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As filed with the Securities and Exchange Commission on June 16, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
PACIFIC SELECT EXEC SEPARATE ACCOUNT OF
PACIFIC LIFE & ANNUITY COMPANY
(Exact Name of Registrant)
PACIFIC LIFE & ANNUITY COMPANY
(Name of Depositor)
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92660
(Address of Depositor's Principal Executive Office)
(949)219-3743
(Depositor's Telephone Number, including Area Code)
Diane N. Ledger
Vice President
Pacific Life Insurance Company
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92660
(Name and Address of Agent for Service of Process)
Copies to:
Jeffrey S. Puretz, Esq.
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006-2401
Title of securities being registered: interests in the Separate Account under
Pacific Select Exec II-NY Flexible Premium Variable Life Insurance Policies.
Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement. The Registrant hereby amends this
Registration Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
Filing fee: None
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Pacific Select Exec Separate Account of Pacific
Life & Annuity Company
CROSS-REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as to the Prospectus in Form S-6)
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Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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1. (a) Name of trust............................... Prospectus front cover
(b) Title of securities issued.................. Prospectus front cover
2. Name and address of each depositor............... Prospectus front cover; Back Cover
3. Name and address of trustee...................... N/A
4. Name and address of each principal underwriter... About PL&A
5. State of organization of trust................... Pacific Select Exec Separate
Account
6. Execution and termination of trust agreement..... Pacific Select Exec Separate
Account
7. Changes of name.................................. N/A
8. Fiscal year...................................... N/A
9. Material Litigation.............................. N/A
II. General Description of the Trust and Securities of the Trust
10. (a) Registered or bearer securities............. Pacific Select Exec II-NY basics; The death benefit
(b) Cumulative or distributive
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securities................................ Pacific Select Exec II-NY basics; The death benefit
(c) Withdrawal or redemption......... Withdrawals, surrenders and loans
(d) Conversion, transfer, etc........ Withdrawals, surrenders and loans
(e) Periodic payment plan............ N/A
(f) Voting rights.................... Voting Rights
(g) Notice to security holders....... Reports we'll send you
(h) Consents required................ Voting Rights
(i) Other provisions................. N/A
11. Type of securities comprising
units................................. Pacific Select Exec II-NY basics
12. Certain information regarding
periodic payment plan certificates.... N/A
13. (a) Load, fees, expenses, etc......... Deductions from your premiums; Surrendering your policy
(b) Certain information regarding
periodic payment plan certificates.... N/A
(c) Certain percentages................... Deductions from your premiums; Surrendering your policy
(d) Difference in price................... N/A
(e) Certain other fees, etc............... Deductions from your premiums; Surrendering your policy
(f) Certain other profits or
benefits.............................. The death benefit; Your policy's accumulated value
(g) Ratio of annual charges to
income................................ N/A
14. Issuance of trust's securities........ Pacific Select Exec II-NY basics
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15. Receipt and handling of payments
From purchasers..................... How premiums work
16. Acquisition and disposition of Your policy's accumulated
underlying securities............... value: Your investment
options
17. Withdrawal or redemption............ Withdrawals, surrenders
and loans
18. (a) Receipt, custody and disposition
of income....................... Your policy's accumulated
value
(b) Reinvestment of distributions... N/A
(c) Reserves or special funds....... N/A
(d) Schedule of distributions....... N/A
19. Records, accounts and reports....... Statements and
Reports
20. Certain miscellaneous provisions
of trust agreement:
(a) Amendment....................... N/A
(b) Termination..................... N/A
(c) and (d) Trustees, removal and
successor....................... N/A
(e) and (f) Depositors, removal
and successor................... N/A
21. Loans to security holders........... Withdrawals,
surrenders and loans
22. Limitations on liability............ N/A
23. Bonding arrangements................ N/A
24. Other material provisions of
trust agreement..................... N/A
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III. Organizations, Personnel and Affiliated Persons of Depositor
25. Organization of depositor...................................................... About PL&A
26. Fees received by depositor..................................................... See Items 13(a) and 13(e)
27. Business of depositor.......................................................... About PL&A
28. Certain information as to officials and affiliated persons of depositor........ About PL&A
29. Voting securities of depositor................................................. N/A
30. Persons controlling depositor.................................................. N/A
31. Payments by depositor for certain services rendered to trust................... N/A
32. Payments by depositor for certain other services rendered to trust............. N/A
33. Remuneration of employees of depositor for certain services rendered to trust.. N/A
34. Remuneration of other persons for certain services rendered to trust........... N/A
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states................................... N/A
36. Suspension of sales of trust's securities...................................... N/A
37. Revocation of authority to distribute.......................................... N/A
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38. (a) Method of distribution.......................................... How policies are distributed
(b) Underwriting agreements......................................... How policies are distributed
(c) Selling agreements.............................................. How policies are distributed
39. (a) Organization of principal underwriters.......................... How policies are distributed
(b) N.A.S.D. membership of principal underwriters................... How policies are distributed
40. Certain fees received by principal underwriters...................... How policies are distributed
41. (a) Business of each principal underwriter.......................... How policies are distributed
(b) Branch offices of each principal underwriter.................... N/A
(c) Salesmen of each principal underwriter.......................... N/A
42. Ownership of trust's securities by certain persons................... N/A
43. Certain brokerage commissions received by principal underwriters..... N/A
44. (a) Method of valuation............................................. Your policy's accumulated value
(b) Schedule as to offering price................................... How premiums work
(c) Variation in offering price to certain persons.................. Monthly deductions
45. Suspension of redemption rights...................................... Timing of payments, forms, and requests
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46. (a) Redemption valuation................................................... Withdrawals, surrenders and loans
(b) Schedule as to redemption price........................................ Withdrawals, surrenders and loans
47. Maintenance of position in underlying securities............................ Your investment options
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee...................................... N/A
49. Fees and expenses of trustees............................................... N/A
50. Trustee's lien.............................................................. N/A
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's securities.................................. The death benefit
VII. Policy of Registrant
52. (a) Provisions of trust agreement with respect to selection
or elimination of under lying securities............................... How our accounts work
(b) Transactions involving elimination of underlying securities............ How our accounts work
(c) Policy regarding substitution or elimination of underlying securities.. How our accounts work
(d) Fundamental policy not otherwise covered............................... N/A
53. Tax status of trust......................................................... Variable life insurance and your taxes
VIII. Financial and Statistical Information
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54. Trust's securities during last ten years.......... N/A
55. N/A
56. Certain information regarding periodic payment
plan certificates................................. N/A
57. N/A
58. N/A
59. Financial statements (Instruction 1(c) of
"Instructions as to the Prospectus" of Form S-6).. Financial Statements
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PACIFIC SELECT
EXEC II - NY PROSPECTUS
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Pacific Select Exec II - NY is a flexible premium variable life insurance
policy issued by Pacific Life & Annuity Company.
This policy is not available in all states. This prospectus provides information that you should know before buying a
This prospectus is not an offer in any state policy. It's accompanied by a current prospectus for the Pacific Select Fund, a
or jurisdiction where we're not legally fund that provides the underlying portfolios for the variable investment
permitted to offer the policy. options offered under the policy. Please read these prospectuses carefully and
keep them for future reference.
The policy is described in detail in this
prospectus. The Pacific Select Fund is Here's a list of all of the investment options available under your policy:
described in its prospectus and in its
Statement of Additional Information (SAI). VARIABLE INVESTMENT OPTIONS
No one has the right to describe the policy Money Market Large-Cap Value
or the Pacific Select Fund any differently High Yield Bond Mid-Cap Value
than they have been described in Managed Bond Equity
these documents. Government Securities Bond and Income
Growth Equity Index
You should be aware that the Securities and Aggressive Equity Small-Cap Index
Exchange Commission (SEC) has not reviewed Growth LT REIT
the policy for its investment merit, and Equity Income International
does not guarantee that the information in Multi-Strategy Emerging Markets
this prospectus is accurate or complete.
It's a criminal offense to say otherwise. FIXED OPTIONS
Fixed Account
Fixed LT Account
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YOUR GUIDE TO THIS PROSPECTUS
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An overview of Pacific Select Exec II - NY 4
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Pacific Select Exec II - NY basics 12
Owners, person insured by the policy, and beneficiaries 13
Policy date, monthly payment date, policy anniversary date 14
Statements and reports we'll send you 15
Your right to cancel 15
Timing of payments, forms and requests 16
Telephone transactions 17
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The death benefit 18
Choosing your death benefit option 18
Choosing a death benefit qualification test 19
Comparing the death benefit options 20
When we pay the death benefit 22
Changing your death benefit option 22
Changing the face amount 23
Optional riders 24
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How premiums work 26
Planned periodic premium payments 26
Deductions from your premiums 27
Allocating your premiums 27
Limits on the premium payments you can make 28
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Your policy's accumulated value 29
Calculating your policy's accumulated value 29
Monthly deductions 29
Lapsing and reinstatement 32
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Your investment options 34
Variable investment options 34
Fixed options 38
Transferring among investment options 38
Transfer programs 39
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Withdrawals, surrenders and loans 41
Making withdrawals 41
Taking out a loan 42
Ways to use your policy's loan and withdrawal features 43
Surrendering your policy 44
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General information about your policy 46
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Variable life insurance and your taxes 49
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About PL&A 53
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Illustrations 77
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Appendices 93
Appendix A: Rates per $1,000 of initial face amount 93
Appendix B: Death benefit percentages 94
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Where to go for more information back cover
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Terms used in this prospectus
We've tried to make this prospectus easy to read and understand, but you may
find some words and terms that are new to you. We've identified some of these
below and the pages where you'll find an explanation of what they mean.
If you have any questions, please ask your registered representative or call us
at 1-800-800-7681.
Accumulated value 29 Joint owners 13
Accumulation units 36 Lapse 32
Age 13 Loan account 42
In this prospectus, you and your mean the Allocation 27 Modified endowment con-
policyholder or owner. PL&A, we, us and our Assignment 48 tract 51
refer to Pacific Life & Annuity Company. Beneficiary 14 Monthly payment date 14
The fund refers to Pacific Select Fund. Business day 16 Net amount at risk 30
Policy means a Pacific Select Exec II - NY Cash surrender value 44 Net cash surrender value 44
variable life insurance policy, unless we Cash value accumulation Net premium 26
state otherwise. Pacific Life means Pacific test 19 Net single premium 19
Life Insurance Company, our parent company. Contingent beneficiary 14 Outstanding loan amount 42
Cost of insurance rate 29 Planned periodic premium 26
Death benefit 18 Policy anniversary 14
Death benefit percentage 19 Policy date 14
Death benefit qualifica- Policy year 14
tion test 19 Portfolio 34
Face amount 18 Proper form 16
Fixed account 38 Reinstatement 33
Fixed LT account 38 Riders 24
Fixed options 38 Separate account 54
General account 54 Seven-pay limit 51
Guideline minimum death Tax code 49
benefit 19 Unit value 36
Guideline premium limit 28 Variable account 34
Guideline premium test 19 Variable investment op-
Illustration 15 tion 34
In force 12
Income benefit 46
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AN OVERVIEW OF PACIFIC SELECT EXEC II - NY
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This overview tells you some key things you should know about your policy. It's
designed as a summary only--please read the entire prospectus and your policy
for more detailed information.
Some states have different rules about how life insurance policies are
described or administered. The terms of your policy, or of any endorsement or
rider, prevail over what's in this prospectus.
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Pacific Select Exec II - NY basics Pacific Select Exec II - NY is a flexible premium variable life insurance
policy.
This policy may be appropriate if you want
to provide a death benefit for family . Flexible premium means you can vary the amount and frequency of your premium
members or others or to help meet other payments.
long-term financial objectives. It may not
be the right kind of policy if you plan to . Variable means the policy's value depends on the performance of the investment
withdraw money for short-term needs. options you choose.
Please discuss your insurance needs and . Life insurance means the policy provides a death benefit to the beneficiary
financial objectives with your registered you choose.
representative.
In addition to providing a death benefit that is generally free of federal
You'll find more about the basics of income tax, any growth in your policy's accumulated value is tax-deferred. You
Pacific Select Exec II - NY starting on can choose from 18 variable investment options, each of which invests in a
page 12. corresponding portfolio of the Pacific Select Fund, and two fixed options, both
of which provide a guaranteed minimum rate of interest.
Pacific Select Exec II - NY is designed for long-term financial planning.
Please take some time to read the information in this prospectus before you
decide if this life insurance policy meets your insurance needs and financial
objectives.
Your right to cancel
During the free look period, you have the right to cancel your policy and
return it to us or your registered representative for a refund. We'll refund
the amount of your premium payments. We'll hold the net premiums in the Money
Market investment option until the free look transfer date.
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The death benefit You can choose one of three death benefit options depending on what is more
important to you: a larger death benefit or building the accumulated value of
Your policy provides a death benefit for your policy.
your beneficiary after the person insured
by the policy has died, as long as your The death benefit will always be the greater of the death benefit under the
policy is in force. option you choose or the guideline minimum death benefit.
You'll find more about the death benefit This policy offers two ways to calculate the guideline minimum death benefit:
starting on page 18. the cash value accumulation test and the guideline premium test. These are
called death benefit qualification tests. The test you choose will generally
depend on the amount of premiums you want to pay. In general, you should choose
the cash value accumulation test if you do not want to limit the amount of
premiums you can pay into your policy.
You cannot change your death benefit qualification test. But you can change
your death benefit option and increase or decrease your policy's face amount
(with certain restrictions) while your policy is in force. Any of these changes
may affect your policy charges.
Optional riders
There are eight optional riders that provide extra benefits, some at additional
cost.
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How premiums work Deductions from your premiums
We deduct a premium load from each premium payment you make. The premium load
Your policy gives you the flexibility to is made up of a sales load, a state and local tax charge, and a federal tax
choose the amount and frequency of your charge.
premium payments within certain limits.
Each premium payment must be at least $50. Limits on the premium payments you can make
Federal tax law puts limits on the premium payments you can make in relation to
You'll find more about how premiums work your policy's death benefit. We may refuse all or part of a premium payment you
starting on page 26. make, or remove all or part of a premium from your policy and return it to you
under certain circumstances.
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Your policy's accumulated value Accumulated value is the value of your policy on any business day. It is not
guaranteed - it depends on the performance of the investment options you've
Accumulated value is used as the basis for chosen, the premium payments you've made, policy charges, and how much you've
determining policy benefits and charges. If borrowed or withdrawn from the policy.
there is not enough accumulated value to
cover policy charges, your policy could Monthly deductions
lapse. We deduct a monthly charge from your policy's accumulated value on each monthly
payment date. The charge is made up of cost of insurance, an administrative
You'll find more about accumulated value charge, and a mortality and expense risk charge. If you add any riders, we'll
starting on page 29. add any charges for them to your monthly charge.
Lapsing and reinstatement
If there is not enough accumulated value to cover the monthly charge on the day
we make the deduction, your policy may lapse - which means you'll no longer
have any insurance coverage. If your policy is in danger of lapsing, we'll give
you a grace period of 61 days to pay the required premium. If your policy
lapses at the end of the grace period, you have five years from the day it
lapses to apply for a reinstatement.
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AN OVERVIEW OF PACIFIC SELECT EXEC II - NY
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Your investment options You can choose from 18 variable investment options, each of which invests in a
corresponding portfolio of the Pacific Select Fund. We're the investment
The investment options you choose will adviser for the Pacific Select Fund. We oversee the management of all the
affect your policy's accumulated value, fund's portfolios and manage two of the portfolios directly. We've retained
and may affect the death benefit. other portfolio managers to manage the other portfolios. The value of each
portfolio will fluctuate with the value of the investments it holds, and
Please review the investment options returns are not guaranteed.
carefully and ask your registered
representative to help you choose the You can also choose from two fixed options, the Fixed account and the Fixed LT
right ones for your goals and risk account, both of which provide a guaranteed minimum annual interest rate of 3%
tolerance. during the first 10 policy years, and 3.3% thereafter. We may offer a higher
interest rate. If we do, we'll guarantee that rate for one year.
You'll find more about the investment
options starting on page 35. We allocate your premium payments and accumulated value to the investment
options you choose. Your policy's accumulated value will fluctuate depending on
You'll find out more about our automatic the investment options you've chosen. You bear the investment risk of any
transfer programs starting on page 39. variable investment options you choose.
We'll hold your premium payments in the Money Market investment option until
the free look transfer date. Please turn to Your right to cancel for details.
Transferring among investment options
You can transfer among the investment options during the life of your policy
without paying any current income tax. There is currently no charge for
transfers.
You can make as many transfers as you like between variable investment options.
You can also make automatic transfers from one variable investment option to
another using our dollar cost averaging or portfolio rebalancing programs.
These programs are not available for the fixed options.
You can only make one transfer from each fixed option in any 12-month period.
For the Fixed account, each transfer may be no more than $5,000 or 25% of the
accumulated value in the Fixed account, whichever is greater. For the Fixed LT
account, each transfer may be no more than $5,000 or 10% of the accumulated
value in the Fixed LT account, whichever is greater. You can only transfer to
the fixed options in the policy month right before each policy anniversary.
You can also make automatic transfers from the Fixed account to other
investment options during the first policy year using our first year transfer
program.
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Withdrawals, surrenders and loans You can take out all or part of your policy's accumulated value while your
policy is in force by making withdrawals or surrendering your policy. You can
Making a withdrawal, taking out a loan or take out a loan from us using your policy as security. You can also use your
surrendering your policy can change your policy's loan and withdrawal features to supplement your income, for example,
policy's tax status, generate taxable during retirement.
income, or make your policy more
susceptible to lapsing. Be sure to plan Making withdrawals
carefully before using these policy You can withdraw part of your policy's net cash surrender value starting on
benefits. your policy's first anniversary. This reduces your policy's accumulated value
and could affect the face amount and death benefit.
You'll find more about withdrawals,
surrenders and loans starting on page 41.
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Taking out a loan
You can take out a loan from us using your policy's accumulated value as
security. You pay interest at an annual rate of 3.55% on the amount you borrow.
The accumulated value used to secure your loan is set aside in a loan account,
where it earns interest at an annual rate of 3% during the first 10 policy
years, and 3.3% thereafter.
The amount in the loan account is not available to help pay for any policy
charges. Taking out a loan affects the accumulated value of your policy because
the amount set aside in the loan account misses out on the potential earnings
available through the investment options.
Surrendering your policy
You can surrender or cash in your policy for its net cash surrender value while
the person insured by the policy is still living. If you surrender your policy
during the first 10 policy years, we'll apply a surrender charge. If you
increase your policy's face amount and surrender your policy during the first
10 years after the increase, we'll apply a surrender charge to the amount of
the increase.
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Variable life insurance and your taxes Your beneficiary generally will not have to pay federal income tax on death
benefit proceeds. You'll also generally not be taxed on any or all of your
There are tax issues to consider when you policy's accumulated value unless you receive a cash distribution by making a
own a life insurance policy. These are withdrawal or surrendering your policy.
described in detail starting on page 49.
If your policy is a modified endowment contract, all distributions you receive
during the life of the policy may be subject to tax and a 10% penalty.
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About PL&A PL&A is a life insurance company based in Arizona. We issue the policies.
Pacific Mutual Distributors, Inc., our affiliate, is the distributor of the
When you buy a life insurance policy, policies.
you're relying on the insurance company
that issues it to be able to meet its How our accounts work
financial obligations to you. We put your premium payments in our general and separate accounts. We own the
assets in our accounts and make the allocations to the investment options
You'll find more about PL&A, and our you've chosen.
strength as a company, starting on page 53.
Amounts allocated to the fixed options are held in our general account. Our
We may use any profit derived from any general account includes all of our assets, except for those held in our
charges under the policy for any lawful separate accounts. Our ability to meet our obligations under the policy is
purpose, including our sales and backed by our strength as an insurance company.
distribution expenses.
Amounts allocated to the variable investment options are held in our separate
account. The assets in this account are kept separate from the assets in our
general account and our other separate accounts, and are protected from our
general creditors.
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AN OVERVIEW OF PACIFIC SELECT EXEC II - NY
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This section of the overview explains the fees and expenses associated with
your Pacific Select Exec II - NY policy.
Understanding policy expenses ----------------------------------------------------------------------------------
and cash flow
Your premium
The chart to the right illustrates how You make a
cash normally flows through a Pacific premium payment
Select Exec II - NY policy. We deduct a
premium load
The dark shaded boxes show the fees
and expenses you pay directly or Net premium
indirectly under your policy. These are We allocate the
explained in the pages that follow. net premium to
the investment
We'll hold your net premium payments in options you
the Money Market investment option choose
until the free look transfer date.
Please turn to Your right to cancel for Fixed options Variable Pacific Select The fund deducts
details. We hold amounts investment Fund advisory fees and
you allocate to options The variable other fund
these options in We hold amounts investment options expenses from the
our general you allocate to invest in the portfolios
account these options fund's portfolios
in our separate
account.
We deduct:
. cost of
insurance
We make monthly deductions . administrative
charge
. mortality and
. expense risk
charge
. rider charges
Loan account Accumulated
Accumulated value We deduct a
value set aside The total value If you make a withdrawal withdrawal charge
to secure of your policy
a policy loan
We deduct a
surrender charge
If you surrender your policy . during the first
10 policy years
. during the first
10 years after
you increase
the face amount
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Deductions from your premiums We deduct a premium load from each premium payment you make. The load is made
up of three charges:
The premium load is explained in more
detail on page 27. Sales load - 2.5% of each premium payment.
State and local tax charge - 2.35% of each premium payment.
Federal tax charge - 1.50% of each premium payment.
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Deductions from your policy's We deduct a monthly charge from your policy's accumulated value in the
accumulated value investment options on each monthly payment date. This charge is made up of
three charges:
The monthly charge is explained in more
detail starting on page 29. Cost of insurance - We deduct a cost of insurance charge based on the cost of
insurance rate for your policy's initial face amount and for each increase you
An example make to the face amount. We calculate this charge by multiplying the current
cost of insurance rate by a discounted net amount at risk at the beginning of
For a policy that insures a male non- each policy month. When the person insured by the policy reaches age 100, the
smoker who is age 45 when the policy is cost of insurance charge is zero--in other words, you no longer pay any cost of
issued, with: insurance charge.
. a face amount of $350,000 Administrative charge - We deduct a charge of $7.50 a month. When the person
. accumulated value of $30,000 in the insured by the policy reaches age 100, the administrative charge is zero -- in
variable options. other words, you no longer pay any administrative charge.
The monthly charge for the M&E risk face Mortality and expense risk charge - The mortality and expense risk charge
amount charge is: varies depending on your policy's face amount, the age of the person insured by
the policy, and accumulated value. We deduct a charge based on your policy's
. $44.45 (($350,000 / 1,000) X 0.127) initial face amount and on each increase to the face amount. The charge is made
up of two separate charges:
The monthly charge for the M&E risk asset
charge is $17.09 in policy years 1 through . The M&E risk face amount charge, which we deduct every month during the
10 (($25,000 X 0.0625%) plus first 10 policy years at a rate that is based on the age of the person insured
($5,000 X 0.0292%)). by the policy on the policy date and each $1,000 of the initial face amount of
your policy. If you increase your policy's face amount, the charge for the
The monthly charge for the M&E risk asset amount of the increase is based on the age of the person insured by the policy
charge is $9.58 in policy year 11 and on the day of the increase.
thereafter (($25,000 X 0.0375%) plus
($5,000 X 0.0042%)). . The M&E risk asset charge, which we deduct every month of policy years 1
through 10 at an annual rate of:
Sample rates for the M&E risk face amount
charge appear in Appendix A. . 0.75% (0.0625% monthly), of the first $25,000 of your policy's accumulated
value in the variable investment options, plus
. 0.35% (0.0292% monthly), of the accumulated value in the investment options
that exceeds $25,000
and which we deduct every month of policy years 11 and thereafter at an annual
rate of:
. 0.45% (0.0375% monthly), of the first $25,000 of your policy's accumulated
value in the variable investment options, plus
. 0.05% (0.0042% monthly) of the accumulated value in the variable investment
options that exceeds $25,000.
For the purposes of this charge, accumulated value is calculated on the monthly
payment date before we deduct the monthly charge, but after we deduct any
outstanding loan amount or allocate any new net premiums, withdrawals or loans.
When the person insured by the policy reaches age 100, the annual rate is 0% --
in other words, you no longer pay this charge.
Riders - If you add any riders to your policy, we add any charges for them to
your monthly charge.
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AN OVERVIEW OF PACIFIC SELECT EXEC II - NY
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Withdrawal and surrender charges You can withdraw part of your policy's net cash surrender value at any time
starting on your policy's first anniversary. There is a $25 charge for each
Withdrawal and surrender charges are withdrawal you make. We deduct this charge proportionately from all of your
explained in more detail on pages investment options.
41 and 44.
If you surrender or cash in your policy during the first 10 years of owning the
An example policy, we'll deduct a surrender charge. If you increase your policy's face
For a policy: amount and surrender your policy during the first 10 years after the increase,
. that insures a male non-smoker who is we'll apply a surrender charge to the amount of the increase.
age 45 when the policy is issued
. with an initial face amount of $350,000. The surrender charge is assessed at a rate that is based on the age and risk
class of the person insured by the policy on the policy date, and each $1,000
The surrender charge is: of the initial face amount of your policy. The amount of the surrender charge
does not change during the first policy year. Starting on the first policy
. $8,757.00 in the first policy year anniversary, we reduce the charge by 0.9259% a month until it reaches zero at
(($350,000 / $1,000) X 25.02) the end of 10 policy years.
. $2,919.16 at the end of the seventh Your policy's surrender charge will never be greater than the maximum surrender
policy year ($8,757.00 - ($8,757.00 X charge. The maximum surrender charge is calculated at a rate that is based on
.9259% X 72 months)) the age and risk class of the person insured by the policy on the policy date,
and each $1,000 of the initial face amount of your policy. It does not change
However, we will never deduct more than during the first 10 policy years, and then is reduced to zero at the end of the
the maximum surrender charge, which is 10th policy year.
$4,426.10.
If you increase your policy's face amount, each increase has a surrender charge
Sample rates for the surrender charge and and maximum surrender charge based on the amount of the increase. If you
the maximum surrender charge appear decrease the face amount, the decrease will not affect your policy's surrender
in Appendix A. charge or maximum surrender charge.
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Fees and expenses paid by the The Pacific Select Fund pays advisory fees and other expenses. These are
Pacific Select Fund deducted from the assets of the fund's portfolios and may vary from year to
year. They are not fixed and are not part of the terms of your policy. If you
You'll find more about the Pacific Select choose a variable investment option, these fees and expenses affect you
Fund starting on page 34, and in the fund's indirectly because they reduce portfolio returns.
prospectus, which accompanies this prospectus.
Advisory fee
Pacific Life is the investment adviser to the fund. The fund pays an advisory
fee to them for these services. The table below shows the advisory fee as an
annual percentage of each portfolio's average daily net assets.
Other expenses
The table also shows expenses the fund paid in 1998 as an annual percentage of
each portfolio's average daily net assets. To help limit fund expenses, Pacific
Life agreed to waive all or part of their investment advisory fees or otherwise
reimburse each portfolio for expenses (not including advisory fees, additional
costs associated with foreign investing and extraordinary expenses) that exceed
0.25% of its average daily net assets. Pacific Life does this voluntarily, but
do not guarantee that they'll continue to do so after December 31, 2000. No
reimbursement was necessary for 1998.
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Portfolio Advisory fee Other expenses Total expenses
-----------------------------------------------------------------
Money Market/1/ 0.37% 0.06% 0.43%
High Yield Bond/1/ 0.60% 0.06% 0.66%
Managed Bond 0.60% 0.06% 0.66%
Government Securities 0.60% 0.06% 0.66%
Growth 0.65% 0.05% 0.70%
Aggressive Equity 0.80% 0.09% 0.89%
Growth LT 0.75% 0.05% 0.80%
Equity Income/1/ 0.65% 0.05% 0.70%
Multi-Strategy/1/ 0.65% 0.06% 0.71%
Large-Cap Value/2/ 0.85% 0.06% 0.91%
Mid-Cap Value/2/ 0.85% 0.06% 0.91%
Equity 0.65% 0.06% 0.71%
Bond and Income 0.60% 0.10% 0.70%
Equity Index 0.16% 0.05% 0.21%
Small-Cap Index/2/ 0.50% 0.06% 0.56%
REIT/2/ 1.10% 0.06% 1.16%
International 0.85% 0.15% 1.00%
Emerging Markets 1.10% 0.36% 1.46%
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/1/ Total net expenses for these portfolios in 1998, after deduction of an
offset for custodian credits, was: 0.42% for Money Market Portfolio, 0.65% for
High Yield Bond Portfolio, 0.69% for Equity Income Portfolio, and 0.70% for
Multi-Strategy Portfolio.
/2/ Expenses are estimated. There were no actual advisory fees or other
expenses for these portfolios in 1998 because the portfolios started on January
4, 1999.
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PACIFIC SELECT EXEC II - NY BASICS
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When you buy a Pacific Select Exec II - NY life insurance policy, you're
entering into a contract with Pacific Life & Annuity Company. Your contract
with us is made up of your application, your policy, applications to change or
reinstate the policy, any amendments, riders or endorsements to your policy,
and specification pages.
Policy amendments and When we approve your signed application, we'll issue your policy. If your
endorsements are a part of your application does not meet our underwriting requirements, we can reject it or
policy and confirm changes you or ask you for more information. Once we receive your first premium payment, the
we make to the policy. policy has been delivered to you and any delivery requirements have been met,
we'll consider your policy to be in force. That's when our obligations under
Specification pages summarize the policy begin.
information specific to your
policy at the time the policy is Your policy will be in force until one of the following happens:
issued. . the person insured by the policy dies
. the grace period expires and your policy lapses, or
Riders provide extra benefits, . you surrender your policy.
some at additional cost. Some
riders may only be added when you If your policy is not in force when the person insured by the policy dies, we
apply for your policy. are not obligated to pay the death benefit proceeds to your beneficiary.
This policy may be appropriate if Pacific Select Exec II - NY is a flexible premium variable life insurance
you want to provide a death policy that insures the life of one person and pays death benefit proceeds
benefit for family members or after that person has died.
others or to help meet other
long-term financial objectives. Under a flexible premium life insurance policy, you have the flexibility to
It may not be the right kind of choose the amount and frequency of your premium payments. You must, however,
policy if you plan to withdraw pay enough premiums to cover the ongoing cost of policy benefits.
money for short-term needs.
A premium load is deducted from each premium payment you make. The resulting
Please discuss your insurance net premium is allocated to the investment options you choose, and becomes part
needs and financial objectives of your policy's accumulated value.
with your registered
representative. Charges are deducted from the accumulated value each month to help cover the
cost of the policy's death benefit and other expenses. If there is not enough
We'll hold your net premium accumulated value to cover the monthly charge on the day we make the deduction,
payments in the Money Market your policy may lapse after a grace period - which means you'll no longer have
investment option until the free any insurance coverage.
look transfer date. Please turn
to Your right to cancel for Investment earnings will increase your policy's accumulated value, while
details. investment losses will decrease it. The premium payments you'll be required to
make to keep your policy in force will be influenced by the investment results
of the investment options you've chosen.
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Owners, person insured by the Owners
policy, and beneficiaries The owner is the person named on the application who makes the decisions about
the policy and its benefits while it's in force. You can own a policy by
Please consult your financial yourself or with someone else. Two or more owners are called joint owners. You
advisor or a lawyer about need the signatures of all owners for all policy transactions.
designating ownership interests.
If one of the joint owners dies, the surviving owners will hold all rights
If you would like to change the under the policy. If the last joint owner dies, his or her estate will own the
owner of your policy, please policy unless you've given us other instructions.
contact us or your registered
representative for a change of A policy can also be owned by an institution, trust, corporation or group or
owner form. We can process the sponsored arrangement. These owners often buy more than one policy, which may
change only if we receive your qualify them for reduced charges or lower premium payments.
instructions in writing.
We may reduce or waive the sales load or surrender charges on policies sold to
our directors or employees, to any of our affiliates, or to trustees, employees
or affiliates of the fund.
You can change the owner of your policy by completing a change of owner form.
Once we've received and recorded your request, the change will be effective as
of the day you signed the change of owner form.
Person insured by the policy
Risk classes are usually based on This policy insures the life of one person who is age 85 or younger at the time
age, gender, health and whether you apply for your policy, and who has given us satisfactory evidence of
or not the person to be insured insurability. Your policy refers to this person as the insured. The policy pays
by the policy smokes. Most death benefit proceeds after this person has died.
insurance companies use similar
risk classification criteria. The person to be insured by the policy is assigned an underwriting or insurance
risk class which we use to calculate cost of insurance and other charges. We
When we refer to age throughout normally use the medical or paramedical underwriting method to assign
this prospectus, we're using the underwriting or insurance risk classes, which may require a medical
word as we've defined it here, examination. We may, however, use other forms of underwriting if we think it's
unless we tell you otherwise. appropriate.
When we use a person's age in policy calculations, we generally use his or her
age as of the nearest policy date, and we add one year to this age on each
policy anniversary date. For example, when we talk about someone "reaching age
100", we're referring to the policy anniversary date closest to that person's
100th birthday, not to the day when he or she actually turns 100.
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PACIFIC SELECT EXEC II - NY BASICS
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Beneficiaries
The beneficiary is the person, people, entity or entities you name to receive
the death benefit proceeds. Here are some things you need to know about naming
beneficiaries:
. You can name one or more primary beneficiaries who each receive an equal share
of the death benefit proceeds unless you tell us otherwise. If one beneficiary
dies, his or her share will pass to the surviving primary beneficiaries in
proportion to the share of the proceeds they're entitled to receive, unless you
tell us otherwise.
If you would like to change the
beneficiary of your policy, . You can also name a contingent beneficiary for each primary beneficiary you
please contact us or your name. The contingent beneficiary will receive the death benefit proceeds if the
registered representative for a primary beneficiary dies.
change of beneficiary form. We
can process the change only if we . You can choose to make your beneficiary permanent (sometimes called
receive your instructions in irrevocable). You cannot change a permanent beneficiary's rights under the
writing. policy without his or her permission.
. If none of your beneficiaries is still living when the death benefit proceeds
are payable, you as the policy owner will receive the proceeds. If you're no
longer living, the proceeds will go to your estate.
. You can change your beneficiary at any time while the person insured by the
policy is still living, and while the policy is in force. The change will be
effective as of the day you signed the change of beneficiary form.
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Policy date, monthly payment Your policy date
date, policy anniversary date This is usually the day we approve your policy application. It's also the
beginning of your first policy year. Your policy's monthly, quarterly, semi-
annual and annual anniversary dates are based on your policy date.
The policy date is set so that it never falls on the 29th, 30th or 31st of any
month. We'll apply your first premium payment as of your policy date or as of
the day we receive your premium, whichever is later.
Backdating your policy
You can have your policy backdated up to six months, as long as we approve it.
Backdating in some cases may lower your cost of insurance rates since these
rates are based on the age of the person insured by the policy. Your first
premium payment must cover the premium load and monthly charges for the period
between the backdated policy date and the day your policy is issued.
Your monthly payment date
This is the day we deduct the monthly charges from your policy's accumulated
value. The first monthly payment date is your policy date, and it's the same
day each month thereafter. Monthly charges are explained in the section called
Your policy's accumulated value.
Your policy anniversary date
This is the same day as your policy date every year after we issue your policy.
A policy year starts on your policy date and each anniversary date, and ends on
the day before the next anniversary date.
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Statements and reports we'll send We send the following statements and reports to policy owners:
you
. a confirmation for many financial transactions, usually including premium
We can create customized payments and transfers, loans, loan repayments, withdrawals and surrenders.
hypothetical illustrations of Monthly deductions and scheduled transactions made under the dollar cost
benefits under your policy based averaging, portfolio rebalancing and first year transfer programs are reported
on different assumptions. You'll on your quarterly policy statement.
find sample illustrations
starting on page 106. . a quarterly policy statement. The statement will tell you the accumulated
value of your policy by investment options, cash surrender value, the amount of
We'll send you one policy the death benefit, the policy's face amount, and any outstanding loan amount.
illustration free of charge each It will also include a summary of all transactions that have taken place since
policy year if you ask for one. the last quarterly statement, as well as any other information required by law.
We reserve the right to charge
$25 for additional illustrations. . supplemental schedules of benefits and planned periodic premiums. We'll send
these to you if you change your policy's face amount or change any of the
policy's other benefits.
. financial statements, at least annually or as required by law, of the separate
account and Pacific Select Fund, that include a listing of securities for each
portfolio of the Pacific Select Fund.
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Your right to cancel During the free look period, you have the right to cancel your policy and
return it to us or your registered representative for a refund.
Please call us or your registered
representative if you have The amount of your refund will be the amount of the premium payments you've
questions about your right to made. We'll always deduct any outstanding loan amount from the amount we refund
cancel your policy. to you.
You'll find a complete description of the free look period that applies to your
policy on the policy's cover sheet, or on a notice that accompanied your
policy. The free look period ends 10 days after you receive your policy. If you
are replacing another life insurance policy, your free-look period ends 60 days
after you receive your policy.
If you cancel your policy during the free-look period, we're required to refund
the premium payments you've made. We'll hold the net premiums in the Money
Market investment option until the free look transfer date. On that day, we'll
transfer the accumulated value in the Money Market investment option to the
investment options you've chosen.
The free look transfer date is the latest of the following:
. 15 days after we issue your policy
. when we consider your policy to be in force.
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PACIFIC SELECT EXEC II - NY BASICS
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Timing of payments, forms and Effective date
requests The effective date of payments, forms and requests you send us is usually
determined by the day and time we receive the item in proper form at the
A business day, called a mailing address that appears on the back cover of this prospectus.
valuation date in your policy, is
any day that the New York Stock Planned periodic premium payments, loan requests, transfer requests, loan
Exchange and our life insurance payments or withdrawal or surrender requests that we receive in proper form
client services offices are open. before 4:00 p.m. Eastern time on a business day will normally be effective as
It usually ends at 4:00 p.m. of the end of that day, unless the transaction is scheduled to occur on another
Eastern time. business day. If we receive your payment or request on or after 4:00 p.m.
Eastern time on a business day, your payment or request will be effective as of
The New York Stock Exchange is the end of the next business day. If a scheduled transaction falls on a day
usually closed on weekends and on that is not a business day, we'll process it as of the end of the next business
the following days: day.
. New Year's Day, Martin Luther
King, Jr. Day, President's Day, Other forms, notices and requests are normally effective as of the next
Good Friday, Memorial Day, July business day after we receive them in proper form, unless the transaction is
Fourth, Labor Day, Thanksgiving scheduled to occur on another business day. Change of owner and beneficiary
Day and Christmas Day. forms are effective as of the day you sign the change form, once we receive
them in proper form.
Our client services offices are
also usually closed on the Proper form
following days: We'll process your requests once we receive all letters, forms or other
. the Monday before New Year's necessary documents, completed to our satisfaction. Proper form may require,
Day, July Fourth, or Christmas among other things, a signature guarantee or some other proof of authenticity.
Day, if any of these holidays We do not generally require a signature guarantee, but we may ask for one if it
falls on a Tuesday appears that your signature has changed, if the signature does not appear to be
. the Tuesday before Christmas yours, if we have not received a properly completed application or confirmation
Day if that holiday falls on of an application, or for other reasons to protect you and us.
a Wednesday
. the Friday after New Year's
Day, July Fourth or Christmas
Day, if any of these holidays
falls on a Thursday
. the Friday after Thanksgiving.
Call us or contact your
registered representative if you
have any questions about the
proper form required for a
request.
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When we make payments and transfers
We'll normally send the proceeds of transfers, withdrawals, loans, surrenders,
To request payment of death exchanges and death benefit payments within seven days after the effective date
benefit proceeds, send us proof of the request. We may delay payments and transfers, or the calculation of
of death and payment payments and transfers based on the value in the variable investment options
instructions. under unusual circumstances, for example, if:
. the New York Stock Exchange closes on a day other than a regular holiday or
weekend
. trading on the New York Stock Exchange is restricted
. an emergency exists as determined by the SEC, as a result of which the sale of
securities is not practicable, or it is not practicable to determine the value
of a variable account's assets, or
. the SEC permits a delay for the protection of policy owners.
We may delay transfers and payments from the fixed options, including the
proceeds from withdrawals, surrenders and loans, for up to six months. We'll
pay interest at an annual rate of at least 3% on any withdrawals or surrender
proceeds from the fixed options that we delay for 30 days or more.
We pay interest at an annual rate of at least 3% on death benefit proceeds,
calculated from the day the person insured by the policy dies to the day we pay
the proceeds.
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Telephone transactions You can make loans or transfers by telephone any time after the free look
period as long as we have your signed authorization form on file.
Here are some things you need to know about telephone transactions:
. You must complete a telephone authorization form.
. If your policy is jointly owned, all joint owners must sign the telephone
authorization. We'll take instructions from any owner.
. We may use any reasonable method to confirm that your telephone instructions
are genuine. For example, we may ask you to provide personal identification or
we may record all or part of the telephone conversation. We may refuse any
transaction request made by telephone.
We'll send you a written confirmation of each telephone transaction.
Sometimes, you may not be able to make loans or transfers by telephone, for
example, if our telephone lines are busy because of unusual market activity or
a significant economic or market change, or our telephone lines are out of
service during severe storms or other emergencies. In these cases, you can send
your request to us in writing, or call us the next business day or when service
has resumed.
When you send us your telephone authorization form, you agree that:
. we can accept and act upon instructions you give us over the telephone
. neither we, Pacific Life, any of our other affiliates, the Pacific Select
Fund, or any director, trustee, officer, employee or agent of ours or theirs
will be liable for any loss, damages, cost or expenses that result from
transactions processed because of a request by telephone that we believe to be
genuine, as long as we have followed our own procedures
. you bear the risk of any loss that arises from your right to make loans or
transfers over the telephone.
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THE DEATH BENEFIT
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We'll pay death benefit proceeds to your beneficiary after the person insured
by the policy dies while the policy is still in force. Your beneficiary
generally will not have to pay federal income tax on death benefit proceeds.
Your policy's initial amount of This policy offers three death benefit options, Options A, B and C. The option
insurance coverage is its initial you choose will generally depend on which is more important to you: a larger
face amount. We determine the death benefit or building the accumulated value of your policy.
face amount based on instructions
provided in your application. This policy offers two ways to calculate the guideline minimum death benefit:
the cash value accumulation test and the guideline premium test. These are
The minimum face amount when a called death benefit qualification tests. The test you choose will generally
policy is issued is usually depend on the amount of premiums you want to pay.
$50,000, but we may reduce this
in some circumstances. Here are some things you need to know about the death benefit:
. You choose your death benefit option and death benefit qualification test
You'll find your policy's face on your policy application.
amount, which includes any . If you do not choose a death benefit option, we'll assume you've chosen
increases or decreases, in the Option A.
specification pages in your . If you do not choose a death benefit qualification test, we'll assume
policy. you've chosen the guideline premium test.
. The death benefit will always be the greater of the death benefit under
the option you choose or the guideline minimum death benefit, calculated using
the death benefit qualification test you've chosen.
. The death benefit will never be lower than the face amount of your policy
if you've chosen Option A or B. Of course, the death benefit proceeds will
always be reduced by any outstanding loan amount.
. We'll pay the death benefit proceeds to your beneficiary when we receive
proof of the death of the person insured by the policy.
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Choosing your death benefit option You can choose one of the following three options for the death benefit on your
application.
Option A - the face amount of your policy. Option B - the face amount of your policy
plus its accumulated value.
[GRAPHIC APPEARS HERE] [GRAPHIC APPEARS HERE]
The death benefit changes as your policy's
accumulated value changes. The better your
investment options perform, the larger the
death benefit will be.
Option C - the face amount of your policy
plus the total premiums you've paid minus
any withdrawals or distributions made.
[GRAPHIC APPEARS HERE]
The more premiums you pay and the less you
withdraw, the larger the death benefit will be.
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Choosing a death benefit This policy offers two death benefit qualification tests, which we use to
qualification test calculate the guideline minimum death benefit. You choose one of these tests on
your application. Once you choose a test, you cannot change it.
The guideline minimum death benefit is the
minimum death benefit needed for your In general, you should choose the cash value accumulation test if you do not
policy to qualify as life insurance under want to limit the amount of premiums you can pay into your policy. If you want
Section 7702 of the Internal Revenue Code. to pay a premium that increases the net amount at risk, however, you need to
provide us with satisfactory evidence of insurability before we can increase
Net amount at risk is the difference between the death benefit.
the death benefit that would be payable if
the person insured by the policy died and The guideline minimum death benefit will generally be smaller under the
the accumulated value of your policy. guideline premium test than under the cash value accumulation test.
There are other limits on premiums you can Cash value accumulation test
pay into your policy, which are described If you choose the cash value accumulation test, your policy's guideline minimum
in How premiums work. death benefit will be the greater of:
. the minimum death benefit amount that's needed for the policy to qualify as
life insurance under the tax code or
The cash value accumulation test is . 101% of the policy's accumulated value.
defined in Section 7702(b) of the tax code.
This test determines what the death benefit should be in relation to your
policy's accumulated value. In general, as your policy's accumulated value
increases, the death benefit must also increase to ensure that your policy
qualifies as life insurance under the tax code.
An example
For a policy that insures a male, age 45 Under the test, a policy's death benefit must be large enough to ensure that
when the policy was issued, with a standard its cash surrender value, as defined in Section 7702 of the tax code (and which
nonsmoking risk class, in Policy Year 6 the is based on accumulated value, among other things), is never larger than the
guideline minimum death benefit under the net single premium that's needed to fund future benefits under the policy. The
cash value accumulation test is calculated net single premium under your policy varies according to the age, sex, and risk
by multiplying each $1,000 of accumulated class of the person insured by your policy. It's calculated using an interest
value by a "net single premium factor" rate of at least 4% and the guaranteed mortality charges as of the time the
of 2.4728. policy is issued. We'll use a higher interest rate if we've guaranteed it under
your policy.
