File Nos. 811-09167
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. ___ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___ [ ]
(Check appropriate box or boxes.)
FSL SEPARATE ACCOUNT M
_________________________________________
(Exact Name of Registrant)
Fidelity Security Life Insurance Company
_________________________________________
(Name of Depositor)
3130 Broadway, Kansas City, Missouri 64118
____________________________________________________________ __________
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (800) 648-8624
Name and Address of Agent for Service
Leland Eugene Schmitt
Senior Vice President
Fidelity Security Life Insurance Company
3130 Broadway
Kansas City, Missouri 64111-2406
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
4401 West Tradewinds Avenue
Suite 207
Lauderdale by the Sea, FL 33308
(954) 771-7909
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Calculation of Registration Fee under the Securities Act of 1933:
Registrant is registering an indefinite number of securities under the
Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.
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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.
CROSS REFERENCE SHEET
(Required by Rule 495)
Item No. Location
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PART A
Item 1. Cover Page Cover Page
Item 2. Definitions Glossary of Terms
Item 3. Synopsis Summary
Item 4. Condensed Financial Information Not Applicable
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies Investment Options,
American Fidelity,
the Separate Account
Item 6. Deductions and Expenses Expenses
Item 7. General Description of Variable Annuity
Contracts The AFAdvantage
Variable Annuity
Item 8. Annuity Period Annuity Provisions
Item 9. Death Benefit Death Benefit
Item 10. Purchases and Contract Value How to Purchase the
AFAdvantage Variable
Annuity
Item 11. Redemptions Withdrawals
Item 12. Taxes Taxes
Item 13. Legal Proceedings. Legal Proceedings
Item 14. Table of Contents of the Statement of
Additional Information Table of Contents of
the Statement of
Additional Information
CROSS REFERENCE SHEET (CONT'D)
(Required by Rule 495)
Item No. Location
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PART B
Item 15. Cover Page Cover Page
Item 16. Table of Contents. Table of Contents
Item 17. General Information and History General Information
and History of the
Company
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Offered Not Applicable
Item 20. Underwriters Distributor
Item 21. Calculation of Performance Data Performance
Information
Item 22. Annuity Payments. Annuity Provisions
Item 23. Financial Statements Financial Statements
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.
PART A
FIDELITY SECURITY LIFE INSURANCE COMPANY
FSL SEPARATE ACCOUNT M
FSL FLEXIBLE PREMIUM VARIABLE ANNUITY
This prospectus describes the variable annuity contract offered by Fidelity
Security Life Insurance Company (we, us, our). This is an individual deferred
variable annuity. The contract is offered as a non-qualified annuity, an
individual retirement annuity (IRA), as a tax sheltered annuity (TSA), or
pursuant to other qualified plans. This contract provides for accumulation of
contract values and annuity payments on a fixed and variable basis.
The contract has a number of investment choices (1 fixed account and 5
investment options). The fixed account is part of our general assets and
provides an investment rate guaranteed by us. The 5 investment options available
are portfolios of Investors Mark Series Fund, Inc. and Berger Institutional
Products Trust which are listed below. You can put your money in any of these
options which are offered through our separate account, the FSL Separate Account
M.
INVESTORS MARK SERIES FUND, INC.
Money Market Portfolio
Growth & Income Portfolio
Large Cap Growth Portfolio
Small Cap Equity Portfolio
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger/BIAM IPT - International Fund
Please read this Prospectus before investing. You should keep it for future
reference. It contains important information about the contract.
To learn more about the contract, you can obtain a copy of the Statement of
Additional Information (SAI) (dated ________, 1999). The SAI has been filed with
the Securities and Exchange Commission (SEC) and is legally a part of this
prospectus. The SEC maintains a Web site (http://www.sec.gov) that contains the
SAI, material incorporated by reference and other information regarding
companies that file electronically with the SEC. The Table of Contents of the
SAI is on page _ of this prospectus. For a free copy of the SAI, call us at
(800) 648-8624 or write to: Fidelity Security Life Insurance Company, Annuity
Products, 3130 Broadway, P.O. Box 418131, Kansas City, MO 64141-9131.
The Contracts:
* are not bank deposits.
* are not federally insured.
* are not endorsed by any bank or governmental agency.
* are not guaranteed and may be subject to loss of principle.
The SEC has not approved these contracts or determined that this prospectus is
accurate or complete. Any representation that it has is a criminal offense.
DATE
TABLE OF CONTENTS
INDEX OF SPECIAL TERMS...................................................i
HIGHLIGHTS...............................................................1
FSL SEPARATE ACCOUNT M TABLE OF FEES AND EXPENSES........................2
THE COMPANY..............................................................6
THE ANNUITY CONTRACT.....................................................6
INVESTMENT CHOICES.......................................................7
CONTRACT VALUE..........................................................15
SURRENDERS..............................................................16
DEATH BENEFIT...........................................................17
ANNUITY PAYMENTS........................................................18
TAXES ...............................................................20
PERFORMANCE.............................................................22
OTHER INFORMATION.......................................................23
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable. We have identified the following as some of these
words or terms. The page indicated here is where we believe you will find the
best explanation for the word or term. These words and terms are in italics on
the indicated page.
Page
Accumulation Phase
Accumulation Unit
Annuitant
Annuity Date
Annuity Options
Annuity Payments
Annuity Unit
Beneficiary
Income Phase
Investment Options
Non-Qualified
Qualified
HIGHLIGHTS
The variable annuity contract that we are offering is a contract between you,
the owner, and us, the insurance company. The contract provides a means for
investing on a tax-deferred basis in our fixed account and 5 investments
options. The contract is intended for retirement savings or other long-term
investment purposes and provides for a death benefit and guaranteed income
options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your contract.
You can choose to receive annuity payments on a variable basis, fixed basis or
combination of both. If you choose variable payments, the amount of the variable
annuity payments will depend upon the investment performance of the investment
options you select for the income phase. If you choose fixed payments, the
amount of the fixed annuity payments are level for the payout period.
Free Look. If you cancel the contract within 10 days after receiving it (or
whatever period is required in your state), we will send your money back without
assessing a sales charge. You will receive whatever your contract is worth on
the day we receive your request. This may be more or less than your original
payment. If we are required by law to return your original payment, we will put
your money in the Money Market Portfolio during the free-look period plus 5
days.
Tax Penalty. The earnings in your contract are not taxed until you take money
out of your contract. If you take money out during the accumulation phase,
earnings come out first and are taxed as income. If you are younger than 591/2
when you take money out, you may be charged a 10% federal tax penalty on those
earnings. Payments during the income phase are considered partly a return of
your original investment.
Inquiries. If you need more information, please contact us at:
FSL Insurance Company
Annuity Products
3130 Broadway
P.O. Box 418131
Kansas City, Missouri 64141-9131
(800)648-8624
FSL SEPARATE ACCOUNT M TABLE OF FEES AND EXPENSES
<TABLE>
<CAPTION>
OWNER TRANSACTION EXPENSES
Surrender Charge: (as a percentage of purchase payments surrendered) (See Note 2)
Number of Complete Years Surrender Charge
From Receipt of Purchase Payments Easy Pay Lump Sum
--------------------------------- -------- --------
<S> <C> <C> <C>
1 6% 7%
2 6 6
3 6 5
4 5 4
5 5 3
6 4 2
7 3 1
8 2 0
9 2 0
10 1 0
11 and thereafter 0 0
Transfer Fee (See Notes 3 & 4) No charge for the first 12
transfers in a contract year
during the accumulation
phase; thereafter, the fee is
$50 per transfer. There is no
charge for the 4 allowable
transfers in a contract year
during the income phase.
</TABLE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES: (as a percentage of the average account value)
Mortality and Expense Risk Fees (See Note 5)
<S> <C>
Lump Sum 0.90%
Easy Pay 1.50% (0.90% if contract value exceeds $100,000)
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES
Lump Sum 0.90%
Easy Pay 1.50% (0.90% if contract value
exceeds $100,000)
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OPTION EXPENSES: (as a percentage of the average daily net assets of an investment
option)
Other
Expenses
(after Total Operating
expense Expenses (after
Management reimburse expense
Fees ment) reimbursement)
---- ----- --------------
INVESTORS MARK SERIES FUND, INC.
(See Note 6)
<S> <C> <C> <C>
Money Market Portfolio .40% .10% .50%
Growth & Income Portfolio .80% .10% .90%
Large Cap Growth Portfolio .80% .10% .90%
Small Cap Equity Portfolio .95% .10% 1.05%
BERGER INSTITUTIONAL PRODUCTS TRUST
(See Note 7)
Berger/BIAM IPT - International Fund .00% 1.20% 1.20%
</TABLE>
EXAMPLES
There are two sets of examples below. The first set assumes your initial
purchase payment is a Lump Sum payment or that your contract value exceeds
$100,000. The second set assumes that you are making Easy Pay purchase payments
to your contract and that your contract value does not exceed $100,000.
These examples are designed to help you to understand the expenses in a
contract. You should not consider these to represent the actual expenses you
would pay. The actual expenses may be greater or less than those shown.
- --------------------------------------------------------------------------------
This first set of examples assumes you invested $1,000 in a contract and
allocated all of it to an investment option which earned 5% each year. It also
assumes that your initial purchase payment was a Lump Sum payment or that your
contract value exceeded $100,000. All the expenses of the options shown above
are assumed to apply. Under these assumptions you would pay the following:
a) upon surrender at the end of each time period;
b) if the contract is not surrendered or that you decided to begin the
income phase.
<TABLE>
<CAPTION>
Time Periods
1 Year 3 Year
------ ------
INVESTORS MARK SERIES FUND, INC.
<S> <C> <C>
Money Market Portfolio a) $84.00 $95.70
b) 14.00 45.70
Growth & Income Portfolio a) 88.00 108.53
b) 18.00 58.53
Large Cap Growth Portfolio a) 88.00 108.53
b) 18.00 58.53
Small Cap Equity Portfolio a) 89.50 113.31
b) 19.50 63.31
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger/BIAM IPT - International Fund a) 91.00 118.08
b) 21.00 68.08
____________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
This second set of examples assumes that you are making Easy Pay purchase
payments to your contract and that your contract value does not exceed $100,000.
All the expenses of the investment options shown above are assumed to apply.
Under these assumptions you would pay the following:
a) upon surrender at the end of each time period;
b) if the contract is not surrendered or that you decided to begin the
income phase.
Time Periods
1 Year 3 Year
------ ------
INVESTORS MARK SERIES FUND, INC.
<S> <C> <C>
Money Market Portfolio a) $80.00 $124.90
b) 20.00 64.90
Growth & Income Portfolio a) 84.00 137.58
b) 24.00 77.58
Large Cap Growth Portfolio a) 84.00 137.58
b) 24.00 77.58
Small Cap Equity Portfolio a) 85.50 142.31
b) 25.50 82.31
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger/BIAM IPT - International Fund a) $87.00 147.03
b) 27.00 87.03
<FN>
Notes to Table Of Fees and Expenses and Examples
1. The purpose of the Table of Fees and Expenses is to assist you in
understanding the various costs and expenses that you will incur directly
or indirectly. The Table reflects expenses of the separate account as well
as the investment options.
2. The contract provides for several circumstances under which we will waive
or reduce the surrender charge.
3. We charge $50 per transfer during the accumulation phase for any transfers
after 12 in any contract year.
4. When you transfer contract values from one of our annuity contracts to
another, we assess an internal transfer fee of 2% of the amount
transferred.
5. The contract refers to a Product Expense Charge. This charge is equivalent
to the aggregate charges that until recently were referred to as a
Mortality and Expense Risk Charge and an Administrative Charge by many
companies issuing variable annuity contracts. Throughout this prospectus we
will refer to this charge as a Product Expense Charge.
6. Investors Mark Advisors, Inc. has voluntarily agreed to reimburse expenses
for each portfolio of Investors Mark Series Fund, Inc. through April 30,
1999, so that the annual expenses do not exceed the amounts we stated
above. If such an expense reimbursement plan was not in place, the Total
Annual Expenses for these investment options are estimated to be: 1.15% for
the Money Market Portfolio; 1.25% for the Small Cap Equity Portfolio; 1.02%
for the Large Cap Growth Portfolio; and 1.10% for the Growth & Income
Portfolio.
7. BBOI Worldwide LLC has voluntarily agreed to waive its advisory fee and
expects to voluntarily reimburse the Berger/BIAM IPT - International Fund
for additional expenses to the extent that normal operating expenses in any
fiscal year, including the management fee but excluding brokerage
commissions, interest, taxes and extraordinary expenses, of the Fund exceed
1.20% of the Fund's average daily net assets. If such an expense
reimbursement plan and fee waiver were not in place, the management fee for
the Fund would be .90% and the total annual expenses are estimated to be
3.83%.
8. Premium taxes are not reflected in the examples and may apply in the state
where you live.
</FN>
</TABLE>
THE COMPANY
Fidelity Security Life Insurance Company, 3130 Broadway, Kansas City, Missouri
64111-2406, is a stock life insurance company. It is principally engaged in the
sale of life insurance and annuities. We are licensed in the District of
Columbia and all states except New York, where we are only admitted as a
reinsurer. It is majority owned by Richard F. Jones (an individual).
THE ANNUITY CONTRACT
This Prospectus describes the variable annuity contract that we are offering.
An annuity is a contract between you, the owner, and us, the insurance company,
where we promise to pay you an income, in the form of annuity payments,
beginning on a designated date in the future. Until you decide to begin
receiving annuity payments, your annuity is in the accumulation phase. Once you
begin receiving annuity payments, your contract enters the income phase.
The contract benefits from tax deferral. Tax deferral means that you are not
taxed on earnings or appreciation on the assets in your contract until you take
money out of your contract.
The contract is called a variable annuity because you can choose among the
investment options, and depending upon market conditions, you can make or lose
money in any of these options. If you select the variable annuity portion of the
contract, the amount of money you are able to accumulate in your contract during
the accumulation phase depends upon the investment performance of the investment
option(s) you select as well as the interest we credit to the fixed account.
You can choose to receive annuity payments on a variable basis, fixed basis or a
combination of both. If you choose variable payments, the amount of the annuity
payments you receive will depend upon the investment performance of the
investment option(s) you select for the income phase. If you select to receive
payments on a fixed basis, the payments you receive will remain level.
PURCHASE
PURCHASE PAYMENTS
A purchase payment is the money you give us to buy the contract. You can make
payments in two ways:
* as Lump Sum payments; or
* as Easy Pay payments.
A Lump Sum payment is any payment of $5,000 or more. Easy Pay payments are
designed to give you the opportunity to make regular payments to your contract.
The minimum Easy Pay payment we will accept is $50. The maximum total of all
purchase payments we will accept for the contract is $500,000, without our prior
consent.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, you choose how we will apply your purchase
payments among the investment options. If you make additional purchase payments,
we will allocate them in the same way as your first purchase payment, unless you
tell us otherwise.
Free Look. If you change your mind about owning this contract, you can cancel it
within 10 days after receiving it (or the period required in your state, which
is shown on page 1 of your contract). When you cancel the contract within this
time period, we will not assess a sales charge. You will receive back whatever
your contract is worth on the day we receive your request. In certain states, or
if you have purchased the contract as an IRA, we may be required to give you
back your purchase payment if you decide to cancel your contract within 10 days
after receiving it (or whatever period is required in your state). If that is
the case, we will put your purchase payment in the Money Market Portfolio for 15
days before we allocate your first purchase payment to the investment option(s)
you have selected. (In some states, the period may be longer.) If we do allocate
your purchase payment to the Money Market Portfolio and you exercise your free
look right, we will return the greater of your contract value or your purchase
payments.
Once we receive your purchase payment and the necessary information, we will
issue your contract and allocate your first purchase payment within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to complete this process within 5
business days, we will either send back your money or get your permission to
keep it until we get all of the necessary information. If you add more money to
your contract by making additional purchase payments, we will credit those
amounts to your contract within one business day. Our business day closes when
the New York Stock Exchange closes, usually 4:00 p.m. Eastern time.
INVESTMENT CHOICES
The contract offers you the choice of allocating purchase payments to our fixed
account or to one or more of the investment options which are listed below.
Additional investment options may be available in the future.
You should read the prospectuses for these funds carefully before investing.
Copies of these prospectuses are attached to this prospectus. Certain investment
options contained in the fund prospectuses may not be available with your
contract.
INVESTORS MARK SERIES FUND, INC.
Investors Mark Series Fund, Inc. is managed by Investors Mark Advisors, LLC
(Adviser). Investors Mark Series Fund, Inc. is a mutual fund with multiple
portfolios, four of which are available under the contract. Each portfolio has a
different investment objective. The Adviser has engaged sub-advisers to provide
investment advice for the individual portfolios. The following portfolios are
available under the contract:
* Money Market Portfolio - Standish, Ayer & Wood, Inc. is the
sub-advisor.
