this Prospectus applies to each increase in face amount.
ADDITIONAL RIDER BENEFITS
You may elect additional benefits under the Policy, and you may cancel these
benefits at any time. A charge will be deducted monthly from the Policy Value
for each additional rider benefit chosen except where noted below. More details
will be included in the form of a rider to the Policy if any of these benefits
is chosen. The following benefits are currently available and additional riders
may be available as described in the Policy.
[bullet] DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER
PHL Variable waives the specified premium if the Insured becomes
totally disabled and the disability continues for at least six months.
Premiums will be waived to the Policy Anniversary nearest the Insured's
65th birthday (provided that the disability continues). If premiums
have been waived continuously during the entire five years prior to
such date, the waiver will continue beyond that date. The premium will
be waived upon PHL Variable's receipt of notice that the Insured is
totally disabled and that the disability occurred while the rider was
In Force.
[bullet] ACCIDENTAL DEATH BENEFIT RIDER
An additional death benefit will be paid (1) if the Insured dies
from bodily injury that results from an accident; (2) if the Insured
dies no later than 90 days after injury; and (3) before the Policy
Anniversary nearest the Insured's 75th birthday.
[bullet] DEATH BENEFIT PROTECTION RIDER
The purchase of this rider provides that the death benefit will be
guaranteed. The amount of the guaranteed death benefit is equal to the
initial face amount, or the face amount that later may be increased or
decreased by you provided that certain minimum premiums are paid.
Unless PHL Variable agrees otherwise, the initial face amount and the
face amount remaining after any decrease must at least equal $50,000
and the minimum issue age of the Insured is 20. Three (3) Death Benefit
Guarantee periods are available. The minimum premium required to
maintain the guaranteed death benefit is based on the length of the
guarantee period as elected on the application. The three available
guarantee periods are:
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Level: Expiry Date of Death Benefit Guaranteed, the later of:
1 The Policy Anniversary nearest the Insured's 70th
birthday or the 7th Policy Year
2 The Policy Anniversary nearest the Insured's 80th
birthday or the 10th Policy Year
3 The Policy Anniversary nearest the Insured's 95th birthday.
Level 1 or 2 guarantees may be extended provided that the Policy's Cash
Surrender Value is sufficient and you pay the new Minimum Required Premium.
[bullet] WHOLE LIFE EXCHANGE OPTION RIDER
This rider permits you to exchange the Policy for a fixed benefit
whole life policy at the later of age 65 or Policy Year 15. There is no
charge for this rider.
[bullet] PURCHASE PROTECTION PLAN RIDER
Under this rider you may, at predetermined future dates, purchase
additional insurance protection without evidence of insurability.
[bullet] LIVING BENEFITS RIDER
Under certain conditions, in the event of the terminal illness of
the Insured, an accelerated payment of up to 75% of the Policy's death
benefit (up to a maximum of $250,000) is available. The minimum face
amount of the Policy after any such accelerated benefit payment is
$10,000. There is no charge for this rider.
[bullet] CASH VALUE ACCUMULATION RIDER
This rider generally permits you to pay more in premium than
otherwise would be permitted. This rider must be elected before the
Policy is issued. There is no charge for this rider.
[bullet] CHILD TERM RIDER
This rider provides annually renewable term coverage on children of
the Insured who are between 14 days old and age 18. The term insurance
is renewable to age 25. Each child will be insured under a separate
rider and the amount of insurance must be the same. Coverage may be
converted to a new whole life or variable insurance policy at any time
prior to the Policy Anniversary nearest insured child's 25th birthday.
[bullet] FAMILY TERM RIDER
This rider provides annually renewable term insurance coverage to
age 70 on the Insured or members of the Insured's immediate family who
are at least 18 years of age. The rider is fully convertible through
age 65 for each Insured to either a fixed benefit or variable policy.
[bullet] BUSINESS TERM RIDER
This rider provides annually renewable term insurance coverage to
age 95 on the life of the Insured under the base Policy. The face
amount of the term insurance may be level or increasing. The initial
rider death benefit cannot exceed 6 times the initial base Policy. This
rider is only available for Policies sold in the Corporate Owned Life
Insurance, employer sponsored life insurance market, or other business
related life insurance market.
INVESTMENTS OF THE VUL ACCOUNT
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PARTICIPATING MUTUAL FUNDS
THE PHOENIX EDGE SERIES FUND
Certain Subaccounts of the VUL Account invest in corresponding Series of The
Phoenix Edge Series Fund. The Fund currently has the following Series available
through the Policies:
MONEY MARKET SERIES: The investment objective of the Money Market Series is
to provide maximum current income consistent with capital preservation and
liquidity. The Money Market Series invests exclusively in high quality money
market instruments.
GROWTH SERIES: The investment objective of the Growth Series is to achieve
intermediate and long-term growth of capital, with income as a secondary
consideration. The Growth Series invests principally in common stocks of
corporations believed by management to offer growth potential.
MULTI-SECTOR FIXED INCOME ("MULTI-SECTOR") SERIES: The investment objective
of the Multi-Sector Series is to seek long-term total return. The Multi-Sector
Series seeks to achieve its investment objective by investing in a diversified
portfolio of high yield and high quality fixed income securities.
STRATEGIC ALLOCATION ("ALLOCATION") SERIES: The investment objective of the
Allocation Series is to realize as high a level of total return over an extended
period of time as is considered consistent with prudent investment risk. The
Allocation Series invests in stocks, bonds and money market instruments in
accordance with the Investment Adviser's appraisal of investments most likely to
achieve the highest total return.
INTERNATIONAL SERIES: The investment objective of the International Series
is to seek a high total return consistent with reasonable risk. The
International Series invests primarily in an internationally diversified
portfolio of equity securities. It intends to reduce its risk by engaging in
hedging transactions involving options, futures contracts and foreign currency
transactions. The International Series provides a means for investors to invest
a portion of their assets outside the United States.
BALANCED SERIES: The investment objective of the Balanced Series is to seek
reasonable income, long-term capital growth and conservation of capital. The
Balanced Series invests based on combined considerations of risk, income,
capital enhancement and protection of capital value.
REAL ESTATE SECURITIES ("REAL ESTATE") SERIES: The investment objective of
the Real Estate Series is to seek capital appreciation and income with
approximately equal emphasis. Under normal circumstances, it invests in
marketable securities of publicly traded real estate investment trusts (REITs)
and companies that operate, develop, manage and/or invest in real estate located
primarily in the United States.
STRATEGIC THEME ("THEME") SERIES: The investment objective of the Theme
Series is to seek long-term appreciation of capital by identifying securities
benefiting from long-term trends present in the United States and abroad. The
Theme Series invests primarily in common stocks believed to have substantial
potential for capital growth.
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ABERDEEN NEW ASIA ("ASIA") SERIES: The investment objective of the Asia
Series is to seek long-term capital appreciation. The Asia Series invests
primarily in a diversified portfolio of equity securities of issuers organized
and principally operating in Asia, excluding Japan.
RESEARCH ENHANCED INDEX ("ENHANCED INDEX") SERIES: The investment objective
of the Enhanced Index Series is to seek high total return by investing in a
broadly diversified portfolio of equity securities of large and medium
capitalization companies within market sectors reflected in the S&P 500. The
Enhanced Index Series invests in a portfolio of undervalued common stocks and
other equity securities which appear to offer growth potential and an overall
volatility of return similar to that of the S&P 500.
ENGEMANN NIFTY FIFTY ("NIFTY FIFTY") SERIES: The investment objective of the
Nifty Fifty Series is to seek long-term capital appreciation by investing in
approximately 50 different securities which offer the best potential for
long-term growth of capital. At least 75% of the Series' assets will be invested
in common stocks of high quality growth companies. The remaining portion will be
invested in common stocks of small corporations with rapidly growing earnings
per share or common stocks believed to be undervalued.
SENECA MID-CAP GROWTH ("SENECA MID-CAP") SERIES: The investment objective of
the Seneca Mid-Cap Series is to seek capital appreciation primarily through
investments in equity securities of companies that have the potential for above
average market appreciation. The Series seeks to outperform the Standard &
Poor's Mid-Cap 400 Index.
PHOENIX GROWTH AND INCOME ("GROWTH & INCOME") SERIES: The investment
objective of the Growth & Income Series is to seek dividend growth, current
income and capital appreciation by investing in common stocks. The Growth &
Income Series seeks to achieve its objective by selecting securities primarily
from equity securities of the 1,000 largest companies traded in the United
States, ranked by market capitalization.
PHOENIX VALUE EQUITY ("VALUE") SERIES: The primary investment objective of
the Value Series is long-term capital appreciation, with a secondary investment
objective of current income. The Value Series seeks to achieve its objective by
investing in a diversified portfolio of common stocks that meet certain
quantitative standards that indicate above average financial soundness and
intrinsic value relative to price.
SCHAFER MID-CAP VALUE ("SCHAFER MID-CAP") SERIES: The primary investment
objective of the Schafer Mid-Cap Series is to seek long-term capital
appreciation, with current income as the secondary investment objective. The
Schafer Mid-Cap Series will invest in common stocks of established companies
having a strong financial position and a low stock market valuation at the time
of purchase which are believed to offer the possibility of increase in value.
WANGER ADVISORS TRUST
Certain Subaccounts of the VUL Account invest in corresponding Series of the
Wanger Advisors Trust. The following Series are currently available through the
Policies:
WANGER U.S. SMALL CAP ("U.S. SMALL CAP") SERIES: The investment objective of
the U.S. Small Cap Series is to provide long-term growth. The U.S. Small Cap
Series invests primarily in securities of U.S. companies with total common stock
market capitalization of less than $1 billion.
WANGER INTERNATIONAL SMALL CAP ("INTERNATIONAL SMALL CAP") SERIES: The
investment objective of the International Small Cap Series is to provide
long-term growth. The International Small Cap Series invests primarily in
securities of non-U.S. companies with total common stock market capitalization
of less than $1 billion.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Certain Subaccounts of the VUL Account invest in corresponding Series of the
Templeton Variable Products Series Fund. The following Series are currently
available through the Policies:
TEMPLETON STOCK ("STOCK") SERIES: The investment objective of the Stock
Series is to provide capital growth. The Stock Series invests primarily in
common stocks issued by companies, large and small, in various nations
throughout the world.
TEMPLETON ASSET ALLOCATION ("TPT ALLOCATION") SERIES: The investment
objective of the TPT Allocation Series is to seek a high level of total return
through a flexible investment policy. The TPT Allocation Series invests in
stocks of companies of any nation, debt securities of companies and governments
of any nation and in money market instruments. Changes in the asset mix will be
made in an attempt to capitalize on total return potential produced by changing
economic conditions throughout the world.
TEMPLETON INTERNATIONAL ("TPT INTERNATIONAL") SERIES: The investment
objective of the TPT International Series is to seek long-term capital growth
through a flexible policy of investing. The TPT International Series invests in
stocks and debt obligations of companies and governments outside the United
States. Any income realized will be incidental. Although the Series generally
invests in common stock, it also may invest in preferred stocks and certain debt
securities such as convertible bonds which are rated in any category by S&P or
Moody's or which are unrated by any rating agency.
TEMPLETON DEVELOPING MARKETS ("DEVELOPING MARKETS") SERIES: The investment
objective of the Developing Markets Series is to seek long-term capital
appreciation. The Developing Markets Series invests primarily in equity
securities of issuers in countries having developing markets.
TEMPLETON MUTUAL SHARES INVESTMENTS ("SHARES") SERIES: The primary
investment objective of the Shares Series is to seek capital appreciation with
income as a secondary objective. The Shares Series invests in domestic equity
securities and domestic debt obligations.
Each Series will be subject to market fluctuations and risks inherent in the
ownership of any security and there can be no assurance that the stated
investment objective of any Series will be realized.
In addition to being sold to the VUL Account, shares of the Funds also are
sold to the PHLVIC Variable Accumulation Account, a separate account used by PHL
Variable to receive and invest premiums paid under certain variable annuity
contracts issued by PHL Variable. Shares of the Funds also may be sold to other
separate accounts of PHL Variable or its affiliates or of other insurance
companies.
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It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Fund(s) simultaneously. Although neither PHL Variable nor the
Fund(s) currently foresees any such disadvantages either to variable life
insurance Policyowners or to variable annuity Contract Owners, the Funds'
trustees intend to monitor events in order to identify any material conflicts
between variable life insurance Policyowners and variable annuity Contract
Owners and to determine what action, if any, should be taken in response
thereto. Material conflicts could result from, for example, (1) changes in state
insurance laws, (2) changes in federal income tax laws, (3) changes in the
investment management of any portfolio of the Fund(s) or (4) differences in
voting instructions between those given by variable life insurance Policyowners
and those given by variable annuity Contract Owners. PHL Variable will, at its
own expense, remedy such material conflict including, if necessary, segregating
the assets underlying the variable life insurance policies and the variable
annuity contracts and establishing a new registered investment company.
INVESTMENT ADVISERS
Phoenix Investment Counsel, Inc. ("PIC") is the investment adviser to all
Series in The Phoenix Edge Series Fund except the Real Estate and Asia Series.
Based on subadvisory agreements with the Fund, PIC delegates certain investment
decisions and research functions to subadvisers for the following Series:
Enhanced Index Series J.P. Morgan Investment Management, Inc.
Nifty Fifty Series Roger Engemann & Associates, Inc. ("Engemann")
Seneca Mid-Cap Series Seneca Capital Management, LLC ("Seneca")
Schafer Mid-Cap Series Schafer Capital Management, Inc.
The investment adviser to the Real Estate Series is Duff & Phelps Investment
Management Co. ("DPIM").
The investment adviser to the Asia Series is Phoenix-Aberdeen International
Advisors LLC ("PAIA"). Pursuant to subadvisory agreements with the Fund, PAIA
delegates certain investment decisions and research functions with respect to
the Asia Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect, less than wholly-owned
subsidiaries of Phoenix. PAIA is jointly owned and managed by PM Holdings, Inc.,
a subsidiary of Phoenix, and Aberdeen Fund Managers, Inc.
The investment adviser to the Wanger Advisors Trust is Wanger Asset
Management, L.P.
The investment adviser for the Stock, TPT Asset Allocation and TPT
International Series is Templeton Investment Counsel, Inc.
Templeton Asset Management, Ltd. is the investment adviser for the
Developing Markets Series.
Franklin Mutual Advisers, Inc. is the investment adviser for the Shares
Series.
SERVICES OF THE ADVISERS
The Advisers continuously furnish an investment program for each Series and
manage the investment and reinvestment of the assets of each Series subject at
all times to the authority and supervision of the Trustees. A detailed
discussion of the investment advisers and subadvisers, and the investment
advisory and subadvisory agreements, is contained in the accompanying prospectus
for the Funds.
REINVESTMENT AND REDEMPTION
All dividend distributions of the Fund are automatically reinvested in
shares of the Fund at their net asset value on the date of distribution; all
capital gains distributions of the Fund, if any, are likewise reinvested at the
net asset value on the record date. PHL Variable redeems Fund shares at their
net asset value to the extent necessary to make payments under the Policy.
SUBSTITUTION OF INVESTMENTS
PHL Variable reserves the right, subject to compliance with the law as
currently applicable or subsequently changed, to make additions to, deletions
from, or substitutions for the investments held by the VUL Account. In the
future, PHL Variable may establish additional Subaccounts within the VUL
Account, each of which will invest in shares of a designated portfolio of the
Fund with a specified investment objective. These portfolios will be established
if, and when, in the sole discretion of PHL Variable, marketing needs and
investment conditions warrant, and will be made available under existing
Policies to the extent and on a basis to be determined by PHL Variable.
If shares of any of the portfolios of the Fund should no longer be available
for investment, or if in the judgment of PHL Variable's management further
investment in shares of any of the portfolios should become inappropriate in
view of the objectives of the Policy, then PHL Variable may substitute shares of
another mutual fund for shares already purchased, or to be purchased in the
future, under the Policy. No substitution of mutual fund shares held by the VUL
Account may take place without prior approval of the SEC and prior notice to
you. In the event of a substitution, you will be given the option of
transferring the Policy Value of the Subaccount in which the substitution is to
occur to another Subaccount.
CHARGES AND DEDUCTIONS
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Charges are deducted in connection with the Policy to compensate PHL
Variable for: (1) incurring expenses in distributing the Policy; (2) issuing the
Policy; (3) premium and federal taxes incurred on premiums received; (4)
providing the insurance benefits set forth in the Policy; and (5) assuming
certain risks in connection with the Policy. The nature and amount of these
charges are described more fully below.
1. MONTHLY DEDUCTION
A charge is deducted monthly from the Policy Value under a Policy ("monthly
deduction") to pay: the cost of insurance provided under the Policy, the cost of
any rider benefits provided, any unpaid balance of the issue expense charge and
an administrative charge. This administrative charge is currently set at $5 per
month and is guaranteed not to exceed $10 per month. The monthly deduction is
made on each Monthly Calculation Day. It is allocated among the
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Subaccounts of the VUL Account and the unloaned portion of the GIA based on the
allocation schedule for monthly deductions specified by the applicant in the
application for a Policy or as later changed by you. In the event that the
Policy's share in the value of the Subaccounts or the unloaned portion of the
GIA is insufficient to permit the withdrawal of the full monthly deduction, the
remainder will be taken on a proportionate basis from the Policy's share of each
of the other Subaccounts and the unloaned portion of the GIA. The number of
Units deducted will be determined by dividing the portion of the monthly
deduction allocated to each Subaccount or to the unloaned portion of the GIA by
the Unit value on the Monthly Calculation Day. Because portions of the monthly
deduction, such as the cost of insurance, can vary from month to month, the
monthly deduction itself may vary in amount from month to month.
(A) ISSUE EXPENSE CHARGE. An issue administration charge is assessed on a
prorated basis in equal monthly installments over a 12-month period to
compensate PHL Variable for underwriting and start-up expenses in
connection with issuing a Policy. The issue expense charge is $1.50 per
$1,000 of face amount, up to a maximum charge of $600. PHL Variable may
reduce or eliminate the issue expense charge for Policies issued under
group or sponsored arrangements. Generally, administrative costs per
Policy vary with the size of the group or sponsored arrangement, its
stability as indicated by its term of existence and certain
characteristics of its members, the purposes for which the Policies are
purchased and other factors. The amounts of any reductions will be
considered on a case-by-case basis and will reflect the reduced
administration costs expected as a result of sales to a particular group
or sponsored arrangement.
(B) COST OF INSURANCE. In order to calculate the cost of insurance charge,
PHL Variable multiplies the applicable cost of insurance rate by the
difference between the death benefit selected (death benefit Option 1 if
no selection is made) and the Policy Value. Generally, cost of insurance
rates for Life Policies are based on the sex, issue age, duration and
risk class. However, in certain states and for policies issued in
conjunction with certain qualified plans, cost of insurance rates are
not based on sex. The actual monthly cost of insurance rates are based
on PHL Variable's expectations of future mortality experience. They will
not, however, be greater than the guaranteed cost of insurance rates set
forth in the Policy. These guaranteed maximum rates are equal to 100% of
the 1980 Commissioners Standard Ordinary ("CSO") Mortality Table, with
appropriate adjustment for the Insured's risk classification. Any change
in the cost of insurance rates will apply to all persons of the same
sex, insurance age and risk class whose Policies have been In Force for
the same length of time. The risk class of an Insured may affect the
cost of insurance rate. PHL Variable currently places Insureds into a
preferred or standard risk class or a risk class involving a higher
mortality risk, depending upon the health of the Insured as determined
by medical information that PHL Variable requests. In an otherwise
identical Policy, Insureds in the preferred or standard risk class will
have a lower cost of insurance than those in the risk class with the
higher mortality risk. The standard risk class also is divided into
categories: smokers, nonsmokers and those who have never smoked.
Non-smokers will generally incur a lower cost of insurance than
similarly situated Insureds who smoke.
2. PREMIUM TAXES
Various states and subdivisions impose a tax on premiums received by
insurance companies. Premium taxes vary from state to state. Currently, the
taxes imposed by states on premiums range from 0.75% to 4% of premiums paid.
Moreover, certain municipalities in Louisiana, Kentucky and South Carolina also
impose taxes on premiums paid, in addition to the state taxes imposed. The
premium tax charge represents an amount PHL Variable considers necessary to pay
all premium taxes imposed by such states and any subdivisions thereof, and PHL
Variable does not expect to derive a profit from this charge. The Policies will
be assessed a charge equal to 2.25% of the premiums paid. This charge is
deducted from the Issue Premium, and from each subsequent premium payment.
3. FEDERAL TAX CHARGE
A charge equal to 1.50% of each premium will be deducted from each premium
payment to cover the estimated cost to PHL Variable of the federal income tax
treatment of deferred acquisition costs.
4. MORTALITY AND EXPENSE RISK CHARGE
PHL Variable will deduct a daily charge from the VUL Account at an annual
rate of 0.80% of the average daily net assets of the VUL Account to compensate
for certain risks assumed in connection with the Policy. A reduced annual rate
of .25% will apply after the 15th Policy Year. This charge is not deducted from
the GIA.
The mortality risk assumed by PHL Variable is that Insureds may live for a
shorter time than projected because of inaccuracies in that projecting process
and, accordingly, that an aggregate amount of death benefits greater than that
projected will be payable. The expense risk assumed is that expenses incurred in
issuing the Policies may exceed the limits on administrative charges set in the
Policies. If the expenses do not increase to an amount in excess of the limits,
or if the mortality projecting process proves to be accurate, PHL Variable may
profit from this charge. PHL Variable also assumes risks with respect to other
contingencies including the incidence of Policy loans, which may cause PHL
Variable to incur greater costs than anticipated when designing the Policies. To
the extent PHL Variable profits from this charge, it may use those profits for
any proper purpose, including the payment of sales expenses or any other
expenses that may exceed income in a given year.
5. INVESTMENT MANAGEMENT CHARGE
As compensation for investment management services to the Funds, the
Advisers are entitled to fees, payable monthly and based on an annual percentage
of the average aggregate daily net asset values of each Series.
These Fund charges and other expenses are described more fully in the
accompanying Fund prospectuses.
6. OTHER CHARGES
SURRENDER CHARGE
During the first 10 Policy Years, there is a difference between the amount
of Policy Value and the amount of Cash Surrender Value of
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the Policy. This difference is the surrender charge, consisting of a contingent
deferred sales charge designed to recover expenses for the distribution of
Policies that are terminated by surrender before distribution expenses have been
recouped, and a contingent deferred issue charge designed to recover expenses
for the administration of Policies that are terminated by surrender before
administrative expenses have been recouped. These are contingent charges because
they are paid only if the Policy is surrendered (or the face amount is reduced
or the Policy lapses) during this period. They are deferred charges because they
are not deducted from premiums.
During the first 10 Policy Years, the full surrender charge as described
below will apply if you either surrender the Policy for its Cash Surrender Value
or let the Policy lapse. The applicable surrender charge in any Policy Month is
the full surrender charge minus any surrender charges that have been previously
paid as a result of a partial surrender or decrease in the Face Amount. There
is no surrender charge after the 10th Policy Year. During the first two Policy
Years, the maximum surrender charge that a you could pay while you own the
Policy is equal to either A plus B (as defined below) or the amount shown in the
Policy's Surrender Charge Schedule, whichever is less. After the first two
Policy Years, the maximum surrender charge that you could pay is based on the
amount shown in the Policy's Surrender Charge Schedule.
A. (the contingent deferred sales charge) is equal to:
1) 28.5% of all premiums paid (up to and including the amount stated in the
Policy's Surrender Charge Schedule, which is calculated according to a
formula contained in a SEC rule); plus
2) 8.5% of all premiums paid in excess of this amount but not greater than
twice this amount; plus
3) 7.5% of all premiums paid in excess of twice this amount.
B. (the contingent deferred issue charge) is equal to:
$5 per $1,000 of initial face amount.
As an example, the following illustrates the surrender charge on a $100,000
Life Policy for a male age 35 who has never smoked, who has paid $3,000 in
premium payments, and who surrenders the Policy.
Example: If you were to surrender your Policy in the 70th Policy Month your
surrender charge will be $1,186.78, as given in the Schedule.
Example: If you were to surrender your Policy in the first two years, your
surrender charge may be reduced (as described above). The surrender charge in
the first two years would be equal to the lesser of the amount in the surrender
charge table and the sum of the following:
A. 1) 28.5% of premiums paid up to $1,076.72, plus
2) 8.5% of premiums paid in excess of $1,076.72 but not greater than
$2,153.44, plus
3) 7.5% of premiums paid in excess of $2,153.44,
B. Plus $500.
If you were to surrender your Policy in the second year after paying $3,000
of premiums your surrender charge would be the lesser of $1,307.54 from the
table, and $961.88. In this case, you would pay less surrender charge if you
were to surrender your Policy in the first two Policy Years.
SURRENDER CHARGE SCHEDULE
-------------------------
POLICY SURRENDER POLICY SURRENDER POLICY SURRENDER
MONTH CHARGE MONTH CHARGE MONTH CHARGE
----- ------ ----- ------ ----- ------
1-60 $1307.54 80 $1066.03 100 $727.09
61 1295.46 81 1053.95 101 690.65
62 1283.39 82 1041.88 102 654.22
63 1271.31 83 1029.80 103 617.78
64 1259.24 84 1017.73 104 581.35
65 1247.16 85 1005.65 105 544.91
66 1235.08 86 993.58 106 508.48
67 1223.01 87 981.50 107 472.05
68 1210.93 88 969.43 108 435.61
69 1198.86 89 957.35 109 399.18
70 1186.78 90 945.28 110 362.74
71 1174.71 91 933.20 111 326.31
72 1162.63 92 921.13 112 289.97
73 1150.56 93 909.05 113 253.44
74 1138.48 94 896.97 114 217.01
75 1126.41 95 884.90 115 180.57
76 1114.33 96 872.82 116 144.14
77 1102.26 97 836.39 117 107.70
78 1090.18 98 799.95 118 71.27
79 1078.10 99 763.52 119 34.83
120 .00
PHL Variable may reduce the surrender charge for Policies issued under group
or sponsored arrangements. The amount of reduction will be considered on a
case-by-case basis and will reflect the reduced costs to PHL Variable expected
as a result of sales to a particular group or sponsored arrangement.
PARTIAL SURRENDER FEE
A fee equal to the lesser of $25 or 2% of the amount withdrawn from the
Policy is deducted from the Policy Value upon a partial surrender of the Policy
to recover the costs of processing the partial surrender request. The assessment
to each Subaccount or to the GIA will be made in the same manner as provided for
the partial surrender amount paid. That is, the Policy's share in the value of
each Subaccount or the GIA will be reduced based on the allocation made at the
time of the partial surrender. If no allocation request is made, the assessment
to each Subaccount and to the GIA will be made in the same manner as provided
for monthly deductions.
PARTIAL SURRENDER CHARGE
A charge as described below is deducted from the Policy Value upon a partial
surrender of the Policy. The charge is equal to a prorated portion of the
applicable surrender charge that would apply to a full surrender, determined by
multiplying the applicable surrender charge by a fraction (equal to the partial
surrender amount payable divided by the result of subtracting the applicable
surrender charge from the Policy Value). This amount is assessed against the
Subaccounts or the GIA in the same manner as provided for with respect to the
partial surrender amount paid.
A partial surrender charge also is deducted from Policy Value upon a
decrease in face amount. The charge is equal to the applicable surrender charge
multiplied by a fraction (equal to the decrease in face
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amount divided by the face amount of the Policy prior to the decrease).
TAXES
Currently no charge is made to the VUL Account for federal income taxes that
may be attributable to the VUL Account. PHL Variable may, however, make such a
charge in the future. Charges for other taxes, if any, attributable to the VUL
Account also may be made.
GENERAL PROVISIONS
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POSTPONEMENT OF PAYMENTS
GENERAL
Payment of any amount upon complete or partial surrender, Policy loan, or
benefits payable at death (in excess of the initial face amount) or maturity may
be postponed: (i) for up to six months from the date of the request, for any
transactions dependent upon the value of the GIA; (ii) whenever the NYSE is
closed other than for customary weekend and holiday closings, or trading on the
NYSE is restricted as determined by the SEC; or (iii) whenever an emergency
exists, as determined by the Commission as a result of which disposal of
securities is not reasonably practicable or it is not reasonably practicable to
determine the value of the VUL Account's net assets. Transfers also may be
postponed under these circumstances.
PAYMENT BY CHECK
Payments under the Policy of any amounts derived from premiums paid by check
may be delayed until such time as the check has cleared your bank.
THE CONTRACT
The Policy and attached copy of the application are the entire contract.
Only statements in the application can be used to void the Policy. The
statements are considered representations and not warranties. Only an executive
officer of PHL Variable can agree to change or waive any provisions of the
Policy.
SUICIDE
If the Insured commits suicide within two years after the Policy's Date of
Issue, PHL Variable will pay only the Policy Value adjusted by the addition of
any monthly deductions and other fees and charges made under the Policy and the
subtraction of any Debt owed to PHL Variable under the Policy.
INCONTESTABILITY
PHL Variable cannot contest this Policy or any attached rider after it has
been In Force during the lifetime of the Insured for two years from the Policy
Date.
CHANGE OF OWNER OR BENEFICIARY
The Beneficiary, as named in the Policy application or as subsequently
changed, will receive the Policy benefits at the Insured's death. If the named
Beneficiary dies before the Insured, the contingent Beneficiary, if named,
becomes the Beneficiary. If no Beneficiary survives the Policyowner, the
benefits payable at the Insured's death will be paid to your estate.
As long as the Policy is In Force, the Policyowner and the Beneficiary may
be changed by Written Request, satisfactory to PHL Variable. A change in
Beneficiary will take effect as of the date the notice is signed, whether or not
the Insured is living when the notice is received by PHL Variable. PHL Variable
will not, however, be liable for any payment made or action taken before receipt
of the notice.
ASSIGNMENT
The Policy may be assigned. PHL Variable will not be bound by the assignment
until a written copy has been received and will not be liable with respect to
any payment made prior to receipt. PHL Variable assumes no responsibility for
determining whether an assignment is valid.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Insured has been misstated, the death benefit will
be adjusted based on what the cost of insurance charge for the most recent
monthly deduction would have purchased based on the correct age and sex.
SURPLUS
Policyowners may share in divisible surplus of PHL Variable to the extent
determined annually by the PHL Variable Board of Directors. However, it is not
currently anticipated that the Board will authorize these payments since
Policyowners will be participating directly in investment results.
PAYMENT OF PROCEEDS
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SURRENDER AND DEATH BENEFIT PROCEEDS
Death benefit proceeds and the proceeds of full or partial surrenders will
be processed at Unit values next computed after PHL Variable receives the
request for surrender or due proof of death, provided such request is complete
and in good order. Payment of surrender or death proceeds usually will be made
in one lump sum within seven days, unless another payment option has been
elected. Payment of the death proceeds, however, may be delayed if the claim for
payment of the death proceeds needs to be investigated; e.g., to ensure payment
of the proper amount to the proper payee. Any such delay will not be beyond that
reasonably necessary to investigate such claims consistent with insurance
practices customary in the life insurance industry. In addition, under certain
conditions, in the event of the terminal illness of the Insured, an accelerated
payment of up to 75% of the Policy's Death Benefit (up to maximum of $250,000),
is available under the Living Benefits Rider. The minimum face amount remaining
after any such accelerated benefit payment is $10,000.
While the Insured is living, you may elect a payment option for payment of
the death proceeds to the Beneficiary. You may revoke or change a prior
election, unless such right has been waived. The Beneficiary may make or change
an election prior to payment of the death proceeds, unless you have made an
election which does not permit such further election or changes by the
Beneficiary.
A written form satisfactory to PHL Variable is required to elect, change or
revoke a payment option.
The minimum amount of surrender or death proceeds that may be applied under
any option is $1,000.
If the Policy is assigned as collateral security, PHL Variable will pay any
amount due the assignee in one lump sum. Any remaining proceeds will remain
under the option elected.
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PAYMENT OPTIONS
All or part of the surrender or death proceeds of a Policy may be applied
under one or more of the following payment options or such other payment options
or alternative versions of the options listed as PHL Variable may choose to make
available in the future.
OPTION 1--LUMP SUM.
Payment in one lump sum.
OPTION 2--LEFT TO EARN INTEREST.
A payment of interest during the payee's lifetime on the amount payable as a
principal sum. Interest rates are guaranteed to be at least 3% per year.
OPTION 3--PAYMENT FOR A SPECIFIC PERIOD.
Equal income installments are paid for a specified period of years whether
the payee lives or dies. The first payment will be on the date of settlement.
The assumed interest rate on the unpaid balance is guaranteed not to be less
than 3% per year.
OPTION 4--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN.
Equal installments are paid until the later of: (A) The death of the payee;
(B) The end of the period certain. The first payment will be on the date of
settlement. The period certain must be chosen at the time this option is
elected. The periods certain that may be chosen are as follows: (A) Ten years;
(B) Twenty years; (C) Until the installments paid refund the amount applied
under this option; and if the payee is not living when the final payment falls
due, that payment will be limited to the amount which needs to be added to the
payments already made to equal the amount applied under this option. If, for the
age of the payee, a period certain is chosen that is shorter than another period
certain paying the same installment amount, PHL Variable will deem the longer
period certain as having been elected. Any life annuity provided under Option 4
is calculated using an interest rate guaranteed to be no less than 3 3/8% per
year, except that any life annuity providing a period certain of 20 years or
more is calculated using an interest rate guaranteed to be no less than 3 1/4%
per year.
OPTION 5--LIFE ANNUITY.
Equal installments are paid only during the lifetime of the payee. The first
payment will be on the date of settlement. Any life annuity as may be provided
under Option 5 is calculated using an interest rate guaranteed to be no less
than 3 1/2% per year.
OPTION 6--PAYMENTS OF A SPECIFIED AMOUNT.
Equal installments of a specified amount, out of the principal sum and
interest on that sum, are paid until the principal sum remaining is less than
the amount of the installment. When that happens, the principal sum remaining
with accrued interest will be paid as a final payment. The first payment will be
on the date of settlement. The payments will include interest on the principal
sum remaining at a rate guaranteed to be at least equal to 3% per year. This
interest will be credited at the end of each year. If the amount of interest
credited at the end of the year exceeds the income payments made in the last 12
months, that excess will be paid in one sum on the date credited.
OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10 YEAR PERIOD CERTAIN.
The first payment will be on the date of settlement. Equal income
installments are paid until the latest of: (A) the end of the 10-year period
certain; (B) the death of the Insured; (C) the death of the other named
annuitant. The other annuitant must be named at the time this option is elected
and cannot later be changed. The other annuitant must have an Attained Age of at
least 40. Any joint survivorship annuity as may be provided under this option is
calculated using an interest rate guaranteed to be no less than 3 3/8% per year.
For additional information concerning the above payment options, see the
Policy.
FEDERAL TAX CONSIDERATIONS
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INTRODUCTION
The ultimate effect of federal income taxes on values under the VUL Account
and on the economic benefit to you or the Beneficiary depends on PHL Variable's
tax status and upon the tax status of the individual concerned. The discussion
contained herein is general in nature and is not intended as tax advice. For
complete information on federal and state tax considerations, a qualified tax
adviser should be consulted. No attempt is made to consider any estate and
inheritance taxes, or any state, local or other tax laws. Because the discussion
herein is based upon PHL Variable's understanding of federal income tax laws as
they are currently interpreted, PHL Variable cannot guarantee the tax status of
any Policy. No representation is made regarding the likelihood of continuation
of current federal income tax laws, Treasury regulations or of the current
interpretations by the Internal Revenue Service (the "IRS"). PHL Variable
reserves the right to make changes to the Policy in order to assure that it will
continue to qualify as a life insurance contract for federal income tax
purposes.