The death benefit determined by your policy's net single premium will be at
least equal to the amount required for the policy to qualify as life insurance
under the tax code.
Guideline premium test
The guideline premium test is defined in If you choose the guideline premium test, we calculate the guideline minimum
Section 7702(a)(2) of the tax code. death benefit by multiplying your policy's accumulated value by a death benefit
percentage.
Death benefit percentages are defined in You'll find a table of death benefit percentages in Appendix D and in your
Section 7702(d) of the tax code. policy. The death benefit percentage is based on the guideline premium limit
and the age of the person insured by the policy. It is 250% when the person is
age 40 or younger, and reduces as the person gets older.
Under this test, the total premiums you pay cannot exceed your policy's
guideline premium limit. You'll find a more detailed discussion of the
guideline premium limit in How premiums work.
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THE DEATH BENEFIT
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Comparing the death benefit options The tables below compare the death benefits provided by the policy's three
death benefit options. The examples are intended only to show differences in
death benefits and net amounts at risk. Accumulated value assumptions may not
be realistic.
The example below is based on the following:
. the person insured by the policy is age 45 at the time the policy was issued
and dies at the beginning of the sixth policy year
. face amount is $100,000
. accumulated value at the date of death is $25,000
. total premium paid into the policy is $30,000
. the guideline minimum death benefit under the guideline premium test is
$46,250 (assuming a guideline premium test factor of 185% x accumulated
value)
. the guideline minimum death benefit under the cash value accumulation test is
$61,820.00 (assuming a net single premium factor of $2.4728 for each $1,000
of accumulated value)
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If you select the guideline
premium test, the death
benefit is the larger of
these two amounts
---------------------------
Death Death benefit Guideline Net amount at
benefit How it's under minimum risk used for cost
option calculated the option death benefit of insurance charge
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Option A Face amount $100,000 $46,250 $74,754.01
Option B Face amount plus
accumulated value $125,000 $46,250 $99,692.51
Option C Face amount plus
premiums less distributions $130,000 $46,250 $104,680.21
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If you select the cash
value accumulation test, the
death benefit is the larger
of these two amounts
---------------------------
Death Death benefit Guideline Net amount at
benefit How it's under minimum risk used for cost
option calculated the option death benefit of insurance charge
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Option A Face amount $100,000 $61,820.00 $74,754.01
Option B Face amount plus
accumulated value $125,000 $61,820.00 $99,692.51
Option C Face amount plus
premiums less distributions $130,000 $61,820.00 $104,680.21
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If the death benefit equals the guideline Here's the same example, but with an accumulated value of $75,000. Because
minimum death benefit, any increase in accumulated value has increased, the guideline minimum death benefit is now:
accumulated value will cause an automatic
increase in the death benefit. . $138,750 for the guideline premium test
. $185,460 for the cash value accumulation test.
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If you select the guideline
premium test, the death
benefit is the larger of
these two amounts
---------------------------
Death Death benefit Guideline Net amount at
benefit How it's under minimum risk used for cost
option calculated the option death benefit of insurance charge
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Option A Face amount $100,000 $138,750 $63,408.68
Option B Face amount plus
accumulated value $175,000 $138,750 $99,569.51
Option C Face amount plus
premiums less distributions $130,000 $138,750 $63,408.68
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If you select the cash
value accumulation test,
the death benefit is the
larger of these two amounts
---------------------------
Death Death benefit Guideline Net amount at
benefit How it's under minimum risk used for cost
option calculated the option death benefit of insurance charge
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Option A Face amount $100,000 $185,460 $110,003.78
Option B Face amount plus
accumulated value $175,000 $185,460 $110,003.78
Option C Face amount plus
premiums less distributions $130,000 $185,460 $110,003.78
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These examples show that each death benefit option provides a different level
of protection. Keep in mind that cost of insurance charges, which affect your
policy's accumulated value, increase with the amount of the death benefit, as
well as over time. The cost of insurance is charged at a rate per $1,000 of the
discounted net amount at risk. As the net amount at risk increases, your cost
of insurance increases. Accumulated value also varies depending on the
performance of the investment options in your policy.
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THE DEATH BENEFIT
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When we pay the death benefit We calculate the amount of the death benefit proceeds as of the end of the day
the person insured by the policy dies. If that person dies on a day that is not
Your beneficiary can choose to receive the a business day, we calculate the proceeds as of the next business day.
death benefit proceeds in a lump sum or use
it to buy an income benefit. Please see the Your policy's beneficiary must send us proof that the person insured by the
discussion about income benefits in General policy died while the policy was in force, along with payment instructions.
information about your policy.
Death benefit proceeds equal the total of the death benefits provided by your
It is important that we have a current policy and any riders you've added, minus any outstanding loan amount, minus
address for your beneficiary so that we can any overdue charges.
pay death benefit proceeds promptly. If we
cannot pay the proceeds to your beneficiary We'll pay interest at an annual rate of at least 3% on the death benefit
within five years of the death of the person proceeds, calculated from the day the person insured by the policy dies to the
insured by the policy, we'll be required to day we pay the proceeds.
pay them to the state.
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Changing your death benefit option You can change your death benefit option while your policy is in force. Here's
how it works:
We will not change your death benefit option
if it means your policy will be treated as a . You can change the death benefit option once in any policy year.
modified endowment contract, unless you've
told us in writing that this would be . You must send us your request in writing.
acceptable to you. Modified endowment
contracts are discussed in Variable life . You can change to Option A or Option B.
insurance and your taxes.
. You cannot change from any death benefit option to Option C.
Net amount at risk is the difference between
the death benefit that would be payable if . The change will become effective on the first monthly payment date after we
the person insured by the policy died and receive your request. If we receive your request on a monthly payment date,
the accumulated value of your policy. we'll process it that day.
. The face amount of your policy will change by the amount needed to make the
death benefit under the new option equal the death benefit under the old option
just before the change. We will not let you change the death benefit option if
doing so means the face amount of your policy will become less than $50,000. We
may waive this minimum amount under certain circumstances.
. Changing the death benefit option can also affect the monthly cost of
insurance charge since this charge varies with the net amount at risk.
. The new death benefit option will be used in all future calculations.
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Changing the face amount You can increase or decrease your policy's face amount starting on the first
policy anniversary as long as we approve it. Here's how it works:
If you change the face amount, we'll send
you a supplemental schedule of benefits . You can change the face amount as long as the person insured by the policy is
and premiums. still living.
If your policy's death benefit is equal to . You can only change the face amount once in any policy year.
the guideline minimum death benefit, and
the net amount at risk is more than three . You must send us your request in writing while your policy is in force.
times the death benefit on the policy date,
we may reduce the death benefit by . The change will become effective on the first monthly payment date after we
requiring you to make a withdrawal from receive your request. If we receive your request on a monthly payment date,
your policy. we'll process it that day.
If we require you to make a withdrawal, we . The person insured by the policy will also need to agree to the change in
will not charge you our usual $25 face amount, if that person is someone other than you.
withdrawal fee, but the withdrawal may be
taxable. Please turn to Withdrawals, . Increasing the face amount may increase the death benefit, and decreasing the
surrenders and loans for information about face amount may decrease the death benefit. The amount the death benefit
making withdrawals. changes will depend, among other things, on the death benefit option you've
chosen and whether, and by how much, the death benefit is greater than the
face amount before you make the change.
. Changing the face amount can affect the net amount at risk, which affects the
cost of insurance charge. An increase in the face amount may increase the cost
of insurance charge, while a decrease may decrease the charge.
. We can refuse your request to make the face amount less than $50,000. We can
waive this minimum amount in certain situations, such as group or sponsored
arrangements.
Increasing the face amount
Here are some additional things you should know about increasing the face
amount:
. You must give us satisfactory evidence of insurability.
. Each increase you make to the face amount must be $25,000 or more.
. We may charge you a fee of up to $100 for each increase to cover the costs of
processing the request. We deduct the fee on the day the increase is effective
from all of your investment options in proportion to the accumulated value you
have in each option.
. Increasing the face amount will increase the mortality and expense risk
charge.
. For any increase in face amount which arises from conversion of a term rider,
we will waive the surrender charge and the mortality and expense risk charge
that would otherwise apply for the increase.
. We will allow an increase in face amount only if the resulting death benefit
increase at least equals our minimum limit on the request date.
. We will not allow an increase if there has been a prior decrease in face
amount, including any decrease caused by a withdrawal.
Decreasing the face amount may affect your Decreasing the face amount
policy's tax status. To ensure your policy Here are some additional things you should know about decreasing the face
continues to qualify as life insurance, we amount:
might be required to return part of your
premium payments to you if you've chosen the . We'll apply any decrease in the face amount in the following order:
guideline premium test, or make distributions . to the most recent increases you made to the face amount in the order you
from the accumulated value, which may made them
be taxable. . to the original face amount.
. We do not charge you for a decrease in face amount.
For more information, please see Variable . We can refuse your request to decrease the face amount if making the change
life insurance and your taxes. means:
. your policy will end because it no longer qualifies as life insurance
. the distributions we'll be required to make from your policy's accumulated
value will be greater than your policy's net cash surrender value
. your policy will become a modified endowment contract and you have not told
us in writing that this is acceptable to you.
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THE DEATH BENEFIT
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Optional riders There are eight optional riders that provide extra benefits, some at additional
cost. Not all riders are available in every state, and some riders may only be
Ask your registered representative for more added when you apply for your policy.
information about the riders available with
the policy. . Accidental death rider
Provides additional insurance coverage in the event of the accidental death of
There may be tax consequences if you the person insured by the policy.
exercise your rights under the Accelerated
living benefits rider. Please see Variable . Children's term rider
life insurance and your taxes for more Provides term insurance for the children of the person insured by the policy.
information.
. Annual renewable term rider
Samples of the provisions for the extra Provides annual renewal term insurance on the person insured by the policy
optional benefits are available from us until age 80.
upon written request.
. Annual renewable and convertible term rider
Provides annual renewal term insurance on members of the immediate family of
the person insured by the policy.
. Guaranteed insurability rider
Gives the right to buy additional insurance on the life of the person insured
by the policy on certain specified dates without proof of insurability.
. Waiver of charges rider
Waives certain charges if the person insured by the policy becomes totally
disabled before age 60.
. Accelerated living benefits rider
Gives the policy owner access to a portion of the policy's death benefit if
the person insured by the policy has been diagnosed with a terminal illness
resulting in a life expectancy of six months or less (or longer than six
months in some states).
. Disability benefit rider
Provides a monthly addition to the policy's accumulated value when the person
insured by the policy has a qualifying disability, until he or she reaches age
65.
We guarantee the amounts of the extra benefits when we issue your rider. We'll
add any rider charges to the monthly charge we deduct from your policy's
accumulated value.
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Things to keep in mind
Combining a policy and a rider may be more economical than adding another
policy. It may also be more economical to provide an amount of insurance
coverage through a policy alone.
Under certain circumstances, combining a policy with an Annual renewable term rider
may result in a face amount equal to the face amount of a single policy until age 80.
Combining a policy and an Annual renewable term rider will result in current charges
that are lower than for a single policy with the same face amount.
However, your policy has guaranteed maximum charges. Adding an Annual renewable
term rider will result in guaranteed maximum charges that are higher than for a
single policy with the same face amount.
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HOW PREMIUMS WORK
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Your policy gives you the flexibility to choose the amount and frequency of
your premium payments within certain limits. Each premium payment must be at
least $50.
The amount, frequency, and period of time
over which you make premium payments may We deduct a premium load from each premium payment, and then allocate your net
affect whether your policy will be premium to the investment options you've chosen. Depending on the performance
classified as a modified endowment contract, of your investment options, and on how many withdrawals, loans or other policy
or no longer qualifies as life insurance for features you've taken advantage of, you may need to make additional premium
tax purposes. See Variable life insurance payments to keep your policy in force.
and your taxes for more information.
If we do not receive your first premium payment within 20 days after we issue
your policy, we can cancel the policy and refund any partial premium payment
you've made. We may waive the 20 day requirement in some cases.
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Planned periodic premium payments You can schedule the amount and frequency of your premium payments. We refer to
scheduled premium payments as your planned periodic premium. Here's how it
works:
Even if you pay all your premiums when . On your application, you choose a fixed amount of at least $50 for each
they're scheduled, your policy could lapse premium payment.
if the accumulated value, less any
outstanding loan amount, is not enough to . You indicate whether you want to make premium payments annually, semi-
pay your monthly charges. Turn to Your annually, or quarterly. You can also choose monthly payments using our
policy's accumulated value for more monthly Uni-check plan, which is described below.
information.
. We send you a notice to remind you of your scheduled premium payment (except
for monthly Uni-check payments, which are paid automatically). If you own
more than one policy, we'll send one notice -- called a listbill -- that
reminds you of your payments for all of your policies. You can choose to
receive the listbill every month. While you do not have to make the premium
payments you've scheduled, not making a premium payment may have an impact on
any financial objectives you may have set for your policy's accumulated value
and death benefit, and could cause your policy to lapse.
. We'll treat any payment you make during the life of your policy as a loan
repayment, not as a premium payment, unless you tell us otherwise. When a
payment, or any portion of it, exceeds your outstanding loan amount, we'll
treat it as a premium payment. Some states may require us to consider your
payments as premium payments if you have not given us instructions to do
otherwise.
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Monthly Uni-check plan
Once you've made your first premium payment, you can make monthly premium
payments using our Uni-check plan. Here's how it works:
. you authorize us to withdraw a specified amount from your checking account
each month
. you can choose any day between the 4th and 28th of the month
. if you do not specify a day for us to make the withdrawal, we'll withdraw
the premium payment on your policy's monthly anniversary. If your policy's
monthly anniversary falls on the 1st, 2nd or 3rd of the month, we'll withdraw
the payment on the 4th of each month.
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Deductions from your premiums We deduct a premium load from each premium payment you make. The load is made
up of three charges:
Your net premium is your premium payment
less the premium load. Sales load
We deduct a 2.5% sales load from each premium payment you make.
This charge helps pay for the cost of distributing our policies and is
guaranteed not to increase. If our sales and distribution expenses are more
than the sales load, we can recover these expenses from other charges, such as
the mortality and expense risk charge and the surrender charge, and from any
mortality gains.
State and local tax charge
We deduct 2.35% from each premium payment to pay state and local premium and
other taxes. The actual taxes we pay vary from state to state, and in some
instances, among municipalities. We do not expect to profit from this charge,
and do not expect to change the rate unless the rate we pay changes.
Federal tax charge
We deduct 1.50% from each premium payment to pay federal taxes. We reserve the
right to change this rate to respond to changes in law.
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Allocating your premiums We generally allocate your net premiums to the investment options you've chosen
on your application on the day we receive them.
There are special restrictions when
allocating premiums to the Fixed LT We allocate your first premium on the free look transfer date. We'll hold your
account. net premiums in the Money Market investment option until the free look transfer
date, and then transfer them to the investment options you've chosen.
Please turn to Your investment options for
more information about the investment
options.
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HOW PREMIUMS WORK
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Limits on the premium payments Federal tax law puts limits on the amount of premium payments you can make in
you can make relation to your policy's death benefit. These limits apply in the following
situations:
Before you buy a policy, you can . If you've chosen the guideline premium test as your death benefit
ask us or your registered qualification test and accepting the premium means your policy will no longer
representative for a personalized qualify as life insurance for federal income tax purposes.
illustration that will show you
the guideline single premium and The total amount you can pay in premiums and still have your policy qualify as
guideline level annual premiums. life insurance is your policy's guideline premium limit. The sum of the
premiums paid, less any withdrawals, at any time cannot exceed the guideline
premium limit, which is the greater of:
. the guideline single premium or
. the sum of the guideline level annual premiums.
Your policy's guideline single premium and guideline level annual premiums
appear on your policy's specification pages.
We may refuse to accept all or part of a premium payment if, by accepting it,
you will exceed your policy's guideline premium limit. If we find that you've
exceeded your guideline premium limit, we may remove all or part of a premium
you've paid from your policy as of the day we applied it, and return it to you.
We'll adjust the death benefit retroactively to that date to reflect the
reduction in premium payments.
You'll find a detailed discussion . If applying the premium in that policy year means your policy will become a
of modified endowment contracts modified endowment contract.
in Variable life insurance and
your taxes. A life insurance policy will become a modified endowment contract if the sum of
premium payments made during the first seven contract years, less a portion of
withdrawals, exceeds the seven-pay limit defined in Section 7702A of the
Internal Revenue Code.
Unless you've told us in writing that you want your policy to become a modified
endowment contract, we'll remove all or part of the premium payment from your
policy as of the day we applied it and return it to you. We'll also adjust the
death benefit retroactively to that date to reflect the reduction in premium
payments. If we receive such a premium within 20 days before your policy
anniversary, we'll hold it and apply it to your policy on the anniversary date.
In both of these situations, if we remove an excess premium from your policy,
we'll return the premium amount to you no later than 60 days after the end of
that policy year. We may adjust the amount for interest or for changes in
accumulated value that relate to the amount of the excess premium payment we're
returning to you.
If we do not return the premium amount to you within that time, we'll increase
your policy's death benefit retroactively, to the day we applied the premium,
and prospectively so that it's always the amount necessary to ensure your
policy qualifies as life insurance, or to prevent it from becoming a modified
endowment contract. If we increase your death benefit, we'll adjust cost of
insurance or rider charges retroactively and prospectively to reflect the
increase.
Net amount at risk is the . If applying the premium payment to your policy will increase the net amount
difference between the death at risk. This will happen if your policy's death benefit is equal to the
benefit that would be payable if guideline minimum death benefit or would be equal to it once we applied your
the person insured by the policy premium payment.
died and the accumulated value of
your policy. We may choose to accept your premium payment in this situation, but before we
do so, we may require satisfactory evidence of the insurability of the person
insured by the policy.
We will not accept premium payments after the person insured by the policy
reaches age 100.
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YOUR POLICY'S ACCUMULATED VALUE
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Accumulated value is used as the Accumulated value is the value of your policy on any business day.
basis for determining policy
benefits and charges. We use it to calculate how much money is available to you for loans and
withdrawals, and how much you'll receive if you surrender your policy. It also
affects the amount of the death benefit if you choose a death benefit option
that's calculated using accumulated value.
The accumulated value of your policy is not guaranteed - it depends on the
performance of the investment options you've chosen, the premium payments
you've made, policy charges and how much you've borrowed or withdrawn from the
policy.
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Calculating your policy's Your policy's accumulated value is the total amount allocated to the variable
accumulated value investment options and the fixed options, plus the amount in the loan account.
Please see Taking out a loan for We determine the value allocated to the variable investment options on any
information about loans and the business day by multiplying the number of accumulation units for each variable
loan account. investment option credited to your policy on that day, by the variable
investment option's unit value at the end of that day. The process we use to
calculate unit values for the variable investment options is described in Your
investment options.
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Monthly deductions We deduct a monthly charge from your policy's accumulated value in the
investment options each monthly payment date.
If there is not enough
accumulated value to pay the Unless you tell us otherwise, we deduct the monthly charge from the investment
monthly charge, your policy could options that make up your policy's accumulated value, in proportion to the
lapse. The performance of the accumulated value you have in each option. This charge is made up of three
investment options you choose, charges:
not making planned premium
payments, or taking out a loan Cost of insurance
all affect the accumulated value This charge covers the cost of providing you with life insurance protection. We
of your policy. deduct a cost of insurance charge based on the cost of insurance rate for your
policy's initial face amount and for each increase you make to the face amount.
You'll find a discussion about
when your policy might lapse, and There are maximum or guaranteed cost of insurance rates associated with your
what you can do to reinstate it, policy. These rates are shown in your policy's specification pages. When the
later in this section. person insured by your policy reaches age 100, the guaranteed cost of insurance
rate is zero - in other words, you no longer pay any cost of insurance.
Unisex rates are used when a The guaranteed rates include the insurance risks associated with insuring one
policy is owned by an employer in person. They are calculated using 1980 Commissioners Standard Ordinary
connection with employment- Mortality Tables or the 1980 Commissioners Ordinary Mortality Table B, which
related or benefit programs. are used for unisex cost of insurance rates. The rates are also based on the
age, gender and risk class of the person insured by the policy unless unisex
rates are required.
Our current cost of insurance rates are based on the age, risk class, smoking
status and gender (unless unisex rates are required) of the person insured by
the policy. These rates generally increase as the person's age increases, and
they vary with the number of years the policy has been in force. Our current
rates are lower than the guaranteed rates and they will not exceed the
guaranteed rates in the future.
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YOUR POLICY'S ACCUMULATED VALUE
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Guaranteed period
We'll guarantee our current cost of insurance rates for five years.
If you increase the face amount, the cost of insurance rates associated with
the increase will have a five-year guaranteed period. This will be effective on
the day of the increase.
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If you add an annual renewable How we calculate cost of insurance
term rider to your policy, we We calculate cost of insurance by multiplying the current cost of insurance
will include the face amount of rate by a discounted net amount at risk at the beginning of each policy month.
the rider in this calculation of
cost of insurance. Net amount at risk for the cost of insurance calculation is the difference
between a discounted death benefit that would be payable if the person insured
by the policy died and the accumulated value of your policy at the beginning of
the policy month before the monthly charge is due.
First, we calculate the total net amount at risk for your policy in two steps:
. Step 1: we divide the death benefit that would be payable at the beginning of
the policy month by 1.002466.
. Step 2: we subtract your policy's accumulated value at the beginning of the
policy month from the amount we calculated in step 1.
Next, we allocate the net amount at risk in proportion to the face amount and
each increase that's in force as of your monthly payment date.
We then multiply the amount of each allocated net amount at risk by the cost of
insurance rate for each coverage. The sum of these amounts is your cost of
insurance charge.
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Administrative charge
We deduct a charge of $7.50 a month to help cover the costs of administering
and maintaining our policies. We guarantee that this charge will not increase.
When the person insured by the policy reaches age 100, the administrative
charge is zero - in other words, you no longer pay any administrative charge.
Mortality and expense risk charge
Mortality risk is the chance that the people insured by policies we've issued
do not live as long as expected. This means the cost of insurance charges
specified in the policies may not be enough to pay out actual claims.
Expense risk is the chance that our actual administrative and operating
expenses are more than the fees and expenses deducted under the policies and
the separate account.
The mortality and expense risk charge helps compensate us for these risks. It
has two components, which are described in the following box. We guarantee this
charge will not increase.
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An example How we calculate the mortality and expense risk charge
For a policy that insures a male
non-smoker who is age 45 when the The mortality and expense risk charge has two separate charges:
policy is issued, with:
. a face amount of $350,000 . M&E risk face amount charge We deduct a face amount charge every month during
the first 10 policy years, at a rate that is based on the age of the person
. accumulated value of $30,000 in insured by the policy on the policy date and on a face amount component
the variable options after factor per $1,000 of the initial face amount of your policy. The rates for
deducting any outstanding loan the face amount component are shown in Appendix A.
amount.
If you increase the face amount, each increase will have a corresponding face
The monthly charge for the M&E amount charge related to the amount of the increase. We'll specify these
risk face amount charge is: charges in a supplemental schedule of benefits at the time of the increase.
. $44.45 (($350,000 / 1,000) X 0.127). We'll apply each charge for 10 years from the day of the increase. If you
decrease the face amount, the charge will remain the same.
The monthly charge for the M&E
risk asset charge is $17.09 in . M&E risk asset charge We deduct a risk asset charge every month.
policy years 1 through 10
(($25,000 X 0.0625%) plus During policy years 1 through 10, we charge an annual rate 0.75% (0.000625
($5,000 X 0.0292%)). monthly), of the first $25,000 of your policy's accumulated value in the
variable investment options, plus an annual rate of 0.35% (0.000292 monthly),
The monthly charge for the M&E of the accumulated value in the variable investment options that exceeds
risk asset charge is $9.58 in $25,000.
policy year 11 and thereafter
(($25,000 x 0.0375%) plus During policy years 11 and thereafter, we charge an annual rate of 0.45%
($5,000 x 0.0042%)). (0.0375% monthly) on the first $25,000 of your policy's accumulated value in
the variable investment options plus an annual rate of 0.05% (0.0042% monthly)
Sample rates for the M&E risk of the accumulated value in the variable investment options that exceeds
face amount charge appear in $25,000.
Appendix A.
For the purposes of this charge, the amount of accumulated value is calculated
on the monthly payment date before we deduct the monthly charge, but after we
deduct any outstanding loan amount or allocate any new net premiums,
withdrawals or loans. When the person insured by the policy reaches age 100,
the annual rate is 0%--in other words, you no longer pay this charge.
Charges for optional riders
If you add any riders to your policy, we add any charges for them to your
monthly charge.
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YOUR POLICY'S ACCUMULATED VALUE
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Lapsing and reinstatement Your policy will lapse if there is not enough accumulated value, after
subtracting any outstanding loan amount, to cover the monthly charge on the day
we make the deduction. Your policy's accumulated value is affected by the
following:
. loans or withdrawals you make from your policy
. not making planned premium payments
. the performance of your investment options
. charges under the policy.
There is no guarantee that your policy will not lapse even if you pay your
planned periodic premium.
If there is not enough accumulated value to pay the total monthly charge, we
deduct the amount that's available and send you, and anyone you've assigned
your policy to, a notice telling you the minimum amount you have to pay to keep
your policy in force. This minimum amount is equal to three times the monthly
charge that was due on the monthly payment date when there was not enough
accumulated value to pay the charge.
We'll give you a grace period of 61 days from when we send the notice to pay
the required premium. Your policy will remain in force during the grace period.
If you do not make the minimum payment
If we do not receive your payment within the grace period, your policy will
lapse with no value. This means we'll end your life insurance coverage.
Remember to tell us if your payment is a If you make the minimum payment
premium payment. Otherwise, we'll
treat it as a loan repayment. If we receive your payment within the grace period, we'll allocate your net
premium to the investment options you've chosen and deduct the monthly charge
from your investment options in proportion to the accumulated value you have in
each option.
If your policy is in danger of lapsing and you have an outstanding loan amount,
you may find that making the minimum payment would cause the total premiums
paid to exceed the maximum amount for your policy's face amount under tax laws.
In that situation, we will not accept the portion of your payment that would
exceed the maximum amount. To stop your policy from lapsing, you'll have to
repay a portion of your outstanding loan amount.
How to avoid future lapsing
To stop your policy from lapsing in the future, you may want to make larger or
more frequent premium payments if tax laws permit it. Or if you have a loan,
you may want to repay a portion of it.
Paying death benefit proceeds during the grace period
If the person insured by the policy dies during the grace period, we'll pay
death benefit proceeds to your beneficiary. We'll reduce the payment by any
unpaid monthly charges and any outstanding loan amount.
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Reinstating a lapsed policy
If your policy lapses, you have five years from the end of the grace period to
apply for a reinstatement. We'll reinstate it if you send us the following:
. a written application
. evidence satisfactory to us that the person insured by the policy is still
insurable
. a premium payment sufficient to keep your policy in force for three months
after the day your policy is reinstated
. payment of all unpaid monthly charges that were due in the grace period.
We'll reinstate your policy as of the first monthly payment date on or after
the day we approve the reinstatement. Once we reinstate your policy, its
accumulated value will be the same as it was on the day your policy lapsed.
We'll allocate it according to your most recent premium allocation
instructions.
Reinstating a lapsed policy with an outstanding loan amount
If you had an outstanding loan amount when your policy lapsed, we will not pay
or credit interest on it during the period between the lapsing and
reinstatement of your policy. There are special rules that apply to reinstating
a policy with an outstanding loan amount:
. If we reinstate your policy on the first monthly payment date that immediately
follows the lapse, we'll also reinstate the loan amount that was outstanding
the day your policy lapsed.
. If we reinstate your policy on any monthly payment date other than the monthly
payment date that immediately follows the lapse, we'll deduct the outstanding
loan amount from your policy's accumulated value. This means you will no longer
have an outstanding loan amount when your policy is reinstated.
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YOUR INVESTMENT OPTIONS
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This section tells you about the investment options available under your policy
and how they work.
You can change your premium allocation We put your premium payments in our general and separate accounts. We own the
instructions by writing, sending a fax, or, assets in our accounts and allocate your premiums, less any charges, to the
if we have your completed telephone investment options you've chosen. Amounts allocated to the fixed options are
authorization form on file, by calling us held in our general account. Amounts allocated to the variable investment
at 1-800-800-7681. Or you can ask your options are held in our separate account.
registered representative to contact us.
You choose your initial investment options on your application. If you choose
You'll find information about when we more than one investment option, you must tell us the dollar amount or
allocate premium payments to your percentage you want to allocate to each option. You can change your premium
investment options in How premiums work. allocation instructions at any time.
The investment options you choose, and how they perform, will affect your
policy's accumulated value and may affect the death benefit. Please review the
investment options carefully and ask your registered representative to help you
choose the right ones for your goals and tolerance for risk. Make sure you
understand any costs you may pay directly and indirectly on your investment
options because they will affect the value of your policy.
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Variable investment options You can choose from 18 variable investment options. Each variable investment
option is set up as a variable account under our separate account and invests
Variable investment options are also known in a corresponding portfolio of the Pacific Select Fund. Each portfolio invests
as variable accounts. These variable in different securities and has its own investment goals, strategies and risks.
accounts are divisions of our separate The value of each portfolio will fluctuate with the value of the investments it
account. We bear the direct operating holds, and returns are not guaranteed. Your policy's accumulated value will
expenses of our separate account. For more fluctuate depending on the investment options you've chosen. You bear the
information about how these accounts work, investment risk of any variable investment options you choose.
see About PL&A.
The following chart is a summary of the Pacific Select Fund portfolios. You'll
Pacific Life is the investment adviser for find detailed descriptions of the portfolios in the Pacific Select Fund
the Pacific Select Fund. They oversee the prospectus that accompanies this prospectus. There's no guarantee that a
management of all the fund's portfolios, portfolio will achieve its investment objective. You should read the fund
and manage two of the portfolios directly. prospectus carefully before investing.
They've retained other portfolio managers
to manage the other portfolios.
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<CAPTION>
PORTFOLIO THE PORTFOLIO'S THE PORTFOLIO'S PORTFOLIO
INVESTMENT GOAL MAIN INVESTMENTS MANAGER
<S> <C> <C> <C>
Money Market Current income consistent Highest quality money market Pacific Life
with preservation of instruments believed to have
capital. limited credit risk.
High Yield Bond High level of current Fixed income securities with Pacific Life
income. lower and medium-quality credit
ratings and intermediate to
long terms to maturity.
Managed Bond Maximize total return Medium and high-quality fixed Pacific Investment
consistent with prudent income securities with varying Management Company
investment management. terms to maturity.
Government Securities Maximize total return Fixed income securities that Pacific Investment
consistent with prudent are issued or guaranteed by the Management Company
investment management. U.S. government, its agencies
or government-sponsored
enterprises.
Growth Growth of capital. Equity securities of smaller Capital Guardian
and medium-sized companies. Trust Company
Aggressive Equity Capital appreciation. Equity securities of small Alliance Capital
emerging-growth companies and Management L.P.
medium-sized companies.
Growth LT Long-term growth of capital Equity securities of a large Janus Capital
consistent with the number of companies of any Corporation
preservation of capital. size.
Equity Income Long-term growth of capital Equity securities of large and J.P. Morgan
and income. medium-sized dividend-paying Investment Management
U.S. companies. Inc.
Multi-Strategy High total return. A mix of equity and fixed J.P. Morgan
income securities. Investment Management
Inc.
Large-Cap Value Long-term growth of Equity securities of large U.S. Salomon Brothers
capital. Current income is companies. Asset Management Inc
of secondary importance.
Mid-Cap Value Capital appreciation. Equity securities of medium- Lazard Asset
sized U.S. companies believed Management
to be undervalued.
Equity Capital appreciation. Equity securities of large U.S. Goldman Sachs Asset
Current income is of growth-oriented companies. Management
secondary importance.
Bond and Income Total return and income A wide range of fixed income Goldman Sachs Asset
consistent with prudent securities with varying terms Management
investment management. to maturity, with an emphasis
on long-term bonds.
Equity Index Investment results that Equity securities of companies Bankers Trust Company
correspond to the total that are included in the
return of common stocks Standard & Poor's 500 Composite
publicly traded in the U.S. Stock Price Index.
Small-Cap Index Investment results that Equity securities of companies Bankers Trust Company
correspond to the total that are included in the
return of an index of small Russell 2000 Small Stock Index.
capitalization companies.
REIT Current income and long- Equity securities of real Morgan Stanley Asset
term capital appreciation. estate investment trusts. Management
International Long-term capital Equity securities of companies Morgan Stanley Asset
appreciation. of any size located in Management
developed countries outside of
the U.S.
Emerging Markets Long-term growth of Equity securities of companies Blairlogie Capital
capital. that are located in countries Management
generally regarded as "emerging
market" countries.
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YOUR INVESTMENT OPTIONS
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An example Calculating unit values
You ask us to allocate $6,000 to the When you choose a variable investment option, we credit your policy with
Government Securities investment option on accumulation units. The number of units we credit equals the amount we've
a business day. At the end of that day, the allocated divided by the unit value of the variable account. Similarly, the
unit value of the variable account is $15. number of accumulation units in your policy will be reduced when you make a
We'll credit your policy with 400 units transfer, withdrawal or loan from a variable investment option, and when your
($6,000 divided by $15). monthly charges are deducted.
The value of an accumulation unit is not The value of an accumulation unit is the basis for all financial transactions
the same as the value of a share in the relating to the variable investment options. We calculate the unit value for
underlying portfolio. each variable account once every business day, usually at or about 4:00 p.m.
Eastern time.
Generally, for any transaction, we'll use the next unit value calculated after
we receive your written request. If we receive your written request before 4:00
For information about timing of p.m. Eastern time, we'll use the unit value calculated as of the end of that
transactions, see Pacific Select Exec II - business day. If we receive your request on or after 4:00 p.m. Eastern time,
NY basics. we'll use the unit value calculated as of the end of the next business day.
If a scheduled transaction falls on a day that is not a business day, we'll
process it as of the end of the next business day. For your monthly charge,
we'll use the unit value calculated on your monthly payment date. If your
monthly payment date does not fall on a business day, we'll use the unit value
calculated as of the end of the next business day.
The unit value calculation is based on the following:
. the investment performance of the underlying portfolio
. any dividends or distributions paid by the underlying portfolio
. any charges for any taxes that are, or may become, associated with the
operation of the variable account.
The unit value of a variable account will change with the value of its
corresponding Pacific Select Fund portfolio. Changes in the unit value of a
variable account will not change the number of accumulation units credited to
your policy.
A look at performance
Performance information may appear in advertisements, sales literature, or
reports to policy owners or prospective buyers.
Information about the performance of any variable account of the separate
account reflects only the performance of a hypothetical policy. The
calculations are based on allocating the hypothetical policy's accumulated
value to the variable account during a particular time period.
Performance information is no guarantee of how a variable account will perform
in the future. You should keep in mind the investment objectives and policies,
characteristics and quality of the portfolio of the fund in which the variable
account invests, and the market conditions during the period of time that's
shown.
We may show performance information in any way that's allowed under the law
that applies to it. This may include presenting a change in accumulated value
due to the performance of one or more variable accounts, or as a change in a
policy owner's death benefit.
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We may show performance as a change in accumulated value over time or in terms
of the average annual compounded rate of return on accumulated value. This
would be based on allocating premium payments for a hypothetical policy to a
particular variable account over certain periods of time, including one year,
or from the day the variable account started operating. If a portfolio has
existed for longer than its corresponding variable account, we may also show
the hypothetical returns that the variable account would have achieved had it
invested in the portfolio from the day the portfolio started operating.
Performance may reflect the deduction of all policy charges including premium
load, the cost of insurance, the administrative charge, and the mortality and
expense risk charge. The different death benefit options will result in
different expenses for the cost of insurance, and the varying expenses will
result in different accumulated values.
Performance may also reflect the deduction of the surrender charge, if it
applies, by assuming the hypothetical policy is surrendered at the end of the
particular period. At the same time, we may give other performance figures that
do not assume the policy is surrendered and do not reflect any deduction of the
surrender charge.
In our advertisements, sales literature and reports to policy owners, we may
compare performance information for a variable account to:
. other variable life separate accounts, mutual funds, or investment products
tracked by research firms, ratings services, companies, publications, or
persons who rank separate accounts or investment products on overall
performance or other criteria
. the Consumer Price Index, to assess the real rate of return from buying a
policy by taking inflation into consideration.
Reports and promotional literature may also contain our rating or a rating of
our claims-paying ability. These ratings are set by firms that analyze and rate
insurance companies and by nationally recognized statistical rating
organizations.
You'll find more about Pacific Select Fund Fees and expenses paid by the Pacific Select Fund
fees and expenses in An overview of Pacific The Pacific Select Fund pays advisory fees and other expenses. These are
Select Exec II - NY. deducted from the assets of the fund's portfolios and may vary from year to
year. They are not fixed and are not part of the terms of your policy. If you
choose a variable investment option, these fees and expenses affect you
indirectly because they reduce portfolio returns. The fund is governed by its
own Board of Trustees.
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YOUR INVESTMENT OPTIONS
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Fixed options You can also choose from two fixed options: the Fixed account and the Fixed LT
account. The fixed options provide a guaranteed minimum annual rate of
The fixed options are not securities, so interest. The amounts allocated to the fixed options are held in our general
they do not fall under any securities act. account.
For this reason, the SEC has not reviewed
the disclosure in this prospectus about Here are some things you need to know about the fixed options:
these options. However, other federal
securities laws may apply to the accuracy . Accumulated value allocated to the fixed options earns interest on a daily
and completeness of the disclosure about basis, using a 365-day year. Our minimum annual interest rate is 3% during the
these options. first 10 policy years, and 3.3% thereafter.
For more information about the general . We may offer a higher annual interest rate on the fixed options. If we do,
account, see About PL&A. we'll guarantee the higher rate for one year.
. If we offer a higher annual interest rate on a fixed option, we may also pay
additional interest on accumulated value in excess of $25,000 in that fixed
option. Ask your registered representative for current interest rates.
. There are no investment risks or direct charges.
. There are limitations on when and how much you can transfer from the fixed
options. These limitations are described below, in Transferring among
investment options.
. We may limit the total amount you allocate to the Fixed LT account for all
Pacific Life policies you own to $1,000,000 in any 12-month period, and
transfer any amount over $1,000,000 to your other investment options according
to your most recent instructions. We may increase the $1,000,000 limit at any
time at our sole discretion. You should contact us to find out if a higher
limit is in effect.
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Transferring among You can transfer among your investment options any time during the life of your
investment options policy without triggering any current income tax. You can make transfers by
writing to us, by making a telephone transfer, or by signing up for one of our
You can make transfers and use transfer automatic transfer programs. You'll find more information about making
programs only after the free look transfer telephone transfers in Pacific Select Exec II basics.
date. For more information, please see
Pacific Select Exec II - NY basics. Transfers will normally be effective as of the end of the business day we
receive your written or telephone request.
You can make transfers to the fixed
options any time during the first 18 Here are some things you need to know about making transfers:
months of your policy.
. If you're making transfers between variable investment options, there is no
You'll find more about the first year minimum amount required and you can make as many transfers as you like.
transfer program later in this section.
. You can make transfers from the variable investment options to the fixed
options only in the policy month right before each policy anniversary.
. You can only make one transfer from each fixed option in any 12-month period,
except if you've signed up for the first year transfer program.
. You can only transfer up to the greater of $5,000 or 25% of your policy's
accumulated value in the Fixed account in any 12-month period, except for
scheduled transfers under the first year transfer program.
. You can only transfer up to the greater of $5,000 or 10% of your policy's
accumulated value in the Fixed LT account in any 12-month period.
. Currently, there is no charge for making a transfer but we may charge you in
the future.
. There is no minimum required value for the investment option you're
transferring to or from.
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. You cannot make a transfer if your policy is in the grace period and is in
danger of lapsing.
. We can restrict or suspend transfers.
. We may choose to impose limits on transfer amounts, the value of the
investment options you're transferring to or from, or the number and frequency
of transfers you can make.
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Transfer programs We offer three programs that allow you to make automatic transfers of
accumulated value from one investment option to another. Under the dollar cost
averaging and portfolio rebalancing programs, you can transfer among the
variable investment options. Under the first year transfer program, you can
make transfers from the Fixed account to the Fixed LT account and the variable
investment options.
Since the value of accumulation units can Dollar cost averaging program
change, more units are credited for a Our dollar cost averaging program allows you to make scheduled transfers of $50
scheduled transfer when unit values are or more between variable investment options without paying a transfer fee. It
lower, and fewer units when unit values does not allow you to make transfers to or from either of the fixed options.
are higher. This allows you to average the Here's how the program works:
cost of investments over time. Investing
this way does not guarantee profits or . You can set up this program at any time while your policy is in force.
prevent losses.
. You need to complete a request form to enroll in the program.
. You must have at least $5,000 in a variable investment option to start the
program.
. We'll automatically transfer accumulated value from one variable investment
option to one or more of the other variable investment options you've
selected.
. We'll process transfers as of the end of the business day on your policy's
monthly, quarterly, semi-annual or annual anniversary, depending on the
interval you've chosen. We will not make the first transfer until after the
free look transfer date.
. We will not charge you for the dollar cost averaging program or for transfers
made under this program, even if we decide to charge you in the future for
transfers outside of the program, except if we have to by law.
. We have the right to discontinue, modify or suspend the program at any time.
. We'll keep making transfers at the intervals you've chosen until one of the
following happens:
. the total amount you've asked us to transfer has been transferred
. there is no more accumulated value in the investment option you're
transferring from
. your policy enters the grace period and is in danger of lapsing
. you tell us in writing to cancel the program
. we discontinue the program.
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YOUR INVESTMENT OPTIONS
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Because the portfolio rebalancing Portfolio rebalancing program
program matches your original As the value of the underlying portfolios changes, the value of the allocations
percentage allocations, we may to the variable investment options will also change. The portfolio rebalancing
transfer money from an investment program automatically transfers your policy's accumulated value among the
option with relatively higher variable investment options according to your original percentage allocations.
returns to one with relatively
lower returns. Here's how the program works:
. You can set up this program at any time while your policy is in force.
. You enroll in the program by sending us a written signed request or a
completed automatic rebalancing form.
. Your first rebalancing will take place on the monthly payment date you choose.
You choose whether we should make transfers quarterly, semi-annually or
annually, based on your policy date.
. If you cancel this program, you must wait 30 days to begin it again.
. You cannot use this program if you're already using the dollar cost averaging
program.
. We do not currently charge for the portfolio rebalancing program or for
transfers made under this program.
. We can discontinue, suspend or change the program at any time.
This program allows you to First year transfer program
average the cost of investments Our first year transfer program allows you to make monthly transfers during the
over your first policy year. first policy year from the Fixed account to the variable investment options or
Investing this way does not the Fixed LT account. It does not allow you to transfer among variable
guarantee profits or prevent investment options.
losses.
Here's how the program works:
. You enroll in the program when you apply for your policy.
. You choose a regular amount to be transferred every month for 12 months
. We make the first transfer on the day we allocate your first premium to the
investment options you've chosen. Each transfer will be made on the same day
every month.
. If you sign up for this program, we'll waive the usual transfer limit for the
Fixed account during the first policy year.
. If we make the last transfer during the second policy year, we will not count
it toward the usual one transfer per year limit for the Fixed account.
. If the accumulated value in the Fixed account is less than the amount to be
transferred, we'll transfer the balance and then cancel the program.
. If there is accumulated value remaining in the Fixed account at the end of the
program, our usual rules for the fixed account will apply.
. We do not currently charge for the first year transfer program or for
transfers made under this program.
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WITHDRAWALS, SURRENDERS AND LOANS
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Making a withdrawal, taking out a loan or You can take out all or part of your policy's accumulated value while your
surrendering your policy can change your policy is in force by making withdrawals or surrendering your policy. You can
policy's tax status, generate taxable take out a loan from us using your policy as security. You can also use your
income, or make your policy more susceptible policy's loan and withdrawal features to supplement your income, for example,
to lapsing. Be sure to plan carefully before during retirement.
using these policy benefits.
If you withdraw a larger amount than you've
paid into your policy, your withdrawal may
be considered taxable income.
For more information, see Variable life
insurance and your taxes.
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Making withdrawals You can withdraw part of your policy's net cash surrender value starting on
your policy's first anniversary. Here's how it works:
You can choose to receive your withdrawal
in a lump sum or use it to buy an income . You must send us a written request that's signed by all joint owners.
benefit. Please see the discussion about . Each withdrawal must be at least $200, and the net cash surrender value of
income benefits in General information your policy after the withdrawal must be at least $500.
about your policy. . If your policy has an outstanding loan amount, the maximum withdrawal you can
take is the amount, if any, by which the cash surrender value just before the
We will not accept your request to make a withdrawal exceeds the outstanding loan amount divided by 90%.
withdrawal if it will cause your policy to . We'll charge you $25 for each withdrawal you make.
become a modified endowment contract, unless . If you do not tell us which investment options to take the withdrawal from,
you've told us in writing that you want your we'll deduct the withdrawal and the withdrawal charge from all of your
policy to become a modified endowment investment options in proportion to the accumulated value you have in each
contract. option.
. The accumulated value, cash surrender value and net cash surrender value of
your policy will be reduced by the amount of each withdrawal.
. If the person insured under the policy dies after you've sent a withdrawal
request to us, but before we've made the withdrawal, we'll deduct the amount of
the withdrawal from any death benefit proceeds owing.
How withdrawals affect your policy's death benefit
Making a withdrawal will affect your policy's death benefit in the following
ways:
. if your policy's death benefit does not equal the guideline minimum death
benefit, the death benefit will decrease by the amount of your withdrawal.
. if your policy's death benefit equals the guideline minimum death benefit, the
death benefit may decrease by more than the amount of your withdrawal.
How withdrawals affect your policy's face amount
If you've chosen death benefit Option B or Option C, making a withdrawal does
not reduce your policy's face amount.