* Growth & Income Portfolio - Lord, Abbett & Co. is the sub-adviser.
* Large Cap Growth Portfolio - Stein Roe & Farnham, Incorporated is the
sub- adviser.
* Small Cap Equity Portfolio - Stein Roe & Farnham, Incorporated is the
sub- adviser.
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger Institutional Products Trust is a mutual fund with multiple portfolios,
one of which, the Berger/BIAM IPT - International Fund, is available under the
contract. The portfolio is managed by BBOI Worldwide LLC, who has retained Bank
of Ireland Asset Management (U.S.) Limited (BIAM) as sub-adviser. The following
portfolio is available under the contract:
* Berger/BIAM IPT - International Fund
FIXED ACCOUNT
During the accumulation phase, you may allocate purchase payments and contract
values to our fixed account. The fixed account forms a portion or our general
account. At our discretion, we may, from time to time, declare an excess
interest rate for the fixed account.
GENERAL ACCOUNT
During the income phase, you can select to have your annuity payments paid out
of our general account. We guarantee a specified interest rate used in
determining the payments. If you select this option, the payments you receive
will remain level. This option is only available during the income phase.
TRANSFERS
You can make transfers as described below. We have the right to terminate or
modify these transfer provisions.
You can make transfers by telephone. If you own the contract with a joint owner,
unless we are instructed otherwise, we will accept instructions from either you
or the other owner. We will use reasonable procedures to confirm that
instructions given to us by telephone are genuine. If we fail to use such
procedures, we may be liable for any losses due to unauthorized or fraudulent
instructions. However, we will not be liable for following telephone
instructions that we reasonably believe to be genuine. We tape record all
telephone instructions.
Transfers are subject to the following:
1. Currently, during the accumulation phase, you can make 12 transfers
every contract year without charge. You can transfer into the fixed
account from the investment options.
2. Currently, during the accumulation phase you can only make one
transfer in a calendar quarter out of the fixed account into the
investment options.
3. We will assess a $50 transfer fee for each transfer during the
accumulation phase in excess of the free 12 transfers allowed per
contract year. Transfers made at the end of the Free Look Period by us
and any transfers made pursuant to the Dollar Cost Averaging or
Rebalancing programs will not be counted in determining the
application of any transfer fee.
4. The minimum amount which you can transfer is $500 or your entire value
in the investment option or fixed account if it is less. This
requirement is waived if the transfer is made in connection with the
Dollar Cost Averaging or Rebalancing programs.
5. After a transfer is made you must keep a minimum of $100 in the
account, (either in the fixed account or an investment option) from
which the transfer was made.
6. You may not make a transfer until after the end of the free look
period.
7. A transfer will be effected as of the end of a business day when we
receive an acceptable transfer request containing all required
information. This would include the amount which is to be transferred,
and the investment option(s) and/or the fixed account affected.
8. We are not liable for a transfer made in accordance with your
instructions.
9. We reserve the right to restrict transfers between investment options
to a maximum of 12 per contract year and to restrict transfers from
being made on consecutive business days. We also reserve the right to
restrict transfers into and out of the fixed account.
10. Your right to make transfers is subject to modification if we
determine, in our sole opinion, that the exercise of the right by one
or more owners is, or would be, to the disadvantage of other owners.
Restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by us to be
to the disadvantage of other owners. A modification could be applied
to transfers to, or from, one or more of the investment options and
could include, but is not limited to:
a. the requirement of a minimum time period between each transfer;
b. not accepting a transfer request from an agent acting under a
power of attorney on behalf of more than one owner; or
c. limiting the dollar amount that may be transferred between
investment options by an owner at any one time.
11. During times of drastic economic or market conditions, we may suspend
the transfer privilege temporarily without notice and treat transfer
requests based on their separate components (a redemption order with a
simultaneous request for purchase of another investment option). In
such a case, the redemption order would be processed at the source
investment option's next determined accumulation unit value. However,
the purchase into the new investment option would be effective at the
next determined accumulation unit value for the new investment option
only after we receive the proceeds from the source investment option,
or we otherwise receive cash on behalf of the source investment
option.
12. Transfers do not change your allocation instructions for future
purchase payments.
13. Transfers made during the income phase are subject to the following:
a. you may make 4 transfers each contract year between investment
options or between the investment options and the general
account;
b. you may not make a transfer within 3 business days of the annuity
calculation date; and
c. you may not make a transfer from the general account to the
investment option.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount each month from a selected investment option or the fixed account to any
of the other investment options. By allocating amounts on a regular schedule as
opposed to allocating the total amount at one particular time, you may be less
susceptible to the impact of market fluctuations. The Dollar Cost Averaging
Program is available only during the accumulation phase.
The minimum amount which can be transferred each month is $100. You must have at
least $1,200 in the selected investment option or fixed account (or the amount
required to complete your program, if less), in order to participate in the
Dollar Cost Averaging Program.
We have the right to modify, terminate or suspend the Dollar Cost Averaging
Program.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee. If
you are participating in the Dollar Cost Averaging Program, you cannot also
participate in the Rebalancing Program.
Dollar Cost Averaging does not assure a profit and does not protect against loss
in declining markets. Dollar Cost Averaging involves continuous investment in
the selected investment option(s) regardless of fluctuating price levels of the
investment option(s). You should consider your financial ability to continue the
Dollar Cost Averaging Program through periods of fluctuating price levels.
REBALANCING PROGRAM
Once your money has been allocated among the investment options, the performance
of the selected options may cause your allocation to shift. You can direct us to
automatically rebalance your contract to return to your original percentage
allocations by selecting our Rebalancing Program. You can tell us whether to
rebalance monthly, quarterly, semi-annually or annually.
The Rebalancing Program is available only during the accumulation phase.
If you participate in the Rebalancing Program, the transfers made under the
program are not taken into account in determining any transfer fee. Amounts
allocated to the fixed account are not taken into account as part of the
Rebalancing Program. You can not participate in the Rebalancing Program if you
are in the Dollar Cost Averaging Program.
EXAMPLE:
Assume that you want your initial purchase payment split between 2 investment
options. You want 80% to be in the Growth & Income Portfolio and 20% to be in
the International Fund. Over the next 2 1/2 months the domestic market does very
well while the international market performs poorly. At the end of the quarter,
the Growth & Income Portfolio now represents 86% of your holdings because of its
increase in value. If you had chosen to have your holdings rebalanced quarterly,
on the first day of the next quarter, we would sell some of your units in the
Growth & Income Portfolio to bring its value back to 80% and use the money to
buy more units in the International Fund to increase those holdings to 20%.
SUBSTITUTION AND LIMITATION ON FURTHER INVESTMENT
We may be required to substitute one of the investment options you have selected
with another investment option. We would not do this without the prior approval
of the Securities and Exchange Commission. We may also limit further investment
in an investment option. We will give you notice of our intent to take either of
these actions.
EXPENSES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
PRODUCT EXPENSE CHARGE
Each day we make a deduction for our Product Expense Charge. We do this as part
of our calculation of the value of the accumulation units and the annuity units.
This charge is for all the insurance benefits e.g., guarantee of annuity rates,
the death benefit, for certain expenses of the contract, and for assuming the
risk (expense risk) that the current charges will be insufficient in the future
to cover the cost of administering the contract. If the charges under the
contract are not sufficient, then we will bear the loss. We do, however, expect
to profit from this charge. This charge cannot be increased.
We assess the Product Expense Charge each business day and it is based on the
average value of your contract. We assess a Product Expense Charge as follows:
<TABLE>
<CAPTION>
<S> <C>
* Lump Sum Payments: 0.90%, on an annual basis.
* Easy Pay Payments: 0.90%, on an annual basis, for contracts that have
a contract value of $100,000 or more.
1.50%, on an annual basis, for contracts that have
a contract value less than $100,000.
</TABLE>
REDUCTION OF PRODUCT EXPENSE CHARGE
We may, at our sole discretion, reduce the Product Expense Charge. We would do
so when sales of the contract are made to individuals or to a group of
individuals in such a manner that results in a reduction of our administrative
costs or other savings. We would consider making such a reduction when:
* the size and type of group to whom the contract is offered can
reasonably be expected to produce such a cost savings; or
* the amount of purchase payments can produce some economies resulting
in a savings to us.
Any reduction of the Product Expense Charge will not be unfairly discriminatory
against any person. We will make such reductions in accordance with our own
administrative rules in effect at the time the contract(s) is issued. We have
the right to change these rules from time to time.
SURRENDER CHARGE
During the accumulation phase, you can make surrenders from your contract. We
keep track of each purchase payment. Subject to the free surrender amount and
other waivers discussed below, if you make a surrender and it has been less than
the stated number of years since you made your purchase payment, we will assess
a surrender charge.
Surrender Charge: (as a percentage of purchase payments surrendered)
<TABLE>
<CAPTION>
SURRENDER CHARGES
Number of Complete Years Surrender Charge
From Receipt of Purchase Payments Easy Pay Lump Sum
--------------------------------- -------- --------
<S> <C> <C> <C>
1 6% 7%
2 6 6
3 6 5
4 5 4
5 5 3
6 4 2
7 3 1
8 2 0
9 2 0
10 1 0
11 and thereafter 0 0
</TABLE>
Each purchase payment has its own surrender charge period. For purposes of the
surrender charge, we treat surrenders as coming from the most recent purchase
payments first. When the surrender is for only part of the value of your
contract, the surrender charge is deducted from the remaining value in your
contract.
NOTE: FOR TAX PURPOSES EARNINGS ARE CONSIDERED TO COME OUT FIRST.
WAIVER OF THE SURRENDER CHARGE
Free Surrenders. You may make one surrender of up to 10% of your contract value
during a contract year free from any surrender charge. This right is
non-cumulative.
Internal Transfers. It is our current practice to reduce surrender charges for
an owner of one of our annuity contracts who wishes to transfer contract values
to another of our annuity contracts. The following will apply to such internal
transfers:
* there is an internal transfer fee of 2% of the amount transferred when
you make a transfer of contract value to another contract (which could
be the variable annuity contract we are offering by this prospectus)
issued by us;
* once transferred into the other contract, the amount transferred will
be subject to an Adjusted Surrender Charge in accordance with the
following:
<TABLE>
<CAPTION>
ADJUSTED SURRENDER CHARGES
Number of Complete Number of Complete Years you have been our Annuity Customer
Years from Transfer 5 Years or less 5-10 Years 10 Years +
- ------------------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
1 6% 4% 3%
2 5 3 3
3 4 2 2
4 3 1 1
5 2 0 0
6 1 0 0
7 and longer 0 0 0
</TABLE>
* if your contract is no longer subject to a surrender charge, we
will not assess the internal transfer fee for the first internal
transfer you make. Once contract values are in the new contract,
they will be subject to the Adjusted Surrender Charge shown
above. Any subsequent internal transfer will be subject to the
above conditions.
Reduction of Surrender Charges. We may, at our sole discretion, reduce the
Surrender Charge or the Adjusted Surrender Charge. We would do so when sales of
the contract are made to individuals or to a group of individuals in such a
manner that results in a reduction of our distribution costs. Some examples are:
if there is a large group of individuals that will be purchasing the contract or
if a prospective purchaser already had a relationship with us. We may, at our
sole discretion, not deduct the surrender charge under a contract issued to an
officer, director or employee of ours or any of our affiliates.
Any reduction of surrender charges will not be unfairly discriminatory against
any person. We will make such reductions in accordance with our administrative
rules in effect at the time the contract is issued. We have the right to change
those rules from time to time.
Waiver of Surrender Charges under Certain Benefits. Under the conditions set out
in the contract endorsements providing the following benefits, we will not
assess the surrender charge when:
* Terminal Illness Endorsement. You become terminally ill (which
means you are not expected to live more than 12 months). Under
this benefit, you may make a one time surrender during the
accumulation phase up to the full value of your account.
* Nursing Home or Hospital Confinement Endorsement. You become
confined to a long term care facility, nursing facility or
hospital for at least 90 consecutive days. Under this benefit,
the maximum amount that you can surrender without the imposition
of the surrender charge is $2,000 each month for the period of
confinement. The maximum total surrenders under this provision is
equal to your contract value. This benefit is only available
during the accumulation phase.
These benefits may not be available in your state.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for the payment of these
taxes and will make a deduction from the value of the contract for them. Some of
these taxes are due when the contract is issued, and others are due when annuity
payments begin. It is our current practice to not charge anyone for these taxes
until annuity payments begin. We may some time in the future discontinue this
practice and assess the charge when the tax is due. Premium taxes generally
range from 0% to 4%, depending on the state.
TRANSFER FEE
We will charge $50 for each additional transfer in excess of the free transfers
permitted. Transfers made at the end of the free look period by us and any
transfers made pursuant to the Dollar Cost Averaging or Rebalancing programs
will not be counted in determining the application of any transfer fee.
INCOME TAXES
We will deduct from the contract for any income taxes which we incur because of
the contract. At the present time, we are not making any such deductions.
INVESTMENT OPTION EXPENSES
There are deductions from and expenses paid out of the assets of the various
investment options, which are described in the attached fund prospectuses.
CONTRACT VALUE
Your contract value is the sum of your interest in the various investment
options and our fixed account.
Your interest in the investment option(s) will vary depending upon the
investment performance of the options you choose. In order to keep track of your
contract value, we use a unit of measure called an accumulation unit. During the
income phase of your contract we call the unit an annuity unit.
ACCUMULATION UNITS
Every day we determine the value of an accumulation unit and an annuity unit for
each of the investment option. We do this by:
1. determining the change in investment experience (including any
charges) for the investment option from the previous business day to
the current business day;
2. subtracting our Product Expense Charge and any other charges such as
taxes we have deducted; and
3. multiply the previous business day's accumulation unit (or annuity
unit) value by this result.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing the
amount of the purchase payment allocated to an investment option by the value of
the accumulation unit for that investment option. When you make a surrender, we
debit from your contract accumulation units representing the surrender.
We calculate the value of an accumulation unit for each investment option after
the New York Stock Exchange closes each day and then debit or credit your
account.
EXAMPLE:
On Monday we receive an additional purchase payment of $5,000 from you. You have
told us you want this to go to the Growth & Income Portfolio. When the New York
Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Growth & Income Portfolio is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Growth & Income Portfolio.
SURRENDERS
You can have access to the money in your contract:
* by making a surrender (either a partial or a complete surrender); or
* by electing to receive annuity payments; or
* if your contract was issued as a TSA, by taking a loan out of the
fixed account.
Surrenders can only be made during the accumulation phase.
When you make a complete surrender you will receive the value of your contract
on the day you made the surrender less any applicable surrender charge and less
any premium tax.
Unless you instruct us otherwise, any partial surrender will be made pro-rata
from all the investment options and the fixed account you selected. Under most
circumstances the amount of any partial surrender must be for at least $500, or
your entire interest in the fixed account or an investment option. We require
that after a partial surrender is made you keep at least $5,000 in your contract
for Lump Sum payments or $1,000 for Easy Pay payments.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY SURRENDER
YOU MAKE.
There are limits to the amount you can surrender from a qualified plan referred
to as a 403(b) plan (TSA). For a more complete explanation see the discussion in
the Taxes Section and the discussion in the Statement of Additional Information.
MINIMUM DISTRIBUTION PROGRAM
If your contract has been issued as an IRA, TSA or other qualified plan, you may
elect the Minimum Distribution Program. Under this program, we will make
payments to you that are designed to meet the applicable minimum distribution
requirements imposed by the Internal Revenue Code on such qualified plans. We
will make payments to you periodically at your election (currently: monthly,
quarterly, semi-annually or annually). Each payment must be at least $1000, or
the entire required distribution. The payments will not be subject to the
surrender charges and will be in lieu of the 10% free surrender amount allowed
each year.
LOANS
If you purchased this contract as a TSA (also referred to as a 403(b) plan),
during the accumulation phase you can make a loan out of the fixed account using
the contract as collateral. No loans are permitted out of the investment options
and no loans are permitted during the income phase. Repayment of the loan will
be made into the fixed account. We will then allocate that money in the same
manner that your purchase payments are being allocated.
DEATH BENEFIT
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PHASE
Upon your death or that of the joint owner during the accumulation phase, the
death benefit will be paid to your primary beneficiary. Upon the death of a
joint owner, the surviving joint owner, if any, will be treated as the primary
beneficiary. Any other beneficiary designation on record at the time of death
will be treated as a contingent beneficiary unless you have informed us
otherwise in writing.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PHASE
The death benefit during the accumulation phase will be the greater of:
1. the purchase payments, less any surrenders including any applicable
charges; or
2. your contract value.