PHL VARIABLE'S TAX STATUS
PHL Variable is taxed as a life insurance company under the Internal Revenue
Code of 1986 (the "Code"), as amended. For federal income tax purposes, neither
the VUL Account nor the GIA is a separate entity from PHL Variable and their
operations form a part of PHL Variable.
Investment income and realized capital gains on the assets of the VUL
Account are reinvested and taken into account in determining the value of the
VUL Account. Investment income of the VUL Account, including realized net
capital gains, is not taxed to PHL Variable. Due to PHL Variable's tax status
under current provisions of the Code, no charge currently will be made to the
VUL Account for PHL Variable's federal income taxes which may be attributable to
the VUL Account. PHL Variable reserves the right to make a deduction for taxes
if the federal tax treatment of PHL Variable is determined to be other than what
PHL Variable currently believes it to be, if changes are made affecting the tax
treatment to PHL Variable of variable life insurance contracts or if changes
occur in PHL Variable's tax status. If imposed, such charge would be equal to
the federal income taxes attributable to the investment results of the VUL
Account.
POLICY BENEFITS
DEATH BENEFIT PROCEEDS. The Policy, whether or not it is a modified
endowment contract (see the discussion on modified endowment contracts below),
should be treated as meeting the definition of a life insurance contract for
federal income tax purposes, under Section 7702 of the Code. As such, the death
benefit proceeds thereunder should be excludable from the gross income of the
Beneficiary under Code Section 101(a)(1). Also, you should not be
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<PAGE>
deemed to be in constructive receipt of the Cash Value, including increments
thereon. See, however, the sections below on possible taxation of amounts
received under the Policy, via full surrender, partial surrender or loan. In
addition, a benefit paid under a Living Benefit Rider may be taxable as income
in the year of receipt.
Code Section 7702 imposes certain conditions with respect to premiums
received under a Policy. PHL Variable intends to monitor the premiums to assure
compliance with such conditions. However, in the event that the premium
limitation is exceeded during the year, PHL Variable may return the excess
premium, with interest, to you within 60 days after the end of the Policy
Year, and maintain the qualification of the Policy as life insurance for federal
income tax purposes.
FULL SURRENDER. Upon full surrender of a Policy for its Cash Value, the
excess, if any, of the Cash Value (unreduced by any outstanding indebtedness)
over the premiums paid will be treated as ordinary income for federal income tax
purposes. The full surrender of a Policy which is a modified endowment contract
may result in the imposition of an additional 10% tax on any income received.
PARTIAL SURRENDER. If the Policy is a modified endowment contract, partial
surrenders are fully taxable to the extent of income in the Policy and are
possibly subject to an additional 10% tax. See the discussion on modified
endowment contracts below. If the Policy is not a modified endowment contract,
partial surrenders still may be taxable, as follows. Code Section 7702(f)(7)
provides that where a reduction in death benefits occurs during the first 15
years after a Policy is issued and there is a cash distribution associated with
that reduction, you may be taxed on all or a part of the amount distributed. A
reduction in death benefits may result from a partial surrender. After 15 years,
the proceeds will not be subject to tax, except to the extent such proceeds
exceed the total amount of premiums paid but not previously recovered. PHL
Variable suggests you consult with your tax adviser in advance of a proposed
decrease in death benefits or a partial surrender as to the portion, if any,
which would be subject to tax, and in addition as to the impact such partial
surrender might have under the new rules affecting modified endowment contracts.
The benefit payment under the Living Benefits Rider is not considered a partial
surrender.
LOANS. PHL Variable believes that any loan received under a Policy will be
treated as your debt. If the Policy is a modified endowment contract, loans are
fully taxable to the extent of income in the Policy and are possibly subject to
an additional 10% tax. See the discussion on modified endowment contracts below.
If the Policy is not a modified endowment contract, PHL Variable believes that
no part of any loan under a Policy will constitute income to you.
Your deductibility of loan interest under a Policy may be limited under Code
Section 264, depending on the circumstances. Any Policyowner intending to fund
premium payments through borrowing should consult a tax adviser with respect to
the tax consequences thereof. Under the "personal" interest limitation
provisions of the Code, interest on Policy loans used for personal purposes is
not tax deductible. Other rules may apply to allow all or part of the interest
expense as a deduction if the loan proceeds are used for "trade or business" or
"investment" purposes. See your tax adviser for further guidance.
BUSINESS-OWNED POLICIES
If the Policy is owned by a business or a corporation, the Code may impose
additional restrictions. The Code limits the interest deduction on
business-owned Policy loans and may impose tax upon the inside build-up of
corporate-owned life insurance policies through the corporate alternative
minimum tax.
MODIFIED ENDOWMENT CONTRACTS
GENERAL. Pursuant to Code Section 72(e), loans and other amounts received
under modified endowment contracts will, in general, be taxed to the extent of
accumulated income (generally, the excess of Cash Value over premiums paid).
Policies are modified endowment contracts if they meet the definition of life
insurance, but fail the 7-pay test. This test essentially provides that the
cumulative premiums paid under the Policy at any time during the Policy's first
seven years cannot exceed the sum of the net level premiums that would have been
paid on or before that time had the Policy provided for paid-up future benefits
after the payment of seven level annual premiums. In addition, a modified
endowment contract includes any life insurance contract that is received in
exchange for a modified endowment contract. Premiums paid during a Policy Year
that are returned by PHL Variable (with interest) within 60 days after the end
of the Policy Year will not cause the Policy to fail the 7-pay test.
REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS. If there is a reduction
in benefits during the first seven Policy Years, the premiums are redetermined
for purposes of the 7-pay test as if the Policy originally had been issued at
the reduced death benefit level and the new limitation is applied to the
cumulative amount paid for each of the first seven Policy Years.
DISTRIBUTIONS AFFECTED. If a Policy fails to meet the 7-pay test, it is
considered a modified endowment contract only as to distributions in the year in
which the death benefit reduction takes effect and all subsequent Policy Years.
However, distributions made in anticipation of such failure (there is a
presumption that distributions made within two years prior to such failure were
"made in anticipation") also are considered distributions under a modified
endowment contract. If the Policy satisfies the 7-pay test for seven years,
distributions and loans generally will not be subject to the modified endowment
contract rules.
PENALTY TAX. Any amounts taxable under the modified endowment contract rule
will be subject to an additional 10% excise tax, with certain exceptions. This
additional tax will not apply in the case of distributions: (i) made on or after
the taxpayer attains age 59 1/2; (ii) which are attributable to the taxpayer's
disability (within the meaning of Code Section 72(m)(7)); or (iii) which are
part of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the taxpayer or the
joint lives (or life expectancies) of the taxpayer and his Beneficiary.
MATERIAL CHANGE RULES. Any determination of whether the Policy meets the
7-pay test will begin again any time the Policy undergoes a "material change,"
which includes any increase in death benefits or any increase in or addition of
a qualified additional benefit, with the following two exceptions. First, if an
increase is attributable to premiums paid "necessary to fund" the lowest death
benefit and qualified additional benefits payable in the first seven Policy
Years or to the crediting of interest or dividends with respect to these
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<PAGE>
premiums, the "increase" does not constitute a material change. Second, to the
extent provided in regulations, if the death benefit or qualified additional
benefit increases as a result of a cost-of-living adjustment based on an
established broad-based index specified in the Policy, this does not constitute
a material change if (1) the cost-of-living determination period does not exceed
the remaining premium payment period under the Policy, and (2) the
cost-of-living increase is funded ratably over the remaining premium payment
period of the Policy. A reduction in death benefits is not considered a material
change unless accompanied by a reduction in premium payments.
A material change may occur at any time during the life of the Policy
(within the first seven years or thereafter), and future taxation of
distributions or loans would depend upon whether the Policy satisfied the
applicable 7-pay test from the time of the material change. An exchange of
policies is considered to be a material change for all purposes.
SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS. All modified endowment
contracts issued by the same insurer (or affiliated companies of the insurer) to
the same Policyowner within the same calendar year will be treated as one
modified endowment contract in determining the taxable portion of any loans or
distributions made to the Policyowner. The Treasury has been given specific
legislative authority to issue regulations to prevent the avoidance of the new
distribution rules for modified endowment contracts. A qualified tax adviser
should be consulted about the tax consequences of the purchase of more than one
modified endowment contract within any calendar year.
LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES
The Code imposes limitations on unreasonable mortality and expense charges
for purposes of ensuring that a Policy qualifies as a life insurance contract
for federal income tax purposes. The mortality charges taken into account to
calculate permissible premium levels may not exceed those charges required to be
used in determining the federal income tax reserve for the Policy, unless
Treasury regulations prescribe a higher level of charge. In addition, the
expense charges taken into account under the guideline premium test are required
to be reasonable, as defined by the Treasury regulations. PHL Variable intends
to comply with the limitations in calculating the premium it is permitted to
receive from the Policyowner.
QUALIFIED PLANS
A Policy may be used in conjunction with certain qualified plans. Since the
rules governing such use are complex, a purchaser should not use the Policy in
conjunction with a qualified plan until he has consulted a competent pension
consultant or tax adviser.
DIVERSIFICATION STANDARDS
To comply with the Diversification Regulations under Code Section 817(h),
("Diversification Regulations") each Series of the Funds is required to
diversify its investments. The Diversification Regulations generally require
that on the last day of each quarter of a calendar year no more than 55% of the
value of a Series' assets 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. A
"look-through" rule applies to treat a prorated portion of each asset of a
Series as an asset of the VUL Account; therefore, each Series of the Funds will
be tested for compliance with the percentage limitations. For purposes of these
diversification rules, all securities of the same issuer are treated as a single
investment, but each United States government agency or instrumentality is
treated as a separate issuer.
The general diversification requirements are modified if any of the assets
of the VUL Account are direct obligations of the Treasury. In this case, there
is no limit on the investment that may be made in Treasury securities. For
purposes of determining whether assets other than Treasury securities are
adequately diversified, the generally applicable percentage limitations are
increased based on the value of the VUL Account's investment in Treasury
securities. Notwithstanding this modification of the general diversification
requirements, the portfolios of the Funds will be structured to comply with the
general diversification standards because they serve as an investment vehicle
for certain variable annuity contracts which must comply with these standards.
In connection with the issuance of the Diversification Regulations, the
Treasury announced that such regulations do not provide guidance concerning the
extent to which Policyowners may direct their investments to particular
divisions of a separate account. It is possible that a revenue ruling or other
form of administrative pronouncement in this regard may be issued in the near
future. At this time, it is not clear what such a revenue ruling or other
pronouncement will provide. It is possible that the Policy may need to be
modified to comply with such future Treasury announcements. For these reasons,
PHL Variable reserves the right to modify the Policy, as necessary, to prevent
you from being considered the Owner of the assets of the VUL Account.
PHL Variable intends to comply with the Diversification Regulations to
assure that the Policies continue to qualify as a life insurance contract for
federal income tax purposes.
CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT
Depending on the circumstances, changing the Policyowner or the Insured or
an exchange or assignment of the Policy may have tax consequences. Code Section
1035 provides that a life insurance Policy can be exchanged for another life
insurance contract, without recognition of gain or loss, assuming that no money
or other property is received in the exchange, and that the policies relate to
the same Insured. If the surrendered Policy is subject to a Policy loan, this
may be treated as the receipt of money on the exchange. PHL Variable recommends
that any person contemplating such actions seek the advice of a qualified tax
consultant.
OTHER TAXES
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 Policyowner or Beneficiary. PHL Variable does not make any
representations or guarantees regarding the tax consequences of any Policy with
respect to these types of taxes.
22
<PAGE>
VOTING RIGHTS
- --------------------------------------------------------------------------------
THE FUNDS
PHL Variable will vote the Funds' shares held by the Subaccounts of the VUL
Account at any regular and special meetings of shareholders of the Funds. To the
extent required by law, such voting will be in accordance with instructions
received from you. However, if the 1940 Act or any regulation thereunder should
be amended or if the present interpretation thereof should change, and as a
result PHL Variable determines that it is permitted to vote the Funds' shares at
its own discretion, it may elect to do so.
The number of votes that you have the right to cast will be determined by
applying your percentage interest in a Subaccount to the total number of votes
attributable to the Subaccount. In determining the number of votes, fractional
shares will be recognized.
Funds' shares held in a Subaccount for which no timely instructions are
received, and Funds shares which are not otherwise attributable to you, will be
voted by PHL Variable in proportion to the voting instructions that are received
with respect to all Policies participating in that Subaccount. Voting
instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by PHL Variable.
You will receive proxy materials, reports and other materials relating to
the Funds.
PHL Variable may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the subclassification or investment objective
of one or more of the portfolios of the Funds or to approve or disapprove an
investment advisory contract for the Funds. In addition, PHL Variable itself may
disregard voting instructions in favor of changes initiated by you in the
investment policies or the investment adviser of the Funds if PHL Variable
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 or PHL Variable determined that the change would have an adverse
effect on the General Account because the proposed investment policy for a
portfolio may result in overly speculative or unsound investments. In the event
PHL Variable does disregard voting instructions, a summary of that action and
the reasons for such action will be included in the next periodic report to you.
THE DIRECTORS AND EXECUTIVE OFFICERS OF PHL VARIABLE
- --------------------------------------------------------------------------------
PHL Variable is managed by its Board of Directors. The following are the
Directors and Executive Officers of PHL Variable:
NAME AND TITLE PRINCIPAL OCCUPATION
Robert W. Fiondella, Chairman of the Board, President
Chairman and President and Chief Executive Officer
Richard H. Booth, Executive Vice President,
Director and Executive Strategic Development; formerly
Vice President President, The Travelers Insurance
Company
Robert G. Chipkin, Senior Vice President and
Director Corporate Actuary
Philip R. McLoughlin, Executive Vice President and Chief
Director and Executive Investment Officer
Vice President
David W. Searfoss, Executive Vice President and Chief
Director, Executive Vice Financial Officer
President and Chief
Financial Officer
Dona D. Young, Director Executive Vice President,
and Executive Vice Individual Insurance and General
President Counsel
Joseph E. Kelleher, Senior Vice President,
Director and Senior Vice Underwriting and Operations
President
Simon Y. Tan, Director Senior Vice President, Market and
and Senior Vice President Product Development
Bruce M. Jones, Senior Vice President, Individual Market
Vice President and Chief Development
Operating Officer
Robert G. Lautensack, Senior Vice President, Individual
Senior Vice President Line Financial
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS
- --------------------------------------------------------------------------------
The assets of the VUL Account are held by PHL Variable. The assets of the
VUL Account are kept physically segregated and held separate and apart from the
General Account of PHL Variable. PHL Variable maintains records of all purchases
and redemptions of shares of the Funds.
SALES OF POLICIES
- --------------------------------------------------------------------------------
Policies may be purchased from registered representatives of W.S. Griffith &
Co., Inc. ("W.S. Griffith"), a corporation formed under the laws of the state of
New York on August 7, 1970, licensed to sell PHL Variable insurance policies as
well as policies, annuity contracts and funds of companies affiliated with PHL
Variable. W. S. Griffith, an indirect subsidiary of Phoenix, is registered as a
broker-dealer with the SEC under the Securities Exchange Act of 1934 ("1934
Act") and is a member of the National Association of Securities Dealers, Inc.
PEPCO serves as national distributor of the Policies. PEPCO is an indirect
subsidiary of Phoenix Investment Partners ("PXP"). Phoenix owns a majority
interest in PXP. Policies also may be purchased from other broker-dealers
registered under the 1934 Act whose representatives are authorized by applicable
law to sell Policies under terms of agreements provided by PEPCO. Sales
commissions will be paid to registered representatives on purchase payments
received by PHL Variable under these Policies. Total sales commission of a
maximum of 50% of premiums will be paid by PHL Variable to PEPCO. To the extent
that the sales charge under the Policies is less than the sales commissions paid
with respect to the Policies, PHL Variable will pay the shortfall from its
General Account assets, which will include any profits it may derive under the
Policies.
23
<PAGE>
The following are the Directors and Executive Officers of PEPCO:
NAME AND TITLE PRINCIPAL OCCUPATION
Michael E. Haylon Director
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice President,
100 Bright Meadow Blvd. Chief Financial Officer and
P.O. Box 2200 Treasurer
Enfield, CT 06083-2200
John F. Sharry Executive Vice President,
100 Bright Meadow Blvd. Retail Distribution
P.O. Box 2200
Enfield, CT 06083-2200
Paul A. Atkins Senior Vice President and
56 Prospect Street Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Mutual Fund
101 Munson Street Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
Eugene A. Charon Vice President and Corporate
100 Bright Meadow Blvd. Controller
P.O. Box 2200
Enfield, CT 06083-2200
Nancy G. Curtiss Vice President and Treasurer,
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and
56 Prospect Street Secretary
P.O. Box 150480
Hartford, CT 06115-0480
STATE REGULATION
- --------------------------------------------------------------------------------
PHL Variable is subject to the provisions of the Connecticut insurance laws
applicable to mutual life insurance companies and to regulation and supervision
by the Connecticut Superintendent of Insurance. PHL Variable also is subject to
the applicable insurance laws of all the other states and jurisdictions in which
it does an insurance business.
State regulation of PHL Variable includes certain limitations on the
investments which it may make, including investments for the VUL Account and the
GIA. It does not include, however, any supervision over the investment policies
of the VUL Account.
REPORTS
- --------------------------------------------------------------------------------
All Policyowners will be furnished with those reports required by the 1940
Act and regulations promulgated thereunder, or under any other applicable law or
regulation.
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The VUL Account is not engaged in any litigation. PHL Variable is not
involved in any litigation that would have a material adverse effect on its
ability to meet the obligations under the Policies.
LEGAL MATTERS
- --------------------------------------------------------------------------------
The organization of PHL Variable, its authority to issue variable life
insurance Policies, and the validity of the Policy have been passed upon by
Edwin L. Kerr, Counsel, Phoenix. Legal matters relating to the federal
securities and income tax laws have been passed upon for PHL Variable by Jorden
Burt Boros Cicchetti Berenson & Johnson, LLP.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A Registration Statement has been filed with the SEC, under the Securities
Act of 1933 ("1933 Act") as amended, with respect to the securities offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and amendments thereto and exhibits filed as a part
thereof, to all of which reference is made for further information concerning
the VUL Account, PHL Variable and the Policy. Statements contained in this
Prospectus as to the content of the Policy and other legal instruments are
summaries. For a complete statement of the terms thereof, reference is made to
such instruments as filed.
YEAR 2000 ISSUE
- --------------------------------------------------------------------------------
Many existing computer programs use only two digits to identify the year in
a date field. Commonly referred to as the "Year 2000 Issue," companies must
consider the impact of the upcoming change in the century on their computer
systems. The Year 2000 Issue, if not adequately addressed, could result in
computer system failures or miscalculations causing disruptions of operations
and the possible inability of companies to process transactions. PHL Variable
believes that the Year 2000 Issue is an important business priority requiring
careful analysis of every business system in order to be assured that all
information systems applications are century compliant.
Phoenix, PHL Variable's parent company, has been addressing the Year 2000
Issue in earnest since 1995 when, with consultants, a comprehensive inventory
and assessment of all business systems, including those of its subsidiaries, was
conducted. Phoenix has identified and is now actively pursuing a number of
strategies to address the issue, including:
- upgrading systems with compliant versions;
- developing or acquiring new systems to replace those that are obsolete;
- and remediating existing systems by converting code or hardware.
24
<PAGE>
Based on current assessments, Phoenix expects to have its computer systems
and those of its subsidiaries compliant by the end of 1998, with testing to
continue through 1999. In addition, Phoenix is examining the status of its
third-party vendors, obtaining assurances that their software and hardware
products will be century compliant by 1999.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The consolidated financial statements of PHL Variable contained herein
should be considered only as bearing upon PHL Variable's ability to meet its
obligations under the Policy. They should not be considered as bearing on the
investment performance of the VUL Account. The financial statements of the VUL
Account are not yet available.
25
<PAGE>
PHL VARIABLE
INSURANCE COMPANY
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
[TO BE FILED BY AMENDMENT]
26
<PAGE>
PHLVIC VARIABLE
UNIVERSAL LIFE ACCOUNT
FINANCIAL STATEMENTS
THE SUBACCOUNTS OF PHLVIC VARIABLE UNIVERSAL LIFE ACCOUNT TO WHICH
ALLOCATIONS UNDER THE POLICY MAY BE MADE WILL BE ACTIVATED UPON THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. THEREFORE, FINANCIAL
DATA WITH RESPECT TO THESE SUBACCOUNTS IS NOT AVAILABLE.
27
<PAGE>
APPENDIX A
THE GUARANTEED INTEREST ACCOUNT
Contributions to the GIA under the Policy and transfers to the GIA become
part of the PHL Variable General Account (the "General Account"), which supports
insurance and annuity obligations. Because of exemptive and exclusionary
provisions, interest in the General Account has not been registered under the
Securities Act of 1933 ("1933 Act") nor is the General Account registered as an
investment company under the Investment Company Act of 1940 ("1940 Act").
Accordingly, neither the General Account nor any interest therein is
specifically subject to the provisions of the 1933 or 1940 Acts and the staff of
the Securities and Exchange Commission has not reviewed the disclosures in this
Prospectus concerning the GIA. Disclosures regarding the GIA and the General
Account, however, may be subject to certain generally applicable provisions of
the federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
The General Account is made up of all of the general assets of PHL Variable
other than those allocated to any separate account. Premium payments will be
allocated to the GIA and, therefore, the General Account, as elected by the
Policyowner at the time of purchase or as subsequently changed. PHL Variable
will invest the assets of the General Account in assets chosen by it and allowed
by applicable law. Investment income from General Account assets is allocated
between PHL Variable and the contracts participating in the General Account, in
accordance with the terms of such contracts.
Investment income from the General Account allocated to PHL Variable
includes compensation for mortality and expense risks borne by it in connection
with General Account contracts.
The amount of investment income allocated to the Policies will vary from
year to year in the sole discretion of PHL Variable. However, PHL Variable
guarantees that it will credit interest at a rate of not less than 4% per year,
compounded annually, to amounts allocated to the unloaned portion of the GIA.
The loaned portion of the GIA will be credited interest at an effective annual
rate of 2%. PHL Variable may credit interest at a rate in excess of 4% per year;
however, it is not obligated to credit any interest in excess of 4% per year.
Biweekly, PHL Variable will set the excess interest rate, if any, that will
apply to amounts deposited to the GIA. That rate will remain in effect for such
deposits for an initial guarantee period of one full year from the date of
deposit. Upon expiration of the initial one-year guarantee period (and each
subsequent one-year guarantee period thereafter), the rate to be applied to any
deposits whose guaranteed period has just ended will be the same rate as is
applied to new deposits allocated at that time to the GIA. This rate will
likewise remain in effect for a guarantee period of one full year from the date
the new rate is applied.
Excess interest, if any, will be determined by PHL Variable based on
information as to expected investment yields. Some of the factors that PHL
Variable may consider in determining whether to credit interest to amounts
allocated to the GIA and the amount thereof, are general economic trends, rates
of return currently available and anticipated on investments, regulatory and tax
requirements and competitive factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED
TO THE GIA IN EXCESS OF 4% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF
PHL VARIABLE AND WITHOUT REGARD TO ANY SPECIFIC FORMULA. THE POLICY OWNER
ASSUMES THE RISK THAT INTEREST CREDITED TO GIA ALLOCATIONS MAY NOT EXCEED THE
MINIMUM GUARANTEE OF 4% FOR ANY GIVEN YEAR.
PHL Variable is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in PHL Variable's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
Policyholders, Contract Owners and shareholders.
Excess interest, if any, will be credited on the GIA Policy Value. PHL
Variable guarantees that, at any time, the GIA Policy Value will not be less
than the amount of premium payments allocated to the GIA, plus interest at the
rate of 4% per year, compounded annually, plus any additional interest which PHL
Variable may, in its discretion, credit to the GIA, less the sum of all annual
administrative or surrender charges, any applicable premium taxes, and less any
amounts surrendered or loaned. If the Policyowner surrenders the Policy, the
amount available from the GIA will be reduced by any applicable surrender charge
and annual administration charge. See "Deductions and Charges."
IN GENERAL, ONE TRANSFER PER CONTRACT YEAR IS ALLOWED FROM THE GIA. THE AMOUNT
WHICH CAN BE TRANSFERRED IS LIMITED TO THE GREATER OF $1,000 OR 25% OF THE
CONTRACT VALUE IN THE GIA AT THE TIME OF THE TRANSFER. UNDER THE SYSTEMATIC
TRANSFER PROGRAM, TRANSFERS OF APPROXIMATELY EQUAL AMOUNTS MAY BE MADE OVER A
MINIMUM 18-MONTH PERIOD. NON-SYSTEMATIC TRANSFERS FROM THE GIA WILL BE
EFFECTUATED ON THE DATE OF RECEIPT BY VPMO, UNLESS OTHERWISE REQUESTED BY THE
CONTRACT OWNER.
28
<PAGE>
APPENDIX B
ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES ("ACCOUNT VALUES")
AND CASH SURRENDER VALUES.
The tables on the following pages illustrate how a Policy's death benefits,
account values and Cash Surrender Value could vary over time assuming constant
hypothetical gross (after tax) annual investment returns of 0%, 6% and 12%. The
Policy benefits will differ from those shown in the tables if the annual
investment returns are not absolutely constant. That is, the figures will be
different if the returns averaged 0%, 6% or 12% over a period of years but went
above or below those figures in individual Policy Years. The Policy benefits
also will differ, depending on your premium allocations to each Subaccount of
the VUL Account, if the overall actual rates of return averaged 0%, 6% or 12%,
but went above or below those figures for the individual Subaccounts. The tables
are for standard risk males and females who have never smoked. In states where
cost of insurance rates are not based on the Insured's sex, the tables
designated "male" apply to all standard risk insureds who have never smoked.
Account Values and Cash Surrender Values may be lower for smokers or former
smokers or for risk classes involving higher mortality risk. Planned premium
payments are assumed to be paid at the beginning of each Policy Year. The
difference between the Policy Value and the Cash Surrender Value in the first 10
years is the Surrender Charge.
The death benefit, account value and Cash Surrender Value amounts reflect
the following current charges:
1. Issue Charge of $150.
2. Monthly Administrative Charge of $5 per month ($10 per month guaranteed
maximum).
3. Premium Tax Charge of 2.25%.
4. A Federal Tax Charge of 1.5%.
5. Cost of Insurance Charge. The tables illustrate cost of insurance at both
the current rates and at the maximum rates guaranteed in the Policies. See
"Charges and Deductions--Cost of Insurance."
6. Mortality and Expense Risk Charge, which is a daily charge equivalent to
.80% on an annual basis (or .25% on an annual basis after the 15th Policy
Year), against the VUL Account for mortality and expense risks. See "Charges
and Deductions--Mortality and Expense Risk Charge."
These illustrations also assume an average investment advisory fee of .73%
on an annual basis, of the average daily net asset value of each of the Series
of the Funds. These illustrations also assume other ongoing average Fund
expenses of .29%. All other Fund expenses, except capital items such as
brokerage commissions, are paid by the Adviser, Phoenix or PHL Variable.
Management may decide to limit the amount of expense reimbursement in the
future. If expense reimbursement had not been in place for the fiscal year ended
December 31, 1997, average total fund expenses for the Series would have been
approximately 1.14% of the average net assets. See "Charges and
Deductions--Investment Management Charge."
Taking into account the Mortality and Expense Risk Charge and the investment
advisory fees and expenses, the gross annual investment return rates of 0%, 6%
and 12% on the Funds' assets are equivalent to net annual investment return
rates of approximately -1.81%, 4.14% and 10.10%, respectively (applicable for
the first 15 Policy Years and -1.27%, 4.72% and 10.70%, respectively, after the
15th Policy Year). For individual illustrations, an interest rate ranging
between 0% and 12% may be selected in place of the 6% rate.
The hypothetical returns shown in the tables are without any tax charges
that may be attributable to the VUL Account in the future. If such tax charges
are imposed in the future, then in order to produce after tax returns equal to
those illustrated for 0%, 6% and 12%, a sufficiently higher amount in excess of
the hypothetical interest rates would have to be earned. See "Charges and
Deductions--Other Charges--Taxes."
The second column of each table shows the amount that would accumulate if an
amount equal to the premiums paid were invested to earn interest, after taxes,
at 5% compounded annually. These tables show that if a Policy is returned in its
very early years for payment of its Cash Surrender Value, that Cash Surrender
Value may be low in comparison to the amount of the premiums accumulated with
interest. Thus, the cost of owning a Policy for a relatively short time may be
high.
On request, we will furnish the Policyowner with a comparable illustration
based on the age and sex of the proposed insured person(s), standard risk
assumptions and the initial face amount and planned premium chosen.
29
<PAGE>
<TABLE>
PHL VARIABLE INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
<CAPTION>
CASH CASH CASH
ASSUMED ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- -------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 574 0 100,000 620 0 100,000 665 0 100,000
2 1,000 1,280 395 100,000 1,412 527 100,000 1,549 664 100,000
3 1,000 1,964 657 100,000 2,227 920 100,000 2,512 1,205 100,000
4 1,000 2,626 1,319 100,000 3,067 1,760 100,000 3,563 2,256 100,000
5 1,000 3,263 1,956 100,000 3,929 2,622 100,000 4,708 3,401 100,000
6 1,000 3,877 2,715 100,000 4,814 3,652 100,000 5,957 4,795 100,000
7 1,000 4,464 3,447 100,000 5,722 4,704 100,000 7,318 6,301 100,000
8 1,000 5,025 4,153 100,000 6,652 5,779 100,000 8,803 7,931 100,000
9 1,000 5,558 5,123 100,000 7,604 7,168 100,000 10,423 9,987 100,000
10 1,000 6,064 6,064 100,000 8,579 8,579 100,000 12,192 12,192 100,000
11 1,000 6,548 6,548 100,000 9,582 9,582 100,000 14,130 14,130 100,000
12 1,000 7,008 7,008 100,000 10,614 10,614 100,000 16,256 16,256 100,000
13 1,000 7,445 7,445 100,000 11,677 11,677 100,000 18,589 18,589 100,000
14 1,000 7,860 7,860 100,000 12,772 12,772 100,000 21,151 21,151 100,000
15 1,000 8,251 8,251 100,000 13,900 13,900 100,000 23,967 23,967 100,000
16 1,000 8,668 8,668 100,000 15,145 15,145 100,000 27,215 27,215 100,000
17 1,000 9,059 9,059 100,000 16,435 16,435 100,000 30,807 30,807 100,000
18 1,000 9,423 9,423 100,000 17,769 17,769 100,000 34,782 34,782 100,000
19 1,000 9,759 9,759 100,000 19,147 19,147 100,000 39,183 39,183 100,000
20 1,000 10,062 10,062 100,000 20,571 20,571 100,000 44,059 44,059 100,000
@ 65 1,000 9,987 9,987 100,000 39,172 39,172 100,000 148,790 148,790 178,548
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
34.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.82%
(includes mortality and expense risk charge of 0.8% for 15 years, then 0.25% and
average fund operating expenses of 1.27% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A GIA
providing interest at a minimum guaranteed rate of 4% also is available under
this product through the General Account.
This illustration assumes a premium tax of 2.25%.
30
<PAGE>
<TABLE>
PHL VARIABLE INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
<CAPTION>
CASH CASH CASH
ASSUMED ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- -------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 512 0 100,000 555 0 100,000 598 0 100,000
2 1,000 1,156 270 100,000 1,279 394 100,000 1,408 523 100,000
3 1,000 1,778 471 100,000 2,024 717 100,000 2,290 983 100,000
4 1,000 2,380 1,073 100,000 2,789 1,482 100,000 3,251 1,944 100,000
5 1,000 2,958 1,651 100,000 3,573 2,266 100,000 4,296 2,989 100,000
6 1,000 3,512 2,350 100,000 4,377 3,215 100,000 5,434 4,272 100,000
7 1,000 4,041 3,023 100,000 5,199 4,182 100,000 6,673 5,656 100,000
8 1,000 4,544 3,672 100,000 6,040 5,168 100,000 8,022 7,150 100,000
9 1,000 5,020 4,584 100,000 6,898 6,462 100,000 9,492 9,056 100,000
10 1,000 5,469 5,469 100,000 7,774 7,774 100,000 11,095 11,095 100,000
11 1,000 5,888 5,888 100,000 8,666 8,666 100,000 12,841 12,841 100,000
12 1,000 6,275 6,275 100,000 9,573 9,573 100,000 14,746 14,746 100,000
13 1,000 6,630 6,630 100,000 10,494 10,494 100,000 16,826 16,826 100,000
14 1,000 6,952 6,952 100,000 11,429 11,429 100,000 19,097 19,097 100,000
15 1,000 7,237 7,237 100,000 12,376 12,376 100,000 21,579 21,579 100,000
16 1,000 7,527 7,527 100,000 13,409 13,409 100,000 24,430 24,430 100,000
17 1,000 7,775 7,775 100,000 14,457 14,457 100,000 27,567 27,567 100,000
18 1,000 7,974 7,974 100,000 15,515 15,515 100,000 31,021 31,021 100,000
19 1,000 8,120 8,120 100,000 16,582 16,582 100,000 34,826 34,826 100,000
20 1,000 8,205 8,205 100,000 17,650 17,650 100,000 39,022 39,022 100,000
@ 65 1,000 2,743 2,743 100,000 27,763 27,763 100,000 128,862 128,862 154,635
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
34.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.82%
(includes mortality and expense risk charge of 0.8% for 15 years, then 0.25% and
average fund operating expenses of 1.27% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A GIA
providing interest at a minimum guaranteed rate of 4% also is available under
this product through the General Account.
This illustration assumes a premium tax of 2.25%.
31
<PAGE>
<TABLE>
PHL VARIABLE INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
<CAPTION>
CASH CASH CASH
ASSUMED ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- -------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 601 0 100,000 647 0 100,000 694 0 100,000
2 1,000 1,333 479 100,000 1,468 614 100,000 1,608 754 100,000
3 1,000 2,043 847 100,000 2,313 1,118 100,000 2,606 1,411 100,000
4 1,000 2,730 1,534 100,000 3,183 1,988 100,000 3,695 2,499 100,000
5 1,000 3,393 2,197 100,000 4,078 2,883 100,000 4,882 3,687 100,000
6 1,000 4,031 2,968 100,000 4,999 3,935 100,000 6,178 5,114 100,000
7 1,000 4,644 3,712 100,000 5,943 5,010 100,000 7,590 6,658 100,000
8 1,000 5,231 4,430 100,000 6,912 6,111 100,000 9,133 8,332 100,000
9 1,000 5,793 5,393 100,000 7,907 7,508 100,000 10,819 10,419 100,000
10 1,000 6,330 6,330 100,000 8,931 8,931 100,000 12,664 12,664 100,000
11 1,000 6,849 6,849 100,000 9,990 9,990 100,000 14,691 14,691 100,000
12 1,000 7,350 7,350 100,000 11,085 11,085 100,000 16,919 16,919 100,000
13 1,000 7,833 7,833 100,000 12,219 12,219 100,000 19,369 19,369 100,000
14 1,000 8,298 8,298 100,000 13,393 13,393 100,000 22,064 22,064 100,000
15 1,000 8,744 8,744 100,000 14,609 14,609 100,000 25,031 25,031 100,000
16 1,000 9,223 9,223 100,000 15,955 15,955 100,000 28,455 28,455 100,000
17 1,000 9,685 9,685 100,000 17,358 17,358 100,000 32,247 32,247 100,000
18 1,000 10,129 10,129 100,000 18,819 18,819 100,000 36,449 36,449 100,000
19 1,000 10,552 10,552 100,000 20,339 20,339 100,000 41,106 41,106 100,000
20 1,000 10,956 10,956 100,000 21,923 21,923 100,000 46,271 46,271 100,000
@ 65 1,000 13,687 13,687 100,000 44,450 44,450 100,000 157,337 157,337 188,805
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
39.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.82%
(includes mortality and expense risk charge of 0.8% for 15 years, then 0.25% and
average fund operating expenses of 1.27% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A GIA
providing interest at a minimum guaranteed rate of 4% also is available under
this product through the General Account.