If you've chosen death benefit Option A, a withdrawal may reduce your face
amount. You can make one withdrawal during each of the first 15 policy years of
up to 10% of the total premium payments you've made without reducing your
policy's face amount. If you withdraw a larger amount, or make additional
withdrawals, the face amount will be reduced by the amount, if any, by which
the face amount exceeds the death benefit immediately before the withdrawal,
minus the amount of the withdrawal.
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WITHDRAWALS, SURRENDERS AND LOANS
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Taking out a loan You can borrow money from us any time while your policy is in force either by
sending us a request in writing, or over the telephone. You'll find more
The amount in the loan account, plus any information about requesting a loan by telephone in Pacific Select Exec II - NY
interest you owe, is referred to throughout basics.
this prospectus as your outstanding loan
amount. Your policy refers to this amount When you borrow money from us, we use your policy's accumulated value as
as policy debt. security. You pay interest on the amount you borrow. The accumulated value set
aside to secure your loan also earns interest. Here's how it works:
Taking out a loan will affect the growth of
your policy's accumulated value, and may . To secure the loan, we transfer an amount equal to the amount you're
affect the death benefit. borrowing from your accumulated value in the investment options to the loan
account. We'll transfer this amount from your investment options in proportion
An example to the accumulated value you have in each option, unless you tell us
For a policy with: otherwise.
. accumulated value of $100,000 . Interest owing on the amount you've borrowed accrues daily at an annual rate
. an outstanding loan amount of $60,000 of 3.55%. Interest that has accrued during the policy year is due on your
. a most recent monthly charge of $225 policy anniversary. If you do not pay the interest when it's due, we'll add it
to the amount of your loan and begin accruing interest on it from the day it was
The maximum amount you can borrow during due. We'll also transfer an amount equal to the interest that was due, from your
policy years 1 through 10 is the greater of: policy's accumulated value to the loan account. We'll transfer this amount from
your investment options in proportion to the accumulated value you have in each
$25,500 ((90% X ($100,000 - option, unless you tell us otherwise.
$5,000)) - $60,000) . The amount in the loan account earns interest daily at an annual rate of
3% during the first 10 policy years, and 3.3% thereafter. On your policy
or anniversary, we transfer the interest that's been credited to the loan account
proportionately to your investment options according to your most recent
$31,809.75 allocation instructions.
(a X (b / c)) - d, where:
a = $92,300 ($100,000 - How much you can borrow
$5,000 - ($12 X $225)) The minimum amount you can borrow is $200. You can borrow up to the larger of
b = 1.03 the following amounts:
c = 1.0355
d = $60,000) . 90% of the accumulated value in the investment options, less any surrender
charges that would apply if you surrendered your policy on the day you took
The maximum amount you can borrow during out the loan.
policy year 11 and thereafter is the . the result of a X (b / c) - d, where:
greater of:
a = the accumulated value of your policy less any surrender charges that would
$25,500 have applied if you surrendered your policy on the day you took out the loan,
((90% X ($100,000 - $5,000)) - and less 12 times the most recent monthly charge
$60,000) b = 1.03 during policy years 1 through 10, and
or 1.033 during policy year 11 and thereafter
c = 1.0355
d = any outstanding loan amount.
$32,077.16
(a X (b / c)) - d, where: Paying off your loan
a = $92,300 ($100,000 - You can pay off all or part of the loan any time while your policy is in force.
$5,000 - ($12 X $225)) Unless you tell us otherwise, we'll generally transfer any loan payments you
b = 1.033 make proportionately to your investment options according to your most recent
c = 1.0355 allocation instructions. We may, however, first transfer any loan payments you
d = $60,000) make to the fixed options, up to the amount originally transferred from the
fixed options to the loan account. We'll then transfer any excess amount to
your variable investment options according to your most recent allocation
instructions.
While you have an outstanding loan, we'll treat any money you send us as a loan
payment unless you tell us otherwise in writing.
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Your outstanding loan amount could result in What happens if you do not pay off your loan
taxable income if you surrender your policy, If you do not pay off your loan, we'll deduct the amount in the loan account,
if your policy lapses, or if your policy is including any interest you owe, from one of the following:
a modified endowment contract. You should
talk to your tax advisor before taking out a . the death benefit proceeds before we pay them to your beneficiary
loan under your policy. See Taking out a . the cash surrender value if you surrender your policy
loan in Variable life insurance and . the amount we refund if you exercise your right to cancel.
your taxes.
Taking out a loan, whether or not you repay it, will have a permanent effect on
the value of your policy. For example, while your policy's accumulated value is
held in the loan account, it will miss out on the potential earnings available
through the variable investment options. The amount of interest you earn on the
loan account may be less than the amount of interest you would have earned from
the fixed options. These could lower your policy's accumulated value, which
could reduce the amount of the death benefit.
When a loan is outstanding, the amount in the loan account is not available to
help pay for any policy charges. If, after deducting your outstanding loan
amount, there is not enough accumulated value in your policy to cover the
policy charges, your policy could lapse. You may need to make additional
premium payments or loan repayments to prevent your policy from lapsing.
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Ways to use your policy's loan and You can use your policy's loan and withdrawal features to supplement your
withdrawal features income, for example, during retirement.
If you're interested in using your life Using your policy to supplement your income does not change your rights or our
insurance policy to supplement your obligations under the policy. The terms for loans and withdrawals described in
retirement income, please contact us for this prospectus remain the same.
more information.
Here are some things you should consider when setting up an income stream:
We can provide you with illustrations that
give you examples of how this could affect . the rate of return you expect to earn on your investment options
the accumulated value, net cash surrender . how long you would like to receive regular income
value and death benefit of your policy based . the amount of accumulated value you want to maintain in your policy.
on different hypothetical gross rates of
return. We will not use a higher rate than Understanding the risks
12%, and will always compare it with a rate Setting up an income stream may not be suitable for all policy owners. It's
of 0% based on guaranteed insurance costs. important to understand the risks that are involved in using your policy's loan
You'll find sample illustrations and the and withdrawal features.
assumptions they're based on starting on
page 106. You must always leave enough accumulated value in your policy to help ensure
your policy will continue to qualify as life insurance and will not lapse. Your
The hypothetical rates of return are policy will lapse if there is not enough accumulated value, after subtracting
illustrative of past or future results. any outstanding loan amount, to cover the monthly charge on the day we make the
Policy values and benefits would be deduction and the grace period expires. If your policy lapses, we'll end your
different from those shown in the life insurance coverage.
illustrations if:
There are also charges associated with reinstating a lapsed policy.
. the gross annual rates of return are
different from the hypothetical rates You should consult with your financial adviser and carefully consider how much
you can withdraw and borrow from your policy each year to set up your income
. premiums were not paid as illustrated stream.
. loan interest was paid when due. Remember that the performance of your investment options also affects your
policy's accumulated value. Poor performance can increase the danger of your
policy lapsing. And as the cost of insurance generally increases with the age
of the person insured by the policy, this can also reduce the accumulated
value.
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WITHDRAWALS, SURRENDERS AND LOANS
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You can also ask for accompanying charts In addition, you should carefully review the policy statements we send you.
and graphs that compare results from Your statements will allow you to monitor your policy's accumulated value, less
various retirement strategies. your outstanding loan amount, to ensure your policy can continue to support the
income stream you have chosen.
You can ask your registered representative If your policy lapses or you surrender your policy after you have taken out a
for illustrations showing how policy loan, you could face significant income tax liability in the year of the lapse
charges may affect existing accumulated or surrender. Any outstanding loan amount will automatically be repaid when
value and how future withdrawals and loans your policy lapses or you surrender your policy. You could be taxed to the
may affect the accumulated value and death extent that the net surrender value plus the outstanding loan amount repaid
benefit. exceeds the cost basis of your policy.
Tax issues are described in detail in Interest on a loan is due to us on each policy anniversary. If we do not
Variable insurance and your taxes. receive the interest when due, we'll add it to the outstanding loan amount and
begins accruing interest on it from the day it was due. This has a compounding
effect and can add to your income tax liability.
If the person insured by the policy dies, we'll deduct any outstanding loan
amount from the death benefit. This means the death benefit proceeds will be
less than the death benefit and may be less than the face amount.
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Surrendering your policy You can surrender or cash in your policy at any time while the person insured
by the policy is still living. Your policy's cash surrender value is its
You can choose to receive your money in a accumulated value less any surrender charge that applies. The net cash
lump sum or use it to buy an income benefit. surrender value equals your policy's cash surrender value after deducting any
Please see the discussion about income outstanding loan amount.
benefits in General information about your
policy. Here are some things you need to know about surrendering your policy:
If you increase your policy's face amount, . You must send us your policy and a written request.
we'll send you a supplemental schedule of . We'll send you the policy's net cash surrender value. If you surrender your
benefits that shows the surrender charge policy during the first 10 policy years, we'll deduct a surrender charge that
associated with the increase. helps cover our costs for underwriting, issuing and distributing our policies
. Your policy's surrender charge is based on the initial face amount of your
policy and will never be greater than the maximum surrender charge. The maximum
surrender charge is calculated at a rate that is based on the age and risk
class of the person insured by the policy, and each $1,000 of initial face
amount.
. There's no surrender charge on the initial face amount after 10 policy years.
. We guarantee the surrender charge rates will not increase.
. If you increase your policy's face amount, each increase has a surrender
charge and maximum surrender charge, based on the amount of the increase, for
10 years.
. If you decrease the face amount, the decrease will not affect your policy's
surrender charge or maximum surrender charge.
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Sample rates for the surrender charge How we calculate the surrender charge
and the maximum surrender charge appear
in Appendix A. The surrender charge and the maximum surrender charge are assessed against your
policy's accumulated value. They are based on the age and risk class of the
An example person insured by the policy for each $1,000 of the initial face amount of your
For a policy: policy.
. that insures a male non-smoker who
is age 45 when the policy is issued The amount of the surrender charge does not change during the first policy
. with an initial face amount of $350,000. year. Starting on the first policy anniversary, we reduce the charge by 0.9259%
each month until it reaches zero at the end of 10 policy years.
The surrender charge is:
The maximum surrender charge does not change during the first 10 policy years,
. $8,757.00 in the first policy year and then is reduced to zero at the end of the 10th policy year. The maximum
(($350,000 / $1,000) X 25.02) surrender charge on the initial face amount of your policy will never be more
. $2,919.16 at the end of the seventh than $32.752 per $1,000 of initial face amount.
policy year ($8,757.00 - ($8,757.00 X
.9259% X 72 months))
We will never deduct more than the maximum
surrender charge, which is $4,426.10
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This section tells you some additional things you should know about your
policy.
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Income benefit If you surrender or make a withdrawal from your policy, you can use the money
to buy an income benefit that provides a monthly income. Your policy's
beneficiary can use death benefit proceeds to buy an income benefit. In
addition to the income benefit described below, you can choose from other
income benefits we may make available from time to time.
The following is one income benefit available under the Pacific Select Exec II
policy:
. The income benefit is based on the life of the person receiving the income. If
the policy owner is buying the income benefit, monthly income will be based on
the owner's life. If the policy's beneficiary buys the income benefit, monthly
income will be based on the beneficiary's life.
. We'll pay a monthly income for at least 10 years regardless of whether the
person receiving the income is still alive.
. After 10 years, we'll only pay the monthly income for as long as the person
receiving it is still alive.
. The minimum monthly income benefit calculated must be at least $100.
. For this income benefit, the amount you receive will always be at least as
much as the amount guaranteed by your policy.
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Reduced Paid-Up Benefit You may use the net cash surrender value of your policy to purchase guaranteed
fixed paid-up insurance on the life of the person insured by the policy. You
may choose to do this at any time while the policy is in force.
If you convert your policy, the net cash surrender value will be transferred to
our general account. The amount of paid-up insurance is determined by applying
the net cash surrender value as the net single premium based upon the insured's
age and risk class, 1980 CSO mortality table, and 3% interest. Any riders
attached to the policy will terminate at the time of conversion.
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Substituting the person insured by Starting on your policy's first anniversary, you can apply to substitute the
your policy person insured by your policy. You must apply in writing and we must receive
satisfactory evidence of insurability of the new person to be insured by the
If you substitute the person insured policy. You can only add riders on the new person insured by the policy if we
by the policy, we'll send you a revised approve the addition of the riders.
schedule of benefits.
The substitution will become effective on the first monthly payment date after
we approve your request. We may have to adjust the face amount, accumulated
value, surrender charge and policy charges to reflect the substitution.
We can refuse your request to substitute if, among other reasons:
. we would be required to end the policy in order to comply with new guideline
premium limits under tax law
. we would be required to make distributions from your policy's accumulated
value that are greater than the net cash surrender value.
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Paying the death benefit in the case If the person insured by the policy, whether sane or insane, commits suicide
of suicide within two years of the policy date, death benefit proceeds will be the total
of all premiums you've paid, less any outstanding loan amount and any
withdrawals you've made.
If you've substituted the person insured by the policy and that person, whether
sane or insane, commits suicide within two years of the day the substitution
was made, we'll calculate death benefit proceeds differently. Proceeds will be
limited to the net cash surrender value of your policy as of the day the
substitution was made, less any increase in any outstanding loan amount, any
withdrawals you've made, and any dividends we've paid in cash, since the day
the substitution was made.
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Replacement of life insurance The term replacement has a special meaning in the life insurance industry.
or annuities Before you make a decision to buy, we want you to understand what impact a
replacement may have on your existing insurance policy.
A replacement occurs when you buy a new life insurance policy or annuity
contract, and a policy or contract you already own has been or will be:
. lapsed, forfeited, surrendered or partially surrendered, assigned to the
replacing insurer, or otherwise terminated
. converted to reduced paid-up insurance, continued as extended term insurance,
or otherwise reduced in value by the use of nonforfeiture benefits or other
policy values
. amended to effect either a reduction in benefits or in the term for which
coverage would otherwise remain in force or for which benefits would be paid
. reissued with any reduction in cash value, or
. pledged as collateral or subject to borrowing, whether in a single loan or
under a schedule of borrowing over a period of time.
There are circumstances when replacing your existing life insurance policy or
annuity contract can benefit you. As a general rule, however, replacement is
not in your best interest. You should carefully compare the costs and benefits
of your existing policy or contract with those of the new policy or contract to
determine whether replacement is in your best interest.
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Errors on your application If the age or gender of the person insured by your policy is stated incorrectly
on your application, the death benefit under your policy will be the greater of
If unisex cost of insurance rates apply to the following:
your policy, we will not adjust the face
amount if we discover that gender has been . the amount of death benefit that would be purchased by the most recent cost of
stated incorrectly on your application. insurance charge for the correct age and gender or
. the guideline minimum death benefit for the correct age and gender.
We'll adjust the accumulated value by recalculating all previous cost of
insurance charges and other monthly deductions based on the correct age and
gender.
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Contesting the validity of your policy We have the right to contest the validity of your policy for two years from the
policy date. Once your policy has been in force for two years from the policy
date during the lifetime of the person insured by the policy, we generally lose
the right to contest its validity.
We also have the right to contest the validity of a policy that you reinstate
for two years from the day that it was reinstated. Once your reinstated policy
has been in force for two years from the reinstatement date during the lifetime
of the person insured by the policy, we generally lose the right to contest its
validity. During this period, we may contest your policy only if there is a
material misrepresentation on your application for reinstatement.
We have the right to contest the validity of an increase in the face amount of
a policy for two years from the day the increase becomes effective. Once the
increased face amount has been in force for two years during the lifetime of
the person insured by the policy, we generally lose the right to contest its
validity.
We also have the right to contest the validity of a policy if there has been a
substitution to the person insured by the policy. We can contest a policy's
validity for two years from the day the substitution becomes effective. Once
the substitution has been in force for two years during the lifetime of the
person insured by the policy, we generally lose the right to contest its
validity.
Regardless of the above, we can contest the validity of your policy for failure
to pay premiums at any time. The policy will terminate upon successful contest
with respect to the person insured by the policy.
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Assigning your policy as collateral You can assign your policy as collateral to secure a loan, mortgage, or other
kind of debt. Here's how it works:
Assigning a policy that's a modified
endowment contract may generate taxable . An assignment does not change the ownership of the policy.
income and a 10% penalty tax. . After the policy has been assigned, your rights and the rights of your
beneficiary will be subject to the assignment. The entire policy, including any
income benefit, rider, benefit and endorsement, will also be subject to the
assignment.
. We're not responsible for the validity of any assignment.
. We must receive and record a copy of the original assignment in a form that's
acceptable to us before we'll consider it binding.
. Unless otherwise provided, the person or organization you assign your policy
to may exercise the rights under the policy, except the right to change the
policy owner or the beneficiary or the right to choose a monthly income
benefit.
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Non-participating This policy will not share in any of our surplus earnings.
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VARIABLE LIFE INSURANCE AND YOUR TAXES
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This discussion about taxes is based on our understanding of the present
federal income tax laws as they are currently interpreted by the Internal
Revenue Service (IRS). It's based on the Internal Revenue Code of 1986, as
amended, (the tax code) and does not cover any state or local tax laws.
The tax consequences of owning a policy
or receiving proceeds from it may vary This is not a complete discussion of all federal income tax questions that may
by jurisdiction and according to the arise under the policy. There are special rules that we do not include here
circumstances of each owner or beneficiary. that may apply in certain situations.
Speak to a qualified tax adviser for We do not know whether the current treatment of life insurance policies under
complete information about federal, state current federal income tax or estate or gift tax laws will continue. We also do
and local taxes that may apply to you. not know whether the current interpretations of the laws by the IRS or the
courts will remain the same. Future legislation may adversely change the tax
treatment of life insurance policies, other tax consequences described in this
discussion or tax consequences that relate directly or indirectly to life
insurance policies.
We do not make any guarantees about the tax status of your policy, and you
should not consider the discussion that follows to be tax advice.
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Tax treatment of life insurance policies Definition of life insurance
We believe that the policy qualifies as life insurance. That means it will
In order to qualify as a life insurance receive the same tax advantages as a conventional fixed life insurance policy.
contract for federal income tax purposes, The two main tax advantages are:
the policy must meet the statutory
definition of life insurance. . In general, your policy's beneficiary will not be subject to federal income
tax when he or she receives the death benefit proceeds. This is true regardless
Death benefits may be excluded from income of whether the beneficiary is an individual, corporation, or other entity.
under Section 101(a) of the tax code. . You'll generally not be taxed on any or all of your policy's accumulated value
unless you receive a cash distribution by making a withdrawal, surrendering
your policy, or in some instances, taking a loan from your policy.
The tax laws defining life insurance, however, do not cover all policy
features. Your policy may have features that could prevent it from qualifying
as life insurance. For example, the tax laws have yet to address many issues
concerning the treatment of substandard risk policies and policies with term
insurance on the person insured by the policy. We can make changes to your
policy if we believe the changes are needed to ensure that your policy
continues to qualify as a life insurance contract.
Tax regulations deal with allowable charges for mortality costs and other
expenses that are used in calculating whether a policy qualifies as life
insurance. For life insurance policies entered into on or after October 21,
1988, these calculations must be based upon reasonable mortality charges and
other charges reasonably expected to be actually paid.
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VARIABLE LIFE INSURANCE AND YOUR TAXES
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The Treasury Department has issued proposed regulations about reasonable
standards for mortality charges. While we believe that our mortality costs and
other expenses used in calculating whether the policy qualifies as life
insurance are reasonable under current laws, we cannot be sure that the IRS
agrees with us. We can change our mortality charges if we believe the changes
are needed to ensure that your policy qualifies as a life insurance contract.
Section 817(h) of the tax code describes Diversification rules and ownership of the separate account
the diversification rules. Your policy will not qualify for the tax benefit of a life insurance contract
unless the separate account follows certain rules requiring diversification of
For more information about diversification investments underlying the policy. In addition, the IRS requires that the
rules, please see Managing the Pacific policyholder does not have control over the underlying assets.
Select Fund in the accompanying Pacific
Select Fund prospectus. The Treasury Department has announced that the diversification rules "do not
provide guidance concerning the circumstances in which it will treat an
investor, rather than the insurance company, as the owner of the assets in a
separate account." The IRS treats a variable policy owner as the owner of
separate account assets if he or she has the ability to exercise investment
control over them. Owners of the assets are taxed on any income or gains the
assets generate. Although the Treasury Department announced it would provide
further guidance on the issue, it had not done so when we wrote this
prospectus.
No IRS rulings deal with policies that have exactly the same ownership rights
as your policy. Since you have additional flexibility in allocating premiums
and policy values, it is possible the IRS would treat you as the owner of your
policy's proportionate share of the assets of the separate account.
We do not know what will be in future Treasury Department regulations. We
cannot guarantee that the fund's portfolios will be able to operate as
currently described in the prospectus, or that the fund will not have to change
any portfolio's investment objective or policies. We can modify your policy if
we believe it will prevent you from being considered the owner of your policy's
proportionate share of the assets of the separate account.
Policy exchanges fall under Section Policy exchanges
1035(a) of the tax code. If you exchange your entire policy for another one that insures the same
person, it generally will be treated as a tax-free exchange and, if so, will
not result in the recognition of gain or loss. If the person insured by the
policy is changed, the exchange will be treated as a taxable exchange.
Change of ownership
You may have taxable income if you transfer ownership of your policy, sell your
policy, or change the ownership of it in any way.
There are special rules for corporate-owned Corporate owners
policies. You should consult your There are special tax issues for corporate owners:
tax adviser.
. using your policy to fund deferred compensation arrangements for employees
Section 59A of the tax code deals with the has special tax consequences
environmental tax. . corporate ownership of a policy may affect your exposure to the alternative
minimum tax and the environmental tax.
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Conventional life insurance policies The tax treatment of your policy will depend upon whether it is a type of
contract known as a modified endowment contract. We describe modified endowment
Under Section 7702A of the tax code, contracts later in this section. If your policy is not a modified endowment
policies that are not classified as contract, it will be treated as a conventional life insurance policy and will
modified endowment contracts are taxed as have the following tax treatment:
conventional life insurance policies.
Surrendering your policy
The cost basis in your policy is generally When you surrender, or cash in, your policy, you'll generally be taxed on the
the premiums you've paid plus any taxable difference, if any, between the cash surrender value and the cost basis in your
distributions less any withdrawals or policy.
premiums previously recovered that were
not taxable. Making a withdrawal
If you make a withdrawal after your policy has been in force for 15 years,
you'll only be taxed on the amount you withdraw that exceeds the cost basis in
the policy.
Special rules apply if you make a withdrawal within the first 15 policy years
and it's accompanied by a reduction in benefits. In this case, there is a
special formula under which you may be taxed on all or a portion of the
withdrawal amount.
Taking out a loan
If you take out a loan, you will not pay tax on the loan amount unless your
policy is surrendered or lapses and you have not repaid your outstanding loan
amount. The interest you pay, or that's accrued, on a loan is generally
nondeductible. Ask your tax adviser for more information.
Loans and corporate-owned policies
If you borrow money to buy or carry certain life insurance policies, tax law
provisions may limit the deduction of interest payable on loan proceeds. If the
taxpayer is an entity that's a direct or indirect beneficiary of certain life
insurance, endowment or annuity contracts, a portion of the entity's deductions
for loan interest may be disallowed, even though this interest may relate to
debt that's completely unrelated to the contract. There may be a limited
exception that applies to contracts issued on 20% owners, officers, directors
or employees of the entity. For more information about this exception, you
should consult your tax adviser.
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Modified endowment contracts A modified endowment contract is a special type of life insurance policy. If
your policy is a modified endowment contract, it will have the tax treatment
Section 7702A of the tax code defines a described below. Any distributions you receive during the life of the policy
class of life insurance policies known are treated differently than under conventional life insurance policies.
as modified endowment contracts. Like Withdrawals, loans, pledges, assignments and the surrender of your policy are
other life insurance policies, the death all considered distributions and may be subject to tax on an income-first basis
benefit proceeds paid to your beneficiary and a 10% penalty.
generally are not subject to federal
income tax and your policy's accumulated When a policy becomes a modified endowment contract
value grows on a tax-deferred basis A life insurance policy becomes a modified endowment contract if, at any time
until you receive a cash distribution. during the first seven policy years, the sum of actual premiums paid exceeds
the seven-pay limit. The seven-pay limit is the cumulative total of the level
If there is a material change to your annual premiums (or seven-pay premiums) required to pay for the policy's future
policy, like a change in the death death and endowment benefits.
benefit, we may have to retest your
policy and restart the seven-pay premium
period to determine whether the change
has caused the policy to become a
modified endowment contract.
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For example, if the seven-pay premiums were $1,000 a year, the maximum premiums
you could pay during the first seven years to avoid modified endowment
treatment would be $1,000 in the first year, $2,000 through the first two years
and $3,000 through the first three years, etc. Under this test, a Pacific
Select Exec II - NY policy may or may not be a modified endowment contract,
depending on the amount of premiums paid during the policy's first seven
contract years or after a material change has been made to the policy.
Surrendering your policy
If you surrender your policy, you're taxed on the amount by which the cash
surrender value exceeds the cost basis in the policy.
Making a withdrawal or taking out a loan
If you make a withdrawal or take out a loan from a modified endowment contract,
you're taxed on the amount of the withdrawal or loan that's considered income,
including all previously non-taxed gains. Income is the difference between the
cash surrender value and the cost basis in your policy. It's unclear whether
interest paid, or accrued, on a loan is considered interest for federal income
tax purposes. If you borrow money to buy or carry certain life insurance
policies, tax law provisions may limit the deduction of interest payable on
loan proceeds. You should consult your tax adviser.
All modified endowment contracts we or our affiliates issue to you in a
calendar year are treated as a single contract when we calculate whether a
distribution amount is subject to tax.
10% penalty tax
If any amount you receive from a modified endowment contract is taxable, you
may also have to pay a penalty tax equal to 10% of the taxable amount.
A taxpayer will not have to pay the penalty tax if any of the following
exceptions apply:
. you're at least 59 1/2 years old
. you're receiving an amount because you've become disabled
. you're receiving an amount that's part of a series of substantially equal
periodic payments, paid out at least annually. These payments may be made for
your life or life expectancy or for the joint lives or joint life expectancies
of you and your beneficiaries.
Distributions before a policy becomes a modified endowment contract
If your policy fails the seven-pay test and becomes a modified endowment
contract, any amount you receive or are deemed to have received during the two
years before it became a modified endowment contract may be taxable. The
distribution would be treated as having been made in anticipation of the
policy's failing to meet the seven-pay test under Treasury Department
regulations which are yet to be prescribed.
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Policy riders Accelerated living benefits rider
Amounts received under this rider should be generally excluded from taxable
Please see the discussion of optional income under Section 101(g) of the tax code.
riders in The death benefit.
Benefits under the rider will be taxed, however, if they are paid to someone
Please consult with your tax adviser if other than a person insured by the policy, and the person insured by the
you want to exercise your rights under policy:
this rider.
. is a director, officer or employee of the person receiving the benefit, or
. has a financial interest in a business of the person receiving the benefit.
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ABOUT PL&A
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Pacific Life & Annuity Company is a life insurance company based in Arizona.
Our operations include life insurance, annuity and institutional products, group
life and health insurance and various other insurance products and services. At
the end of 1998, we had total assets of $337.9 million.
PL&A is authorized to conduct life insurance and annuity business in the
State of New York and certain other states. Our principal office is located at
700 Newport Center Drive, Newport Beach, California 92660.
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How we're organized PL&A was incorporated in 1982 under the name of Pacific Financial Life
Insurance Company. It merged with Pacific Financial Life Insurance Company of
Arizona and assumed the name PM Group Life Insurance Company in transferring
domicile from California to Arizona, which was completed in 1990. On January 1,
1999, we changed our name to our current name, PL&A.
PL&A is a direct, wholly-owned subsidiary of Pacific Life Insurance Company.
Pacific Life is a life insurance company based in California. Along with its
subsidiaries and affiliates, Pacific Life's operations include life insurance,
annuity, pension and institutional products, group employee benefits, broker-
dealer operations, and investment advisory services.
Pacific Life was established on January 2, 1868 under the name, Pacific Mutual
Life Insurance Company of California. It was reincorporated as Pacific Mutual
Life Insurance Company on July 22, 1936. On September 1, 1997, Pacific Life
converted from a mutual life insurance company to a stock life insurance
company. Pacific Life is a subsidiary of Pacific LifeCorp, a holding company,
which in turn is a subsidiary of Pacific Mutual Holding Company, a mutual
holding company.
Under their charters, Pacific Mutual Holding Company must always hold at least
51% of the outstanding voting stock of Pacific LifeCorp. Pacific LifeCorp must
always own 100% of the voting stock of Pacific Life. Owners of Pacific Life's
annuity contracts and life insurance policies have certain membership interests
in Pacific Mutual Holding Company. They have the right to vote on the election
of the Board of Directors of the mutual holding company and on other matters.
They also have certain rights if the mutual holding company is liquidated or
dissolved.
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How policies are administered Pacific Life Insurance Company administers the policies sold under this
prospectus. At the end of 1998, Pacific Life had over $89.6 billion of
individual life insurance and total admitted assets of approximately $37.6
billion. In 1998, they were ranked the 18th largest life insurance carrier in
the U.S. in terms of admitted assets.
Pacific Life, together with its affiliated enterprises, has total assets and
funds under management of $290 billion. They are authorized to conduct life and
annuity business in the District of Columbia and in all states except New York.
Pacific Life's principal office is at 700 Newport Center Drive, Newport Beach,
CA 92660.
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How policies are distributed Pacific Mutual Distributors, Inc. (PMD), our affiliate, is the distributor of
our policies. PMD is located at 700 Newport Center Drive, Newport Beach,
California 92660.
PMD is registered as a broker-dealer with the SEC and is a member of the
National Association of Securities Dealers (NASD). We pay PMD for its services
as our distributor.
The policies are sold by registered representatives of broker-dealers who have
signed agreements with us and PMD. Registered representatives must be licensed
to sell variable life insurance under the state insurance and securities
regulations that apply. Broker-dealers must be registered with the SEC.
How we pay broker-dealers
We pay broker-dealers commission for promoting, marketing and selling our
policies. Broker-dealers pay a portion of the commission to their registered
representatives, under their own arrangements.
Commissions are based on "target" premiums we determine. The commission we pay
will vary with the agreement, but the most common schedule of commissions we
pay is:
A target premium is a hypothetical premium . 63% of premiums paid up to the first target premium in the first policy year
that is used only to calculate commissions. . 4% of premiums paid up to the first target premium after the first policy year
It varies with the death benefit option you . 4% of the premiums paid under targets 2-10
choose, the age of the person insured by . 2% of premiums paid in excess of the 10th target premium.
the policy on the policy date, and the
gender (unless unisex rates are required) We may pay broker-dealers an annual renewal commission of up to 0.20% of a
and risk class of the person insured by policy's accumulated value less any outstanding loan amount. We calculate the
the policy renewal amount monthly and it becomes payable on each policy anniversary.
A policy's target premium will be less than
the policy's guideline level premiums. We may also pay override payments, expense and marketing allowances, bonuses,
wholesaler fees and training allowances.
Registered representatives who meet certain sales levels can qualify for sales
incentives programs we sponsor. We may also pay them non-cash compensation like
expense-paid trips, expense-paid educational seminars, and merchandise. They
can choose to receive their compensation on a deferred basis.
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How our accounts work We own the assets in our general account and our separate account. We allocate
your net premiums to these accounts according to the investment options you've
chosen.
General account
We can provide you with reports of our Our general account includes all of our assets, except for those held in our
ratings as an insurance company and our separate accounts. We guarantee you an interest rate for up to one year on any
ability to pay claims with respect to our amount allocated to the fixed options. The rate is reset annually. The fixed
general account assets. options are part of our general account, which we may invest as we wish,
according to any laws that apply. We'll credit the guaranteed rate even if the
investments we make earn less. Our ability to pay these guarantees is backed by
our strength as a company.
The fixed options are not securities, so they do not fall under any securities
act. For this reason, the SEC has not reviewed the disclosure in this
prospectus about the fixed options. However, other federal securities laws may
apply to the accuracy and completeness of the disclosure about the fixed
options.
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Separate account
You'll find the audited consolidated Amounts allocated to the variable investment options are held in our separate
financial statements for PL&A later in account. The assets in this account are kept separate from the assets in our
this section of the prospectus. We include general account and our other separate accounts, and are protected from our
these financial statements to show our general creditors.
strength as a company and our ability to
meet our obligations under the policies. The separate account was established on September 24, 1998 under Arizona law
under the authority of our Board of Directors. It's registered with the SEC as
a type of investment company called a unit investment trust. The SEC does not
oversee the administration or investment practices or policies of the account.
The separate account is not the only The separate account is divided into variable accounts. Each variable account
investor in the Pacific Select Fund. invests in shares of a designated portfolio of the Pacific Select Fund. We may
Investment in the fund by other separate add variable accounts that invest in other portfolios of the fund or in other
accounts for variable annuity contracts securities.
and variable life insurance contracts
could cause conflicts. For more We're the legal owner of the assets in the separate account, and pay its
information, please see the Statement of operating expenses. The separate account is operated only for our variable life
Additional Information for the Pacific insurance policies. We must keep enough money in the account to pay anticipated
Select Fund. obligations under the insurance policies funded by the account, but we can
transfer any amount that's more than these anticipated obligations to our
general account. Some of the money in the separate account may include charges
we collect from the account and any investment results on those charges.
We cannot charge the assets in the separate account attributable to our
reserves and other liabilities under the policies funded by the account with
any liabilities from our other business.
Similarly, the income, gains or losses, realized or unrealized, of the assets
of any variable account belong to that variable account and are credited to or
charged against the assets held in that variable account without regard to our
other income, gains or losses.
Making changes to the separate account
We can add, change or remove any securities that the separate account or any
variable account holds or buys, as long as we comply with the laws that apply.
We can substitute shares of one Pacific Select Fund portfolio with shares of
another portfolio or fund if:
. any portfolio is no longer available for investment
. our management believes that a portfolio is no longer appropriate in view of
the purposes of the policy.
We'll give you any required notice or receive any required approval from policy
owners or the SEC before we substitute any shares. We'll comply with the filing
or other procedures established by insurance regulators as required by law.
We can add new variable accounts, which may include additional subaccounts of
the separate account, to serve as investment options under the policies. These
may be managed separate accounts or they may invest in a new portfolio of the
fund, or in shares of another investment company or one of its portfolios, or
in a suitable investment vehicle with a specified investment objective.
We can add new variable accounts when we believe that it's warranted by
marketing needs or investment conditions. We'll decide on what basis we'll make
new accounts available to existing policy owners.
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<PAGE>
<TABLE>
<CAPTION>
ABOUT PL&A
<S> <C>
We can also eliminate any of our variable accounts if we believe marketing, tax
or investment conditions warrant it. We can terminate and liquidate any
variable account.
If we make any changes to variable accounts or substitution of securities, we
can make appropriate changes to this policy or any of our other policies, by
appropriate endorsement, to reflect the change or substitution.
We will notify you if there is a material change in the investment policy of a
Variable Account. The notice will inform you of your options, including your
option to transfer from such Variable Account to the Fixed Account within 60
days after:
. the effective date of the material change, or
. the date we send you the notice, whichever is later.
If we believe it's in the best interests of people holding voting rights under
the policies and we meet any required regulatory approvals we can do the
following:
. operate the separate account as a management investment company, unit
investment trust, or any other form permitted under securities or other laws
. register or deregister the separate account under securities law
. combine the separate account with one of our other separate accounts or our
affiliates' separate accounts
. combine one or more variable accounts
. create a committee, board or other group to manage the separate account.
. change the classification of any variable account.
Taxes we pay
We may be charged for state and local taxes. Currently, we pay these taxes
because they are small amounts with respect to the policy. If these taxes
increase significantly, we may deduct them from the separate account.
We may charge the separate account for any federal, state and local taxes that
apply to the separate account or to our operations. This could happen if our
tax status or the tax treatment of variable life insurance changes.
--------------------------------------------------------------------------------
Voting rights We're the legal owner of the shares of the Pacific Select Fund that are held by
the variable accounts. We may vote on any matter at shareholder meetings of the
fund. However, we are required by law to vote as you instruct on the shares
relating to your allocation in a variable investment option. This is called
your voting interest.
Your voting interest is calculated as of a day set by the Board of Trustees of
the fund called the record date. Your voting interest equals the accumulated
value in a variable investment option divided by the net asset value of a share
of the corresponding portfolio. Fractional shares are included. If allowed by
law, we may change how we calculate your voting interest.
We'll send you documents from the fund called proxy materials. They include
information about the items you'll be voting on and forms for you to give us
your instructions. We'll vote shares held in the separate account for which we
do not receive voting instructions in the same proportion as all other shares
in the portfolio held by that separate account for which we've received timely
instructions.
We'll vote shares of any portfolio we hold in our general account in the same
proportion as the total votes for all of our separate accounts, including this
separate account.
</TABLE>
56
<PAGE>
<TABLE>
<S> <C>
If the law changes to allow it, we can vote as we wish on shares of the
portfolios held in the separate account.
When required by state insurance regulatory authorities, we may disregard
voting instructions that:
. would change a portfolio's investment objective or subclassification
. would approve or disapprove an investment advisory contract.
We may disregard voting instructions on a change initiated by policy owners
that would change a portfolio's investment policy, investment adviser or
portfolio manager if:
. our disapproval is reasonable
. we determine in good faith that the change would be against state law or
otherwise be inappropriate, considering the portfolio's objectives and
purpose, and considering what effect the change would have on us.
If we disregard any voting instructions, we'll include a summary of the action
we took and our reasons for it in the next report to policy owners.
--------------------------------------------------------------------------------
Preparing for the year 2000 We rely significantly on Pacific Life's computer systems and applications in
our daily operations. Pacific Life long ago recognized the challenges
associated with the Year 2000 date change. This change involves the ability of
computer systems to properly recognize the Year 2000. The inability to do so
could result in major failures or miscalculations. Pacific Life began prior to
1995 to assess and plan for the potential impact of the Year 2000. More
recently, Pacific Life has been executing a company-wide plan adopted during
1998 which called for correction or replacement of remaining non-compliant
systems by December 31, 1998.
Pacific Life has successfully executed this project plan to date. Virtually all
affected systems were remediated and tested in time for use during 1998 year-
end processing cycles. Although it is not possible to certify that any system
will be completely free of Year 2000 problems, they have performed extensive
testing to identify and deal with such potential problems. Additionally, most
of the company's critical systems were subject to an independent third-party
review process which used sophisticated automated tools to identify Year 2000
related bugs. The results have been very positive and Pacific Life feels the
company's internal systems are positioned well for the date change in the
century.
Pacific Life plans to continue to test and re-test throughout 1999 and will
respond promptly should any problems arise at any time thereafter.
Pacific Life is continuing to work on contingency plans for critical business
processes. When appropriate, alternative methods and procedures are being
developed to work around unanticipated problems.
In addition to the above, Pacific Life will continue to carefully evaluate
responses from vendors and significant business partners regarding the
compliance of their critical business processes and products. Although
ultimately PL&A and Pacific Life cannot be responsible for the Year 2000
compliance efforts of these outside entities, we will take appropriate steps
wherever possible to develop contingency plans to address vendors and partners
deemed non-compliant.
57
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ABOUT PL&A
<S> <C>
Expenses to make Pacific Life's systems Year 2000 compliant are currently
estimated to range from $10 million to $12 million, which excludes the cost of
their personnel who support Year 2000 compliance efforts. Pacific Life does not
anticipate any other material future costs associated with the Year 2000
compliance projects, although there can be no assurance.
These Year 2000 related statements are designated as "Year 2000 Readiness
Disclosure" pursuant to the Year 2000 Information Readiness Disclosure Act,
enacted October 19, 1998.
--------------------------------------------------------------------------------
State regulation We're subject to the laws of the state of Arizona governing insurance companies
and to regulations issued by the Commissioner of Insurance of Arizona. In
addition, we're subject to the insurance laws and regulations of the other
states and jurisdictions in which we're licensed or may become licensed to
operate.
An annual statement in a prescribed form must be filed with the Commissioner of
Insurance of Arizona and with regulatory authorities of other states on or
before March 1st in each year. This statement covers our operations for the
preceding year and our financial condition as of December 31st of that year.
Our affairs are subject to review and examination at any time by the
Commissioner of Insurance or his agents, and subject to full examination of our
operations at periodic intervals.
--------------------------------------------------------------------------------
Legal proceedings and legal matters The separate account is not involved in any legal proceedings that would have a
material effect on policy owners.
Legal matters concerning the issue and sale of the life insurance policies
described in this prospectus, our organization and authority to issue the
policies under Arizona law, and the validity of the forms of the policies under
Arizona law, have been passed upon by our general counsel. Legal matters
relating to federal securities laws and federal income tax laws have been
passed upon by Dechert Price & Rhoads.
--------------------------------------------------------------------------------
Registration statement We've filed a registration statement with the SEC for Pacific Select Exec II -
NY, under the Securities Act of 1933. The SEC's rules allow us to omit some of
the information required by the registration statement from this prospectus.
You can ask for it from the SEC's office in Washington, D.C. They may charge
you a fee.
--------------------------------------------------------------------------------
Management The following is a list of our directors and certain officers, along with some
information about their business activities over the past five years. They do
not receive any compensation from the separate account for services they
provide to it nor do we pay any separately allocable compensation for these
services.
Unless otherwise indicated, the business address of each of these people is c/o
Pacific Life & Annuity Company, 700 Newport Center Drive, Newport Beach,
California 92660.
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION DURING THE LAST FIVE YEARS
<S> <C>
William L. Ferris Director, President and Chief Executive Officer of PL&A; Director of American Cancer
Director, President Society of Orange County and of California Health Decisions.
and Chief Executive
Officer
Thomas C. Sutton Director and Chairman of the Board of Pacific Life & Annuity Company; Director,
Director and Chairman of the Board and Chief Executive Officer of Pacific Life Insurance Company;
Chairman of the Director, Chairman of the Board and Chief Executive Officer of Pacific LifeCorp,
Board August 1997 to present; Director, Chairman of the Board and Chief Executive Officer
of Pacific Mutual Holding Company, August 1997 to present; Trustee and Chairman of
the Board and Former President of Pacific Select Fund; Management Board Member of
PIMCO Advisors L.P., December 1997 to present; Former Equity Board Member of PIMCO
Advisors L.P.; Former Director of Pacific Corinthian Life Insurance Company;
Director of Newhall Land & Farming; The Irvine Company; Edison International; and
similar positions with other affiliated companies of Pacific Life Insurance Company.
David R. Carmichael Director of PL&A; Senior Vice President and General Counsel of PL&A, July 1998 to
Director, Senior present; Director (since August 1997), Senior Vice President and General Counsel of
Vice President and Pacific Life Insurance Company; Senior Vice President and General Counsel of Pacific
General Counsel LifeCorp, August 1997 to present; Senior Vice President and General Counsel of
Pacific Mutual Holding Company, August 1997 to present; Director of: Association of
California Life and Health Insurance Companies and Association of Life Insurance
Counsel.
Audrey L. Milfs Director, Vice President (since February 1999) and Secretary of PL&A; Director
Director, Vice (since August 1997), Vice President and Corporate Secretary of Pacific Life
President and Insurance Company; Vice President and Corporate Secretary of Pacific LifeCorp,
Secretary August 1997 to present; Vice President and Corporate Secretary of Pacific Mutual
Holding Company, August 1997 to present; Secretary of Pacific Select Fund; similar
positions with other affiliated companies of Pacific Life Insurance Company.
Glenn S. Schafer Director of PL&A; Director (since November 1994) and President (since January 1995)
Director of Pacific Life Insurance Company; Executive Vice President and Chief Financial
Officer of Pacific Life Insurance Company, April 1991 to January 1995; Director and
President of Pacific LifeCorp, August 1997 to present; Director and President of
Pacific Mutual Holding Company, August 1997 to present; President (since February
1999) and Former Trustee of Pacific Select Fund; Management Board Member of PIMCO
Advisors L.P., December 1997 to present; Former Equity Board Member of PIMCO
Advisors L.P.; Former Director of Pacific Corinthian Life Insurance Company; and
similar positions with other affiliated companies of Pacific Life Insurance Company.
Khanh T. Tran Senior Vice President (since February 1999) and Chief Financial Officer of PL&A;
Senior Vice Director (since August 1997), Senior Vice President and Chief Financial Officer of
President and Chief Pacific Life Insurance Company, June 1996 to present; Vice President and Treasurer
Financial Officer of Pacific Life, November 1991 to June 1996; Senior Vice President and Chief
Financial Officer of Pacific LifeCorp, August 1997 to present; Senior Vice President
and Chief Financial Officer of Pacific Mutual Holding Company, August 1997 to
present; Senior Vice President and Chief Financial Officer of other affiliated
companies of Pacific Life Insurance Company.
Lynn C. Miller Executive Vice President of PL&A, July 1998 to present; Executive Vice President of
Executive Vice Pacific Life Insurance Company, January 1995 to present; Senior Vice President of
President Pacific Life Insurance Company 1989 to 1995.
Brian D. Klemens Vice President and Treasurer of PL&A, February 1999 to present; Vice President and
Vice President and Treasurer of Pacific Life Insurance Company, December 1998 to present; Assistant
Treasurer Vice President, Accounting and Assistant Controller of Pacific Life Insurance
Company, April 1994 to December 1998; Vice President and Treasurer of Pacific
LifeCorp, June 1999 to present; Vice President and Treasurer of Pacific Mutual
Holding Company, June 1999 to present; Vice President and Treasurer of other
affiliated companies of Pacific Life Insurance Company.
59
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ABOUT PL&A
<S> <C>
--------------------------------------------------------------------------------
Financial statements The next several pages contain the audited financial statements-statutory basis
for PM Group Life Insurance Company of December 31, 1998 and 1997 and for the
two years ended December 31, 1998, which are included in this prospectus only
so you can assess our ability to meet our obligations under the policies.
Unaudited financial statements-statutory basis for PL&A as of ,
1999 and for the months ended , 1999 and 1998 are also
included.