The amount of the death benefit is determined as of the end of the business day
during which we receive both due proof of death and an election for the payment
method. The death benefit amount remains in an investment option and/or the
fixed account until distribution begins. From the time the death benefit is
determined until complete distribution is made, any amount in an investment
option will be subject to investment risk which is borne by the beneficiary.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PHASE
A beneficiary must elect the death benefit to be paid under one of the following
options in the event of your death during the accumulation phase. If the
beneficiary is the spouse of the owner, he or she may elect to continue the
contract in his or her own name and exercise all the owner's rights under the
contract. In this event, the contract value will be adjusted to equal the death
benefit.
Option 1 - lump sum payment of the death benefit; or
Option 2 - the payment of the entire death benefit within 5 years of the
date of death of the owner or any joint owner; or
Option 3 - payment of the death benefit under an annuity option over the
lifetime of the beneficiary or over a period not extending beyond the life
expectancy of the beneficiary with distribution beginning within 1 year of
the date of your death or of any joint owner.
Any portion of the death benefit not applied under Option 3 within 1 year of the
date of your death, or that of a joint owner, must be distributed within 5 years
of the date of death.
If a lump sum payment is requested, the amount will be paid within 7 days,
unless there is the suspension of payments provision is in effect.
Payment to the beneficiary, in any form other than a lump sum, may only be
elected during the sixty-day period beginning with the date of receipt by us of
proof of death.
DEATH OF CONTRACT OWNER DURING THE INCOME PHASE
If you or a joint owner, who is not the annuitant, dies during the income phase,
any remaining payments under the annuity option elected will continue to be made
at least as rapidly as under the method of distribution in effect at the time of
your death. Upon your death during the income phase, the beneficiary becomes the
owner.
DEATH OF ANNUITANT
Upon the death of the annuitant, who is not an owner, during the accumulation
phase, you automatically become the annuitant. You may designate a new annuitant
subject to our underwriting rules then in effect. If the owner is a non-natural
person, the death of the annuitant will be treated as the death of the owner and
a new annuitant may not be designated.
Upon the death of the annuitant during the income phase, the death benefit, if
any, will be as specified in the annuity option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
annuitant's death.
ANNUITY PAYMENTS (THE INCOME PHASE)
Under the contract you can receive regular income payments. You can choose the
month and year in which those payments begin. We call that date the annuity
date. Your annuity date must be the first or fifteenth day of a calendar month.
You can also choose among income plans. We call those annuity options.
We ask you to chose your annuity date and annuity option when you purchase the
contract. You can change either at any time before the annuity date with 30 days
notice to us. Your annuity date must be the first or fifteenth day of a calendar
month and must be at least 1 month after you buy the contract. Annuity payments
must begin by the annuitant's 85th birthday or the 85th birthday of the oldest
joint annuitant. The annuitant is the person whose life we look to when make
annuity payments.
If you do not choose an annuity option at the time you purchase the contract, we
will assume that you selected Option 2 with 10 years of guaranteed payments.
During the income phase, you have the same investment choices you had just
before the start of the income phase. If you do not tell us otherwise, your
annuity payments will be based on the investment allocations that were in place
on the annuity date.
The dollar amount of your payment from the investment option(s) will depend upon
four things:
* the value of your contract in the investment option(s) on the annuity
date;
* the 3% assumed investment rate used in the annuity table for the
contract; and
* the performance of the investment options you selected; and
* if permitted in your state and under the type of contract you have
purchased, the age and sex of the annuitant(s).
If the actual performance exceeds the 3% assumed rate plus the deductions for
expenses, your annuity payments will increase. Similarly, if the actual
performance is less than 3% plus the amount of the deductions, your annuity
payments will decrease.
We will determine the amount of your variable annuity payments, including the
first, no more than 10 business days prior to the payment date. The payment
dates must be the same day each month as the date you selected for the annuity
date, i.e. the first or the fifteenth. The day we determine the variable annuity
payment is called the annuity calculation date.
You can choose one of the following annuity options. After annuity payments
begin, you cannot change the annuity option. All annuity payments are made to
you unless you direct us otherwise.
Option 1 - Life Annuity.
Under this option we make monthly income payments during the lifetime of the
annuitant and terminating with the last payment preceding his/her death.
Option 2 - Life Income with a Guaranteed Period.
Under this option we make monthly income payments during the lifetime of the
annuitant. We guarantee that if, at the death of the annuitant, payments have
been made for less than a stated certain period, which may be five, ten, fifteen
or twenty years, as elected, the monthly income will continue during the
remainder of the stated period to the beneficiary . However, the beneficiary may
elect to receive a single sum payment. A single sum payment will be equal to the
present value of remaining payments as of the date of receipt of due proof of
death commuted at the assumed investment rate.
Option 3 - Survivorship.
Under this option we make monthly income payments during the joint lifetime of
the annuitant and another named individual and thereafter during the lifetime of
the survivor. Payments cease with the last income payment due prior to the death
of the survivor.
Option 4 - Other Options.
Under this option we provide you with any payout plan that is mutually agreed
upon between you and us.
OTHER BENEFITS
DISABILITY BENEFIT
This benefit is only available with respect to Easy Pay payments during the
accumulation phase. Under this benefit, so long as you are totally and
permanently disabled and can provide us with evidence of that fact, we will pay
you a life annuity with fixed payments at your normal retirement date (which is
defined in your endorsement) or make a death benefit payment to your beneficiary
if you die prior to that date. You should refer to the Disability Endorsement,
if any, for the details.
ACCIDENTAL DEATH BENEFIT
During the accumulation phase, in the event that you die due to an accidental
injury prior to age 70, we will pay your beneficiary an accidental death benefit
equal to, and in addition to, the death benefit contained in the contract (less
any outstanding loan balance if your contract was issued as a 403(b) contract
and you took out a loan). The maximum amount of the accidental death benefit is
$500,000.
TAXES
NOTE: We have prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. We have
included in the Statement of Additional Information an additional discussion
regarding taxes.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you are taxed
depending on how you take the money out and the type of contract - qualified or
non-qualified (see following sections).
Under non-qualified contracts, you, as the owner, are not taxed on increases in
the value of your contract until a distribution occurs - either as a withdrawal
or as annuity payments. When you make a withdrawal, you are taxed on the amount
of the withdrawal that is earnings. For annuity payments, different rules apply.
A portion of each annuity payment is treated as a partial return of your
purchase payments and is not taxed. The remaining portion of the annuity payment
is treated as ordinary income. How the annuity payment is divided between
taxable and non-taxable portions depends upon the period over which the annuity
payments are expected to be made. Annuity payments received after you have
received all of your purchase payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b) contracts), and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 Plans.
WITHDRAWALS - NON-QUALIFIED CONTRACTS
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. Such
withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 59 1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined
in the Code);
(4) paid in a series of substantially equal payments made annually (or
more frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS
The above information describing the taxation of non-qualified contracts does
not apply to qualified contracts. There are special rules that govern with
respect to qualified contracts. We have provided a more complete discussion in
the Statement of Additional Information.
WITHDRAWALS - TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of purchase payments made by owners from certain
Tax-Sheltered Annuities. Withdrawals can only be made when an owner:
(1) reaches age 59 1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship.
However, in the case of hardship, the owner can only withdraw the purchase
payments and not any earnings.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. We believe that the investment options are managed so as to
comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, are considered the
owner of the shares of the investment options. If you are considered owner of
the shares, it will result in the loss of the favorable tax treatment for the
contract. It is unknown to what extent owners are permitted to select investment
options, to make transfers among the investment options or the number and type
of investment options owners may select from without being considered owner of
the shares. If any guidance is provided which is considered a new position, then
the guidance is generally applied prospectively. However, if such guidance is
considered not to be a new position, it may be applied retroactively. This would
mean that you, as the owner of the contract, could be treated as the owner of
the investment options.
Due to the uncertainty in this area, we reserve the right to modify the contract
in an attempt to maintain favorable tax treatment.
PERFORMANCE
We periodically advertise performance of the various investment options. We will
calculate performance by determining the percentage change in the value of an
accumulation unit by dividing the increase (decrease) for that unit by the value
of the accumulation unit at the beginning of the period. This performance number
reflects the deduction of the insurance charges. It does not reflect the
deduction of any surrender charge. The deduction of any surrender charges would
reduce the percentage increase or make greater any percentage decrease. Any
advertisement will also include total return figures which reflect the deduction
of the product expense charges, and surrender charges.
For periods starting prior to the date the contracts were first offered, the
performance will be based on the historical performance of the corresponding
investment options for the periods commencing from the date on which the
particular investment option was made available through the contracts. In
addition, for certain investment options performance may be shown for the period
commencing from the inception date of the investment option. These figures
should not be interpreted to reflect actual historical performance of the
Separate Account.
We may, from time to time, include in our advertising and sales materials, tax
deferred compounding charts and other hypothetical illustrations, which may
include comparisons of currently taxable and tax deferred investment programs,
based on selected tax brackets.
OTHER INFORMATION
THE SEPARATE ACCOUNT
We established a separate account, FSL Separate Account M (Separate Account), to
hold the assets that underlie the contracts. Our Board of Directors adopted a
resolution to establish the Separate Account under Missouri insurance law on
August 25, 1998. We have registered the Separate Account with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940.
The assets of the Separate Account are held in our name on behalf of the
Separate Account and legally belong to us. However, those assets that underlie
the contracts, are not chargeable with liabilities arising out of any other
business we may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
contracts and not against any other contracts we may issue.
YEAR 2000
We have developed and initiated plans to assure that our computer systems will
function properly in the year 2000 and later years. These efforts have included
receiving assurances from outside service providers that their computer systems
will also function properly in this context. Included within these plans are the
computer systems of the advisers and sub-advisers of the various investment
options.
Although an assessment of the total cost of implementing these plans has not
been completed, the total amounts to be expended are not expected to have a
material effect on our financial position or results of operations. We believe
that we have taken all reasonable steps to address these potential problems.
There can be no assurance, however, that the steps taken will be adequate to
avoid any adverse impact.
VOTING RIGHTS
We are the legal owner of the investment option shares. However, we believe that
when an investment option solicits proxies in conjunction with a vote of
shareholders, it is required to obtain from you and other owners instructions as
to how to vote those shares. When we receive those instructions, we will vote
all of the shares we own in proportion to those instructions. This will also
include any shares that we own on our own behalf. Should we determine that it is
no longer required to comply with the above, we will vote the shares in our own
right.
DISTRIBUTOR
National Pension & Group Consultants, Inc. (NPGC) serves as the distributor for
the contracts. NPGC is located at 3130 Broadway, Kansas City MO 64111-2406.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions up to __% of purchase payments but,
under certain circumstances, may be paid an additional __% commission.
Sometimes, we enter into an agreement with the broker-dealer to pay the
broker-dealer persistency bonuses, in addition to the standard commissions.
OWNERSHIP
Owner. You, as the owner of the contract, have all the rights under the
contract. Prior to the annuity date, the owner is as designated at the time the
contract is issued, unless changed. On and after the annuity date, you continue
as the owner. The beneficiary becomes the owner when a death benefit is payable.
Joint Owner. The contract can be owned by joint owners. Any joint owner must be
the spouse of the other owner (except in Pennsylvania). Upon the death of either
joint owner, the surviving spouse will be the designated beneficiary. Any other
beneficiary designation at the time the contract was issued or as may have been
later changed will be treated as a contingent beneficiary unless otherwise
indicated.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before you die.
ASSIGNMENT
You can assign the contract at any time during your lifetime. We will not be
bound by the assignment until we receive written notice of the assignment. We
will not be liable for any payment or other action we take in accordance with
the contract before we receive notice of the assignment. AN ASSIGNMENT MAY BE A
TAXABLE EVENT.
If the contract is issued pursuant to a qualified plan, there may be limitations
on your ability to assign the contract.
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments for surrenders or transfers
for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
investment options is not reasonably practicable or we cannot
reasonably value the shares of the investment options;
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of owners.
We have reserved the right to defer payment for a withdrawal or transfer from
the fixed account for the period permitted by law but not for more than six
months.
FINANCIAL STATEMENTS
Our consolidated financial statements and the Separate Account have been
included in the Statement of Additional Information.
ADDITIONAL INFORMATION
For further information about the contract you may obtain a Statement of
Additional Information. You can call the telephone number indicated on the cover
page or you can write to us. For your convenience we have included a post card
for that purpose.
The Table of Contents of this statement is as follows:
Company
Experts
Legal Opinion
Distribution
Performance Information
Federal Tax Status
Annuity Provisions
Financial Statements
FIDELITY SECURITY LIFE INSURANCE COMPANY
3130 BROADWAY
KANSAS CITY, MO 64111-2406
ATTN:
____________________________________________________________________________
Please send me, at no charge, the Statement of Additional Information
dated___________, 1999 for the Annuity Contract issued by Fidelity Security Life
Insurance Company.
(Please print or type and fill in all information)
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE AND FIXED
ANNUITY CONTRACT
issued by
FSL SEPARATE ACCOUNT M
AND
FIDELITY SECURITY LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED , 1999, FOR THE INDIVIDUAL
FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT WHICH IS
DESCRIBED HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE THE
COMPANY AT: 3130 Broadway, Kansas City, MO 64111-2406, (800) 648-8624.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED , 1999.
TABLE OF CONTENTS
Page
COMPANY ................................................................3
EXPERTS ................................................................3
LEGAL OPINIONS...........................................................3
DISTRIBUTION.............................................................3
Reduction of the Surrender Charge...............................3
PERFORMANCE INFORMATION..................................................4
Total Return....................................................4
Historical Unit Values..........................................5
Reporting Agencies..............................................6
Performance Information.........................................6
FEDERAL TAX STATUS.......................................................7
General .......................................................7
Diversification.................................................8
Multiple Contracts..............................................9
Contracts Owned by Other than Natural Persons...................9
Tax Treatment of Assignments...................................10
Income Tax Withholding.........................................10
Tax Treatment of Withdrawals - Non-Qualified Contracts.........10
Qualified Plans................................................11
Tax Treatment of Withdrawals - Qualified Contracts.............13
Tax-Sheltered Annuities - Withdrawal Limitations...............15
ANNUITY PROVISIONS......................................................15
Variable Annuity...............................................15
Fixed Annuity..................................................16
Annuity Unit...................................................16
Net Investment Factor..........................................16
Expense Guarantee..............................................16
FINANCIAL STATEMENTS....................................................17
COMPANY
Fidelity Security Life Insurance Company (the "Company") was originally
incorporated on January 17, 1969, as a Missouri corporation. The Company
presently is licensed to do business in the District of Columbia and all states
except New York, where it is only admitted as a reinsurer.
The Company is a Kansas City-based stock company with more than $8 billion of
life insurance in force and approximately $400 million in assets. It provides
life and health insurance, retirement plans, and related financial services to
individuals and groups.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1997 and 1998,
and the related consolidated statements of income, shareholder's equity, and
cash flows for the years ended December 31, 1997 and 1998, have been included
herein in reliance upon the reports of Deloitte & Touche LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing. There are no financial
statements for the Separate Account because as of this date the Separate Account
has not yet commenced operations.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Contracts.
DISTRIBUTION
National Pension and Group Consultants, Inc. ("NPGC") acts as the distributor.
NPGC is an affiliate of the Company. The offering is on a continuous basis.
REDUCTION OF THE SURRENDER CHARGE
The amount of the Surrender Charge on the Contracts may be reduced or eliminated
when sales of the Contracts are made to individuals or to a group of individuals
in a manner that results in savings of sales expenses. The entitlement to
reduction of the Surrender Charge will be determined by the Company after
examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made. Generally,
the sales expenses for a larger group are less than for a smaller
group because of the ability to implement large numbers of Contracts
with fewer sales contacts.
2. The total amount of purchase payments to be received. Per Contract
sales expenses are likely to be less on larger purchase payments than
on smaller ones.
3. Any prior or existing relationship with the Company. Per Contract
sales expenses are likely to be less when there is a prior existing
relationship because of the likelihood of implementing the Contract
with fewer sales contacts.
4. Other circumstances, of which the Company is not presently aware,
which could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction of the Surrender Charge.
The Surrender Charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Company or any of its affiliates. In no
event will any reduction of the Surrender Charge be permitted where the
reduction or elimination will be unfairly discriminatory to any person.
PERFORMANCE INFORMATION
TOTAL RETURN
From time to time, the Company may advertise performance data. Such data will
show the percentage change in the value of an Accumulation Unit based on the
performance of an investment option over a period of time, usually a calendar
year, determined by dividing the increase (decrease) in value for that unit by
the Accumulation Unit value at the beginning of the period.