This illustration assumes a premium tax of 2.25%.
32
<PAGE>
<TABLE>
PHL VARIABLE INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
<CAPTION>
CASH CASH CASH
ASSUMED ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- -------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 533 0 100,000 577 0 100,000 621 0 100,000
2 1,000 1,197 344 100,000 1,324 470 100,000 1,455 601 100,000
3 1,000 1,840 645 100,000 2,091 896 100,000 2,364 1,168 100,000
4 1,000 2,460 1,265 100,000 2,880 1,685 100,000 3,353 2,158 100,000
5 1,000 3,057 1,862 100,000 3,689 2,494 100,000 4,430 3,235 100,000
6 1,000 3,630 2,566 100,000 4,519 3,455 100,000 5,604 4,540 100,000
7 1,000 4,177 3,245 100,000 5,367 4,435 100,000 6,881 5,948 100,000
8 1,000 4,698 3,897 100,000 6,236 5,435 100,000 8,272 7,471 100,000
9 1,000 5,194 4,794 100,000 7,125 6,725 100,000 9,790 9,390 100,000
10 1,000 5,665 5,665 100,000 8,037 8,037 100,000 11,450 11,450 100,000
11 1,000 6,112 6,112 100,000 8,971 8,971 100,000 13,264 13,264 100,000
12 1,000 6,533 6,533 100,000 9,929 9,929 100,000 15,249 15,249 100,000
13 1,000 6,928 6,928 100,000 10,909 10,909 100,000 17,423 17,423 100,000
14 1,000 7,295 7,295 100,000 11,912 11,912 100,000 19,804 19,804 100,000
15 1,000 7,634 7,634 100,000 12,938 12,938 100,000 22,413 22,413 100,000
16 1,000 7,987 7,987 100,000 14,064 14,064 100,000 25,416 25,416 100,000
17 1,000 8,308 8,308 100,000 15,221 15,221 100,000 28,730 28,730 100,000
18 1,000 8,596 8,596 100,000 16,407 16,407 100,000 32,390 32,390 100,000
19 1,000 8,844 8,844 100,000 17,621 17,621 100,000 36,432 36,432 100,000
20 1,000 9,052 9,052 100,000 18,864 18,864 100,000 40,904 40,904 100,000
@ 65 1,000 7,958 7,958 100,000 34,597 34,597 100,000 137,312 137,312 164,775
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
39.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.82%
(includes mortality and expense risk charge of 0.8% for 15 years, then 0.25% and
average fund operating expenses of 1.27% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A GIA
providing interest at a minimum guaranteed rate of 4% also is available under
this product through the General Account.
This illustration assumes a premium tax of 2.25%.
33
<PAGE>
<TABLE>
PHL VARIABLE INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
<CAPTION>
CASH CASH CASH
ASSUMED ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- -------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 573 0 100,574 618 0 100,619 664 0 100,664
2 1,000 1,277 391 101,277 1,408 522 101,408 1,544 659 101,545
3 1,000 1,957 650 101,957 2,219 912 102,219 2,503 1,196 102,503
4 1,000 2,613 1,306 102,614 3,051 1,744 103,052 3,545 2,238 103,546
5 1,000 3,244 1,937 103,244 3,905 2,598 103,905 4,679 3,372 104,679
6 1,000 3,849 2,687 103,849 4,778 3,616 104,778 5,911 4,749 105,912
7 1,000 4,425 3,408 104,426 5,670 4,652 105,670 7,249 6,232 107,250
8 1,000 4,974 4,101 104,974 6,580 5,708 106,581 8,704 7,831 108,704
9 1,000 5,492 5,056 105,492 7,507 7,072 107,508 10,284 9,848 110,284
10 1,000 5,980 5,980 105,981 8,452 8,452 108,452 12,001 12,001 112,002
11 1,000 6,444 6,444 106,444 9,419 9,419 109,419 13,875 13,875 113,876
12 1,000 6,882 6,882 106,883 10,409 10,409 110,409 15,920 15,920 115,921
13 1,000 7,295 7,295 107,296 11,421 11,421 111,422 18,154 18,154 118,154
14 1,000 7,683 7,683 107,683 12,458 12,458 112,459 20,593 20,593 120,594
15 1,000 8,044 8,044 108,045 13,517 13,517 113,518 23,259 23,259 123,259
16 1,000 8,427 8,427 108,427 14,682 14,682 114,683 26,319 26,319 126,319
17 1,000 8,781 8,781 108,782 15,878 15,878 115,879 29,681 29,681 129,681
18 1,000 9,105 9,105 109,105 17,103 17,103 117,103 33,374 33,374 133,375
19 1,000 9,395 9,395 109,396 18,356 18,356 118,356 37,433 37,433 137,434
20 1,000 9,649 9,649 109,650 19,634 19,634 119,635 41,891 41,891 141,892
@ 65 1,000 8,627 8,627 108,628 33,973 33,973 133,973 131,485 131,485 231,486
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
33.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.82%
(includes mortality and expense risk charge of 0.8% for 15 years, then 0.25% and
average fund operating expenses of 1.27% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A GIA
providing interest at a minimum guaranteed rate of 4% also is available under
this product through the General Account.
This illustration assumes a premium tax of 2.25%.
34
<PAGE>
<TABLE>
PHL VARIABLE INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
<CAPTION>
CASH CASH CASH
ASSUMED ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- -------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 510 0 100,511 554 0 100,554 597 0 100,598
2 1,000 1,152 267 101,153 1,275 390 101,276 1,404 519 101,405
3 1,000 1,771 464 101,772 2,016 709 102,016 2,281 974 102,281
4 1,000 2,368 1,061 102,368 2,774 1,467 102,775 3,234 1,927 103,234
5 1,000 2,939 1,632 102,940 3,550 2,243 103,551 4,268 2,961 104,268
6 1,000 3,486 2,324 103,486 4,343 3,181 104,344 5,391 4,228 105,391
7 1,000 4,004 2,987 104,005 5,150 4,133 105,151 6,608 5,590 106,608
8 1,000 4,496 3,623 104,496 5,973 5,100 105,973 7,929 7,056 107,929
9 1,000 4,958 4,522 104,958 6,808 6,372 106,808 9,361 8,926 109,362
10 1,000 5,390 5,390 105,391 7,656 7,656 107,656 10,916 10,916 110,917
11 1,000 5,790 5,790 105,791 8,513 8,513 108,514 12,602 12,602 112,602
12 1,000 6,157 6,157 106,157 9,379 9,379 109,379 14,429 14,429 114,429
13 1,000 6,487 6,487 106,488 10,250 10,250 110,251 16,410 16,410 116,410
14 1,000 6,781 6,781 106,782 11,127 11,127 111,127 18,558 18,558 118,559
15 1,000 7,036 7,036 107,036 12,003 12,003 112,004 21,887 20,887 120,887
16 1,000 7,290 7,290 107,291 12,951 12,951 112,952 23,543 23,543 123,543
17 1,000 7,498 7,498 107,498 13,899 13,899 113,899 26,436 26,436 126,436
18 1,000 7,652 7,652 107,652 14,839 14,839 114,839 29,585 29,585 129,586
19 1,000 7,748 7,748 107,748 15,765 15,765 115,765 33,011 33,011 133,012
20 1,000 7,777 7,777 107,777 16,667 16,667 116,667 36,734 36,734 136,735
@ 65 1,000 1,457 1,457 101,458 21,723 21,723 121,724 105,882 105,882 205,882
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
33.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.82%
(includes mortality and expense risk charge of 0.8% for 15 years, then 0.25% and
average fund operating expenses of 1.27% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A GIA
providing interest at a minimum guaranteed rate of 4% also is available under
this product through the General Account.
This illustration assumes a premium tax of 2.25%.
35
<PAGE>
<TABLE>
PHL VARIABLE INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
<CAPTION>
CASH CASH CASH
ASSUMED ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- -------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 600 0 100,601 646 0 100,647 693 0 100,693
2 1,000 1,330 476 101,330 1,464 610 101,465 1,605 751 101,605
3 1,000 2,036 841 102,037 2,306 1,110 102,306 2,598 1,402 102,598
4 1,000 2,718 1,523 102,719 3,170 1,975 103,171 3,679 2,484 103,679
5 1,000 3,375 2,180 103,376 4,057 2,862 104,058 4,856 3,660 104,856
6 1,000 4,006 2,943 104,007 4,966 3,903 104,967 6,136 5,073 106,137
7 1,000 4,609 3,677 104,610 5,896 4,964 105,897 7,528 6,596 107,529
8 1,000 5,185 4,384 105,185 6,847 6,046 106,848 9,043 8,242 109,044
9 1,000 5,733 5,333 105,733 7,820 7,421 107,821 10,693 10,294 110,694
10 1,000 6,254 6,254 106,255 8,816 8,816 108,817 12,492 12,492 112,493
11 1,000 6,755 6,755 106,756 9,843 9,843 109,843 14,461 14,461 114,462
12 1,000 7,237 7,237 107,237 10,900 10,900 110,901 16,617 16,617 116,618
13 1,000 7,698 7,698 107,699 11,990 11,990 111,990 18,979 18,979 118,980
14 1,000 8,139 8,139 108,139 13,112 13,112 113,113 21,566 21,566 121,567
15 1,000 8,560 8,560 108,560 14,269 14,269 114,269 24,402 24,402 124,403
16 1,000 9,010 9,010 109,010 15,545 15,545 115,546 27,663 27,663 127,663
17 1,000 9,440 9,440 109,440 16,868 16,868 116,868 31,257 31,257 131,258
18 1,000 9,849 9,849 109,849 18,236 18,236 118,237 35,220 35,220 135,221
19 1,000 10,235 10,235 110,235 19,651 19,651 119,651 39,587 39,587 139,588
20 1,000 10,598 10,598 110,599 21,114 21,114 121,114 44,404 44,404 144,405
@ 65 1,000 12,600 12,600 112,600 40,508 40,508 140,509 144,543 144,543 244,543
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
38.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.82%
(includes mortality and expense risk charge of 0.8% for 15 years, then 0.25% and
average fund operating expenses of 1.27% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A GIA
providing interest at a minimum guaranteed rate of 4% also is available under
this product through the General Account.
This illustration assumes a premium tax of 2.25%.
36
<PAGE>
<TABLE>
PHL VARIABLE INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
<CAPTION>
CASH CASH CASH
ASSUMED ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- -------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 532 0 100,533 576 0 100,577 620 0 100,621
2 1,000 1,194 340 101,195 1,320 466 101,321 1,452 598 101,452
3 1,000 1,834 638 101,834 2,084 889 102,084 2,355 1,160 102,356
4 1,000 2,449 1,254 102,450 2,867 1,672 102,867 3,338 2,142 103,338
5 1,000 3,040 1,845 103,041 3,668 2,473 102,669 4,405 3,209 104,405
6 1,000 3,606 2,542 103,606 4,487 3,423 104,488 5,563 4,500 105,564
7 1,000 4,143 3,221 104,144 5,322 4,390 105,322 6,820 5,888 106,821
8 1,000 4,653 3,852 104,653 6,173 5,372 106,173 8,185 7,384 108,185
9 1,000 5,136 4,736 105,136 7,041 6,641 107,041 9,668 9,269 109,669
10 1,000 5,592 5,592 105,592 7,926 7,926 107,926 11,283 11,283 111,283
11 1,000 6,021 6,021 106,021 8,828 8,828 108,829 13,040 13,040 113,040
12 1,000 6,423 6,423 106,423 9,748 9,748 109,748 14,954 14,954 114,954
13 1,000 6,795 6,795 106,796 10,683 10,683 110,683 17,037 17,037 117,038
14 1,000 7,137 7,137 107,137 11,632 11,632 111,633 19,306 19,306 119,306
15 1,000 7,448 7,448 107,449 12,595 12,595 112,596 21,777 21,777 121,778
16 1,000 7,769 7,769 107,769 13,645 13,645 113,645 24,604 24,604 124,605
17 1,000 8,055 8,055 108,055 14,712 14,712 114,713 27,701 27,701 127,702
18 1,000 8,302 8,302 108,303 15,794 15,794 115,795 31,093 31,093 131,093
19 1,000 8,506 8,506 108,506 16,885 16,885 116,886 34,804 34,804 134,804
20 1,000 8,665 8,665 108,666 17,985 17,985 117,985 38,868 38,868 138,868
@ 65 1,000 6,731 6,731 106,732 29,711 29,711 129,711 119,992 119,992 219,992
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
38.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.82%
(includes mortality and expense risk charge of 0.8% for 15 years, then 0.25% and
average fund operating expenses of 1.27% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A GIA
providing interest at a minimum guaranteed rate of 4% also is available under
this product through the General Account.
This illustration assumes a premium tax of 2.25%.
37
<PAGE>
PART II. OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
RULE 484 UNDERTAKING
Section 5.9 of the Connecticut Corporation Law & Practice, provides that a
corporation may indemnify any director or officer of the corporation made, or
threatened to be made, a party to an action or proceeding other than one by or
in the right of the corporation to procure a judgment in its favor, whether
civil or criminal, including an action by or in the right of any other
corporation of any type or kind, by reason of the fact that he, his testator or
intestate, served such other corporation in any capacity at the request of the
indemnifying corporation.
Article V of the Bylaws of the Company provides that: "Each person who is or
was a director or officer of the Company (including the heirs, executors,
administrators or estate of such person) shall be indemnified by the Company as
of right to full extent permitted or authorized by the laws of the State of
Connecticut against any liability, cost or expense asserted against him and
incurred by him by reason of his capacity as a director or officer, or arising
out of his status as a director or officer."
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION PURSUANT TO SECTION 26(E)(2)(A) UNDER THE INVESTMENT COMPANY
ACT OF 1940.
Pursuant to Section 26(e)(2)(A) of the Investment Company Act of 1940, as
amended, PHL Variable Insurance Company represents that the fees and charges
deducted under the Policies, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred and the risks to be
assumed thereunder by PHL Variable Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This Form S-6 Registration Statement comprises the following papers and
documents:
The facing sheet.
The cross-reference sheet to Form N-8B-2.
The Prospectus describing Policy Form V605 ("Flex Edge Success"), consisting
of 37 pages.
The undertaking to file reports.
The Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A) under the Investment Company
Act of 1940.
The signature page.
The powers of attorney.
Written consents of the following persons:
(a) Edwin L. Kerr, Esq., to be filed by Amendment.
(b) Jorden Burt Boros Cicchetti Berenson & Johnson LLP, to be filed by
Amendment.
(c) PricewaterhouseCoopers, LLP, to be filed by Amendment.
(d) Paul M. Fischer, FSA, CLU, ChFC, to be filed by Amendment.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A to the
instructions as to exhibits in Form N-8B-2:
II-1
<PAGE>
A. (1) Resolution of the Board of Directors of Depositor establishing the
VUL Account.*
(2) Not Applicable.
(3) Distribution of Policies:
(a) Master Service and Distribution Compliance Agreement between
Depositor and Phoenix Equity Planning Corporation, to be
filed by Amendment.
(b) Form of Broker Dealer Supervisory and Service Agreement
between Phoenix Equity Planning Corporation and Independent
Brokers with respect to the sale of Policies, to be filed by
Amendment.
(c) Not Applicable.
(4) Not Applicable.
(5) Specimen Policy.
Flexible Premium Variable Universal Life Insurance Policy Form
Number V605 of Depositor.*
(6) (a) Charter of PHL Variable Insurance Company, filed via
Edgar with the PHL Variable Accumulation Account, Form N-4
Registration Statement (File No. 33-87376) on December 14,
1994 and incorporated herein by reference.
(b) By-Laws of PHL Variable Insurance Company filed via Edgar
with the PHL Variable Accumulation Account, Form N-4
Registration Statement (File No. 33-87376) on December 14,
1994, and incorporated herein by reference.
(7) Not Applicable.
(8) (a) Participation Agreement(s) between PHL Variable Insurance
Company and Wanger Advisors Trust.*
(b) Participation Agreement between PHL Variable Insurance
Company and Franklin Templeton Distributors, Inc.*
(9) Not Applicable.
(10) Form of application for Flex Edge Success.*
(11) Memorandum describing transfer and redemption procedures and
method of computing adjustments in payments and cash values upon
conversion to fixed benefit policies.*
2. Opinion of Edwin L. Kerr, Esq., Counsel of Depositor, as to the legality of
the securities being registered. (See Exhibit 8 below.)
3. Not Applicable. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not Applicable.
5. Not Applicable.
6. Consent of Jorden Burt Boros Cicchetti Berenson & Johnson, LLP, to be filed
by Amendment.
7. Consent of PricewaterhouseCooper, LLP, to be filed by Amendment.
8. Opinion and Consent of Edwin L. Kerr, Esq., to be filed by Amendment.
9. Opinion and Consent of Paul M. Fischer, FSA, CLU, ChFC, to be filed by
Amendment.
- --------------
* Filed herewith.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
PHLVIC Variable Universal Life Account has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Hartford, State of Connecticut on the 16th day of
October, 1998.
PHLVIC VARIABLE UNIVERSAL LIFE ACCOUNT
--------------------------------------
(Registrant)
By: PHL VARIABLE INSURANCE COMPANY
----------------------------------------
(Depositor)
By: /s/ Dona D. Young
--------------------------------------------------
*Dona D. Young, Executive Vice President,
Individual Insurance
ATTEST: /s/ Emily J. Poriss
------------------------------------------
Emily J. Poriss, Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 16th day of October, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Director
- ----------------------------------------
*Richard H. Booth
Director
- ----------------------------------------
*Robert G. Chipkin
- ---------------------------------------- Chairman of the Board, President and Chief
*Robert W. Fiondella Executive Officer (Principal Executive Officer)
Director
- ----------------------------------------
*Joseph E. Kelleher
Director
- ----------------------------------------
*Philip R. McLoughlin
Director, Executive Vice President, Chief
- ---------------------------------------- Financial Officer and Treasurer (Principal
*David W. Searfoss Accounting and Financial Officer)
Director
- ----------------------------------------
*Simon Y. Tan
Director
- ----------------------------------------
*Dona D. Young
</TABLE>
By: /s/ Dona D. Young
-------------------------------------------------------
* Dona D. Young as Attorney-in-Fact pursuant to Powers of Attorney, copies of
which are filed herewith.
S-1(c)
<PAGE>
POWERS OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to securities issued or sold
by PHL Variable Insurance Company or any of its separate accounts and any and
all periodic reports required to be filed by PHL Variable Insurance Company with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/Robert W. Fiondella , Director September 2, 1998
- -----------------------------------
Robert W. Fiondella
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to securities issued or sold
by PHL Variable Insurance Company or any of its separate accounts and any and
all periodic reports required to be filed by PHL Variable Insurance Company with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/Richard H. Booth , Director September 3, 1998
- -----------------------------------
Richard H. Booth
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to securities issued or sold
by PHL Variable Insurance Company or any of its separate accounts and any and
all periodic reports required to be filed by PHL Variable Insurance Company with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/Robert G. Chipkin , Director September 1, 1998
- -----------------------------------
Robert G. Chipkin
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to securities issued or sold
by PHL Variable Insurance Company or any of its separate accounts and any and
all periodic reports required to be filed by PHL Variable Insurance Company with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/Philip R. McLoughlin , Director September 4, 1998
- -----------------------------------
Philip R. McLoughlin
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to securities issued or sold
by PHL Variable Insurance Company or any of its separate accounts and any and
all periodic reports required to be filed by PHL Variable Insurance Company with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/David W. Searfoss , Director September 1, 1998
- -----------------------------------
David W. Searfoss
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to securities issued or sold
by PHL Variable Insurance Company or any of its separate accounts and any and
all periodic reports required to be filed by PHL Variable Insurance Company with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/Dona D. Young , Director September 2, 1998
- -----------------------------------
Dona D. Young
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to securities issued or sold
by PHL Variable Insurance Company or any of its separate accounts and any and
all periodic reports required to be filed by PHL Variable Insurance Company with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/Joseph E. Kelleher , Director September 2, 1998
- -----------------------------------
Joseph E. Kelleher
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to securities issued or sold
by PHL Variable Insurance Company or any of its separate accounts and any and
all periodic reports required to be filed by PHL Variable Insurance Company with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, and hereby ratify and confirm my signature as it may be signed by said
attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/Simon Y. Tan , Director September 8, 1998
- -----------------------------------
Simon Y. Tan
Exhibit 1.A.(1)
RESOLUTION OF THE BOARD OF DIRECTORS OF DEPOSITOR
ESTABLISHING THE VUL ACCOUNT
<PAGE>
I, Nancy J. Engberg, Secretary of PHL Variable Insurance Company, hereby certify
that the annexed vote was duly adopted by action of the Board of Directors of
PHL Variable Insurance Company pursuant to statutory written consent, effective
September 10, 1998, and that said vote has not been rescinded or modified and it
is in effect on the date hereof.
Dated: September 25, 1998 /s/Nancy J. Engberg
------------------------ -------------------------------
Nancy J. Engberg
<PAGE>
PHL VARIABLE INSURANCE COMPANY
Establishment of PHLVIC Variable Universal Life Account
WHEREAS, Section 38a-433 of the Connecticut Insurance Laws permits a domestic
life insurance company to establish one or more separate accounts; and
WHEREAS, it is desired that the Company create such a separate account to house
certain of its variable life insurance products;
NOW, THEREFORE, BE IT RESOLVED: That a separate account referred to herein as
"PHLVIC Variable Universal Life Account" is hereby established.
FURTHER RESOLVED: That the assets of PHLVIC Variable Universal Life Account
shall be derived solely from (a) the sale of variable life insurance products,
(b) funds corresponding to dividend accumulation with respect to investment of
such assets, and (c) advances made by the Company in connection with the
operation of PHLVIC Variable Universal Life Account.
FURTHER RESOLVED: That this Company shall maintain in PHLVIC Variable Universal
Life Account assets with a fair market value at least equal to the statutory
valuation reserves for the variable life insurance policies.
FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized in his or her discretion, as the Company may deem appropriate
from time to time, in accordance with applicable laws and regulations (a) to
divide PHLVIC Variable Universal Life Account into divisions and subdivisions,
with each division or subdivision investing in shares of designated classes of
designated investment companies or other appropriate securities, (b) to modify
or eliminate any such divisions or subdivisions, (c) to designate further any
division or subdivision thereof and (d) to change the designation of PHLVIC
Variable Universal Life Account to another designation.
FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized to invest cash from the Company's general account in PHLVIC
Variable Universal Life Account or in any division or subdivision thereof as may
be deemed necessary or appropriate to facilitate the commencement of the
operations of PHLVIC Variable Universal Life Account or to meet any minimum
capital requirements under the Investment Company Act of 1940 and to transfer
cash or securities from time to time between the Company's general account and
PHLVIC Variable Universal Life Account as deemed necessary or appropriate so
long as such transfers are not prohibited by law and are consistent with the
terms of the variable life insurance policies issued by the Company providing
for allocations to PHLVIC Variable Universal Life Account.
FURTHER RESOLVED: That the income, gains, and losses (whether or not realized)
from assets allocated to PHLVIC Variable Universal Life Account shall, in
accordance with any variable life insurance policies issued by the Company
providing for allocations to PHLVIC
<PAGE>
Variable Universal Life Account, be credited to or charged against PHLVIC
Variable Universal Life Account without regard to the other income, gains, or
losses of the Company.
FURTHER RESOLVED: That authority is hereby delegated to the President of the
Company to adopt procedures regarding, among other things, criteria by which the
Company shall afford a pass-through of voting rights to the owners of variable
life insurance policies providing for allocation to PHLVIC Variable Universal
Life Account with respect to the shares of any investment companies which are
held in PHLVIC Variable Universal Life Account.
FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized and directed to prepare and execute any necessary agreements to
enable PHLVIC Variable Universal Life Account to invest or reinvest the assets
of PHLVIC Variable Universal Life Account in securities issued by investment
companies registered under the Investment Company Act of 1940 or other
appropriate securities as the officers of the Company may designate pursuant to
the provisions of the variable life insurance policies providing for allocations
to PHLVIC Variable Universal Life Account.
FURTHER RESOLVED: That the Company may register under the Securities Act of 1933
variable life insurance policies, or units of interest thereunder, under which
amounts will be allocated by the Company to PHLVIC Variable Universal Life
Account to support reserves for such policies and, in connection therewith, the
officers of the Company be, and each of them hereby is, authorized, to prepare,
execute and file with the Securities and Exchange Commission, in the name and on
behalf of the Company, registration statements under the Securities Act of 1933,
including prospectuses, supplements, exhibits and other documents relating
thereto, and amendments to the foregoing, in such form as the officer executing
the same may deem necessary or appropriate.
FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized to take all actions necessary to register PHLVIC Variable
Universal Life Account as a unit investment trust under the Investment Company
Act of 1940 and to take such related actions as they deem necessary and
appropriate to carry out the foregoing.
FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized to prepare, execute and file with the Securities and Exchange
Commission, applications and amendments thereto for such exemptions from or
orders under the Investment Company Act of 1940 and the Securities Act of 1933,
and to request from the Securities and Exchange Commission no-action and
interpretative letters as they may from time to time deem necessary or
desirable.
FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized to prepare, execute and file all periodic reports required under
the Investment Company Act of 1940 and the Securities Exchange Act of 1934.
FURTHER RESOLVED: That the Secretary of the Company, or the person as is
designated by the Secretary from time to time, is hereby appointed as agent for
service under any such
<PAGE>
registration statement and is duly authorized to receive communications and
notices from the Securities and Exchange Commission with respect thereto, and to
exercise powers given to such agent by the Securities Act of 1933 and the Rules
thereunder and any other necessary Act.
FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized to effect in the name and on behalf of the Company, all such
registrations, filings and qualifications under blue sky or other applicable
securities laws and regulations and under insurance securities laws and
insurance laws and regulations of such states and other jurisdictions as they
may deem necessary or appropriate, with respect to the Company, and with respect
to any variable life insurance policies under which amounts will be allocated by
the Company to PHLVIC Variable Universal Life Account to support reserves for
such policies; such authorization shall include registration, filing and
qualification of the Company and of said policies, as well as registration,
filing and qualification of officers, employees and agents of the Company as
brokers, dealers, agents, salespersons, or otherwise; and such authorization
shall also include, in connection therewith, authority to prepare, execute,
acknowledge and file all such applications, applications for exemptions,
certificates, affidavits, covenants, consents to service of process and other
instruments, and to take all such action as the officer executing the same or
taking such action may deem necessary or desirable.
FURTHER RESOLVED: That the officers of the Company be, and each of them hereby
is, authorized to execute and deliver all such documents and papers and to do or
cause to be done all such acts and things as they may deem necessary or
desirable to carry out the foregoing resolutions and the intent and purpose
thereof.
Exhibit 1.A.(5)
SPECIMEN POLICY
<PAGE>
[logo] PHOENIX PHL Variable Insurance Company
Main Administrative Office
One American Row
Hartford, CT 06115
- --------------------------------------------------------------------------------
INSURED : John Doe 35 Male : ISSUE AGE AND SEX
POLICY NUMBER : 2,000,000 August 1, 1998 : POLICY DATE
FACE AMOUNT : $100,000.00
Dear Policyowner:
We agree to pay the benefits of this policy in accordance with its provisions.
It is important to Us that You are satisfied with your policy and that it meets
your insurance goals. For service or information on this policy, contact the
agent who sold the policy, any of Our agency offices, or Variable and Universal
Life Administration at the following address:
PHL VARIABLE INSURANCE COMPANY
VARIABLE PRODUCTS MAIL OPERATIONS
PO Box 8027
Boston, MA 02266-8027
RIGHT TO CANCEL. You have the right to cancel this policy within a limited time
after the policy is delivered to You. The policy may be cancelled by returning
the policy to Us at Variable and Universal Life Administration before the later
of:
1. 10 days after the policy is delivered to You; or
2. 10 days after a Notice of Right to Cancel is delivered to You; or
3. 45 days after Part 1 of the application is signed;
for a refund of:
1. the Policy Value less debt, if any; plus
2. any monthly deductions, partial surrender fees, and other charges made under
the policy.
The Policy Value and debt will be determined as of the nearest Valuation Date
coincident with or following the date We receive the returned policy at Variable
and Universal Life Division.
Signed for PHL Variable Insurance Company at its Main Administrative Office in
Hartford, Connecticut.
Sincerely yours,
/s/ Nancy J. Engberg /s/ Robert W. Fiondella
- ----------------------------------- -----------------------------------
Nancy J. Engberg Robert W. Fiondella
Secretary Chief Executive Officer
Registrar
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE
RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST
ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS WITHIN OUR SEPARATE
ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. THUS, THE DEATH BENEFIT AND OTHER
VALUES MAY INCREASE OR DECREASE IN AMOUNT OR DURATION. SEE PART 7 FOR A
DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
V605 ELIGIBLE FOR ANNUAL DIVIDENDS
<PAGE>
SCHEDULE PAGE
BASIS INFORMATION
INSURED : John Doe 35-Male : ISSUE AGE AND SEX
POLICY NUMBER : 2,000,000 August 1, 1998 : POLICY DATE
FACE AMOUNT : $100,000.00
OWNER AS STATED IN THE APPLICATION UNLESS LATER CHANGED.
DEATH BENEFIT OPTION: Death Benefit Option 1 or as later changed as provided
herein.
BENEFICIARY AS STATED IN THE APPLICATION UNLESS LATER CHANGED.
PREMIUMS
--------
ISSUE PREMIUM: $1,000.00 due on August 1, 1998
SUBSEQUENT PLANNED ANNUAL PREMIUM: $1,000.00
TOTAL PREMIUM LIMIT: Greater of $16,257.00 and result of $1,331.00
multiplied by the number of policy elapsed years (or
fraction thereof) ending on August 1, 2063
PREMIUM DUE DATES: The amount and time of premium payments following the
Policy Date are flexible. Subsequent planned premiums
are payable on the first day of each August thereafter
for the life of the insured, but not beyond August 1,
2063.
SUBACCOUNT ALLOCATION SCHEDULE ON THE POLICY DATE
-------------------------------------------------
MONTHLY
SUBACCOUNT* PREMIUMS DEDUCTIONS**
Money Market 100% Proportionate
* See next page for description of subaccounts.
** See Part 1 for definition of Proportionate. Subaccounts marked "NONE" will
be charged with a portion of the monthly deduction only if the subaccounts
marked "PROPORTIONATE" are not sufficient to make the full monthly
deduction.
V605 PAGE 1 OF 9
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
SEPARATE ACCOUNT SUBACCOUNTS
THE PHOENIX EDGE SERIES FUND
MONEY MARKET The investment objective of the Money Market
Subaccount is to provide maximum current income
consistent with capital preservation and liquidity.
The Money Market Subaccount invests exclusively in
high quality money market instruments.
GROWTH The investment objective of the Growth Subaccount is
to achieve intermediate and long-term growth of
capital, with income as a secondary consideration. The
Growth Subaccount invests principally in common stocks
of corporations believed by management to offer growth
potential.
MULTI-SECTOR FIXED The investment objective of the Multi-Sector
INCOME ("MULTI-SECTOR") Subaccount is to seek long-term total return. The
Multi-Sector Subaccount seeks to achieve its
investment objective by investing in a diversified
portfolio of high yield and high quality fixed income
securities.
STRATEGIC ALLOCATION The investment objective of the Allocation Subaccount
("ALLOCATION") is to realize as high a level of total return over an
extended period of time as is considered consistent
with prudent investment risk. The Allocation
Subaccount invests in stocks, bonds and money market
instruments in accordance with the Investment
Adviser's appraisal of investments most likely to
achieve the highest total return.
INTERNATIONAL The investment objective of the International
Subaccount is to seek a high total return consistent
with reasonable risk. The International Subaccount
invests primarily in an internationally diversified
portfolio of equity securities. It intends to reduce
its risk by engaging in hedging transactions involving
options, futures contracts and foreign currency
transactions. The International Subaccount provides a
means for investors to invest a portion of their
assets outside the United States.
BALANCED The investment objective of the Balanced Subaccount is
to seek reasonable income, long-term capital growth
and conservation of capital. The Balanced Subaccount
invests based on combined considerations of risk,
income, capital enhancement and protection of capital
value.
REAL ESTATE SECURITIES The investment objective of the Real Estate Subaccount
("REAL ESTATE") is to seek capital appreciation and income with
approximately equal emphasis. Under normal
circumstances, it invests in marketable securities of
publicly traded real estate investment trusts (REITs)
and companies
V605 PAGE 2 OF 9
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
that operate, develop, manage and/or invest in real
estate located primarily in the United States.
STRATEGIC THEME The investment objective of the Theme Subaccount is to
("THEME") seek long-term appreciation of capital by identifying
securities benefiting from long-term trends present in
the United States and abroad. The Theme Subaccount
invests primarily in common stocks believed to have
substantial potential for capital growth.
ABERDEEN NEW ASIA The investment objective of the Asia Subaccount is to
("ASIA") seek long-term capital appreciation. The Asia
Subaccount invests primarily in a diversified portfolio
of equity securities of issuers organized and
principally operating in Asia, excluding Japan.
RESEARCH ENHANCED INDEX The investment objective of the Enhanced Index
("ENHANCED INDEX") Subaccount is to seek high total return by investing in
a broadly diversified portfolio of equity securities of
large and medium capitalization companies within market
sectors reflected in the S&P 500. The Enhanced Index
Subaccount invests in a portfolio of undervalued common
stocks and other equity securities which appear to
offer growth potential and an overall volatility of
return similar to that of the S&P 500.
ENGEMANN NIFTY FIFTY The investment objective of the Nifty Fifty Subaccount
("NIFTY FIFTY") is to seek long-term capital appreciation by investing
in approximately 50 different securities which offer
the best potential for long-term growth of capital. At
least 75% of the Subaccount assets will be invested in
common stocks of high quality growth companies. The
remaining portion will be invested in common stocks of
small corporations with rapidly growing earnings per
share or common stocks believed to be undervalued.
SENECA MID-CAP GROWTH The investment objective of the Seneca Mid-Cap
("SENECA MID-CAP") Subaccount is to seek capital appreciation primarily
through investments in equity securities of companies
that have the potential for above average market
appreciation. The Subaccount seeks to outperform the
Standard & Poor's Mid-Cap 400 Index.
PHOENIX GROWTH AND The investment objective of the Growth & Income
INCOME ("GROWTH & Subaccount is to seek dividend growth, current income
INCOME") and capital appreciation by investing in common stocks.
The Growth & Income Subaccount seeks to achieve its
objective by selecting securities primarily from equity
securities of the 1,000 largest companies traded in the
United States, ranked by market capitalization.