--------------------------------------------------------------------------------
Experts The audited financial statements-statutory basis for PM Group Life Insurance
Company as of December 31, 1998 and 1997 and for the two years ended December 31,
1998 included in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein, and have been
so included in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
</TABLE>
60
<PAGE>
PM GROUP LIFE INSURANCE COMPANY
Financial Statements - Statutory Basis as of and for the years ended
December 31, 1998 and 1997
and Independent Auditors' Report
61
<PAGE>
INDEPENDENT AUDITORS' REPORT
PM Group Life Insurance Company:
We have audited the accompanying statements of admitted assets, liabilities and
capital and surplus - statutory basis of PM Group Life Insurance Company (the
"Company") as of December 31, 1998 and 1997, and the related statements of
operations - statutory basis, capital and surplus - statutory basis, and cash
flows - statutory basis for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Department of the State of Arizona which practices
differ from generally accepted accounting principles. The effects on the
financial statements of the variances between the statutory basis of accounting
and generally accepted accounting principles are presumed to be material.
In our opinion, because of the effects of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial
position of PM Group Life Insurance Company as of December 31, 1998 and 1997,
or the results of its operations or its cash flows for the years then ended.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities and capital and surplus
of PM Group Life Insurance Company as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for the years then ended, on the
basis of accounting described in Note 1.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 22, 1999
62
<PAGE>
PM Group Life Insurance Company
STATEMENTS OF ADMITTED ASSETS,
LIABILITIES AND CAPITAL AND SURPLUS-STATUTORY BASIS
<TABLE>
<CAPTION>
December 31,
1998 1997
- --------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ADMITTED ASSETS
Bonds $217,096 $227,199
Preferred stocks 5,662 5,215
Common stocks 17,372 9,419
Mortgage loans 11,118 14,079
Real estate 687
Cash and short-term investments 36,922 33,185
Premiums due and uncollected 26,186 25,635
Other assets 23,555 22,761
- --------------------------------------------------------------------------
TOTAL ADMITTED ASSETS $337,911 $338,180
- --------------------------------------------------------------------------
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Policy reserves $119,743 $126,716
Policy benefits payable 83,792 85,338
Deposit funds 7,748 9,882
Accrued general expenses 11,640 13,193
Other liabilities 31,027 24,521
Asset valuation reserve 7,262 6,870
- --------------------------------------------------------------------------
TOTAL LIABILITIES 261,212 266,520
- --------------------------------------------------------------------------
Capital and Surplus:
Common stock - $1 par value; 5 million shares
authorized; 2.9 million shares issued and outstanding 2,900 2,900
Paid-in surplus 37,607 37,607
Unassigned surplus 36,192 31,153
- --------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS 76,699 71,660
- --------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL AND SURPLUS $337,911 $338,180
- --------------------------------------------------------------------------
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis
63
<PAGE>
PM Group Life Insurance Company
STATEMENTS OF OPERATIONS-STATUTORY BASIS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997
- ---------------------------------------------------------------
(In Thousands)
<S> <C> <C>
REVENUES
Premiums $ 499,481 $ 439,629
Net investment income 23,795 23,143
Other income 4,510 2,695
- ---------------------------------------------------------------
TOTAL REVENUES 527,786 465,467
- ---------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future policy benefits 404,671 330,435
Operating expenses 114,774 110,288
- ---------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 519,445 440,723
- ---------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 8,341 24,744
Federal income taxes 2,237 8,581
- ---------------------------------------------------------------
NET GAIN FROM OPERATIONS 6,104 16,163
Net realized capital gains (losses) (1,014) 1,228
- ---------------------------------------------------------------
NET INCOME $ 5,090 $ 17,391
- ---------------------------------------------------------------
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis
64
<PAGE>
PM Group Life Insurance Company
STATEMENTS OF CAPITAL AND SURPLUS-STATUTORY BASIS
<TABLE>
<CAPTION>
Common Stock
------------- Paid-in Unassigned
Shares Amount Surplus Surplus Total
- ----------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
BALANCES,
JANUARY 1, 1997 2,900 $2,900 $37,607 $ 22,685 $ 63,192
Net income 17,391 17,391
Dividend paid to parent (14,000) (14,000)
Other surplus transactions 5,077 5,077
- ----------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1997 2,900 2,900 37,607 31,153 71,660
Net income 5,090 5,090
Other surplus transactions (51) (51)
- ----------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1998 2,900 $2,900 $37,607 $ 36,192 $ 76,699
- ----------------------------------------------------------------------
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis
65
<PAGE>
PM Group Life Insurance Company
STATEMENTS OF CASH FLOWS-STATUTORY BASIS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997
- ------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Receipts
Premiums $ 500,017 $ 444,232
Net investment income 22,048 21,363
Other, net 3,238 8,598
Payments
Policy benefit payments (408,288) (326,113)
Operating expenses (117,981) (106,716)
Federal income taxes (3,377) (9,688)
- ------------------------------------------------------
NET CASH PROVIDED BY
(USED IN) OPERATING AC-
TIVITIES (4,343) 31,676
- ------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds
Bonds 72,754 56,909
Stocks 3,736 3,768
Mortgage loans 3,274 2,469
Other 8,180 2,623
Payments for the
purchases of
Bonds (63,816) (79,015)
Stocks (7,608) (3,300)
Other (8,440) (7,649)
- ------------------------------------------------------
NET CASH PROVIDED BY
(USED IN) INVESTING AC-
TIVITIES 8,080 (24,195)
- ------------------------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Dividend paid to parent (14,000)
- ------------------------------------------------------
Change in cash and short-
term investments 3,737 (6,519)
Cash and short-term in-
vestments, beginning of
year 33,185 39,704
- ------------------------------------------------------
CASH AND SHORT-TERM IN-
VESTMENTS, END OF YEAR $ 36,922 $ 33,185
- ------------------------------------------------------
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis
66
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
PM Group Life Insurance Company ("PM Group") is a stock life insurance
company domiciled in the State of Arizona, and a wholly-owned subsidiary of
Pacific Life Insurance Company ("Pacific Life"), formerly Pacific Mutual
Life Insurance Company ("Pacific Mutual"). PM Group offers group health,
dental and life products to three principal market segments in the United
States. Its Group Employee Benefits Operation serves larger employer groups
of fifty or more lives, while the Multiple Employer Trust unit insures
smaller employer groups with less than fifty lives per group. The Pacific
Risk Management Services unit offers stop loss and life products to self-
funded plan sponsors.
Pursuant to consent received from the Insurance Department of the State of
California, Pacific Mutual implemented a plan of conversion to form a
mutual holding company structure (the "Conversion") on September 1, 1997.
The Conversion created Pacific LifeCorp, an intermediate stock holding
company and Pacific Mutual Holding Company ("PMHC"), a mutual holding
company. Pacific Mutual was converted to a stock life insurance company and
renamed Pacific Life. Under their respective charters, PMHC must always own
at least 51% of the outstanding voting stock of Pacific LifeCorp, and
Pacific LifeCorp must always own 100% of the voting stock of Pacific Life.
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with accounting
practices prescribed or permitted by the Insurance Department of the State
of Arizona, which is a comprehensive basis of accounting other than
generally accepted accounting principles ("GAAP"). Prescribed statutory
accounting practices include a variety of publications of the National
Association of Insurance Commissioners ("NAIC"), as well as state laws,
regulations, and general administrative rules. Permitted statutory
accounting practices encompass all accounting practices not so prescribed.
Accounting practices prescribed or permitted by the Insurance Department of
the State of Arizona differ in certain respects, which in some cases are
materially different from GAAP. The significant differences are noted
below:
An interest maintenance reserve ("IMR") is established to capture
realized investment gains and losses, net of tax, on the sale of fixed
income investments resulting from changes in the general level of
interest rates, and is amortized into income over the remaining years
to expected maturity of the assets sold under statutory accounting
practices; no such reserve is required under GAAP.
An asset valuation reserve ("AVR"), based upon a formula prescribed by
the NAIC, is established as a liability to offset potential non-
interest related investment losses, and changes in the AVR are charged
or credited directly to surplus under statutory accounting practices;
no such reserve is required under GAAP.
Investments in bonds and preferred stocks are generally carried at
amortized cost under statutory accounting practices; under GAAP,
investments in bonds and preferred stocks, other than those classified
as held to maturity, are carried at estimated fair value.
Certain assets, principally deferred income taxes and furniture and
equipment, are designated as non admitted and excluded from assets by a
direct charge to surplus under statutory accounting practices; under
GAAP, such assets are carried on the statement of financial condition
with appropriate valuation allowances.
In March 1998, the NAIC adopted the Codification of Statutory Accounting
Principles ("Codification"). The Codification, which is intended to
standardize regulatory accounting and reporting for the insurance industry,
is
67
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
proposed to be effective January 1, 2001. However, statutory accounting
principles will continue to be established by individual state laws and
permitted practices and it is uncertain when, or if, the state of Arizona
will require adoption of Codification for the preparation of statutory
financial statements. PM Group has not finalized the quantification of the
effects of Codification on its statutory financial statements.
The following is a reconciliation of statutory capital and surplus, as
reflected in the accompanying financial statements, to stockholder's equity
on a GAAP basis:
<TABLE>
<CAPTION>
December 31,
1998 1997
--------------------
(In Thousands)
<S> <C> <C>
Statutory capital and surplus as reported
herein $ 76,699 $ 71,660
Non admitted deferred income tax 19,383 16,632
Asset valuation reserve 7,262 6,870
Unrealized gain on securities 3,874 18,740
Other non admitted assets 2,309 3,102
Interest maintenance reserve 1,389 1,186
Deferred tax on unrealized gains on
securities (4,877) (9,380)
Other (1,891) (2,084)
--------------------
Stockholder's equity - GAAP basis $104,148 $106,726
--------------------
</TABLE>
There were no significant differences between statutory net income of $5.1
million and GAAP net income of $5.8 million for the year ended December 31,
1998 and statutory net income of $17.4 million and GAAP net income of $17.3
million for the year ended December 31, 1997.
PM Group's significant statutory accounting practices are described below.
INVESTMENTS
Bonds qualifying for amortization are carried at amortized cost; all other
bonds are carried at prescribed values. Preferred stocks are principally
stated at amortized cost. Common stocks are carried at market value.
Mortgage loans are stated at unpaid principal balances. Real estate is
valued at the lower of depreciated cost or market, less related mortgage
debt. Real estate is depreciated using the straight-line method over 5 to
30 years.
Short-term investments are carried at amortized cost which approximates
estimated fair value. Short-term investments generally consist of bonds,
commercial paper and money market instruments whose maturities at the time
of acquisition were one year or less.
The AVR is computed in accordance with a prescribed formula and is designed
to stabilize surplus against valuation and credit-related losses for
certain invested assets. Changes to the AVR are reported as direct
additions to, or deductions from, surplus. The IMR results in the deferral
of after-tax realized capital gains and losses attributable to interest
rate fluctuations on fixed income investments. These capital gains and
losses are amortized into investment income over the remaining life of the
investment sold. The IMR of $1.4 million and $1.2 million as of December
31, 1998 and 1997, respectively, is included in other liabilities on the
accompanying statements of admitted assets, liabilities and capital and
surplus - statutory basis.
Net realized capital gains and losses are determined on the specific
identification method and are presented net of Federal capital gains tax
and transfers to the IMR.
68
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Derivatives are used principally for hedging purposes and are valued
consistently with the hedged items.
POLICY RESERVES AND DEPOSIT FUNDS
Medical expense claim reserves are based on PM Group's actual loss
experience. Life insurance reserves, including premium waivers, are based
on various tabular methods and actual loss experience. Disabled life
reserves are determined using various tabular reserve methods.
The liability for deposit funds is based primarily on the policyholders'
equity in their deposit accounts, including credited interest.
REVENUES AND EXPENSES
Premiums are recognized as revenue over the premium paying period.
Investment income is recorded as earned.
Expenses, including policy acquisition costs, and Federal income taxes are
charged to operations as incurred.
FEDERAL INCOME TAXES
PM Group's operations are included in the consolidated Federal income tax
return of PMHC, PM Group's ultimate parent. PM Group is allocated an income
tax expense based on the effect of including its operations in the
consolidated provision. Deferred taxes are provided for as permitted by the
Insurance Department of the State of Arizona. The net deferred tax asset is
non admitted. This practice has no effect on total surplus.
OTHER SURPLUS TRANSACTIONS
Other surplus transactions primarily consist of unrealized capital gains
and losses, changes in non admitted assets and change in the AVR.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments disclosed in Notes 2 and
3 has been determined using available market information and appropriate
valuation methodologies. However, considerable judgment is required to
interpret market data to develop the estimates of fair value. Accordingly,
the estimates presented may not be indicative of the amounts PM Group could
realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies could have a significant effect
on the estimated fair value amounts.
RISK-BASED CAPITAL
Risk-based capital is a method developed by the NAIC to measure the minimum
amount of capital appropriate for an insurance company to support its
overall business operations in consideration of its size and risk profile.
The formulas for determining the amount of risk-based capital specify
various weighting factors that are applied to financial balances or various
levels of activity based on the perceived degree of risk. The adequacy of a
company's actual capital is measured by comparing it to the risk-based
capital as determined by the formulas. Companies below minimum risk-based
capital requirements are classified within certain levels, each of which
requires specified corrective action. As of December 31, 1998 and 1997, PM
Group exceeded the minimum risk-based capital requirements.
69
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
BUSINESS RISKS
PM Group operates in a business environment which is subject to various
risks and uncertainties. PM Group's group health insurance is subject to
varying levels of regulation. The United States Congress has, from time to
time, considered various health care proposals and several states have
enacted health care reform legislation. Although it is not possible to
predict what changes may be adopted at the state or Federal level, certain
changes could have a negative impact upon the group health business of PM
Group.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
practices prescribed or permitted by regulatory authorities requires
management to make estimates and assumptions that affect the reported
amounts of admitted assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1998
financial statement presentation.
70
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
2. INVESTMENTS IN DEBT SECURITIES
The statement value, gross unrealized gains and losses, and estimated fair
value of debt securities are shown below. Debt securities include bonds,
redeemable preferred stocks and short-term investments. Short-term
investments amounted to $38.0 million and $31.1 million as of December 31,
1998 and 1997, respectively. The estimated fair value of publicly traded
securities is based on quoted market prices. For securities not actively
traded, estimated fair values were provided by independent pricing services
specializing in "matrix pricing" and modeling techniques. PM Group also
estimates certain fair values based on interest rates, credit quality and
average maturity or from securities with comparable trading
characteristics.
<TABLE>
<CAPTION>
Gross Unrealized
Statement ---------------- Estimated
Value Gains Losses Fair Value
-------------------------------------
<S> <C> <C> <C> <C>
(In Thousands)
December 31, 1998:
------------------
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 6,145 $ 114 $ 3 $ 6,256
Obligations of states, political
subdivisions and foreign
governments 8,409 345 16 8,738
Corporate securities 157,844 3,189 952 160,081
Mortgage-backed and asset-backed
securities 82,730 1,462 225 83,967
Redeemable preferred stock 4,862 165 6 5,021
-------------------------------------
Total $259,990 $5,275 $1,202 $264,063
-------------------------------------
December 31, 1997:
------------------
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 5,907 $ 56 $ 5,963
Obligations of states, political
subdivisions and foreign
governments 7,605 228 7,833
Corporate securities 143,201 20,115 $429 162,887
Mortgage-backed and asset-backed
securities 101,613 1,591 274 102,930
Redeemable preferred stock 5,203 165 193 5,175
-------------------------------------
Total $263,529 $22,155 $896 $284,788
-------------------------------------
</TABLE>
The carrying value and estimated fair value of debt securities as of
December 31, 1998, by contractual repayment date of principal, are shown
below. Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.
<TABLE>
<CAPTION>
Statement Estimated
Value Fair Value
---------------------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 55,829 $ 55,837
Due after one year through five years 95,381 96,983
Due after five years through ten years 20,987 21,652
Due after ten years 5,063 5,624
---------------------
177,260 180,096
Mortgage-backed and asset-backed securities 82,730 83,967
---------------------
Total $259,990 $264,063
---------------------
</TABLE>
71
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
2. INVESTMENTS IN DEBT SECURITIES (Continued)
Proceeds from sales of investments in debt securities were $35.8 million
and $39.0 million for the years ended December 31, 1998 and 1997,
respectively. Gross gains of $3.0 million and $16,000 and gross losses of
$0 and $715,000 were realized on those sales for the years ended December
31, 1998 and 1997, respectively.
3. FINANCIAL INSTRUMENTS
The estimated fair values of PM Group's financial instruments, including
debt securities (Note 2), are as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
----------------- -----------------
Statement Estimated Statement Estimated
Value Fair Value Value Fair Value
-------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
Assets:
Debt securities $259,990 $264,063 $263,529 $284,788
Preferred and common stocks 18,172 18,172 9,431 9,445
Mortgage loans 11,118 12,396 14,079 15,775
Liabilities:
Deposit funds 7,748 7,748 9,882 9,882
Derivative financial
instrument:
Asset swap contract (2,327)
</TABLE>
The following methods and assumptions were used to estimate the fair value
of these financial instruments as of December 31, 1998 and 1997:
PREFERRED AND COMMON STOCKS
The estimated fair values are based on quoted market prices or dealer
quotes.
MORTGAGE LOANS
The estimated fair value of the mortgage loan portfolio is determined by
discounting the estimated future cash flows, using a year-end market rate
which is applicable to the yield, credit quality and average maturity of
the composite portfolio.
DERIVATIVE FINANCIAL INSTRUMENT
PM Group used an asset swap contract to manage interest rate and equity
risk to better match portfolio duration to liabilities. Asset swap
contracts involve the exchange of upside equity potential for fixed income
streams. The amounts to be received or paid pursuant to the agreement are
accrued and recognized through an adjustment to net investment income in
the accompanying statements of operations - statutory basis over the life
of the agreement. The asset swap contract matured during 1998. As of
December 31, 1997 the asset swap contract had a notional principal amount
of $5.0 million.
DEPOSIT FUNDS
The estimated fair value of deposit funds with no defined maturities is the
amount payable on demand.
72
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
4. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES
Activity in the liability for unpaid claims and claim adjustment expenses,
which is included in both policy reserves and policy benefits payable on
the accompanying statements of admitted assets, liabilities and capital and
surplus - statutory basis, is summarized as follows:
<TABLE>
<CAPTION>
Years Ended
December 31,
1998 1997
------------------
(In Thousands)
<S> <C> <C>
Balance at January 1 $139,533 $118,712
Less reinsurance recoverables 755 1,009
------------------
Net balance at January 1 138,778 117,703
------------------
Incurred related to:
Current year 415,300 350,231
Prior years (18,282) (17,973)
------------------
Total incurred 397,018 332,258
------------------
Paid related to:
Current year 305,894 241,508
Prior years 93,596 68,920
------------------
Total paid 399,490 310,428
------------------
Net balance at December 31 136,306 139,533
Plus reinsurance recoverables 119 755
------------------
Balance at December 31 $136,425 $140,288
------------------
</TABLE>
As a result of payment of prior years estimated claims, the provision for
claims and claim adjustment expenses decreased by $18.3 million and $18.0
million for the years ended December 31, 1998 and 1997, respectively. This
reduction is primarily due to lower than anticipated settlement of claims
and reduced claim adjustment expenses.
5. RELATED PARTY TRANSACTIONS
Pacific Life provides services of certain management and other personnel,
and other support services to PM Group. Services provided include employee
participation in a pension plan and postretirement health care and life
insurance plans maintained by Pacific Life. Charges for these services
amounted to $12.1 million and $13.1 million for the years ended December
31, 1998 and 1997, respectively, and are included in operating expenses on
the accompanying statements of operations - statutory basis.
PM Group permits certain officers and employees to defer a portion of
current cash compensation under a deferred compensation plan maintained by
Pacific Life. Interest accrued to this plan amounted to $312,375 and
$252,886 for the years ended December 31, 1998 and 1997, respectively.
Under a reinsurance and service agreement, which terminated on January 1,
1999, PM Group assumed substantially all of Pacific Life's group life and
health insurance. Premiums of $99.6 million and $98.6 million and benefits
of $95.1 million and $82.1 million were assumed for the years ended
December 31, 1998 and 1997, respectively. Amounts receivable under this
agreement were $25.0 million and $16.8 million as of December 31, 1998 and
1997, respectively.
73
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
6. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE PLANS
PM Group participates in a defined benefit health care plan and a defined
benefit life insurance plan (the "Plans") sponsored by Pacific Life that
provide postretirement benefits for all eligible retirees and their
dependents. Generally, qualified employees may become eligible for these
benefits if they reach normal retirement age, have been covered under
Pacific Life's policy as an active employee for a minimum continuous period
prior to the date retired, and have an employment date before January 1,
1990. The Plans contain cost-sharing features such as deductibles and
coinsurance, and require retirees to make contributions which can be
adjusted annually. Pacific Life's commitment to qualified employees who
retire after April 1, 1994 is limited to specific dollar amounts. Pacific
Life reserves the right to modify or terminate the Plans at any time.
Pacific Life and PM Group utilize the accrual method of accounting for the
costs of the Plans as prescribed by the Insurance Departments of the States
of California and Arizona, respectively. PM Group has elected to amortize
the transition obligation, which has been allocated from Pacific Life, of
$3.7 million over twenty years. The transition obligation amortization
amounted to $183,000 for each of the years ended December 31, 1998 and
1997.
7. DIVIDEND RESTRICTIONS
Dividend payments by PM Group to its parent cannot exceed the lesser of 10%
of surplus as regards to policyholders or the statutory net gain from
operations, without prior approval from the Insurance Commissioner of the
State of Arizona. During 1997, PM Group received approval to pay an
extraordinary dividend in excess of these limitations. For the year ended
December 31, 1997, PM Group paid a dividend of $14.0 million, of which $8.0
million was considered extraordinary. No dividends were paid during 1998.
During 1999, PM Group can pay dividends amounting to approximately
$6.1 million without prior approval from the Insurance Commissioner of the
State of Arizona.
8. COMMITMENTS
PM Group has outstanding commitments to make investments in bonds and
limited partnerships as follows (In Thousands):
<TABLE>
<CAPTION>
Year Ending December 31:
-----------------------
<S> <C>
1999 $ 6,248
2000-2003 18,657
2004 and thereafter 5,370
-------
Total $30,275
-------
</TABLE>
PM Group leases office facilities under various non-cancelable operating
leases. Aggregate minimum future commitments are as follows (In Thousands):
<TABLE>
<CAPTION>
Year Ending December 31:
-----------------------
<S> <C>
1999 $2,190
2000 1,872
2001 1,443
2002 1,328
------
Total $6,833
------
</TABLE>
74
<PAGE>
PM Group Life Insurance Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
9. LITIGATION
PM Group is a respondent in a number of legal proceedings, some of which
involve extra-contractual damages. In the opinion of management, the
outcome of these proceedings is not likely to have a material adverse
effect on the financial position of PM Group.
10. SUBSEQUENT EVENT
PM Group is in the process of requesting from the New York Insurance
Department authority to transact business in the State of New York. In
connection with this request, the Insurance Department of the State of
Arizona has approved the amendment of PM Group's certificate of authority
to allow the sale of variable annuities and variable life insurance. PM
Group is awaiting approval of its name change to Pacific Life & Annuity
Company.
----------------------------------------------------------------------------
75
<PAGE>
PACIFIC LIFE & ANNUITY COMPANY
Financial Statements - Statutory Basis
as of , 1999 and December 31, 1998
and for the Months ended , 1999 and 1998
[To Be Inserted Later]
76
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
-----------------------------------------------------------------------------------
If you ask us, we'll provide you with Illustrations 1 through 14, which appear on the following pages, illustrate how
different kinds of illustrations: the death benefit, accumulated value and net cash surrender value of a
hypothetical policy may vary over an extended period of time, based on certain
. Illustrations similar to the ones in hypothetical rates of return.
this prospectus, but based on information
you give us about the age of the person These illustrations are based on a hypothetical policy with the following
to be insured by the policy, their risk characteristics:
class, the face amount, the death benefit
and premium payments. . the annual premium is $10,000
. on the policy date, the person insured by the policy is a 45-year old male
. Illustrations that show the allocation of select non-smoker
premium payments to specified variable
accounts. These will reflect the expenses The death benefit option, death benefit qualification test and the cost of
of the portfolio of the fund in which the insurance rates vary by illustration, as follows:
variable account invests.
-----------------------------------------------------------------------------------
. Illustrations that use a hypothetical Face amount Death benefit Qualification test Cost of insurance rate
gross rate of return that's greater than -----------------------------------------------------------------------------------
12%. These are available only to certain Illustration 1 $451,940 Option A Guideline premium Current
large institutional investors. Illustration 2 $451,940 Option A Guideline premium Guaranteed
Illustration 3 $181,828 Option B Guideline premium Current
Illustration 4 $181,828 Option B Guideline premium Guaranteed
Illustration 5 $451,940 Option C Guideline premium Current
Illustration 6 $451,940 Option C Guideline premium Guaranteed
Illustration 7 $451,940 Option A Cash value accumulation Current
Illustration 8 $451,940 Option A Cash value accumulation Guaranteed
Illustration 9 $181,828 Option B Cash value accumulation Current
Illustration 10 $181,828 Option B Cash value accumulation Guaranteed
Illustration 11 $451,940 Option C Cash value accumulation Current
Illustration 12 $451,940 Option C Cash value accumulation Guaranteed
Illustration 13 $451,940 Option A Guideline premium Current
Illustration 14 $451,940 Option A Guideline premium Guaranteed
Assumptions
Here are the assumptions we're using:
. The hypothetical rates of return are equal to constant gross annual rates of
0%, 6% and 12%.
. All premium payments are made at the beginning of the policy year.
. An amount equal to the annual premium, after taxes, is invested to earn
interest at 5% compounded annually for the second column of each table, Total
premiums paid plus interest at 5%, which shows the amount that would
accumulate.
. No policy loans have been taken out.
. The amounts shown for the death benefits, accumulated values and net cash
surrender values reflect charges deducted from the variable accounts. This
means that the net investment return on the variable accounts is lower than the
gross investment return on the assets.
. The amounts shown for the death benefits, accumulated values and net cash
surrender values also reflect premium loads, cost of insurance, administrative
charges, mortality and expense risk charges, and surrender charges.
. Illustrations 1 through 12 assume total annual advisory fees and expenses of
The fund's investment advisory fees and .77% of total average daily net assets of the fund. This reflects average
expenses are shown in An overview of advisory fees of .69% and average expenses of .08% based upon fees and expenses
Pacific Select Exec II - NY. of portfolios available as investment options under the policy.
77
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
. Illustrations 13 and 14 assume total annual advisory fees and expenses of .72%
of total average daily net assets of the fund. This reflects weighted average
advisory fees of .65% and weighted average expenses of .08% based upon fees and
expenses of portfolios available as investment options under the policy.
. There are no charges against the variable accounts for income taxes but we
reserve the right to impose charges in the future.
Things to keep in mind
Here are a few things to keep in mind when reviewing the illustrations:
. The values shown would be different if, although the gross annual investment
rates of return averaged 0%, 6% or 12% over a period of years, they also rose
above or fell below those averages for individual policy years.
. After we've deducted the charges and fund expenses described in the
assumptions above, the illustrated gross annual investment rates of return of
0%, 6% and 12% correspond to approximate net annual rates of return of -.77%,
5.18%, and 11.14% for illustrations 1 through 12 and -.72%, 5.24%, and 11.19%
for illustrations 13 and 14.
. The amounts shown would be different if unisex insurance rates were used or if
the people insured by the policy were females and insurance rates for females
were used.
. For the illustrations that assume current cost of insurance rates, the amounts
shown would be different if either person insured by the policy was a smoker
and rates for smokers were used.
. The fund expenses used in the illustrations do not include foreign taxes.
Here's what foreign taxes were for the year ended December 31, 1998:
-------------------------------------------------
Percentage of average
Portfolio daily net assets
-------------------------------------------------
Aggressive Equity 0.01%
Growth LT 0.01%
Equity Income 0.01%
Equity Index 0.01%
International 0.23%
Emerging Markets 0.26%
-------------------------------------------------
</TABLE>
78
<PAGE>
<TABLE>
<S> <C>
----------------------------------------------------------------------------
Illustration 1
Death benefit Option A and guideline premium test at current cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:A
GUIDELINE PREMIUM TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
----------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums End of year DEATH BENEFIT assuming
Illustration of death benefits, accumulated End of paid plus hypothetical gross annual investment
values and net cash surrender values. policy interest at return of
year 5% 0% 6% 12%
All premium payments are illustrated as ----------------------------------------------------------------------------
if made at the beginning of the policy 1 $10,500 $451,940 $451,940 $451,940
year. 2 $21,525 $451,940 $451,940 $451,940
3 $33,101 $451,940 $451,940 $451,940
This illustration assumes no policy loans 4 $45,256 $451,940 $451,940 $451,940
or partial withdrawals have been made. 5 $58,019 $451,940 $451,940 $451,940
6 $71,420 $451,940 $451,940 $451,940
The death benefits, accumulated values and 7 $85,491 $451,940 $451,940 $451,940
cash surrender values will differ if 8 $100,266 $451,940 $451,940 $451,940
premiums are paid in different amounts 9 $115,779 $451,940 $451,940 $451,940
or frequencies. 10 $132,068 $451,940 $451,940 $451,940
15 $226,575 $451,940 $451,940 $451,940
The hypothetical investment rates shown 20 $347,193 $451,940 $451,940 $640,342
above and elsewhere in this prospectus 25 $501,135 $451,940 $451,940 $1,094,265
are illustrative only and should not be 30 $697,608 $451,940 $564,267 $1,760,824
interpreted as a representation of past 35 $948,363 $451,940 $762,929 $2,972,033
or future investment results. Actual ----------------------------------------------------------------------------
rates of return may be more or less than End of year End of year
those shown and will depend on a number ACCUMULATED VALUE NET CASH SURRENDER VALUE
of factors, including the investment End of assuming hypothetical gross assuming hypothetical gross
allocations made to variable accounts by policy annual investment return of annual investment return of
the owner and the experience of the year 0% 6% 12% 0% 6% 12%
accounts. No representation can be made ----------------------------------------------------------------------------
by us, the separate account or the fund 1 $6,950 $7,431 $7,914 $1,235 $1,716 $2,198
that these hypothetical rates of return 2 $13,725 $15,120 $16,574 $8,010 $9,404 $10,859
can be achieved for any one year or 3 $20,408 $23,161 $26,151 $14,692 $17,445 $20,436
sustained over any period of time. 4 $26,996 $31,583 $36,763 $21,280 $25,868 $31,048
5 $33,502 $40,411 $48,527 $27,787 $34,696 $42,812
This is an illustration only. An 6 $39,929 $49,667 $61,573 $34,903 $44,642 $56,547
illustration is not intended to predict 7 $46,275 $59,374 $76,044 $42,506 $55,605 $72,275
actual performance. Interest rates, 8 $52,542 $69,556 $92,102 $50,029 $67,043 $89,590
dividends, and values set forth in the 9 $58,731 $80,238 $109,928 $57,475 $78,982 $108,671
illustration are not guaranteed. 10 $64,842 $91,449 $129,721 $64,842 $91,449 $129,721
15 $98,926 $162,644 $275,421 $98,926 $162,644 $275,421
20 $129,767 $254,085 $524,871 $129,767 $254,085 $524,871
25 $154,648 $372,321 $943,332 $154,648 $372,321 $943,332
30 $171,158 $527,352 $1,645,630 $171,158 $527,352 $1,645,630
35 $176,529 $726,600 $2,830,508 $176,529 $726,600 $2,830,508
----------------------------------------------------------------------------
79
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
-------------------------------------------------------------------------------
Illustration 2
Death benefit Option A and guideline premium test at guaranteed cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:A
GUIDELINE PREMIUM TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
-------------------------------------------------------------------------------
Flexible premium variable Total
universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash policy interest at hypothetical gross annual investment return of
surrender values. year 5% 0% 6% 12%
-------------------------------------------------------------------------------
All premium payments are 1 $10,500 $451,940 $451,940 $451,940
illustrated as if made at the 2 $21,525 $451,940 $451,940 $451,940
beginning of the policy year. 3 $33,101 $451,940 $451,940 $451,940
4 $45,256 $451,940 $451,940 $451,940
This illustration assumes no 5 $58,019 $451,940 $451,940 $451,940
policy loans or partial 6 $71,420 $451,940 $451,940 $451,940
withdrawals have been made. 7 $85,491 $451,940 $451,940 $451,940
8 $100,266 $451,940 $451,940 $451,940
*Additional payment will be 9 $115,779 $451,940 $451,940 $451,940
required to prevent policy 10 $132,068 $451,940 $451,940 $451,940
termination. 15 $226,575 $451,940 $451,940 $451,940
20 $347,193 $451,940 $451,940 $563,691
The death benefits, accumulated 25 $501,135 $451,940 $451,940 $954,633
values and cash surrender values 30 $697,608 $451,940 $451,940 $1,518,808
will differ if premiums are paid 35 $948,363 $0* $527,321 $2,539,141
in different amounts or -------------------------------------------------------------------------------
frequencies. End of year End of year
ACCUMULATED VALUE NET CASH SURRENDER VALUE
The hypothetical investment rates End of assuming hypothetical gross assuming hypothetical gross
shown above and elsewhere in this policy annual investment return of annual investment return of
prospectus are illustrative only year 0% 6% 12% 0% 6% 12%
and should not be interpreted as -------------------------------------------------------------------------------
a representation of past or 1 $6,950 $7,431 $7,914 $1,235 $1,716 $2,198
future investment results. Actual 2 $13,725 $15,120 $16,574 $8,010 $9,404 $10,859
rates of return may be more or 3 $20,408 $23,161 $26,151 $14,692 $17,445 $20,436
less than those shown and will 4 $26,996 $31,583 $36,763 $21,280 $25,868 $31,048
depend on a number of factors, 5 $33,502 $40,411 $48,527 $27,787 $34,696 $42,812
including the investment 6 $38,772 $48,498 $60,397 $33,747 $43,472 $55,371
allocations made to variable 7 $43,779 $56,790 $73,392 $40,010 $53,021 $69,622
accounts by the owner and the 8 $48,501 $65,283 $87,631 $45,988 $62,770 $85,118
experience of the accounts. No 9 $52,909 $73,962 $103,246 $51,653 $72,706 $101,989
representation can be made by us, 10 $56,972 $82,815 $120,386 $56,972 $82,815 $120,386
the separate account or the fund 15 $76,024 $135,816 $245,076 $76,024 $135,816 $245,076
that these hypothetical rates of 20 $82,672 $197,011 $462,042 $82,672 $197,011 $462,042
return can be achieved for any 25 $67,932 $269,079 $822,960 $67,932 $269,079 $822,960
one year or sustained over any 30 $12,450 $362,433 $1,419,447 $12,450 $362,433 $1,419,447
period of time. 35 $0* $502,210 $2,418,229 $0* $502,210 $2,418,229
-------------------------------------------------------------------------------
This is an illustration only. An
illustration is not intended to
predict actual performance.
Interest rates, dividends, and
values set forth in the
illustration are not guaranteed.
</TABLE>
80
<PAGE>
<TABLE>
<S> <C>
-------------------------------------------------------------------------------
Illustration 3
Death benefit Option B and guideline premium test at current cost of insurance
rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:B
GUIDELINE PREMIUM TEST
FACE AMOUNT:$181,828
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
-------------------------------------------------------------------------------
Flexible premium variable Total
universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash policy interest at hypothetical gross annual investment return of
surrender values. year 5% 0% 6% 12%
-------------------------------------------------------------------------------
All premium payments are 1 $10,500 $190,072 $190,594 $191,117
illustrated as if made at the 2 $21,525 $198,153 $199,706 $201,321
beginning of the policy year. 3 $33,101 $206,107 $209,222 $212,592
4 $45,256 $213,957 $219,182 $225,059
This illustration assumes no 5 $58,019 $221,706 $229,607 $238,852
policy loans or partial 6 $71,420 $229,354 $240,520 $254,112
withdrawals have been made. 7 $85,491 $236,902 $251,943 $270,997
8 $100,266 $244,351 $263,901 $289,681
The death benefits, accumulated 9 $115,779 $251,700 $276,419 $310,357
values and cash surrender values 10 $132,068 $258,952 $289,523 $333,239
will differ if premiums are paid 15 $226,575 $296,584 $368,949 $496,165
in different amounts or 20 $347,193 $331,268 $469,350 $769,929
frequencies. 25 $501,135 $361,226 $594,492 $1,228,641
30 $697,608 $384,608 $749,059 $1,997,535
The hypothetical investment rates 35 $948,363 $399,482 $938,932 $3,288,461
shown above and elsewhere in this -------------------------------------------------------------------------------
prospectus are illustrative only End of year End of year
and should not be interpreted as ACCUMULATED VALUE NET CASH SURRENDER VALUE
a representation of past or End of assuming hypothetical gross assuming hypothetical gross
future investment results. Actual policy annual investment return of annual investment return of
rates of return may be more or year 0% 6% 12% 0% 6% 12%
less than those shown and will -------------------------------------------------------------------------------
depend on a number of factors, 1 $8,244 $8,766 $9,289 $5,945 $6,467 $6,989
including the investment 2 $16,325 $17,878 $19,493 $14,026 $15,578 $17,194
allocations made to variable 3 $24,279 $27,394 $30,764 $21,979 $25,094 $28,464
accounts by the owner and the 4 $32,129 $37,354 $43,231 $29,830 $35,054 $40,932
experience of the accounts. No 5 $39,878 $47,779 $57,024 $37,579 $45,480 $54,724
representation can be made by us, 6 $47,526 $58,692 $72,284 $45,504 $56,670 $70,262
the separate account or the fund 7 $55,074 $70,115 $89,169 $53,558 $68,599 $87,652
that these hypothetical rates of 8 $62,523 $82,073 $107,853 $61,512 $81,062 $106,842
return can be achieved for any 9 $69,872 $94,591 $128,529 $69,367 $94,085 $128,023
one year or sustained over any 10 $77,124 $107,695 $151,411 $77,124 $107,695 $151,411
period of time. 15 $114,756 $187,121 $314,337 $114,756 $187,121 $314,337
20 $149,440 $287,522 $588,101 $149,440 $287,522 $588,101
This is an illustration only. An 25 $179,398 $412,664 $1,046,813 $179,398 $412,664 $1,046,813
illustration is not intended to 30 $202,780 $567,231 $1,815,707 $202,780 $567,231 $1,815,707
predict actual performance. 35 $217,654 $757,104 $3,106,633 $217,654 $757,104 $3,106,633
Interest rates, dividends, and -------------------------------------------------------------------------------
values set forth in the
illustration are not guaranteed.
81
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
-------------------------------------------------------------------------------
Illustration 4
Death benefit Option B and guideline premium test at guaranteed cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:B
GUIDELINE PREMIUM TEST
FACE AMOUNT:$181,828
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
-------------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash policy interest at hypothetical gross annual investment return of
surrender values. year 5% 0% 6% 12%
-------------------------------------------------------------------------------
All premium payments are 1 $10,500 $190,072 $190,594 $191,117
illustrated as if made at the 2 $21,525 $198,153 $199,706 $201,321
beginning of the policy year. 3 $33,101 $206,107 $209,222 $212,592
4 $45,256 $213,957 $219,182 $225,059
This illustration assumes no 5 $58,019 $221,706 $229,607 $238,852
policy loans or partial 6 $71,420 $228,844 $239,993 $253,569
withdrawals have been made. 7 $85,491 $235,795 $250,769 $269,755
8 $100,266 $242,548 $261,940 $287,553
The death benefits, accumulated 9 $115,779 $249,090 $273,510 $307,121
values and cash surrender values 10 $132,068 $255,405 $285,477 $328,628
will differ if premiums are paid 15 $226,575 $285,974 $355,499 $478,926
in different amounts or 20 $347,193 $309,140 $438,357 $725,056
frequencies. 25 $501,135 $321,186 $533,087 $1,128,049
30 $697,608 $316,473 $636,190 $1,788,815
The hypothetical investment rates 35 $948,363 $284,496 $737,213 $2,871,603
shown above and elsewhere in this -------------------------------------------------------------------------------
prospectus are illustrative only End of year End of year
and should not be interpreted as ACCUMULATED VALUE NET CASH SURRENDER VALUE
a representation of past or End of assuming hypothetical gross assuming hypothetical gross
future investment results. Actual policy annual investment return of annual investment return of
rates of return may be more or year 0% 6% 12% 0% 6% 12%
less than those shown and will -------------------------------------------------------------------------------
depend on a number of factors, 1 $8,244 $8,766 $9,289 $5,945 $6,467 $6,989
including the investment 2 $16,325 $17,878 $19,493 $14,026 $15,578 $17,194
allocations made to variable 3 $24,279 $27,394 $30,764 $21,979 $25,094 $28,464
accounts by the owner and the 4 $32,129 $37,354 $43,231 $29,830 $35,054 $40,932
experience of the accounts. No 5 $39,878 $47,779 $57,024 $37,579 $45,480 $54,724
representation can be made by us, 6 $47,016 $58,165 $71,741 $44,994 $56,143 $69,719
the separate account or the fund 7 $53,967 $68,941 $87,927 $52,450 $67,425 $86,410
that these hypothetical rates of 8 $60,720 $80,112 $105,725 $59,709 $79,101 $104,714
return can be achieved for any 9 $67,262 $91,682 $125,293 $66,757 $91,176 $124,787
one year or sustained over any 10 $73,577 $103,649 $146,800 $73,577 $103,649 $146,800
period of time. 15 $104,146 $173,671 $297,098 $104,146 $173,671 $297,098
20 $127,312 $256,529 $543,228 $127,312 $256,529 $543,228
This is an illustration only. An 25 $139,358 $351,259 $946,221 $139,358 $351,259 $946,221
illustration is not intended to 30 $134,645 $454,362 $1,606,987 $134,645 $454,362 $1,606,987
predict actual performance. 35 $102,668 $555,385 $2,689,775 $102,668 $555,385 $2,689,775
Interest rates, dividends, and -------------------------------------------------------------------------------
values set forth in the
illustration are not guaranteed.
</TABLE>
82
<PAGE>
<TABLE>
<S> <C>
-------------------------------------------------------------------------------
Illustration 5
Death benefit Option C and guideline premium test at current cost of insurance
rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:C
GUIDELINE PREMIUM TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
-------------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash policy interest at hypothetical gross annual investment return of
surrender values. year 5% 0% 6% 12%
-------------------------------------------------------------------------------
All premium payments are 1 $10,500 $461,940 $461,940 $461,940
illustrated as if made at the 2 $21,525 $471,940 $471,940 $471,940
beginning of the policy year. 3 $33,101 $481,940 $481,940 $481,940
4 $45,256 $491,940 $491,940 $491,940
This illustration assumes no 5 $58,019 $501,940 $501,940 $501,940
policy loans or partial 6 $71,420 $511,940 $511,940 $511,940
withdrawals have been made. 7 $85,491 $521,940 $521,940 $521,940
8 $100,266 $531,940 $531,940 $531,940
The death benefits, accumulated 9 $115,779 $541,940 $541,940 $541,940
values and cash surrender values 10 $132,068 $551,940 $551,940 $551,940
will differ if premiums are paid 15 $226,575 $601,940 $601,940 $601,940
in different amounts or 20 $347,193 $651,940 $651,940 $651,940
frequencies. 25 $501,135 $701,940 $701,940 $1,052,003
30 $697,608 $751,940 $751,940 $1,695,435
The hypothetical investment rates 35 $948,363 $801,940 $801,940 $2,864,137
shown above and elsewhere in this -------------------------------------------------------------------------------
prospectus are illustrative only End of year End of year
and should not be interpreted as ACCUMULATED VALUE NET CASH SURRENDER VALUE
a representation of past or End of assuming hypothetical gross assuming hypothetical gross
future investment results. Actual policy annual investment return of annual investment return of
rates of return may be more or year 0% 6% 12% 0% 6% 12%
less than those shown and will -------------------------------------------------------------------------------
depend on a number of factors, 1 $6,916 $7,396 $7,878 $1,201 $1,681 $2,162
including the investment 2 $13,619 $15,009 $16,457 $7,904 $9,293 $10,742
allocations made to variable 3 $20,194 $22,932 $25,905 $14,479 $17,217 $20,190
accounts by the owner and the 4 $26,635 $31,189 $36,332 $20,920 $25,474 $30,617
experience of the accounts. No 5 $32,955 $39,801 $47,846 $27,240 $34,085 $42,131
representation can be made by us, 6 $39,153 $48,785 $60,568 $34,127 $43,759 $55,542
the separate account or the fund 7 $45,228 $58,160 $74,632 $41,459 $54,391 $70,863
that these hypothetical rates of 8 $51,180 $67,945 $90,189 $48,667 $65,432 $87,676
return can be achieved for any 9 $57,007 $78,159 $107,405 $55,751 $76,903 $106,149
one year or sustained over any 10 $62,709 $88,826 $126,467 $62,709 $88,826 $126,467
period of time. 15 $93,915 $155,844 $265,940 $93,915 $155,844 $265,940
20 $119,274 $238,748 $503,290 $119,274 $238,748 $503,290
This is an illustration only. An 25 $132,578 $338,474 $906,899 $132,578 $338,474 $906,899
illustration is not intended to 30 $125,391 $458,618 $1,584,518 $125,391 $458,618 $1,584,518
predict actual performance. 35 $84,760 $608,696 $2,727,749 $84,760 $608,696 $2,727,749
Interest rates, dividends, and -------------------------------------------------------------------------------
values set forth in the
illustration are not guaranteed.