Any such advertisement will include total return figures for the time periods
indicated in the advertisement. Such total return figures will reflect the
deduction of a .9% to 1.50% (depending on the Contract Value) Product Expense
Charge, the expenses for the underlying investment option being advertised and
any applicable Surrender Charges.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual Accumulation Unit
values for an initial $1,000 purchase payment, and deducting any applicable
Surrender Charge to arrive at the ending hypothetical value. The average annual
total return is then determined by computing the fixed interest rate that a
$1,000 purchase payment would ave to earn annually, compounded annually, to grow
to the hypothetical value at the end of the time periods described. The formula
used in these calculations is:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used (or fractional
portion thereof) of a hypothetical $1,000 payment made at the beginning of the
time periods used.
The Company may also advertise performance data which will be calculated in the
same manner as described above but which will not reflect the deduction of any
Surrender Charge. The deduction of any Surrender Charge would reduce any
percentage increase or make greater any percentage decrease.
Owners should note that the investment results of each investment option will
fluctuate over time, and any presentation of the investment option's total
return for any period should not be considered as a representation of what an
investment may earn or what an owner's total return may be in any future period.
HISTORICAL UNIT VALUES
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the investment options
against established market indices such as the Standard & Poor's 500 Composite
Stock Price Index, the Dow Jones Industrial Average or other management
investment companies which have investment objectives similar to the investment
option being compared. The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged, unweighted average of 500 stocks, the majority of which are listed
on the New York Stock Exchange. The Dow Jones Industrial Average is an
unmanaged, weighted average of thirty blue chip industrial corporations listed
on the New York Stock Exchange. Both the Standard & Poor's 500 Composite Stock
Price Index and the Dow Jones Industrial Average assume quarterly reinvestment
of dividends.
REPORTING AGENCIES
The Company may also distribute sales literature which compares the performance
of the Accumulation Unit values of the Contracts with the unit values of
variable annuities issued by other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data which
currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges. The Company's sales literature utilizing these rankings will
indicate whether or not such charges have been deducted. Where the charges have
not been deducted, the sales literature will indicate that if the charges had
been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking may address the question as to which funds
provide the highest total return with the least amount of risk. Other ranking
services may be used as sources of performance comparison, such as
CDA/Weisenberger.
Morningstar rates a variable annuity against its peers with similar investment
objectives. Morningstar does not rate any variable annuity that has less than
three years of performance data.
PERFORMANCE INFORMATION
The Accumulation Units invest in the portfolios managed by Investors Mark Series
Fund, Inc. and Berger Institutional Products Trust. While the Separate Account
has recently commenced operations, these portfolios have been in existence for
some time and consequently have an investment performance history. In order to
demonstrate how the investment experience of the these portfolios affect
Accumulation Unit values, performance information was developed. The information
is based upon the historical experience of the portfolios and is for the periods
shown.
Future performance of the portfolios will vary and the results shown are not
necessarily representative of future results. Performance for periods ending
after those shown may vary substantially from the examples shown. The
performance of the portfolios is calculated for a specified period of time by
assuming an initial purchase payment of 1,000 allocated to the portfolio.
Performance figures for the Accumulation Units will reflect the Product Expense
Charges as well as the portfolio expenses. There are also performance figures
for the Accumulation Units which reflect the Product Expense Charges, the
portfolio expenses, and assume that you make a surrender at the end of the
period and therefore the Surrender Charge is reflected. The percentage increases
(decreases) are determined by subtracting the initial purchase payment from the
ending value and dividing the remainder by the beginning value. The performance
may also show figures when no surrender is assumed.
FEDERAL TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY
OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO
ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An Owner is not
taxed on increases in the value of a Contract until distribution occurs, either
in the form of a lump sum payment or as annuity payments under the Annuity
Option selected. For a lump sum payment received as a total withdrawal (total
surrender), the recipient is taxed on the portion of the payment that exceeds
the cost basis of the Contract. For Non-Qualified Contracts, this cost basis is
generally the purchase payments, while for Qualified Contracts there may be no
cost basis. The taxable portion of the lump sum payment is taxed at ordinary
income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period or refund feature) bears
to the expected return under the Contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the Contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the Contract has been recovered i.e. when the total of the
excludable amount equals the investment in the Contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under the Contracts
should seek competent financial advice about the tax consequences of any
distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
options underlying variable contracts such as the Contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment option will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
option is represented by any one investment; (2) no more than 70% of the value
of the total assets of the option is represented by any two investments; (3) no
more than 80% of the value of the total assets of the option is represented by
any three investments; and (4) no more than 90% of the value of the total assets
of the option is represented by any four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment options underlying the Contracts will be
managed in such a manner as to comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owners being
retroactively determined to be the owners of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a Contract held by a trust or other entity as an
agent for a natural person nor to Contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the Owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the Owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
c) the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions). Participants should consult their own tax counsel
or other tax adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her Beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered herein are designed to be suitable for use under various
types of Qualified Plans. Taxation of participants in each Qualified Plan varies
with the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Company's administrative procedures. Owners, Annuitants
and Beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts comply with
applicable law. Following are general descriptions of the types of Qualified
Plans with which the Contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
Qualified Plans are very complex and will have differing applications depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employees until the
employees receive distributions from the Contracts. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations" below.) Employee loans are not allowable under the
Contracts. Any employee should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's taxable income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of Contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as Individual Retirement Annuities should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
Roth IRAs
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution.
Purchasers of Contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employees until distributed from the
Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Purchasers of Contracts for use with Pension or Profit Sharing Plans should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b)(Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been rolled over to an IRA or to another eligible Qualified Plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
Owner or Annuitant (as applicable) reaches age 59 1/2; (b) distributions
following the death or disability of the Owner or Annuitant (as applicable) (for
this purpose disability is as defined in Section 72(m) (7) of the Code); (c)
after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the Owner or Annuitant (as applicable) or the joint lives
(or joint life expectancies) of such Owner or Annuitant (as applicable) and his
or her designated Beneficiary; (d) distributions to an Owner or Annuitant (as
applicable) who has separated from service after he has attained age 55; (e)
distributions made to the Owner or Annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Owner or Annuitant (as applicable) for amounts paid during
the taxable year for medical care; (f) distributions made to an alternate payee
pursuant to a qualified domestic relations order; (g) distributions from an
Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Owner or Annuitant (as
applicable) has received unemployment compensation for at least 12 weeks (this
exception will no longer apply after the Owner or Annuitant (as applicable) has
been re-employed for at least 60 days); (h) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) to the extent
such distributions do not exceed the qualified higher education expenses (as
defined in Section 72(t)(7) of the Code) of the Owner or Annuitant (as
applicable) for the taxable year; and (i) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8)of
the Code.) The exceptions stated in (d) and (f) above do not apply in the case
of an Individual Retirement Annuity. The exception stated in (c) above applies
to an Individual Retirement Annuity without the requirement that there be a
separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years on which the exception was used.
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect transfers between Tax-Sheltered Annuity Plans. Owners should consult
their own tax counsel or other tax adviser regarding any distributions.
ANNUITY PROVISIONS
VARIABLE ANNUITY
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable investment option(s) of the separate account. At the annuity
date, the contract value in each investment option will be applied to the
applicable annuity tables. The annuity table used will depend upon the annuity
option chosen. The dollar amount of Annuity Payments after the first is
determined as follows:
(1) the dollar amount of the first annuity payment is divided by the value of
an annuity unit as of the annuity calculation date. This establishes the
number of annuity units for each monthly payment. The number of annuity
units remains fixed during the annuity payment period.
(2) the fixed number of annuity units per payment in each Subaccount is
multiplied by the annuity unit value as of the annuity calculation date.
This result is the dollar amount of the payment.
The total dollar amount of each variable annuity payment is the sum of all
investment options variable annuity payments.
FIXED ANNUITY
A fixed annuity is a series of payments made during the annuity period which are
guaranteed as to dollar amount by the Company and do not vary with the
investment experience of the Separate Account. The general account value as of
the annuity calculation date will be used to determine the fixed annuity monthly
payment. The first monthly annuity payment will be based upon the annuity option
elected and the appropriate annuity option table. Fixed annuity payments will
remain level.
ANNUITY UNIT
The value of an annuity unit for each investment option was arbitrarily set
initially at $10. This was done when the first investment option shares were
purchased. The investment option annuity unit value for any business day is
determined by multiplying the investment option annuity unit value for the
immediately preceding business day by the product of (a) the Net Investment
Factor for the business day for which the annuity unit value is being
calculated, and (b) 0.999919.
NET INVESTMENT FACTOR
The Net Investment Factor for any investment option for any business day is
determined by dividing:
(a) the accumulation unit value as of the close of the current business day, by
(b) the accumulation unit value as of the close of the immediately preceding
business day.
The Net Investment Factor may be greater or less than one, as the annuity unit
value may increase or decrease.
EXPENSE GUARANTEE
The Company guarantees that the dollar amount of each annuity payment after the
first annuity payment will not be affected by variations in actual mortality or
expense experience.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the contracts. There are no financial statements for the
Separate Account because as of this date, the Separate Account has not yet
commenced operations.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
Financial Statements for the Company will be included in an amendment.
B. EXHIBITS
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Separate Account.
2. Not Applicable.
3. Form of Principal Underwriters Agreement (to be filed by
amendment).
4. Individual Flexible Purchase Payment Deferred Variable and Fixed
Annuity Contract.
5. Application Form (to be filed by amendment).
6. (i) Copy of Articles of Incorporation of the Company.
(ii) Copy of the Bylaws of the Company.
7. Not Applicable.
8. Not Applicable.
9. Opinion and Consent of Counsel (to be filed by amendment).
10. Consent of Independent Auditors (to be filed by amendment).
11. Not Applicable.
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. Company Organizational Chart.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Executive Officers and Directors of the Company:
Name and Principal Position and Offices
Business Address* with Depositor
- ----------------------- ----------------------------------------
Richard Forrest Jones Chief Executive Officer, Chief Financial
Officer, Director
Michael Eugene Hall Sr. Vice President, Director
Leland Eugene Schmitt Sr. Vice President, Secretary, Director
Robert Bruce Schorb Sr. Vice President, Director
Mark Linsley Burley Vice President of Administration
Benjamin Arthur Pullan Controller, Asst. Secretary
David James Smith III Vice President of Marketing and Advertising
John Collings Caton Vice President-Actuary
Dorothy Marie Jones Director
Albert Harry Wohlers Director
1440 N. Northwest Hwy.
Park Ridge, IL
George John Bereska Director
Richard L. Andrews Director
118 Hill Hall
Columbia, MO
Robert Eugene McGannon Director
922 Walnut
Kansas City, Missouri
Gale Thomas Bartow Consultant, Director
1201 Fairway Circle
Blue Springs, MO
* The principal business address for all officers and directors listed above
is 3130 Broadway, Kansas City. Missouri 64118 except as noted above.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
A Company organizational chart is included as Exhibit 15.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
ITEM 28. INDEMNIFICATION
The Bylaws of the Company (Article XII) provide, in part, that:
Section 1. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal administrative or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that he is or was a director or officer of the corporation,
or is or was serving at the request of the corporation as a director or officer
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding had
reasonable cause to believe that his conduct was not unlawful.
Section 2. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director or officer, of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the court in which the action or suit was brought determines
upon application that, despite the adjudication of liability and in view of all
the circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 3. To the extent that a director or officer of the corporation has
been successful on the merits or otherwise in defense of any action, suit, or
proceeding referred to in Section 1 and 2 of this Article, or in the defense of
any claim, issue or matter therein, he shall be indemnified against expenses
including attorneys' fees, actually and reasonably incurred by him in connection
with the action, suit, or proceeding.
Section 4. Any indemnification under Section 1 and 2 of this Article,
unless ordered by a court, shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director
or officer is proper in the circumstances because he has met the applicable
standard of conduct set forth in this Article. The determination shall be made
by the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the action, suit, or proceeding, or if such a quorum is
not obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or by the
shareholders.
Section 5. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of the action, suit, or proceeding as authorized by the Board of Directors in
the specific case upon receipt of a guarantee by or on behalf of the director or
officer to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in this Article.
Section 6. The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 7. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of this
Article.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not Applicable.
National Pension & Group Consultants, Inc. ("NPGC") is the principal underwriter
for the Policies. The following persons are the officers and directors of NPGC.
The principal business address for each officer and director of NPGC is 3130
Broadway, Kansas City, MO.
(b) Name and Principal Positions and Offices
Business Address with Underwriter
---------------- ----------------
Richard F. Jones President, Treasurer
Michael E. Hall Vice President
N. Susan Kirks Secretary
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
David James, Assistant Vice President, whose address is 3130 Broadway, Kansas
City, Missouri 64118, maintains physical possession of the accounts, books or
documents of the Separate Account required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. Fidelity Security Life Insurance Company ("Company") hereby represents
that the fees and charges deducted under the Policies described in the
Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No-Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant has caused this Registration Statement to be
signed on its behalf in the City of Kansas City and State of Missouri, on this
23rd day of December, 1998.
FSL SEPARATE ACCOUNT M
(Registrant)
By: FIDELITY SECURITY LIFE INSURANCE COMPANY
(Depositor)
By: /S/ LELAND EUGENE SCHMITT
____________________________________________
Leland Eugene Schmitt, Senior Vice President
FIDELITY SECURITY LIFE INSURANCE
(Depositor)
By: /S/ LELAND EUGENE SCHMITT
____________________________________________
Leland Eugene Schmitt, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chief Executive Officer,
RICHARD F. JONES* Chief Financial Officer, 12/23/98
- ---------------------- --------
Richard F. Jones and Director (Principal
Executive Officer and
Principal Financial
Officer)
BENJAMIN A. PULLAN* Controller (Principal 12/23/98
- ---------------------- Accounting Officer) --------
Benjamin A. Pullan
/s/ LELAND E. SCHMITT Director 12/23/98
- ---------------------- --------
Leland E. Schmitt
ROBERT L. SCHORB* Director 12/23/98
- ---------------------- --------
Robert L. Schorb
MICHAEL E. HALL* Director 12/23/98
- ---------------------- --------
Michael E. Hall
DOROTHY M. JONES* Director 12/23/98
- ---------------------- --------
Dorothy M. Jones
GALE T. BARTOW* Director 12/23/98
- ---------------------- --------
Gale T. Bartow
*By /S/ LELAND E. SCHMITT
_______________________________________
Leland E. Schmitt, Power of Attorney
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Richard F. Jones, Chief Executive
Officer of Fidelity Security Life Insurance Company (FSL), a corporation duly
organized under the laws of the State of Missouri, do hereby appoint Leland E.
Schmitt and Benjamin A. Pullan, each individually, as my attorney and agent, for
me, and in my name as a Chief Financial Officer of FSL on behalf of FSL or
otherwise, with full power to execute, deliver and file with the Securities and
Exchange Commission all documents required for registration of a security under
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ RICHARD F. JONES
- ------------------- --------------------
Linda K. Harper Richard F. Jones
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Richard F. Jones, Chief Financial
Officer of Fidelity Security Life Insurance Company (FSL), a corporation duly
organized under the laws of the State of Missouri, do hereby appoint Leland E.
Schmitt and Benjamin A. Pullan, each individually, as my attorney and agent, for
me, and in my name as a Chief Financial Officer of FSL on behalf of FSL or
otherwise, with full power to execute, deliver and file with the Securities and
Exchange Commission all documents required for registration of a security under
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ RICHARD F. JONES
- ------------------- --------------------
Linda K. Harper Richard F. Jones
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Richard F. Jones, a Director of Fidelity
Security Life Insurance Company (FSL), a corporation duly organized under the
laws of the State of Missouri, do hereby appoint Leland E. Schmitt and Benjamin
A. Pullan, each individually, as my attorney and agent, for me, and in my name
as a Chief Financial Officer of FSL on behalf of FSL or otherwise, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ RICHARD F. JONES
- ------------------- --------------------
Linda K. Harper Richard F. Jones
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Benjamin A. Pullan, Controller and
Assistant Secretary of Fidelity Security Life Insurance Company (FSL), a
corporation duly organized under the laws of the State of Missouri, do hereby
appoint Leland E. Schmitt and Benjamin A. Pullan, each individually, as my
attorney and agent, for me, and in my name as a Chief Financial Officer of FSL
on behalf of FSL or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ BENJAMIN A. PULLAN
- ------------------- ------------------------
Linda K. Harper Benjamin A. Pullan
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Leland E. Schmitt, a Director of
Fidelity Security Life Insurance Company (FSL), a corporation duly organized
under the laws of the State of Missouri, do hereby appoint Benjamin A. Pullan,
as my attorney and agent, for me, and in my name as a Chief Financial Officer of
FSL on behalf of FSL or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of the aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ LELAND E. SCHMITT
- ------------------- ---------------------
Linda K. Harper Leland E. Schmitt
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Robert L. Schorb, a Director of Fidelity
Security Life Insurance Company (FSL), a corporation duly organized under the
laws of the State of Missouri, do hereby appoint Leland E. Schmitt and Benjamin
A. Pullan, each individually, as my attorney and agent, for me, and in my name
as a Chief Financial Officer of FSL on behalf of FSL or otherwise, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ ROBERT L. SCHORB
- ------------------- --------------------
Linda K. Harper Robert L. Schorb
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Michael E. Hall, a Director of Fidelity
Security Life Insurance Company (FSL), a corporation duly organized under the
laws of the State of Missouri, do hereby appoint Leland E. Schmitt and Benjamin
A. Pullan, each individually, as my attorney and agent, for me, and in my name
as a Chief Financial Officer of FSL on behalf of FSL or otherwise, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ MICHAEL E. HALL
- ------------------- -------------------
Linda K. Harper Michael E. Hall
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Dorothy M. Jones, a Director of Fidelity
Security Life Insurance Company (FSL), a corporation duly organized under the
laws of the State of Missouri, do hereby appoint Leland E. Schmitt and Benjamin
A. Pullan, each individually, as my attorney and agent, for me, and in my name
as a Chief Financial Officer of FSL on behalf of FSL or otherwise, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ DOROTHY M. JONES
- ------------------- --------------------
Linda K. Harper Dorothy M. Jones
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, Gale Bartow, a Director of Fidelity
Security Life Insurance Company (FSL), a corporation duly organized under the
laws of the State of Missouri, do hereby appoint Leland E. Schmitt and Benjamin
A. Pullan, each individually, as my attorney and agent, for me, and in my name
as a Chief Financial Officer of FSL on behalf of FSL or otherwise, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 22nd day of December, 1998.