PHOENIX VALUE EQUITY The primary investment objective of the Value
("VALUE") Subaccount is long-term capital appreciation, with a
secondary investment objective of
V605 PAGE 3 OF 9
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
current income. The Value Subaccount seeks to achieve
its objective by investing in a diversified portfolio
of common stocks that meet certain quantitative
standards that indicate above average financial
soundness and intrinsic value relative to price.
SCHAFER MID-CAP VALUE The primary investment objective of the Schafer Mid-
("SCHAFER MID-CAP") Cap Subaccount is to seek long-term capital
appreciation, with current income as the secondary
investment objective. The Schafer Mid-Cap Subaccount
will invest in common stocks of established companies
having a strong financial position and a low stock
market valuation at the time of purchase which are
believed to offer the possibility of increase in
value.
WANGER ADVISORS TRUST
WANGER U.S. SMALL CAP The investment objective of the U.S. Small Cap
("U.S. SMALL CAP") Subaccount is to provide long-term growth. The U.S.
Small Cap Subaccount invests primarily in securities
of U.S. companies with total common stock market
capitalization of less than $1 billion.
WANGER INTERNATIONAL The investment objective of the International Small
SMALL CAP ("INTERNATIONAL Cap Subaccount is to provide long-term growth. The
SMALL CAP") International Small Cap Subaccount invests primarily
in securities of non-U.S. companies with total common
stock market capitalization of less than $1 billion.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
TEMPLETON STOCK The investment objective of the Stock Subaccount is to
("STOCK") provide capital growth. The Stock Subaccount invests
primarily in common stocks issued by companies, large
and small, in various nations throughout the world.
TEMPLETON ASSET The investment objective of the TPT Allocation
ALLOCATION ("TPT Subaccount is to seek a high level of total return
ALLOCATION") through a flexible investment policy. The TPT
Allocation Subaccount invests in stocks of companies
of any nation, debt securities of companies and
governments of any nation and in money market
instruments. Changes in the asset mix will be made in
an attempt to capitalize on total return potential
produced by changing economic conditions throughout
the world.
TEMPLETON INTERNATIONAL The investment objective of the TPT International
("TPT INTERNATIONAL") Subaccount is to seek long-term capital growth through
a flexible policy of investing. The TPT International
Subaccount invests in stocks and debt obligations of
companies and governments outside the United States.
Any income realized will be incidental. Although the
Subaccount generally invests in common stock, it also
may invest in preferred
V605 PAGE 4 OF 9
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
stocks and certain debt securities such as convertible
bonds which are rated in any category by S&P or
Moody's or which are unrated by any rating agency.
TEMPLETON DEVELOPING The investment objective of the Developing Markets
MARKETS ("DEVELOPING Subaccount is to seek long-term capital appreciation.
MARKETS") The Developing Markets Subaccount invests primarily in
equity securities of issuers in countries having
developing markets.
TEMPLETON MUTUAL SHARES The primary investment objective of the Shares
INVESTMENTS ("SHARES") Subaccount is to seek capital appreciation with income
as a secondary objective. The Shares Subaccount
invests in domestic equity securities and domestic
debt obligations.
GENERAL ACCOUNT SUBACCOUNTS
GUARANTEED INTEREST The GIA is not part of the Separate Account. We
ACCOUNT ("GIA") reserve the right to limit cumulative deposits made to
the GIA during any one-week period to not more than
$250,000. It is accounted for as part of Our General
Account. We will credit interest daily on any amounts
held under the unloaned portion of the GIA at such
rates as We shall determine but in no event will the
effective annual rate of interest be less than 4%.
Twice each calendar month We will set the interest
rate that will apply to any deposit made to the
unloaned portion of the GIA, during the applicable
period of that month. That rate will remain in effect
for such deposits for an initial guaranteed period, of
one full year. Upon expiry of the initial one-year
guarantee period and for any deposits whose guarantee
has just ended, the applicable rate shall be the same
rate that applies to new deposits made at the time the
guarantee period expires. Such rate shall likewise
remain in effect for such deposits for a subsequent
guarantee period of one full year.
V605 PAGE 5 OF 9
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
SUBACCOUNT FEES
---------------
MAXIMUM DAILY MORTALITY AND EXPENSE RISK FEE:
0.0000219 (Based on Annual Rate of 0.80% for 15 policy
years)
0.0000068 (Based on Annual Rate of 0.25% after 15
policy Years)
MAXIMUM DAILY TAX FEE: 0 or such greater amount as may be assessed as a
result of a change in tax laws.
POLICY CHARGES
--------------
ISSUE EXPENSE CHARGE: $150.00
ISSUE EXPENSE CHARGE
FOR FACE INCREASES
AFTER POLICY DATE: $1.50 per thousand of Face Increase, but not to
exceed $600.
PREMIUM TAX CHARGE: 2.25% of premiums
FEDERAL TAX CHARGE: 1.50% of premiums
MONTHLY DEDUCTION: See Part 4, "Monthly Deduction". Includes cost of
insurance, any rider charges, any flat extra mortality
charges, a monthly administrative charge which shall
not exceed $10 and is currently set at $5, and
one-twelfth of the Issue Expense Charge for the first
Policy Year and for the first Policy Year after an
increase in face amount.
MAXIMUM TRANSFER $0 - First two transfers per Policy Year.
CHARGE: $10 - Subsequent transfers per Policy Year.
PARTIAL SURRENDER FEE: Lesser of $25.00 or 2% of partial surrender amount
paid.
SURRENDER CHARGE: See Table on next page.
OTHER RATES
-----------
GUARANTEED INTEREST ACCOUNT:
UNLOANED PORTION: Minimum Rate 4%
LOANED PORTION: 2%
LOAN INTEREST RATE: 4% for the first 10 Policy Years or until age 65
whichever is sooner, 3% thereafter.
V605 PAGE 6 OF 9
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
SURRENDER CHARGE
----------------
In Policy Years 1 through 10 the full Surrender Charge is given in the table
below. The applicable Surrender Charge in any Policy Month is the full Surrender
Charge minus any Surrender Charges previously paid, but not less than zero. In
all Policy Years after the 10th Policy Year, the Surrender Charge is zero.
<TABLE>
SURRENDER CHARGE TABLE
<CAPTION>
Policy Surrender Policy Surrender Policy Surrender
Month Charge Month Charge Month Charge
----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
1-60 1295.14 80 1056.12 100 720.48
61 1283.19 81 1044.16 101 684.37
62 1271.24 82 1032.21 102 648.27
63 1259.29 83 1020.26 103 612.17
64 1247.34 84 1008.31 104 576.06
65 1235.39 85 996.36 105 539.96
66 1223.44 86 984.41 106 503.85
67 1211.48 87 972.46 107 467.75
68 1199.53 88 960.50 108 431.65
69 1187.58 89 948.55 109 395.54
70 1175.63 90 936.60 110 359.44
71 1163.68 91 924.65 111 323.33
72 1151.73 92 912.70 112 287.23
73 1139.78 93 900.75 113 251.13
74 1127.82 94 888.80 114 215.02
75 1115.87 95 876.84 115 178.92
76 1103.92 96 864.89 116 142.82
77 1091.97 97 828.79 117 106.71
78 1080.02 98 792.69 118 70.61
79 1068.07 99 756.58 119 34.50
120 0.00
</TABLE>
If You fully surrender your policy in the first two Policy Years, You may be
entitled to a reduction in the amount of the above Surrender Charge. Any such
reduction will depend on the amount of premium paid. Assuming that You pay the
planned premium stated in the Schedule Pages in each of the first two Policy
Years, such reduced Surrender Charge would equal $785.00 in the first Policy
Year, and $882.04 in the second Policy Year.
V605 PAGE 7 OF 9
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
<TABLE>
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
BASED ON 1980 CSO MORTALITY TABLE
PER $1,000 OF NET AMOUNT AT RISK
RISK CLASSIFICATION: MALE NON SMOKER
<CAPTION>
Attained Monthly Attained Monthly Attained Monthly
Age Rate Age Rate Age Rate
--- ---- --- ---- --- ----
<S> <C> <C> <C> <C> <C> <C>
35 .1408 57 .7908 79 7.1433
36 .1475 58 .8683 80 7.8058
37 .1567 59 .9558 81 8.5433
38 .1667 60 1.0533 82 9.3767
39 .1783 61 1.1617 83 10.3158
40 .1908 62 1.2850 84 11.3425
41 .2058 63 1.4258 85 12.4333
42 .2208 64 1.5850 86 13.5667
43 .2383 65 1.7608 87 14.7325
44 .2558 66 1.9500 88 15.9075
45 .2767 67 2.1550 89 17.1075
46 .2992 68 2.3750 90 18.3492
47 .3233 69 2.6150 91 19.6533
48 .3492 70 2.8858 92 21.0625
49 .3783 71 3.1925 93 22.6358
50 .4092 72 3.5467 94 24.6375
51 .4458 73 3.9533 95 27.4967
52 .4883 74 4.4100 96 32.0458
53 .5358 75 4.9000 97 40.0167
54 .5908 76 5.4217 98 54.8317
55 .6517 77 5.9700 99 83.3333
56 .7192 78 6.5392
</TABLE>
V605 PAGE 8 OF 9
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
TABLE OF FACE AMOUNTS OF INSURANCE
----------------------------------
ISSUE DATE FACE AMOUNT RISK CLASSIFICATION
---------- ----------- -------------------
August 1, 1998 $100,000.00 Male Non-Smoker
<TABLE>
RIDERS AND RIDER BENEFITS
-------------------------
<S> <C> <C> <C> <C> <C>
RIDER PAYABLE MONTHLY
RIDER DESCRIPTION DATE AMOUNT PREMIUM TO CHARGE
- ----------------- ---- ------ ------- -- ------
</TABLE>
V605 PAGE 9 OF 9
<PAGE>
TABLE OF CONTENTS
Part Page
- --------------------------------------------------------
Schedule Pages
Basic Information
Descriptions of Subaccounts
Policy Charges and Rates
Table of Surrender Charges
Table of Guaranteed Maximum Insurance
Rates
Table of Face Amounts of Insurance
and Riders
Table of Contents
1. Definitions................................... 1-2
2. About the Policy.............................. 2
Effective Date of Insurance............... 2
Entire Contract........................... 2
Dividends................................. 2
Contestability............................ 2
Suicide................................... 3
Misstatement of Age or Sex................ 3
Assignments............................... 3
Annual Reports............................ 4
Transaction Rules......................... 4
3. Rights of Owner............................... 4
Who is the Owner.......................... 4
What are the Rights of the Owner.......... 4
How to Change the Owner................... 5
4. Premiums...................................... 5
Premium Payments.......................... 5
Premium Deductions........................ 6
Net Premium Allocation
to Subaccounts......................... 6
Premium Flexibility....................... 6
Total Premium Limit....................... 6
Grace Period and Lapse.................... 7
Policy Value.............................. 7
Monthly Deduction......................... 7
5. The Accounts.................................. 9
Guaranteed Interest Account............... 9
Separate Account.......................... 10
Voting Rights............................. 10
Shares of Separate Account
Subaccount Values....................... 11
Unit Value................................ 11
Net Investment Factor..................... 11
6. Lifetime Benefits............................. 12
Transfers................................. 12
Loans..................................... 12
Loan Interest............................. 13
Cash Surrender Value...................... 13
Full Surrender............................ 13
Partial Surrender......................... 14
Additional Insurance Option............... 15
7. Death Benefits................................ 16
Death Benefit Option 1.................... 16
Death Benefit Option 2.................... 16
Minimum Death Benefit..................... 16
Death Benefit Following Insured's
Age 100................................. 16
How to Change the Death
Benefit Option.......................... 17
Request for an Increase in
Face Amount............................. 17
Right to Cancel Face Amount
Increases............................... 17
Request for Decrease in
Face Amount............................. 18
Death Proceeds............................ 18
Interest on Death Proceeds................ 18
The Beneficiary........................... 18
How to Change the Beneficiary............. 19
8. Payment Options............................... 19
Who May Elect Payment
Options................................. 19
How to Elect a Payment Option............. 19
Payment Options........................... 19
(1) Payment in One Sum.................... 20
(2) Left to Earn Interest................. 20
(3) Payments for a Specified
Period............................. 20
(4) Life Annuity with Specified
Period Certain..................... 20
(5) Life Annuity.......................... 21
(6) Payments of Specified
Amount............................. 21
(7) Joint Survivorship Annuity
with 10-year Period Certain........ 21
Additional Interest....................... 21
9. Tables of Payment Option
Amounts................................ 22-23
V605
<PAGE>
PART 1: DEFINITIONS
ATTAINED AGE Age of the insured on the birthday nearest the
most recent Policy Anniversary.
DEBT Unpaid loans against this policy plus accrued
interest.
GENDER The terms "he," "his" and "him" are applicable
without regard to sex. Where proper, "she," "hers"
or "her" may be substituted.
IN FORCE The policy has not terminated.
IN WRITING (WRITTEN In a written form satisfactory to Us and filed at
REQUEST) Variable Products Mail Operations ("VPMO").
VPMO Variable Products Mail Operations. The address is
shown on the cover page of this policy.
MONTHLY CALCULATION DAY The first Monthly Calculation Day of a policy is
the same day as its Policy Date as shown on the
Schedule Page. Subsequent Monthly Calculation Days
are the same day for each month thereafter or, if
such day does not fall within a given month, the
last day of that month will be the Monthly
Calculation Day.
PAYMENT DATE The Valuation Date on which a premium payment or
loan repayment is received at VPMO unless it is
received after the close of the New York Stock
Exchange in which case it will be the next
Valuation Date.
POLICY ANNIVERSARY The anniversary of the Policy Date.
POLICY DATE The Policy Date as shown on the Schedule Page. It
is the date from which Policy Years and policy
anniversaries are measured.
POLICY MONTH The period from one Monthly Calculation Day up to,
but not including, the next Monthly Calculation
Day.
POLICY VALUE The Policy Value as defined in Part 4.
POLICY YEAR The first Policy Year is the one-year period from
the Policy Date up to, but not including, the
first Policy Anniversary. Each succeeding Policy
Year is the one-year period from the period from
the Policy Anniversary up to but not including the
next Policy Anniversary.
PROPORTIONATE Amounts are allocated to subaccounts on a
proportionate basis such that the ratios of this
policy's subaccount values to each other are the
same before and after the allocation.
SEPARATE ACCOUNT PHLVIC Variable Universal Life Account.
SUBACCOUNTS The GIA (exclusive of the loaned portion of such
account) and the accounts within Our Separate
Account to which non-loaned assets under the
policy are allocated as described in Part 5.
UNIT A standard of measurement, as described in Part 4,
used to determine
V605 -1-
<PAGE>
the share of this policy in the value of each
subaccount of the Separate Account.
VALUATION DATE Every day the New York Stock Exchange is open for
trading and PHL Variable Insurance Company is open
for business.
VALUATION PERIOD The period in days from the end of one Valuation
Date through the next Valuation Date.
WE (OUR, US) PHL Variable Insurance Company.
YOU (YOUR) The owner of this policy.
PART 2: ABOUT THE POLICY
EFFECTIVE DATE OF This policy will begin In Force on the Policy
INSURANCE Date, provided the issue premium is paid while the
insured is alive.
ENTIRE CONTRACT This policy and the written application of the
policyholder, a copy of which is attached to and
made a part of the policy, are the entire contract
between You and Us. Any change in the provisions
of the contract, to be in effect, must be signed
by one of Our executive officers and countersigned
by a registrar or one of Our executive officers.
This policy is issued at Our Main Administrative
Office in Hartford, Connecticut. Any benefits
payable under this policy are payable at Our Main
Administrative Office.
DIVIDENDS While this policy is In Force it will share in
divisible surplus to the extent that We may
provide. We do not expect any dividends to be
apportioned to this policy. The share to be
apportioned to this policy, if any, will be
determined annually by Us and credited no later
than the end of the Policy Year for which it was
determined. You may elect that the dividend be
paid to You in cash or applied under any other
method mutually agreed to by You and Us.
CONTESTABILITY We rely on all statements made by or for the
insured in the written application. These
statements are considered to be representations
and not warranties. We can contest the validity of
this policy and any coverage under it for any
material misrepresentation of fact. To do so,
however, the misrepresentation must be contained
in an application and the application must be
attached to this policy when issued or made a part
of this policy when a change is made.
We cannot contest the validity of the original
face amount of this policy after it has been In
Force during the insured's lifetime for two years
from its Policy Date. If We contest the policy, it
will be based on the application for this policy.
V605 -2-
<PAGE>
We cannot contest the validity of any increase in
face amount after the policy has been In Force
during the insured's lifetime for two years from
the issue date of the increase. Any such contest
will be based on the supplemental application for
the increase.
If We contest the validity of all or a portion of
the face amount provided under this policy, the
amount We pay with respect to such portion of the
face amount will be limited to the higher of a
return of any paid premium required by Us for the
contested Face Amount, or the sum of any monthly
deductions made under this policy for the
contested face amount.
SUICIDE If within two years from the Policy Date the
insured dies by suicide, while sane or insane, and
while this policy is In Force, the amount of death
benefit will be limited to the Policy Value
adjusted as follows:
a. we will add any monthly deductions made
under this policy;
b. we will subtract any Debt owed Us under
this policy.
If within two years from the issue date of an
increase in face amount the insured dies by
suicide, while sane or insane, and while the
policy is In Force, the death benefit for that
increase will be limited to a pro rata portion of
the Policy Value corresponding to such increase
adjusted as follows:
a. we will add the sum of the monthly
deductions corresponding to such increase;
b. we will subtract any Debt owed Us under
this policy.
MISSTATEMENT OF If the age or sex of the insured has been
AGE OR SEX misstated, any benefits payable under this policy
will be adjusted to reflect the correct age and
sex as follows:
(A) For adjustments made prior to the insured's
death, no change will be made to the then
current cost of insurance rates, but
subsequent cost of insurance rates will be
adjusted to such rates that would apply had
this policy been issued based on the correct
age and sex.
(B) For adjustments made at the time of the
insured's death, the death benefit payable
will be adjusted to reflect the amount of
coverage that would have been supported by
the most recent monthly deduction based on
the then current cost of insurance rates for
the correct age and sex.
ASSIGNMENTS Except as otherwise provided herein, any or all of
the rights in this policy may be assigned. We will
not be considered to have notice of any assignment
until We receive the original or copy of the
V605 -3-
<PAGE>
assignment at VPMO. We are not responsible for the
validity of any assignment.
ANNUAL REPORTS We will annually send You a report for this
policy.
a. the then current Policy Value, cash
surrender value, death benefit and face
amount;
b. the premiums paid, and deductions and
partial surrenders made since the last
report;
c. any outstanding Debt;
d. an accounting of the change in Policy Value
since the last report; and
e. such additional information as required by
applicable law or regulation.
TRANSACTION RULES Requests for transactions involving subaccounts
will usually be processed within 7 days after We
receive the written request. However, We may, at
Our discretion, postpone the payment of any death
benefit in excess of the initial face amount, any
policy loans, partial withdrawals, surrenders or
transfers:
(A) For up to six months from the date of
request, for any transactions dependent upon
the value of the Guaranteed Interest
Account; or
(B) Otherwise, for any period during which the
New York Stock Exchange is closed for
trading (except for normal holiday closing)
or when the Securities and Exchange
Commission has determined that a state of
emergency exists which may make processing
such transactions impractical.
PART 3: RIGHTS OF OWNER
WHO IS THE OWNER The owner is the person named as owner in the
application, unless later changed as provided in
this policy. If you, the owner, are not the
insured and You die before the insured, ownership
rights in this policy will pass to the successive
owner if one has been named, except that if joint
owners are designated, this policy would remain
with the surviving joint owner until death of the
survivor. The insured will be the owner if no
other person is named the owner. If more than one
person is named as owner, they must act jointly
unless You and We agree otherwise.
WHAT ARE THE RIGHTS You control this policy during the insured's
OF THE OWNER lifetime but not until this policy begins In
Force. Unless You and We agree otherwise, You
V605 -4-
<PAGE>
may exercise all rights provided under this policy
without the consent of anyone else. These rights
include the right to:
a. receive any amounts payable under this
policy during the insured's lifetime.
b. change the owner or the interest of any
owner.
c. change the planned premium payment amount
and frequency. See Part 4.
d. change the subaccount allocation schedule
for premium payments and monthly deductions.
See Part 4.
e. transfer amounts between and among
subaccounts. See Part 6.
f. obtain policy loans. See Part 6.
g. obtain a partial surrender. See Part 6.
h. surrender this policy for its cash surrender
value. See Part 6.
i. select a payment option for any cash
surrender value that becomes payable. See
Part 6.
j. request changes in the insurance amount. See
Part 7.
k. change the beneficiary of the death benefit.
See Part 7.
l. assign, release, or surrender any interest
in the policy.
m. change the death benefit option. See Part 7.
You may exercise these rights only while the
insured is alive. Exercise of any of these rights
will, to the extent thereof, assign, release, or
surrender the interest of the insured and all
other beneficiaries and owners under this policy.
HOW TO CHANGE You may change the owner by written request,
THE OWNER satisfactory to us, filed at VPMO.
PART 4: PREMIUMS
PREMIUM PAYMENTS The issue premium as shown on the Schedule Page is
due on the Policy Date. The insured must be alive
when the issue premium is paid. Thereafter, the
amount and payment frequency of planned premiums
are as shown on the Schedule Page unless later
changed as described below. All premiums are
payable at VPMO, except that the issue premium may
be paid to an authorized agent of ours for
V605 -5-
<PAGE>
forwarding to VPMO. No benefit associated with any
premium shall be provided until it is actually
received by Us at VPMO.
PREMIUM DEDUCTIONS Premium tax charges and federal tax charges as
stated on the Schedule Page, will be deducted from
any premiums received by Us at VPMO. If the issue
premium is received by Us at VPMO after the Policy
Date, then it will also be reduced by the amount
necessary to cover any past unpaid monthly
deductions described below. In addition, payments
received by Us during a grace period will also be
reduced by the amount needed to cover any monthly
deductions during the grace period.
NET PREMIUM ALLOCATION The premiums, net of these charges, will be
TO SUBACCOUNTS applied on the Payment Date to the various
subaccounts based on the premium allocation
schedule elected in the application for this
policy or as later changed by you. You may change
the allocation schedule for premium payments by
written notice filed with Us at VPMO. Allocations
to each subaccount must be expressed in whole
percentages unless We agree otherwise.
The number of units credited to each subaccount of
the Separate Account will be determined by
dividing the net premium applied to that
subaccount by the unit value of that subaccount on
the Payment Date. The number of units credited to
each subaccount is carried to four decimal places.
PREMIUM FLEXIBILITY Subject to the total premium limit described in
the next section and except for the issue premium,
You may change the amount and frequency of premium
payments while this policy is In Force during the
lifetime of the insured as follows:
a. You may increase or decrease the planned
premium amount or payment frequency at any
time by written notice to Us. We reserve the
right to limit increases to such maximums as
We may establish from time to time.
b. Additional premium payments may be made at
any time.
c. Each premium payment made must at least
equal $25 or, if during a grace period, the
amount needed to prevent lapse of this
policy. We reserve the right to reduce this
limit.
TOTAL PREMIUM LIMIT The total premium limit is shown on the Schedule
Page and is applied to the sum of all premiums
received by Us for this policy to date, reduced by
the sum of all partial surrender amounts paid by
Us to date. if the total premium limit is
exceeded, We will pay You the excess, with
interest at an annual rate of not less than 4%,
not later than 60 days after the end of the Policy
Year in which the limit was exceeded. The Policy
Value will be adjusted to reflect such refund.
V605 -6-
<PAGE>
The amount to be taken from the subaccount will be
allocated in the same manner as provided for
monthly deductions unless You request another
allocation in writing.
The total premium limit may be exceeded if
additional premium is needed to prevent lapse
under the grace period and lapse provision. The
total premium limit may change due to:
a. a partial surrender or a decrease in face
amount;
b. addition, cancellation, or change of a
rider; or
c. a change in federal tax laws or regulations.
If the total premium limit changes, We will send
You a Revised Schedule Page reflecting the change.
However, We reserve the right to require that this
policy be returned to Us so that We may endorse
the change.
GRACE PERIOD AND LAPSE If, on any Monthly Calculation Day, the required
monthly deduction exceeds the Policy Value during
the first three Policy Years, or the cash
surrender value after the third Policy Year, a
grace period of 61 days will be allowed for the
payment of an amount equal to three times the
required monthly deduction. This policy will
continue In Force during any such grace period. We
will mail a written notice to You and any assigns
at the post office addresses last known to Us as
to the amount of premium required. If such premium
is not paid to Us by the end of the grace period
this policy will lapse without value, but not
before 30 days have elapsed since We mailed Our
written notice to you. The "date of lapse" will be
the Monthly Calculation Day on which the deduction
was to be made, and any insurance and rider
benefits provided under this policy will terminate
as of that date.
POLICY VALUE The Policy Value is the sum of this policy's share
in the value of each subaccount of the Separate
Account and the value of this policy's Guaranteed
Interest Account. See Part 5 for an explanation as
to how this policy's share in the value of each
subaccount of the Separate Account is determined
and for a description of the Guaranteed Interest
Account.
MONTHLY DEDUCTION A deduction is made each Policy Month from the
Policy Value (excluding the value of the loaned
portion of the Guaranteed Interest Account) to
pay:
(a) the cost of insurance provided under this
policy;
(b) any flat extra mortality charges;
(c) the cost of any rider benefits provided;
V605 -7-
<PAGE>
(d) an administrative charge as shown on the
Schedule Page. The administrative charge may
vary but in no event will exceed the maximum
amount shown on the Schedule Page. We will
send You a written notice of any change at
least 30 days in advance of such change; and
(e) for the first Policy Year and for the first
Policy Year after a face amount increase,
one-twelfth of the Issue Expense Charge
shown on the Schedule Page. Any unpaid
balance of the Issue Expense Charge will be
paid to Us upon policy lapse or termination.
Deductions are made on each Monthly Calculation
Day. If the Monthly Calculation Day is not a
Valuation Date, the monthly deduction for that
Policy Month will be made on the next Valuation
Date.
You may request in the application for this policy
that monthly deductions not be taken from certain
specified subaccounts. Such a request may later be
changed by notifying Us in writing, but only with
respect to future monthly deductions. Monthly
deductions will be taken from this policy's share
of the remaining subaccounts exclusive of the
loaned portion of the Guaranteed Interest Account,
on a proportionate basis. In the event this
policy's share in the value of such subaccounts is
not sufficient to permit the withdrawal of the
full monthly deduction, the remainder will be
taken on a proportionate basis from this policy's
share of each of the other subaccounts exclusive
of the loaned portion of the Guaranteed Interest
Account. The number of units deducted from each
subaccount of the Separate Account will be
determined by dividing the portion of the monthly
deduction allocated to each such subaccount by the
unit value of that subaccount on the Monthly
Calculation Day.
Each monthly deduction will pay the cost of
insurance from the Monthly Calculation Day on
which the deduction is made up to, but not
including, the next Monthly Calculation Day. The
cost of insurance is equal to the cost of
insurance rate for the current Policy Month
divided by 1,000 and then multiplied by the result
of:
(a) the death benefit on the Monthly Calculation
Day; minus
(b) the Policy Value on the Monthly Calculation
Day.
The cost of insurance rate for the current Policy
Month is based on the insured's Attained Age and
risk classification. The rate used in computing
the cost of insurance is obtained from the Table
of Guaranteed Maximum Cost of Insurance Rates on
the Schedule Page for the risk classification(s)
shown, or such lower rate as We may declare. Any
change We make in the declared cost of insurance
rates will be uniform by class and based on Our
future mortality,
V605 -8-
<PAGE>
expense and lapse expectations. The declared cost
of insurance rates for an insured will not be
affected by a change in the insured's health or
occupation.
PART 5: THE ACCOUNTS
Assets under this policy may be allocated either
to the Guaranteed Interest Account or to any of
the subaccounts of the Separate Account.
GUARANTEED INTEREST The Guaranteed Interest Account is not part of the
ACCOUNT Separate Account. It is part of Our General
Account. We reserve the right to limit cumulative
deposits, including transfers, to the unloaned
portion of the Guaranteed Interest Account during
any one-week period to no more than $250,000. We
will credit interest daily on the amounts
allocated under this policy to the Guaranteed
Interest Account. The loaned portion of the
Guaranteed Interest Account will be credited
interest at an effective annual fixed rate as
shown on the Schedule Page. We will credit
interest on the unloaned portion of the Guaranteed
Interest Account at such rates as We shall
determine but in no event will the effective
annual rate of interest on such portion be less
than the minimum interest rate shown on the
Schedule Page.
Twice each calendar month We will set the interest
rate that will apply to any net premium or
transferred amounts deposited to the unloaned
portion of the Guaranteed Interest Account during
the applicable period of that month. That rate
will remain in effect for such deposits, for an
initial guarantee period of one full year. Upon
expiry of the initial one-year guarantee period,
and each subsequent one-year guarantee period
thereafter, the rate applicable for any deposits
in the unloaned portion of the Guaranteed Interest
Account whose guarantee period has just ended
shall be the same rate that applied to new
deposits to such subaccount at the time the
guarantee period expires. Such rate shall likewise
remain in effect for such deposits for a
subsequent guarantee period of one full year.
All transfers, partial surrenders, and deductions
from the unloaned portion of the Guaranteed
Interest will be assessed on a Last-In, First-Out
basis based on the date the deposit was initially
made to the unloaned portion of such subaccount.
At the end of each Policy Year and at the time of
any Debt repayment, interest credited to the
loaned portion of the Guaranteed Interest Account
will be transferred to the unloaned portion of the
Guaranteed Interest Account. We reserve the right
to add other Guaranteed Interest Accounts,
subject, where required, to approval by the
insurance supervisory official of the state where
this policy is delivered.
V605 -9-
<PAGE>
SEPARATE ACCOUNT The Separate Account has been established by Us as
a Separate Account pursuant to Connecticut law and
is registered as a unit investment trust under the
Investment Company Act of 1940 (1940 Act). Income
and realized and unrealized gains and losses from
assets in the Separate account are credited to or
charged against it without regard to Our other
income, gains or losses. We own the Separate
Account assets and they are kept separate from the
Assets of Our General Account. Separate Account
assets will be valued on each Valuation Date. The
portion of the Separate Account equal to reserves
and liabilities for policies supported by the
Separate Account will not be charged with any
liabilities arising out of Our other business. We
reserve the right to use assets of the Separate
Account in excess of these reserves and
liabilities for any purposes.
The Separate Account has several subaccounts
available under this policy as shown on the
Schedule Page. We have the right to add additional
subaccounts of the Separate Account subject to
approval by the Securities and Exchange Commission
and, where required, by the insurance supervisory
official of the state where this policy is
delivered. We use the assets of the Separate
Account to buy shares of the Fund identified on
the Schedule Page according to your allocation
instructions. The Funds are registered under the
1940 Act as open-end, diversified management
investment companies. The Funds have separate
Series that correspond to the subaccounts of the
Separate Account. Assets of each such subaccount
are invested in shares of the corresponding Series
of the Funds.
A Series of the Funds might make a material change
in its investment policy. If that occurs, You will
be notified of the change. In addition, no change
will be made in the investment policy of any of
the subaccounts of the Separate Account without
approval of the appropriate insurance supervisory
official of Our domiciliary state Connecticut. The
approval process is on file with the insurance
supervisory official of the state where the policy
is delivered. If, in Our judgment, a Series of the
Funds becomes unsuitable for investment by a
subaccount of the Separate Account for any reason,
We may substitute shares of another Series of the
Funds or shares of another mutual fund. Any such
change will be subject to approval by the
Securities and Exchange Commission and, where
required, by the insurance supervisory official of
the state where this policy is delivered.
VOTING RIGHTS Although We are the legal owner of the shares of
the Funds, We will vote the shares at regular and
special meetings of the shareholders of the Funds
in accordance with instructions received from You
and the other owners of the policies. Any shares
held by Us will be voted in the same proportion as
voted by You and the other owners of the policies.
However, We reserve the right to vote the shares
of the Funds without direction from You if there
is a change in the law which would permit this to
be done.
V605 -10-
<PAGE>
SHARES OF SEPARATE The share of this policy in the value of each
ACCOUNT SUBACCOUNT subaccount of the Separate Account on a Valuation
VALUES Date is the unit value of that subaccount on that
date multiplied by the number of this policy's
units in that subaccount after all transactions
for the Valuation Period ending on that day have
been processed. For any day which does not fall on
a Valuation Date, the share of this policy in the
value of each subaccount of the Separate Account
is determined using the number of units on that
day after all transactions for that day have been
processed and the unit values on the next
Valuation Date.
UNIT VALUE The unit value of each subaccount of the Separate
Account was set by Us on the first Valuation Date
of each such subaccount. The unit value of a
subaccount of the Separate Account on any other
Valuation Date is determined by multiplying the
unit value of that subaccount on the just prior
Valuation Date by the Net Investment Factor for
that subaccount for the then current Valuation
Period. The unit value of each subaccount of the
Separate Account on a day other than a Valuation
Date is the unit value on the next Valuation Date.
Unit values are carried to 6 decimal places. The
unit value of each subaccount of the Separate
Account on a Valuation Date is determined at the
end of that day.
NET INVESTMENT FACTOR The Net Investment Factor for each subaccount of
the Separate Account is determined by the
investment performance of the assets held by the
subaccount during the Valuation Period. Each
valuation will follow applicable law and accepted
procedures. The Net Investment factor is
determined by dividing the sum of A and B by C,
then subtracting D.
(A) The value of the assets in the subaccount on
the current Valuation Date (exclusive of the
net value of any transactions during the
current Valuation Period).
(B) The amount of any dividend (or, if
applicable, any capital gain distribution)
received by the subaccount if the
"ex-dividend" date for the Funds occur
during the current Valuation Period.
(C) The value of the assets in the subaccount as
of the just prior Valuation Date, including
accrued net investment income and realized
and unrealized capital gains and losses, and
including the net value of all transactions
during the Valuation Period ending on that
date.
(D) The sum of the following daily charges (as
shown on the Schedule page), multiplied by
the number of days in the current Valuation
Period:
(1) the mortality and expense risk charge;
and
V605 -11-
<PAGE>
(2) the charge, if any, for taxes and
reserves for taxes on investment
income, and realized and unrealized
capital gains.
PART 6: LIFETIME BENEFITS
TRANSFERS You may transfer all or a portion of this policy's
value among one or more of the subaccounts of the
Separate Account and the unloaned portion of the
Guaranteed Interest Account. We reserve the right
to limit the number of transfers You may make,
however, You can make up to six transfers per
contract year from subaccounts of the Separate
Account and only one transfer per contract year
from the unloaned portion of the Guaranteed
Interest Account unless the Systematic Transfer
Program is elected. Under that program, funds may
be transferred automatically among the subaccounts
on a monthly, quarterly, semiannual or annual
basis. Unless We agree otherwise, the minimum
initial and subsequent transfer amounts are $25
monthly, $75 quarterly, $150 semiannually or $300
annually. Except as otherwise provided under the
Systematic Transfer Program, the amount that may
be transferred from the Guaranteed Interest
Account at any one time cannot exceed the higher
of $1,000 or 25% of the value of the Guaranteed
Interest Account.
Transfers may be made by written or telephone
request. The maximum transfer charge is shown on
the Schedule Page. There is no transfer charge for
the Systematic Transfer Program. Any such charge
will be deducted from the subaccounts from which
the amounts are to be transferred in the same
proportion as the amounts to be transferred bear
to the total amount transferred. The value of each
subaccount will be determined on the Valuation
Date that coincides with the date of transfer.