83
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
---------------------------------------------------------------------------------
Illustration 6
Death benefit Option C and guideline premium test at guaranteed cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:C
GUIDELINE PREMIUM TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
---------------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash surrender policy interest at hypothetical gross annual investment return of
values. year 5% 0% 6% 12%
---------------------------------------------------------------------------------
All premium payments are illustrated as 1 $10,500 $461,940 $461,940 $461,940
if made at the beginning of the policy 2 $21,525 $471,940 $471,940 $471,940
year. 3 $33,101 $481,940 $481,940 $481,940
4 $45,256 $491,940 $491,940 $491,940
This illustration assumes no policy loans 5 $58,019 $501,940 $501,940 $501,940
or partial withdrawals have been made. 6 $71,420 $511,940 $511,940 $511,940
7 $85,491 $521,940 $521,940 $521,940
* Additional payment will be required to 8 $100,266 $531,940 $531,940 $531,940
prevent policy termination. 9 $115,779 $541,940 $541,940 $541,940
10 $132,068 $551,940 $551,940 $551,940
The death benefits, accumulated values 15 $226,575 $601,940 $601,940 $601,940
and cash surrender values will differ if 20 $347,193 $651,940 $651,940 $651,940
premiums are paid in different amounts 25 $501,135 $0* $701,940 $826,721
or frequencies. 30 $697,608 $0* $751,940 $1,324,285
35 $948,363 $0* $0* $2,222,385
The hypothetical investment rates shown ---------------------------------------------------------------------------------
above and elsewhere in this prospectus End of year End of year
are illustrative only and should not be ACCUMULATED VALUE NET CASH SURRENDER VALUE
interpreted as a representation of past End of assuming hypothetical gross assuming hypothetical gross
or future investment results. Actual rates policy annual investment return of annual investment return of
of return may be more or less than those year 0% 6% 12% 0% 6% 12%
shown and will depend on a number of ---------------------------------------------------------------------------------
factors, including the investment 1 $6,916 $7,396 $7,878 $1,201 $1,681 $2,162
allocations made to variable accounts by 2 $13,619 $15,009 $16,457 $7,904 $9,293 $10,742
the owner and the experience of the 3 $20,194 $22,932 $25,905 $14,479 $17,217 $20,190
accounts. No representation can be made by 4 $26,635 $31,189 $36,332 $20,920 $25,474 $30,617
us, the separate account or the fund that 5 $32,955 $39,801 $47,846 $27,240 $34,085 $42,131
these hypothetical rates of return can be 6 $37,826 $47,439 $59,210 $32,800 $42,413 $54,184
achieved for any one year or sustained over 7 $42,326 $55,146 $71,525 $38,556 $51,376 $67,755
any period of time. 8 $46,416 $62,888 $84,870 $43,903 $60,375 $82,357
9 $50,046 $70,622 $99,327 $48,790 $69,365 $98,071
This is an illustration only. An 10 $53,157 $78,292 $114,987 $53,157 $78,292 $114,987
illustration is not intended to predict 15 $63,736 $120,045 $224,408 $63,736 $120,045 $224,408
actual performance. Interest rates, 20 $51,413 $153,763 $402,335 $51,413 $153,763 $402,335
dividends, and values set forth in the 25 $0* $160,610 $712,690 $0* $160,610 $712,690
illustration are not guaranteed. 30 $0* $95,774 $1,237,649 $0* $95,774 $1,237,649
35 $0* $0* $2,116,557 $0* $0* $2,116,557
---------------------------------------------------------------------------------
</TABLE>
84
<PAGE>
<TABLE>
<S> <C>
----------------------------------------------------------------------------
Illustration 7
Death benefit Option A and cash value accumulation test at current cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:A
CASH VALUE ACCUMULATION TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
----------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums
Illustration of death benefits, accumulated End of paid plus End of year DEATH BENEFIT assuming
values and net cash surrender values. policy interest at hypothetical gross annual investment return of
year 5% 0% 6% 12%
All premium payments are illustrated as if ----------------------------------------------------------------------------
made at the beginning of the policy year. 1 $10,500 $451,940 $451,940 $451,940
2 $21,525 $451,940 $451,940 $451,940
This illustration assumes no policy loans 3 $33,101 $451,940 $451,940 $451,940
or partial withdrawals have been made. 4 $45,256 $451,940 $451,940 $451,940
5 $58,019 $451,940 $451,940 $451,940
The death benefits, accumulated values 6 $71,420 $451,940 $451,940 $451,940
and cash surrender values will differ if 7 $85,491 $451,940 $451,940 $451,940
premiums are paid in different amounts 8 $100,266 $451,940 $451,940 $451,940
or frequencies. 9 $115,779 $451,940 $451,940 $451,940
10 $132,068 $451,940 $451,940 $451,940
The hypothetical investment rates shown 15 $226,575 $451,940 $451,940 $529,123
above and elsewhere in this prospectus 20 $347,193 $451,940 $451,940 $877,869
are illustrative only and should not be 25 $501,135 $451,940 $561,426 $1,386,191
interpreted as a representation of past 30 $697,608 $451,940 $704,553 $2,142,168
or future investment results. Actual rates 35 $948,363 $451,940 $871,967 $3,304,229
of return may be more or less than those ----------------------------------------------------------------------------
shown and will depend on a number of End of year End of year
factors, including the investment ACCUMULATED VALUE NET CASH SURRENDER VALUE
allocations made to variable accounts by End of assuming hypothetical gross assuming hypothetical gross
the owner and the experience of the policy annual investment return of annual investment return of
accounts. No representation can be made by year 0% 6% 12% 0% 6% 12%
us, the separate account or the fund that ----------------------------------------------------------------------------
these hypothetical rates of return can be 1 $6,950 $7,431 $7,914 $1,235 $1,716 $2,198
achieved for any one year or sustained over 2 $13,725 $15,120 $16,574 $8,010 $9,404 $10,859
any period of time. 3 $20,408 $23,161 $26,151 $14,692 $17,445 $20,436
4 $26,996 $31,583 $36,763 $21,280 $25,868 $31,048
This is an illustration only. An 5 $33,502 $40,411 $48,527 $27,787 $34,696 $42,812
illustration is not intended to predict 6 $39,929 $49,667 $61,573 $34,903 $44,642 $56,547
actual performance. Interest rates, 7 $46,275 $59,374 $76,044 $42,506 $55,605 $72,275
dividends, and values set forth in the 8 $52,542 $69,556 $92,102 $50,029 $67,043 $89,590
illustration are not guaranteed. 9 $58,731 $80,238 $109,928 $57,475 $78,982 $108,671
10 $64,842 $91,449 $129,721 $64,842 $91,449 $129,721
15 $98,926 $162,644 $275,155 $98,926 $162,644 $275,155
20 $129,767 $254,085 $517,143 $129,767 $254,085 $517,143
25 $154,648 $369,589 $912,535 $154,648 $369,589 $912,535
30 $171,158 $511,246 $1,554,425 $171,158 $511,246 $1,554,425
35 $176,529 $684,634 $2,594,347 $176,529 $684,634 $2,594,347
----------------------------------------------------------------------------
85
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
----------------------------------------------------------------------------
Illustration 8
Death benefit Option A and cash value accumulation test at guaranteed cost
of insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:A
CASH VALUE ACCUMULATION TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
----------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash surrender policy interest at hypothetical gross annual investment return of
values. year 5% 0% 6% 12%
----------------------------------------------------------------------------
All premium payments are illustrated as 1 $10,500 $451,940 $451,940 $451,940
if made at the beginning of the policy 2 $21,525 $451,940 $451,940 $451,940
year. 3 $33,101 $451,940 $451,940 $451,940
4 $45,256 $451,940 $451,940 $451,940
This illustration assumes no policy loans 5 $58,019 $451,940 $451,940 $451,940
or partial withdrawals have been made. 6 $71,420 $451,940 $451,940 $451,940
7 $85,491 $451,940 $451,940 $451,940
*Additional payment will be required to 8 $100,266 $451,940 $451,940 $451,940
prevent policy termination. 9 $115,779 $451,940 $451,940 $451,940
10 $132,068 $451,940 $451,940 $451,940
The death benefits, accumulated values and 15 $226,575 $451,940 $451,940 $471,175
cash surrender values will differ if 20 $347,193 $451,940 $451,940 $755,078
premiums are paid in different amounts 25 $501,135 $451,940 $451,940 $1,135,935
or frequencies. 30 $697,608 $451,940 $494,676 $1,651,999
35 $948,363 $0 $582,216 $2,358,166
The hypothetical investment rates shown ----------------------------------------------------------------------------
above and elsewhere in this prospectus End of year End of year
are illustrative only and should not be ACCUMULATED VALUE NET CASH SURRENDER VALUE
interpreted as a representation of past End of assuming hypothetical gross assuming hypothetical gross
or future investment results. Actual rates policy annual investment return of annual investment return of
of return may be more or less than those year 0% 6% 12% 0% 6% 12%
shown and will depend on a number of ----------------------------------------------------------------------------
factors, including the investment 1 $6,950 $7,431 $7,914 $1,235 $1,716 $2,198
allocations made to variable accounts by 2 $13,725 $15,120 $16,574 $8,010 $9,404 $10,859
the owner and the experience of the 3 $20,408 $23,161 $26,151 $14,692 $17,445 $20,436
accounts. No representation can be made by 4 $26,996 $31,583 $36,763 $21,280 $25,868 $31,048
us, the separate account or the fund 5 $33,502 $40,411 $48,527 $27,787 $34,696 $42,812
that these hypothetical rates of return 6 $38,772 $48,498 $60,397 $33,747 $43,472 $55,371
can be achieved for any one year or 7 $43,779 $56,790 $73,392 $40,010 $53,021 $69,622
sustained over any period of time. 8 $48,501 $65,283 $87,631 $45,988 $62,770 $85,118
9 $52,909 $73,962 $103,246 $51,653 $72,706 $101,989
This is an illustration only. An 10 $56,972 $82,815 $120,386 $56,972 $82,815 $120,386
illustration is not intended to predict 15 $76,024 $135,816 $245,021 $76,024 $135,816 $245,021
actual performance. Interest rates, 20 $82,672 $197,011 $444,808 $82,672 $197,011 $444,808
dividends, and values set forth in the 25 $67,932 $269,079 $747,791 $67,932 $269,079 $747,791
illustration are not guaranteed. 30 $12,450 $358,952 $1,198,743 $12,450 $358,952 $1,198,743
35 $0* $457,132 $1,851,537 $0* $457,132 $1,851,537
----------------------------------------------------------------------------
</TABLE>
86
<PAGE>
<TABLE>
<S> <C>
--------------------------------------------------------------------------------
Illustration 9
Death benefit Option B and cash value accumulation test at current cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:B
CASH VALUE ACCUMULATION TEST
FACE AMOUNT:$181,828
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
--------------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums
Illustration of death benefits, accumulated End of paid plus End of year DEATH BENEFIT assuming
values and net cash surrender values. policy interest at hypothetical gross annual investment return of
year 5% 0% 6% 12%
All premium payments are illustrated as if --------------------------------------------------------------------------------
made at the beginning of the policy year. 1 $10,500 $190,072 $190,594 $191,117
2 $21,525 $198,153 $199,706 $201,321
This illustration assumes no policy loans 3 $33,101 $206,107 $209,222 $212,592
or partial withdrawals have been made. 4 $45,256 $213,957 $219,182 $225,059
5 $58,019 $221,706 $229,607 $238,852
The death benefits, accumulated values and 6 $71,420 $229,354 $240,520 $254,112
cash surrender values will differ if 7 $85,491 $236,902 $251,943 $270,997
premiums are paid in different amounts or 8 $100,266 $244,351 $263,901 $289,681
frequencies. 9 $115,779 $251,700 $276,419 $310,357
10 $132,068 $258,952 $289,523 $333,389
The hypothetical investment rates shown 15 $226,575 $296,584 $368,949 $601,782
above and elsewhere in this prospectus 20 $347,193 $331,268 $487,723 $983,811
are illustrative only and should not be 25 $501,135 $361,226 $624,524 $1,542,027
interpreted as a representation of past 30 $697,608 $384,608 $775,631 $2,373,347
or future investment results. Actual rates 35 $948,363 $399,482 $953,226 $3,652,280
of return may be more or less than those --------------------------------------------------------------------------------
shown and will depend on a number of End of year End of year
factors, including the investment ACCUMULATED VALUE NET CASH SURRENDER VALUE
allocations made to variable accounts End of assuming hypothetical gross assuming hypothetical gross
by the owner and the experience of the policy annual investment return of annual investment return of
accounts. No representation can be made by year 0% 6% 12% 0% 6% 12%
us, the separate account or the fund that --------------------------------------------------------------------------------
these hypothetical rates of return can be 1 $8,244 $8,766 $9,289 $5,945 $6,467 $6,989
achieved for any one year or sustained over 2 $16,325 $17,878 $19,493 $14,026 $15,578 $17,194
any period of time. 3 $24,279 $27,394 $30,764 $21,979 $25,094 $28,464
4 $32,129 $37,354 $43,231 $29,830 $35,054 $40,932
This is an illustration only. An 5 $39,878 $47,779 $57,024 $37,579 $45,480 $54,724
illustration is not intended to predict 6 $47,526 $58,692 $72,284 $45,504 $56,670 $70,262
actual performance. Interest rates, 7 $55,074 $70,115 $89,169 $53,558 $68,599 $87,652
dividends, and values set forth in the 8 $62,523 $82,073 $107,853 $61,512 $81,062 $106,842
illustration are not guaranteed. 9 $69,872 $94,591 $128,529 $69,367 $94,085 $128,023
10 $77,124 $107,695 $151,411 $77,124 $107,695 $151,411
15 $114,756 $187,121 $312,939 $114,756 $187,121 $312,939
20 $149,440 $287,312 $579,552 $149,440 $287,312 $579,552
25 $179,398 $411,127 $1,015,123 $179,398 $411,127 $1,015,123
30 $202,780 $562,822 $1,722,176 $202,780 $562,822 $1,722,176
35 $217,654 $748,434 $2,867,623 $217,654 $748,434 $2,867,623
--------------------------------------------------------------------------------
87
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
-------------------------------------------------------------------------------
Illustration 10
Death benefit Option B and cash value accumulation test at guaranteed cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:B
CASH VALUE ACCUMULATION TEST
FACE AMOUNT:$181,828
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
-------------------------------------------------------------------------------
Flexible premium variable Total
universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash policy interest at hypothetical gross annual investment return of
surrender values. year 5% 0% 6% 12%
-------------------------------------------------------------------------------
All premium payments are 1 $10,500 $190,072 $190,594 $191,117
illustrated as if made at the 2 $21,525 $198,153 $199,706 $201,321
beginning of the policy year. 3 $33,101 $206,107 $209,222 $212,592
4 $45,256 $213,957 $219,182 $225,059
This illustration assumes no 5 $58,019 $221,706 $229,607 $238,852
policy loans or partial 6 $71,420 $228,844 $239,993 $253,569
withdrawals have been made. 7 $85,491 $235,795 $250,769 $269,755
8 $100,266 $242,548 $261,940 $287,553
The death benefits, accumulated 9 $115,779 $249,090 $273,510 $307,121
values and cash surrender values 10 $132,068 $255,405 $285,477 $328,628
will differ if premiums are paid 15 $226,575 $285,974 $355,499 $565,099
in different amounts or 20 $347,193 $309,140 $438,357 $885,100
frequencies. 25 $501,135 $321,186 $533,577 $1,315,839
30 $697,608 $316,473 $636,187 $1,900,660
The hypothetical investment rates 35 $948,363 $284,496 $737,209 $2,701,857
shown above and elsewhere in this -------------------------------------------------------------------------------
prospectus are illustrative only End of year End of year
and should not be interpreted as ACCUMULATED VALUE NET CASH SURRENDER VALUE
a representation of past or End of assuming hypothetical gross assuming hypothetical gross
future investment results. Actual policy annual investment return of annual investment return of
rates of return may be more or year 0% 6% 12% 0% 6% 12%
less than those shown and will -------------------------------------------------------------------------------
depend on a number of factors, 1 $8,244 $8,766 $9,289 $5,945 $6,467 $6,989
including the investment 2 $16,325 $17,878 $19,493 $14,026 $15,578 $17,194
allocations made to variable 3 $24,279 $27,394 $30,764 $21,979 $25,094 $28,464
accounts by the owner and the 4 $32,129 $37,354 $43,231 $29,830 $35,054 $40,932
experience of the accounts. No 5 $39,878 $47,779 $57,024 $37,579 $45,480 $54,724
representation can be made by us, 6 $47,016 $58,165 $71,741 $44,994 $56,143 $69,719
the separate account or the fund 7 $53,967 $68,941 $87,927 $52,450 $67,425 $86,410
that these hypothetical rates of 8 $60,720 $80,112 $105,725 $59,709 $79,101 $104,714
return can be achieved for any 9 $67,262 $91,682 $125,293 $66,757 $91,176 $124,787
one year or sustained over any 10 $73,577 $103,649 $146,800 $73,577 $103,649 $146,800
period of time. 15 $104,146 $173,671 $293,863 $104,146 $173,671 $293,863
20 $127,312 $256,529 $521,403 $127,312 $256,529 $521,403
This is an illustration only. An 25 $139,358 $351,256 $866,222 $139,358 $351,256 $866,222
illustration is not intended to 30 $134,645 $454,359 $1,379,179 $134,645 $454,359 $1,379,179
predict actual performance. 35 $102,668 $555,381 $2,121,389 $102,668 $555,381 $2,121,389
Interest rates, dividends, and -------------------------------------------------------------------------------
values set forth in the
illustration are not guaranteed.
</TABLE>
88
<PAGE>
<TABLE>
<S> <C>
-------------------------------------------------------------------------------
Illustration 11
Death benefit Option C and cash value accumulation test at current cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:C
CASH VALUE ACCUMULATION TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
-------------------------------------------------------------------------------
Flexible premium variable Total
universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash policy interest at hypothetical gross annual investment return of
surrender values. year 5% 0% 6% 12%
-------------------------------------------------------------------------------
All premium payments are 1 $10,500 $461,940 $461,940 $461,940
illustrated as if made at the 2 $21,525 $471,940 $471,940 $471,940
beginning of the policy year. 3 $33,101 $481,940 $481,940 $481,940
4 $45,256 $491,940 $491,940 $491,940
This illustration assumes no 5 $58,019 $501,940 $501,940 $501,940
policy loans or partial 6 $71,420 $511,940 $511,940 $511,940
withdrawals have been made. 7 $85,491 $521,940 $521,940 $521,940
8 $100,266 $531,940 $531,940 $531,940
The death benefits, accumulated 9 $115,779 $541,940 $541,940 $541,940
values and cash surrender values 10 $132,068 $551,940 $551,940 $551,940
will differ if premiums are paid 15 $226,575 $601,940 $601,940 $601,940
in different amounts or 20 $347,193 $651,940 $651,940 $850,728
frequencies. 25 $501,135 $701,940 $701,940 $1,346,266
30 $697,608 $751,940 $751,940 $2,082,941
The hypothetical investment rates 35 $948,363 $801,940 $801,940 $3,215,061
shown above and elsewhere in this -------------------------------------------------------------------------------
prospectus are illustrative only End of year End of year
and should not be interpreted as ACCUMULATED VALUE NET CASH SURRENDER VALUE
a representation of past or End of assuming hypothetical gross assuming hypothetical gross
future investment results. Actual policy annual investment return of annual investment return of
rates of return may be more or year 0% 6% 12% 0% 6% 12%
less than those shown and will -------------------------------------------------------------------------------
depend on a number of factors, 1 $6,916 $7,396 $7,878 $1,201 $1,681 $2,162
including the investment 2 $13,619 $15,009 $16,457 $7,904 $9,293 $10,742
allocations made to variable 3 $20,194 $22,932 $25,905 $14,479 $17,217 $20,190
accounts by the owner and the 4 $26,635 $31,189 $36,332 $20,920 $25,474 $30,617
experience of the accounts. No 5 $32,955 $39,801 $47,846 $27,240 $34,085 $42,131
representation can be made by us, 6 $39,153 $48,785 $60,568 $34,127 $43,759 $55,542
the separate account or the fund 7 $45,228 $58,160 $74,632 $41,459 $54,391 $70,863
that these hypothetical rates of 8 $51,180 $67,945 $90,189 $48,667 $65,432 $87,676
return can be achieved for any 9 $57,007 $78,159 $107,405 $55,751 $76,903 $106,149
one year or sustained over any 10 $62,709 $88,826 $126,467 $62,709 $88,826 $126,467
period of time. 15 $93,915 $155,844 $265,940 $93,915 $155,844 $265,940
20 $119,274 $238,748 $501,154 $119,274 $238,748 $501,154
This is an illustration only. An 25 $132,578 $338,474 $886,253 $132,578 $338,474 $886,253
illustration is not intended to 30 $125,391 $458,618 $1,511,448 $125,391 $458,618 $1,511,448
predict actual performance. 35 $84,760 $608,696 $2,524,335 $84,760 $608,696 $2,524,335
Interest rates, dividends, and -------------------------------------------------------------------------------
values set forth in the
illustration are not guaranteed.
89
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
------------------------------------------------------------------------------
Illustration 12
Death benefit Option C and cash value accumulation test at guaranteed cost of
insurance rates
Based on average annual advisory fees and expenses of the portfolios
DEATH BENEFIT OPTION:C
CASH VALUE ACCUMULATION TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums
Illustration of death benefits, accumulated End of paid plus End of year DEATH BENEFIT assuming
values and net cash surrender values. policy interest at hypothetical gross annual investment return of
year 5% 0% 6% 12%
All premium payments are illustrated as if ------------------------------------------------------------------------------
made at the beginning of the policy year. 1 $10,500 $461,940 $461,940 $461,940
2 $21,525 $471,940 $471,940 $471,940
This illustration assumes no policy loans 3 $33,101 $481,940 $481,940 $481,940
or partial withdrawals have been made. 4 $45,256 $491,940 $491,940 $491,940
5 $58,019 $501,940 $501,940 $501,940
*Additional payment will be required to 6 $71,420 $511,940 $511,940 $511,940
prevent policy termination. 7 $85,491 $521,940 $521,940 $521,940
8 $100,266 $531,940 $531,940 $531,940
The death benefits, accumulated values and 9 $115,779 $541,940 $541,940 $541,940
cash surrender values will differ if 10 $132,068 $551,940 $551,940 $551,940
premiums are paid in different amounts 15 $226,575 $601,940 $601,940 $601,940
or frequencies. 20 $347,193 $651,940 $651,940 $682,706
25 $501,135 $0* $701,940 $1,035,798
The hypothetical investment rates shown 30 $697,608 $0* $751,940 $1,513,591
above and elsewhere in this prospectus 35 $948,363 $0* $0* $2,166,863
are illustrative only and should not be ------------------------------------------------------------------------------
interpreted as a representation of past End of year End of year
or future investment results. Actual ACCUMULATED VALUE NET CASH SURRENDER VALUE
rates of return may be more or less than End of assuming hypothetical gross assuming hypothetical gross
those shown and will depend on a number policy annual investment return of annual investment return of
of factors, including the investment year 0% 6% 12% 0% 6% 12%
allocations made to variable accounts by ------------------------------------------------------------------------------
the owner and the experience of the 1 $6,916 $7,396 $7,878 $1,201 $1,681 $2,162
accounts. No representation can be made 2 $13,619 $15,009 $16,457 $7,904 $9,293 $10,742
by us, the separate account or the fund 3 $20,194 $22,932 $25,905 $14,479 $17,217 $20,190
that these hypothetical rates of return 4 $26,635 $31,189 $36,332 $20,920 $25,474 $30,617
can be achieved for any one year or 5 $32,955 $39,801 $47,846 $27,240 $34,085 $42,131
sustained over any period of time. 6 $37,826 $47,439 $59,210 $32,800 $42,413 $54,184
7 $42,326 $55,146 $71,525 $38,556 $51,376 $67,755
This is an illustration only. An 8 $46,416 $62,888 $84,870 $43,903 $60,375 $82,357
illustration is not intended to predict 9 $50,046 $70,622 $99,327 $48,790 $69,365 $98,071
actual performance. Interest rates, 10 $53,157 $78,292 $114,987 $53,157 $78,292 $114,987
dividends, and values set forth in the 15 $63,736 $120,045 $224,408 $63,736 $120,045 $224,408
illustration are not guaranteed. 20 $51,413 $153,763 $402,174 $51,413 $153,763 $402,174
25 $0* $160,610 $681,871 $0* $160,610 $681,871
30 $0* $95,774 $1,098,309 $0* $95,774 $1,098,309
35 $0* $0* $1,701,333 $0* $0* $1,701,333
------------------------------------------------------------------------------
</TABLE>
90
<PAGE>
<TABLE>
<S> <C>
----------------------------------------------------------------------------
Illustration 13
Death benefit Option A and guideline premium test at current cost of
insurance rates
Based on a weighted average of annual advisory fees and expenses of
the portfolios
DEATH BENEFIT OPTION:A
GUIDELINE PREMIUM TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
----------------------------------------------------------------------------
Flexible premium Total
variable universal life premiums
Illustration of death benefits, accumulated End of paid plus End of year DEATH BENEFIT assuming
values and net cash surrender values. policy interest at hypothetical gross annual investment return of
year 5% 0% 6% 12%
All premium payments are illustrated as ----------------------------------------------------------------------------
if made at the beginning of the policy year. 1 $10,500 $451,940 $451,940 $451,940
2 $21,525 $451,940 $451,940 $451,940
This illustration assumes no policy loans or 3 $33,101 $451,940 $451,940 $451,940
partial withdrawals have been made. 4 $45,256 $451,940 $451,940 $451,940
5 $58,019 $451,940 $451,940 $451,940
The death benefits, accumulated values and 6 $71,420 $451,940 $451,940 $451,940
cash surrender values will differ if 7 $85,491 $451,940 $451,940 $451,940
premiums are paid in different amounts or 8 $100,266 $451,940 $451,940 $451,940
frequencies. 9 $115,779 $451,940 $451,940 $451,940
10 $132,068 $451,940 $451,940 $451,940
The hypothetical investment rates shown 15 $226,575 $451,940 $451,940 $451,940
above and elsewhere in this prospectus 20 $347,193 $451,940 $451,940 $644,794
are illustrative only and should not be 25 $501,135 $451,940 $451,940 $1,104,074
interpreted as a representation of past or 30 $697,608 $451,940 $569,883 $1,780,416
future investment results. Actual rates of 35 $948,363 $451,940 $771,855 $3,011,877
return may be more or less than those shown ----------------------------------------------------------------------------
and will depend on a number of factors, End of year End of year
including the investment allocations made ACCUMULATED VALUE NET CASH SURRENDER VALUE
to variable accounts by the owner and the End of assuming hypothetical gross assuming hypothetical gross
experience of the accounts. No policy annual investment return of annual investment return of
representation can be made by us, the year 0% 6% 12% 0% 6% 12%
separate account or the fund that these ----------------------------------------------------------------------------
hypothetical rates of return can be 1 $6,954 $7,436 $7,918 $1,239 $1,720 $2,203
achieved for any one year or sustained 2 $13,736 $15,132 $16,588 $8,021 $9,417 $10,873
over any period of time. 3 $20,430 $23,186 $26,180 $14,715 $17,471 $20,465
4 $27,032 $31,626 $36,815 $21,317 $25,911 $31,100
This is an illustration only. An 5 $33,556 $40,478 $48,610 $27,841 $34,763 $42,895
illustration is not intended to predict 6 $40,002 $49,763 $61,696 $34,977 $44,738 $56,671
actual performance. Interest rates, 7 $46,372 $59,505 $76,220 $42,603 $55,736 $72,451
dividends, and values set forth in the 8 $52,666 $69,730 $92,346 $50,153 $67,217 $89,833
illustration are not guaranteed. 9 $58,884 $80,463 $110,254 $57,628 $79,206 $108,998
10 $65,028 $91,732 $130,150 $65,028 $91,732 $130,150
15 $99,325 $163,390 $276,818 $99,325 $163,390 $276,818
20 $130,463 $255,684 $528,520 $130,463 $255,684 $528,520
25 $155,724 $375,403 $951,788 $155,724 $375,403 $951,788
30 $172,713 $532,601 $1,663,941 $172,713 $532,601 $1,663,941
35 $178,691 $735,100 $2,868,454 $178,691 $735,100 $2,868,454
----------------------------------------------------------------------------
91
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
<S> <C>
-------------------------------------------------------------------------------
Illustration 14
Death benefit Option A and guideline premium test at guaranteed cost of
insurance rates
Based on a weighted average of annual advisory fees and expenses of the
portfolios
DEATH BENEFIT OPTION:A
GUIDELINE PREMIUM TEST
FACE AMOUNT:$451,940
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
-------------------------------------------------------------------------------
Flexible premium variable Total
universal life premiums
Illustration of death benefits, End of paid plus End of year DEATH BENEFIT assuming
accumulated values and net cash policy interest at hypothetical gross annual investment return of
surrender values. year 5% 0% 6% 12%
-------------------------------------------------------------------------------
All premium payments are 1 $10,500 $451,940 $451,940 $451,940
illustrated as if made at the 2 $21,525 $451,940 $451,940 $451,940
beginning of the policy year. 3 $33,101 $451,940 $451,940 $451,940
4 $45,256 $451,940 $451,940 $451,940
This illustration assumes no 5 $58,019 $451,940 $451,940 $451,940
policy loans or partial 6 $71,420 $451,940 $451,940 $451,940
withdrawals have been made. 7 $85,491 $451,940 $451,940 $451,940
8 $100,266 $451,940 $451,940 $451,940
*Additional payment will be 9 $115,779 $451,940 $451,940 $451,940
required to prevent policy 10 $132,068 $451,940 $451,940 $451,940
termination. 15 $226,575 $451,940 $451,940 $451,940
20 $347,193 $451,940 $451,940 $568,027
The death benefits, accumulated 25 $501,135 $451,940 $451,940 $963,776
values and cash surrender values 30 $697,608 $451,940 $451,940 $1,536,516
will differ if premiums are paid 35 $948,363 $0* $538,106 $2,574,391
in different amounts or -------------------------------------------------------------------------------
frequencies. End of year End of year
ACCUMULATED VALUE NET CASH SURRENDER VALUE
The hypothetical investment rates End of assuming hypothetical gross assuming hypothetical gross
shown above and elsewhere in this policy annual investment return of annual investment return of
prospectus are illustrative only year 0% 6% 12% 0% 6% 12%
and should not be interpreted as -------------------------------------------------------------------------------
a representation of past or 1 $6,954 $7,436 $7,918 $1,239 $1,720 $2,203
future investment results. Actual 2 $13,736 $15,132 $16,588 $8,021 $9,417 $10,873
rates of return may be more or 3 $20,430 $23,186 $26,180 $14,715 $17,471 $20,465
less than those shown and will 4 $27,032 $31,626 $36,815 $21,317 $25,911 $31,100
depend on a number of factors, 5 $33,556 $40,478 $48,610 $27,841 $34,763 $42,895
including the investment 6 $38,846 $48,593 $60,520 $33,820 $43,568 $55,495
allocations made to variable 7 $43,875 $56,921 $73,567 $40,106 $53,152 $69,798
accounts by the owner and the 8 $48,622 $65,455 $87,873 $46,110 $62,942 $85,360
experience of the accounts. No 9 $53,059 $74,183 $103,569 $51,802 $72,927 $102,313
representation can be made by us, 10 $57,151 $83,092 $120,810 $57,151 $83,092 $120,810
the separate account or the fund 15 $76,390 $136,527 $246,446 $76,390 $136,527 $246,446
that these hypothetical rates of 20 $83,282 $198,530 $465,596 $83,282 $198,530 $465,596
return can be achieved for any 25 $68,837 $272,093 $830,842 $68,837 $272,093 $830,842
one year or sustained over any 30 $13,702 $368,431 $1,435,997 $13,702 $368,431 $1,435,997
period of time. 35 $0* $512,482 $2,451,801 $0* $512,482 $2,451,801
-------------------------------------------------------------------------------
This is an illustration only. An
illustration is not intended to
predict actual performance.
Interest rates, dividends, and
values set forth in the
illustration are not guaranteed.
</TABLE>
92
<PAGE>
APPENDIX A - RATES PER $1,000 OF INITIAL FACE AMOUNT
<TABLE>
<CAPTION>
Face amount component of M&E Risk Charge
- --------------------------------------------------------------------------------
Issue Issue
Age Male Female Unisex Age Male Female Unisex
- ----- ----- ------ ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.075 0.063 0.073 45 0.127 0.118 0.125
5 0.069 0.059 0.067 50 0.139 0.127 0.136
10 0.066 0.058 0.064 55 0.155 0.138 0.151
15 0.064 0.055 0.062 60 0.176 0.154 0.171
20 0.098 0.095 0.098 65 0.206 0.176 0.199
25 0.101 0.098 0.101 70 0.247 0.208 0.237
30 0.105 0.101 0.105 75 0.306 0.257 0.292
35 0.111 0.106 0.110 80 0.385 0.329 0.368
40 0.118 0.111 0.116 85 0.498 0.440 0.478
- ----- -------------------------- -------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Surrender Charge Maximum Surrender Charge
Issue ------------------------------ -------------------------------
Age Male Female Unisex Male Female Unisex
- ----- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
0 5.70 4.79 5.52 1.150 0.724 1.074
5 5.24 4.48 5.09 1.222 0.772 1.146
10 5.02 4.41 4.89 1.258 0.784 1.182
15 4.86 4.18 4.73 1.282 0.820 1.206
20 9.35 7.83 9.04 3.284 2.444 3.132
25 11.32 9.58 10.97 4.342 3.368 4.172
30 12.69 10.87 12.33 5.246 4.164 5.056
35 14.36 12.31 13.95 6.302 5.096 6.082
40 19.08 16.26 18.51 8.918 7.302 8.632
45 25.02 21.85 24.35 12.646 10.400 12.246
50 29.24 24.97 28.32 16.190 13.352 15.696
55 34.88 29.06 33.59 19.504 16.132 18.916
60 42.39 34.52 40.60 25.560 21.144 24.770
65 52.23 42.29 50.23 32.196 26.922 31.250
66 51.67 44.17 52.00 32.752 27.516 31.800
67 51.56 46.16 51.89 32.696 27.470 31.744
68 51.44 48.29 51.78 32.568 27.386 31.628
69 51.39 50.58 51.74 32.024 26.950 31.094
70 51.29 51.15 51.63 31.732 26.730 30.812
75 50.63 49.40 50.98 30.034 25.452 29.164
80 49.91 46.06 50.19 26.284 22.080 25.458
85 48.14 48.74 48.30 18.606 14.570 17.918
- ----- ------------------------------ -------------------------------
</TABLE>
If the person insured by the policy is assigned a risk classification other
than standard, a factor is applied to the M&E risk face amount charge,
surrender charge rate and maximum surrender charge rate according to the
nonstandard table rating assigned to that person insured. If the person insured
is assigned a nonstandard rating reflected in the table below, the rates above
that apply to the person insured is multiplied by the nonstandard table factor
below that applies.
NONSTANDARD TABLE FACTORS
<TABLE>
<CAPTION>
Nonstandard Table Number
Issue -------------------------------------------------------------------------------
age 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0-45 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60 1.65 1.70 1.75 1.80
50 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60 1.65 1.65 1.65 1.65
55 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35
60 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05
65-85 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
----- -------------------------------------------------------------------------------
</TABLE>
Representative figures shown. For issue ages not listed, please ask your
registered representative.
93
<PAGE>
APPENDIX B - DEATH BENEFIT PERCENTAGES
<TABLE>
<CAPTION>
--------------- --------------- --------------- --------------------------
Age Percentage Age Percentage Age Percentage Age Percentage
--------------- --------------- --------------- --------------------------
<S> <C> <C> <C> <C>
0-40 250 50 185 60 130 70 115
41 243 51 178 61 128 71 113
42 236 52 171 62 126 72 111
43 229 53 164 63 124 73 109
44 222 54 157 64 122 74 107
45 215 55 150 65 120 75-90 105
46 209 56 146 66 119 91 104
47 203 57 142 67 118 92 103
48 197 58 138 68 117 93 102
49 191 59 134 69 116 greater than 93 101
--------------- --------------- --------------- --------------------------
</TABLE>
94
<PAGE>
<TABLE>
<CAPTION>
PACIFIC SELECT
EXEC II - NY WHERE TO GO FOR MORE INFORMATION
<S> <C>
The Pacific Select Exec II - NY variable For more information about Pacific Select Exec II - NY, please call or write to
life insurance policy is underwritten us at the address below. You should also use this address to send us any
by Pacific Life & Annuity Company. notices, forms or requests about your policy.
--------------------------------------------------------------------------------
How to contact us Pacific Life & Annuity Company
Client Services Department
700 Newport Center Drive
P.O. Box
Newport Beach, California 92658-7500
1-800-800-7681
7 a.m. through 5 p.m. Pacific time
--------------------------------------------------------------------------------
How to contact the SEC You can also find reports and other information about the policy and separate
account from the SEC. The SEC may charge you a fee for this information.
Public Reference Section of the SEC
Washington, D.C. 20549-6009
1-800-SEC-0330
Internet: www.sec.gov
</TABLE>
<PAGE>
PACIFIC SELECT EXEC II - NY
Flexible Premium Variable Insurance Policy
Issued by Pacific Life & Annuity Company
Supplement dated to
Prospectus dated
The attached prospectus describes two death benefit qualification tests
available in connection with the Pacific Select Exec II - NY Flexible Premium
Variable Life Insurance Policy ("Policy")--the cash value accumulation test
and the guideline premium test. As of the date of this supplement to the
prospectus, the cash value accumulation test is not yet available.
The attached prospectus describes an Annual renewable term rider under "The
death benefit: Optional riders". As of the date of this supplement to the
prospectus, the Annual renewable term rider is not yet available.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
Contents of Registration Statement
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet.
The cross-reference sheet.
The Prospectus consisting of 94 pages.
Supplement to prospectus consisting of 1 page.
The undertaking to file reports.
Representation pursuant to Section 26(e) of the Investment Company Act of 1940.
Rule 6e-3(T) representation.
The Signatures.
Written consent of the following person (included in the exhibits shown below):
Deloitte & Touche LLP, independent auditors
Dechert Price & Rhoads
The following exhibits:
1. (1) (a) Minutes of Action of Board of Directors of PM Group Life Insurance
Company (PL&A) dated July 1, 1998
(b) Memorandum Establishing Separate Account
(2) Inapplicable
(3) (a) Form of Distribution Agreement Between PL&A and Pacific Mutual
Distributors, Inc.
(b) Form of Selling Agreement Between Pacific Mutual Distributors, Inc.
and Various Broker-Dealers
(4) Inapplicable
(5) (a) Flexible Premium Variable Life Insurance Policy
(b) Annual Renewable Term Rider (Form R98-ART NY)
(c) Accelerated Living Benefit Rider (Form R92-ABR NY)
(d) Spouse Term Rider (Form R98-SPT NY)
(e) Children's Term Rider (Form R84-CT NY)
(f) Waiver of Charges (Form R98-WC NY)
(g) Accidental Death Benefit (Form R84-AD NY)
(h) Guaranteed Insurability Rider (Form R84-GI NY)
(i) Disability Benefit Rider (Form R98-DB NY)
(6) (a) Bylaws of PL&A
(b) Articles of Incorporation of PM Group Life Insurance Company
(c) Amended & Restated Articles of Incorporation for PM Group Life
Insurance Company
<PAGE>
(7) Inapplicable
(8) Inapplicable
(9) (a) Form of Participation Agreement between PL&A and Pacific Select
Fund
(b) Administrative Agreement Between PL&A and Pacific Life Insurance
Company (Pacific Life)
(10) Application for Flexible Premium Variable Life Insurance Policy &
General Questionnaire
2. Form of Opinion and consent of legal officer of PL&A as to legality of
Policies being registered
3. Inapplicable
4. Inapplicable
5. Inapplicable
6. (a) Consent of Deloitte & Touche LLP
(b) Consent of Dechert Price & Rhoads
7. Opinion of Actuary
8. Memorandum Describing Issuance, Transfer and Redemption Procedures
9. Powers of Attorney
10. Inapplicable
11. Inapplicable
12. Inapplicable
13. Inapplicable
14. Inapplicable
15. Inapplicable
16. Inapplicable
17. Inapplicable
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940
Pacific Life & Annuity Company, the sponsoring insurance company of the
Registrant, represents that the fees and charges to be deducted under the
variable Life Insurance Policy ("Policy") described in the prospectus contained
in this registration statement are, in the aggregate, reasonable in relation to
the services rendered, the expenses expected to be incurred, and the risks
assumed in connection with the Policy.
RULE 6e-3(T) REPRESENTATION
This filing is made pursuant to Rule 6e-3(T) and Rule 6c-3 under the
Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Pacific Select Exec Separate Account of Pacific Life & Annuity Company, has
duly caused this Registration Statement on Form S-6 to be signed on its behalf
by the undersigned thereunto duly authorized in the City of Newport Beach, and
State of California, on this 16th day of June, 1999.
PACIFIC SELECT EXEC SEPARATE ACCOUNT
(Registrant)
BY: PACIFIC LIFE & ANNUITY COMPANY
(Depositor)
BY: _____________________________________
William L. Ferris*
President and Chief Executive Officer
*BY: /s/ DAVID R. CARMICHAEL
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained in this Registration Statement on Form S-6 for
the Pacific Select Exec Separate Account, as Exhibit 9.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Pacific Life &
Annuity Company has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized all in the City of Newport
Beach, and State of California, on this 16th day of June, 1999.
BY: PACIFIC LIFE & ANNUITY COMPANY
(Registrant)
BY: _________________________________
William L. Ferris *
President and Chief Executive Officer
*BY: /s/ DAVID R. CARMICHAEL
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained in this Registration Statement on Form S-6 for
the Pacific Select Exec Separate Account, as Exhibit 9.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<C> <S> <C>
Signature Title Date
____________________ Director, President and Chief __________ , 1999
William L. Ferris* Executive Officer
____________________ Director and Chairman of the Board __________ , 1999
Thomas C. Sutton*
____________________ Director, Senior Vice President and __________ , 1999
David R. Carmichael* General Counsel
____________________ Director and Secretary __________ , 1999
Audrey L. Milfs*
____________________ Director __________ , 1999
Glenn S. Schafer*
____________________ Chief Financial Officer and __________ , 1999
Khanh T. Tran* Treasurer
____________________ Executive Vice President __________ , 1999
Lynn C. Miller*
____________________ Senior Vice President __________ , 1999
William J. Doomey*
____________________ Vice President __________ , 1999
Gary L. Falde*
*By: /s/ DAVID R. CARMICHAEL June 16, 1999
------------------------------
David R. Carmichael
as attorney-in-fact
</TABLE>
(Powers of Attorney are contained as Exhibit 9 in this Registration Statement on
Form S-6 of Pacific Select Exec Separate Account.)
<PAGE>
MINUTES OF ACTION OF BOARD OF DIRECTORS
OF
PM GROUP LIFE INSURANCE COMPANY
TAKEN BY UNANIMOUS WRITTEN CONSENT
WITHOUT A MEETING
The undersigned, and each of them, constituting all of the directors of PM
Group Life Insurance Company, an Arizona corporation, acting by unanimous
written consent without a meeting pursuant to Section 10-044 of the Arizona
Revised Statutes and Article III, Section 12 of the bylaws of this corporation,
take the following actions:
Authority to Establish Fixed or Variable Dollar Separate Accounts, or Both,
---------------------------------------------------------------------------
and to Issue Variable Life Insurance Policies and Variable Annuity Contracts.
- ----------------------------------------------------------------------------
The following resolution is adopted:
RESOLVED, that the Board of Directors of this corporation hereby authorizes
this corporation to obtain approval from the appropriate regulatory
authorities of an amendment to its Certificate of Authority to issue
variable life insurance policies and variable annuity contracts and any
derivative thereof being herein collectively referred to as "Variable
Contracts"; and
RESOLVED FURTHER, that the Board of Directors of this corporation hereby
authorizes and directs the establishment of Separate Accounts ("Separate
Accounts") to which the amounts received by this corporation in connection
with the sale of Variable Contracts or contracts payable in fixed dollar
amounts, or both, may be allocated; and
RESOLVED FURTHER, that within the Separate Accounts payable in variable
dollar amounts there may be a number of variable accounts with different
investment policies and objectives into which a policyowner may direct
their interests in the Separate Accounts; and
RESOLVED FURTHER, that the Separate Accounts are to be established and
maintained in accordance with the provisions of Section 20-651 of the
Arizona Insurance Code and the regulations promulgated under that Section;
and
RESOLVED FURTHER, that any officer of this corporation is authorized and
directed to take whatever action may be necessary or advisable to obtain
the appropriate regulatory authority to amend the Certificate of Authority
to issue Variable Contracts and to establish and maintain fixed or variable
Separate Accounts, or both, and to register, file or qualify the Variable
Contracts for sale, including, but not limited to, determining the states
or other jurisdictions in which action shall be taken to qualify, file, or
register the Variable Contracts for sale, performing any and all acts as
such officer deems necessary or advisable to comply with the applicable
laws of any such state or jurisdiction including making any required
filings with the Arizona Insurance Department or any other regulatory
authority in Arizona or any other regulatory authority in any state or
jurisdiction having jurisdiction over the insurance activities of this
corporation or over
<PAGE>
the Variable Contracts; performing any and all acts as such officer deems
necessary or advisable to comply with the applicable laws of the United
States including, but not limited to, preparing and filing registration
statements with the Securities and Exchange Commission to register any
Variable Contracts or interests therein under the Securities Act of 1933
and the Investment Company Act of 1940 and to register any Separate
Account, the benefits of which are payable in variable dollar amounts, or
interests therein under the Investment Company Act of 1940, and to file any
exemptive application if necessary or advisable under the Investment
Company Act of 1940 and to make such other filings or seek any
interpretations that are necessary or advisable from the Securities and
Exchange Commission or any other agency of the United States Government; or
making any filings, seek any interpretations, or make other submissions
that such officer deems necessary or advisable with other regulatory
authorities having jurisdiction over the offer and sale of the Variable
Contracts and to execute and file all requisite papers and documents,
including, but not limited to, applications, reports, surety bonds,
irrevocable consents, powers of attorneys, and appointments of agents for
service of process, and the paying of all necessary fees and expenses as in
such officer's judgment may be necessary or advisable.