WITNESS:
/S/ LINDA K. HARPER /S/ GALE T. BARTOW
- ------------------- -------------------
Linda K. Harper Gale T. Bartow
EXHIBITS
TO
FORM N-4
FOR
FSL SEPARATE ACCOUNT M
FIDELITY SECURITY INSURANCE COMPANY
INDEX TO EXHIBITS
EXHIBIT NO.
EX-99.B1 Resolution of Board of Directors of the Company
authorizing the establishment of the Separate Account.
EX-99.B4 Individual Flexible Purchase Payment Deferred Variable and Fixed
Annuity Contract.
EX-99.B6(i) Copy of Articles of Incorporation of the Company.
EX-99.B6(ii) Copy of Bylaws of the Company.
EX-99.B15 Organizational Chart.
RESOLVED that the President and/or the Executive Committee is specifically
authorized to take whatever actions are desirable from time to time to put the
company into the Variable Annuity business and to maintain that business as a
viable line for the Company; and
FURTHER RESOLVED, the President or executive Committee is authorized to
establish and designate one or more separate accounts to hold the assets
resulting from premium paid on Variable Annuity contracts determined by the
Company to be allocated to such accounts; and
FURTHER RESOLVED, that the President or Executive Committee is authorized to
register the separate account(s) authorized by this resolution and the Variable
Annuity contracts to be issued by the Company with the United States Securities
and Exchange Commission, as the President and/or Executive Committee shall deem
necessary or appropriate; and
FURTHER RESOLVED, that assets allocated to the separate account(s) established
pursuant to this resolution shall not be chargeable with liabilities arising
from any other business the company may be conducting and that all such assets
shall be for the exclusive use as reserves and contract obligations of the
Variable Annuity Contracts issued under the auspices of such separate
account(s).
(Corporate Seal) _______________________________________
Leland E. Schmitt, Secretary
FIDELITY SECURITY LIFE INSURANCE COMPANY
3130 BROADWAY
KANSAS CITY, MO 64111-2406
FIDELITY SECURITY LIFE INSURANCE COMPANY (referred to "as we, us and our). We
will make Annuity Payments as described in this Contract beginning on the
Annuity Date.
This Contract is issued in return for the payment of the initial purchase
payment.
[10] DAY RIGHT TO EXAMINE
This Contract may be returned within [10] days after you receive it by mailing
or delivering the contract to either us or the agent who sold it. Return of this
Contract by mail is effective on being postmarked, properly addressed and
postage prepaid. The returned Contract will be treated as if it were never
issued. We will promptly refund your Contract Value as of the Business Day we
receive your Contract. Your Contract Value may be more or less than your
purchase payment.
Signed for the Company.
______________________________ ______________________________
Secretary President
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT
NONPARTICIPATING
NO DIVIDENDS
READ YOUR CONTRACT CAREFULLY.
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE
VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
THE VARIABLE PROVISIONS OF THIS CONTRACT CAN BE FOUND ON PAGES __ AND __.
TABLE OF CONTENTS
PAGE
CONTRACT SCHEDULE............................................................3
DEFINITIONS..................................................................8
GENERAL PROVISIONS..........................................................10
ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS.................................11
BENEFICIARY PROVISIONS......................................................11
PURCHASE PAYMENT PROVISIONS.................................................12
CONTRACT VALUE PROVISION....................................................12
FIXED ACCOUNT PROVISIONS....................................................13
SEPARATE ACCOUNT PROVISIONS.................................................13
TRANSFER PROVISIONS.........................................................15
DEATH BENEFIT PROVISIONS....................................................16
ANNUITY PROVISIONS..........................................................18
SURRENDER PROVISIONS........................................................21
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE SEPARATE ACCOUNT..........................................22
DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE FIXED ACCOUNT.............................................22
RESERVES, VALUES AND BENEFITS...............................................22
<TABLE>
<CAPTION>
CONTRACT SCHEDULE
<S> <C>
OWNER: [John Doe] AGE AT ISSUE: [ ]
JOINT OWNER: [Jane Doe] AGE AT ISSUE: [ ]
ANNUITANT: [John Doe] AGE AT ISSUE: [ ]
CONTRACT NUMBER: [ ] ISSUE DATE: [ ]
PLAN TYPE: [Non-qualified] ANNUITY DATE: [ ]
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PURCHASE PAYMENTS: [Purchase payments can be made either as "Lump Sum Payments"
or as "Easy Pay Payments."
LUMP SUM PAYMENTS: Any purchase payment of $5,000 or more.
EASY PAY PAYMENT: $50 or more per month.
MAXIMUM TOTAL PURCHASE PAYMENTS: The maximum total of all purchase
payments is $500,000 without our
prior consent.]
</TABLE>
BENEFICIARY: [As designated by you at Issue Date unless changed in accordance
with the Contract provisions.]
<TABLE>
<CAPTION>
<S> <C>
PRODUCT EXPENSE CHARGE: [We assess each Subaccount of the Separate Account a
Product Expense Charge against the average daily net asset
value of the Subaccount as follows:
LUMP SUM PAYMENTS: 0.90%, on an annual basis.
EASY PAY PAYMENTS: For contracts that have a Contract Value of $100,000
or more, 0.90%, on an annual basis. For contracts that
have a Contract Value less than $100,000, 1.50%, on
an annual basis.
</TABLE>
INVESTMENT OPTIONS:
[Investors Mark Series Fund, Inc.
Money Market Portfolio
Growth & Income Portfolio
Large Cap Growth Portfolio
Small Cap Equity Portfolio
Berger Institutional Products Trust
Berger/BIAM IPT - International Fund]
SEPARATE ACCOUNT: [FSL SEPARATE ACCOUNT M]
ALLOCATION GUIDELINES:
[1. Currently, you can select from any of the Subaccounts. However, we
reserve the right to limit this in the future.
2. If the purchase payments and forms required to issue a Contract are in
good order, the initial purchase payment will be credited to your
Contract within two (2) business days after receipt at the Annuity
Service Office. Additional purchase payments will be credited to your
Contract as of the Business Day they are received.
3. Allocations must be in whole numbers. Each allocation must be at least
$25. Allocations made pursuant to a pre-approved Rebalancing or Dollar
Cost Averaging program are not subject to these limitations.]
TRANSFERS:
NUMBER OF PERMITTED: [Currently, there are no limits on the number of
transfers between Subaccounts that can be made during the accumulation phase. We
reserve the right to change this.
Currently, during the accumulation phase, you can make twelve (12)
transfers every contract year without charge. You can transfer contract values
into the fixed account from the investment options.
Currently, during the accumulation phase, you can only make one transfer in
a calendar quarter out of the fixed account into the Subaccounts.
Currently, during the Annuity Period, you can make four (4) transfers each
Contract Year between Investment Options or between the Investment Option and
the General Account.]
TRANSFER FEE: [We will charge $50 for each additional transfer during the
accumulation period in excess of twelve (12) transfers in any contract year.
Transfers made at the end of the "Right to Examine Period" by us and any
transfers made pursuant to the Dollar Cost Averaging or Rebalancing Program will
not be counted in determining the application of any Transfer Fee.]
MINIMUM AMOUNT TO BE TRANSFERRED: [$500, or your entire interest in the
Fixed Account or the Subaccount, if less. This requirement is waived if the
transfer is pursuant to a transfer for the Dollar Cost Averaging or Rebalancing
Program.]
MINIMUM AMOUNT WHICH MUST REMAIN IN THE FIXED ACCOUNT OR
ANY SUBACCOUNT AFTER A TRANSFER: [$100]
SURRENDERS AND INTERNAL TRANSFERS:
<TABLE>
<CAPTION>
SURRENDER CHARGE: [A Surrender Charge is assessed against purchase payments
surrendered. The Surrender Charge is calculated at the time of each surrender.
Each purchase payment is tracked from the date of its receipt and the type of
purchase payment. Surrender Charges are determined in accordance with the
following schedule:
SURRENDER CHARGES
NUMBER OF COMPLETE YEARS % CHARGE
------------------------ --------
FROM RECEIPT OF PURCHASE PAYMENT EASY PAY LUMP SUM
-------------------------------- -------- --------
<S> <C> <C> <C>
1 6% 7%
2 6 6
3 6 5
4 5 4
5 5 3
6 4 2
7 3 1
8 2 0
9 2 0
10 1 0
11 and thereafter 0 0
</TABLE>
WAIVER OF SURRENDER CHARGE: [Each Contract Year a partial surrender of 10%
of the Contract Value may be made free from any Surrender Charge on a
non-cumulative basis.
It is our current practice to waive Surrender Charges for an owner of one of our
annuity contracts who wishes to transfer Contract Values to another of our
Annuity Contracts. The following will apply to such internal transfers:
1. there is an internal transfer fee of 2% of the amount transferred when
you make an transfer of Contract Value to another contract (including
this contract) issued by us;
2. once transferred into the other contract, the amount transferred will
be subject to an Adjusted Surrender Charge in accordance with the
following schedule:
<TABLE>
<CAPTION>
ADJUSTED SURRENDER CHARGES
NUMBER OF COMPLETE YEARS YOU HAVE BEEN
NUMBER OF COMPLETE OUR ANNUITY CUSTOMER.
YEARS FROM TRANSFER 5 YEARS OR LESS 5-10 YEARS 10 YEARS +
------------------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
1 6% 4% 3%
2 5 3 3
3 4 2 2
4 3 1 1
5 2 0 0
6 1 0 0
7 and longer 0 0 0
</TABLE>
3. if your contract was issued prior to May 1, 1999, or is no longer
subject to a withdrawal or surrender charge we will not assess the
internal transfer fee for the first internal transfer you make. Once
Contract Values are in the new contract they will be subject to the
Adjusted Surrender Charges. Any subsequent internal transfer will be
subject to items 1 and 2 above.
MINIMUM PARTIAL SURRENDER: [$500, or your entire interest in the Fixed
Account or Subaccount]
MINIMUM CONTRACT VALUE WHICH MUST REMAIN IN THE CONTRACT
AFTER A PARTIAL SURRENDER: [Lump Sum $5,000; Easy Pay $1,000]
<TABLE>
<CAPTION>
<S> <C>
FIXED ACCOUNT:
CURRENT INTEREST RATE AS OF ISSUE DATE: [X%, guaranteed through the end of
the current calendar year]
MINIMUM GUARANTEED INTEREST RATES: [3%]
</TABLE>
ENDORSEMENTS:
[Individual Retirement Annuity Endorsement]
[403(b) Endorsement]
[Unisex Endorsement]
[Accidental Death Benefit]
[Disability Benefit]
[Nursing Home/Terminal Illness/Hospital Rider]
[Qualified Plan Endorsement]
ANNUITY SERVICE OFFICE:
FIDELITY SECURITY LIFE INSURANCE COMPANY
[3130 Broadway]
[Kansas City, MO 64111]
DEFINITIONS
ACCUMULATION UNIT - A unit of measure used to calculate the Contract Value in a
Subaccount of the Separate Account.
ACCUMULATION PERIOD - The period prior to the Annuity Date during which you can
make purchase payments.
ANNUITANT - The natural person on whose life Annuity Payments are based. You may
change the Annuitant at any time prior to the Income Date unless the Owner is
not a natural person. On or after the Annuity Date, any reference to Annuitant
shall also include any Joint Annuitant.
ANNUITY OR ANNUITY PAYMENTS - The series of payments made to the Owner or other
named payee after the Annuity Date under the Annuity Option elected.
ANNUITY DATE - The date on which Annuity Payments begin. The Annuity Date is
shown on the Contract Schedule.
ANNUITY PERIOD - The period starting on the Annuity Date during which Annuity
Payments are paid.
ANNUITY SERVICE OFFICE - The office indicated on the Contract Schedule to which
notices, requests and purchase payments must be sent. All sums payable by us
under the Contract are payable through the Annuity Service Office.
ANNUITY UNIT - A unit of measure used to calculate Variable Annuity Payments
after the Annuity Date.
ATTAINED AGE - The age of any Owner or Annuitant on his/her birthday nearest the
date for which age is being determined.
BENEFICIARY - The person(s) or entity(ies) who will receive any death benefit
payable under this Contract.
BUSINESS DAY - Each day that the New York Stock Exchange and we are open for
business. The Separate Account will be valued each Business Day.
COMPANY - Fidelity Security Life Insurance Company.
CONTRACT ANNIVERSARY - An anniversary of the Issue Date of this Contract.
CONTRACT VALUE - The sum of your interest in the Fixed Account and the
Subaccounts of the Separate Account.
CONTRACT YEAR - One year from the Issue Date and from each Contract Anniversary.
FIXED ACCOUNT - A portion of the General Account into which you can allocate
purchase payments or transfer Contract Value. At our discretion, we may from
time to time declare an excess interest rate for this Account. The Fixed Account
is only available prior to the Annuity Date.
FIXED ANNUITY - A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by us and do not vary with the investment
experience of the Separate Account. Fixed Annuity Payments are made out of our
General Account.
GENERAL ACCOUNT - Our general investment account which contains all of our
assets with the exception of the Separate Account and other segregated asset
accounts.
INVESTMENT OPTION - The investment choices within the Separate Account available
under the Contract. Current Investment Options are shown on the Contract
Schedule.
ISSUE DATE - The date this Contract was issued. The Issue Date is shown on the
Contract Schedule.
JOINT OWNER - If there is more than one Owner, each Owner shall be a Joint Owner
of the Contract. Joint Owners have equal ownership rights and must both
authorize any exercising of those ownership rights unless otherwise allowed by
us. Any Joint Owner must be the spouse of the other Owner, unless limited by
state law.
OWNER - The person(s) or entity(ies) entitled to the ownership rights under this
Contract. If Joint Owners are named, all references to Owner shall mean Joint
Owners.
SEPARATE ACCOUNT - A separate investment account of the Company designated on
the Contract Schedule.
SUBACCOUNT - Separate Account assets are divided into Subaccounts. Assets of
each Subaccount will be invested in shares of an Investment Option.
VARIABLE ANNUITY - A series of payments made during the Annuity Period which
vary in amount with the investment experience of each applicable Subaccount.
GENERAL PROVISIONS
THE CONTRACT - The entire contract consists of this Contract and application,
riders or endorsements attached to this Contract.
INCONTESTABILITY - We will not contest this Contract at any time following the
Issue Date.
NON-PARTICIPATING - This Contract will not share in any distribution of
dividends.
MISSTATEMENT OF AGE OR SEX - We may require proof of age or sex of the Annuitant
before making any life Annuity Payments under this Contract. If the age or sex
of the Annuitant has been misstated, the amount payable will be the amount that
the Contract Value would have provided at the correct age or sex.
Once Annuity Payments have begun, any underpayments will be made up in one sum
with the next Annuity Payment. Any overpayments will be deducted from future
Annuity Payments until the total is repaid.
CONTRACT SETTLEMENT - This Contract must be returned to us prior to any
settlement. Prior to any payment of a death claim, due proof of death must be
submitted to us.
PROTECTION OF PROCEEDS - No Beneficiary may commute, encumber, alienate or
assign any payments under this Contract. To the extent permitted by law, no
payments will be subject to the debts, contracts or engagements of any payee or
to any judicial process to levy upon or attach the same for payment thereof.
REPORTS - At least once each calendar year we will furnish you with a report
showing the Contract Value and any other information as may be required by law.
Reports will be sent to your last known address.