LOANS While this policy is In Force, a loan may be
obtained against this policy in any amount up to
the available loan value. To obtain a loan, this
policy must be properly assigned to Us as
security. We need no other collateral. We reserve
the right not to allow loans of less than $500
unless the loans are to pay premiums on another
policy issued by Us.
The loan value is 90% of the result of subtracting
the then applicable surrender charge from the then
Policy Value. The "available loan value" is the
loan value on the current day less any outstanding
Debt.
The amount of the loan will be added to the loaned
portion of the Guaranteed Interest Account and
subtracted from this policy's share of the
subaccounts based on the allocation You request at
the time of the loan. The total reduction will
equal the amount added to the loaned portion of
the Guaranteed Interest Account. Unless We agree
otherwise, allocations to each subaccount must be
expressed in whole percentages. If no allocation
request is made, the amount subtracted from the
share of each subaccount will be determined in the
same manner as provided for monthly deductions.
V605 -12-
<PAGE>
Debt may be repaid at any time during the lifetime
of the insured while this policy is In Force. Such
repayment, in excess of any outstanding accrued
loan interest, will be applied to reduce the
loaned portion of the Guaranteed Interest Account
and will be transferred to the unloaned portion of
the Guaranteed Interest Account to the extent that
loaned amounts taken from such account have not
previously been repaid. Otherwise, such balance
will be transferred among the subaccounts You
request upon repayment and, if no allocation
request is made, We will use your most recent
premium allocation schedule on file with Us. Any
Debt repayment received by Us during a grace
period as described in Part 4 will be reduced to
cover any overdue monthly deductions and only the
balance applied to reduce the Debt. Such balance
will also be applied as described to reduce the
loaned portion of the Guaranteed Interest Account.
While there is any outstanding Debt against this
policy, any payments received by Us for this
policy will be applied directly to reduce the Debt
unless specified as a premium payment. Until the
Debt is fully repaid, additional Debt repayments
may be made at any time during the lifetime of the
insured while this policy is In Force.
Failure to repay a policy loan or to pay loan
interest will not terminate this policy except as
otherwise provided under Grace Period and Lapse in
Part 4 when the policy does not have sufficient
remaining value to pay the monthly deductions, in
which event, that grace period provision will
apply.
LOAN INTEREST Loans will bear interest at an effective annual
rate equal to the loan interest rate shown on the
Schedule Page and will be compounded daily.
Interest will accrue on a daily basis from the
date of the loan and is included as part of the
Debt under this policy. Loan interest will be due
on each Policy Anniversary. If not paid when due,
the outstanding accrued interest on that date will
be charged as a loan against this policy.
CASH SURRENDER VALUE The cash surrender value of this policy is the
Policy Value as defined in Part 4 less any
applicable surrender charge on the date of
surrender and less any Debt. The surrender charge
for a full surrender is as stated on the Schedule
Pages, or Revised Schedule Pages if there has been
an increase in face amount.
FULL SURRENDER You may fully surrender this policy for its cash
surrender value by returning this policy to Us at
VPMO along with a written release and surrender of
all claims under this policy signed by You and any
assigns. You may do this at any time during the
lifetime of the insured while this policy is In
Force. The written surrender must be in a form
satisfactory to Us and must include such tax
withholding information as We may reasonably
require. The surrender will be effective on the
"date of surrender" which is the later of the
dates on which We receive the returned policy and
the written surrender. Upon full surrender all
insurance and any rider benefits provided under
this policy will terminate. You may direct that We
apply the surrender proceeds under any of the
Payment Options described in Part 8.
V605 -13-
<PAGE>
PARTIAL SURRENDER You may obtain a partial surrender of this policy
by requesting that a part of this policy's cash
surrender value be paid to you. You may do this at
any time during the lifetime of the insured while
this policy is In Force with a written request
signed by You and any assigns. We reserve the
right to require that this policy first be
returned to Us before payment is made. A partial
surrender will be effective on the date We receive
the written request or, if required, the date We
receive this policy if later. You may direct that
We apply the surrender proceeds under any of the
Payment Options described in Part 8.
A partial surrender will be denied if the
resultant cash surrender value would be less than
or equal to zero. We reserve the right not to
allow partial surrenders if the resulting death
benefit would be less than $25,000 or if the
amount of the partial surrender is less than $500.
We further reserve the right to require that the
entire balance of a subaccount be surrendered and
withdrawn if the share of this policy in the value
of that subaccount would, immediately after a
partial surrender, be less than $500.
Upon a partial surrender, the Policy Value will be
reduced by the sum of the following:
(A) The partial surrender amount paid. This
amount comes from a reduction in this
policy's share in the value of each
subaccount based on the allocation You
request at the time of the partial
surrender. If no allocation request is made,
the assessment to each subaccount will be
made in the same manner as provided for
monthly deductions.
(B) The partial surrender fee. The fee is the
lesser of $25 and 2% of the partial
surrender amount paid. The assessment to
each subaccount will be made in the same
manner as provided for the partial surrender
amount paid.
(C) A partial surrender charge. This charge is
equal to a pro rata portion of the
applicable surrender charge that would apply
to a full surrender, determined by
multiplying such applicable surrender charge
by a fraction equal to the partial surrender
amount payable divided by the result of
subtracting the applicable surrender charge
from the Policy Value. This amount is
assessed against the subaccounts in the same
manner as provided for the partial surrender
amount paid.
The cash surrender value will be reduced by the
partial surrender amount paid plus the partial
surrender fee. The face amount of this policy will
be reduced by the same amount as the Policy Value
is reduced as described above. We will send You a
Revised Schedule Page reflecting this change.
V605 -14-
<PAGE>
ADDITIONAL INSURANCE While this policy is In Force and subject to the
OPTION terms of this provision, including Our receipt of
evidence satisfactory to Us of the insured's then
insurability, You have the option to purchase
additional insurance on the same insured under the
same plan of insurance as this policy without Our
assessment of any issue expense charge under the
new policy. Except for Our waiver of the issue
expense charge, the new policy will be based on
the same guaranteed rates and charges as are in
effect for this plan on the Policy date of this
policy as adjusted for the insured's new Attained
Age and change, if any, in risk classification.
The new policy will only include such rider
benefits as We may agree based on Our rules and
practices in effect on the Policy Date of the new
policy. The amount of insurance under the new
policy, when added to all other insurance with Our
company on the life of the insured, cannot exceed
Our total insurance amount limitations in effect
on the Policy Date of the new policy.
To elect this option, You must file a written
application with VPMO. It must be signed by You
and the insured. We must also receive:
(A) Evidence that You have a satisfactory
insurable interest in the life of the
insured.
(B) Evidence, satisfactory to us, that the
insured is then insurable under Our
established practice in the selection of
risks for this plan of insurance, including
the new rider benefits requested. Selection
of risks includes health and nonhealth
factors.
(C) Payment, while the insured is alive, of the
full issue premium for the new policy. The
payment must equal or exceed Our minimum
issue premium requirements in effect for
this plan on the Policy Date of the new
policy.
Any exclusions applicable to the new policy will
be determined in accordance with Our rules and
practices in effect on the Policy Date of the new
policy. The new policy will not be subject to any
assignments or liens against this policy. The
owner and the beneficiary under the new policy
shall be as requested in the application for the
new policy. Any subsequent changes will be
governed by the printed provisions of the new
policy.
The new policy will begin in effect as of the
later of:
a. our approval of the application for the new
policy;
b. payment of the full issue premium due on the
new policy.
The Policy Date of the new policy will be as shown
on the schedule pages of the new policy based on
Our rules and practices then in effect. The time
periods for the suicide and contestability
provisions in the new policy will be measured from
the Policy Date of the new policy.
V605 -15-
<PAGE>
PART 7: DEATH BENEFITS
While the policy is In Force, You have the right
to elect either of the two death benefit options
as described below. The death benefit option shall
be as elected in the original application unless
later changed as provided below. If no option is
elected, Death Benefit Option 1 shall apply.
DEATH BENEFIT OPTION 1 Under this option, during all Policy Years until
the Policy Anniversary which follows the insured's
100th birthday, the death benefit is equal to the
greater of (a) and (b) as defined below:
a. the policy's face amount on date of death.
b. the minimum death benefit on the date of death
as defined below.
DEATH BENEFIT OPTION 2 Under this option, during all Policy Years until
the Policy Anniversary which follows the insured's
100th birthday, the death benefit is equal to the
greater of (a) and (b) as defined below:
a. the policy's face amount on the date of death
plus the Policy Value.
b. the minimum death benefit on the date of death
as defined below.
MINIMUM DEATH BENEFIT The minimum death benefit is the Policy Value on
the date of death of the insured increased by the
applicable percentage from the table below, based
on the insured's Attained Age at the beginning of
the Policy Year in which the death occurs.
<TABLE>
<CAPTION>
Attained Attained Attained Attained
-------- -------- -------- --------
Age Pct Age Pct Age Pct Age Pct
--- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Under 40 150% 53 64% 67 18% 81 5%
40 150 54 57 68 17 82 5
41 143 55 50 69 16 83 5
42 136 56 46 70 15 84 5
43 129 57 42 71 13 85 5
44 122 58 38 72 11 86 5
45 115 59 34 73 9 87 5
46 109 60 30 74 7 88 5
47 103 61 28 75 5 89 5
48 97 62 26 76 5 90 5
49 91 63 24 77 5 91 4
50 85 64 22 78 5 92 3
51 78 65 20 79 5 93 2
52 71 66 19 80 5 94 1
95 0
Over 95 0
</TABLE>
DEATH BENEFIT FOLLOWING After the Policy Anniversary which follows the
INSURED'S AGE 100 insured's 100th birthday, the death benefit
will equal the Policy Value.
V605 -16-
<PAGE>
HOW TO CHANGE THE While this policy is In Force, You may request in
DEATH BENEFIT OPTION writing that the Death Benefit Option be changed
from Option 1 to Option 2, or from Option 2 to
Option 1. No evidence of insurability is required.
If the request is to change from Option 1 to
Option 2, the face amount will be decreased by the
Policy Value and if the request is to change from
Option 2 to Option 1, the face amount will be
increased by the Policy Value. Any such change
will be in effect on the Monthly Calculation Day
coincident with or next following the day We
approve the request.
REQUEST FOR AN Anytime that this policy is In Force, You may
INCREASE IN request an increase in its face amount. Unless We
FACE AMOUNT agree otherwise, the minimum such face amount
increase is $25,000, and the increase will be
effective on the first Policy Anniversary on or
following the date that We approve the request.
Such date will be shown as the issue date for such
increase on the Revised Schedule Pages We send You
reflecting the change. We reserve the right to
limit increases in face amount. All requests to
increase the face amount must be applied for on a
supplemental application and will be subject to
evidence of the insured's insurability
satisfactory to Us. The insured must be alive on
the issue date, and You must also pay to Us in
advance such issue premium for the increase as We
may require according to Our published rules then
in effect. If no issue premium is required, the
increase will not take effect unless the cash
surrender value on the issue date at least equals
the monthly deduction for the total combined face
amount. The Issue Expense Charge for Face Amount
increases is as stated on the Schedule Page.
We will send You Revised Schedule Pages reflecting
the change. We reserve the right to further
require that the policy be returned to Us so that
We may incorporate the change.
RIGHT TO CANCEL FACE You have the right to cancel any increase in the
AMOUNT INCREASES face amount provided by Us under this policy
pursuant to your request, within a limited time as
stated below. The increase in face amount may be
cancelled by returning the policy to Us at the
following address:
PHL VARIABLE INSURANCE COMPANY
VARIABLE PRODUCTS MAIL OPERATIONS
PO Box 8027
Boston, MA 02266-8027
To cancel, You must return the policy, including
the Revised Schedule Pages, before the latest of:
1. 10 days after the new Revised Schedule Page
showing such increase in the face amount is
delivered to you; or
2. 10 days after a Notice of Right to Cancel is
delivered to you; or
V605 -17-
<PAGE>
3. 45 days after Part 1 of the supplementary
application for such increased face amount
is signed.
Upon any such cancellation We will refund the
higher of any paid premium required by Us for the
increase or the sum of any monthly deductions and
any other fees and charges made under this policy
for the increase in face amount.
REQUEST FOR A DECREASE You may request a decrease in face amount at any
IN FACE AMOUNT time after the first Policy Year. Unless We
agree otherwise, the decrease requested must at
least equal $10,000 and the face amount remaining
after the decrease must at least equal $25,000.
All requests to decrease the face amount must be
in writing and will be effective on the first
Monthly Calculation Day following the date We
approve the request. We reserve the right to
require that this policy first be returned to Us
before the decrease is made. Upon a decrease in
face amount, a partial surrender charge will be
deducted from the Policy Value based on the amount
of the decrease. The charge will equal the
applicable surrender charge that would then apply
to a full surrender multiplied by the result of
dividing the decrease in face amount by the face
amount of the policy before the decrease. We will
send You a Revised Schedule Page reflecting the
change.
DEATH PROCEEDS Upon receipt of due proof at VPMO that the insured
died while this policy is In Force, We will pay
the death proceeds of this policy. The death
proceeds equal the death benefit on the date of
death, with the following adjustments;
(A) We will deduct any Debt outstanding against
this policy.
(B) We will deduct any monthly deductions to and
including the Policy Month of death not
already made.
(C) We will add any premiums received by Us
after the Monthly Calculation Day just prior
to the date of death and on or before the
date of death.
INTEREST ON DEATH We will pay interest on any death proceeds from
PROCEEDS the date of the insured's death to the date of
payment. The amount of interest will be the same
as would be paid were the death proceeds left for
that period of time to earn interest under Payment
Option 2.
THE BENEFICIARY Unless another payment option is elected as
described in Part 8, any death proceeds that
become payable will be paid in equal shares to
such beneficiaries living at the death of the
insured as stated in the application for this
policy or as later changed. Payments will be made
successively in the following order:
a. Primary beneficiaries.
V605 -18-
<PAGE>
b. Contingent beneficiaries, if any, provided
beneficiary is living at the death of the
insured.
c. You or your executor or administrator,
provided no primary or contingent
beneficiary is living at the death of the
insured.
Unless otherwise stated the relationship of a
beneficiary is the relationship to the insured.
HOW TO CHANGE THE You may change the beneficiary under this policy
BENEFICIARY by written notice signed by You and filed with Us
at VPMO. When We receive it, the change will
relate back and take effect as of the date it was
signed. However, the change will be subject to any
payments made or actions taken by Us before We
receive the notice at VPMO.
PART 8: PAYMENT OPTIONS
WHO MAY ELECT The proceeds of this policy will be paid in one
PAYMENT OPTIONS sum unless otherwise provided. As an alternative
to payment in one sum as provided under Option 1,
any surrender or death proceeds that become
payable under an account may be applied under one
or more of the alternative income payment options
as described in this part or such other payment
options as may then be currently available for the
policy.
Our consent is required for the election of an
income payment option by a fiduciary or any entity
other than a natural person. Our consent is also
required for elections by any assigns or an owner
other than the insured if the owner has been
changed. You may designate or change one or more
beneficiaries who will be the payee or payees
under the option elected. You may only do this
during the lifetime of the insured. For death
proceeds, if no election is in effect when the
death benefit becomes payable, the beneficiary may
elect a payment option.
Unless We agree otherwise, all payments under any
option chosen will be made to the designated payee
or to his executor or administrator. We may
require proof of age of any payee or payees on
whose life payments depend as well as proof of the
continued survival of any such payee(s).
HOW TO ELECT A The election of an income payment option must be
PAYMENT OPTION in a written form satisfactory to Us. Payments may
be made on an annual, semiannual, quarterly, or
monthly basis provided that each installment will
at least equal $25. We also require that at least
$1,000 be applied under any income option chosen.
PAYMENT OPTIONS This section provides a brief description of the
various payment options that are available. In
Part 9 You will find tables illustrating the
guaranteed installment amount provided by several
of the options
V605 -19-
<PAGE>
described in this section. The amount shown for
Options 4, 5, and 7 are the minimum monthly
payments for each $1,000 applied. The actual
payments will be based on the monthly payment
rates We are using when the first payment is due.
They will not be less than shown in the tables.
Option 1 - Payment in one sum
Option 2 - Left to earn interest
We pay interest during the payee's
lifetime on the amount left with Us
under this option as a principal sum.
We guarantee that at least one of the
versions of this option will provide
interest at a rate of at least 3% per
year.
Option 3 - Payments for a specified period
Equal income installments are paid for
a specified period of years whether the
payee lives or dies. The first payment
will be on the date of settlement. The
Option 3 Table shows the guaranteed
amount of each installment for monthly
and annual payment frequencies. The
table assumes an interest rate of 3%
per year on the unpaid balance. The
actual interest rate is guaranteed not
to be less than this minimum rate.
Option 4 - Life annuity with specified period
certain
Equal installments are paid until the
later of:
(A) The death of the payee.
(B) The end of the period certain.
The first payment will be on the date
of settlement. The period certain must
be chosen at the time this option is
elected. The periods certain that may
be chosen are as follows;
(A) Ten years
(B) Twenty years
(C) Until the installments paid refund
the amount applied under this
option. If the payee is not living
when the final payment falls due,
that payment will be limited to the
amount which needs to be added to
the payments already made to equal
the amount applied under this
option.
If, for the age of the payee, a period
certain is chosen that is shorter than
another period certain paying the same
installment amount, We will deem the
longer period certain as having been
elected. The life annuity provided
V605 -20-
<PAGE>
under this option is calculated using
an interest rate of 3-3/8%, except that
any life annuity providing a period
certain of twenty years or more is
calculated using an interest rate of
3-1/4%.
Option 5 - Life Annuity
Equal installments are paid only during
the lifetime of the payee. The first
payment will be on the date of
settlement. Any life annuity as may be
provided under this option is
calculated using an interest rate of
3-1/2%.
Option 6 - Payments of specified amount.
Equal installments of a specified
amount, out of the principal sum and
interest on that sum, are paid until
the principal sum remaining is less
than the amount of the installment.
When that happens, the principal sum
remaining with accrued interest will be
paid as a final payment. The first
payment will be on the date of
settlement. The payments will include
interest on the principal sum remaining
at a rate guaranteed to at least equal
3% per year. This interest will be
credited at the end of each year. If
the amount of interest credited at the
end of a year exceeds the income
payments made in the last 12 months,
that excess will be paid in one sum on
the date credited.
Option 7 - Joint survivorship annuity with 10-year
period certain
The first payment will be on the date
of settlement. Equal income
installments are paid until the latest
of:
(A) The end of the 10-year period
certain.
(B) The death of the insured.
(C) The death of the other named
annuitant.
The other annuitant must be named at
the time this option is elected and
cannot later be changed. That annuitant
must have an adjusted age of at least
40 as defined in Part 9. The joint
survivorship annuity provided under
this option is calculated by using an
interest rate of 3-3/8%.
We may offer other payment options or alternative
versions of the options listed in the above
section.
ADDITIONAL INTEREST In addition to:
(A) the interest of 3% per year guaranteed on
the principal sum remaining with Us under
Options 2 or 6; and
V605 -21-
<PAGE>
(B) the interest of 3% per year included in the
installments payable under Option 3.
We will pay or credit at the end of each year such
additional interest as We may declare.
PART 9: TABLES OF PAYMENT OPTION AMOUNTS
The installment amounts shown in the tables that
follow are shown for each $1,000 applied. Amounts
for payment frequencies, periods or ages not shown
will be furnished upon request. Under Options 4
and 5, the installment amount for younger ages
than shown will be the same as for the first age
shown, and for older ages than shown, it will be
the same amount as for the last age shown.
The term "age" as used in the tables refers to the
adjusted age. Under Options 4 and 5, the adjusted
age is defined as follows:
(A) For surrender values, the age of the payee
on the payee's birthday nearest to the
Policy Anniversary nearest the date of
surrender.
(B) For death proceeds, the age of the payee on
the payee's birthday nearest the effective
date of the payment option elected.
Under Option 7, the adjusted age is the age on the
birthday nearest to the Policy Anniversary nearest
the date of surrender.
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Number of Years 5 6 7 8 9 10 11 12 13
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual
Installments $211.99 179.22 155.80 138.31 124.89 113.82 104.93 97.54 91.29
Mo. Installments $17.91 15.14 13.16 11.68 10.53 9.61 8.86 8.24 7.71
- --------------------------------------------------------------------------------------------------------------------------------
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------------------
Number of Years 14 15 16 17 18 19 20 25 30
- --------------------------------------------------------------------------------------------------------------------------------
Annual
Installments $85.95 81.33 77.29 73.74 70.59 67.78 65.26 55.76 49.53
Mo. Installments $7.26 6.87 6.53 6.23 5.96 5.73 5.51 4.71
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 4 - LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Installment Refund 10 Yrs. Certain 20 Yrs. Certain
Payee
---------------------------------------------------------------------------------------------------------------
Male Female Male Female Male Female
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 $3.08 $3.03 $3.08 $2.99 $3.00 $2.94
15 3.14 3.09 3.15 3.04 3.07 3.00
- --------------------------------------------------------------------------------------------------------------------------------
20 3.22 3.16 3.24 3.11 3.15 3.07
- --------------------------------------------------------------------------------------------------------------------------------
25 3.33 3.24 3.34 3.20 3.25 3.15
- --------------------------------------------------------------------------------------------------------------------------------
30 3.45 3.35 3.47 3.30 3.38 3.25
- --------------------------------------------------------------------------------------------------------------------------------
35 3.61 3.48 3.64 3.43 3.55 3.38
- --------------------------------------------------------------------------------------------------------------------------------
40 3.80 3.64 3.86 3.60 3.74 3.54
- --------------------------------------------------------------------------------------------------------------------------------
45 4.05 3.85 4.14 3.82 3.99 3.74
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
V605 -22-
<PAGE>
<TABLE>
*OPTION 4 - LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Installment Refund 10 Yrs. Certain 20 Yrs. Certain
Payee
--------------------------------------------------------------------------------------------------------
Male Female Male Female Male Female
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.36 $4.12 $4.50 $4.10 $4.28 $3.99
55 4.76 4.47 4.95 4.47 4.61 4.31
- -------------------------------------------------------------------------------------------------------------------------
60 5.28 4.93 5.54 4.96 4.97 4.67
- -------------------------------------------------------------------------------------------------------------------------
65 5.97 5.54 6.30 5.63 5.29 5.06
- -------------------------------------------------------------------------------------------------------------------------
70 6.91 6.39 7.24 6.50 5.43 5.31
- -------------------------------------------------------------------------------------------------------------------------
75 8.21 7.57 8.26 7.56 5.44 5.40
- -------------------------------------------------------------------------------------------------------------------------
80 10.04 9.26 9.12 8.60 5.46 5.46
- -------------------------------------------------------------------------------------------------------------------------
85 12.61 11.68 9.60 9.31 5.46 5.46
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
OPTION 5 - LIFE ANNUITY
- ----------------------------------------------------------------------------------------------------
<CAPTION>
Age of Male Female Age of Male Female
Payee Payee
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 3.17 3.12 50 4.62 4.28
15 3.24 3.18 55 5.12 4.68
- ----------------------------------------------------------------------------------------------------
20 3.32 3.25 60 5.79 5.24
- ----------------------------------------------------------------------------------------------------
25 3.42 3.34 65 6.75 6.04
- ----------------------------------------------------------------------------------------------------
30 3.56 3.44 70 8.15 7.22
- ----------------------------------------------------------------------------------------------------
35 3.73 3.58 75 10.26 9.03
- ----------------------------------------------------------------------------------------------------
40 3.95 3.75 80 13.54 11.88
- ----------------------------------------------------------------------------------------------------
45 4.24 3.98 85 18.72 16.54
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 7 - JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Age of Insured Age of Age of Insured
Other Other
Annuitant Annuitant
-------------------------------------------- --------------------------------------------
Male Male
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
F 55 60 65 F 55 60 65
- -------------------------------------------------------------------------------------------------------------------------
40 3.62 3.64 3.65 60 4.43 4.64 4.82
- -------------------------------------------------------------------------------------------------------------------------
45 3.80 3.83 3.86 65 4.61 4.93 5.23
- -------------------------------------------------------------------------------------------------------------------------
50 4.00 4.07 4.12 70 4.75 5.18 5.63
- -------------------------------------------------------------------------------------------------------------------------
55 4.22 4.34 4.44 75 4.86 5.36 5.96
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 7 - JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Age of Age of Insured Age of Age of Insured
Other Other
Annuitant Annuitant
-------------------------------------------- --------------------------------------------
Female Female
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M 55 60 65 M 55 60 65
- -------------------------------------------------------------------------------------------------------------------------
40 3.72 3.77 3.80 60 4.34 4.64 4.93
- -------------------------------------------------------------------------------------------------------------------------
45 3.89 3.97 4.03 65 4.44 4.82 5.23
- -------------------------------------------------------------------------------------------------------------------------
50 4.06 4.19 4.31 70 4.50 4.95 5.48
- -------------------------------------------------------------------------------------------------------------------------
55 4.22 4.43 4.61 75 4.54 5.03 5.65
- -------------------------------------------------------------------------------------------------------------------------
* Minimum monthly income for each $1,000 applied.
</TABLE>
V605 -23-
<PAGE>
Flexible Premium Variable Universal Life Insurance Policy
The death benefit and other values provided under this policy are based on the
rates of interest credited on any amounts allocated to the Guaranteed Interest
Account and the investment experience of the subaccounts within Our Separate
Account to which your premiums are allocated. Thus, the death benefit and other
values may increase or decrease in amount or duration. See Part 7 for a
description of how the death benefit is determined.
Eligible for Annual Dividends
V605
Exhibit 1.A.(8)(a)
PARTICIPATION AGREEMENT BETWEEN PHLVIC AND WANGER ADVISORS TRUST
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 23rd day of February, 1995
by and between WANGER ADVISORS TRUST, an unincorporated business trust formed
under the laws of Massachusetts (the "Trust"), and PHL VARIABLE INSURANCE
COMPANY, a Connecticut life insurance company (the "Company"), on its own behalf
and on behalf of each separate account of the Company identified herein.
WHEREAS, the Trust is a series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares ("Series shares"), each such series representing an
interest in a particular managed portfolio of securities and other assets; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for (i) separate accounts supporting variable annuity
contracts and variable life insurance policies to be offered by insurance
companies, and (ii) certain pension and retirement plans receiving favorable tax
treatment under the Internal Revenue Code of 1986, as amended; and
WHEREAS, the Company desires that the Trust serve as an investment
vehicle for certain separate accounts of the Company;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Company agree as follows:
ARTICLE I. ADDITIONAL DEFINITIONS
----------------------
1.1. "Account" -- each separate account of the Company described more
specifically in Schedule 1 to this Agreement.
1.2. "Business Day" -- each day that the Trust is open for business
as provided in the Trust Prospectus.
1.3. "Code" -- the Internal Revenue Code of 1986, as amended.
1.4. "Contracts" -- the class or classes of variable annuity contracts
or variable life insurance contracts issued by the Company and described more
specifically on Schedule 2 to this Agreement.
1.5. "Contract Owners" -- the owners of the Contracts, as
distinguished from all Product Owners.
1.6. "Investment Adviser" -- the investment manager of the Trust.
<PAGE>
1.7. "Participating Account" -- a separate account investing all or a
portion of its assets in the Trust, including the Account.
1.8. "Participating Insurance Company" -- any insurance company
investing in the Trust on its behalf or on behalf of a Participating Account,
including the Company.
1.9. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts investing assets
attributable thereto in the Trust, including the Contracts.
1.10. "Product Owners" -- owners of Products.
1.11. "Prospectus" -- with respect to a class of Contracts, each
version of the definitive prospectus or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act ("Contracts Prospectus"). With respect
to Trust shares, each version of the definitive prospectus or supplement thereto
filed with the SEC pursuant to Rule 497 under the 1933 Act with respect to a
series of the Trust listed on Schedule 3 to this Agreement ("Trust Prospectus").
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version last filed prior to the taking of such action. For purposes of
Article VIII, the term "Prospectus" shall include any statement of additional
information incorporated therein.
1.12. "Qualified Entity" -- A person or plan, including a pension or
retirement plan receiving favorable tax treatment under the Code, that qualifies
to purchase shares of the Trust under Section 817(h) of the Code. A natural
person having an indirect interest in the Trust by virtue of such natural
person's participation in a Qualified Entity is a "Qualified Participant."
1.13. "Registration Statement" -- with respect to the Trust Shares
("Trust Registration Statement") or a class of Contracts ("Contracts
Registration Statement"), the registration statement filed with the SEC to
register the securities issued thereby under the 1933 Act, or the most recently
filed amendment thereto, in either case in the form in which it was declared or
became effective. The Contracts Registration Statement is described more
specifically on Schedule 2 to this Agreement. The Trust Registration Statement
was filed on Form N-1A (File No. 33-83548).
1.14. "1940 Act Registration Statement" -- with respect to the Trust or
the Account, the registration statement filed with the SEC to register such
entity as an investment company under the 1940 Act, or the most recently filed
amendment thereto. The Account 1940 Act Registration Statement is described more
specifically on Schedule 2 to this Agreement. The Trust 1940 Act
- 2 -
<PAGE>
Registration Statement was filed on Form N-1A (File No. 811-8748).
1.15. "Statement of Additional Information" -- with respect to the
Trust or a class of Contracts, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to Rule
497 under the 1933 Act.
1.16. "SEC" -- the Securities and Exchange Commission.
1.17. "1933 Act" -- the Securities Act of 1933, as amended.
1.18. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II. SALE OF TRUST SHARES
--------------------
2.1. The Trust shall make shares of those Series listed on Schedule 3
to this Agreement available for purchase by the Company on behalf of the
Account, such purchases to be effected at net asset value in accordance with
Section 2.3 of this Agreement. Notwithstanding the foregoing, (i) Trust Series
in existence now or that may be established in the future and not listed on
Schedule 3 will be made available to the Company only as the Trust and the
Company may agree pursuant to Article XI hereof, and (ii) the Board of Trustees
of the Trust (the "Trust Board") may suspend or terminate the offering of Trust
shares of any Series in any jurisdiction, if such action is required by law or
by regulatory authorities having jurisdiction or if, in the sole discretion of
the Trust Board acting in good faith and in light of its fiduciary duties under
Federal and any applicable state laws, suspension or termination is necessary or
in the best interests of the shareholders of any Series (it being understood
that "shareholders" for this purpose shall mean Product Owners and Qualified
Participants).
2.2. The Trust shall redeem, at the Company's request, any full or
fractional shares of the Trust held by the Company on behalf of the Account,
such redemptions to be effected at net asset value in accordance with Section
2.3 of this Agreement. Notwithstanding the foregoing, (i) the Company shall not
redeem Trust shares attributable to Contract Owners except in the circumstances
permitted in Section 2.7 of this Agreement, and (ii) the Trust may delay
redemption of Trust shares of any Series to the extent permitted by the 1940
Act, any rules, regulations or orders thereunder, or as described in the Trust
Prospectus.
- 3 -
<PAGE>
2.3.
(a) The Trust hereby appoints the Company as its designee for
the limited purpose of receiving purchase and redemption requests from
the Account based on allocations of net amounts to the Account or
subaccounts thereof under the Contracts and other transactions relating
to the Contracts or the Account. Purchase and redemption requests shall
be processed by the Trust at the net asset value per share next
calculated after the Trust receives and accepts such request. The Trust
shall calculate its net asset value per share at the Trust's close of
business on each Business Day (as defined from time to time in the
Trust Prospectus, and which as of the date of execution of this
Agreement is the time of the close of regular session trading on the
New York Stock Exchange, which is generally 4:00 p.m. Eastern Time).
Receipt of any such request on any Business Day by the Company as
designee of the Trust prior to the Trust's close of business shall
constitute receipt by the Trust on that same Business Day, provided
that the Trust receives notice of such request by 10 a.m. Eastern Time
on the next following Business Day.
(b) The Company shall pay for shares of each Series on the
same day that it notifies the Trust of a purchase request for such
shares. Payment for Series shares shall be made in Federal funds
transmitted to the Trust by wire to be received by the Trust by 12:00
p.m. Eastern Time on the day the Trust is notified of the purchase
request for Series shares (unless the Trust determines and so advises
the Company that sufficient proceeds are available from redemption of
shares of other Series effected pursuant to redemption requests
tendered by the Company on behalf of the Account). If payment in
Federal funds for any purchase is not received, or is received by the
Trust after 3 p.m. Eastern Time on such Business Day, the Company shall
promptly, upon the Trust's request, reimburse the Trust for any
charges, costs, fees, interest or other expenses incurred by the Trust
in connection with any advances to, or borrowings or overdrafts by, the
Trust, or any similar expenses incurred by the Trust, as a result of
non-payment or late payment.
(c) Payment for Series shares redeemed by the Account or the
Company shall be made in Federal funds transmitted by wire to the
Company or any other designated person by 3 p.m. Eastern Time on the
next Business Day after the Trust is properly notified of the
redemption order of Series shares (unless redemption proceeds are to be
applied to the purchase of Trust shares of other Series in accordance
with Section 2.3(b) of this Agreement), except that (i) if payment of
the redemption proceeds would require
- 4 -
<PAGE>
the Trust to dispose of portfolio securities or otherwise incur
additional costs, proceeds shall be wired to the company within seven
days and the Trust shall notify the Company of such delay by 3 p.m.
Eastern Time on such Business Day; and (ii) the Trust reserves the
right to delay payment of redemption proceeds to the extent permitted
under Section 22(e) of the 1940 Act; and (iii) the Trust reserves the
right to effect payment of redemptions in kind, but only to the extent
described in the Trust Prospectus. The Trust shall not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company; the Company alone shall be
responsible for such action.
2.4. The Trust shall use reasonable efforts to make the net asset value
per share for each Series available to the Company by 7 p.m. Eastern Time each
Business Day, and in any event, as soon as reasonably practicable after the net
asset value per share for such Series is calculated, and shall calculate such
net asset value in accordance with the Trust Prospectus. Neither the Trust, any
Series, the Investment Adviser, nor any of their affiliates shall be liable for
any information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by the Company or any
other Participating Company to the Trust or the Investment Adviser.
2.5. The Trust shall furnish notice to the Company as soon as
reasonably practicable of any income dividends or capital gain distributions
payable on any Series shares. The Trust shall notify the Company promptly of the
number of Series shares so issued as payment of such dividends and
distributions. The Company, on its behalf and on behalf of the Account, hereby
elects to receive all such dividends and distributions as are payable on any
Series shares in the form of additional shares of that Series. The Company
reserves the right, on its behalf and on behalf of the Account, to revoke this
election and to receive all such dividends in cash.
2.6. Issuance and transfer of Trust shares shall be by book entry only.
Stock certificates will not be issued to the Company or the Account. Purchase
and redemption orders for Trust shares shall be recorded in an appropriate
ledger for the Account or the appropriate subaccount of the Account.
2.7.