RESOLVED FURTHER, that actions taken by officers of this corporation prior
to the adoption of these resolutions, which are within the authority
conferred hereby had these resolutions predated such action, are hereby
ratified, confirmed and approved.
Dated: July 1, 1998
------------
/s/ DAVID R. CARMICHAEL /s/ WILLIAM L. FERRIS
- -------------------------- --------------------------
David R. Carmichael William L. Ferris
/s/ AUDREY L. MILFS /s/ GLENN S. SCHAFER
- -------------------------- --------------------------
Audrey L. Milfs Glenn S. Schafer
/s/ TC SUTTON
- --------------------------
Thomas C. Sutton
<PAGE>
INTEROFFICE MEMO [--] [Logo of PM Group]
DATE: September 24, 1998
TO: William L. Ferris
FROM: Jane M. Guon
SUBJECT: PM GROUP SEPARATE ACCOUNT FOR REGISTERED VARIABLE LIFE PRODUCTS
______________________________________________________________________________
RECOMMENDATION:
- --------------
That you authorize the establishment of the Pacific Select Exec Separate
Account.
WHY RECOMMENDATION IS SUBMITTED AT THIS TIME:
- --------------------------------------------
Documentation of this authorization must accompany registered variable life
product registration filings made with the Securities and Exchange Commission.
BACKGROUND:
- ----------
Management has approved the development of registered variable life
products,
for sale in the State of New York. Amounts received by PM Group in connection
with the sale of the new products will be allocated to the Pacific Select Exec
Separate Account and among the subaccounts, at the policyowners' direction.
On July 1, 1998, the Board of Directors of PM Group Life Insurance Company
adopted resolutions authorizing any Officer of the Corporation to take whatever
action necessary to establish and maintain Separate Accounts, which may be,
required in connection with registered variable life products. Outside counsel
for our variable life products recommends that authorization for new Separate
Accounts be obtained from the Chief Executive Officer.
OTHERS CONSULTED:
- ----------------
Diane Ledger and Sharon Cheever concur in this recommendation.
AUTHORIZATION:
- -------------
On behalf of PM Group Life Insurance Company, the establishment of the Pacific
Select Exec Separate Account is hereby authorized to be used in connection with
registered variable life products develop
ed and established by PM Group.
/s/WILLIAM L. FERRIS
- -----------------------------
William L. Ferris
President and Chief Executive Officer
<PAGE>
DRAFT
DISTRIBUTION AGREEMENT
AGREEMENT made this ____ day of ____________, 199__, by and between Pacific Life
& Annuity Company, an Arizona Corporation, "PL&A" on its own behalf and on
behalf of the segregated asset accounts of PL&A listed on Exhibit A to this
Agreement (the "Separate Accounts"), and Pacific Mutual Distributors, Inc., a
California corporation, ("PMD").
WHEREAS, PL&A has established and maintains the Separate Accounts, a separate
investment account, for the purpose of selling variable life contracts
("Contracts") to commence after the effectiveness of the Registration Statement
relating thereto filed with the Securities and Exchange Commission on form S-6,
or any successor form thereto, pursuant to the Securities Act of 1933, as
amended (the "1933 Act"), through PMD, acting as general agent of PL&A;
WHEREAS, the Separate Accounts are registered as a unit investment trust under
the Investment Company Act of 1940 ("the 1940 Act");
WHEREAS, PMD is registered as a broker-dealer under the Securities Exchange Act
of 1934 (the "Securities Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, PL&A desires to retain PMD as the Distributor and Principal Underwriter
to provide for the sale and distribution to the public of the Contracts issued
by PL&A and funded by interests in the General Account of PL&A and in the
Separate Accounts and PMD is willing to render such services;
NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter
set forth, the parties agree as follows:
1. Principal Underwriter. PL&A hereby appoints PMD, during the term
---------------------
of this Agreement, subject to the registration requirements of the 1933 Act
and the 1940 Act and the provisions of the Securities Exchange Act, to be
the Distributor and Principal Underwriter for the sale of Contracts to the
public in each state and other jurisdictions in which the Contracts may be
lawfully sold. PL&A also appoints PMD as its independent General Agent for
sale of its Contracts (including any riders which PL&A may make available
in connection therewith or any contracts for which the Contracts may be
exchanged or converted) and for sale of such other insurance contracts or
annuity contracts as PL&A may, from time to time, authorize in writing by
amendment thereto. PMD shall offer the Contracts for sale and distribution
at premium rates set by PL&A.
2. Selling Agreements. PMD is hereby authorized to enter into separate
------------------
written agreements, on such terms and conditions as PMD determines are not
inconsistent with this Agreement, with such organizations which agree to
participate as a general agent and/or broker-dealer in the distribution of
the Contracts and to use their best efforts to solicit applications for
<PAGE>
Contracts. Any such broker-dealer (hereinafter "Broker") shall be both
registered as a broker-dealer under the Securities Exchange Act and a
member of the NASD. PMD shall be responsible for ensuring that Broker and
its agents or representatives and general agent and its sub-agents
soliciting applications for Contracts shall be duly and appropriately
licensed, registered and otherwise qualified for the sale of the Contracts
(and the riders and other contracts offered in connection therewith) under
the insurance laws and any applicable blue sky laws of each state or other
jurisdiction in which such policies may be lawfully sold and in which PL&A
is licensed to sell such Contracts. PL&A shall undertake to appoint
Broker's qualified agents or representatives and general agent's sub-agents
as life insurance agents of PL&A, provided that PL&A reserves the right to
refuse to appoint any proposed representative, agent, or sub-agent or once
appointed, to terminate such appointment. PMD shall be responsible for
ensuring that Broker and general agent supervise its agents,
representatives, or sub-agents.
PMD is also authorized to enter into separate written agreements, on such
terms and conditions as PMD determines are not inconsistent with this
Agreement, with such organizations ("wholesalers") that agree to
participate in the distribution of the Contracts and to use their best
efforts to solicit Brokers and general agents that, in turn, will solicit
applications of the Contracts.
3. Life Insurance Agents. PL&A shall be responsible for ensuring that Broker
---------------------
and its agents or representatives and general agent and its sub-agents meet
all qualifications and hold any licenses or authorizations that may be
required for the solicitation or sale of the Contracts under the insurance
laws of the applicable jurisdictions.
4. Suitability. PL&A desires to ensure that Contracts will be sold to
-----------
purchasers for whom the Contract will be suitable. PMD shall take
reasonable steps to ensure that the various representatives of Broker and
sub-agents of general agents shall not make recommendations to an applicant
to purchase a Contract in the absence of reasonable grounds to believe the
purchase of the Contract is suitable for such applicant. While not limited
to the following, a determination of suitability shall be based on
information furnished to a representative or sub-agent after reasonable
inquiry of such applicant concerning the applicant's other security
holdings, insurance and investment objectives, financial situation and
needs, and the likelihood that the applicant will continue to make any
premium payments contemplated by the Contracts and will keep the Policy in
force for a sufficient period of time so that PL&A's acquisition costs are
amortized over a reasonable period of time.
5. Conformity with Registration Statement and Approved Sales Materials. In
-------------------------------------------------------------------
performing its duties as Distributor, PMD will act in conformity with the
Prospectus and with the instructions and directions of PL&A, the
requirements of the 1933 Act, the 1940 Act, the Securities Exchange Act,
and all other applicable federal and state laws and regulations. PMD shall
not give any information nor make any representations, concerning any
aspect of the Contract or of PL&A's operations to any persons or entity
unless such information or representations are contained in the
Registration Statement and
2
<PAGE>
the pertinent prospectus filed with the Securities and Exchange Commission,
or are contained in sales or promotional literature approved by PL&A. PMD
will not use and will take reasonable steps to ensure Broker will not use
any sales promotion material and advertising which has not been previously
approved by PL&A.
6. Expenses. During the term of this Agreement, PMD will bear all of its
--------
expenses in complying with this Agreement, including the following
expenses:
(a) costs of sales presentations, mailings, sales promotion materials,
advertising, and any other marketing efforts by PMD in connection with
the distribution or sale of the Contracts; and
(b) any compensation paid to employees of PMD and to wholesalers, Brokers
and general agents in connection with the distribution or sale of the
Contracts.
Notwithstanding any other provision of this Agreement, it is understood and
agreed that PL&A shall at all times retain the ultimate responsibility for
and control of all functions performed pursuant to this Agreement, and for
marketing the Contract, and reserves the right to direct, approve or
disapprove any action hereunder taken on its behalf by PMD.
7. Applications. Completed applications for Contracts solicited by such
------------
Broker through its agents or representatives or by general agent through
its sub-agents shall be transmitted directly to PL&A. All payments under
the Contracts shall be made by check to PL&A or by other method acceptable
to PL&A, and if received by PMD, shall be held at all times in a fiduciary
capacity and remitted promptly to PL&A. All such payments will be the
property of PL&A. PL&A has the sole authority to approve or reject such
applications or payments and maintains ultimate responsibility for
underwriting. Anything in this Agreement to the contrary notwithstanding,
PL&A retains the ultimate right to control the sale of the Contracts and to
appoint and discharge life insurance agents of PL&A.
8. Standard of Care. PMD shall be responsible for exercising reasonable care
----------------
in carrying out the provisions of this Agreement.
9. Reports. PMD shall be responsible for maintaining the records of Broker
-------
and general agent and their agents, representatives or sub-agents who are
licensed, registered and otherwise qualified to sell the Contracts;
calculating and furnishing the fees payable to Brokers or general agents;
and for furnishing periodic reports to PL&A as to the sale of Contracts
made pursuant to this Agreement.
10. Records. PMD shall maintain and preserve such records as are required of
-------
it by applicable laws and regulations. The books, accounts and records of
PL&A, the Separate Accounts and PMD shall be maintained so as to clearly
and accurately disclose the nature
3
<PAGE>
and details of the transactions, including such accounting information as
necessary to support the reasonableness of the amounts to be paid by PL&A
hereunder.
11. Compensation. For the services rendered and product development in the
------------
initial sales efforts and continuing obligations under this Agreement, PL&A
shall pay PMD in the amounts set forth in Schedule A, which schedule is
incorporated herein. PL&A shall arrange for the payment of commissions,
through PMD, to those Brokers and general agents that sell Contracts under
agreements entered into pursuant to Section 2, hereof, and to wholesalers
that solicit brokers and general agents to sell Contracts under agreements
entered into pursuant to Section 2, hereof, in amounts as may be agreed to
by PL&A and PMD specified in such written agreements.
12. Investigation and proceedings. PMD and PL&A agree to cooperate fully in
-----------------------------
any insurance regulatory investigation or proceeding or judicial proceeding
arising in connection with the Contracts distributed under this Agreement.
PMD further agrees to furnish regulatory authorities with any information
or reports in connection with such services which may be requested in order
to ascertain whether the operations of PL&A and the Separate Accounts are
being conducted in a manner consistent with applicable laws and
regulations. PMD and PL&A further agree to cooperate fully in any
securities regulatory investigation or proceeding with respect to PL&A,
PMD, their affiliates and their agents or representatives to the extent
that such investigation or proceeding is in connection with Contracts
distributed under this Agreement. Without limiting the foregoing:
(a) PMD will be notified promptly of any customer complaint or notice of
any regulatory investigation or proceeding or judicial proceeding
received by PL&A with respect to PMD or any agent, representative, or
sub-agent of a Broker or general agent or which may affect PL&A's
issuance of any Contract sold under this Agreement; and
(b) PMD will promptly notify PL&A of any customer complaint or notice of
any regulatory investigation or proceeding received by PMD or its
affiliates with respect to PMD or any agent, representative, or sub-
agent of a Broker or general agent in connection with any Contract
distributed under this Agreement or any activity in connection with
any such Contract.
In the case of a meritorious customer complaint, PMD and PL&A will
cooperate in investigating such complaint and any response will be sent to
the other party to this Agreement for approval not less than five business
days prior to its being sent to the customer or regulatory authority,
except that if a more prompt response is required, the proposed response
shall be communicated by telephone or telegraph.
13. Indemnification. PL&A hereby agrees to indemnify and hold harmless PMD and
---------------
its officers and directors, and employees for any expenses (including legal
expenses), losses, claims, damages, or liabilities incurred by reason of
any untrue or alleged untrue statement
4
<PAGE>
or representation of a material fact or any omission or alleged omission to
state a material fact required to be stated to make other statements not
misleading, if made in reliance on any prospectus, registration statement,
post-effective amendment thereof, or sales materials supplied or approved
by PL&A or the Separate Accounts. PL&A shall reimburse each such person for
any legal or other expenses reasonably incurred in connection with
investigating or defending any such loss, liability, damage, or claim.
However, in no case shall PL&A be required to indemnify for any expenses,
losses, claims, damages, or liabilities which have resulted from the
willful misfeasance, bad faith, negligence, misconduct, or wrongful act of
PMD.
PMD hereby agrees to indemnify and hold harmless PL&A, its officers,
directors, and employees, and the Separate Accounts for any expenses,
losses, claims, damages, or liabilities arising out of or based upon any of
the following in connection with the offer or sale of the contracts: 1)
except for such statements made in reliance on any prospectus, registration
statement or sales material supplied or approved by PL&A or the Separate
Accounts, any untrue or alleged untrue statement of representation made; 2)
any failure to deliver a currently effective prospectus; 3) the use of any
unauthorized sales literature by any officer, employee, agent, or sub-agent
of PMD, Broker or general agent; or 4) any willful misfeasance, bad faith,
negligence, misconduct or wrongful act. PMD shall reimburse each such
person for any legal or other expenses reasonably incurred in connection
with investigating or defending any such loss, liability, damage, or claim.
Promptly after receipt by a party entitled to indemnification ("indemnified
party") of notice of the commencement of any action, if a claim for
indemnification in respect thereof is to be made against PL&A or PMD
("indemnifying party") such indemnified party will notify indemnifying
party in writing of the commencement thereof, but failure to notify the
indemnifying party of any claim shall not relieve it from any liability
which it may have to the person against whom such action is brought
otherwise than on account of this agreement contained in this Section 13.
The indemnifying party will be entitled to participate in the defense of
the indemnified party and such participation will not relieve such
indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses incurred by such indemnified party in
defending himself.
14. Agent of PM Group [PLA] or Separate Accounts. Any person, even though also
--------------------------------------------
an officer, director, employee, or agent of PMD, who may be or become an
officer, director, employee, or agent of PL&A or the Separate Accounts
shall be deemed when rendering services to PL&A or the Separate Accounts or
acting in any business of PL&A or the Separate Accounts, to be rendering
such services to or acting solely for PL&A or the Separate Accounts and not
as an officer, director, employee, or agent or one under the control or
direction of PMD even thought paid by PMD. Likewise, any person even though
also an officer, director, employee, or agent of PL&A or the Separate
Accounts, who may be or become an officer, director, employee, or agent of
PMD shall be deemed, when rendering services to PMD or acting in any
business of PMD, to be rendering such services to or acting solely for PMD
and not as an officer, director,
5
<PAGE>
employee, or agent or one under the control or direction of PL&A or the
Separate Accounts even though paid by PL&A or the Separate Accounts.
15. Books and Records. It is expressly understood and agreed that all
-----------------
documents, reports, records, books, files and other materials relating to
this Agreement and the services to be performed hereunder shall be the sole
property of PL&A and the Separate Accounts and that such property shall be
held by PMD as agent, during the effective term of this Agreement. This
material shall be delivered to PL&A upon the termination of this Agreement
free from any claim or retention of rights by PMD. During the term of this
Agreement and for a period of three years from the date of termination of
this Agreement, PMD will not disclose or use any records or information and
will regard and preserve as confidential all information related to the
business of PL&A or the Separate Accounts that may be obtained by PMD from
any source as a result of this Agreement and will disclose such information
only if PL&A or the Separate Accounts has authorized such disclosure, or if
such disclosure is expressly required by applicable federal or state
regulatory authorities. PMD further acknowledges and agrees that, in the
event of a breach or threatened breach by it of the provisions of this
article, PL&A will have no adequate remedy in moneys or damages and,
accordingly, PL&A shall be entitled in its discretion to seek an injunction
against such breach. However, no specification in this Agreement of a
specific legal or equitable remedy shall be construed as a waiver or
prohibition against any other legal or equitable remedy in the event of a
breach of a provision of this Agreement.
16. Employees. PMD will not employ, except with the prior written approval of
---------
the Commissioner of Insurance of the state of Arizona, in any material
connection with the handling of the Separate Accounts' assets any person
who, to the knowledge of PMD:
(a) in the last 10 years has been convicted of any felony or misdemeanor
arising out of conduct involving embezzlement, fraudulent conversion,
or misappropriation of funds or securities, or involving violations of
Sections 1341, 1342, or 1343 of Title 18, United States Code; or
(b) within the last 10 years has been found by any state regulatory
authority to have violated or has acknowledged violation of any
provision of any state insurance law involving fraud, deceit, or
knowing misrepresentation; or
(c) within the last 10 years has been found by any federal or state
regulatory authorities to have violated or have acknowledged violation
of any provision of federal or state securities laws involving fraud,
deceit, or knowing misrepresentation.
17. Termination. This Agreement shall terminate automatically upon its
-----------
assignment without the prior written consent of both parties. This
Agreement may be terminated at any time, for any reason, by either party on
60 days' written notice to the other party, without the payment of any
penalty. Upon termination of this Agreement, all authorizations, rights
and obligations
<PAGE>
shall cease except the obligation to settle accounts hereunder, including
commissions on premiums subsequently received for Contracts in effect at
time of termination, and the agreements contained in Sections 12 and 13
hereof.
18. Regulations. This Agreement shall be subject to the provisions of the 1940
-----------
Act and the Securities Exchange Act and the rules, regulations and rulings
thereunder, and of the applicable rules and regulations of the NASD, and
applicable state insurance law and other applicable law, from time to time
in effect, and the terms hereof shall be interpreted and construed in
accordance therewith.
19. Independent Contractor. PMD shall act as an independent contractor and
----------------------
nothing herein contained shall constitute PMD or its agents, officers or
employees as agents, officers, or employees of PL&A in connection with the
sale of the Contracts.
20. Notices. Notices of any kind to be given to PMD by PL&A or the Separate
-------
Accounts shall be in writing and shall be duly given if mailed, first class
postage prepaid, or delivered to PMD at 700 Newport Center Drive, Newport
Beach, California 92660, or at such other address or to such individual as
shall be specified by PMD. Notices of any kind to be given to PL&A or the
Separate Accounts shall be in writing and shall be duly given if mailed,
first class postage prepaid, or delivered to them at 700 Newport Center
Drive, Newport Beach, California 92660, or at such other address or to such
individual as shall be specified by PL&A.
If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
21. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with and governed by the laws of the State of Arizona.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC LIFE & ANNUITY COMPANY
Attest: By:
- --------------------------------- ---------------------------------
Name: Name:
Title:
PACIFIC MUTUAL DISTRIBUTORS, INC.
Attest: By:
- --------------------------------- ---------------------------------
Name: Name:
Title:
<PAGE>
EXHIBIT A
PACIFIC SELECT EXEC SEPARATE ACCOUNT
SEPARATE ACCOUNT A
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to be executed
by their Officers designated below on this ____ day of ____________, 1999.
PACIFIC MUTUAL DISTRIBUTORS, INC.
Attest: By:
- ------------------------------------- --------------------------------
Name: Name:
Title: President
PACIFIC LIFE & ANNUITY COMPANY
Attest: By:
- ------------------------------------- --------------------------------
Name: Name:
Title: President
<PAGE>
PACIFIC LIFE & ANNUITY COMPANY
VARIABLE CONTRACT SELLING AGREEMENT
This Agreement ("Agreement") is made as of _______________________, 19__ by
and among PACIFIC LIFE & ANNUITY COMPANY ("PL&A"), PACIFIC MUTUAL DISTRIBUTORS,
INC. ("Distributor"), a broker/dealer registered with the Securities and
Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and a member of the National Association of Securities
Dealers, Inc. ("NASD"), _____________________________________ ("Broker/Dealer"),
and each undersigned agency (jointly and severally referred to herein as
"Agency"); Broker/Dealer and Agency jointly and severally hereinafter referred
to collectively as "Selling Entities".
This Agreement is for the purpose of providing for the distribution of
certain variable life insurance policies and/or annuity contracts set forth in
Schedule A hereto and of any successor additional SEC registered insurance
products (as discussed in Paragraph [3] of this Agreement) issued by PL&A and
distributed by Distributor through representatives who are both (a) state
insurance licensed and appointed agents of PL&A and associated with the Agency
and (b) NASD registered representatives of Broker/Dealer who are appropriately
licensed both with the NASD and with the relevant states. The variable life
insurance and/or annuity contracts set forth in Schedule A hereto, as such
Schedule may be amended and/or restated from time to time to include any
successor or additional SEC registered insurance products, and together with any
riders to such contracts, are referred to collectively herein as the
"Contracts".
1. APPOINTMENT
In consideration of the mutual promises and covenants contained in this
Agreement, PL&A and Distributor appoint Broker/Dealer and those persons
associated with Agency who are NASD registered representatives of Broker/Dealer
and state insurance licensed agents of PL&A to solicit and procure applications
for the Contracts.
These appointments are not deemed to be exclusive in any manner and extend
only to those jurisdictions, set forth in Schedule B hereto as such Schedule B
may be amended from time to time by PL&A in its sole discretion, where
the Contracts specified in such Schedule B have been approved for sale.
From time to time, PL&A will provide Selling Entities with information
regarding the jurisdictions in which PL&A is authorized to solicit applications
for the Contracts and any limitations on the availability of such Contracts in
any jurisdiction.
2. RESPONSIBILITIES
Broker/Dealer is authorized to collect the premium on the Contracts and
must remit such premiums to PL&A in the manner set forth in the applicable
Compensation Schedule set forth in one of the Schedule Ds. Contract applications
shall be taken only on preprinted, state-appropriate application forms supplied
by PL&A. All completed applications, supporting documents and payments are the
sole property of PL&A and must be promptly delivered to PL&A. All applications
are subject to acceptance by PL&A at its sole discretion.
3. NEW PRODUCTS
Distributor may propose and PL&A may issue additional or successor
products, in which event Broker/Dealer will be informed of the new product and
its related Compensation Schedule. If Broker/Dealer does not agree to distribute
such new product(s), it must notify PL&A in writing within 30 days of receipt of
the Compensation Schedule for such new product(s). If Broker/Dealer does not
indicate disapproval of the new product(s) or the terms contained in its related
Compensation Schedule, Broker/Dealer will be deemed to have thereby agreed (a)
to distribute such new product(s) and agreed to its related Compensation
Schedule, which shall be attached to and made a part of this Agreement as an
amendment or addendum to the applicable Schedule D, or as
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a new Schedule D hereto, and (b) to the amendment of Schedules A and B to this
Agreement to name such new product(s) and to identify where their offer and sale
has been approved.
4. SUBAGENTS
Agency is authorized to appoint Subagents to solicit sales of the Contracts
("Subagents"); provided, however, that PL&A shall have the right in its sole
discretion to terminate the appointment of any Subagent upon notice from PL&A to
Agency. Agency warrants that no Subagent shall commence solicitation nor aid,
directly or indirectly, in the solicitation of any application for any Contract
unless, at the time of such solicitation or aid, such Subagent is appropriately
licensed for such product under applicable insurance laws and is an NASD
registered representative of Broker/Dealer.
Selling Entities each represent that they have, for each Subagent,
fulfilled all requirements set forth in the form of general letter of
recommendation set forth in Schedule C hereto; and agree, upon reasonable
request by PL&A, to furnish proof of such fulfillment as PL&A may require.
5. SALES MATERIAL
Neither Selling Entities nor any of their respective Subagents, officers,
directors, employees, affiliates, representatives or agents shall utilize in
their marketing efforts for the Contracts any written brochure, prospectus,
descriptive literature, printed and published material, audio-visual material or
standard letters; provided, however, that they may: (a) use material that has
been provided preprinted by PL&A or Distributor, and (b) use material, the use
of which PL&A or Distributor has specifically approved, in writing, prior to
such use. In order for PL&A or Distributor to review and approve materials not
produced by PL&A in accordance with clause (b) above, Broker/Dealer must provide
PL&A and Distributor with evidence that any material proposed to be used was
filed with the NASD in accordance with applicable rules and copies of
correspondence with the NASD relating to the proposed material.
6. RECORDS
In accordance with the requirements of federal and state laws and rules of
applicable self-regulatory organizations as defined in the Exchange Act ("SROs")
including but limited to the Rules of Fair Practice of the NASD ("NASD Rules"),
Selling Entities shall maintain complete records concerning the sale of the
Contracts, information regarding the customs relating to the sale and/or
servicing of the Contracts, including the manner and extent of distribution of
any sales, marketing or other solicitation material, shall make such records and
files available to staff of PL&A or Distributor at such times as PL&A or
Distributor may reasonably request and shall make such material available to
personnel of state insurance departments, the NASD or other regulatory agency,
including the SEC, that have regulatory authority over PL&A or Distributor.
7. DELIVERY OF PROSPECTUSES
Selling Entities warrant that each solicitation, specifically including any
solicitation effected by any Subagent, will be made by use of a currently
effective prospectus, that a prospectus will be delivered concurrently with each
sales presentation and that no statements shall be made to a client superseding
or controverting any statement made in the prospectus. PL&A and Distributor
shall furnish Selling Entities, at no cost to Selling Entities, reasonable
quantities of prospectuses and such other material as PL&A and Distributor deem
necessary to aid in the solicitation of Contracts.
8. BROKER/DEALER REPRESENTATIONS
The representations, warranties and covenants of Broker/Dealer set forth in
this Agreement are continuous during the term of this Agreement and
Broker/Dealer agrees to notify each of PL&A and Distributor immediately, in
writing, if, at any time during the course of this Agreement, any of the
representations, warranties or covenants set forth herein become inaccurate or
untrue of the facts related thereto.
Broker/Dealer represents, warrants and covenants that:
(a) Broker/Dealer is affiliated with Agency which is an entity properly
licensed under the insurance laws of the jurisdiction(s) in which Broker/Dealer
will act under this Agreement;
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(b) Broker/Dealer is registered with the SEC as a broker/dealer under the
Exchange Act, a member of the NASD and will, throughout the duration of this
Agreement, remain in compliance with the requirements of the NASD and of the
Exchange Act, including but not limited to laws requiring that the Broker/Dealer
and each of its Subagents/registered representatives be appropriately securities
registered, insurance licensed and appointed by PL&A, and such other applicable
federal or state laws;
(c) Broker/Dealer has established rules, procedures, and supervisory and
inspection techniques necessary to train and to supervise diligently the
activities of its NASD registered representatives who are state insurance
licensed and appointed agents of PL&A;
(d) Broker/Dealer shall ensure that no registered representative of
Broker/Dealer, including any Subagent, shall sell or recommend for sale any
Contract to any person without reasonable grounds for believing, after
appropriate inquiry, that the purchase of that Contract is suitable for that
person;
(e) Upon request by PL&A and Distributor, Broker/Dealer will furnish such
appropriate records as are necessary to document the training, licensing and
diligent supervision required by subparagraph (b) above, and client suitability
determinations required by subparagraph (c) above.
9. AGENCY REPRESENTATIONS
The representations, warranties and covenants of Agency set forth in this
Agreement are continuous during the term of this Agreement and Agency agrees to
notify each of PL&A and Distributor immediately, in writing, if, at any time
during the course of this Agreement, any of the representations, warranties or
covenants set forth herein become inaccurate or untrue of the facts related
thereto.
Agency represents, warrants and covenants that it will, and will cause each
Subagent to, comply fully with the requirements of state insurance law and
applicable federal laws, including but not limited to assuring appropriate state
insurance licensing and appointment by PL&A, and will establish rules and
procedures necessary to supervise diligently the activities of licensed and
appointed agents of PL&A associated with Agency. Upon request by PL&A or
Distributor, Agency will furnish such appropriate records as are necessary to
document such diligent supervision.
10. PL&A REPRESENTATIONS
PL&A represents that the prospectus(es) and registration statement(s)
relating to the Contracts that are and shall be in effect from time to time
contain no untrue statements of material fact and do not omit to state material
facts, the omission of which makes any statement contained in such
prospectus(es) and registration statement(s) misleading.
11. COMPENSATION
11.1 PL&A, through Distributor, will remit to Broker/Dealer or Agency
compensation as set forth in the applicable Schedule D hereto, which payments or
termination thereof shall be governed by the administrative rules established by
PL&A in its sole discretion. Selling Entities shall pay all Subagents. PL&A
reserves the right not to pay compensation on a Contract, the premium for which
is paid in whole or in part by the loan or surrender value of any other life
insurance policy or annuity contract issued by PL&A.
11.2 PL&A may offset, against any claim for commission and any other
compensation payable to Broker/Dealer or Agency under this Agreement, any
existing or future indebtedness of, respectively, Broker/Dealer or Agency,
whether fixed or contingent, whether such indebtedness arises under this
Agreement or otherwise. Such indebtedness shall constitute a first lien against
any such compensation. Neither Broker/Dealer nor Agency may offset, against any
such indebtedness, any compensation accruing under this Agreement.
12. COMPLAINTS AND INVESTIGATIONS
PL&A, Distributor, Broker/Dealer and Agency agree to cooperate fully in any
insurance or securities regulatory investigation or proceeding or judicial
proceeding with respect to PL&A,
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Distributor, Broker/Dealer and/or Agency, their affiliates and their agents or
representatives to the extent that such investigation or proceeding is in
connection with the Contracts distributed under this Agreement. Without limiting
the foregoing:
(a) Selling Entities shall promptly notify PL&A and Distributor
of any complaint or comment regarding the Contracts and/or any allegation that
Selling Entities or any of its Subagents/representatives violated any law,
regulation or rule in soliciting applications for or servicing the Contracts.
Selling Entities shall promptly investigate such complaint or allegation, take
appropriate remedial measures and notify PL&A and Distributor of same. Selling
Entities shall provide PL&A and Distributor with full details of and
correspondence relating to any of the foregoing, including copies of all legal
documents pertaining thereto.
(b) Selling Entities shall cooperate fully with PL&A and Distributor in
any regulatory proceeding or judicial proceeding involving the solicitation of
applications for or the servicing of Contracts by the Selling Entities or any of
their representatives.
13. INDEMNIFICATION
13.1 PL&A and Distributor agree to indemnify and hold harmless Selling
Entities, their officers, directors, agents and employees, against any and all
losses, claims, damages, or liabilities to which they may become subject under
the Securities Act, the Exchange Act, the Investment Company Act of 1940, or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission to state a
material fact required to be stated or necessary to make the statements made not
misleading in the registration statement for the Contracts or for the shares of
Pacific Select Fund (the "Fund") filed pursuant to the Securities Act, or any
prospectus included as a part thereof, as from time to time amended and
supplemented, or in any advertisement or sales literature provided by PL&A and
Distributor.
13.2 Selling Entities agree to, jointly and severally, hold harmless and
indemnify PL&A and Distributor and any of their respective affiliates,
employees, officers, agents and directors (collectively, "Indemnified Persons")
against any and all claims, liabilities and expenses (including, without
limitation, losses occasioned by any rescission of any Contract pursuant to a
"free look" provision or by any return of initial purchase payment in connection
with an incomplete application), including, without limitation, reasonable
attorneys' fees and expenses and any loss attributable to the investment
experience under a Contract, that any Indemnified Person may incur from
liabilities resulting or arising out of or based upon (a) any untrue or alleged
untrue statement other than statements contained in the registration statement
or prospectus relating to any Contract, (b) (i) any inaccurate or misleading, or
allegedly inaccurate or misleading sales material used in connection with any
marketing or solicitation relating to any Contract, other than sales material
provided preprinted by PL&A or Distributor, and (ii) any use of any sales
material that either has not been specifically approved in writing by PL&A or
Distributor or that, although previously approved in writing by PL&A or
Distributor, has been disapproved, in writing by either of them, for further
use, or (c) any act or omission of a Subagent, director, officer or employee of
Selling Entities, including, without limitation, any failure of Selling Entities
or any Subagent to be registered as required as a broker/dealer under the 1934
Act, or licensed in accordance with the rules of any applicable SRO or insurance
regulator.
14. FIDELITY BOND
Selling Entities each represent and covenant that all directors, officers,
employees and Subagents of Selling Entities licensed pursuant to this Agreement
or who have access to funds of PL&A are and will continue to be covered by a
blanket fidelity bond including coverage for larceny, embezzlement and other
defalcation, issued by a bonding company rated A- or better from A.M. Best or
equivalent rating from another nationally recognized statistical rating
organization. This bond shall be maintained at Broker/Dealer's and/or Agency's
expense. Such bond shall be at least equivalent to the minimal coverage required
under the NASD Rules, and endorsed to extend coverage to life insurance and
annuity transactions. Selling Entities acknowledge that PL&A may require
evidence that such coverage is in force, and Broker/Dealer or Agency shall
promptly give notice to PL&A of any notice of cancellation or change of
coverage.
4
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Selling Entities each assign any proceeds received from the fidelity bond
company, error and omissions or other liability coverage, to PL&A to the extent
of PL&A's loss due to activities covered by the bond. If there is any
deficiency, Selling Entities will promptly pay PL&A the amount of such
deficiency on demand. Selling Entities each shall indemnify and hold harmless
PL&A from any such deficiency and from the cost of collection.
15. LIMITATIONS OF AUTHORITY
The Contract forms are the sole property of PL&A. No person other than PL&A
has the right or authority to: (i) make, alter or discharge any policy,
Contract, certificate, supplemental contract or form issued by PL&A; (ii) make,
alter, modify or discharge any Contract; (iii) waive or modify any provision
with respect to any Contract or policy; (iv) incur indebtedness or liability, or
expend or contract for expenditure of any funds on behalf of PL&A or the
Contracts; (v) extend the time for payment of any premiums, bind PL&A to
reinstate any terminated Contracts, or accept notes for payment of premiums;
(vi) enter into any proceeding in a court of law or before a regulatory agency
in the name of or on behalf of PL&A; or (vii) institute or file any response to
any legal proceeding in connection with any matter pertaining to the Contracts
on behalf of PL&A without the prior written consent of PL&A (except that if
Selling Entities themselves are named as a party or parties in such proceedings
each named party may enter into legal proceedings on its own behalf without the
written consent of PL&A).
16. GENERAL PROVISIONS
16.1 Waiver
Failure of any of the parties to insist promptly upon strict compliance
with any of the obligations of any other party under this Agreement will not be
deemed to constitute a waiver of the right to enforce strict compliance.
16.2 Independent Contractors
Selling Entities are each an independent contractor and not an employee or
subsidiary of PL&A or Distributor. Nothing contained in this Agreement or
otherwise shall be deemed to make any registered representative of Broker/Dealer
or any Subagent appointed by Agency an employee or agent of PL&A or Distributor
for tax or any other purposes. Neither PL&A nor Distributor shall have any
responsibility for training or supervision of any such Subagent or registered
representative or of any other employee or affiliate of any Selling Entities.
16.3 Independent Assignment
No assignment of this Agreement or of commissions or other payments under
this Agreement shall be valid without prior written consent of PL&A. Any
purported assignment in violation of this Paragraph 16.3 is void.
16.4 Notice
Any notice required or otherwise given pursuant to this Agreement may be
given electronically by facsimile or electronic mail (but not orally by
telephone) or by mail, postage paid, (including any express mail service),
transmitted to the last address communicated by the receiving party to the other
parties to this Agreement. The current address for mailing purposes of this
Agreement shall be set forth on the signature page.
16.5 Severability
To the extent this Agreement may be in conflict with any applicable law or
regulation, this Agreement shall be construed in a manner consistent with such
law or regulation. The invalidity or illegality of any provisions of this
Agreement shall not be deemed to affect the validity or legality of any other
provision of this Agreement.
16.6 Amendment
Except as expressly provided herein, this Agreement may be amended only by
a writing signed by all parties. The Schedules hereto may be amended by PL&A or
Distributor upon 10 days' written notice to Broker/Dealer and Agency which shall
be deemed received the earlier of actual receipt or 10 days after mailing or
transmission. The submission of an application for the Contracts by
Broker/Dealer or Agency after the date of any
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<PAGE>
such amendment shall constitute such party's agreement to such amendment. No
amendment will impair the right to receive commissions as accrued with respect
to Contracts issued and applications procured prior to the amendment.
16.7 Termination
This Agreement may be terminated by any party for any reason upon 10 days'
prior written notice. It may be terminated, for cause, by any party
immediately. Termination of this Agreement shall not impair the right to
receive commissions accrued with respect to applications procured prior to the
termination except as otherwise specifically provided in the applicable Schedule
D hereto.
16.8 Survival
All representations and warranties made in or pursuant to this Agreement
and the provisions of Paragraphs 11, 12 and 14.10 of this Agreement shall
survive the termination of this Agreement.
16.9 Governing Law
This Agreement shall be construed in accordance with the laws of the State
of California, without giving effect to the conflict of law provisions thereof.
Broker/Dealer and Agency consent to the jurisdiction of the courts of the State
of California and to the jurisdiction of federal courts located within
California.
16.10 Proprietary Information
Selling Entities acknowledge that information pertaining to any Distributor
program or service, including names of Contract owners, is proprietary in nature
and belongs exclusively to Distributor. Selling Entities agree that they will
not disclose any information concerning Distributor programs or services to any
person, for consideration or otherwise, unless (a) PL&A or Distributor has
authorized such disclosure in writing or (b) if such disclosure is expressly
required by state or federal regulatory authorities and PL&A and Distributor
have received notice, in writing, of such disclosure. Selling Entities agree
further that, following termination of this Agreement for any reason, they will
not solicit or otherwise contact any Contract owner for any reason except as
expressly agreed in writing by Distributor or PL&A.
16.11 Entire Agreement
This Agreement shall constitute the entire agreement among the parties and
supersedes all prior agreements and understandings, whether written or verbal.
By signing below, each of the undersigned agrees to have read and be bound
by the terms and conditions of this Agreement. Each of the undersigned
acknowledges receipt of a copy of this Agreement.
PACIFIC LIFE & ANNUITY COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
By:______________________________________
Title:___________________________________
PACIFIC MUTUAL DISTRIBUTORS, INC.
700 Newport Center Drive
Newport Beach, CA 92660
By:______________________________________
Title:___________________________________
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BROKER/DEALER:___________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
7
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AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
8
<PAGE>
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
9
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AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
10
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SCHEDULE A
PACIFIC LIFE & ANNUITY COMPANY
CONTRACTS COVERED BY THIS AGREEMENT
Contract Name Contract Number
- ------------- ---------------
Pacific Portfolios-NY
Pacific Select Exec II-NY
Date:_____________________
11
<PAGE>
SCHEDULE B
JURISDICTIONS IN WHICH
PACIFIC LIFE & ANNUITY COMPANY
IS APPROVED FOR SALE OF CONTRACTS
COVERED BY THIS AGREEMENT
CONTRACT JURISDICTIONS
- -------- -------------
Pacific Portfolios-NY New York
Pacific Select Exec II-NY New York
Date:____________________
12
<PAGE>
SCHEDULE C
GENERAL LETTER OF RECOMMENDATION
Selling Entities hereby certify to PL&A that all of the following requirements
will be fulfilled in conjunction with the submission of licensing/appointment
papers for all applicants as Subagents ("Applicant") submitted by Agency. Agency
will, upon request, forward proof of compliance with same to PL&A in a timely
manner, including but not limited to general background check information, NASD
background information/reports, fingerprint reports, etc.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence and business reputation and declare that
each applicant is personally known to us, has been examined by us, is known to
be of good moral character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Our inquiries and
investigations were sufficient to meet the requirements of requisite state
insurance regulation, federal securities regulation and NASD requirements. Each
individual is trustworthy, competent, and qualified to act as an agent for PL&A,
and to hold himself out in good faith to the general public. We vouch for each
applicant.
2. We have on file a B-300, B-301 or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements for
the registration of each applicant as a registered representative through our
NASD member firm, and each applicant is presently registered as an NASD
registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license, and all the findings of
all investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state in which each applicant is requesting a license, and that all such persons
have fulfilled the appropriate examination, education and training requirements.
4. If the applicant is required to submit his or her picture, signature, and
securities registration in the state in which he or she is applying for a
license, we certify that those items forwarded to PL&A are those of the
applicant and that the securities registration and any insurance licenses are
true copies of the original.
5. We hereby warrant that the applicant is not applying for a license with
PL&A in order to place insurance chiefly or solely on his or her life or
property, lives or property of his or her relatives, or property or liability of
his or her associates.
6. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will be
properly protected.
7. We will not permit any applicant to transact insurance as an agent until
duly licensed therefor. No applicants have been given a contract or furnished
supplies, nor have any applicants been permitted to write, solicit business or
act as an agent in any capacity, and they will not be so permitted until the
certificate of authority or license applied for is received.
8. We certify that Selling Entities and applicant shall have entered into a
written agreement pursuant to which: (i) applicant is appointed a Subagent of
Agency and a registered representative of Broker/Dealer; (ii) applicant agrees
that his/her selling activities relating to securities-regulated Contracts shall
be under the supervision and control of Broker/Dealer and his/her selling
activities relating to all other Contracts shall be under the supervision and
control of Agency; and (iii) applicant's right to continue to sell such
Contracts is subject to his/her continued compliance with such agreement and any
procedures, rules or regulations implemented by Selling Entities.
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SCHEDULE D-1
COMPENSATION SCHEDULE FOR
PACIFIC PORTFOLIOS-NY - INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ACCUMULATION DEFERRED ANNUITY
[TO BE FILED BY PRE-EFFECTIVE AMENDMENT]
<PAGE>
SCHEDULE D-2
COMPENSATION SCHEDULE FOR
PACIFIC SELECT EXEC II-NY - INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICY
[TO BE FILED BY PRE-EFFECTIVE AMENDMENT]
<PAGE>
(DRAFT)
[PL&A LOGO APPEARS HERE]
700 Newport Center Drive
Newport Beach, CA 92660
<TABLE>
<CAPTION>
<S> <C>
FLEXIBLE READ YOUR POLICY CAREFULLY. This is a legal contract between you, the Owner,
PREMIUM and us, Pacific Life & Annuity Company, a stock insurance company. We agree to
VARIABLE LIFE pay the benefits of this policy according to its provisions. The consideration
INSURANCE for this policy is the application for it, a copy of which is attached, and
POLICY payment of the premiums.
Death Benefit is described in the Death Benefit section of this policy.
Variable Account Cash Surrender Values may increase or decrease depending upon
Variable Account Investment experience, subject to any minimum guarantees.
There is no guaranteed Variable Account Cash Surrender Value. Policy loan value
is less than one hundred percent (100%) of the policy's cash surrender value.
The amount and duration of the death benefit may be fixed or variable depending
upon investment experience of the Variable Accounts.
Free Look Right - You may return this policy within 10 days after you receive it.
To do so, deliver or mail it to us or to our agent. This policy will then be
deemed void from the beginning and we will refund the premiums paid.
Signed for Pacific Life & Annuity Company,
. Adjustable Face Amount
. Benefits Vary Based on
Investment Experience /s/ WILLIAM FERRIS /s/ AUDREY L. MILFS
. Non-Participating President and Chief Executive Officer Secretary
</TABLE>
<TABLE>
<CAPTION>
POLICY NUMBER: VP99999990 OWNER(S): LELAND STANFORD
<S> <C> <C> <C>
POLICY DATE: JAN 10, 1998 INSURED: LELAND STANFORD
RISK CLASSIFICATION: MALE SELECT NONSMOKER AGE ON POLICY DATE: 35
INITIAL FACE AMOUNT: $100,000
</TABLE>
NOTE: IT IS POSSIBLE THAT COVERAGE WILL LAPSE IF THE ACCUMULATED VALUE IS
INSUFFICIENT TO PAY THE CHARGES ASSESSED ON A MONTHLY PAYMENT DATE. BECAUSE THE
ACCUMULATED VALUE MAY BE BASED ON THE INVESTMENT RESULTS OF THE SEPARATE
ACCOUNT, THE PAYMENT OF INITIAL AND PLANNED PREMIUMS MAY NOT BE ADEQUATE TO
GUARANTEE THAT THE POLICY WILL REMAIN IN FORCE. IF THE POLICY DOES NOT REMAIN
IN FORCE, THERE WILL BE NO DEATH BENEFIT OR ACCUMULATED VALUE.
P98-52 (PNY)
<PAGE>
GUIDE TO POLICY PROVISIONS
<TABLE>
<CAPTION>
<S> <C>
POLICY SPECIFICATIONS............................................. 3
DEFINITIONS....................................................... 5
PREMIUMS.......................................................... 6
DEATH BENEFIT..................................................... 7
ACCUMULATED VALUE................................................. 10
TRANSFERS......................................................... 14
SURRENDER AND WITHDRAWAL OF VALUES................................ 15
TIMING OF PAYMENTS AND TRANSFERS.................................. 16
INCOME BENEFITS................................................... 16
POLICY LOANS...................................................... 17
SEPARATE ACCOUNT PROVISIONS....................................... 17
SUBSTITUTION OF INSURED........................................... 18
GENERAL PROVISIONS................................................ 19
INDEX............................................................. 21
</TABLE>
P98-52 NY
<PAGE>
POLICY NUMBER: VP999999990
POLICY SPECIFICATIONS
BASIC POLICY: FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PREMIUMS: PLANNED PERIODIC PREMIUM PAYMENT = $ 1,938.05
GUIDELINE SINGLE PREMIUM = $21,569.72
GUIDELINE LEVEL PREMIUM = $ 1,938.05
DEATH BENEFIT QUALIFICATION TEST: GUIDELINE PREMIUM TEST
(THIS ELECTION IS IRREVOCABLE FOR THE LIFE OF THE CONTRACT)
DEATH BENEFIT OPTION: A
ACCOUNT ALLOCATIONS AVAILABLE:
MONEY MARKET GOVERNMENT SECURITIES SMALL-CAP INDEX
MULTI-STRATEGY EQUITY INDEX MID-CAP VALUE
GROWTH GROWTH LT LARGE-CAP VALUE
MANAGED BOND EQUITY REIT
INTERNATIONAL EMERGING MARKETS FIXED
EQUITY INCOME AGGRESSIVE EQUITY FIXED LT
HIGH YIELD BOND BOND AND INCOME
INTEREST ON THE FIXED OPTIONS IS GUARANTEED TO BE NOT LESS THAN 3.00% ANNUALLY
FOR THE FIRST 10 POLICY YEARS AND 3.30% THEREAFTER. IN ADDITION, ANY EXCESS
- ---------------------------------------------------
INTEREST DECLARED BY US WILL BE GUARANTEED FOR ONE YEAR. BEFORE SUCH
DECLARATION, EXCESS AMOUNTS ARE NOT GUARANTEED. SUBJECT TO POLICY GUARANTEES,
WE HAVE THE RIGHT TO CHANGE THE INTEREST CREDITED TO THE FIXED OPTIONS AND THE
COST OF INSURANCE AND OTHER CHARGES DEDUCTED, WHICH MAY REQUIRE MORE PREMIUM TO
BE PAID OR THE ACCUMULATED VALUE TO BE LESS THAN WAS ILLUSTRATED.