TAXES - Any taxes paid to any governmental entity relating to this Contract will
be deducted from the purchase payments or Contract Value when incurred. We will,
at our sole discretion, determine when taxes have resulted from: the investment
experience of the Separate Account; receipt by us of the purchase payments; or
commencement of Annuity Payments. We may, at our sole discretion, pay taxes when
due and deduct that amount from the Contract Value at a later date. Payment at
an earlier date does not waive any right we may have to deduct amounts at a
later date. We will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL - We may require satisfactory evidence of the continued
survival of any person(s) on whose life Annuity Payments are based.
MODIFICATION OF CONTRACT - This Contract may be modified by us in order to
maintain compliance with applicable state and federal law. This Contract may be
changed or altered only by our President or our Secretary. A change or
alteration will be made in writing.
ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
OWNER - You, as the Owner, have all the interest and rights under this Contract.
The Owner is the person designated as such on the Issue Date, unless changed.
You may change the Owner at any time. A change of Owner will automatically
revoke any prior designation of Owner. A request for change must be:
1. made in writing; and
2. received by us at the Annuity Service Office.
The change will become effective as of the date the written request is signed. A
new designation of Owner will not apply to any payment made or action taken by
us prior to the time the new designation was received.
JOINT OWNER - A Contract may be owned by Joint Owners. Any Joint Owner must be
the spouse of the other Owner, unless limited by state law. Upon the death of
either Owner, the surviving Joint Owner will be the Primary Beneficiary. Any
other Beneficiary designation will be treated as a Contingent Beneficiary unless
otherwise indicated in a written notice to us.
ANNUITANT - The Annuitant is the person on whose life Annuity Payments are
based. The Annuitant is the person designated by you at the Issue Date, unless
changed prior to the Annuity Date. The Annuitant may not be changed in a
Contract which is owned by a non-individual. Any change of Annuitant is subject
to our underwriting rules then in effect.
ASSIGNMENT - You may, at any time during your lifetime, assign your rights under
this Contract. We will not be bound by any assignment until written notice of
the assignment is received by us at the Annuity Service Office. We are not
responsible for the validity of any assignment. We will not be liable as to any
payment or other settlement made by us before receipt of written notice of the
assignment.
BENEFICIARY PROVISIONS
BENEFICIARY - The Beneficiary designation in effect on the Issue Date will
remain in effect, unless changed. Unless you provide otherwise, the death
benefit will be paid in equal shares or all to the survivor as follows:
1. to the primary Beneficiaries who survive you and/or the Annuitant's
death, as applicable; or if there are none,
2. to the contingent Beneficiaries who survive you and/or the Annuitant's
death, as applicable; or if there are none,
3. to your estate.
CHANGE OF BENEFICIARY - Subject to the rights of any irrevocable Beneficiary,
you may change the primary Beneficiary or contingent Beneficiary. A change may
be made by filing a written request with us at the Annuity Service Office. The
change will take effect as of the date the written request is signed. We will
not be liable for any payment made or action taken before we record the change.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS - The initial purchase payment is due on the Issue Date. The
minimum subsequent purchase payment and maximum total purchase payments are
shown on the Contract Schedule. We reserve the right to reject any purchase
payment.
CHANGE IN PURCHASE PAYMENTS - Subject to the minimum and maximum payments shown
on the Contract Schedule, you may increase or decrease or change the frequency
of subsequent purchase payments.
ALLOCATION OF PURCHASE PAYMENTS - The allocation of purchase payments is made in
accordance with the selection made at the Issue Date. We have reserved the right
to allocate initial purchase payments to a Money Market Subaccount. Unless you
elect otherwise, subsequent purchase payments will be allocated in accordance
with your initial selection. Allocation of the purchase payments is subject to
the allocation guidelines set forth in the Contract Schedule.
NO DEFAULT - Unless you make a total surrender, this Contract will remain in
force until the Annuity Date. This Contract will not be in default if subsequent
purchase payments are not made.
CONTRACT VALUE PROVISION
CONTRACT VALUE - The Contract Value for any Valuation Period is the sum of the
Contract Value in each of the Subaccounts of the Separate Account and the
Contract Value in the Fixed Account.
The Contract Value in a Subaccount of the Separate Account is determined by
multiplying the number of Accumulation Units allocated to the Contract for the
Subaccount by the Accumulation Unit Value.
Surrenders will result in the cancellation of Accumulation Units in a Subaccount
or a reduction in the Fixed Account.
FIXED ACCOUNT PROVISIONS
FIXED ACCOUNT VALUE - The Fixed Account Value at any time is equal to :
1. the purchase payments allocated to the Fixed Account; plus
2. amounts transferred to the Fixed Account; plus
3. interest credited to the Fixed Account; less
4. any prior partial surrenders and Surrender Charges deducted from the
Fixed Account; less
5. amounts transferred from the Fixed Account; less
6. any applicable premium taxes or Transfer Fees deducted from the Fixed
Account.
INTEREST TO BE CREDITED - The Company guarantees that the interest to be
credited to the Fixed Account will not be less than the Minimum Guaranteed
Interest Rate shown on the Contract Schedule. We may credit additional interest
at our sole discretion for any Fixed Account option. The Fixed Account option
and the Initial Current Interest Rate are shown on the Contract Schedule.
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNT - The Separate Account is designated on the Contract
Schedule and consists of assets set aside by us, which are kept separate from
our general assets and all of our other Separate Account assets. The assets of
the Separate Account, equal to reserves and other liabilities of your Contract
and those of other owners, will not be charged with liabilities arising out of
any other business we may do.
The Separate Account assets are divided into Subaccounts. The assets of the
Subaccounts are allocated to the Investment Options shown on the Contract
Schedule.
INVESTMENTS OF THE SEPARATE ACCOUNT - Purchase payments applied to the Separate
Account are allocated to a Subaccount of the Separate Account. We may, from time
to time, add additional Investment Options to those options shown on the
Contract Schedule. You may be permitted to transfer Contract Values to the
additional Investment Option. However, the right to make any transfer will be
limited by any terms and conditions in effect at the time of transfer.
If the shares of any of the Investment Options become unavailable for investment
by the Separate Account, or our Board of Directors deems further investment in
these shares inappropriate, we may limit further purchase of such shares or
substitute shares of another Investment Option for shares already purchased
under this Contract.
VALUATION OF ASSETS - Assets of the Separate Account are valued at their fair
market value in accordance with our procedures.
ACCUMULATION UNIT - Accumulation Units shall be used to account for all amounts
allocated to or surrendered from a Subaccount of the Separate Account as a
result of purchase payments, surrenders, transfers, or fees and charges. We will
determine the number of Accumulation Units of a Subaccount purchased or
canceled. This is done by dividing the amount allocated to (or the amount
withdrawn from) the Subaccount, by the dollar value of one Accumulation Unit of
the Subaccount as of the Business Day during which the request for the
transaction is received at the Annuity Service Office.
NET INVESTMENT FACTOR - The Net Investment Factor for each Subaccount is
determined by dividing A by B and multiplying by (1-C) where:
A is (i) the net asset value per share of the Investment Option held by
the Subaccount at the end of the current Business Day; plus
(ii) any dividend or capital gains per share declared on behalf of
such Investment Option that has an ex-dividend date as of the current
Business Day.
B is the net asset value per share of the Investment Option held by the
Subaccount for the immediately preceding Business Day.
C is (i) the Business Day equivalent of the daily Product Charge which
is shown on the Contract Schedule; plus
(ii) a charge factor, if any, for any taxes or any tax reserve we have
established as a result of the operation of this Subaccount.
ACCUMULATION UNIT VALUE - The Accumulation Unit Value for each Subaccount was
arbitrarily set initially at $10. Subsequent Accumulation Unit Values for each
Subaccount are determined by multiplying the Accumulation Unit Value for the
immediately preceding Business Day by the Net Investment Factor of the
Subaccount for the current Business Day.
The Accumulation Unit Value may increase or decrease from Business Day to
Business Day.
PRODUCT EXPENSE CHARGE - We deduct a Product Expense Charge from each Subaccount
of the Separate Account which is equal, on an annual basis, to the amount shown
on the Contract Schedule.
TRANSFER PROVISIONS
TRANSFERS - A transfer is subject to the following:
1. the maximum number of transfers without a Transfer Fee is shown on the
Contract Schedule;
2. we reserve the right to assess a Transfer Fee if the number of
transfers exceeds the maximum number of permissible free transfers not
subject to a Transfer Fee. We will notify you of the imposition of any
Transfer Fee. Any Transfer Fee we may impose is deducted from the
amount which is transferred;
3. you may not make a transfer until after the end of the Right to
Examine Period;
4. the minimum amount which may be transferred is shown on the Contract
Schedule;
5. a transfer will be effected as of the end of a Business Day when we
receive an acceptable transfer request containing all required
information including the amount which is to be transferred, and the
Subaccount(s) and/or the Fixed Account affected;
6. neither us or our Annuity Service Office are liable for a transfer
made in accordance with your instructions;
7. we reserve the right to restrict transfers between Subaccounts to a
maximum of twelve (12) per contract year and to restrict transfers
from being made on consecutive Business Days. We also reserve the
right to restrict transfers into and out of the Fixed Account;
8. your right to make transfers is subject to modification if we
determine, in our sole opinion, that the exercise of the right by one
or more Owners is, or would be, to the disadvantage of other Owners.
Restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by us to be
to the disadvantage of other Owners. A modification could be applied
to transfers to, or from, one or more of the Subaccounts and could
include, but is not limited to:
a. the requirement of a minimum time period between each transfer;
b. not accepting a transfer request from an agent acting under a
power of attorney on behalf of more than one Owner; or
c. limiting the dollar amount that may be transferred between the
Subaccounts by an Owner at any one time;
9. during times of drastic economic or market conditions, we may suspend
the transfer privilege temporarily without notice and treat transfer
requests based on their separate components (a redemption order with a
simultaneous request for purchase of another Subaccount). In such a
case, the redemption order would be processed at the source
Subaccount's next determined Accumulation Unit. However, the purchase
into the new Subaccount would be effective at the next determined
Accumulation Unit value for the new Subaccount only after we receive
the proceeds from the source Subaccount, or we otherwise receive cash
on behalf of the source Subaccount;
10. transfers do not change the allocation instructions for future
purchase payments;
11. you may elect to make transfers by telephone. However, to elect this
option you must first make a written request in a form acceptable to
us. If there are Joint Owners, unless we are instructed to the
contrary, instructions by telephone will be accepted from either one
of the Joint Owners. We will use reasonable procedures to confirm that
instructions communicated by telephone are genuine;
12. transfers made during the Annuity Period are subject to the following:
a. you may make the number of transfers each Contract Year as set
forth in the Contract Schedule between the Subaccounts of the
Separate Account;
b. you may not make a transfer from the General Account to the
Separate Account;
c. the amount transferred to the General Account from a Subaccount
of the Separate Account will be based upon current Company
practice for such requests at the time of the transfer; and
d. you may not make a transfer within three (3) business days of an
Annuity Calculation Date.
DEATH BENEFIT PROVISIONS
DEATH OF OWNER DURING THE ACCUMULATION PERIOD - The death benefit will be paid
to the Beneficiary(ies) designated by you upon your death, or the death of any
Joint Owner, during the Accumulation Period. Upon the death of a Joint Owner,
the surviving Joint Owner, if any, will be treated as the primary Beneficiary.
Any other Beneficiary designation on record at the time of death will be treated
as a contingent Beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD - The death benefit will be
the greater of:
(i) the purchase payments, less any surrenders and related Surrender
Charges;
(ii) the Contract Value determined as of the end of the Business Day during
which we receive both due proof of death and an election for the
payment method.
The amount of the death benefit is determined as of the end of the Business Day
during which we receive both due proof of death and an election for the payment
method. The death benefit amount remains in the Separate Account and/or Fixed
Account until distribution begins. From the time the death benefit is determined
until complete distribution is made, any amount in the Subaccount will be
subject to investment risk which is borne by the Beneficiary.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD - A Beneficiary must elect
the death benefit to be paid under one of the options below in the event of the
death of an Owner during the Accumulation Period. In addition, if the
Beneficiary is the spouse of the Owner, he or she may elect to continue the
Contract in his or her own name and exercise all the Owner's rights under the
Contract. In this event, the Contract Value will be adjusted to equal the death
benefit.
OPTION 1 - lump sum payment of the death benefit; or
OPTION 2 - the payment of the entire death benefit within five (5) years of
the date of the death of the Owner or any Joint Owner; or
OPTION 3 - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one (1)
year of the date of death of the Owner or any Joint Owner.
Any portion of the death benefit not applied under Option 3 within one (1) year
of the date of the Owner's or Joint Owner's death must be distributed within
five (5) years of the date of death.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, other than in a single sum, may only be elected
during the 60-day period beginning with the date of receipt of proof of death.
DEATH OF OWNER DURING THE ANNUITY PERIOD - If the Owner or a Joint Owner, who is
not the Annuitant, dies during the Annuity Period, any remaining payments under
the Annuity Option elected will continue at least as rapidly as under the method
of distribution in effect at the time of the Owner's death. Upon the death of
the Owner during the Annuity Period, the Beneficiary becomes the Owner.
DEATH OF ANNUITANT - Upon the death of an Annuitant, who is not the Owner,
during the Accumulation Period, the Owner automatically becomes the Annuitant.
The Owner may designate a new Annuitant, subject to the Company's underwriting
rules then in effect. If the Owner is a non- natural person, the death of the
primary Annuitant will be treated as the death of the Owner and a new Annuitant
may not be designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit, if
any, will be as specified in the Annuity Option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
PAYMENT OF DEATH BENEFIT - We will require due proof of death before any death
benefit is paid. Due proof of death will be:
1. a certified death certificate;
2. a certified decree of a court of competent jurisdiction as to the
finding of death;
3. a written statement by a medical doctor who attended the deceased; or
4. any other proof satisfactory us.
Any death benefit will be paid in accordance with applicable law or regulations
governing death benefit payments.
ANNUITY PROVISIONS
ANNUITY DATE - You elect the Annuity Date at the time of issue. The Annuity Date
is shown on the Contract Schedule. The Annuity Date must be the first or
fifteenth day of a calendar month and must be at least one (1) month after the
Issue Date. The Annuity Date may not be later than the first day of the calendar
month following the Annuitant's [85th] birthday. If there are joint annuitants,
it is the birthday of the oldest Annuitant that is applicable.
Prior to the Annuity Date, you may, subject to the above, change the Annuity
Date upon thirty (30) days prior written notice to us at the Annuity Service
Office.
ANNUITY CALCULATION DATE - We will determine the amount of your Variable Annuity
Payments, including the first, no more than ten (10) Business Days prior to the
payment date. The payment dates must be the same day each month as the date you
selected for the Annuity Date, i.e. the first or the fifteenth.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS - Annuity Payments will be paid as
monthly installments or at any frequency acceptable to you and us. The Contract
Value on the Annuity Date is applied to the Annuity Table for the Annuity Option
elected. If the amount of the Contract Value to be applied under an Annuity
Option is less than $5,000, we reserve the right to make one lump sum payment in
lieu of Annuity Payments. If the amount of any Annuity Payment would be or
become less than $100, we will reduce the frequency of payments to an interval
which will result in each payment being at least $100.
BASIS OF PAYMENTS - The Annuity Tables are based on the 1983 Individual Annuity
Mortality Table with mortality projected to the year 2000 by projection scale G
and with an annual effective interest rate of [3%].
ANNUITY OPTIONS - The following Annuity Options may be elected:
Option 1 - Life Annuity - A monthly income payable during the lifetime of
the Annuitant and terminating with the last payment preceding his/her
death.
Option 2 - Life Annuity with a Guaranteed Period - A monthly income payable
during the lifetime of the Annuitant with the guarantee that if, at the
death of the Annuitant, payments have been made for less than a stated
certain period, which may be five, ten, fifteen or twenty years, as
elected, the monthly income will be continued during the remainder of the
elected period. However, the Beneficiary may elect to receive a single sum
payment. A single sum payment will be equal to the present value of
remaining payments as of the date of receipt of due proof of death commuted
at the assumed investment rate of [3%].
Option 3 - Survivorship Annuity - A monthly income payable during the joint
lifetime of the Annuitant and another named individual and thereafter
during the lifetime of the survivor, ceasing with the last income payment
due prior to the death of the survivor.
Option 4 - Any other option that is mutually agreed upon between you and
the Company will be available.
ELECTION OF ANNUITY OPTION - The Annuity Option is elected by you. If no Annuity
Option is elected, Option 2 with ten (10) years guaranteed will automatically be
applied. Prior to the Annuity Date, you may, upon thirty (30) days prior written
notice to us, change the Annuity Option.