(a) The Company shall invest amounts available for investment
under the Contracts in the Series of the Trust specified in Schedule 3
in accordance with allocation instructions received from Contract
Owners, it being understood that no changes shall be made to Schedule 3
- 5 -
<PAGE>
without the prior written consent of the Trust and the Investment
Adviser. The Company may withdraw the Account's investment in the Trust
or a Series of the Trust only: (i) as necessary to facilitate Contract
Owner requests; (ii) upon a determination by a majority of the Trust
Board, or a majority of disinterested Trust Board members, that an
irreconcilable material conflict exists among the interests of (x) some
or all Product Owners or (y) the interests of some or all of the
Participating Insurance Companies and/or Qualified Entities investing
in the Trust; or (iii) in the event that the shares of another
investment company are substituted for series shares in accordance with
the terms of the Contracts upon the (x) requisite vote of the Contract
Owners having an interest in the affected Series and the written
consent of the Trust (unless otherwise required by applicable law); (y)
upon issuance of an SEC exemptive order pursuant to Section 26(b) of
the 1940 Act permitting such substitution; or (z) as may otherwise be
permitted under applicable law.
(b) The Company shall not, without the prior written consent
of the Trust (unless otherwise required by applicable law), take any
action to operate the Account as a management investment company under
the 1940 Act.
(c) The Trust shall not, without the prior written consent of
the Company (unless otherwise required by applicable law), take any
action to operate the Trust as a unit investment trust under the 1940
Act.
(d) The Company shall not, without the prior written consent
of the Trust (unless otherwise required by applicable law), solicit,
induce or encourage Contract Owners to change or modify the Trust or
change the Trust's investment adviser.
(e) The Company and the Trust acknowledge that the arrangement
contemplated by this Agreement is not exclusive; Trust shares may be
sold to other insurance companies; and the cash value of the Contracts
may be invested in other investment companies, provided, however, that
(a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the
investment objectives and policies of the Trust; or (b) the Company
gives the Trust 45 days written notice of its intention to make such
other investment company available as a funding vehicle for the
Contracts; or (c) such other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement
and the Company so informs the Trust prior to the execution of this
Agreement; or (d) the Trust consents to
- 6 -
<PAGE>
the use of such other investment company, such consent not to
be unreasonably withheld.
2.8. The Trust shall sell Trust shares only to Participating Insurance
Companies and their separate accounts and to Qualified Entities. The Trust shall
not sell Trust shares to any insurance company or separate account unless an
agreement complying with Article VII of this Agreement is in effect to govern
such sales.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
------------------------------
3.1. The Company represents and warrants that: (i) the Company is an
insurance company duly organized and in good standing under applicable law; (ii)
the Account is a validly existing separate account, duly established and
maintained in accordance with applicable law; (iii) the Account 1940 Act
Registration Statement has been filed with the SEC in accordance with the
provisions of the 1940 Act and the Account is duly registered as a unit
investment trust thereunder; (iv) the Contracts Registration Statement has been
declared effective by the SEC; (v) the Contracts will be issued in compliance in
all material respects with all applicable Federal and state laws; and (vi) the
Contracts currently are and at the time of issuance will be treated as annuity
contracts under applicable provisions of the Code.
3.2. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed under Massachusetts law; (ii) the
Trust 1940 Act Registration Statement has been filed with the SEC in accordance
with the provisions of the 1940 Act and the Trust is duly registered as an
open-end management investment company thereunder; (iii) the Trust Registration
Statement has been declared effective by the SEC; (iv) Trust shares sold
pursuant to this Agreement have been duly authorized for issuance in accordance
with applicable law; (v) the Trust believes that it (x) currently qualifies as a
"regulated investment company" under Subchapter M of the Code and (y) currently
complies with Section 817(h) of the Code and regulations thereunder; and (vi)
the Trust's investment policies are in material compliance with any investment
restrictions set forth on Schedule 4 to this Agreement. The Trust, however,
makes no representation as to whether any aspect of its operations (including,
but not limited to, fees and expenses and investment policies) otherwise
complies with the insurance laws or regulations of any state.
3.3. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party, and,
- 7 -
<PAGE>
when so executed and delivered, this Agreement will be the valid and binding
obligation of such party enforceable in accordance with its terms.
ARTICLE IV. FILINGS, INFORMATION AND EXPENSES
---------------------------------
4.1. The Trust shall amend the Trust Registration Statement and the
Trust 1940 Act Registration Statement from time to time as required in order to
effect the continuous offering of Trust shares and to maintain the Trust's
registration under the 1940 Act for so long as Trust shares are sold.
4.2. The Company shall amend the Contracts Registration Statement and
the Account 1940 Act Registration Statement from time to time as required in
order to effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company shall maintain a current effective
Contracts Registration Statement and the Account's registration under the 1940
Act for so long as the Contracts are outstanding, unless (a) a no-action letter
from the SEC has been obtained by the Company to the effect that such
registration statement need no longer be maintained; or (b) the Company has
supplied the Trust with an opinion of counsel to the effect that maintaining
such registration statement is no longer required; or (c) the company has
notified the Trust in writing that, with respect to such registration statement,
the Company meets the terms and conditions of, and is relying on, Great West
Life & Annuity Insurance Company (pub. avail. Oct. 23, 1990), and any subsequent
no-action letter released by the staff of the SEC addressing the same subject
matter. The Company shall file, register, qualify and obtain approval of the
Contracts for sale to the extent required by applicable insurance and securities
laws of the various states.
4.3 The Trust shall provide the Company with as many copies of the
Trust Prospectus as the Company may reasonably request. If requested by the
Company in lieu thereof, the Trust shall provide such documentation (including a
final copy of the Trust Prospectus as set in type at the Trust's expense) and
other assistance as is reasonably necessary in order for the Company once each
year (or more frequently if the Trust Prospectus is more frequently amended) to
have the Contracts Prospectus and Trust Prospectus printed together in one
document.
4.4 The Company shall deliver Contracts, Contracts and Trust
Prospectuses, Contracts and Trust Statements of Additional Information, and all
amendments or supplements to any of the foregoing to Contract Owners and
prospective Contract Owners, as required by applicable federal securities laws.
- 8 -
<PAGE>
4.5. The Company shall:
(a) inform the Trust of any state in which the Trust is
required under such state's securities laws to register the offering of
its shares pursuant to this participation agreement; and
(b) inform the Trust of any investment restrictions imposed by
state insurance law that may become applicable to the Trust from time
to time as a result of the Account's investment therein (including, but
not limited to, restrictions with respect to fees and expenses and
investment policies), other than those set forth on Schedule 4 to this
Agreement.
4.6. Upon receipt of information from the Company pursuant to Section
4.5(b), the Trust shall determine whether it is in the best interests of
shareholders (it being understood that "shareholders" for this purpose shall
mean Product Owners and Qualified Participants) to comply with any such
restrictions. If the Trust determines that it is not in the best interests of
shareholders, the Trust shall so inform the Company, and the Trust and the
Company shall discuss alternative accommodations in the circumstances. If the
Trust determines that it is in the best interests of shareholders to comply with
such restrictions, the Trust and the Company shall amend Schedule 4 to this
Agreement to reflect such restrictions.
4.7. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
(a) Expenses assumed by the Trust include, but are not limited
to, the costs of: registration and qualification of the Trust shares
under the federal securities laws; preparation and filing with the SEC
of the Trust Prospectus, Trust Registration Statement, Trust proxy
materials and shareholder reports; the printing and mailing of all
proxy statements and periodic reports; the preparation of camera-ready
copy of Trust Prospectuses and Statements of Additional Information
required to be provided by the Trust to its then-current shareholders;
preparation of all statements and notices required by any Federal or
state securities law; all taxes on the issuance or transfer of Trust
shares; and any expenses permitted to be paid or assumed by the Trust
pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act. The
Trust shall pay no fee or other compensation to the Company under this
Agreement, and shall not be charged for the costs of printing and
mailing to prospective Contract Owners copies of the Trust Prospectus,
Trust Statement of Additional Information,
- 9 -
<PAGE>
notices, proxy statements, periodic reports, or other printed
materials.
(b) Expenses assumed by the Company include, but are not
limited to, the costs of: registration and qualification of the
Contracts under the federal securities laws; preparation and filing with
the SEC of the Contracts Prospectus, Contracts Registration Statement,
and Contract Owner reports; and the printing and mailing of all periodic
reports, Contracts Prospectuses, Statements of Additional Information,
and notices to current and prospective Contract Owners required by any
Federal or state insurance law other than those paid for by the Trust.
4.8. No piece of advertising or sales literature or other promotional
material in which the Trust is named shall be used, except with the prior
written consent of the Trust. Any such piece shall be furnished to the Trust for
such consent prior to its use. The Trust shall respond to any request for
written consent on a prompt and timely basis, but failure to respond shall not
relieve the Company of the obligation to obtain the prior written consent of the
Trust. The Trust may at any time in its sole discretion revoke such written
consent, and upon notification of such revocation, the Company shall no longer
use the material subject to such revocation. The Trust may delegate its rights
and responsibilities under this provision to the Investment Adviser.
4.9. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust
other than the information or representations contained in the Trust
Registration Statement or Trust Prospectus or in reports or proxy statements for
the Trust which are in the public domain or approved in writing by the Trust for
distribution to Contract Owners, or in sales literature or other promotional
material approved in accordance with Section 4.8 of this Agreement, except with
the prior written consent of the Trust.
4.10. The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account
or the Contracts other than the information or representations contained in the
Contracts Registration Statement or Contracts Prospectus or in reports of the
Account which are in the public domain or approved in writing by the Company for
distribution to Contract Owners, or in sales literature or other promotional
material approved in writing by the Company, except with the prior written
consent of the Company.
- 10 -
<PAGE>
4.11. Each party shall provide to the other at least one complete copy
of all Registration Statements, Prospectuses, Statements of Additional
Information, periodic and other shareholder or Contract Owner reports, proxy
statements, solicitations of voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, that relate to
the Trust, the Contracts or the Account, as the case may be, promptly after the
filing by or on behalf of such party of such document with the SEC or other
regulatory authorities.
4.12. Each party shall provide to the other upon request copies of
draft versions of any Registration Statements, Prospectuses, Statements of
Additional Information, periodic and other shareholder or Contract Owner
reports, proxy statements, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, to the extent that the other party reasonably needs such information for
purposes of preparing a report or other filing to be filed with or submitted to
a regulatory agency. If a party requests any such information before it has been
filed, the other party will provide the requested information if then available
and in the version then available at the time of such request.
4.13. Each party hereto shall cooperate with the other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit each other and such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. However, such access shall not extend to attorney-client
privileged information.
4.14. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any material
constituting sales literature or advertising under the NASD rules, the 1940 Act
or the 1933 Act.
- 11 -
<PAGE>
ARTICLE V. VOTING OF TRUST SHARES
----------------------
With respect to any matter put to vote by the holders of Trust shares
or Series shares ("Voting Shares"), the Company shall:
(a) solicit voting instructions from Contract Owners to which
Voting Shares are attributable;
(b) vote Voting Shares of each Series attributable to Contract
Owners in accordance with instructions or proxies timely received from
such Contract Owners;
(c) unless permitted under applicable law, vote Voting Shares
of each Series attributable to Contract Owners for which no
instructions have been received in the same proportion as Voting Shares
of such Series for which instructions have been timely received; and
(d) unless permitted under applicable law, vote Voting Shares
of each Series held by the Company on its own behalf or on behalf of
the Account that are not attributable to Contract Owners in the same
proportion as Voting Shares of such Series for which instructions have
been timely received.
The Company shall be responsible for assuring that voting privileges
for the Account are calculated in a manner consistent with the provisions set
forth above.
ARTICLE VI. COMPLIANCE WITH CODE
--------------------
6.1. The Trust undertakes to comply with Section 817(h) of the Code,
and all regulations issued thereunder.
6.2. The Trust undertakes to maintain its qualification as a registered
investment company (under Subchapter M or any successor or similar provision),
and undertakes to notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
6.3. The Company undertakes to maintain the treatment of the Contracts
as annuity contracts or life insurance policies, whichever is appropriate, under
applicable provisions of the Code and shall notify the Trust immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
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<PAGE>
ARTICLE VII. POTENTIAL CONFLICTS
-------------------
The parties to this Agreement acknowledge that the Trust may file an
application with the SEC to request an order granting relief from various
provisions of the 1940 Act and the rules thereunder to the extent necessary to
permit Trust shares to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated Participating
Insurance Companies, as well as by Qualified Entities. Any conditions or
undertakings that may be imposed on the Company and the Trust by virtue of such
order shall be incorporated herein by this reference, as of the date such order
is granted, as though set forth herein in full, and the parties to this
Agreement shall comply with such conditions and undertakings to the extent
applicable to each such party. The Trust will not enter into a participation
agreement with any other Participating Insurance Company unless it imposes the
same conditions and undertakings imposed by virtue of such order and
incorporated by reference herein on the parties to such agreement.
ARTICLE VIII. INDEMNIFICATION
---------------
8.1. The Company shall indemnify and hold harmless the Trust and each
person who controls or is associated with the Trust within the meaning of such
terms under the federal securities laws (but not any Participating Insurance
Companies or Qualified Entities) and any officer, trustee, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Contracts Registration Statement, Contracts Prospectus, sales
literature or other promotional material for the Contracts or the
Contracts themselves (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission
or such alleged statement or alleged omission was made in reliance upon
and in conformity with information furnished in writing to the
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<PAGE>
Company by the Trust for use in the Contracts Registration Statement,
Contracts Prospectus or in the Contracts or sales literature or
promotional material for the Contracts (or any amendment or supplement
to any of the foregoing) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Trust Registration
Statement, Trust Prospectus or sales literature or other promotional
material of the Trust (or any amendment or supplement to any of the
foregoing), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
to the Trust by or on behalf of the Company; or
(c) arise out of or are based upon any wrongful conduct of the
Company or persons under its control (or subject to its authorization
or supervision) with respect to the sale or distribution of the
Contracts or Trust shares; or
(d) arise as a result of any failure by the Company to perform
its obligations under the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to comply with the
undertaking specified in Article VI of this Agreement, unless such
failure is a result of the Trust's material breach of this Agreement);
or
(e) arise out of any material breach by the Company of this
Agreement, including but not limited to any failure to transmit a
request for redemption or purchase of Trust shares on a timely basis in
accordance with the procedures set forth in Article II.
This indemnification will be in addition to any liability that the Company may
otherwise have; provided, however, that no person otherwise entitled to
indemnification pursuant to this Section 8.1 shall be entitled to
indemnification if such loss, claim, damage or liability is due to the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
person seeking indemnification.
8.2. The Trust shall indemnify and hold harmless the Company and each
person who controls or is associated with the Company within the meaning of such
terms under the federal securities laws and any officer, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
- 14 -
<PAGE>
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Trust
Registration Statement, Trust Prospectus or sales literature or other
promotional material of the Trust (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission or alleged statement or alleged omission was made
in reliance upon and in conformity with information furnished in
writing by the Company to the Trust for use in the Trust Registration
Statement, Trust Prospectus or sales literature or promotional material
for the Trust (or any amendment or supplement to any of the foregoing);
or
(b) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Contracts Registration
Statement, Contracts Prospectus or sales literature or other
promotional material for the Contracts (or any amendment or supplement
to any of the foregoing), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances in which they were made, if such statement or omission
was made in reliance upon information furnished in writing by the Trust
to the Company; or
(c) arise out of or are based upon wrongful conduct of the
Trust with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to perform
its obligations under the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to comply with the
undertakings specified in Article VI of this Agreement, unless such
failure is a result of the Company's material breach of this
Agreement); or
(e) arise out of any material breach by the Trust of this
Agreement.
- 15 -
<PAGE>
This indemnification will be in addition to any liability that the Trust may
otherwise have; provided, however, that no person otherwise entitled to
indemnification pursuant to this Section 8.2 shall be entitled to
indemnification if such loss, claim, damage or liability is due to the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
person seeking indemnification.
8.3. After receipt by a party entitled to indemnification ("indemnified
party") under this Article VIII of notice of the commencement of any action, if
a claim in respect thereof is to be made by the indemnified party against any
person obligated to provide indemnification under this Article VIII
("indemnifying party"), such indemnified party will notify the indemnifying
party in writing of the commencement thereof as soon as practicable thereafter,
provided that the failure to so notify the indemnifying party will not relieve
the indemnifying party from any liability under this Article VIII, except to the
extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
the failure to give such notice. The indemnifying party, upon the request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent but if
settled with such consent, or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
- 16 -
<PAGE>
ARTICLE IX. APPLICABLE LAW
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to the principles of conflicts of laws.
9.2. This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant, and the terms hereof
shall be limited, interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
-----------
10.1 This Agreement shall not terminate until the Trust is dissolved,
liquidated, or merged into another entity, or, as to any Series of the Trust,
an Account no longer invests in that Series. However, certain obligations of,
or restrictions on, the parties to this Agreement may terminate as provided in
Sections 10.2 and 10.3.
10.2. The obligation of the Trust to sell shares to the Company
pursuant to Article II of this Agreement shall terminate at the option of the
Trust upon 30 days notice to the Company:
(a) upon institution of formal proceedings against the Company
by the NASD, the SEC, the insurance commission of any state or any
other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the operation of the
Account, the administration of the Contracts or the purchase of Trust
shares, or an expected or anticipated ruling, judgment or outcome which
would, in the Trust's reasonable judgment, materially impair the
Company's ability to meet and perform the Company's obligations and
duties hereunder;
(b) in the event any of the Contracts are not registered,
issued or sold in accordance with applicable Federal and/or state law;
(c) if the Contracts cease to qualify as annuity contracts
under the Code, or if the Trust reasonably believes that the Contracts
may fail to so qualify;
(d) if the Trust shall determine, in its sole judgment
exercised in good faith, that either (1) the Company shall have
suffered a material adverse change in its business or financial
condition or (2) the Company shall
- 17 -
<PAGE>
have been the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of the
Trust;
(e) upon the Company's assignment of this Agreement
(including, without limitation, any transfer of the Contracts or the
Account to another insurance company pursuant to an assumption
reinsurance agreement) unless the Trust consents thereto; or
(f) upon termination pursuant to Section 10.1 or notice from
the Company pursuant to Section 10.3.
In exercising its option to terminate its obligation to sell Shares to the
Company, the Trust shall continue to make its shares available to the extent
required by applicable law and may elect to continue to make Trust shares
available to the extent necessary to permit owners of Contracts in effect on the
effective date of such termination (hereinafter referred to as "Existing
Contracts") to reallocate investments in the Trust, redeem investments in the
Trust and/or invest in the Trust upon the making of additional purchase payments
under the Existing Contracts. The Trust shall promptly notify the Company
whether the Trust is electing to make Trust shares so available after
termination.
10.3. The restrictions on the Company under Section 2.7 of this
Agreement shall terminate at the option of the Company upon 30 days notice to
the Trust:
(a) if shares of any Series are not reasonably available to
meet the requirements of the Contracts as determined by the Company,
and the Trust, after receiving written notice from the Company of such
non-availability, fails to make available a sufficient number of Trust
shares to meet the requirements of the Contracts within 5 days after
receipt thereof;
(b) upon institution of formal proceedings against the Trust
by the NASD, the SEC or any state securities or insurance commission or
any other regulatory body;
(c) if the Trust ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code, or under any successor or
similar provision, or if the Company reasonably believes based on an
opinion of counsel satisfactory to the Trust that the Trust may fail to
so qualify, and the Trust, upon written request, fails to provide
reasonable assurance that it will take action to cure or correct such
failure;
- 18 -
<PAGE>
(d) if the Trust fails to meet the diversification
requirements specified in Section 817(h) of the Code and any
regulations thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure; or
(e) if the Trust informs the Company pursuant to Section 4.6
that the Trust will not comply with investment restrictions as
requested by the Company and the Trust and the Company are unable to
agree upon any reasonable alternative accommodations.
10.4. This Article X shall not apply to any termination made pursuant
to Article VII or any conditions or undertakings incorporated by reference in
Article VII, and the effect of such Article VII termination shall be governed by
the provisions set forth or incorporated by reference therein.
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
-----------------------------------------------
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts or Series, or additions of new classes of Contracts to be issued by
the Company through separate accounts investing in the Trust. The provisions of
this Agreement shall be equally applicable to each such class of Contracts,
Series and Accounts, effective as of the date of amendment of such Schedule,
unless the context otherwise requires.
ARTICLE XII. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS
------------------------------------------
Any obligation of the Trust hereunder shall be binding only upon the
assets of the Trust (or applicable Series thereof) and shall not be binding upon
any trustee, officer, employee, agent or shareholder of the Trust. Neither the
authorization of any action by the Trust Board or shareholders of the Trust, nor
the execution of this Agreement on behalf of the Trust, shall impose any
liability upon any trustee, officer, or shareholder of the Trust.
ARTICLE XIII. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
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<PAGE>
If to the Trust:
Name: /s/ Charles P. McQuaid
-----------------------------
Title: Sr. Vice President
----------------------------
Wanger Advisors Trust
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
If to the Company:
Name: /s/ Simon Tan
-----------------------------
Title: Sr. Vice President
----------------------------
PHL Variable Insurance Company
One American Row
Hartford, Connecticut 06115
ARTICLE XIV. MISCELLANEOUS
-------------
14.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
14.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
14.3. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
PHL VARIABLE INSURANCE COMPANY
(COMPANY)
Date: March 1, 1995 By: /s/ Dona D. Young
------------------ --------------------------
Name: Dona D. Young
Title: Executive Vice President
WANGER ADVISORS TRUST
(TRUST)
Date: Feb. 23, 1995 By: /s/ Charles P. McQuaid
------------------ --------------------------
Name: Charles P. McQuaid
Title: Sr. Vice President
- 21 -
<PAGE>
AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT ("Amendment No.
1"), made and entered into as of this 16th day of December, 1996, supplementing
and amending the Participation Agreement made and entered into the 23rd day of
February, 1995 (the "Original Participation Agreement," and together with this
Amendment No. 1, the "Agreement") by and between WANGER ADVISORS TRUST, an
unincorporated business trust formed under the laws of Massachusetts (the
"Trust"), and PHL VARIABLE INSURANCE COMPANY, a Connecticut life insurance
company (the "Company"), on its own behalf and on behalf of each separate
account of the Company identified in the Agreement.
WHEREAS, the Trust currently serves as an investment vehicle for
certain accounts of the Company pursuant to the Original Participation
Agreement; and
WHEREAS, the Trust has applied for an order from the Securities and
Exchange Commission (the "SEC") (File No. 812-10198), granting Participating
Insurance Companies (as defined in the Original Participation Agreement) and
variable annuity and variable life separate accounts exemptions from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act (as defined
in the Original Participation Agreement) and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust
and each Series thereof to be sold to and held by variable annuity and variable
life insurance separate accounts of life insurance companies that may or may not
be affiliated with one another and qualified pension and retirement plans
outside of the separate account context (the "Exemptive Order"); and
WHEREAS, the Company and the Trust have agreed to hereby supplement and
amend the Original Participation Agreement in order to reflect the conditions
and undertakings that are expected to be imposed on the Company and the Trust by
virtue of such Exemptive Order;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Company agree as follows:
SECTION 1. DEFINITIONS
-----------
For all purposes of this Amendment No. 1, except as otherwise expressly
provided or unless the context otherwise requires:
(1) All references in this Amendment No. 1 and the Original
Participation Agreement to designated "Articles" and other subdivisions are to
the designated Articles and other subdivisions of the Original Participation
Agreement. The words "herein," "hereof," "hereto," "hereby" and "hereunder" and
other words of similar import refer to this Amendment No. 1 as a whole and not
to any particular "Section" or other subdivision.
(2) All terms used herein and not otherwise defined shall have the same
meanings as those given to such terms in the Original Participation Agreement,
and include the plural as well
<PAGE>
as the singular, and the Original Participation Agreement is hereby amended to
include any terms defined herein.
(3) Any references to the "Agreement" in the Original Participation
Agreement are hereby amended to include, collectively, the Original
Participation Agreement and this Amendment No. 1.
SECTION 2. AMENDMENT TO ARTICLE VII
------------------------
Article VII of the Original Participation Agreement is hereby amended
to read as follows:
"ARTICLE VII. Potential Conflicts and Compliance With
---------------------------------------
Exemptive Order
---------------
7.1. The Trust Board will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the Contract Owners of
all Participating Accounts and of Qualified Participants investing in the Trust
and each Series thereof. A material irreconcilable conflict may arise for a
variety of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of any Series
are managed; (e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract owners; (f) a decision by a
Participating Insurance Company to disregard the voting instructions of contract
owners; or (g) if applicable, a decision by a Qualified Entity to disregard the
voting instructions of Qualified Participants. The Trust Board shall promptly
inform the Company in writing if it determines that a material irreconcilable
conflict exists and the implications thereof.
7.2 The Company shall report any potential or existing conflicts to the
Trust Board. The Company will be responsible for assisting the Trust Board in
carrying out its responsibilities by providing the Trust Board with all
information reasonably necessary for the Trust Board to consider any issues
raised. This responsibility includes, but is not limited to, an obligation by
the Company to inform the Trust Board whenever it has determined to disregard
Contract Owner voting instructions. Such responsibilities shall be carried out
by the Participants with a view only to the interests of Contract Owners.
7.3. If it is determined by a majority of the Trust Board, or a
majority of the members of the Trust Board who are not interested persons of the
Trust, the Investment Adviser or any sub-adviser to any of the Series (the
"Independent Trustees"), that a material irreconcilable conflict exists between
the interests of the Contract Owners of the Company's Participating Accounts and
of other Participating Accounts and Qualified Participants investing in the
Trust and each
2
<PAGE>
Series thereof, the Company shall, at its expense and to the extent reasonably
practicable (as determined by a majority of the Independent Trustees), take
whatever steps are necessary to remedy or eliminate the material irreconcilable
conflict. Such measures may include: (a) withdrawing, without charge or penalty
to the Company, the assets allocable to some or all of the separate accounts
from the Trust or any Series and reinvesting such assets in a different
investment medium, which may include another Series of the Trust, or submitting
the question of whether such segregation should be implemented to a vote of all
affected Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract Owners the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract Owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the Account's investment
in the Trust and terminate this Agreement and no charge or penalty will be
imposed as a result of such withdrawal. Any such withdrawal and termination must
take place within six (6) months after the Trust gives written notice that this
provision is being implemented, and until the end of that six month period the
Investment Adviser and the Trust shall continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Trust.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six months
after the Trust Board informs the Company in writing that it has determined that
such decision has created a material irreconcilable conflict, and that said
conflict cannot be remedied by any other means. Until the end of the foregoing
six month period, the Investment Adviser and the Trust shall continue to accept
and implement orders by the Company for the purchase (and redemption) of shares
of the Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Trustees shall determine whether any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the Trust or the Investment Adviser be required to establish a new funding
medium for the Contracts. The Company shall not be required by Section 7.3 to
establish a new funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract Owners materially adversely affected
by the material irreconcilable conflict. In the event that the Trust Board
determines that
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any proposed action does not adequately remedy any material irreconcilable
conflict, then the Company will withdraw the Account's investment in the Trust
and terminate this Agreement within six (6) months after the Trust Board informs
the Company in writing of the foregoing determination, without charge or penalty
to the Company.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then (a) the Trust and/or
the Company, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Article V and Sections 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
7.8 The Company shall at least annually submit to the Trust Board such
reports, materials or data as the Trust Board may reasonably request so that the
Trust Board may fully carry out its obligations under the Exemptive Order;
provided, however, that the Board may require the submission of such reports on
data on a more frequent basis if it so deems appropriate.
7.9 The Company, or any affiliate, will maintain at its home office,
available to the SEC, (a) a list of its officers, directors and employees who
participate directly in the management of administration of any Account and/or
(b) a list of its agents who, as registered representatives, offer and sell
Contracts."
SECTION 3. SCHEDULES
---------
Schedules 1, 2 and 3 to the Original Participation Agreement are hereby
amended to read as Schedules 1, 2 and 3 to this Amendment No. 1, respectively.
SECTION 4. MISCELLANEOUS
-------------
4.1 The captions in this Amendment No. 1 are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
4.2 This Amendment No. 1 may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
4.3 If any provision of this Amendment No. 1 shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to be executed in its name and behalf by its duly authorized
office on the date specified below.
Date:
Date:
PHL VARIABLE INSURANCE
COMPANY
(Company)
By:
Name:
Title:
WANGER ADVISORS TRUST
(Trust)
By:
Name:
Title:
6
EXHIBIT 1.A.(8)(b)
PARTICIPATION AGREEMENT BETWEEN
PHLVIC AND FRANKLIN TEMPLETON DISTRIBUTORS, INC.
<PAGE>
PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN TEMPLETON DISTRIBUTORS, INC. AND
PHL VARIABLE INSURANCE COMPANY
THIS AGREEMENT made as of May 1, 1997, among Templeton Variable
Products Series Fund (the "Trust"), an open-end management investment company
organized as a business trust under Massachusetts law, Franklin Templeton
Distributors, Inc., a California corporation, the Trust's principal underwriter
("Underwriter"), and PHL Variable Insurance Company, a life insurance company
organized under Connecticut law (the "Company"), on its own behalf and on behalf
of each segregated asset account of the Company set forth in Schedule A, as may
be amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares (sometimes collectively referred to as "Trust shares")
under the Securities Act of 1933, as amended (the "1933 Act" );
WHEREAS, the Trust and the Underwriter desire that Trust shares be
used as an investment vehicle for separate accounts established for variable
life insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets, and certain of those series, named in
Schedule B, (the "Portfolios") are to be made available for purchase by the
Company for the Accounts; and
WHEREAS, the Trust has received an order from the Commission, dated
November 16, 1993 (File No. 812-8546), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies and
certain qualified pension and retirement plans (the "Shared Funding Exemptive
Order");
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WHEREAS, the Company has registered or will register under the 1933 Act
certain variable annuity contracts and variable life insurance policies with the
form number(s) which are listed on Schedule C attached hereto and incorporated
herein by this reference, as such Schedule C may be amended from time to time
hereafter by mutual written agreement of all parties hereto, under which the
Portfolios are to be made available as investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless an exemption from registration
under the 1940 Act is available and the Trust has been so advised;
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such account on Schedule A hereto, to set aside
and invest assets attributable to one or more Contracts; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, each investment adviser listed on Schedule B (each, an
"Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act") and any applicable state
securities laws;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Contracts and the Underwriter
is authorized to sell such shares to unit investment trusts such as each Account
at net asset value;
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
-------------------------------------------------
1.1. For purposes of this Article 1, the Company shall be the Trust's
agent for receipt of purchase orders and requests for redemption relating to
each Portfolio from each Account, provided that the Company notifies the Trust
of such purchase orders and requests for redemption by 10:00 a.m. Eastern time
on the next following Business Day, as defined in Section 1.3.
1.2. The Trust agrees to make shares of the Portfolios available to the
Accounts for purchase at the net asset value per share next computed after
receipt of a purchase order by the Trust (or its agent), as established in
accordance with the provisions of the
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<PAGE>
then current prospectus of the Trust describing Portfolio purchase procedures on
those days on which the Trust calculates its net asset value pursuant to rules
of the Commission, and the Trust shall use its best efforts to calculate such
net asset value on each day on which the New York Stock Exchange ("NYSE") is
open for trading. The Company will transmit orders from time to time to the
Trust for the purchase of shares of the Portfolios. The Trustees of the Trust
(the "Trustees") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or if, in the
sole discretion of the Trustees acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, such action is
deemed in the best interests of the shareholders of such Portfolio.
1.3 The Company shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than the close of the Federal Reserve
Bank, which is 6:00 p.m. Eastern time, on the next Business Day after the Trust
receives the purchase order. If payment in federal funds for any purchase is not
received by the Trust or its designated custodian or is received after such
time, the Company shall promptly upon the Trust's written request, reimburse the
Trust for any reasonable charges, costs, fees, interest, or other expenses
incurred by the Trust in connection with any advances to, or borrowings or
overdrafts by, the Trust, or any similar expenses incurred by the Trust as a
result of transactions effected by the Trust based upon such purchase order.
Payment shall be made in federal funds transmitted by wire to the Trust. Upon
receipt by the Trust of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Trust for this purpose. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the Commission.
1.4 The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at the net
asset value next computed after receipt by the Trust (or its agent) of the
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Trust describing Portfolio redemption procedures.
The Trust shall make payment for such shares in the manner established from time
to time by the Trust. Redemption with respect to a Portfolio will normally be
paid to the Company for an Account in federal funds transmitted by wire to the
Company before the close of the Federal Reserve Bank, which is 6:00 p.m. Eastern
time on the next Business Day after the receipt of the request for redemption.
If payment in federal funds for any redemption request is received by the
Company after such time, the Trust shall promptly upon the Company's written
request, reimburse the Company for any reasonable charges, costs, fees,
interest, or other expenses incurred by the Company as a result of such failure
to provide redemption proceeds within the specified time. Notwithstanding the
foregoing, such payment may be delayed if, for example, the Portfolio's cash
position so requires or if extraordinary market conditions exist, but in no
event shall payment be delayed for a greater period than is permitted by the
1940 Act.
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<PAGE>
1.5 Payments for the purchase of shares of the Trust's Portfolios by
the Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 may be netted against one another on any
Business Day for the purpose of determining the amount of any wire transfer on
that Business Day.
1.6 Issuance and transfer of the Trust's Portfolio shares will be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Portfolio Shares purchased from the Trust will be recorded in the
appropriate title for each Account or the appropriate subaccount of each
Account.
1.7 The Trust shall furnish, on or before the ex-dividend date, notice
to the Company of any income dividends or capital gain distributions payable on
the shares of any Portfolio of the Trust. The Company hereby elects to receive
all such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. The Trust shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.8 The Trust shall calculate the net asset value of each Portfolio on
each Business Day, as defined in Section 1.3. The Trust shall make the net asset
value per share for each Portfolio available to the Company or its designated
agent on a daily basis as soon as reasonably practical after the net asset value
per share is calculated (normally by 6:30 p.m. Eastern time) and shall use
reasonable efforts to make such net asset value per share available by 7:00 p.m.
Eastern time each Business Day.
1.9 The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their separate accounts and to certain
qualified pension and retirement plans to the extent permitted by the Shared
Funding Exemptive Order. The Trust will periodically furnish to the Company on
request the names of the Participating Insurance Companies who offer variable
life insurance policies and variable annuity contracts registered under the 1933
Act which use Trust shares as underlying investments. No shares of any Portfolio
will be sold directly to the general public. The Company agrees that it will use
Trust shares only for the purposes of funding the Contracts through the Accounts
listed in Schedule A, as amended from time to time.
1.10 The Company agrees that all net amounts available under the
Contracts shall be invested in the Trust, in such other Funds advised by an
Adviser or its affiliates as may be mutually agreed to in writing by the parties
hereto, or in the Company's general account, provided that such amounts may also
be invested in an investment company other than the Trust if: (a) such other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
the Portfolios; or (b) the Company gives the Trust and the Underwriter 45 days
written notice of its intention to make such other investment company available
as a funding vehicle for the Contracts; or (c) such other investment company is
available as a funding vehicle for the Contracts at the date of this Agreement
and the Company so informs the Trust and the Underwriter prior to their signing
this
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<PAGE>
Agreement (a list of such investment companies appearing on Schedule D to this
Agreement); or (d) the Trust or Underwriter consents to the use of such other
investment company.
1.11 The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.10 and
Article IV of this Agreement.
ARTICLE II.
OBLIGATIONS OF THE PARTIES; FEES AND EXPENSES
---------------------------------------------
2.1 The Trust shall prepare and be responsible for filing with the
Commission and any state regulators requiring such filing all shareholder
reports, notices, proxy materials (or similar materials such as voting
instruction solicitation materials), prospectuses and statements of additional
information of the Trust. The Trust shall bear the costs of registration and
qualification of its shares of the Portfolios, preparation and filing of the
documents listed in this Section 2.1 and all taxes to which an issuer is subject
on the issuance and transfer of its shares.