PREMIUM LOAD: FOR EACH PREMIUM PAID THERE IS A PREMIUM LOAD THAT CONSISTS OF A
SALES LOAD OF 2.50% PLUS A CHARGE OF 2.35% FOR CERTAIN STATE AND LOCAL TAXES
-----
PLUS A CHARGE OF 1.50% FOR CERTAIN FEDERAL TAXES. REFER TO CONTRACT FOR
DETAILS.
ADMINISTRATIVE CHARGE: $7.50 PER MONTH TO AGE 100; $0 THEREAFTER.
SURRENDER CHARGE: SHOWN ON THE TABLE OF SURRENDER CHARGES, WHICH FOLLOWS.
- --------------------------------------------------------------------------
M&E RISK FACE AMOUNT CHARGE: $5.55 PER MONTH FOR POLICY YEARS 1 TO 10; $0
THEREAFTER. REFER TO CONTRACT FOR DETAILS.
<TABLE>
<S> <C> <C> <C>
POLICY NUMBER: VP99999990 OWNER(S): LELAND STANFORD
POLICY DATE: JAN 10, 1998 INSURED: LELAND STANFORD
RISK CLASSIFICATION: MALE SELECT NONSMOKER AGE ON POLICY DATE: 35
INITIAL FACE AMOUNT: $100,000
</TABLE>
NOTE: IT IS POSSIBLE THAT COVERAGE WILL LAPSE IF THE ACCUMULATED VALUE IS
INSUFFICIENT TO PAY THE CHARGES ASSESSED ON A MONTHLY PAYMENT DATE. BECAUSE THE
ACCUMULATED VALUE MAY BE BASED ON THE INVESTMENT RESULTS OF THE SEPARATE
ACCOUNT, THE PAYMENT OF INITIAL AND PLANNED PREMIUMS MAY NOT BE ADEQUATE TO
GUARANTEE THAT THE POLICY WILL REMAIN IN FORCE. IF THE POLICY DOES NOT REMAIN
IN FORCE, THERE WILL BE NO DEATH BENEFIT OR ACCUMULATED VALUE.
P98-52 NY
Page 3.0
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE
P98-52 : BASIC COVERAGE
FACE AMOUNT: $50,000.00
AGE AT ISSUE: 35
RISK CLASSIFICATION: MALE SELECT NONSMOKER
COVERED PERSON: LELAND STANFORD
________________________________________________________________________________
R98-ART: ANNUAL RENEWABLE TERM RIDER
INITIAL FACE AMOUNT: $50,000.00
AGE AT ISSUE: 35
RISK CLASSIFICATION: MALE SELECT NONSMOKER
COVERED PERSON: LELAND STANFORD
________________________________________________________________________________
R98-WC: WAIVER OF CHARGES RIDER
AGE AT ISSUE: 35
RISK CLASSIFICATION: MALE NONSMOKER
COVERED PERSON: LELAND STANFORD
________________________________________________________________________________
R98-SPT: ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER
INITIAL FACE AMOUNT: $50,000.00
AGE AT ISSUE: 35
RISK CLASSIFICATION: FEMALE NONSMOKER
COVERED PERSON: MARY STANFORD
________________________________________________________________________________
P98-52 NY
Page 3.1
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE
ANNUAL RENEWABLE TERM RIDER
VARYING SCHEDULE
FACE AMOUNT: $50,000.00
AGE AT ISSUE: 35
RISK CLASSIFICATION: MALE SELECT NONSMOKER
PERSON COVERED: LELAND STANFORD
<TABLE>
<CAPTION>
ATTAINED FACE ATTAINED FACE ATTAINED FACE
AGE AMOUNT AGE AMOUNT AGE AMOUNT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
35 $ 50,000 70 $100,000
36 50,000 71 100,000
37 50,000 72 100,000
38 50,000 73 100,000
39 50,000 74 100,000
40 100,000 75 100,000
41 100,000 76 100,000
42 100,000 77 100,000
43 100,000 78 100,000
44 100,000 79 100,000
45 100,000 80 100,000
46 100,000
47 100,000
48 100,000
49 100,000
50 100,000
51 100,000
52 100,000
53 100,000
54 100,000
55 100,000
56 100,000
57 100,000
58 100,000
59 100,000
60 100,000
61 100,000
62 100,000
63 100,000
64 100,000
65 100,000
66 100,000
67 100,000
68 100,000
69 100,000
</TABLE>
P98-52 NY
Page 3.2
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATION
TABLE OF SURRENDER CHARGES
END OF
POLICY YEAR SURRENDER CHARGE*
<TABLE>
<S> <C>
1 $718.00
2 $638.22
3 $558.44
4 $478.67
5 $398.89
6 $319.11
7 $239.33
8 $159.56
9 $ 79.78
10 $ 0.00
</TABLE>
* VALUES ARE THE SURRENDER CHARGE FOR THE END OF EACH POLICY YEAR BEFORE THE
MAXIMUM SURRENDER CHARGE HAS BEEN APPLIED. THE SURRENDER CHARGE IS LEVEL FOR
THE FIRST POLICY YEAR, THEN DECREASES MONTHLY. FOR POLICY MONTHS BETWEEN POLICY
ANNIVERSARIES, THE SURRENDER CHARGE IS A STRAIGHT LINE INTERPOLATION OF THE END
OF POLICY YEAR SURRENDER CHARGES SHOWN ABOVE. HOWEVER, THE SURRENDER CHARGE
WILL NEVER EXCEED THE MAXIMUM SURRENDER CHARGE OF $315.10. THERE IS NO
SURRENDER CHARGE AFTER THE TENTH POLICY ANNIVERSARY.
P98-52 NY
Page 3.3
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF INSURANCE CHARGES - BASIC POLICY
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 OF COVERAGE
APPLICABLE TO BASIC POLICY COVERING LELAND STANFORD. THE RATES BELOW INCLUDE A
5-YEAR GUARANTEE OF OUR CURRENT RATES AS OF THE ISSUE DATE.
<TABLE>
<CAPTION>
MONTHLY MONTHLY MONTHLY MONTHLY
AGE RATE AGE RATE AGE RATE AGE RATE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
35 0.00012477 60 0.00134998 85 0.01373773
36 0.00012873 61 0.00147355 86 0.01502185
37 0.00013293 62 0.00161341 87 0.01635661
38 0.00013525 63 0.00177217 88 0.01773798
39 0.00013763 64 0.00194909 89 0.01917199
40 0.00025202 65 0.00214342 90 0.02067766
41 0.00027458 66 0.00235100 91 0.02228714
42 0.00029715 67 0.00257276 92 0.02406347
43 0.00032307 68 0.00280882 93 0.02611993
44 0.00034984 69 0.00306532 94 0.02881300
45 0.00037996 70 0.00335367 95 0.03281758
46 0.00041093 71 0.00368199 96 0.03964295
47 0.00044442 72 0.00406029 97 0.05306605
48 0.00047960 73 0.00449620 98 0.08333300
49 0.00051898 74 0.00498352 99 0.08333300
50 0.00056089 75 0.00551331 100+ 0.00000000
51 0.00061038 76 0.00607653
52 0.00066577 77 0.00666569
53 0.00072875 78 0.00727588
54 0.00080018 79 0.00792387
55 0.00087672 80 0.00863521
56 0.00096005 81 0.00943078
57 0.00104684 82 0.01033895
58 0.00113962 83 0.01137350
59 0.00123925 84 0.01251385
</TABLE>
P98-52 NY
Page 4.0
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF INSURANCE CHARGES - ANNUAL RENEWABLE TERM RIDER
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 OF COVERAGE
APPLICABLE TO THE ANNUAL RENEWABLE TERM RIDER COVERING LELAND STANFORD.
<TABLE>
<CAPTION>
MONTHLY MONTHLY MONTHLY MONTHLY
AGE RATE AGE RATE AGE RATE AGE RATE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
35 0.00017600 60 0.00134998
36 0.00018686 61 0.00147355
37 0.00020022 62 0.00161341
38 0.00021526 63 0.00177217
39 0.00023280 64 0.00194909
40 0.00025202 65 0.00214342
41 0.00027458 66 0.00235100
42 0.00029715 67 0.00257276
43 0.00032307 68 0.00280882
44 0.00034984 69 0.00306532
45 0.00037996 70 0.00335367
46 0.00041093 71 0.00368199
47 0.00044442 72 0.00406029
48 0.00047960 73 0.00449620
49 0.00051898 74 0.00498352
50 0.00056089 75 0.00551331
51 0.00061038 76 0.00607653
52 0.00066577 77 0.00666569
53 0.00072875 78 0.00727588
54 0.00080018 79 0.00792387
55 0.00087672 80 0.00863521
56 0.00096005
57 0.00104684
58 0.00113962
59 0.00123925
</TABLE>
P98-52 NY
Page 4.1
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF GUARANTEED MAXIMUM M&E RISK FACE AMOUNT CHARGES
ANNUAL RENEWABLE TERM RIDER
M&E RISK FACE AMOUNT CHARGE APPLICABLE TO THE ANNUAL RENEWABLE TERM RIDER:
MONTHLY CHARGE EQUAL TO THE AMOUNTS SHOWN BELOW. REFER TO THE CONTRACT FOR
DETAILS.
<TABLE>
<CAPTION>
ATTAINED M&E RISK ATTAINED M&E RISK ATTAINED M&E RISK
AGE CHARGE AGE CHARGE AGE CHARGE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
35 $ 5.55 70 11.45
36 5.55 71 11.45
37 5.55 72 11.45
38 5.55 73 11.45
39 5.55 74 11.45
40 11.45 75 11.45
41 11.45 76 11.45
42 11.45 77 11.45
43 11.45 78 11.45
44 11.45 79 11.45
45 11.45 80 11.45
46 11.45
47 11.45
48 11.45
49 11.45
50 11.45
51 11.45
52 11.45
53 11.45
54 11.45
55 11.45
56 11.45
57 11.45
58 11.45
59 11.45
60 11.45
61 11.45
62 11.45
63 11.45
64 11.45
65 11.45
66 11.45
67 11.45
68 11.45
69 11.45
</TABLE>
P98-52 NY
Page 4.2
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF MONTHLY M&E RISK ASSET CHARGE PERCENTAGES
M&E RISK ASSET CHARGE IS A PERCENTAGE OF THE VARIABLE ACCUMULATED VALUE (AV), AS
SHOWN BELOW, AND IS DEDUCTED MONTHLY. REFER TO THE CONTRACT FOR DETAILS.
<TABLE>
<CAPTION>
ATTAINED % OF FIRST % OF AV ATTAINED % OF FIRST % OF AV
AGE $25,000 OF AV OVER $25,000 AGE $25,000 OF AV OVER $25,000
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
35 0.0625% 0.0292% 70 0.0375% 0.0042%
36 0.0625 0.0292 71 0.0375 0.0042
37 0.0625 0.0292 72 0.0375 0.0042
38 0.0625 0.0292 73 0.0375 0.0042
39 0.0625 0.0292 74 0.0375 0.0042
40 0.0625 0.0292 75 0.0375 0.0042
41 0.0625 0.0292 76 0.0375 0.0042
42 0.0625 0.0292 77 0.0375 0.0042
43 0.0625 0.0292 78 0.0375 0.0042
44 0.0625 0.0292 79 0.0375 0.0042
45 0.0375 0.0042 80 0.0375 0.0042
46 0.0375 0.0042 81 0.0375 0.0042
47 0.0375 0.0042 82 0.0375 0.0042
48 0.0375 0.0042 83 0.0375 0.0042
49 0.0375 0.0042 84 0.0375 0.0042
50 0.0375 0.0042 85 0.0375 0.0042
51 0.0375 0.0042 86 0.0375 0.0042
52 0.0375 0.0042 87 0.0375 0.0042
53 0.0375 0.0042 88 0.0375 0.0042
54 0.0375 0.0042 89 0.0375 0.0042
55 0.0375 0.0042 90 0.0375 0.0042
56 0.0375 0.0042 91 0.0375 0.0042
57 0.0375 0.0042 92 0.0375 0.0042
58 0.0375 0.0042 93 0.0375 0.0042
59 0.0375 0.0042 94 0.0375 0.0042
60 0.0375 0.0042 95 0.0375 0.0042
61 0.0375 0.0042 96 0.0375 0.0042
62 0.0375 0.0042 97 0.0375 0.0042
63 0.0375 0.0042 98 0.0375 0.0042
64 0.0375 0.0042 99 0.0375 0.0042
65 0.0375 0.0042 100+ 0 0
66 0.0375 0.0042
67 0.0375 0.0042
68 0.0375 0.0042
69 0.0375 0.0042
</TABLE>
P98-52 NY
Page 4.3
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF INSURANCE CHARGES
GUARANTEED MAXIMUM MONTHLY WAIVER OF CHARGES RATES APPLICABLE TO THE POLICY
COVERING LELAND STANFORD.
<TABLE>
<CAPTION>
MONTHLY MONTHLY MONTHLY MONTHLY
AGE RATE AGE RATE AGE RATE AGE RATE
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
35 0.00006
36 0.00006
37 0.00006
38 0.00007
39 0.00007
40 0.00007
41 0.00007
42 0.00007
43 0.00007
44 0.00007
45 0.00007
46 0.00007
47 0.00007
48 0.00007
49 0.00008
50 0.00008
51 0.00009
52 0.00011
53 0.00012
54 0.00015
55* 0.00019
56* 0.00025
57* 0.00030
58* 0.00037
59* 0.00044
</TABLE>
* ONLY FOR RENEWAL PURPOSES
P98-52 NY
Page 4.4
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF INSURANCE CHARGES - ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 OF COVERAGE
APPLICABLE TO THE ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER COVERING MARY
STANFORD.
<TABLE>
<CAPTION>
MONTHLY MONTHLY MONTHLY MONTHLY
AGE RATE AGE RATE AGE RATE AGE RATE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
35 0.00013760 60 0.00079261
36 0.00014679 61 0.00084811
37 0.00015764 62 0.00091795
38 0.00017016 63 0.00100723
39 0.00018519 64 0.00111093
40 0.00020189 65 0.00122404
41 0.00022027 66 0.00134321
42 0.00023948 67 0.00146424
43 0.00025787 68 0.00158372
44 0.00027709 69 0.00171271
45 0.00029715 70 0.00186144
46 0.00031722 71 0.00204194
47 0.00033813 72 0.00226723
48 0.00036155 73 0.00254448
49 0.00038666 74 0.00287245
50 0.00041428 75 0.00324392
51 0.00044358 76 0.00365336
52 0.00047625 77 0.00409428
53 0.00051395 78 0.00456716
54 0.00055251 79 0.00508570
55 0.00059276 80 0.00567286
56 0.00063303
57 0.00067164
58 0.00070859
59 0.00074807
</TABLE>
P98-52 NY
Page 4.5
<PAGE>
DEFINITIONS
In this section, we define certain terms used throughout this policy. Other
terms may be defined in other parts of the policy. Defined terms are usually
capitalized to provide emphasis.
Age -- means the Insured's Age to the nearest birthday as of the Policy Date,
increased by the number of complete policy years elapsed.
Code -- is the U.S. Internal Revenue Code, and the rules and regulations issued
thereunder.
Evidence of Insurability -- is information, including medical information,
satisfactory to us that is used to determine insurability and the Insured's risk
class.
Face Amount -- is used in determining the death benefit under this policy,
including any increases or decreases. The Face Amount is shown in the Policy
Specifications.
Fixed Options -- consist of the Fixed Account and the Fixed LT Account.
Free Look Transfer Date -- is 15 days after the policy is issued, or if later,
the date all requirements necessary to place the policy in force are delivered
to the Service Center.
Insured -- is the person insured under this policy. The Insured is shown in the
Policy Specifications as the Covered Person.
Investment Options -- consist of the Variable Accounts and the Fixed Options.
Monthly Payment Date -- is the day each month on which certain policy charges
are deducted from the Accumulated Value. The first Monthly Payment Date is the
Policy Date. Later Monthly Payment Dates occur each month after the Policy Date
on the same day of the month as the Policy Date.
Net Premium -- is the premium we receive reduced by any Premium Load.
PL&A, we, our, ours, us and the Company -- refers to Pacific Life & Annuity
Company.
Policy Date -- is shown on page 3. Policy months, quarters, years and
anniversaries are measured from this date.
Policy Debt -- is the Loan Account plus Loan Interest.
Separate Account -- is the Pacific Select Exec Separate Account, which is a
separate account of ours that consists of subaccounts, also called Variable
Accounts. Each Variable Account may invest its assets in a separate class of
shares of a designated investment company or companies.
Service Center -- means our service office located at 700 Newport Center Drive,
Newport Beach, CA 92660.
Valuation Date -- is each day required by applicable law and currently includes
each day the New York Stock Exchange is open for trading and our Service Center
is open.
Valuation Period -- is the period of time between successive Valuation Dates.
Variable Account -- is a separate account of ours or a subaccount of a separate
account of ours in which assets are segregated from assets in our general
account or our other separate accounts. Premiums and Accumulated Value (AV)
under this policy may be allocated to a Variable Account for variable
accumulation.
Written Request -- is a request in writing, signed by you, and accepted by us at
our Service Center.
P98-52 Page 5 NY
<PAGE>
You, your or Owner -- refers to the Owner of this policy.
OWNER AND BENEFICIARY
Owner -- The Owner of this policy is as shown in the Policy Specifications or in
a later Written Request. If there are two or more Owners, they will own this
contract as joint tenants with right of survivorship.
Assignment -- You may assign this policy by Written Request. An assignment will
take place only when recorded at our Service Center. When recorded, the
assignment will take effect as of the date the Written Request was signed. Any
rights created by the assignment will be subject to any payments made or actions
taken by us before the change is recorded. We will not be responsible for the
validity of any assignment.
Beneficiary -- The beneficiary is named by you in the application to receive the
death benefit proceeds. The interest of any beneficiary will be subject to any
assignment.
You may make a change of beneficiary by Written Request on a form provided by us
while the Insured is living. The change will take place as of the date the
request is signed. Any rights created by the change will be subject to any
payments made or actions taken by us before the Written Request is received.
You may designate a permanent beneficiary whose rights under the policy cannot
be changed without his or her consent.
The interest of a beneficiary who does not survive to receive payment will pass
to the surviving beneficiaries in proportion to their share in the proceeds,
unless otherwise provided. If no beneficiaries survive to receive payment, the
death proceeds will pass to the Owner, or the Owner's estate if the Owner does
not survive to receive payment.
PREMIUMS
Premiums -- This policy will not be in force until the initial premium is paid.
The initial premium is payable either at our Service Center or to our agent.
Additional premiums, if any, are payable in advance at our Service Center. At
your request, a premium receipt signed by one of our officers will be given to
you. No premium may be less than $50. Premiums may be paid at any time before
the Insured attains Age 100, subject to the premium limitations below.
Premium Allocation Before the Free Look Transfer Date -- Any Net Premium
received before the Free Look Transfer Date will be allocated to the Money
Market Variable Account on the issue date or, if later, the date the premium is
received and accepted by us. On the Free Look Transfer Date, the Accumulated
Value in the Money Market Variable Account will be allocated to the Investment
Options according to the premium allocation specified in the application or your
most recent instructions received by us, if any.
Premium Allocation On or After the Free Look Transfer Date -- Any Net Premium
received by us on or after the Free Look Transfer Date will be allocated to the
Investment Options according to the premium allocation specified in the
application or your most recent instructions received by us, if any.
Upon Written Request, you may change the premium allocation. Subsequently, Net
Premiums will be allocated to the Investment Options according to your most
recent instructions.
Premium Limitation -- We reserve the right to require evidence of insurability,
satisfactory to us, for any premium payment that would result in an immediate
increase in the difference between the death benefit and the Accumulated Value.
P98-52 Page 6 NY
<PAGE>
Guideline Premium Limitation -- (This subsection applies only if you have
elected the Guideline Premium Test.) For this policy to be treated as life
insurance under the Code, the sum of premiums paid less a portion of any
withdrawals, as defined in the Code, may not exceed the greater of:
. The Guideline Single Premium; or
. The sum of the Guideline Level Premiums to the date of payment.
The amounts of the Guideline Premiums are shown on the Policy Specification
pages. The Guideline Premiums will change whenever there is a change in the
Face Amount of insurance or in other policy benefits. Such Guideline Premium
change will be shown in the supplemental schedule of benefits and premiums.
Qualification as Life Insurance - (This subsection applies only if you have
elected the Guideline Premium Test.) The Guideline Premiums are determined by
the rules set forth in the Internal Revenue Code Section 7702. The Guideline
Premiums will be adjusted to conform to any changes in the Code. In the event
that a premium payment would exceed these limits, we will refund the excess
premium, including any associated premium load, within 60 days of the next
policy anniversary. If any such refunds are made, we will adjust the amount
payable for interest, and recalculate policy values as if the excess premium had
never been paid.
Modified Endowment Contract (MEC) Premium Limitation -- In order for this policy
to avoid being treated as a MEC, the sum of premiums paid less a portion of any
withdrawals may not exceed the 7-Pay limit as defined in the Internal Revenue
Code Section 7702(a). In the event that a premium payment would exceed the 7-Pay
limit, we will refund the excess premium to you, including any associated
premium load, within 60 days of the next policy anniversary, unless you have
previously notified us in writing that such payments may be accepted by us and
applied to the policy. If any such refunds are made, we will adjust the amount
payable for interest, and recalculate policy values as if the excess premium had
never been paid.
DEATH BENEFIT
Death Benefit -- This policy provides a death benefit on the death of the
Insured. The death benefit, Death Benefit Option and the two Death Benefit
Qualification Tests are described in this section. On the date of death, the
death benefit is calculated as the larger of:
. The Guideline Minimum Death Benefit calculated under the Death Benefit
Qualification Test elected; and
. The death benefit as calculated under the Death Benefit Option in effect.
Death Benefit Qualification Test -- Unless you have elected otherwise, the Death
Benefit Qualification Test for this policy is the Guideline Premium Test. The
Death Benefit Qualification Test for this policy appears in the Policy
Specifications section. The Death Benefit Qualification Test may not be changed
for the life of the contract. The two Death Benefit Qualification Tests are
explained in this subsection.
1. Cash Value Accumulation Test -- The Guideline Minimum Death Benefit will be
the greater of the amount required for this policy to be deemed "life
insurance" according to the Code or 101% of the Accumulated Value. Such
required amount will be equal to the AV divided by the Net Single Premium
(NSP), as defined in Code Section 7702(b). The NSP for each attained age,
based on the policy as issued, is shown in the Table of NSP's in the Policy
Specifications pages. If there are changes to the policy, the NSP's may
also change. If they do change, we will send you a supplemental schedule of
NSP's.
2. Guideline Premium Test -- The Guideline Minimum Death Benefit at any time
is the Accumulated Value multiplied by the death benefit Percentage shown
in the following table:
P98-52 Page 7 NY
<PAGE>
<TABLE>
<CAPTION>
Death Benefit Death Benefit Death Benefit Death Benefit
Age Percentage Age Percentage Age Percentage Age Percentage
<S> <C> <C> <C> <C> <C> <C> <C>
0-40 250% 50 185% 60 130% 70 115%
41 243 51 178 61 128 71 113
42 236 52 171 62 126 72 111
43 229 53 164 63 124 73 109
44 222 54 157 64 122 74 107
45 215 55 150 65 120 75-90 105
46 209 56 146 66 119 91 104
47 203 57 142 67 118 92 103
48 197 58 138 68 117 93 102
49 191 59 134 69 116 Over 93 101
</TABLE>
We reserve the right to reduce the Guideline Minimum Death Benefit by requiring
distributions be made in order to maintain the Net Amount at Risk at a level
that will not exceed three times the Face Amount on the Policy Date. The
distribution will be equal to the change in Accumulated Value plus premium load
rate calculated on the amount of the distribution, provided that the amount
related to the premium load rate will never exceed the total amount of premium
load paid under the policy. No surrender charge will be imposed.
Qualification as Life Insurance - This policy is intended to qualify as a life
insurance contract under the Internal Revenue Code Section 7702, and the death
benefit under this policy is intended to qualify for income tax exclusion under
the Code. To that end, the provisions of this policy, including any other
rider, benefit or endorsement, are to be interpreted to ensure such tax
qualification, notwithstanding any other provisions to the contrary. Any
mandatory removal of funds from the Accumulated Value initiated by us and not by
you will be treated as a premium refund. The premium load will be refunded up
to the total premium load paid under the policy and no surrender charges will be
imposed.
If premiums paid under this policy exceed the Guideline Premium limitation, if
applicable, and if the excess is greater than the premiums paid in the current
policy year, we will, within 60 days of the next anniversary, make a
distribution of the difference between such excess and the premiums paid in such
policy year. For any such distribution, the face amount will not be reduced and
no surrender charge will be imposed. In such case, we will also refund the
premiums paid in the current year as provided for the in the Premiums section.
If we do not make such a distribution within 60 days of your next policy
anniversary, then we will increase the death benefit under this policy on or
before the date the premium was paid. The death benefit will be increased to
the amount necessary to ensure tax qualification. We will then reduce the
Accumulated Value from the date of the increase to the current date to reflect
the increased Monthly Deductions during the period.
MEC Rules -- Unless you have instructed us differently in writing, it is
intended that this policy will not be treated as a MEC under Internal Revenue
Code Section 7702(a). To that end, the provisions of this policy, including any
other rider, benefit or endorsement, are to be interpreted to prevent the policy
from being subject to such treatment, notwithstanding any other provisions to
the contrary. Any mandatory removal of funds from the Accumulated Value
initiated by us and not by you will be treated as a premium refund. The premium
load will be refunded up to the total premium load paid under the policy and no
surrender charges will be imposed.
Unless you specify to us by Written Request, any request that would change the
death benefits under the policy and riders will not be processed if the change
would cause the policy to be treated as a MEC under the Code. Such changes
include a reduction in the face amount, a change in death benefit option, and a
reduction in face amount due to a Withdrawal.
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If such a change would result in the policy not qualifying as a MEC and the
excess of the premiums paid over the 7-Pay limit is greater than the premiums
paid in the current year, we will, unless you instruct us by Written Request to
the contrary, increase the death benefit under this policy on or before the date
the limit was exceeded. The death benefit will be increased to the amount
necessary to ensure qualification as a non-MEC. We will then reduce the
Accumulated Value from the date of the increase to the current date to reflect
the increased Monthly Deductions during the period. In addition, we will also
refund the premiums paid in the current year as provided for in the Premiums
section.
Death Benefit Options -- There are three Death Benefit Options, as described in
this subsection. You have elected the Death Benefit Option in the application.
The Death Benefit Option for this policy appears in the Policy Specifications.
. Option A -- The death benefit equals the Face Amount.
. Option B -- The death benefit equals the Face Amount plus the Accumulated
Value on the date of death.
. Option C -- The death benefit is the Face Amount plus the sum of the premiums
paid minus the sum of any withdrawals taken and any other distribution of the
Accumulated Value to the date of death. If the sum of the withdrawals is
greater than the sum of the premiums paid, then the death benefit will be
less than the Face Amount.
The Death Benefit Option may be changed to Option A or B upon Written Request a
maximum of once per year. Changes to Option C are not permitted. After any
such change, the Face Amount will be that amount which results in the death
benefit after the change being equal to the death benefit before the change.
The change will be effective on the Monthly Payment Date on or next following
the day we receive your Written Request at our Service Center.
Unless specified otherwise by you in writing, any request for a Death Benefit
Option change will not be processed if the option change would cause the policy
to be treated as a MEC under the Code.
Death Benefit Proceeds -- The death benefit proceeds are the actual amount
payable if the Insured dies while this policy is in force. The death benefit
proceeds are equal to the death benefit, as of the date of the Insured's death,
less any Policy Debt and less any due and unpaid monthly deductions occurring
during a grace period.
We will pay the death benefit proceeds to the beneficiary after we receive, at
our Service Center, due proof of the Insured's death and such other information
as we may reasonably require. The death benefit proceeds paid are subject to
the conditions and adjustments defined in other policy provisions, such as
General Provisions, Withdrawals and Policy Loans. We will pay interest on Death
Benefit Proceeds from the date of death to the date payment is made at a rate of
interest not less than the guaranteed interest rate used for the Fixed Options
under this policy. If state law requires payment of a greater amount of
interest, we will pay that amount.
Face Amount Change -- Subject to our approval, the Owner may change the Face
Amount if such request is made:
. during the lifetime of the Insured;
. no more often than once in any policy year; and
. on your Written Request while this policy is in force.
Face Amount Increase -- The effective date of the increased Face Amount will be
the first Monthly Payment Date on or following the date all applicable
conditions are met. A supplemental schedule of benefits and premiums will be
issued. This schedule will include:
. the risk class;
. the effective date;
. the M&E Risk Charges;
. the Surrender Charges;
. the guaranteed Cost of Insurance Rates;
. the amount of the increase and the total Face Amount after the increase; and
P98-52 Page 9 NY
<PAGE>
. if the Guideline Premium Test is used, the new Guideline Premiums.
We reserve the right to charge a fee not to exceed $100 for each increase. Any
such fee will be deducted from the Accumulated Value of the Fixed and the
Variable Accounts in the proportion that each bears to the Accumulated Value
less Policy Debt on the effective date of the increase. For any increase in
Face Amount which arises from conversion of a term rider, we will waive the
Surrender Charges and M&E Risk Face Amount Charges that would otherwise apply
for the increase.
Limits on Face Amount Increase -- An increase in Face Amount will be allowed
only if it results in a death benefit increase no less than our minimum limit in
effect on the date of the request. Also, an increase will not be allowed if
there has been a prior decrease in Face Amount, including any decrease which
occurred as a result of a Withdrawal.
Face Amount Decrease -- We recommend you consult your tax advisor before
requesting a decrease in policy Face Amount. You may not decrease the Face
Amount before the fifth anniversary of the effective date of the associated
coverage. The effective date of the decreased Face Amount will be the first
Monthly Payment Date on or following the date we receive the Written Request.
Existing insurance will be decreased or eliminated in the following order:
. first, the most recent increase;
. second, the next most recent increases successively; and
. finally, the original Face Amount.
A supplemental schedule of benefits and premiums will be issued. This schedule
will include the following information:
. the effective date of the decreased Face Amount;
. the amount of the decrease and the decreased Face Amount; and
. if the Death Benefit Qualification is the Guideline Premium Test, the new
Guideline Premiums.
If the Guideline Premium Test has been elected as the Death Benefit
Qualification Test, the request for a decrease in the Face Amount will be
subject to the Guideline Premiums Limitation as defined in the Code. This may
result in a refund of premiums and/or the distribution of Accumulated Value in
order to maintain compliance with such limitations. Such request will not be
allowed if the resulting Guideline Premiums could cause an amount greater than
the Net Cash Surrender Value to be distributed from the policy.
Unless specified otherwise by you in writing, no request for a face amount
decrease will be processed if the decrease would cause the policy to be treated
as a MEC under the Code.
Paid-Up Insurance -- At any time you may use the Net Cash Surrender Value to
purchase guaranteed fixed paid-up insurance on the life of the Insured. At the
time of conversion, the Net Cash Surrender Value will be transferred to our
general account. The amount of paid-up insurance is determined by applying the
Net Cash Surrender Value as the net single premium based upon the Insured's Age
and Risk Classification, 1980 CSO mortality and 3% interest. Any riders
attached to the policy will terminate at the time of conversion. Such paid-up
insurance may be surrendered at any time, with the cash surrender value being
determined on the same basis.
ACCUMULATED VALUE
Accumulated Value (AV) -- is the sum of the Fixed Accumulated Value plus the
Variable Accumulated Value plus the Loan Account and any interest credited to
it.
Fixed Accumulated Value -- The Fixed Accumulated Value is the sum of the
Accumulated Value in each Fixed Option as of the last Valuation Period.
This subsection describes how we calculate the Accumulated Value in each Fixed
Option. We credit interest on a daily basis using a 365-day year and at a rate
not less than an annual effective rate of
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3.00% in the first 10 policy years and 3.30% thereafter. At our discretion, we
may credit a higher rate of interest. The Accumulated Value for each Fixed
Option on any date is the following, including interest on each:
. the Accumulated Value for the Fixed Option on the prior Monthly Payment
Date;
. plus the amount of any Net Premium received and allocated to the Fixed
Option since the last Monthly Payment Date;
. plus the amount of any transfer to the Fixed Option, including transfers
from the Loan Account, since the last Monthly Payment Date;
. minus the monthly deduction and other deductions due, if any, and assessed
against the Fixed Option; and
. minus the amount of any withdrawals, or transfers from the Fixed Option,
including transfers to the Loan Account, since the last Monthly Payment
Date.
Variable Accumulated Value -- The Variable Accumulated Value is the sum of the
Accumulated Value in each Variable Account.
This subsection describes how we calculate the Accumulated Value in each of the
Variable Accounts. Assets in each Variable Account are divided into
Accumulation Units, which are a measure of value used for bookkeeping purposes.
We credit your policy with Accumulation Units in each Variable Account as a
result of:
. the amount of any Net Premium received and allocated to the Variable
Account; and
. transfers of Accumulated Value to the Variable Account, including transfers
from the Loan Account.
We debit Accumulation Units in each Variable Account as a result of:
. transfers from the Variable Account, including transfers to the Loan
Account;
. Surrenders and withdrawals from the Variable Account; and
. the monthly deduction and other deductions due, if any, and assessed against
the Variable Account.
To determine the number of Accumulation Units debited or credited for a
transaction, we divide the dollar amount of the transaction by the Unit Value of
the affected Variable Account.
To determine your Accumulated Value in each Variable Account, we multiply the
number of Accumulation Units in the Variable Account by the Unit Value of the
Variable Account. The number of Accumulation Units in each Variable Account will
not change because of subsequent changes in Unit Value.
At the inception of each Variable Account the Unit Value was $10. The Unit
Value of each Variable Account is determined on each Valuation Date. To
calculate the Unit Value of a Variable Account on any Valuation Date, we adjust
the Unit Value from the previous Valuation Date for a number of factors,
including:
. any dividends or distributions paid to the Variable Account;
. the investment performance of the Variable Account, which is based on the
investment performance of the corresponding portfolio and includes expenses
related to the portfolio's management;
. charges, if any, that may be assessed by us for income taxes attributable to
the operation of the Variable Account.
Loan Account -- The Loan Account is the amount set aside to secure Policy Debt.
The amount in the Loan Account on any date is the following, including interest
on each:
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. the amount in the Loan Account on the prior anniversary;
. plus any loan taken since the prior anniversary; and
. minus any loan amount repaid since the prior anniversary.
We will credit interest to the Loan Account on a daily basis using a 365-day
year and at a rate equivalent to an annual effective rate of 3.00% in the first
10 policy years, and 3.30% thereafter. On each policy anniversary, any interest
earned and held in the Loan Account will be transferred to the Investment
Options in accordance with your most recent premium allocation instructions.
Monthly Deduction -- A Monthly Deduction for a policy month is due on each
Monthly Payment Date and is equal to the sum of the following items:
. the monthly Cost of Insurance Charge;
. the M&E Risk Charge;
. the Administrative Charge, if any; and
. rider charges, if any.
Unless you have made a Written Request to the contrary, the Monthly Deduction
will be charged proportionately to the Accumulated Value in each Variable
Account and each Fixed Option on the Monthly Payment Date.
Cost of Insurance Charge -- Beginning on the Policy Date and monthly thereafter,
there will be a charge equal to the Cost of Insurance applicable to the
following:
. the initial Face Amount; plus
. each increase in the Face Amount.
The monthly Cost of Insurance Charge for the death benefit payable under this
policy, is (1) multiplied by (2), where:
(1) is the applicable monthly Cost of Insurance Rate; and
(2) is the Net Amount at Risk.
Net Amount at Risk -- The Net Amount at Risk is equal to the death benefit as of
the most recent Monthly Payment Date divided by 1.002466, then reduced by the
Accumulated Value at the beginning of the policy month before the Monthly
Deduction is due.
If there have been increases of Face Amount, then the Net Amount at Risk will be
proportionately allocated to each increase according to the Face Amount of each
increase in force as of the Monthly Payment Date.
Cost of Insurance Rates -- The Cost of Insurance Rates are based on a number of
factors, including the Insured's Age, Risk Classification and the policy
duration. Part of the cost is intended to recover acquisition expenses at
issue. Such expenses are greater in the early policy years. The current
monthly Cost of Insurance Rates will be determined by us. These rates will not
exceed the Guaranteed Maximum Monthly Cost of Insurance Rates shown in the
Policy Specifications.
Change in Policy Cost Factors -- Any change in policy cost factors, including
interest, cost of insurance rates, expense charges and loads, will be by class
and based on changes in our expectations of future investment earnings,
mortality, persistency and expenses. Any such change will be determined in
accordance with procedures and standards on file with the Insurance Department
of the state in which this policy is delivered.
M&E Risk Charge -- The Mortality and Expense Risk Charge (M&E Risk Charge) is to
compensate us for the risk we assume that mortality, expenses and other costs of
providing your policy will be greater than estimated. Beginning on the Policy
Date and monthly thereafter, the M&E Risk Charge will be
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the sum of the M&E Risk Asset Charge and the M&E Risk Face Amount Charge. These
are calculated as follows:
The M&E Risk Asset Charge is a percentage of the Variable Accumulated Value. In
the first 10 policy years, the charge is 0.0625% (0.75% annually) of the first
$25,000 of Variable Accumulated Value plus a charge of 0.0292% (0.35% annually)
of the Variable Accumulated Value above $25,000. After the 10th policy year,
the charge is 0.0375% (0.45% annually) of the first $25,000 of Variable
Accumulated Value plus a charge of 0.0042 (0.05% annually) of the Variable
Accumulated Value above $25,000. After the Insured's Age 100, the charge is
zero.
The M&E Risk Face Amount Charge is the amount shown in the Policy
Specifications, and is based on the Face Amount at policy issue. If there have
been increases in the Face Amount, each increase will have a corresponding M&E
Risk Face Amount Charge related to the amount of the increase. These charges
will be specified in the supplemental schedule of benefits at the time of the
increase.
Administrative Charge -- Beginning on the Policy Date and monthly thereafter,
there will be an Administrative Charge against the Accumulated Value. The
amount of this charge will equal the amount shown in the Policy Specifications.
Premium Load -- A Premium Load will be charged each time that a premium is paid
to cover certain local, state and federal tax and certain sales and distribution
costs. The Premium Load will equal the premium paid multiplied by the Premium
Load rate shown in the Policy Specifications. The Premium Load associated with
each premium will be immediately deducted from the premium paid. We reserve the
right to increase the Premium Load with respect to the charge for local, state
and federal tax. We will only increase the Premium Load if the effective
tax paid by us increases. We will notify you of any such change.
Other Taxes -- In addition to the charges imposed under Premium Load and
elsewhere, we reserve the right to make a charge for Federal, state or local
taxes that may be attributable to the Variable Accounts or to our operations
with respect to this policy if we incur any such taxes.
Grace Period and Lapse -- If the Accumulated Value less Policy Debt on a Monthly
Payment Date is not sufficient to cover the current monthly deduction, a grace
period of 61 days will be allowed for the payment of sufficient premium to keep
your policy in force.
The grace period begins on the Monthly Payment Date on which the insufficiency
occurred and ends 61 days thereafter. At the start of the grace period, we will
send notice to you at your last known address and to any assignee of record.
The notice will state the due date and the amount of premium required for your
policy to remain in force. A minimum of three times the monthly deduction due
when the insufficiency occurred, plus Premium Load, must be paid. Premiums we
receive during the grace period will be applied to your policy according to your
most recent premium allocation instructions. There is no penalty for paying a
premium during the grace period. Your policy will remain in force during the
grace period. If sufficient premium is not paid by the end of the grace period,
a lapse will occur. Thirty days prior to lapse, we will send you and any
assignee of record a notice containing the lapse date and the required premium
to keep your policy in force. If the Insured dies during the grace period, the
death benefit proceeds will be reduced by any overdue charges. Upon lapse, the
policy will terminate with no value.
Reinstatement -- If it has not been surrendered, this policy may be reinstated
not more than five years after the end of the grace period. To reinstate this
policy you must provide us with the following:
. a written application;
. evidence of insurability satisfactory to us;
. payment of sufficient premium to cover all monthly deductions that were due
and unpaid during the grace period; plus
. payment of sufficient premium to keep the policy in force for three months
after the date of reinstatement.
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The effective date of the reinstated policy will be the first Monthly Payment
Date on or following the date we approve your reinstatement application. When
this policy is reinstated, the Accumulated Value will be equal to the
Accumulated Value on the date of lapse subject to the following. If the policy
is reinstated after the first Monthly Payment Date following lapse, the
Accumulated Value will be reduced by the amount of any Policy Debt on the date
of lapse. If the policy is reinstated on the first Monthly Payment Date
following lapse, any Policy Debt on the date of lapse will also be reinstated,
with the corresponding portion of the Accumulated Value allocated to the Loan
Account as described in the Policy Loan provision.
TRANSFERS
Transfers -- After your initial Net Premium has been allocated according to your
instructions and while your policy is in force, you may, upon Written Request,
transfer your Accumulated Value, or a part of it, among the Investment Options
as provided in this section. No transfer may be made if the policy is in a
grace period and the required premium has not been paid.
Transfers from the Fixed Account: One transfer from the Fixed Account may be
made in any twelve-month period. Transfers from the Fixed Account will be
limited to the greater of $5,000 or 25% of the Accumulated Value in the Fixed
Account.
Transfers from the Fixed LT Account: One transfer from the Fixed LT Account may
be made in any twelve month period. Transfers from the Fixed LT Account will be
limited to the greater of $5,000 or 10% of the Accumulated Value in the Fixed LT
Account.
Transfers into the Fixed Options: Except during the first 18 policy months
during which transfers into the Fixed Account are unlimited (see below),
transfers into the Fixed Options may be made only during the policy month
preceding the policy anniversary.
Allocations into the Fixed LT Account: We reserve the right to limit the amount
allocated to the Fixed LT Account to $1,000,000 during the most recent 12 months
for all policies owned by you. Allocations include Net Premium payments,
transfers and loan repayments. Any excess over $1,000,000 will be transferred
to your other Investment Options relative to your most recent instructions. We
may increase the $1,000,000 limit at any time at our sole discretion. You may
contact us to find out if a higher limit is in effect.
Transfer into the Fixed Account Unlimited Under Special Circumstances: You may
transfer from any Variable Account to the Fixed Account with no limitation under
the following circumstances:
. For a period of time, as described below, after a material change in the
investment policy of that Variable Account; and
. During the first 18 policy months as long as this policy is not in the grace
period.
We will notify you if there is a material change in the investment policy of a
Variable Account. The notice will inform you of your options, including your
option to transfer from such Variable Account to the Fixed Account within 60
days after (i) the effective date of the material change or (ii) the date we
send you the notice, whichever is later.
No charges are currently imposed for transfers. We reserve the right:
. to limit the size of transfers so that each transfer is at least $500;
. to limit the frequency of transfers (however, at least one transfer per
quarter will be allowed);
. to limit the remaining balance in any account as a result of a transfer to
$500; and
. to assess a $50 charge for each transfer exceeding 12 per policy year.
P98-52 Page 14 NY
<PAGE>
SURRENDER AND WITHDRAWAL OF VALUES
Surrender -- Upon Written Request while the Insured is living you may surrender
this policy for its Net Cash Surrender Value. The policy will terminate on the
date the request is received.
Net Cash Surrender Value -- The Net Cash Surrender Value is the Cash Surrender
Value less any Policy Debt.
Cash Surrender Value -- The Cash Surrender Value is the Accumulated Value less
any Surrender Charge.
Surrender Charges -- A Surrender Charge will be deducted from the Accumulated
Value upon surrender of the policy. The Surrender Charge is needed to help pay
for costs such as underwriting, policy issue and sales and distribution costs.
The initial Surrender Charge is equal to the amount shown on the Policy
Specifications pages. This will remain level for the first policy year and then
will decrease by 0.9259% per month to zero at the 120th month. However, the
surrender charge will never be more than the Maximum Surrender Charge that is
shown in the Policy Specifications pages.
If there have been increases in the Face Amount, each increase will have a
corresponding Surrender Charge and Maximum Surrender Charge related to the
amount of the increase. These charges will be specified in the supplemental
schedule of benefits at the time of the increase. If there have been decreases
in the Face Amount, including decreases in Face Amount due to withdrawals, the
Surrender Charge and Maximum Surrender Charge will be unchanged as a result of
such decrease in Face Amount.
Withdrawals -- Upon Written Request on or after the first policy anniversary
while the Insured is living, you may withdraw a portion of the Net Cash
Surrender Value of this policy. We will deduct a withdrawal fee of $25 from the
Accumulated Value for each withdrawal. The withdrawal fee will be deducted from
the Investment Options in the same proportion as the withdrawal.