ANNUITY - You can elect to have the Annuity Option payable as a Fixed Annuity or
a Variable Annuity or a combination. If you do not tell us and if all of the
Contract Value on the Annuity Calculation Date is allocated to the Fixed
Account, the Annuity will be paid as a Fixed Annuity. If all of the Contract
Value on that day is allocated to the Separate Account, the Annuity will be paid
as a Variable Annuity. If the Contract Value on that day is allocated to both
the Fixed Account and the Separate Account, the Annuity will be paid as a
combination of a Fixed Annuity and a Variable Annuity to reflect the allocation
between the Accounts. Variable Annuity Payments will reflect the investment
performance of the Separate Account in accordance with the allocation of the
Contract Value to the Subaccounts on the Annuity Date. Unless another payee is
designated, you will be the payee of the Annuity Payments.
The Contract Value will be applied to the applicable Annuity Tables. The Annuity
Table used will depend upon the Annuity Option elected. The amount of the first
payment for each $1,000 of Contract Value is shown in the Annuity Tables and is
based on the Annuitant's Attained Age. If, as of the Annuity Calculation Date,
the then current Annuity Option rates applicable to this class of contracts
provide a first Annuity Payment greater than that which is guaranteed under the
same Annuity Option under this Contract, the greater payment will be made.
FIXED ANNUITY - The Fixed Account Value will be used to determine the Fixed
Annuity monthly payment. The first monthly Annuity Payment will be based upon
the Annuity Option elected, the Annuitant's Attained Age and the appropriate
Annuity Option Table.
VARIABLE ANNUITY - Variable Annuity Payments:
1. are not predetermined as to dollar amount; and
2. will vary in amount with the net investment results of the applicable
Subaccount(s) of the Separate Account.
The dollar amount of Variable Annuity Payments for each applicable Subaccount
after the first payment is determined as follows:
1. the dollar amount of the first Variable Annuity Payment is divided by
the value of an Annuity Unit for each applicable Subaccount as of the
Annuity Calculation Date. This establishes the number of Annuity Units
for each monthly payment. The number of Annuity Units for each
applicable Subaccount remains fixed during the Annuity Period;
2. the fixed number of Annuity Units per payment in each Subaccount is
multiplied by the Annuity Unit Value for that Subaccount for the
Annuity Calculation Date. This result is the dollar amount of the
payment for each applicable Subaccount.
The total dollar amount of each Variable Annuity Payment is the sum of all
Subaccount Variable Annuity Payments.
ANNUITY UNIT - The value of an Annuity Unit for each Subaccount of the Separate
Account was arbitrarily set initially at $10. This was done when the first
Investment Option shares were purchased.
The Subaccount Annuity Unit Value at the end of any subsequent Business Day is
determined by multiplying the Subaccount Annuity Unit Value for the immediately
preceding Business Day by the net investment factor for the day for which the
Annuity Unit Value is being calculated; and multiplying the result by a factor
for the Business Day which negates the assumed interest rate used to develop the
Annuity Tables.
NET INVESTMENT FACTOR - The Net Investment Factor for any Subaccount of the
Separate Account for any Business Day after the first payment is determined by
dividing:
1. the Accumulation Unit Value as of the current Business Day; by
2. the Accumulation Unit Value as of the immediately preceding Business
Day.
The Net Investment Factor may be greater or less than one, as the Annuity Unit
Value may increase or decrease.
MORTALITY AND EXPENSE GUARANTEE - We guarantee that the dollar amount of each
Annuity Payment after the first Annuity Payment will not be affected by
variations in actual mortality or expenses.
SURRENDER PROVISIONS
SURRENDERS - Prior to the Annuity Date, you may, upon written request received
by us at the Annuity Service Office, make a total or partial surrender of the
Surrender Value. A surrender will result in the cancellation of Accumulation
Units from each applicable Subaccount of the Separate Account or a reduction in
the Fixed Account Value in the ratio that the Subaccount Value and/or the Fixed
Account Value bears to the total Contract Value. You must specify in writing in
advance which units are to be canceled, or which values are to be reduced, if
other than the above method is desired. We will pay the amount of any surrender
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments or Transfers from the Separate Account
provision or the Deferral of Payments or Transfers from the Fixed Account
provision is in effect.
Each partial surrender must be for an amount which is not less than the amount
shown on the Contract Schedule or, if smaller, the remaining Surrender Value.
The minimum Surrender Value which must remain in the Contract after a partial
surrender is shown on the Contract Schedule. The Surrender Value is the Contract
Value less any applicable Surrender Charge and less any Premium or other taxes.
SURRENDER CHARGE - Upon surrender of all or a portion of the Contract Value, a
Surrender Charge as set forth on the Contract Schedule may be assessed. Under
certain circumstances a surrender may be allowed without the imposition of a
Surrender Charge.
For a partial surrender, the Surrender Charge will be deducted from the
remaining Surrender Value, if sufficient, or from the amount surrendered. The
Surrender Charge will be deducted by canceling Accumulation Units from each
applicable Subaccount or reducing the Fixed Account Value in the ratio that the
Subaccount Value and/or Fixed Account bears to the total Contract Value. The
Owner must specify in writing in advance if other than the above method of
cancellation is desired.
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE SEPARATE ACCOUNT
We reserve the right to suspend or postpone payments for a surrender or transfer
for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held
in the Separate Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate
Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners; provided that
applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2)
and (3) exist.
DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE FIXED ACCOUNT
We reserve the right to defer payment for a surrender or transfer from the Fixed
Account for the period permitted by law but not for more than six (6) months
after written election is received by us at the Annuity Service Office.
RESERVES, VALUES AND BENEFITS
All reserves are greater to, or equal to, those required by statute. Any values
and death benefits that may be available under this Contract are not less than
the minimum benefits required by any law of the state in which this Contract is
delivered.
TABLES
DECLARATION OF INTENTION TO FORM
AND
ARTICLES OF INCORPORATION
FIDELITY SECURITY LIFE INSURANCE COMPANY
BE IT KNOW THAT:
We, the undersigned, being natural persons over twenty-one (21) years of
age, hereby declare our intention to organize a joint stock insurance company
under Sections 376.010 to 376.675, inclusive, Revised Statutes of Missouri,
1959, as amended, relating to life accidental insurance, and as incorporators
and subscribers to shares of such corporation, do hereby adopt the following
Articles of incorporation
ARTICLE I
---------
The name of the corporation is FIDELITY SECURITY LIFE INSURANCE COMPANY,
ARTICLE II
----------
The principal office for the transaction of the business of the corporation
shall he located in the City of Kansas City, County of Jackson, State of
Missouri,
ARTICLE III
-----------
The corporation is formed For the following purpose:
To insurance upon the lives of individuals and every assurance pertaining
thereto or conducted therewith, to grant, and purchase and dispose of annuities
and endowments of every kind and description whatsoever; to provide for
contracts of indemnity against death end for weekly or other periodic
indemnities for disability occasioned by accident or sickness to the person of
the in- of this kind by law and not prohibited by Sections 376.010 to 376.675,
Inclusive, Revised Statutes of Missouri, 1959, as amended.
In order to carry out the purpose for which it is organized, the
corporation shall have the Following rights and powers to the extent not
inconsistent with nor prohibited by the provisions of law applicable to life
insurance companies or applicable to all insurance companies;
A. To sue and be sued, complain and defend in any court of law or equity
B. To have a corporate seal which may be altered at the pleasure of the
corporation and to use such seal by causing it or a facsimile thereof
to be impressed or affixed or in any manner reproduced;
C. To purchase, hold or convey such real estate as the purposes of the
corporation shale require, and to take, hold or convey other property,
reel, personal, or mixed, as shall be necessary in the transaction of
business, all to the extent permitted by law, and more particularly as
provided by Sections 375.320, 375,330 and 375,346. Revised Status of
Missouri, 1959 as amended.
D. To sell, convey, mortgage, loan, pledge or otherwise dispose of and
otherwise use and deal in and with shares, or the interests in and
obligations of other domestic and foreign corporations associations,
partnerships or individuals, all to the extent permitted by law
E. To sell, lease, exchange or otherwise dispose of all or substantially
all of the property and assets if the corporation, with or without the
goodwill of the corporation upon such terms and conditions and for
such consideration consisting in whole or in part: of money or
property, real, or personal, including but not restricted to shares of
any other domestic or Foreign corporations as shall be consistent with
the provisions of law applicable to such transfers under The, General
and Business Corporation Act of Missouri and consistent also with any
and all provisions of law applicable to life, health and accident
insurance companies and provisions of law appliance to all insurance
companies;
F. To make contracts and incur liabilities which may be appropriate to
enable it to accomplish any or all of its purposes to issue its notes,
Bonds and other obligations; to issue any of its obligations
by-mortgage, deed of trust or pledge of any or all of its property,
franchises or income; to issue notes or bonds secured or unsecured;
which by their terms are convertible to shares of stock of any class
upon such conditions and at such rates or prices as shall be therein
provided; to enter into contracts of reinsurance, either as reinsurer
otherwise pertaining to life, health and accident insurance to the
extent permitted by law to a corporation of this kind; of whatever
kind or character from time to time and to lend money for its
corporate purposes and to take and hold real and personal property as
security for the payment of funds so invested or loaned, all to the
extent that such investments and loans may be permitted by the
provisions of law applicable to life, health and accident insurance
companies or applicable to all insurance companies;
H. To elect or appoint officers and agents of the corporation and to
define their duties and fix their compensation, such officers to
consist of a president, one or more Vice-presidents, a Secretary, one
or more Assistant Secretary, a Treasurer, and such other officers as
the Board of directors may from time to time deem necessary;
I. To make and alter By-Laws, not inconsistent with these Articles of
incorporation or with the laws of this State for administration
regulation of the affairs of the corporation;
J. To terminate its corporate activities and to surrender its corporate
franchise;
K. To make contributions to corporations or other organizations formed
for civic, charitable or benevolent purpose or to any incorporated or
unincorporated associations, United fund Community funds not operated
or used for profit to its Members, but operated for the purposes of
raising funds. funds for and of distributing funds to other civic,
charitable or benevolent organizations or agencies; and
L. To have and exercise all of the powers necessary or convenient to
effect or accomplish any or all of the purpose for which the
corporation was formed; to exercise all powers now or hereafter
permitted by law to a corporation of this character, and not
prohibited by Sections 376.0l0 to 375.675, inclusive, Revised Statutes
of Missouri, 1959, as amended.
ARTICLE IV
The aggregate number of shares which the corporation shall have authority
to issue shall be One Hundred Thousand Shares of a per value of Two Dollars
($2.00) each, amounting in the aggregate to Two hundred Thousand Dollars
(200,000.00).
The stock of this corporation shall be sold to the original purchasers
thereof for Six Dollars ($6.00) per share. The number of shares to be issued
before the corporation shall commence business is One Hundred Thousand Shares
(100,000.00), and the amount with which the corporation shall commence business
is Six Hundred Thousand Dollars The stock of this corporation shall be sold to
two the original purchasers thereof for Six Dollars ($6.00) per share. The
number of shares to be issued before the corporation shall commence business is
One Hundred Thousand. Shares (100,000.00), and the amount with which the
corporation shall commences business is Six Hundred Thousand Dollars
($600,000.00), consisting of a total Capital of Two Hundred Thousand Dollars
($200,000.00) and a total paid in Surplus of our Four Hundred Thousand Dollars
($400,000.00), Each share of stock nail be entitled to one vote, except that in
all elections of directors, each shareholder shall have the right of cumulative
voting.
ARTICLE V
---------
The property and business of the corporation shall be managed and
controlled by a Board of Directors consisting of nine (9) persons, who shall be
elected by the shareholders at each annual Meeting of its shareholders. The
policyholders as such shall not participate in the selection of the Directors or
in the management of the company. Vacancies on the Board of Directors may be
filled by a majority of the remaining directors. The Board of Directors is
authorized to make, alter, amend, or repeal the By-Laws of the corporation,
subject to the power of the shareholders of the corporation to alter or repeal
any By-laws made by the Board of Directors. The proper officers of this
corporation are authorized to prepare all instruments and to do all things
necessary and proper to effectuate the purposes of these articles.
ARTICLE VI
The duration of the corporation is perpetual.
ARTICLE VII
The names and places of residence of the corporators of this corporation
are as follows:
Name Address
---- -------
Warren D. Gardner 8412 West 88th Terrace
Overland Park, Kansas 66212
James P. Mason Route 1, Box 76
Greenwood, Missouri 64034
Thomas W. Kirgis 5447 North Cleveland
Kansas City, Missouri 64119
James E. Woodruff 229 West Jewell
Kirkwood, Missouri 63122
Donald L. Campbell 6508 Granada Drive
Prairie Village, Kansas 66208
Loraine P. Tramill 4236 West 74th Street
Prairie Village, Kansas 66208
Violet H. Gruver 10611 Hayden Hill Drive
St. Louis, Missouri 63123
Jon W. Hall 9601 West 96 Street
Overland Park, Kansas 66212
M. M. Morrison Star Route 1, Box 92
Branson, Missouri 65616
Forest T. Jones 3518 West 64 Street
Prairie Village, Kansas 66208
Dorothy M. Jones 3518 West 64 Street
Prairie Village, Kansas 66208
Richard F Jones 3518 West 64 Street
Prairie Village, Kansas 66208
Robert E Jones 3518 West 64 Street
Prairie Village, Kansas 66208
In Witness whereof, we have hereunto set our hands this day, 1968.
Warren D. Gardner
James P. Mason
Thomas W Kirgis
James E. Woodruff
Donald L. Cambell
Violet H. Gruver
Loraine F. Tramill
Jon W. Hall
M. M. Morrison
Forest T. Jones
Dorothy M. Jones
Richard F. Jones
Robert E. Jones
State Of Missouri)
) ss:
County Of Jackson)
We, the undersigned, being all the corporators of the above named corporation,
being duly sworn, upon our oaths each does say that the above statements and
matters set forth in the foregoing Declaration of Intention to from and Articles
of Incorporation are true.
Warren D Gardner
James P. Mason
Thomas W. Kirgis
James E Woodruff
Donald L. Cambell
Violet H. Gruver
Loraine F Tramill
Jon W. Hall
M. M. Morrison
Forest T. Jones
Dorothy M. Jones
Richard F. Jones
Robert E. Jones /
Subscribed and sworn to before me this 6th day of November, 1968.
Mable L. Hurest
Notary Public
My Commission Expires: My commission Expires Oct. 12, 1972.
State of Missouri)
)ss:
County of Jackson)
On this 6 day of November, 1969, before me, personally appeared Warren D.
Garder, James P. Mason, Thomas W. Kirgis, James E. Woodruff, Donald L. Cambell,
Violet H. Gruver, Loraine F. Tramill, Jon W. Hall, M.M. Morrison, Forest T
Jones, Dorothy M Jones, Richard F. Jones and Robert E. Jones and Forest T Jones
to me known to be the persons described in and who executed the foregoing and
acknowledged that they executed the same as their free acts and deeds.
In Witness Whereof, I have hereunto set my hand and affixed my notarial seal the
day and year last above stated. Mable L. Hurest Notary Public Filed and
Certificate of Incorporation Issued Jan 17, 1969 My Commission Expires: My
Commission Expires Oct 12, 1972
*BY-LAWS
OF
FIDELITY SECURITY LIFE INSURANCE COMPANY
----------------------------------------
ARTICLE I
---------
MEETINGS OF SHAREHOLDERS
Section 1. ANNUAL MEETINGS. Annual meetings of shareholders for the
election of directors and for the transaction of such other business as may
properly come before such meeting shall be held at 9:00 A.M. on the fourth
Tuesday of April of each year, if not a legal holiday, or if a legal holiday,
then on the next succeeding Tuesday not a legal holiday.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called at any time by the president or a majority of the Board of Directors and
shall be called by the president upon written request of shareholders of record
holding in the aggregate one fourth (1/4) or more of the outstanding shares of
stock in the corporation entitled to vote. Such written request shall state the
purpose or purposes of the meeting and be delivered to the president.
Section 3. PLACE OF MEETING. Annual meetings of the shareholders shall be
held at the registered office of the corporation in Kansas City, Missouri, or at
such other place within or without the State of Missouri as shall be provided
for in written, printed or published notices. Special meetings of the
shareholders shall be held at such place, within or without the State of
Missouri, as shall be specified in the respective notices or waivers of notice.
*As amended 7/22/70, 7/12/71, 3/22/83, 12/31/85 and 4/28/87.