2.2 At the option of the Company, the Trust or the Underwriter shall
either (a) provide the Company with as many copies of portions of the Trust's
current prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the foregoing,
pertaining specifically to the Portfolios as the Company shall reasonably
request; or (b) provide the Company with a camera ready copy of such documents
in a form suitable for printing and from which information relating to series of
the Trust other than the Portfolios has been deleted to the extent practicable.
The Trust or the Underwriter shall provide the Company with a copy of its
current statement of additional information, including any amendments or
supplements, in a form suitable for duplication by the Company. Expenses of
furnishing such documents for marketing purposes shall be borne by the Company
and expenses of furnishing such documents for current contract owners invested
in the Trust shall be borne by the Trust or the Underwriter.
2.3 The Trust (at its expense) shall provide the Company with copies of
any Trust-sponsored proxy materials in such quantity as the Company shall
reasonably require for distribution to Contract owners. The Company shall bear
the costs of distributing proxy materials (or similar materials such as voting
solicitation instructions), prospectuses and statements of additional
information to Contract owners. The Company assumes sole responsibility for
ensuring that such materials are delivered to Contract owners in accordance with
applicable federal and state securities laws.
2.4 If and to the extent required by law, the Company shall: (i)
solicit voting instructions from Contract owners; (ii) vote the Trust shares in
accordance with the instructions received from Contract owners; and (iii) vote
Trust shares for which no instructions have been received in the same proportion
as Trust shares of such Portfolio
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<PAGE>
for which instructions have been received; so long as and to the extent that the
Commission continues to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company reserves the right to vote
Trust shares held in any segregated asset account in its own right, to the
extent permitted by law.
2.5 Except as provided in section 2.6, the Company shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Templeton" without prior written consent, and upon termination of this
Agreement for any reason, the Company shall cease all use of any such name or
mark as soon as reasonably practicable.
2.6 The Company shall furnish, or cause to be furnished to the Trust or
its designee, at least one complete copy of each registration statement,
prospectus, statement of additional information, report, solicitation for voting
instructions, sales literature and other promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. The Company shall furnish, or shall cause to be
furnished, to the Trust or its designee each piece of sales literature or other
promotional material in which the Trust or an Adviser is named, at least 15
Business Days prior to its use. No such material shall be used if the Trust or
its designee objects to such use within ten (10) Business Days after receipt of
such material. For purposes of this paragraph, "sales literature or other
promotional material" includes, but is not limited to, portions of the following
that refer to the Trust or affiliates of the Trust: advertisements (such as
material published or designed for use in a newspaper, magazine or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures or electronic communication or other public
media), sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints or
excerpts or any other advertisement, sales literature or published article or
electronic communication), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, and registration statements, prospectuses, statements of additional
information, reports and proxy materials.
2.7 The Company and its agents shall not give any information or make
any representations or statements on behalf of the Trust or concerning the
Trust, the Underwriter or an Adviser in connection with the sale of the
Contracts other than information or representations contained in and accurately
derived from the registration statement or prospectus for the Trust shares (as
such registration statement and prospectus may be amended or supplemented from
time to time), annual and semi-annual reports of the Trust, Trust-sponsored
proxy statements, or in sales literature or other promotional material approved
by the Trust or its designee, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its designee.
6
<PAGE>
2.8 The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information about the Trust, the Portfolios and each
Adviser, in such form as the Company may reasonably require, as the Company
shall reasonably request in connection with the preparation of registration
statements, prospectuses and annual and semi-annual reports pertaining to the
Contracts.
2.9 The Trust shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus may
be amended or supplemented from time to time), or in materials approved by the
Company for distribution including sales literature or other promotional
materials, except as required by legal process or regulatory authorities or with
the written permission of the Company.
2.10 So long as, and to the extent that, the Commission interprets the
1940 Act to require pass-through voting privileges for Contract owners, the
Company will provide pass-through voting privileges to Contract owners whose
Contract values are invested, through the registered Accounts, in shares of one
or more Portfolios of the Trust. The Trust shall require all Participating
Insurance Companies to calculate voting privileges in the same manner and the
Company shall be responsible for assuring that the Accounts calculate voting
privileges in the manner established by the Trust. With respect to each
registered Account, the Company will vote shares of each Portfolio of the Trust
held by a registered Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
registered Account for which voting instructions are received. The Company and
its agents will in no way recommend or oppose or interfere with the solicitation
of proxies for Portfolio shares held to fund the Contracts without the prior
written consent of the Trust, which consent may be withheld in the Trust's sole
discretion.
2.11 The Trust and Underwriter shall pay no fee or other compensation
to the Company under this Agreement except as provided on Schedule E, if
attached. Nevertheless, the Trust or the Underwriter or an affiliate may make
payments (other than pursuant to a Rule 12b-1 Plan) to the Company or its
affiliates or to the Contracts' underwriter in amounts agreed to by the
Underwriter in writing and such payments may be made out of fees otherwise
payable to the Underwriter or its affiliates, profits of the Underwriter or its
affiliates, or other resources available to the Underwriter or its affiliates.
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<PAGE>
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of Connecticut
and that it has legally and validly established each Account as a segregated
asset account under such law as of the date set forth in Schedule A.
3.2 The Company represents and warrants that it has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated asset account for the Contracts, unless an exemption from
registration is available.
3.3 The Company represents and warrants that the Contracts will be
registered under the 1933 Act unless an exemption from registration is available
prior to any issuance or sale of the Contracts; and the Contracts will be issued
and sold in compliance in all material respects with all applicable federal and
state laws.
3.4 The Trust represents and warrants that it is duly organized and
validly existing as a business trust under the laws of the Commonwealth of
Massachusetts and that it does and will comply in all material respects with the
1940 Act and the rules and regulations thereunder.
3.5 The Trust represents and warrants that the Portfolio shares offered
and sold pursuant to this Agreement will be registered under the 1933 Act and
the Trust shall be registered under the 1940 Act prior to and at the time of any
issuance or sale of such shares. The Trust shall amend its registration
statement under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Trust shall register
and qualify its shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Trust or the
Underwriter.
3.6 The Trust represents and warrants that the investments of each
Portfolio does and will comply with the diversification requirements for
variable annuity, endowment or life insurance contracts set forth in Section
817(h) of the Internal Revenue Code of 1986, as amended ("Code"), and the rules
and regulations thereunder, including without limitation Treasury Regulation
1.817-5, and will notify the Company immediately upon having a reasonable basis
for believing any Portfolio has ceased to comply or might not so comply and will
in that event immediately take all reasonable steps to adequately diversify the
Portfolio to achieve compliance within the grace period afforded by Regulation
1.817-5.
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3.7 The Trust represents and warrants that it is currently qualified as
a "regulated investment company" under Subchapter M of the Code, that it will
make every effort to maintain such qualification and will notify the Company
immediately upon having a reasonable basis for believing it has ceased to so
qualify or might not so qualify in the future.
3.8 [Omitted.]
3.9 The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of a
Portfolio shall at all times be covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less than the minimum
coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such
bond shall include coverage for larceny and embezzlement and be issued by a
reputable bonding company.
3.10 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Trust are and shall be at all
times covered by a blanket fidelity bond or similar coverage which covers losses
to the Trust, in an amount not less than $5 million. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. The Company agrees to make all reasonable efforts to see that
this bond or another bond containing these provisions is always in effect, and
agrees to notify the Trust and the Underwriter in the event that such coverage
no longer applies.
3.11 The Underwriter represents that each Adviser is duly organized and
validly existing and in good standing under applicable corporate law and that
each Adviser is registered and will during the term of this Agreement remain
registered as an investment adviser under the Advisers Act.
3.12 The Trust currently intends for one or more Classes to make
payments to finance its distribution expenses, including service fees, pursuant
to a Plan adopted under Rule 12b-1 under the 1940 Act ("Rule 12b-1"), although
it may determine to discontinue such practice in the future. To the extent that
any Class of the Trust finances its distribution expenses pursuant to a Plan
adopted under Rule 12b-1, the Trust undertakes to comply with any then current
SEC and SEC staff interpretations concerning Rule 12b-1 or any successor
provisions.
3.13 The Trust represents that its Board of Trustees has regularly
monitored the Trust for the existence of any material irreconcilable conflict
between the interests of the contract owners of all Participating Insurance
Companies (as defined in section 4.1, below), and that to date the Board has
made no finding that any such conflict exists.
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ARTICLE IV.
POTENTIAL CONFLICTS
-------------------
4.1 The parties acknowledge that a Portfolio's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Trust shall promptly inform the Company of any determination by the
Trustees that an irreconcilable material conflict exists and of the implications
thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Shared Funding
Exemptive Order by providing the Trustees with all information reasonably
necessary for the Trustees to consider any issues raised including, but not
limited to, information as to a decision by the Company to disregard Contract
owner voting instructions. All communications from the Company to the Trustees
may be made in care of the Trust.
4.3 If it is determined by a majority of the Trustees, or a majority of
the disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its own expense and to the extent reasonably practicable (as determined by
the Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question of
whether or not such withdrawal should be implemented to a vote of all affected
Contract owners and, as appropriate, withdrawal of the assets of any appropriate
group (i.e., annuity contract owners, life insurance policy owners, or variable
contract owners of one or more Participating Insurance Companies) that votes in
favor of such withdrawal, or offering to the affected Contract owners the option
of making such a change; and (b) establishing a new registered management
investment company or managed separate account.
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4.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. Any such withdrawal
and termination must take place within six (6) months after the Trust gives
written notice that this provision is being implemented. Until the end of such
six (6) month period, the Trust shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with a
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect to
such Account within six (6) months after the Trustees inform the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of the
Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Trust be required to establish a new funding medium for the Contracts.
In the event that the Trustees determine that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company will
withdraw the Account's investment in the Trust and terminate this Agreement
within six (6) months after the Trustees inform the Company in writing of the
foregoing determination; provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Shared Funding
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if reasonably deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those
11
<PAGE>
contained in the Shared Funding Exemptive Order, then the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable.
ARTICLE V.
INDEMNIFICATION
---------------
5.1 Indemnification By the Company
------------------------------
(a) The Company agrees to indemnify and hold harmless the
Trust and each of its Trustees, officers, employees and agents and each
person, if any, who controls the Trust within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" and
individually the "Indemnified Party" for purposes of this Article V)
against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company,
which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal
counsel fees incurred in connection therewith) (collectively,
"Losses"), to which the Indemnified Parties may become subject under
any statute or regulation, or at common law, insofar as such Losses are
related to the sale or acquisition of Trust Shares or the Contracts and
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in a registration statement or prospectus for the
Contracts or in the Contracts themselves or in sales
literature generated or approved by the Company on behalf of
the Contracts or Accounts (or any amendment or supplement to
any of the foregoing) (collectively, "Company Documents" for
the purposes of this Article V), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
indemnity shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and was accurately derived from
written information furnished to the Company by or on behalf
of the Trust for use in Company Documents or otherwise for use
in connection with the sale of the Contracts or Trust shares;
or
(ii) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Trust Documents as
defined in Section 5.2 (a)(i) or
12
<PAGE>
wrongful conduct (including without limitation any failure to
comply in all material respects with state insurance
suitability requirements) of the Company or persons under its
control with respect to the sale or acquisition of the
Contracts or Trust shares; or
(iii) arise out of or result from any untrue
statement or alleged untrue statement of a material fact
contained in Trust Documents as defined in Section 5.2(a)(i)
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement
or omission was made in reliance upon and accurately derived
from written information furnished to the Trust by or on
behalf of the Company; or
(iv) arise out of or result from any failure by the
Company to provide the services or furnish the materials
required under the terms of this Agreement; or
(v) arise out of or result from any material breach
of any representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Company.
(b) The Company shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party
would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this
Agreement or to the Trust or Underwriter, whichever is applicable. The
Company shall also not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify
the Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof, the
Indemnified Party
13
<PAGE>
shall bear the fees and expenses of any additional counsel retained by
it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other than
reasonable costs of investigation.
(c) The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust shares or the
Contracts or the operation of the Trust.
5.2 Indemnification By The Underwriter
----------------------------------
(a) The Underwriter agrees to indemnify and hold harmless the
Company, the underwriter of the Contracts and each of its directors and
officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually an "Indemnified Party" for purposes of this
Section 5.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter, which consent shall not be unreasonably withheld) or
expenses (including the reasonable costs of investigating or defending
any alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith) (collectively,
"Losses") to which the Indemnified Parties may become subject under any
statute, at common law, insofar as such Losses are related to the sale
or acquisition of the Trust's Shares or the Contracts and:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in the Registration Statement, prospectus or sales
literature of the Trust (or any amendment or supplement to any
of the foregoing) (collectively, the "Trust Documents") or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission of such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Underwriter or Trust by or on behalf of the Company for
use in the Registration Statement or prospectus for the Trust
or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts
or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or sales
literature for the Contracts not supplied by the Underwriter
or persons under its control) or wrongful conduct of the
Trust,
14
<PAGE>
Adviser or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Trust
shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Trust; or
(iv) arise as a result of any failure by the Trust to
provide the services and furnish the materials under the terms
of this Agreement (including a failure, whether unintentional
or in good faith or otherwise, to comply with the
qualification representation specified in Section 3.7 of this
Agreement and the diversification requirements specified in
Section 3.6 of this Agreement); or
(v) arise out of or result from any material breach
of any representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Sections
5.2(b) and 5.2(c) hereof.
(b) The Underwriter shall not be liable under this
indemnification provision with respect to any Losses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence
in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is
applicable.
(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Underwriter in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim
shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Underwriter of any such
claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the
Underwriter will be entitled to participate, at its own expense, in the
defense thereof. The Underwriter also shall be entitled to assume the
defense thereof, with
15
<PAGE>
counsel satisfactory to the party named in the action. After notice
from the Underwriter to such party of the Underwriter's election to
assume the defense thereof, the Indemnified Party shall bear the
expenses of any additional counsel retained by it, and the Underwriter
will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
(d) The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of
its officers or directors in connection with the issuance or sale of
the Contracts or the operation of each Account.
5.3 Indemnification By The Trust
----------------------------
(a) The Trust agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 5.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Trust, which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or
willful misconduct of the Board or any member thereof, are related to
the operations of the Trust, and arise out of or result from any
material breach of any representation and/or warranty made by the Trust
in this Agreement or arise out of or result from any other material
breach of this Agreement by the Trust; as limited by and in accordance
with the provisions of Section 5.3(b) and 5.3(c) hereof. It is
understood and expressly stipulated that neither the holders of shares
of the Trust nor any Trustee, officer, agent or employee of the Trust
shall be personally liable hereunder, nor shall any resort to be had to
other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
(b) The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against any Indemnified Party as such
may arise from such Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Company, the
Trust, the Underwriter or each Account, whichever is applicable.
16
<PAGE>
(c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claims shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure
to notify the Trust of any such claim shall not relieve the Trust from
any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against
the Indemnified Parties, the Trust will be entitled to participate, at
its own expense, in the defense thereof. The Trust also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Trust to such
party of the Trust's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Trust will not be liable to such party
under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
(d) The Company and the Underwriter agree promptly to notify
the Trust of the commencement of any litigation or proceedings against
it or any of its respective officers or directors in connection with
this Agreement, the issuance or sale of the Contracts, with respect to
the operation of either the Account, or the sale or acquisition of
shares of the Trust.
ARTICLE VI.
TERMINATION
-----------
6.1 This Agreement may be terminated by any party in its entirety or
with respect to one, some or all Portfolios or any reason by sixty (60) days
advance written notice delivered to the other parties, and shall terminate
immediately in the event of its assignment, as that term is used in the 1940
Act.
6.2 This Agreement may be terminated immediately by either the Trust or
the Underwriter following consultation with the Trustees upon written notice to
the Company if:
(a) either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its
business, operations, financial condition or prospects since the date
of this Agreement or is the subject of material adverse publicity; or
17
<PAGE>
(b) if the Company gives the Trust and the Underwriter the
written notice specified in Section 1.10 hereof and at the same time
such notice was given there was no notice of termination outstanding
under any other provision of this Agreement; provided, however, that
any termination under this Section 6.4(b) shall be effective forty-five
(45) days after the notice specified in Section 1.10 was given.
6.3 This Agreement may be terminated immediately by the Company upon
written notice to the Trust and the Underwriter, if the Company shall determine,
in its sole judgment exercised in good faith, that either the Trust or the
Underwriter has suffered a material adverse change in its business, operations,
financial conditions or prospects since the date of this Agreement or is the
subject of material adverse publicity.
6.4 If this Agreement is terminated for any reason, except under
Article IV (Potential Conflicts) above, the Trust shall, at the option of the
Company, continue to make available additional shares of any Portfolio and
redeem shares of any Portfolio pursuant to all of the terms and conditions of
this Agreement for all Contracts in effect on the effective date of termination
of this Agreement. If this Agreement is terminated pursuant to Article IV, the
provisions of Article IV shall govern.
6.5 The provisions of Articles II (Representations and Warranties) and
V (Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 6.4, except that the Trust and the Underwriter shall
have no further obligation to sell Trust shares with respect to Contracts issued
after termination.
6.6 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by an order of the Commission pursuant to Section 26(b) of the 1940
Act. Upon request, the Company will promptly furnish to the Trust and the
Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Trust and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract Owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Trust or the Underwriter 90 days notice of its intention to do so.
18
<PAGE>
ARTICLE VII.
NOTICES.
--------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust or the Underwriter:
Templeton Variable Products Series Fund or
Franklin Templeton Distributors, Inc.
500 E. Broward Boulevard
Fort Lauderdale, FL 33394-3091
Attention: Barbara J. Green, Trust Secretary
WITH A COPY TO
Franklin Resources, Inc.
777 Mariners Island Boulevard
San Mateo, CA 94404
Attention: Karen L. Skidmore, Senior Corporate Counsel
If to the Company:
PHL Variable Insurance Company
One American Row
Hartford, CT 06115
Attention: Jeanie Grasso Gagnon, Assistant Vice President
ARTICLE VIII.
MISCELLANEOUS
-------------
8.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
19
<PAGE>
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Connecticut.
It shall also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder and to any orders of the Commission
granting exemptive relief therefrom and the conditions of such orders. Copies of
any such orders shall be promptly forwarded by the Trust to the Company.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the National Association of Securities Dealers, Inc. and state
insurance regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
8.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided in Section
1.10.
8.9 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party.
20
<PAGE>
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute this Participation Agreement as of the date and
year first above written.
The Company:
PHL Variable Insurance Company
------------------------------
By its authorized officer
By: /s/ Paul M. Fischer
----------------------------------------------------
Name: Paul M. Fischer
Title: Vice President
The Trust:
Templeton Variable Products Series Fund
---------------------------------------
By its authorized officer
By: /s/ Karen L. Skidmore
----------------------------------------------------
Name: Karen L. Skid,pre
Title: Assistant Vice President, Assistant Secretary
The Underwriter:
----------------
Franklin Templeton Distributors, Inc.
By its authorized officer
By: /s/ Deborah R. Gatzek
----------------------------------------------------
Name: Deborah R. Gatzek
Title: Senior Vice President, Assistant Secretary
21
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS OF PHL VARIABLE INSURANCE COMPANY
---------------------------------------------------
PHL Variable Accumulation Account (est. December 7, 1994)
22
<PAGE>
SCHEDULE B
TRUST PORTFOLIOS AND CLASSES AVAILABLE
--------------------------------------
Portfolio: Templeton Asset Allocation Fund
Class: Class 2
Investment Adviser: Templeton Investment Counsel, Inc.
Portfolio: Templeton Developing Markets Fund
Class: Class 2
Investment Adviser: Templeton Asset Management Ltd.
Portfolio: Templeton International Fund
Class: Class 2
Investment Adviser: Templeton Investment Counsel, Inc.
Portfolio: Templeton Stock Fund
Class: Class 2
Investment Adviser: Templeton Investment Counsel, Inc.
23
<PAGE>
SCHEDULE C
VARIABLE ANNUITY AND VARIABLE LIFE CONTRACTS
ISSUED BY PHL VARIABLE INSURANCE COMPANY
----------------------------------------
Contract Name Representative Form Number
- ------------- --------------------------
The Big Edge Choice - Form D601
Individual Deferred Variable Annuity Contract
24
<PAGE>
SCHEDULE D
PORTFOLIOS AVAILABLE IN PHL VARIABLE CONTRACTS
----------------------------------------------
1. Investment Company: The Phoenix Edge Series Fund
Portfolios: Phoenix Multi-Sector Fixed Income Series
Phoenix Money Market Series
Phoenix Growth Series
Phoenix Strategic Allocation Series
Phoenix International Series
Phoenix Balanced Series
Phoenix Strategic Theme Series
Phoenix Real Estate Securities Series
Phoenix Aberdeen New Asia Series
2. Investment Company: Wanger Advisors Trust
Portfolios: Wanger U.S. Small Cap Series
Wanger International Small Cap Series
25
<PAGE>
SCHEDULE E
RULE 12B-1 PLANS
COMPENSATION SCHEDULE
---------------------
Schedule E
Page 1 of 2
Each Portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under its Class 2 Rule 12b-1 Distribution Plan,
stated as a percentage per year of Class 2's average daily net assets
represented by shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
- -------------------------------------------------------------------
TEMPLETON ASSET ALLOCATION FUND 0.25%
TEMPLETON DEVELOPING MARKETS FUND 0.25%
TEMPLETON INTERNATIONAL FUND 0.25%
TEMPLETON STOCK FUND 0.25%
Agreement Provisions
--------------------
If the Company, on behalf of any Account, purchases Trust Portfolio
shares ("Eligible Shares") which are subject to a Rule 12b-1 Plan adopted under
the 1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") provide administrative and other services which assist in
the promotion and distribution of Eligible Shares or Variable Contracts offering
Eligible Shares, the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. "Administrative and other services" may
include, but are not limited to, furnishing personal services to owners of
Contracts which may invest in Eligible Shares ("Contact Owners"), answering
routine inquiries regarding a Portfolio, coordinating responses to Contract
Owner inquiries regarding the Portfolios, maintaining such accounts or providing
such other enhanced services as a Trust Portfolio or Contract may require,
maintaining customer accounts and records, or providing other services eligible
for service fees as defined under NASD rules. Your acceptance of such
compensation is your acknowledgment that eligible services have been rendered.
All Rule 12b-1 fees, shall be based on the value of Eligible Shares owned by the
Company on behalf of its Accounts, and shall be calculated on the basis and at
the rates set forth in the Compensation Schedule stated above. The aggregate
annual fees paid pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in the Portfolio's prospectus, unless an increase is
approved by shareholders as provided in the Plan. These maximums shall be a
specified percent of the value of a Portfolio's net assets attributable to
Eligible Shares owned by the Company on behalf of its Accounts (determined in
the same manner as the Portfolio uses to compute its net assets as set forth in
its effective Prospectus).
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<PAGE>
SCHEDULE E
RULE 12B-1 PLANS
COMPENSATION SCHEDULE
---------------------
Schedule E
Page 2 of 2
You shall furnish us with such information as shall reasonably be
requested by the Trust's Boards of Trustees ("Trustees") with respect to the
fees paid to you pursuant to the Plans. We shall furnish to the Trustees, for
their review on a quarterly basis, a written report of the amounts expended
under the Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must
be approved annually by a vote of the Trustees, including the Trustees who are
not interested persons of the Trust and who have no financial interest in the
Plans or any related agreement ("Disinterested Trustees"). Each Plan may be
terminated at any time by the vote of a majority of the Disinterested Trustees,
or by a vote of a majority of the outstanding shares as provided in the Plan, on
sixty (60) days' written notice, without payment of any penalty. The Plans may
also be terminated by any act that terminates the Underwriting Agreement between
the Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. or Templeton Investment Counsel, Inc. or their
affiliates and the Trust. Continuation of the Plans is also conditioned on
Disinterested Trustees being ultimately responsible for selecting and nominating
any new Disinterested Trustees. Under Rule 12b-1, the Trustees have a duty to
request and evaluate, and persons who are party to any agreement related to a
Plan have a duty to furnish, such information as may reasonably be necessary to
an informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, the Trust is permitted to implement
or continue Plans or the provisions of any agreement relating to such Plans from
year-to-year only if, based on certain legal considerations, the Trustees are
able to conclude that the Plans will benefit each affected Trust Portfolio and
class. Absent such yearly determination, the Plans must be terminated as set
forth above. In the event of the termination of the Plans for any reason, the
provisions of this Schedule E relating to the Plans will also terminate.
Any obligation assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Fund.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule E, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable statutes,
rules and regulations of all rule 12b-1 fees received from us in the prospectus
of the contracts.
27
<PAGE>
AMENDMENT TO
FUND PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN TEMPLETON DISTRIBUTORS, INC. AND
PHL VARIABLE INSURANCE COMPANY
THIS AMENDMENT made effective as of this 2nd day of September, 1998, amends that
certain Participation Agreement dated May 1, 1997 by and among the following
parties (the "Agreement") as hereinbelow provided.
WITNESSETH:
WHEREAS, the parties hereto wish to amend certain Schedules of the
Agreement to include additional Accounts, Portfolios and Contracts and to update
certain other information contained therein:
NOW, THEREFORE, in consideration of the foregoing premise, Schedule A,
Schedule B, Schedule C, Schedule D and Schedule E are hereby replaced with
Schedule A, Schedule B, Schedule C, Schedule D and Schedule E attached hereto
and made a part hereof. Except as hereinabove provided, the Agreement shall be
and remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers.
The Company:
PHL Variable Insurance Company
------------------------------
By its authorized officer
By: /s/ Paul M. Fischer
---------------------------------------------------
Name: Paul M. Fischer
Title: Vice President
The Trust:
Templeton Variable Products Series Fund
---------------------------------------
By its authorized officer
By: /s/ Karen L. Skidmore
---------------------------------------------------
Name: Karen L. Skidmore
Title: Assistant Vice President, Assistant Secretary
The Underwriter:
Franklin Templeton Distributors, Inc.
-------------------------------------
By its authorized officer
By: /s/ Deborah R. Gatzek
---------------------------------------------------
Name: Deborah R. Gatzek
Title: Senior Vice President, Assistant Secretary
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS OF PHL VARIABLE INSURANCE COMPANY
---------------------------------------------------
PHL Variable Accumulation Account (est. December 7, 1994)
PHL Variable Universal Life Account (to be established September,
1998)
<PAGE>
SCHEDULE B
TRUST PORTFOLIOS AND CLASSES AVAILABLE
--------------------------------------
Portfolio: Templeton Asset Allocation Fund
Class: Class 2
Investment Adviser: Templeton Investment Counsel, Inc.
Portfolio: Templeton Developing Markets Fund
Class: Class 2
Investment Adviser: Templeton Asset Management Ltd.
Portfolio: Templeton International Fund
Class: Class 2
Investment Adviser: Templeton Investment Counsel, Inc.
Portfolio: Templeton Stock Fund
Class: Class 2
Investment Adviser: Templeton Investment Counsel, Inc.
Portfolio: Mutual Discovery Investments Fund
Class: Class 2
Investment Adviser: Franklin Mutual Advisers, Inc.
Portfolio: Mutual Shares Investments Fund
Class: Class 2
Investment Adviser: Franklin Mutual Advisers, Inc.
<PAGE>
SCHEDULE C
VARIABLE ANNUITY AND VARIABLE LIFE CONTRACTS
ISSUED BY PHL VARIABLE INSURANCE COMPANY
----------------------------------------
Contract Name Representative Form Number
- ------------- --------------------------
Variable Annuity
- ----------------
The Big Edge Choice - Form D601
Individual Deferred Variable Annuity
(includes all Portfolios listed on Schedule B)
Variable Life
- -------------
Flex Edge Success Form V605
(includes all Portfolios listed on Schedule B)
<PAGE>
SCHEDULE D
PORTFOLIOS AVAILABLE IN PHL VARIABLE CONTRACTS
----------------------------------------------
1. Investment Company: The Phoenix Edge Series Fund
Portfolios: Phoenix Multi-Sector Fixed Income Series
Phoenix Money Market Series
Phoenix Growth Series
Phoenix Strategic Allocation Series
Phoenix International Series
Phoenix Balanced Series
Phoenix Strategic Theme Series
Phoenix Real Estate Securities Series
Phoenix Aberdeen New Asia Series
Phoenix Research Enhanced Index Series
Engemann Nifty Fifty Series
Seneca Mid-Cap Growth Series
Phoenix Growth and Income Series
Phoenix Value Equity Series
Schafer Mid-Cap Value Series
2. Investment Company: Wanger Advisors Trust
Portfolios: Wanger U.S. Small Cap Series
Wanger International Small Cap Series
<PAGE>
SCHEDULE E
RULE 12B-1 PLANS
COMPENSATION SCHEDULE
---------------------
Schedule E
Page 1 of 2
Each Portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under its Class 2 Rule l2b-1 Distribution Plan,
stated as a percentage per year of Class 2's average daily net assets
represented by shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
- -------------------------------------------------------------------
TEMPLETON ASSET ALLOCATION FUND 0.25%
TEMPLETON DEVELOPING MARKETS FUND 0.25%
TEMPLETON INTERNATIONAL FUND 0.25%
TEMPLETON STOCK FUND 0.25%
MUTUAL DISCOVERY INVESTMENTS FUND 0.25%
MUTUAL SHARES INVESTMENTS FUND 0.25%
Agreement Provisions
--------------------
If the Company, on behalf of any Account, purchases Trust Portfolio
shares ("Eligible Shares") which are subject to a Rule l2b-1 Plan adopted under
the 1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") provide administrative and other services which assist in
the promotion and distribution of Eligible Shares or Variable Contracts offering
Eligible Shares, the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. "Administrative and other services" may
include, but are not limited to, furnishing personal services to owners of
Contracts which may invest in Eligible Shares ("Contract Owners"), answering
routine inquiries regarding a Portfolio, coordinating responses to Contract
Owner inquiries regarding the Portfolios, maintaining such accounts or providing
such other enhanced services as a Trust Portfolio or Contract may require,
maintaining customer accounts and records, or providing other services eligible
for service fees as defined under NASD rules. Your acceptance of such
compensation is your acknowledgment that eligible services have been rendered.
All Rule 12b-1 fees, shall be based on the value of Eligible Shares owned by the
Company on behalf of its Accounts, and shall be calculated on the basis and at
the rates set forth in the Compensation Schedule stated above. The aggregate
annual fees paid pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in the Portfolio's prospectus, unless an increase is
approved by shareholders as provided in the Plan. These maximums shall be a
specified percent of the value of a Portfolio's net assets attributable to
Eligible Shares owned by the Company on behalf of its Accounts (determined in
the same manner as the Portfolio uses to compute its net assets as set forth in
its effective Prospectus).
<PAGE>
SCHEDULE E
RULE 12B-1 PLANS
COMPENSATION SCHEDULE
---------------------
Schedule E
Page 2 of 2
You shall furnish us with such information as shall reasonably be
requested by the Trust's Boards of Trustees ("Trustees") with respect to the
fees paid to you pursuant to the Plans. We shall furnish to the Trustees, for
their review on a quarterly basis, a written report of the amounts expended
under the Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must
be approved annually by a vote of the Trustees, including the Trustees who are
not interested persons of the Trust and who have no financial interest in the
Plans or any related agreement ("Disinterested Trustees"). Each Plan may be
terminated at any time by the vote of a majority of the Disinterested Trustees,
or by a vote of a majority of the outstanding shares as provided in the Plan, on
sixty (60) days' written notice, without payment of any penalty. The Plans may
also be terminated by any act that terminates the Underwriting Agreement between
the Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. or Templeton Investment Counsel, Inc. or their
affiliates and the Trust. Continuation of the Plans is also conditioned on
Disinterested Trustees being ultimately responsible for selecting and nominating
any new Disinterested Trustees. Under Rule 12b-1, the Trustees have a duty to
request and evaluate, and persons who are party to any agreement related to a
Plan have a duty to furnish, such information as may reasonably be necessary to
an informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, the Trust is permitted to implement
or continue Plans or the provisions of any agreement relating to such Plans from
year-to-year only if, based on certain legal considerations, the Trustees are
able to conclude that the Plans will benefit each affected Trust Portfolio and
class. Absent such yearly determination, the Plans must be terminated as set
forth above. In the event of the termination of the Plans for any reason, the
provisions of this Schedule E relating to the Plans will also terminate.
Any obligation assumed by the Trust pursuant to this Agreement shall be
limited in all cases to the assets of the Trust and no person shall seek
satisfaction thereof from shareholders of the Trust. You agree to waive payment
of any amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Fund.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule E, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable
statutes, rules and regulations of all Rule 12b-1 fees received from us in the
prospectus of the contracts.
Exhibit 1.A.(10)
FORM OF APPLICATION FOR FLEX EDGE SUCCESS
<PAGE>
<TABLE>
<S> <C>
[logo] PHOENIX APPLICATION FOR LIFE INSURANCE
Company is defined as indicated below:
[ ] Phoenix Home Mutual Insurance Company [ ] PHL Variable Insurance Company [ ] Phoenix Life and Annuity Company (PLAC)
[ ] Phoenix Life Insurance Company (PLIC) [ ] Phoenix National Insurance Company [ ] _______________________________________
PLEASE NOTE: If application is taken in state where insurer selected above has not been admitted to do business, it is void and will
be rejected.
====================================================================================================================================
SECTION I - PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
Print Name as it is to appear on policy (First, Middle, Last) Sex Birthdate (Month, Day, Year)
[ ] Male [ ] Female
- ------------------------------------------------------------------------------------------------------------------------------------
Birthplace (State or Country) United States Citizen Social Security Number
[ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
Home Telephone Number Business Telephone Number (Include Extension) Driver's License Number (Include State)
( ) - ( ) - ext
- ------------------------------------------------------------------------------------------------------------------------------------
Home Address (Include Street, Apt. Number, City, State, and Zip Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Give Prior Address if at address less than 2 years (Include Street, Apt. Number, City, State, and Zip Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Current Occupation and Duties Employer Length of Employment
- ------------------------------------------------------------------------------------------------------------------------------------
Business Address (Include Street, Apt. Number, City, State, and Zip Code)
====================================================================================================================================
SECTION II - OWNERSHIP
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Insured [ ] D. Partnership (Include Name of all Partners - if partnership is
limited, indicate which partners are general partners)
[ ] B. Successive Owners OR [ ] Owners Jointly [ ] E. Sole Proprietorship (Include Name of Sole Proprietor)
[ ] C. Corporation its successors or assigns [ ] F. Trust (Include Name and Date of Trust, Name of Trustee(s)
(include state of incorporation) and of Grantor)
IF OWNER IS OTHER THAN PROPOSED INSURED, give Owner's name, Mailing Address, Relationship to Proposed Insured, and Social Security
Number or Tax Identification Number:
Name: __________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________
Address: __________________________________________________________________________________________________________________________
Social Security or Tax I.D. Number __________________________ Relationship: __________________________ Date of Birth: ______________
CONTINGENT OWNER
Name: ____________________________________________________________________________________________ Date of Birth: ______________
Relationship: ______________________________________________________________________________________________________________________
ULTIMATE OWNER, Check one. If none checked, insured will be ultimate owner.
[ ] Insured [ ] Executor or administrator of the survivor of the primary and contingent owners
- ------------------------------------------------------------------------------------------------------------------------------------
Send premium notices to: (in addition to owner)
[ ] Proposed Insured: [ ] Home Address [ ] Business Address
[ ] Other (Name and Address) _______________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Confirm Statements and Proxies (in addition to owner)
[ ] Insured [ ] Other ______________________________________________________________________________________________________________
====================================================================================================================================
SECTION III - BENEFICIARY
- ------------------------------------------------------------------------------------------------------------------------------------
Primary Beneficiary Relationship to Proposed Insured Date of Birth Social Security No.
(If Available) (If known)
- ------------------------------------------------------------------------------------------------------------------------------------
Contingent Beneficiary Relationship to Proposed Insured Date of Birth Social Security No.
(If Available) (If known)
- ------------------------------------------------------------------------------------------------------------------------------------
Trust
[ ] Trust under insured's will
[ ] Inter vivos - Provide name of Trustee ____________________________________________________________ Date of Trust _______________
- ------------------------------------------------------------------------------------------------------------------------------------
A beneficiary to qualify for payment must be living: (Check A or B, otherwise A will apply)
[ ] A. at the Proposed Insured's death.
[ ] B. on the 30th day after the date of the Proposed Insured's death.
- ------------------------------------------------------------------------------------------------------------------------------------
OL2567 1 of 5 8-97
</TABLE>
<PAGE>
<TABLE>
<S> <C>
====================================================================================================================================
SECTION IV - COVERAGE APPLIED FOR
- ------------------------------------------------------------------------------------------------------------------------------------
Plan of Insurance Basic Policy Amount
$
====================================================================================================================================
SECTION V - RIDERS AND FEATURES FOR TRADITIONAL PLANS OF INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Accidental Death Benefit Dividend Option
------------------------------------------------------------------
[ ] Disability Waiver of Premium on Insured [ ] Optionterm
[ ] Conditional Exchange Optionterm Death Benefit $ ___________________________________
------------------------------------------------------------------
[ ] Guaranteed Renewability Rider Premium Paying Coverage [ ] Yes [ ] No OR
[ ] Purchase Protector _______________________________ units % of Increase ________________________________________________
[ ] Family Protection [ ] Accumulate at Interest
[ ] Children's Protection [ ] Paid-up Additional Insurance (PUA)
[ ] Living Benefit Rider [ ] One Year Term with Balanced to:
[ ] Other __________________________________________________ [ ] Cash [ ] PUA [ ] ACCUM
- --------------------------------------------------------------
ADDITIONAL DEATH BENEFIT RIDERS: [ ] Reduce Premium
PITR $ _______________ [ ] Cash
Other Rider Name __________________ Amount $ ________________ [ ] Other ________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] PAPOR (check one) Automatic Premium Loan, if applicable (If none checked
"Yes" will apply.)
[ ] A-Flexible [ ] B-Flexible with Option term [ ] Yes [ ] No
------------------------------------------------------------------
Number of years payable __________________________ Policy Loan Interest Rate, if applicable (If none checked,
Intended premium payments for the first 7 years: "Variable" will apply.)
Year 1 __________________ Year 5 __________________ [ ] Variable [ ] Fixed
------------------------------------------------------------------
Year 2 __________________ Year 6 __________________ Total Insurance Face Amount (Total of all shaded areas)
Year 3 __________________ Year 7 __________________
Year 4 __________________ MAXIMUM AMOUNT $ _______________ $ __________________
====================================================================================================================================
SECTION VI - RIDERS AND FEATURES FOR VARIABLE OR UNIVERSAL PLANS OF INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Disability Payment of a specified Annual Premium Amount. Death Benefit Option (check one): If none checked Option 1
Annual Amount $ ________________________________________ will apply.
[ ] Accidental Death Benefit [ ] Option 1 - Level Face Amount
[ ] Enhanced Flex Edge (Guaranteed Death Benefit) [ ] Option 2 - Increasing Face Amount
[ ] Age 70 [ ] Age 80 [ ] Age 95 [ ] Living Benefit Rider
[ ] Other Insured Person Rider (VistaFlex ONLY) [ ] Purchase Protector _____________________________________ units
[ ] Guaranteed Insurability Option Rider (VistaFlex and [ ] Other ________________________________________________________
UNIVISTA ONLY) Amount $ ________________________________ __________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
First Year Anticipated, BILLED Premium (Excluding 1035 Subsequent Planned Annual Premium
Exchange, Lump Sum Funds, etc.)
- ------------------------------------------------------------------------------------------------------------------------------------
Sub-Account Allocation Do Not Use Fractional Percentages. (Must total 100%)
_____% Growth _____% Total Return _____% GIA _____% Other
_____% International _____% Balanced _____% Other _____% Other
_____% Money Market _____% Multi-Sector _____% Other _____% Other
Fixed Income Series
TEMPORARY MONEY MARKET ALLOCATION [ ] Yes [ ] No If yes, I elect to temporarily allocate my premiums to the Money Market
sub-account until termination of the Right to Cancel period as stated in the policy. (Yes will apply to all states which require
Temporary Money Market).
- ------------------------------------------------------------------------------------------------------------------------------------
Telephone Transfers/Exchanges
[ ] Yes [ ] No Telephone transfers/and changes in payment allocation are subject to the terms of the prospectus. If you check
the "yes" box, telephone orders will be accepted from you and your registered representative and you agree that,
because we cannot verify the authenticity of telephone instructions, we will not be liable for any loss caused
by our acting on telephone instructions, unless caused by our gross negligence.
====================================================================================================================================
SECTION VII - MODE OF PREMIUM PAYMENT
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Annual [ ] PCS (Phoenix Check-O-Matic Service) [ ] Quarterly [ ] Semi-Annual [ ] Monthly (Variable Life Insurance only)
Multiple Billing Option - Give # or Details ________________________________________________________________________________________
________________________________________________________________________________________
[ ] List Bill [ ] EICS [ ] Salary Allotment [ ] Pension [ ] Money Purchase Pension
[ ] Other __________________________________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
OL2567 2 of 5 8-97
</TABLE>
<PAGE>
<TABLE>
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====================================================================================================================================
SECTION VIII - EXISTING LIFE INSURANCE FOR THE PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] YES [ ] NO With this policy, do you plan to replace (in whole or in part, now or in the future) any existing insurance or
annuity in force?
[ ] YES [ ] NO Do you plan to borrow or otherwise use values from an existing insurance policy or annuity to pay any initial
or subsequent premium(s) for this policy?
For all Yes answers above, please provide the following information.
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY INSURED YEAR ISSUED POLICY NUMBER AMOUNT PERSONAL / BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
Describe all additional coverage in force for proposed insured. Include individual and group. If none, write none.
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY YEAR ISSUED POLICY NUMBER AMOUNT PERSONAL / BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
Total Accidental Death Benefit Amount $ ____________________
====================================================================================================================================
SECTION IX - ADDITIONAL INFORMATION REGARDING THE PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured's Earned Income Independent Income Net Worth
- ------------------------------------------------------------------------------------------------------------------------------------
YES NO
[ ] [ ] 1. Have you used tobacco or nicotine products in any form in the last 15 years? If "Yes", please circle the product(s)
used: cigarettes, cigars, pipes, snuff, smokeless or chewing tobacco, nicotine patch or gum.
Check one: [ ] Use currently [ ] Date quit __________.
[ ] [ ] 2. Have you ever applied for life, accident, or health insurance and been declined, postponed, or been offered a policy
differing in plan, amount or premium rate from that applied for? (If "Yes", give date, company and reason).
[ ] [ ] 3. Are you negotiating for other insurance? (If "Yes", name companies and total amount to be placed in force.)
[ ] [ ] 4. Do you intend to live or travel outside the United States or Canada? (If "Yes", state where and for how long).
[ ] [ ] 5. Have you flown during the past three years as a pilot, student pilot or crew member? (If "Yes", complete Aviation
Questionnaire, form FN 7).
[ ] [ ] 6. Have you participated in the past 3 years or plan to engage in any hazardous activity such as motor vehicle,
motorcycle or motorboat racing, parachute jumping, skin or scuba diving or other underwater activity, hang gliding or
other hazardous avocation? (If "Yes", complete Avocation Questionnaire).
[ ] [ ] 7. Have you in the past three years been the driver of a motor vehicle involved in an accident, or charged with a moving
violation of any motor vehicle law, or had your driver's license suspended or revoked?
- ------------------------------------------------------------------------------------------------------------------------------------
Give full details for all "Yes" answers.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION X - COMPLETE FOR INSURED IF TEMPORARY INSURANCE IS REQUESTED
- ------------------------------------------------------------------------------------------------------------------------------------
If either of the following questions are answered "Yes" or left blank, no agent or broker is authorized to accept money and a
Temporary Insurance Agreement MAY NOT be issued, and no coverage will take effect.
Have you:
[ ] Yes [ ] No a. Within the past two years been treated for heart disease, stroke, or cancer or had such treatment recommended?
[ ] Yes [ ] No b. Been advised within the past 60 days by a physician or other practioner to have any diagnostic test or surgery
not yet performed?
====================================================================================================================================
FOR HOME OFFICE OR ADMINISTRATIVE OFFICE USE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
Minor Correction. (No change will be made in amount, amount of premium, age at issue, class, plan or benefits unless agreed to in
writing.)
- ------------------------------------------------------------------------------------------------------------------------------------
OL2567 3 of 5 8-97
</TABLE>
<PAGE>
<TABLE>
<S> <C>
====================================================================================================================================
SECTION XI - MEDICAL HISTORY OF PROPOSED INSURED (If Proposed Insured Is Less Than Age 15, Questions Are To Be Answered By The
Parent)
- ------------------------------------------------------------------------------------------------------------------------------------
Height Weight Has Your Weight Decreased By 10 or More Pounds In The Past 2 Years? If "yes," how
much? ____________________ lbs. [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(s) of Personal Physician(s) or Health Care Facility(s). [ ] None
____________________________________________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Date and Reason for Last Consultation:
- ------------------------------------------------------------------------------------------------------------------------------------
Did Your Mother, Father, or Any Sibling Die Prior To The Age Of 60?
[ ] Yes [ ] No If "yes", give cause.
- ------------------------------------------------------------------------------------------------------------------------------------
YES NO
Have you within the past 10 years been treated for or had any indication of:
[ ] [ ] 1. Heart disease, abnormal heart rhythm, heart murmur, chest pain, angina, high blood pressure, or other disorder
of the heart or blood vessels?
[ ] [ ] 2. Skin disease, cancer, tumor, anemia or blood or lymph gland disorder?
[ ] [ ] 3. Epilepsy, fainting spells, stroke, nervous or mental condition, paralysis or any other abnormality of the brain
or nervous system?
[ ] [ ] 4. Colitis or Crohn's disease, ulcer, hepatitis, liver, or digestive disorder?
[ ] [ ] 5. Asthma, shortness of breath, emphysema, or other lung disorder?
[ ] [ ] 6. Diabetes or elevated blood sugar, bladder, kidney or other urinary disorder?
[ ] [ ] 7. Arthritis, or any other disorder of the back, spine, neck or joints?
In the past 5 years, have you:
[ ] [ ] 8. Had an electrocardiogram, x-ray, or blood, urine or other medical tests?
[ ] [ ] 9. Been advised to have any diagnostic test, hospitalization or surgery that was not completed?
[ ] [ ] 10. Other than noted above, have you in the last 5 years seen a doctor, counselor, therapist or had any illness,
injury or surgery?
[ ] [ ] 11. Have you ever been diagnosed or treated by a medical professional for Acquired Immune Deficiency Syndrome
(AIDS) or AIDS Related Complex (ARC)?
[ ] [ ] 12. Are you currently taking any medication, treatment, therapy or under medical observation?
[ ] [ ] 13. During the past 10 years, have you used narcotics, amphetamines, cocaine or any prescription drug except in
accordance with a physician's instructions?
[ ] [ ] 14. During the past 10 years, have you been advised or has treatment been recommended to limit or stop your intake
of alcohol?
====================================================================================================================================
Give details to any "Yes" answers to questions. Use OL 1590 if additional space is necessary to record all details.
- ------------------------------------------------------------------------------------------------------------------------------------
QUESTION DATE OF EACH CURRENT NAME AND ADDRESSES OF
NUMBER DIAGNOSIS OCCURRENCE / DURATION / STATUS DOCTORS AND MEDICAL FACILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OL2567 4 of 5 8-97
</TABLE>
<PAGE>
<TABLE>
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====================================================================================================================================
$____________ has been paid by ___________________________________ to the producer named below for proposed insurance applied for in
this application. This sum is to be applied in accordance with and subject to the terms of the Temporary Insurance Receipt bearing
the same number as this application.
I understand that i) no statement made to, or information acquired by any producer who takes this application, shall bind the
Company unless stated in Part I and/or Part II of this application; ii) the producer has no authority to make, modify, alter or
discharge any contract hereby applied for and; iii) the insurance applied for shall not take effect until the issuance of a contract
and payment of the issue premium due.
I have reviewed this application, and I hereby verify that all information given here and any in Part II of this application is true
and complete to the best of my knowledge and belief, and has been fully and correctly recorded.
Under penalty of perjury, I certify that the number given is my correct social security or taxpayer identification number and that I
am not subject to backup withholding (strike this out and initial if not true).
Any person who, with intent to defraud or knowing that he/she is facilitating a fraud against an insurer, submits an application
or files a claim containing a false or deceptive statement is guilty of insurance fraud as determined by a court of competent
jurisdiction. This application should be carefully reviewed by the undersigned to verify that any and all information given to the
producer taking this application has been fully and correctly entered.
The right is reserved to the Company to call for a medical examination by an appointed medical examiner should further evidence of
insurability be deemed necessary. The producer taking this application certifies that he/she has truly and accurately recorded on
the application the information supplied by the proposed insured(s).
THE DEATH BENEFIT AND CASH VALUES UNDER ANY VARIABLE POLICY MAY INCREASE OR DECREASE IN AMOUNT OR DURATION BASED ON THE INVESTMENT
EXPERIENCE OF THE UNDERLYING SUB-ACCOUNTS.
If I have purchased a Variable Life Policy, I certify that I have received the prospectus for that policy and its underlying funds.
- ------------------------------------------------------------------------------------------------------------------------------------
AUTHORIZATION REQUEST FOR INTERVIEW
[ ] I do [ ] I do not (check one only) require that I be interviewed in connection with any investigative consumer report that
may be prepared.
AUTHORIZATION TO OBTAIN INSURANCE (NONMEDICAL) INFORMATION
I hereby authorize any insurance company to which I have applied for or inquired about insurance coverage or benefits to give to
the Company or its reinsurers any information relating to or obtained in connection with such application or inquiry including the
dollar amounts and status of any policies or claims.
AUTHORIZATION TO OBTAIN HEALTH CARE (MEDICAL) INFORMATION
I hereby authorize any physician, hospital, clinic or other health care provider or any persons who have health care information
about me, including insurance companies and MIB, Inc., to give that information to the Company. If the record contains information
relating to alcohol or drug abuse or mental health care, enough of this information is also to be released to accomplish the
purposes for which the information is requested. This information may be used only for the purpose of risk evaluation, the
administration of claims and implementation of policy provisions and for insurance statistical studies.
The Company may then redisclose it to other persons, including MIB, Inc.; legal representatives, medical consultants, reinsurance
companies and consumer reporting agencies, only to the extent required to perform their services for the Company (MIB information
is not disclosed to consumer reporting agencies). They may disclose certain information to a person or organization for use in
risk evaluation, administration of claims or implementation of policy provisions. The Company may also be required to provide
certain information to a state insurance or health department. The information may also be redisclosed as otherwise required or
permitted by law, but no information will be given, sold or transferred to any other person not mentioned in this authorization.
This authorization or a true photocopy thereof shall continue to be valid for 30 months from the date signed below unless
otherwise required by law. It may be revoked in writing to the Company at any time until the insurance coverage has been placed in
force. I may receive a copy of it on request.
I acknowledge that I have received a copy of the Pre-Notification to applicants regarding the Medical Information Bureau,
Investigative Consumer Reports and the Underwriting Process.
- ------------------------------------------------------------------------------------------------------------------------------------
Insured Parent (for minor insured)
X
- ------------------------------------------------------------------------------------------------------------------------------------
Owner (if other than proposed insured) Witness Date
- ------------------------------------------------------------------------------------------------------------------------------------
Signed At
X
- ------------------------------------------------------------------------------------------------------------------------------------
The Producer hereby certifies that the Applicant signed this application in his/her presence; that he/she has truly and accurately
recorded on the application the information supplied by the proposed insured(s); and that he/she is qualified and authorized to
discuss the contract herein applied for.
WILL THE APPLICANT UTILIZE VALUES FROM ANOTHER INSURANCE POLICY (THROUGH LOANS, SURRENDERS OR OTHERWISE) TO PAY FOR THE INITIAL OR
SUBSEQUENT PREMIUM(S) FOR THE POLICY APPLIED FOR? [ ] YES [ ] NO
- ------------------------------------------------------------------------------------------------------------------------------------
Producer's Signature Date Producer I.D. Number
X
- ------------------------------------------------------------------------------------------------------------------------------------
Broker/Dealer Name and Address Broker/Dealer Number
- ------------------------------------------------------------------------------------------------------------------------------------
OL2567 5 of 5 8-97
</TABLE>
Exhibit 1.A.(11)
MEMORANDUM DESCRIBING TRANSFER AND REDEMPTION PROCEDURES
AND METHOD OF COMPUTING ADJUSTMENTS IN PAYMENTS AND
CASH VALUES UPON CONVERSION TO FIXED BENEFIT POLICIES
<PAGE>
PHL Variable Insurance Company's
Redemption and Transfer Procedures and
of Computing Adjustments in Payments and
Cash Values Upon Conversion to Fixed Benefit Policies
-----------------------------------------------------
This document sets forth, as required by Rule 6e-3(T)(b)(12)(ii), the
administrative procedures that will be followed by PHL Variable Insurance
Company ("PHL Variable") in connection with the issuance of the Policies
described in this Registration Statement, the transfer of assets held
thereunder, and the redemption by Policyowners of their interests in the
Policies. This document also describes, as required by Rule
6e-3(T)(b)(13)(v)(B), the method that PHL Variable will use in adjusting the
payments and cash values when a Policy is exchanged for a fixed benefit
insurance policy.
- --------------------------------------------------------------------------------
1. "Public Offering Price":
(a) Purchase and Related Transactions
---------------------------------
Set out below is a summary of the principal Policy provisions and
administrative procedures that might be deemed to constitute, either directly or
indirectly, a "purchase" transaction. The summary shows that, because of the
insurance nature of the Policies, the procedures involved necessarily differ in
certain significant respects from the purchase procedures for mutual funds and
contractual plans. The minimum Issue Premium for a Policy is generally 1/6 of
the Planned Annual Premium. The Planned Annual Premium is the premium amount
that the Policyowner agrees to pay each Policy Year. It must be at least equal
to the minimum premium for the face amount of insurance selected and must be no
greater than the maximum premium (described below) allowed for the face amount
selected. The Issue Premium is due on the Policy Date. The Insured must be alive
when the Issue Premium is paid. Thereafter, the amount and payment frequency of
planned premiums are as shown on the Schedule Page of the Policy. However, after
the Issue Premium is paid, the amount and timing of subsequent premiums is
completely flexible within the limitations of the maximum premium as described
below and a minimum
1
<PAGE>
premium of $25. All premiums are paid to the Variable Products Mail Operations
("VPMO") of PHL Variable, except that the Issue Premium may be paid to an
authorized agent of PHL Variable for forwarding to the Underwriting Department
of PHL Variable.
A Policyowner may increase or decrease the Planned Annual Premium or
payment frequency at any time by written notice to VPMO. PHL Variable reserves
the right to limit increases to such maximums as may be established from time to
time. Additional premium payments may be made at any time. Each premium payment
must be at least equal to $25 or, if made during a grace period, the payment
must equal the amount needed to prevent lapse of the Policy.
The Policy contains a total premium limit as shown on the Schedule Page.
This limit is applied to the sum of all premiums paid under the Policy and is
reduced by the sum of all partial surrender amounts paid out by PHL Variable. If
the total premium limit is exceeded, the Policyowner will receive the excess,
together with any interest at an annual rate of not less than 4%, not later than
sixty days after the end of the Policy Year in which the limit was exceeded. The
Policy Value will then be adjusted to reflect the refund. The amount to be taken
from each subaccount or the Guaranteed Interest Account ("GIA") will be
allocated in the same manner as provided for monthly deductions unless the
Policyowner requests otherwise in writing. The total premium limit may be
exceeded if additional premium is needed to prevent lapse or if PHL Variable
determines that additional premium would be permitted by federal laws or
regulations.
Any premium payments will be reduced by a premium tax charge of 2.25%
and a federal tax charge of 1.50%.
Premium payments received during a grace period also will be reduced by
the amount needed to cover any monthly deductions during the grace period. The
remainder will be applied on the Payment Date to the various subaccounts of the
PHLVIC Variable Universal Life Account (the "VUL Account") or to the GIA, based
on the premium allocation schedule elected in the application for the Policy or
as later changed by the Policyowner. The allocation schedule
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for premium payments may be changed by calling or by written notice to VPMO.
Allocations to the Account subaccounts or to the GIA must be expressed in terms
of whole percentages.
The Policies will be offered and sold pursuant to established
underwriting standards and in accordance with state insurance laws. State
insurance laws generally prohibit unfair discrimination among Insureds but
recognize that premiums may be based upon factors such as age, sex and health.
(b) Application and Initial Premium Processing
------------------------------------------
Upon receipt of a completed application, PHL Variable will follow
certain insurance underwriting (i.e., evaluation of risks) procedures designed
to determine whether the Applicant is insurable. This process may involve such
verification procedures as medical examinations and may require that further
information be provided by the proposed Insured before a determination can be
made. A Policy will not be issued until this underwriting procedure has been
completed.
PHL Variable will generally allocate the Issue Premium less applicable
charges to the Account or GIA upon receipt of a completed application, in
accordance with the allocation instructions in the application for the Policy.
However, Policies issued in certain states, and, if applicable, in certain
states pursuant to applications on which the Applicant notes that the Policy is
intended to replace existing insurance, are issued with a Temporary Money Market
Allocation Amendment. Under this Amendment, PHL Variable temporarily allocates
the entire Issue Premium paid less applicable charges (along with any other
premiums paid during the Right to Cancel Period) to the Money Market Subaccount
of the Separate Account until the expiration of the Right to Cancel Period. At
the end of the Right to Cancel Period, the Policy Value of the Money Market
Subaccount is allocated among the subaccounts of the Account or to the GIA in
accordance with the Applicant's allocation instructions as set forth in the
application for insurance.
A Policy may be returned by mailing or delivering it to PHL Variable
within ten days after the Policyowner receives it (or longer in some states);
within 10 days after PHL Variable mails or delivers a written notice of
withdrawal right to the Policyowner; or within 45 days after the
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Applicant signs the application for a Policy, whichever occurs latest (the
"Right to Cancel Period"). The returned Policy is treated as if PHL Variable
never issued the Policy and, except for Policies issued with a Temporary Money
Market Allocation Amendment, PHL Variable will return the sum of the following
as of the date PHL Variable receives the returned Policy: (i) the then current
Policy Value less any unpaid loans and loan interest; plus (ii) any monthly
deductions, partial surrender fees and other charges made under the Policy,
including investment advisory fees, or any Fund expenses deducted. The amount
returned for Policies issued with the Temporary Money Market Amendment will
equal the premium paid less any unrepaid loans and loan interest, and less any
partial surrender amounts paid.
PHL Variable reserves the right to disapprove an application for
processing within 7 days of receipt at PHL Variable of the completed application
for insurance, in which event PHL Variable will return the premium paid. Even
after approval of the application for processing, PHL Variable reserves the
right to decline issuance of the Policy, in which event PHL Variable will refund
the Applicant the same amount as would have been refunded under the Policy had
it been issued but returned for refund during the Right to Cancel period.
During the first 10 Policy Years, there is a difference between the
amount of Policy Value and the amount of Cash Surrender Value of the Policy.
This difference is the surrender charge, consisting of a contingent deferred
sales charge designed to recover expenses for the distribution of Policies that
are terminated by surrender before distribution expenses have been recouped, and
a contingent deferred issue charge designed to recover expenses for the
administration of Policies that are terminated by surrender before
administrative expenses have been recouped. These are contingent charges because
they are paid only if the Policy is surrendered (or the face amount is reduced
or the Policy lapses) during this period. They are deferred charges because they
are not deducted from premiums. The contingent deferred issue charge is set at a
level designed to recover actual costs and is not designed to result in any
profit for PHL Variable.
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(c) Repayment of Indebtedness
-------------------------
Debt may be repaid at any time during the lifetime of the Insured while
the Policy is in force. Any Debt repayment received by PHL Variable during a
grace period will be reduced to cover any overdue monthly deductions and the
balance will be applied to reduce the Debt. Such balance, in excess of any
outstanding accrued loan interest, will be applied to reduce the loaned portion
of the GIA and will be transferred to the unloaned portion of the GIA to the
extent that loaned amounts taken from such Account have not been previously
repaid. Otherwise, such balance will be transferred among the subaccounts as the
Policyowner requests upon repayment and, if no allocation request is made, PHL
Variable will use the most recent premium allocation schedule on file.
While there is outstanding Debt on the Policy, any payments received by
PHL Variable for the Policy will be applied directly to reduce the Debt unless
they are specified as a premium payment by the Policyowner. Until the Debt is
fully repaid, additional Debt repayments may be made at any time during the
lifetime of the Insured while the Policy is in force.
(d) Correction of Misstatement of Age or Sex
----------------------------------------
If the age or sex of the Insured has been misstated, the death benefit will be
adjusted based on what the cost of insurance charge for the most recent monthly
deduction would have purchased based on the correct age and sex.
(e) Additional Insurance Options
----------------------------
While the Policy is in force and the Policyowner is insurable, the
Policyowner will have the option to purchase additional insurance on the same
Insured with the same guaranteed rates as the Policy without being assessed an
Issue expense charge. PHL Variable will require evidence of insurability and
charges will be adjusted for the Insured's new Attained Age and any change in
risk classification. However, if elected on the application, the Policyowner
may, at predetermined future dates, purchase additional insurance protection on
the same Insured without evidence of insurability.
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In addition, once each Policy Year, a Policyowner may request an increase
in face amount. This request should be made within 90 days prior to the Policy
Anniversary and is subject to an issue expense charge of $1.50 per $1,000 of
increase in face amount, up to a maximum of $600 and to PHL Variable's receipt
of adequate evidence of insurability. A Right to Cancel Period applies to each
increase in face amount.
2. "Redemption Procedures":
Surrender and Related Transactions
----------------------------------
This section outlines those procedures which might be deemed to
constitute redemptions under the Policy. These procedures differ in certain
significant respects from the redemption procedures for mutual funds and
contractual plans.
(a) Cash Values
-----------
At any time during the lifetime of the Insured and while the Policy is
in force, the Policyowner may partially or fully surrender the Policy by sending
a written release and surrender in a form satisfactory to PHL Variable to VPMO,
along with the Policy if PHL Variable so requires. The amount available for
surrender is the Cash Surrender Value at the end of the Valuation Period during
which the surrender request is received at VPMO.
If the Policy is being fully surrendered, the Policy itself must be
returned to the VPMO, along with the Written Request and Surrender of all claims
in a form satisfactory to PHL Variable. A Policyowner may elect to have the
amount paid in a lump sum or under a payment option.
If the Policy is being partially surrendered, the Policy Value will be
reduced by the sum of the following: (i) partial surrender amount paid; (ii) a
partial surrender fee equal to the lesser of $25 or 2% of the partial surrender
amount paid; and (iii) the applicable partial surrender charge. The partial
surrender charge is equal to a prorated portion of the applicable surrender
charge that would apply to a full surrender, and is determined by multiplying
the applicable surrender charge by a fraction. This fraction is equal to the
partial surrender amount payable divided by the result of subtracting the
applicable surrender charge from the Policy Value. This amount is
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assessed against the subaccounts or the GIA in the same manner as provided for
the partial surrender amount paid.
PHL Variable reserves the right not to allow partial surrenders of less
than $500. In addition, if the share of the Policy Value in any subaccount or in
the GIA that would be reduced as a result of a partial surrender would,
immediately after the partial surrender, be less than $500, PHL Variable
reserves the right to require that as part of any partial surrender the entire
remaining balance in that subaccount or the GIA be surrendered.
After a partial surrender, the Cash Surrender Value will be reduced by
the partial surrender amount paid plus the partial surrender fee. The face
amount of the Policy also will be reduced by the same amount as the Policy Value
is reduced as described above.
(b) Benefit Claims
--------------
The death benefit (under Option 1) equals the Policy's face amount on
the date of the Insured's death or, if greater, the minimum death benefit on the
date of death. Under Option 2, the death benefit equals the Policy's face amount
on the date of the Insured's death plus the Policy Value. If no Option has been
chosen, Option 1 will apply.
The minimum Death Benefit is the Policy Value on the date of death of
the Insured increased by the applicable percentage from the table contained in
the Policy, based on the Insured's Attained Age at the beginning of the Policy
Year in which the death occurs.
A Policyowner may request a decrease in Face Amount at any time after
the first Policy Year. Unless PHL Variable agrees otherwise, the decrease must
at least equal $10,000 and the Face Amount remaining after the decrease must at
least equal $25,000. All face amount decrease requests must be in writing and
will be effective on the first Monthly Calculation Day following the date PHL
Variable approves the request. A partial surrender charge will be deducted from
the Policy Value based on the amount of the decrease. The charge will equal the
applicable surrender charge that would apply to a full surrender multiplied by a
fraction, (the decrease in Face Amount divided by the Face Amount of the Policy
before the decrease).
A partial surrender or a decrease in Face Amount generally decreases
the Death Benefit.
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(c) Payment of Proceeds
-------------------
Proceeds of full or partial surrenders and the death benefit proceeds
will usually be paid in one lump sum within seven days after PHL Variable
receives the request for surrender or due proof of death, unless another payment
option has been elected. Payment of the death proceeds, however, may be delayed
if the claim for payment of the death proceeds needs to be investigated to
ensure payment of the proper amount to the proper payee. Any such delay will not
be beyond that reasonably necessary to investigate such claims consistent with
insurance practices customary in the life insurance industry.
- -------------------------
(1) Payment from the Account may be postponed whenever: (i) the New York Stock
Exchange is closed other than for customary week-end and holiday closings, or
trading on the New York Stock Exchange is restricted as determined by the SEC;
(ii) the SEC by order permits postponement for the protection of Policyowners;
or (iii) an emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable or it is not reasonably
practicable to determine the value of the Account's net assets. (Payments under
the Policy of any amount derived from premiums paid by check may be postponed
until such time as the check has cleared the Policyowner's bank.)
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(d) Policy Loans
------------
While the Policy is in force, a loan may be obtained against the Policy
up to the available loan value. The loan value on any day is 90% of the result
of subtracting the then remaining surrender charge from the Policy Value. The
available loan value is the loan value on the current day less any outstanding
Debt.
The amount of any loan will be added to the loaned portion of the GIA
and subtracted from the Policy's share of the subaccounts or the unloaned
portion of the GIA, based on the allocation requested at the time of the loan.
The total reduction will equal the amount added to the loaned portion of the
GIA.
Allocations must generally be expressed in terms of whole percentages.
If no allocation request is made, the amount subtracted from the share of each
subaccount or the unloaned portion of the GIA will be determined in the same
manner as provided for monthly deductions. Interest will be credited and the
loaned portion of the GIA will increase at an effective annual rate of 2%,
compounded daily and payable in arrears. At the end of each Policy year and at
the time of any debt repayment interest credited to the loaned portion of the
GIA will be transferred to the unloaned portion of the GIA.
Failure to repay a policy loan or to pay loan interest will not
terminate the Policy except as otherwise provided under the terms of the Policy
concerning the grace period and lapse.
In the future, PHL Variable may not allow Policy loans of less than
$500, unless such loan is used to pay a premium due on another PHL Variable
policy.
The Policyowner will pay interest on the loan at an effective annual
rate, compounded daily and payable in arrears. The loan interest rates in effect
are: 4% for Policy years 1-10 (or the Insured's age 65, if earlier); 3% through
Policy year 15; and 2 1/2% for Policy years 16 and thereafter. At the end of
each Policy Year, any unpaid interest due on the Debt will be treated as a loan
and will be offset by a transfer from the Policyowner's values to the value of
the loaned portion of the GIA.
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(e) Policy Lapse
------------
Unlike conventional life insurance policies, the payment of the Issue
Premium no matter how large, or the payment of additional premiums will not
necessarily continue the Policy in force to its Maturity Date.
If on any Monthly Calculation Day during the first two Policy Years,
the Policy Value is insufficient to cover the monthly deduction, a grace period
of 61 days will be allowed for the payment of an amount equal to three times the
required monthly deduction. If on any Monthly Calculation Day during any
subsequent Policy Year, the Cash Surrender is less than the required monthly
deduction, a grace period of 61 days will be allowed for the payment of an
amount equal to three times the required monthly deduction. However, until the
Cash Surrender Value becomes positive for the first time, the Policy will not
lapse as long as all premiums planned at issue have been paid.
The Policy will continue in force during any such grace period. Failure
to pay the additional amount within the grace period will result in lapse of the
Policy, but not before thirty days have elapsed since PHL Variable mailed
written notice to the Policyowner. If a premium payment for the additional
amount is received by PHL Variable during the grace period, the amount of any
premium over what is required to prevent lapse will be allocated among the
subaccounts of the Account or to the GIA in accordance with the then current
premium allocation schedule.
In determining the amount of "excess" premium to be applied to the
subaccounts or the GIA, PHL Variable will deduct the premium tax and the amount
needed to cover any monthly deductions not made during the grace period. If the
Insured dies during the grace period, the Death Benefit will equal the amount of
the Death Benefit immediately prior to the commencement of the grace period.
3. Transfers of Policy Value
-------------------------
The Policyowner may transfer all or a portion of the Policy Value among
each subaccount of the Account and the unloaned portion of the GIA. Generally, a
Policyowner may make only one transfer per Policy Year from the unloaned portion
of the GIA and the amount transferred cannot exceed the greater of $1,000 or 25%
of the value of the Policy in the
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<PAGE>
unloaned portion of the GIA at the time of transfer. Transfers from the unloaned
portion of the GIA will be effectuated upon receipt by VPMO.
PHL Variable reserves the right to permit transfers of less than $500
only if the entire balance in the subaccount or the GIA is transferred.
PHL Variable reserves the right to prohibit a transfer to any subaccount
of the Account where the resultant value of the Policy's share in that
subaccount immediately after the transfer would be less than $500. It further
reserves the right to require that the entire balance of a subaccount or the GIA
be transferred if the share of the Policy in the value of that subaccount would,
immediately after the transfer, be less than $500.
For policies issued with the Temporary Money Market Allocation
Amendment, transfers may not be made until termination of the Right to
Cancel Period.
4. Conversion Procedures
---------------------
The Policyowner may effectively exchange the Policy for a non-variable
life insurance policy offered by PHL Variable ("Non-Variable Life Policy") on
the life of the Insured at any time, by transferring the Policy Value to the
GIA. The benefits under the GIA do not vary with the investment experience of
subaccounts in a separate account. Otherwise the Policy benefits are unchanged.
No evidence of the Insured's insurability is required for this transfer. The
Policy will have the same Death Benefit after the transfer. The Policy Date,
issue age and risk class will remain the same.
The transfer will be effective as outlined above under "Transfers of
Policy Value." Any Policy loans outstanding on the date of transfer will
remain outstanding.
11