Section 4. NOTICE OF MEETING. Written or printed notice of each meeting of
shareholders, stating the place, day and hour of the meeting, and, in case of a
special meeting, the purposes for which the meeting is called, shall be
delivered or given not less than ten (10) or more than thirty (30) days before
the date of the meeting, either personally or by mail, by or at the direction of
the president or the secretary to each shareholder of record entitled to vote at
such meeting. Likewise, and in addition to the written or printed notice last
above mentioned, an additional notice shall be published in the city of Kansas
City, or in such city of the county where the registered office of the
corporation may at some later date be located, the first insertion to be not
less than ten (10) days prior to the date of the meeting, and if such notice be
published in a weekly newspaper, such notice shall be published at least twice,
and if in a daily newspaper, such notice shall be published at least nine (9)
times; provided, however, that notices of meetings called to increase the number
of authorized shares of this corporation shall be published in the manner
provided for in such special case by the language of Section 28 of The General
and Business Corporation Act of Missouri. Except as otherwise required by
statute, notice of any adjourned meeting of shareholders shall not be required.
Section 5. QUORUM. Except as otherwise provided by statute, the presence at
any meeting, in person or by proxy, of the holders of record of a majority of
the shares then issued and outstanding and entitled to vote shall be necessary
and sufficient to constitute a quorum for the transaction of business. In the
absence of a quorum, a majority in interest of the shareholders entitled to
vote, present in person or by proxy, or if no shareholder entitled to vote is
present in person or by proxy, any officer entitled to preside or act as
secretary of such meeting, may adjourn the meeting from time to time for a
period not exceeding twenty (20) days in any one case. At any adjourned meeting
at which a quorum may be present, any business may be transacted which might
have been transacted at a meeting as originally called.
Section 6. VOTING. Except as otherwise provided by statute or by the
Articles of Incorporation, and subject to the provisions of these By-Laws, each
shareholder shall at every meeting of the shareholders be entitled to one vote
in person or by proxy for each share of the Capital Stock held by such
Stockholder.
At all meetings of shareholders, except as otherwise required by statute,
by the Articles of Incorporation or by these By-Laws, all matters shall be
decided by the vote of a majority in interest of the shareholders entitled to
vote, present in person or by proxy.
Section 7. TREASURY STOCK. Share of the Capital Stock of the corporation
belonging to the corporation shall not be voted directly or indirectly.
Section 8. PROXIES. Proxies shall be in writing and signed by the
shareholder executing them. No proxy shall be valid after eleven (11) months
from the date of its execution unless otherwise specifically provided in the
proxy.
ARTICLE II
----------
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. All corporate powers shall be exercised by or
under authority of, and the business affairs of the corporation shall be managed
and controlled under the direction of a Board of Directors consisting of ten
(10) persons, at least one of whom shall be a bone fide citizen and resident of
the State of Missouri. The Directors shall be elected by ballot by the
shareholders at each annual meeting, to hold office until the next succeeding
annual meeting and until their successors are elected and qualify.
Section 2. QUORUM. A quorum at all meetings of the Board of Directors shall
consist of a majority of the full Board of Directors.
Section 3. VACANCIES. Any vacancy in the Board of Directors caused by
resignation, death or otherwise may remain unfilled until the next annual
meeting of the shareholders, so long as the number of remaining Directors is not
less than nine (9), or any such vacancy may be filled by a majority of the
remaining Directors at any regular meeting of the Board or at a meeting called
for that purpose. Any person so chosen as a director shall hold office until the
next annual meeting of shareholders or until his successor is elected and
qualifies.
Section 4. SALARIES OR OTHER COMPENSATION. No salary shall be paid to
Directors for their services to the corporation as such. Nothing herein
contained, however, shall be construed to prohibit or prevent any Director from
receiving (1) compensation for his services to the corporation in any capacity
other than as a Director, and (2) a Director's fee for attendance at each
regular or special meeting of the Board, when such fee has been authorized by
the Board.
Section 5. ADVISORY DIRECTORS. The Board of Directors may, from time to
time, elect advisory or honorary directors of the Board. Such advisory directors
shall serve at the pleasure of the Board. Such advisory directors shall not have
a vote in any deliberation of the Board.
ARTICLE III
-----------
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. ANNUAL MEETINGS. The Board of Directors shall meet for the
appointment of officers and for the transaction of any other business as soon as
practicable after the adjournment of the annual meeting of the shareholders, and
other regular meetings of the Board shall be held at such times as the Board
may, by resolution, from time to time determine. No notice need be given of
regular meetings of the Board.
Section 2. SPECIAL MEETINGS. Special meetings of the Board may be called by
the President or Secretary or by a majority of the members of the Board, upon
telegraphic, written or printed notice by the Secretary of the corporation to
each Director at least two days prior to such special meeting. Such notice shall
be addressed to each Director at his last known residence or his business
address as recorded upon the books of the corporation.
Section 3. PLACE OF MEETING. Meetings of the Board of Directors shall be
held at the registered office of the corporation in Kansas City, Missouri, or at
such other place within or without the State of Missouri as shall be provided
for in the resolution or notice calling for such meeting.
Section 4. QUORUM. A majority of the Board of Directors shall constitute a
quorum for the transaction of business, and the act of a majority of the
directors present at any meeting shall be the act of the Board of Directors
except as may be otherwise specifically provided by Statute, by the Articles of
Incorporation or by these By-Laws.
ARTICLE IV
----------
OFFICERS
Section 1. The officers of the corporation shall consist of a President,
one or more Vice Presidents (one of whom may be designated as the Executive Vice
President), a Secretary, an Assistant Secretary and a Treasurer. The Board of
Directors may also elect a Chairman of the Board, additional Assistant
Secretaries and Assistant Treasurers. Any two or more offices may be held by the
same person, except the offices of President and Vice President and President
and Secretary.
Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The officers
designated in Section 1 of this Article shall be chosen annually by the Board of
Directors and shall hold office until their successors are elected and qualify.
Failure to elect an officer annually does not dissolve the corporation.
Section 3. REMOVAL AND RESIGNATION. The Board of Directors may at any
meeting specifically called for the purpose, by a majority of their number,
remove from office any officer of the corporation.
Section 4. VACANCIES. Vacancies among the officers created from any cause
shall be filled for the unexpired portion of the term in the manner provided for
at meetings held for the election of the officer to such office.
Section 5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the shareholders and of the Board of Directors.
Section 6. THE PRESIDENT. The President shall be the chief executive
officer of the corporation and, subject to the direction and under the
supervision of the Board of Directors, shall have general charge of the
business, affairs and property of the corporation, and control over its
officers, agents and employees. If the Board of Directors shall not have elected
a Chairman of the Board, or in the absence of the Chairman of the Board, the
President shall preside at all meetings of the shareholders and of the Board of
Directors. The President shall also perform such other duties and may exercise
such other powers as may from time to time be assigned to him by these By-Laws
or by the Board of Directors.
Section 7. THE VICE PRESIDENT. At the request of the President, or in the
event of his absence or disability, the Executive Vice President, or in the
event of the absence or disability of the Executive Vice President, then a Vice
President designated by the Board of Directors shall perform all the duties of
the President and, when so acting, shall have all the powers of, and be subject
to all the restrictions upon the President. Each Vice President shall have such
additional powers and discharge such additional duties as may be assigned to him
from time to time by the Board of Directors.
Section 8. THE SECRETARY. The Secretary shall (a) record all the
proceedings of the meetings of the corporation, stockholders' and directors', in
a book to be kept for that purpose; (b) have charge of the stock book or ledger,
an original or duplicate of which shall be kept in the office of the Secretary;
(c) maintain a complete list of all shareholders entitled to vote at
shareholders' meetings and have said list available for inspection of any
shareholder who may be present at such meetings; (d) act as custodian of the
records of the corporation and the Board of Directors, and of the seal of the
corporation, and see that the seal is affixed to all stock certificates prior to
their issuance and to all documents the execution of which on behalf of the
corporation shall have been duly authorized; (e) see that all books, reports,
statements, certificates and other documents and records required by law to be
kept or filed are properly kept and filed; and (f) in general, perform all
duties and have all powers incident to the office of Secretary and perform such
other duties and have such other powers as may from time to time be assigned to
him by these By-Laws and amendments thereto or by the Board of Directors or the
President.
Section 9. THE ASSISTANT SECRETARIES. The Assistant Secretaries, in order
of their seniority, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary, and shall perform
such other duties as the Board of Directors, the President or the Executive Vice
President shall prescribe.
Section 10. THE TREASURER. The Treasurer shall (a) have supervision of the
funds, securities, receipts and disbursements of the corporation; (b) cause all
moneys and other value effects of the corporation to be deposited in its name
and to its credit in such depositories as shall be selected by the Board of
Directors or pursuant to authority conferred by the Board of Directors; (c)
cause to be kept at the accounting office of the corporation correct books of
account, proper vouchers and other papers pertaining to the corporation's
business; (d) render to the President or the Board of Directors, whenever
requested, an account of the financial condition of the corporation and of his
transactions as Treasurer, and (e) in general, perform all duties and have all
powers incident to the office of Treasurer and perform such other duties and
have such other powers as from time to time may be assigned to him by these
By-Laws or by the Board of Directors or the President.
Section 11. THE ASSISTANT TREASURERS. The Assistant Treasurers, in order of
their seniority, shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer, and shall perform such
other duties as the Board of Directors, the President or the Executive Vice
President shall prescribe.
Section 12. SALARIES. The salaries or other compensation of all officers
shall be fixed by the Board of Directors, and may be changed from time to time
by a majority vote of the Board.
ARTICLE V
---------
Section 1. EXECUTIVE COMMITTEE. The Board of Directors by vote of a
majority of the entire Board, may provide for an Executive Committee, consisting
of three or more Directors. If provision be made for an Executive Committee, the
Board of Directors shall elect the members thereof to serve during the pleasure
of the Board, and may designate one of such members to act as Chairman.
Vacancies on the Committee shall be filled by the Board. During the intervals
between the meetings of the Board of Directors, the Executive Committee shall
possess and may exercise any or all of the powers of the Board of Directors in
the management of the business and affairs of the corporation, unless such
powers are limited by resolution adopted by a majority of the Board. The
Executive Committee shall keep full and fair account of its transactions, and
every action taken by the Committee shall be reported to the Board of Directors
at its meeting next succeeding such action, and shall be subject to revision or
alteration by the Board; provided that no rights of third persons shall be
affected by any such revision or alteration.
Section 2. MEETINGS OF THE EXECUTIVE COMMITTEE. A majority of the Executive
Committee shall be necessary and sufficient to constitute a quorum. The
Executive Committee may determine its rules of procedure and the notice to be
given of its meetings.
Section 3. OTHER COMMITTEES. The Board of Directors, by resolution, may
provide for such other standing or special committees of three or more Directors
as it deems desirable, and discontinue the same at its pleasure. Each such
Committee shall have such powers and perform such duties, not inconsistent with
law or the By-Laws of this corporation, as may be assigned to it by the Board of
Directors.
ARTICLE VI
----------
EXECUTION OF INSTRUMENTS
Section 1. EXECUTION OF INSTRUMENTS GENERALLY. All documents, instruments
of writing of any nature shall be signed, executed, verified, acknowledged and
delivered by such officer or officers or by such agent or agents of the
corporation and in such manner as the Board of Directors from time to time may
determine.
Section 2. CHECKS, DRAFTS AND LIKE INSTRUMENTS. All notes, drafts,
acceptances, checks, endorsements and all evidences of indebtedness of the
corporation whatsoever shall be signed by such officer or officers or by such
agent or agents of the corporation and in such manner as the Board of Directors
may from time to time determine. Endorsements or instruments for deposit to the
credit of the corporation in any of its duly authorized depositories may be made
by rubber stamp of the corporation or in such other manner as the Board of
Directors may from time to time determine.
Section 3. PROXIES. Proxies to vote with respect to shares of stock of
other corporations that may be owned by or stand in the name of the corporation
may be executed on behalf of the corporation by the President, Vice President or
Secretary, or by any other person or persons authorized so to do by the Board of
Directors.
ARTICLE VII
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CAPITAL STOCK
Section 1. CERTIFICATES OF STOCK. Certificates of stock shall be in such
form as shall in conformity with law be prescribed from time to time by the
stockholders or by the Board of Directors. A certificate of stock shall be
furnished each shareholder, signed in the name of the corporation by the
President or a Vice President and the Secretary or Assistant Secretary, and
sealed with the seal of the corporation. Such seal may be a facsimile, engraved
or printed, and, where any such certificate is signed by a Transfer Agent or
Registrar of Transfers, the signatures of the officers of the corporation upon
such certificate may also be facsimiles, engraved or printed. In case any
officer who has signed or whose facsimile signature has been placed upon any
certificate shall have ceased to be such officer of the corporation, whether by
reason of death, resignation or otherwise, before such certificate is issued,
such certificate may be issued by the corporation with the same effect as if
such officer had not ceased to be such at the time of its issue.
Section 2. TRANSFERS OF SHARES OF STOCK. Shares shall be transferred only
on the books of the corporation and by assignment to the corporation by the
owner thereof, his legally constituted attorney-in-fact, or his legal
representatives, upon surrender and cancelling of the certificate or
certificates therefore. The Board of Directors may appoint a Transfer Agent
and/or a Registrar of Transfers and may require the stock certificates to bear
the signature of such Transfer Agent or Registrar of Transfers.
Section 3. LOST CERTIFICATES. In the event a certificate of stock is lost,
the corporation may issue a new certificate upon there being pledged with it a
good and sufficient bond, as determined by the Board, to indemnify the
corporation against the claims of any person into whose hands the certificate
may fall.
Section 4. SALE OF STOCK RETURNED TO CORPORATION. In the event stock is
returned to the corporation and the owner or his representative has been paid
therefore, the Board of Directors of the corporation shall be vested with
authority to resell the said stock at a price to be determined by the Board of
Directors to such person as may be selected by said Board of Directors.
ARTICLE VIII
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DIVIDENDS
Dividends shall be declared by action of the Directors of the corporation
at annual or special meetings. Dividends shall be paid in cash, in property or
in share of the Capital Stock of the corporation. No dividend shall be declared
or paid unless the financial condition of the corporation is such, under the
laws of the State of Missouri, as to justify and warrant such action.
ARTICLE IX
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CORPORATE SEAL
The corporate seal of the corporation shall be in the form of a circle and
shall bear the name of the corporation.
ARTICLE X
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AMENDMENTS
These By-Laws or any part thereof may be amended, repealed or added to by
the shareholders at any special meeting called for that purpose or by the
affirmative vote of a majority of the Board of Directors of the corporation then
in office at a duly convened meeting of said Board, upon notice which shall
include a statement of the proposed amendment, repeal or addition.
ARTICLE XI
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MISCELLANEOUS
Section 1. WAIVER OF NOTICE. Whenever under the provisions of these By-Laws
or of the laws of the State of Missouri, the shareholders or directors are
authorized to hold any meeting after notice or after the lapse of any prescribed
period of time, such meeting may be held without notice and without such lapse
of time, if a written waiver of such notice be signed by each person entitled
thereto and filed with the Secretary of the corporation, whether before or after
the time of such meeting.
Section 2. POLICIES. All policies of insurance to be issued by the
corporation, together with rates and values thereof, shall be filed with the
Division of Insurance, State of Missouri, in accordance with law.
ARTICLE XII
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INDEMNIFICATION OF OFFICERS AND DIRECTORS AGAINST
LIABILITIES AND EXPENSES IN ACTIONS
Section 1. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal administrative or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that he is or was a director or officer of the corporation,
or is or was serving at the request of the corporation as a director or officer
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding had
reasonable cause to believe that his conduct was not unlawful.
Section 2. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director or officer, of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the court in which the action or suit was brought determines
upon application that, despite the adjudication of liability and in view of all
the circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 3. To the extent that a director or officer of the corporation has
been successful on the merits or otherwise in defense of any action, suit, or
proceeding referred to in Section 1 and 2 of this Article, or in the defense of
any claim, issue or matter therein, he shall be indemnified against expenses
including attorneys' fees, actually and reasonably incurred by him in connection
with the action, suit, or proceeding.
Section 4. Any indemnification under Section 1 and 2 of this Article,
unless ordered by a court, shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director
or officer is proper in the circumstances because he has met the applicable
standard of conduct set forth in this Article. The determination shall be made
by the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the action, suit, or proceeding, or if such a quorum is
not obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or by the
shareholders.
Section 5. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of the action, suit, or proceeding as authorized by the Board of Directors in
the specific case upon receipt of a guarantee by or on behalf of the director or
officer to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in this Article.
Section 6. The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 7. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of this
Article.
The foregoing By-Laws were approved this 11th day of March, 1969, at the
Organizational Meeting of the Subscribers of the corporation.
ss/
___________________________
Dorothy M. Jones, Secretary
ORGANIZATIONAL CHART
The vast majority of Fidelity Security Life Insurance Company (FSL) stock
(approximately 97%) is owned by Richard F. Jones (an individual), with nominal
portion of the stock owned by FSL employees and board members. Affiliated with
the company, but represented by complete ownership by Richard F. Jones (an
individual), is Forrest T. Jones and Company, Inc., Forrest T. Jones Consulting
Co., Inc., American Service Life Insurance Company, and National Pension and
Group Consultants.