Withdrawals will be subject to the following conditions: The amount of each
withdrawal must be at least $200 and the Net Cash Surrender Value remaining
after each withdrawal must be at least $500. Also, if there is any Policy Debt
at the time of each withdrawal, the amount of the withdrawal is limited to the
excess, if any, of the Cash Surrender Value immediately prior to the withdrawal
over the result of the Policy Debt divided by 90%.
The amount of each withdrawal will be allocated proportionately to the
Accumulated Value in the Investment Options unless you request otherwise. If
the Insured dies after the request for a withdrawal is sent to us and prior to
the withdrawal being effected, the amount of the withdrawal will be deducted
from the death benefit proceeds, which will be determined without taking the
withdrawal into account. Unless you request otherwise, no withdrawal will be
processed if the withdrawal would cause the policy to be treated as a MEC.
A withdrawal will affect the death benefit, depending on the Death Benefit
Option you have chosen. If your policy's death benefit is greater than the
Guideline Minimum Death Benefit, then the withdrawal will reduce the death
benefit by the amount of the withdrawal. However, if your policy's death
benefit is equal to the Guideline Minimum Death Benefit, the withdrawal may
cause the death benefit to decrease by an amount greater than the amount of the
withdrawal. For Death Benefit Option C, if the sum of the withdrawals and other
distributions from the policy is greater than the premiums, the death benefit
will be less than the Face Amount.
Withdrawals may also affect the Face Amount. A withdrawal will reduce the Face
Amount, but only for policies having Death Benefit Option A. In such case, a
withdrawal in excess of the difference between the Guideline Minimum Death
Benefit and the Face Amount will reduce the Face Amount by the amount of the
excess. However, for the first withdrawal from a Death Benefit Option A policy
in
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each of the first 15 policy years, the Face Amount will be reduced only to the
extent that the withdrawal exceeds 10% of the premiums paid.
TIMING OF PAYMENTS AND TRANSFERS
Variable Accounts -- With respect to allocations made to the Variable Accounts,
we will pay death benefit proceeds, Net Cash Surrender Value on surrender,
withdrawals, and loans and will effect a transfer between Variable Accounts or
from a Variable Account to a Fixed Option within seven days after we receive all
the information needed to process the payment. However, we may postpone the
calculation, payment or transfer of any amounts that are based on the investment
performance of the Variable Accounts, if:
. the New York Stock Exchange is closed on other than normal weekend and
holiday closings; or
. trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (SEC); or
. an emergency exists, as determined by the SEC, as a result of which it is
not reasonably practicable to determine the value of the Account assets or
to dispose of Account securities; or
. The SEC by order permits postponement for the protection of securities
owners.
Fixed Options -- With respect to allocations made to the Fixed Options, we may
defer payment of any Net Cash Surrender Value, withdrawals or loan amounts or
defer transfers from either Fixed Option for up to six months after we receive
your request. We will allow interest, at a rate of at least 3% annually, on any
Net Cash Surrender Value or withdrawal benefit derived from a Fixed Option if we
defer payment for 30 days or more.
INCOME BENEFITS
Income Benefits -- Surrender or withdrawal benefits may be used to buy a
lifetime monthly income as long as the monthly income is at least $100. Death
benefits may be used to buy a monthly income for the lifetime of the
beneficiary. The monthly income will automatically be guaranteed to continue for
at least ten years, unless another form of payment is requested. Under the
automatic form of payment, if the income recipient dies before the end of the
ten-year period, payments will continue to the end of the ten-year period to a
person designated by the income recipient in writing.
The purchase rates for the monthly income will be set periodically by the
Company. However, under the automatic form, the monthly income bought by each
$1,000 of benefit amount will always be at least as large as that shown below.
<TABLE>
<CAPTION>
Monthly Income Monthly Income Monthly Income
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 3.20 3.09 46 3.81 3.61 62 5.10 4.73
32 3.25 3.14 48 3.92 3.71 64 5.35 4.95
34 3.31 3.19 50 4.05 3.81 66 5.62 5.20
36 3.38 3.24 52 4.18 3.93 68 5.92 5.47
38 3.45 3.30 54 4.33 4.06 70 6.23 5.78
40 3.53 3.37 56 4.49 4.20 72 6.56 6.11
42 3.62 3.44 58 4.68 4.36 74 6.90 6.48
44 3.71 3.52 60 4.88 4.54 75+ 7.08 6.67
</TABLE>
Monthly income amount for ages not shown are halfway between the two amounts for
the nearest two ages that are shown. Amounts shown are based on the Annuity
2000 table with interest at 3.00%. This benefit is not available if the income
would be less than $100 a month. We may require evidence of survival for
incomes that last more than ten years.
P98-52 Page 16 NY
<PAGE>
Other Income Options -- Surrender, withdrawal or death benefits may be used
under any other payment plans that we make available at that time.
POLICY LOANS
Policy Loans -- You may obtain loans by Written Request after the Free Look
Period, on the sole security of the Loan Account of this policy. We recommend
you consult your tax advisor before requesting a policy loan.
Loan Amount Available -- The amount available for a loan is equal to 90% of
Accumulated Value less any Policy Debt and also less any Surrender Charges that
would be imposed if the policy were surrendered on the date the loan is taken
or, if greater, the result of (a x b/c)-d, where: a is the Accumulated Value
less 12 times the most recent monthly deduction less any Surrender Charge on the
date of the loan; b = 1 + the loan interest credited; c = 1.0355; and d = any
existing Policy Debt. The amount of a loan must be at least $200.
Loan Interest -- Interest will accrue daily and is payable in arrears at the
annual rate of 3.55%. Interest not paid when due will be added to the loan
principal and bear interest at the same rate of interest.
Loan Account -- When a loan is taken, an amount equal to the loan is transferred
out of the Accumulated Value in the Investment Options into the Loan Account to
secure the loan. Unless you request otherwise, loan amounts will be deducted
from the Variable Accounts and the Fixed Options on a pro rata basis, up to the
amount available. We will credit interest to the Loan Account as described in
the Accumulated Value section.
On each policy anniversary, if the amount in the Loan Account exceeds Policy
Debt, the excess will be transferred from the Loan Account to the Investment
Options according to your most recent instructions. If Policy Debt exceeds the
amount in the Loan Account, an amount equal to such excess will be transferred
from the Investment Options on a proportionate basis to the Loan Account.
Loan Repayment -- Loans may be repaid at any time prior to lapse of this policy.
An amount equal to the portion of any loan repaid, but not more than the amount
in the Loan Account, will be transferred from the Loan Account to the Investment
Options according to your most recent instructions. We reserve the right to
first transfer repayments from the Loan Account to each Fixed Option up to the
amount that was originally borrowed. Any excess over such amount will be
transferred to the Variable Accounts relative to your most recent instructions.
Any payment we receive from you while you have a loan will be first considered a
loan repayment, unless you tell us in writing it is a premium payment.
SEPARATE ACCOUNT PROVISIONS
Separate Account -- This policy uses the Pacific Select Exec Separate Account
owned by PM Group Life Insurance Company, hereafter called the "Separate
Account". We established the Separate Account and maintain it under the laws of
Arizona. The Separate Account is divided into subaccounts, called Variable
Accounts. Realized and unrealized gains and losses from the assets of each
Variable Account are credited or charged against it without regard to our other
income, gains or losses. Assets may be put in our Separate Account to support
this policy and other variable life policies. Assets may be put in our Separate
Account for other purposes, but not to support contracts or policies other than
variable life contracts or policies.
The assets of our Separate Account are our property. The portion of its assets
equal to the reserves and other policy liabilities with respect to our Separate
Account will not be chargeable with liabilities arising out of any other
business we conduct. We may transfer assets of a Variable Account in excess
P98-52 Page 17 NY
<PAGE>
of the reserves and other liabilities with respect to that Variable Account to
another Variable Account or to our general account. All obligations arising
under the policy are general corporate obligations of ours. We do not hold
ourselves out to be trustees of the Separate Account assets.
Variable Accounts -- Each Variable Account may invest its assets in a separate
class of shares of a designated investment company or companies. The Variable
Accounts of our Separate Account that were available for your initial
allocations are shown in the Policy Specifications. From time to time, we may
make other Variable Accounts available to you. We will provide you with written
notice of all material details including investment objectives and all charges.
We reserve the right, subject to compliance with the law then in effect, to:
. change or add designated investment companies;
. add, remove or combine Variable Accounts;
. add, delete or make substitutions for the securities that are held or
purchased by the Separate Account or any Variable Account;
. register or deregister any Variable Account under the Investment Company Act
of 1940;
. change the classification of any Variable Account;
. operate any Variable Account as a managed investment company or as a unit
investment trust;
. combine the assets of any Variable Account with other separate accounts or
subaccounts of ours or our affiliates;
. transfer the assets of any Variable Account to other separate accounts or
subaccounts of ours or our affiliates;
. run any Variable Account under the direction of a committee, board, or other
group;
. restrict or eliminate any voting rights of policy Owners with respect to any
Variable Account, or other persons who have voting rights as to any Variable
Account;
. change the allocations permitted under the policy;
. terminate and liquidate any Variable Account; and
. make any other change needed to comply with law.
If any of these changes result in a material change in the underlying investment
of a Variable Account of our Separate Account, we will notify you of such
change.
Unless required by law or regulation, an investment policy may not be changed
without our consent. We will not change the investment policy of the Separate
Account without the approval of the Insurance Commissioner in the state of
Arizona and without following filing and other procedures established by
insurance regulators of the state of issue.
SUBSTITUTION OF INSURED
Benefit -- Subject to our approval, you may request a substitution of the
Insured under this policy for a new Insured after the first policy year. We will
require the following before we substitute the Insured:
. The new Insured must submit evidence of insurability satisfactory to us.
. You must submit a written application for the substitution.
We may adjust the Face Amount, Accumulated Value, Surrender Charge, and any
policy fees and charges to reflect the new Insured. A revised schedule of
benefits will be sent to you outlining the benefits for the new Insured. Riders
on the new Insured will be added only with our consent and subject to our
requirements for those riders.
If approved, the substitution will be effective on the next Monthly Payment Date
on or next following our approval.
P98-52 Page 18 NY
<PAGE>
GENERAL PROVISIONS
Entire Contract -- This policy is a contract between you and us. This policy,
any attached endorsements, benefits and riders and the attached copy of the
initial application are the entire contract, except as follows. Any application
or written notice of exercise of policy options made after the policy has been
issued will also become part of the contract upon our acceptance of such
application or notice and our mailing of same to your address last known to us.
Only an authorized officer is permitted to change this contract or extend the
time for paying premiums. Any such change must be in writing.
All statements in the application shall, in the absence of fraud, be deemed
representations and not warranties. We will not use any statement to contest
this policy or defend a claim on grounds of misrepresentation unless the
statement is in an application.
Incontestability -- We will not contest this policy unless there was a material
misstatement in an application, including any reinstatement application. Except
for failure to pay premiums, this policy cannot be contested after the
expiration of the following time periods:
. The initial Face Amount cannot be contested after the policy has been in
force during the Insured's lifetime for two years from the later of the
Policy Date or any reinstatement date; and
. An increase in the Face Amount, for which evidence of insurability was
required, cannot be contested after the increased amount has been in force
during the Insured's lifetime for two years from the later of its effective
date or any reinstatement date.
Non-Participating This policy will not share in any of our surplus earnings.
Juvenile Insured -- If an Insured's Age on the Policy Date is less than 20, the
Insured may apply for Nonsmoker risk status on attaining Age 20. This option
must be requested in writing and accompanied by satisfactory evidence of
nonsmoking.
Suicide Exclusion -- If the Insured dies by suicide, while sane or insane,
within two years of the Policy Date or any reinstatement date, no death benefit
proceeds will be paid. Instead, we will return the sum of the premiums paid,
less the sum of any Policy Debt and withdrawals.
If the Insured dies by suicide, while sane or insane, within two years of the
effective date of any increase in the Face Amount, no benefit will be paid with
respect to such increase. Instead, we will refund the Cost of Insurance Charges
made with respect to that increase.
Misstatement -- If the Insured's age is misstated in the application, the amount
of the death benefit shall be the greater of that which would be purchased by
the most recent Cost of Insurance Charge at the correct age, or the Guideline
Minimum Death Benefit for the correct age.
If the Insured's age is misstated, the Accumulated Value will be modified by
recalculating all prior Cost of Insurance charges and other monthly deductions
based on the correct age.
Reports -- A report will be mailed to you at the end of each policy quarter to
your last known address. This report will include the following information for
the policy quarter:
. the Accumulated Value;
. the Cash Surrender Value;
. the current death benefit;
. any Surrender Charges;
. any existing Policy Debt;
. transactions that occurred during the policy quarter;
. changes in the Guideline Premiums, if applicable; and
P98-52 Page 19 NY
<PAGE>
. any information required by law.
In addition to the above reports, an annual report will also be mailed to you.
The report will contain financial statements for the Separate Account and the
designated investment company or companies in which the Separate Account
invests, the latter of which will include a list of the portfolio securities of
the investment company, as required by the Investment Company Act of 1940. We
will also send any other reports as required by Federal securities law.
Policy Illustrations -- Upon request we will give you an illustration of the
future benefits under this policy based upon both guaranteed and current cost
factor assumptions. However, if you ask us to do this more than once in any
policy year, we reserve the right to charge you a fee not to exceed $25 per
request for this service. Illustrated benefits that are not guaranteed, such as
benefits based on the current cost factor assumptions, will vary depending upon
a number of factors, including but not limited to, changes in future investment
performance.
Basis of Values -- A detailed statement showing how values are determined has
been filed with the state insurance department. All values are at least equal to
the minimums required by the law of the state in which this policy is delivered,
based on the Commissioner's 1980 Standard Ordinary Mortality Table and interest
at the rate of 3%, except for unisex issues which are based on the 1980 CSO
Table B and interest at the rate of 3%.
Ownership of Assets -- We have the exclusive and absolute control of our assets,
including all assets in the Separate Account.
Compliance -- We reserve the right to make any change to the provisions of this
policy to comply with, or give you the benefit of, any Federal or state statute,
rule, or regulation, including but not limited to requirements for life
insurance contracts under the Code or any state.
We will provide you with a copy of any such change, and file such a change with
the insurance supervisory official of the state in which this policy is
delivered. You have the right to refuse any such change.
NY
Page 20
<PAGE>
<TABLE>
<CAPTION>
INDEX
<S> <C> <C> <C>
Accumulated Value (AV) 10 M&E Risk Charge 12
Administrative Charge 13 MEC 7
Age 5 MEC Premium Limitation 7
Assignment 6 MEC Rules 8
Basis of Values 20 Misstatement 19
Beneficiary 6 Modified Endowment Contract 7
Cash Surrender Value 15 Monthly Deduction 12
Cash Value Accumulation Test 7 Monthly Payment Date 5
Change in Policy Cost Factors 12 Mortality and Expense Risk Charge 12
Code 5 Net Amount at Risk 12
Compliance 20 Net Cash Surrender Value 15
Cost of Insurance Charge 12 Net Premium 5
Cost of Insurance Rates 12 Net Single Premium (NSP) 7
Death Benefit 7 Non-Participating 19
Death Benefit Options 9 Owner 6
Death Benefit Proceeds 9 Paid-Up Benefit 10
Death Benefit Qualification Test 7 Policy Date 5
Entire Contract 19 Policy Debt 5
Evidence of Insurability 5 Policy Illustrations 20
Face Amount 5 Policy Loans 17
Face Amount Change 9 Premium Allocation 6
Face Amount Decrease 10 Premium Limitation 6
Face Amount Increase 9 Premium Load 13
Fixed Accumulated Value 10 Premiums 6
Fixed Options 5, 16 Qualification as Life Insurance 7, 8
Free Look Transfer Date 5 Reinstatement 13
Grace Period 13 Reports 19
Guideline Premium Limitation 7 Risk Classification 3
Guideline Premium Test 7 Separate Account 5, 17
Income Benefits 16 Service Center 5
Incontestability 19 Suicide Exclusion 19
Insured 5 Surrender 15
Investment Options 5 Surrender Charges 15
Juvenile Insured 19 Transfers 14
Lapse 13 Valuation Date 5
Limits on Face Amount Increase 10 Valuation Period 5
Loan Account 11, 17 Variable Account 5, 18
Loan Amount Available 17 Variable Accumulated Value 11
Loan Interest 17 Withdrawals 15
Loan Repayment 17 Written Request 5
</TABLE>
P98-52 Page 21 NY
<PAGE>
PACIFIC LIFE & ANNUITY COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
=====================================================================
FLEXIBLE
PREMIUM
VARIABLE LIFE
INSURANCE
POLICY
. Adjustable Face Amount
. Benefits Vary Based on Investment Experience
. Non-Participating
P98-52 NY
<PAGE>
DRAFT
ANNUAL RENEWABLE TERM RIDER
INSURED - As used in this rider, "Insured" means the individual covered under
the policy.
ANNUAL RENEWABLE TERM (ART) FACE AMOUNT - The ART Face Amount provided by this
rider is shown in the Policy Specifications.
DEATH BENEFIT OPTION - This rider provides term insurance on the Insured under
this policy. This rider has no cash value, but it affects the cash value of the
policy. The death benefit of the policy to which this rider is attached is
modified to include the ART Face Amount under this rider. It is now as follows:
The death benefit equals the greater of the Guideline Minimum Death Benefit or
the death benefit as calculated under one of the options below:
. Option A: the Face Amount of the policy plus the ART Face Amount;
. Option B: the Face Amount of the policy plus the ART Face Amount plus the
Accumulated Value on the date of death;
. Option C: the Face Amount of the policy plus the ART Face Amount plus
premiums paid and less withdrawals taken.
CHANGING THE ART FACE AMOUNT - Subject to our approval, you may change the ART
Face Amount by Written Request during the lifetime of the Insured. Such request
may be made not more than once per policy year.
ART FACE AMOUNT INCREASES - You must provide evidence of insurability
satisfactory to us before any request for an increase in ART Face Amount becomes
effective. An Administrative Charge not to exceed $100 will be deducted from
the policy's Accumulated Value on the effective date of any such increase in
ART Face Amount. The effective date of the increase will be the first Monthly
Payment Date on or following the date all applicable conditions are met.
ART FACE AMOUNT DECREASES - Any decrease in ART Face Amount that you request for
any policy year will first be applied against the most recent increase, if any,
and then against successively earlier increases, if any, and finally against the
original ART Face Amount. The effective date of the decrease will be the first
Monthly Payment Date on or following the date we receive your Written Request.
COST OF INSURANCE CHARGE - Beginning on the Policy Date and for every month
thereafter, there will be a charge equal to the Cost of Insurance Charge
applicable to the following:
. the initial ART Face Amount; plus
. each increase in the ART Face Amount.
The monthly Cost of Insurance Charge for the death benefit payable under this
rider is (1) multiplied by (2) where:
(1) is the applicable monthly Cost of Insurance Rate for this rider; and
(2) is the Net Amount at Risk attributed to the ART Face Amount.
The Net Amount at Risk for the policy is calculated by taking the total death
benefit of the policy divided by 1.002466 and subtracting the Accumulated Value
at the beginning of the policy month before the Monthly Deduction is due.
The Net Amount at Risk is allocated between the policy and this rider in
proportion to the Face Amounts of each as of the Monthly Payment Date.
If there have been increases in the ART Face Amount, the Net Amount at Risk will
be proportionately allocated to each increase according to the Face Amount of
each increase in force as of the Monthly Payment Date.
<PAGE>
COST OF INSURANCE RATES - The Cost of Insurance Rates are based on a number of
factors, including the Insured's Age, Risk Classification, and the policy
duration. The current monthly Cost of Insurance Rates will be determined by us.
These rates will not exceed the Guaranteed Maximum Monthly Cost of Insurance
Rates shown in the Policy Specifications. Any changes in the Cost of Insurance
Rates will apply uniformly to all members of the same class.
The Cost of Insurance Rates used to calculate the Cost of Insurance Charges for
an increase in coverage necessary to meet the Guideline Minimum Death Benefit
will be the same as shown in the Policy Specifications.
R98-ART NY
Page 1
<PAGE>
M&E RISK FACE AMOUNT CHARGE - This M&E Risk Face Amount Charge for this rider
is to compensate us for the risk we assume that mortality, expenses and other
costs associated with the rider will be greater than estimated.
The amount of this charge will not exceed the monthly charges shown in the
Policy Specifications. We reserve the right to charge less than such amount.
The amount of this charge is based on the amount of insurance issued under this
rider and any subsequent increases as shown in the Policy Specifications.
WITHDRAWALS - The Withdrawals provision of the policy, to which this rider is
attached, is modified to include this rider. For the purpose of the Withdrawals
provision, this rider is treated the same as any other increase in
the policy Face Amount. For further details, please see the Withdrawals
provision of your contract.
CONVERSION - Coverage under this rider is convertible to an increase in Face
Amount of the policy to which this rider is attached after 5 years from the
effective date of the rider coverage or at the Insured's Age 80. Cost of
insurance rates for such conversion amount will be those applicable for
conversions. No evidence of insurability will be required. The ART Face Amount
will be cancelled on the effective date of the corresponding increase in policy
Face Amount.
EFFECTIVE DATE - This rider is effective on the Policy Date unless otherwise
notified.
TERMINATION This rider will terminate on the earliest of the following:
. the Insured's Age 80; or
. your Written Request; or
. lapse of the policy; or
. termination of the policy.
GENERAL CONDITIONS - This rider is part of the policy to which it is attached.
As applied to this rider, the periods stated in this policy's Incontestability
and Suicide provisions will start with this rider's effective date. This will
also apply to any increase in the Face Amount under this rider. All terms of
this policy that do not conflict with this rider's terms apply to this rider.
Signed for Pacific Life & Annuity Company,
/s/ WILLIAM FERRIS /s/ AUDREY L. MILFS
President and Chief Executive Officer Secretary
R98-ART NY
Page 2
<PAGE>
ACCELERATED LIVING BENEFIT RIDER
This rider is attached to and made part of your policy.
Issue Date: ___________________________
Policy Number: ________________________
AN ACCELERATED BENEFIT (AB) RECEIVED UNDER THIS RIDER MAY BE TAXABLE. YOU
SHOULD CONSULT YOUR TAX ADVISOR PRIOR TO REQUESTING THIS BENEFIT.
ANY BENEFIT RECEIVED UNDER THIS RIDER MAY AFFECT YOUR ELIGIBILITY FOR GOVERNMENT
BENEFITS.
This rider is not meant to cause involuntary access to proceeds, which may be
ultimately payable to the beneficiary. Therefore, this benefit is not
available:
. If either you or the Insured is required by law to use proceeds from this
rider to meet the claims of creditors, whether in bankruptcy or otherwise; or
. If either you or the Insured is required by a government agency to use
proceeds from this rider to apply for, obtain or keep a government benefit.
Requested Portion - is the amount of the policy proceeds you request. The
Requested Portion divided by the Eligible Coverage will be called the Requested
Percentage. The Requested Portion may not exceed the lesser of:
. 50% of the Eligible Coverage; or
. $250,000 for all policies in force with us.
Eligible Coverage - is the portion of the policy proceeds that qualifies for
determining the AB Amount.
The Eligible Coverage includes:
. the base policy death benefit;
. any paid-up additions; and
. any term rider or term coverage on the Insured that has at least two years of
coverage remaining. For term coverage that varies by year, we will use the
lowest coverage for the two years following your request.
Eligible Coverage does not include:
. any insurance provided under the policy on the life of someone other than the
Insured;
. the face amount of any scheduled increase(s) in insurance as provided by an
additional benefit rider during the 12-month period from the date you request
acceleration; or
. any accidental death benefit.
AB Amount - The AB Amount will be determined as of the date we approve your
Written Request. The AB Amount will equal the Requested Portion less the
following:
1. An actuarial discount will apply to the Requested Portion. This discount
reflects the early payment of the Requested Portion of your policy. The
discount will be based on a declared interest rate in effect as of the date
we approve your Written Request; and
2. If there is a policy loan on your policy as of the date we approve your
Written Request, we will reduce the Requested Portion to repay a portion of
the policy loan equal to the Requested Percentage times the policy loan.
3. A reduction to the Requested Portion will be applied to any premiums due and
unpaid if the policy has entered the Grace Period when we approve your
request.
4. An administrative charge not to exceed $150.
We will refund the amounts discussed in 1) and 4) above should the death of the
Insured occur within 30 days after we pay the AB Amount.
The AB Amount may not be less than $500. The AB will be paid either in a lump
sum or under any other payment plan available at the time the Insured qualifies
for payment. WE WILL PAY THE AB AMOUNT ONLY ONCE PER INSURED. If you choose a
payment plan and the Insured dies before all payments have been made, the
remaining amount will be paid to the beneficiary.
Impact on Policy - After we pay the AB, the policy and all riders will remain in
force, but all of the following will be reduced by the Requested Percentage:
. The policy death benefit;
. any cash value;
. any paid-up additions;
. any Accumulated Value;
R92-ABR NY
<PAGE>
. any term insurance eligible to be accelerated under this rider; and
. any required premium payments.
Any policy loan will be reduced as described in the AB Amount Section.
Any adjustment in Accumulated Value will be allocated to the Fixed and Variable
Accounts on a pro-rata basis. Cost of Insurance Charges will be adjusted to
reflect the reduction in the death benefit.
Eligibility - The following conditions must be met prior to payment of any AB
Amount:
. The policy must be in force when your request is approved. If you have a term
insurance policy or your policy is on Extended Term, two years of coverage
must remain to qualify for an AB Amount.
. We must receive written proof satisfactory to us that the Insured is expected
to live 6 months or less from the date of the Written Request. A licensed
physician, other than yourself or a member of your family, must certify to
the condition. Such proof may include clinical, radiological or laboratory
evidence. We reserve the right to obtain a second medical opinion from a
physician of our choice, at our expense.
. You or your legal guardian must apply in writing for this benefit on a form
we supply.
. We require written consent from any irrevocable beneficiary and assignee.
. Joint life policies will qualify for acceleration only after the death of one
of the joint Insureds and only if the surviving Insured meets the
requirements for an AB. In the case of joint life policies, "Insured" in this
rider refers to the survivor of the joint Insureds under the joint life
policy.
Incontestability - This rider is subject to the Incontestability provision of
the policy to which it is attached.
Effective Date - This rider is effective on the issue date shown. This rider
will terminate:
. On your written request;
. On lapse or termination of the policy; or
. When an AB is paid.
General Provisions - There will be an administrative charge, not to exceed $150,
which we will deduct from the AB.
Signed for Pacific Life & Annuity Company,
/s/ WILLIAM L. FERRIS /s/ AUDREY L. MILFS
President and Chief Executive Officer Secretary
R92-ABR 2 NY
<PAGE>
DRAFT
ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER
COVERED PERSON - As used in this rider, the term "Covered Person" means any of
the persons covered under this rider on the Policy Date. Covered Persons may be
deleted from or, with evidence of insurability, added to this rider. When this
occurs, we will give you a revised Policy Specifications page.
BENEFIT AMOUNT - This rider provides term insurance on any Covered Person under
this rider. This rider has no cash value, but it affects the cash value of the
policy. The Benefit Amount is shown on the Policy Specifications pages for each
Covered Person. Any reduction in Benefit Amount for any year may require a
reduction in Benefit Amounts for future years. Any decrease in the face amount
of the policy to which this rider is attached may require a decrease in the
Benefit Amounts under this rider. We will pay the Benefit Amount for this rider
when we receive proof that the death of a Covered Person occurred while this
rider was in force.
COST OF INSURANCE CHARGES - The Cost of Insurance Charges for this rider are
calculated separately for each Covered Person. The monthly Cost of Insurance
Charge for any Covered Person is equal to the product of the applicable monthly
cost of insurance rate times the Benefit Amount for such Covered Person. The
cost of insurance rates are based on a number of factors, including the Covered
Person's attained Age and risk class and the duration of this rider. The current
monthly cost of insurance rates will be determined by us. These rates will not
exceed the Guaranteed Maximum Monthly Cost of Insurance Rates shown on the
Policy Specifications pages.
RENEWAL - Coverage under this rider will be automatically renewed for each
Covered Person on each monthly payment date for which there is an applicable
Guaranteed Maximum Monthly Cost of Insurance Rate shown on the Policy
Specifications pages.
CONVERSION - While this rider is in force or upon termination of this policy by
death of the Insured, the Benefit Amount for this rider may be converted to a
new policy on any Covered Person's life at any time before such Covered Person
becomes Age 65. This rider may be converted during the first two years it is in
force regardless of the Covered Person's Age. The Covered Person's Benefit
Amount for this rider will be cancelled on the new policy's issue date. The
amount of insurance under the new policy will be the same as the Covered
Person's Benefit Amount under this rider. A lower amount may be selected as
long as it is not less than our regular minimum limit at the time of conversion.
The new policy may be on the whole life or any higher premium plan we regularly
issue at the time of conversion. It will be issued in the same underwriting
class and contain the same restrictions, if any, as this rider. It will be
issued at our published rates which apply at the Covered Person's Age on the new
policy's issue date. Riders will not be included in the new policy without our
consent at the time. If we are waiving charges for this rider at the Covered
Person's Age 65, and if this rider is converted to a whole life policy in the
manner described above, we will waive premiums under the new policy while total
disability continues without interruption.
EFFECTIVE DATE - This rider is effective on the policy date unless otherwise
stated. This rider will terminate on the earliest of the following:
. on your written request;
. on lapse or termination of this policy; or
. when the last person covered by this rider becomes Age 80.
GENERAL CONDITIONS - This rider is part of the policy to which it is attached.
As applied to this rider, the periods stated in this policy's Incontestability
and Suicide provisions will start with this rider's effective date. This will
also apply to any increase in the Face Amount under this rider. All terms of
this policy which do not conflict with this rider's terms apply to this rider.
Signed for Pacific Life & Annuity Company,
/s/ WILLIAM FERRIS /s/ AUDREY L. MILFS
President and Chief Executive Officer Secretary
R98-SPT NY
<PAGE>
DRAFT
CHILDREN'S TERM RIDER
BENEFIT - We will pay a benefit when we receive proof that a child's death
occurred while this rider was in effect. The benefit provided is term insurance
to the child's 25th birthday. The Benefit Amount is $1,000 for each rider unit.
CHILD - "Child" means any natural child, adopted child or step-child of the
Insured who is:
. At least 14 days old but not more than 25 years old; and
. Named in the application for this rider, or born to the Insured or adopted by
the Insured or who has become a stepchild of the Insured thereafter.
PAID-UP INSURANCE BENEFIT - The term insurance on each child will become paid-up
upon the insured's death. We will issue a separate policy for the paid-up
insurance with the child as owner.
INSURANCE CHARGES - The monthly Insurance Charge for this rider is shown on the
Policy Specifications pages.
EFFECTIVE DATE - This rider is effective on the policy date unless otherwise
stated hereon. This rider will terminate:
. On your Written Request; or
. On lapse or termination of this policy; or
. When the Insured becomes age 65.
CONVERSION - You may convert the term insurance under this rider to a new policy
on the child's life. The conversion date for insurance on each child is the
earlier of:
. the child's 25th birthday; or
. the date the Insured becomes age 65.
You or the child must apply in writing on a form we provide within 31 days of
the conversion date. The conversion date will be the new policy's date. The new
policy will become effective on its date only if the child is then living.
The amount of insurance on the new policy will be five times the child's Benefit
Amount. If you wish, you may select a lower amount but not less than our
regular minimum limit at the time of conversion.
The new policy will be on the whole life or any higher premium plan we regularly
issue at the time of conversion. It will be issued at our published rates for
the standard class and for the child's age on the new policy's date.
INCONTESTABILITY - This rider will be incontestable after two years from its
issue date during the
<PAGE>
Insured's lifetime. Any paid-up term insurance issued under this rider will be
incontestable from its issue date.
SUICIDE - If the Insured dies by suicide, while sane or insane, within two years
from the issue date of this rider, no paid-up benefit will be issued.
REINSTATEMENT - The reinstatement provision of this policy applies to this rider
except that we will require satisfactory evidence of insurability for each
child upon reinstatement.
GENERAL CONDITIONS - This rider is part of the policy to which it is attached.
All terms of the policy which do not conflict with this rider's terms apply to
this rider.
Signed for Pacific Life & Annuity Company,
/s/ WILLIAM FERRIS /s/ AUDREY L. MILFS
President and Chief Executive Officer Secretary
R84-CT NY
<PAGE>
DRAFT
WAIVER OF CHARGES RIDER
BENEFIT -- Subject to this rider's terms, we will waive any monthly Cost of
Insurance Charges, any monthly Administrative Charges and any monthly cost of
any rider benefits for this policy which fall due while the Insured is totally
disabled.
We will not waive any charges, which fall due more than one year before we
receive proof of total disability. We will not waive any charges, which fall
due before the Insured's age 5. If total disability begins during the grace
period for an unpaid premium, that premium must be paid in order to establish a
valid claim under this rider.
TOTAL DISABILITY -- Total disability means a condition which:
. results from bodily injury accidentally sustained or disease which first
manifests itself while this rider is in effect;
. occurs before the Insured's age 60;
. lasts continuously for at least 3 months; and, either
. stops the Insured from performing the substantial and material duties of the
job; or
. includes the Insured's total and irrecoverable loss of sight of both eyes or
use of two hands, two feet or one hand and one foot.
During the first 24 months of disability, "the job" means the Insured's
occupation for pay or profit at the time total disability began. After that,
"the job" means any job for which the Insured is or becomes reasonably fitted by
education, training or experience. If the Insured is a student when disability
begins, "the job" means attending school.
If the Insured becomes totally disabled, any monthly charges that were deducted
during the three-month waiting period will be credited back to the policy.
NOTICE OF DISABILITY CLAIM -- We must receive notice of the Insured's total
disability, at our home office, on forms we provide while the Insured is alive
and disabled. If it is not reasonably possible for you to give us notice within
the time limits, you must give us notice within one year from the time total
disability ends.
PROOF OF DISABILITY -- Before we pay a benefit, we must receive proof of total
disability. From time to time after the Insured is disabled, we may require
proof of continuing disability. This proof may include a medical exam by a
physician we select and pay. After two years of disability, we will not require
such proof more than once a year. We will not require proof after the Insured's
age 70.
WAR SERVICE NOT COVERED -- Disability occurring in a period during which the
Insured is in the armed forces of any country at war (declared or not) is not
covered under this rider. No insurance charges for this rider will be made for
such a period. If any such charges are made, we will reverse them.
INSURANCE CHARGES -- The monthly Insurance Charge for this rider is the result
of multiplying the applicable monthly Waiver of Charges Rate as shown in the
Policy Specifications pages by the sum of the Net Amount at Risk as calculated
under the policy plus the Benefit Amount for any Annual Renewable and
Convertible Term Rider present.
EFFECTIVE DATE -- This rider is effective on the Policy Date unless otherwise
stated. This rider will terminate (without affecting any claim for disability
occurring before such termination) on the earliest of:
. your Written Request; or
. lapse or termination of the policy; or
. when the Insured becomes age 60.
INCONTESTABILITY -- This rider will be incontestable after 2 years from it's
issue date, excluding any period the insured is disabled.
GENERAL CONDITIONS -- This rider is part of the policy to which it is attached.
All terms of the policy that do not conflict with this rider's terms apply to
this rider.
Signed for Pacific Life & Annuity Company,
/s/ WILLIAM FERRIS /s/ AUDREY L. MILFS
President and Chief Executive Officer Secretary
R98-WC NY
<PAGE>
DRAFT
ACCIDENTAL DEATH RIDER
BENEFIT - We will pay the extra benefit amount when we receive proof that the
insured's death:
. Was accidental, subject to this rider's provisions; and
. Occurred while this rider was in force.
ACCIDENTAL DEATH - An accidental death is one which:
. Results directly and independently of all other causes from bodily injuries
accidentally sustained while this rider is in force; and
. Is not caused by bodily or mental infirmity, illness or disease; and
. Occurs within 120 days of the injuries. We will waive the 120-day limit if
the insured continuously requires artificial means to sustain life from the time
of injury to the time of death.
RISKS NOT COVERED - This rider does not cover death which results from:
. Intentionally self-inflicted injuries while sane or insane; or
. Medical, surgical or dental treatment; or
. Any poison or gas taken or inhaled voluntarily; or
. War or any incident of war, declared or not; or
. Descent from any kind of aircraft; or
. Riding in any kind of aircraft unless solely as a passenger in an aircraft not
operated by or for any armed forces.
WAR SERVICE - This rider will be suspended while the insured is in the armed
forces of any country at war, declared or not. No insurance charges will be made
for this rider during the suspension. If any are made we will reverse them.
INSURANCE CHARGES - The monthly Insurance Charge for this rider is shown on the
Policy Specifications pages.
EFFECTIVE DATE - This rider is effective on the policy date unless otherwise
stated hereon. This rider will terminate:
. On your Written Request; or
. On lapse or termination of this policy; or
. When the insured becomes age 70.
AUTOPSY - We reserve the right to make an autopsy, at our expense, unless
prohibited by law.
INCONTESTABILITY - This rider will be incontestable after 2 years from its issue
date during the insured's lifetime.
GENERAL CONDITIONS - This rider is part of the policy to which it is attached.
All terms of the policy, which do not conflict with this rider's terms apply to
this rider.
Signed for Pacific Life & Annuity Company,
/s/ WILLIAM FERRIS /s/ AUDREY L. MILFS
President and Chief Executive Officer Secretary
R84-AD NY
<PAGE>
DRAFT
GUARANTEED INSURABILITY RIDER
BENEFIT - You may, without providing evidence of insurability, increase the face
amount of this policy on each option date shown in the Policy Specification
pages. To do this, you must make a written request on a form we provide:
. While this rider is in effect:
. During the Insured's lifetime: and
. Within 31 days of the option date.
ADVANCE OF OPTION DATES - You may advance the next available option date to any
date you state following the insured's marriage or the birth of any child of the
Insured. Birth includes legal adoption. The date you state will be an option
date and will replace and cancel the option date so advanced.
AMOUNT OF INCREASE - The increase in face amount may not exceed the maximum
shown in the Policy Specifications pages. The increase will be effective on
the option date if the Insured is then living. If we are waiving insurance and
administrative charges for this policy on any option date, we will automatically
effect any increase options available to you and will waive any increases in
charges, which result from this during continued total disability.
INSURANCE CHARGES - Insurance Charges for this rider are shown in the Policy
Specifications pages.
EFFECTIVE DATE - This rider is effective on the policy date unless otherwise
stated hereon. This rider will terminate:
. On your Written Request: or
. On lapse or termination of this policy: or
. 31 days after the last option date.
GENERAL CONDITIONS - This rider is part of the policy to which it is attached.
As applied to this rider, the periods stated in the policy's Incontestability
and Suicide provisions will start with this rider's effective date. All terms
of the policy, which do not conflict with this rider's terms apply to this
rider.
Signed for Pacific Life & Annuity Company,
/s/ WILLIAM FERRIS /s/ AUDREY L. MILFS
President and Chief Executive Officer Secretary
R84-GI NY
<PAGE>
DISABILITY BENEFIT RIDER
DISABILITY BENEFITS - On each monthly payment date that the Insured qualifies,
we will add the Disability Benefit Amount shown in the Policy Specifications
pages to the Accumulated Value. To qualify, the Insured must be totally
disabled, as defined below, and under age 65. We will make the addition on the
monthly payment date or, if later, at the time we receive proof of disability.
We will not make the addition for a monthly payment date unless we receive proof
of disability within one year following that date.
If total disability begins during the grace period for an unpaid premium, that
premium must be paid in order to establish a valid claim under this rider.
TOTAL DISABILITY - Total disability means a condition which:
. results from bodily injury accidentally sustained or disease which first
manifests itself while this rider is in effect;
. occurs before the Insured's age 60;
. lasts continuously for at least 3 months; and, either
. stops the Insured from performing the substantial and material duties of the
job; or
. includes the Insured's total and irrecoverable loss of sight of both eyes
or the use of two hands, two feet or one hand and one foot.
During the first 24 months of disability, "the job" means the Insured's
occupation for pay or profit at the time total disability began. After that,
"the job" means any job for which the Insured is or becomes reasonably fitted by
education, training or experience. If the Insured is a student when disability
begins, "the job" means attending school.
NOTICE OF DISABILITY CLAIM - We must receive notice of the Insured's total
disability, at our home office, on forms we provide and while the Insured is
alive and disabled. If it is not reasonably possible for you to give us notice
within the time limits, you must give us notice within one year from the time
total disability ends.
PROOF OF DISABILITY - Before we pay a benefit, we must receive proof of total
disability. From time to time after the Insured is disabled, we may require
proof of continuing disability. This proof may include a medical exam by a
physician we select and pay. After two years of disability, we will not require
such proof more than once a year.
WAR SERVICE NOT COVERED - Disability occurring in a period during which the
Insured is in the armed forces of any country at war (declared or not) is not
covered under this rider. No insurance charges for this rider will be made for
such a period. If any such charges are made, we will reverse them.
INSURANCE CHARGES - The Insurance Charges for this rider are shown in the Policy
Specifications pages.
EFFECTIVE DATE - This rider is effective on the Policy Date unless otherwise
stated. This rider will terminate (without affecting any claim for disability
occurring before such termination) on the earliest of:
<PAGE>
. your Written Request; or
. lapse or termination of this policy; or
. when the Insured becomes age 60.
INCONTESTABILITY - This rider will be incontestable after 2 years from its issue
date, excluding any period the Insured is disabled.
GENERAL CONDITIONS - This rider is part of the policy to which it is attached.
All terms of the policy that do not conflict with this rider's terms apply to
this rider.
Signed for Pacific Life & Annuity Company,
/s/ WILLIAM FERRIS /s/ AUDREY L. MILFS
President and Chief Executive Officer Secretary
R98-DB NY
<PAGE>
BYLAWS OF
PACIFIC LIFE & ANNUITY COMPANY
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL EXECUTIVE OFFICE.
The principal executive office of the corporation is fixed at 700 Newport
Center Drive, Newport Beach, California 92660.
The board of directors may relocate the principal executive office by
amendment to these bylaws.
SECTION 2. OTHER OFFICES.
The board of directors may establish branch or subordinate offices wherever
the corporation is authorized to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS.
All meetings of shareholders shall be held at the principal office or at
such other place as may be designated for that purpose from time to time by the
board of directors.
SECTION 2. ANNUAL MEETINGS.
The annual meeting of the shareholders shall be held on the fourth Tuesday
of February in each year at 10:00 a.m. However, if this day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At this meeting, directors shall be elected, and
any other proper business within the power of the shareholders shall be
transacted.
SECTION 3. SPECIAL MEETINGS.
Special meetings of the shareholders, for any purpose or purposes
whatsoever, may be called at any time by the chairman of the board, the
president or by the board of directors, or by any two or more members thereof,
or by one or more shareholders holding not less than one-tenth (1/10) of the
voting power of the corporation.
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SECTION 4. NOTICE OF MEETINGS.
Notices of annual or special meetings shall be given in writing to
shareholders entitled to vote by the secretary or the assistant secretary, or if
there be no such officer, or in case of his neglect or refusal, by any director
or shareholder.
Such notices shall be sent to the shareholder's address appearing on the
books of the corporation or supplied by him to the corporation for the purpose
of notice, or shall be delivered personally, not less than ten (10) days before
such meeting.
Notice of any meeting of shareholders shall specify the place, the day and
the hour of meeting, and in case of special meeting, as provided by the general
corporation law of Arizona, the purpose or purposes for which the meeting is
called.
When a meeting is adjourned for forty-five (45) days or more, notice of the
adjourned meeting shall be given as in case of an original meeting. If the
meeting is adjourned for less than forty-five days, it shall not be necessary to
give any notice of the adjournment or of the business to be transacted at any
adjourned meeting other than by announcement at the meeting at which such
adjournment is taken.
SECTION 5. CONSENT TO SHAREHOLDERS' MEETINGS.
The transactions of any meeting of shareholders, however called and
noticed, shall be valid as though had at a meeting duly held after regular call
and notice if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each of the shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice, or a consent to
the holding of such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Any action which may be taken at a meeting of the shareholders, may be
taken without a meeting if authorized by a writing signed by all of the holders
of shares who would be entitled to vote at a meeting for such purpose, and filed
with the secretary of the corporation.
SECTION 6. QUORUM.
The holders of a majority of the shares entitled to vote thereat, present
in person, or represented by proxy, shall be requisite and shall constitute a
quorum at all meetings of the shareholders for the transaction of business
except as otherwise provided by law, by the articles of incorporation, or by
these bylaws. If however, such majority shall not be present or represented at
any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person, or by proxy, shall have power to adjourn the meeting from
time to time, until the requisite amount of voting shares shall be present. At
such adjourned meeting at which the requisite amount of voting shares shall be
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. No notice of the adjourned meeting need be
given, other than an announcement at the meeting at which the adjournment is
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taken, unless the meeting is adjourned for forty-five (45) days or more in which
case notice of the adjourned meeting shall be given as in the case of an
original meeting.
SECTION 7. VOTING RIGHTS; CUMULATIVE VOTING.
Only persons in whose names shares entitled to vote stand on the stock
records of the corporation on the day of any meeting of shareholders, unless
some other day be fixed by the board of directors for the determination of
shareholders of record, then on such other day, shall be entitled to vote at
such meeting.
Every shareholder entitled to vote shall be entitled to one vote for each
said share and in any election of directors he shall have the right to cumulate
his votes as provided in A.R.S. S 10-033.
SECTION 8. PROXIES.
Every person entitled to vote or execute consents shall have the right to
do so either in person or by one or more agents authorized by a written proxy
executed by such person or his duly authorized agent and filed with the
secretary of the corporation. Any proxy duly executed is not revoked and
continues in full force and effect until an instrument revoking it or a duly
executed proxy bearing a later date is filed with the secretary of the
corporation; provided that no such proxy shall be valid after the expiration of
eleven months from the date of its execution, unless the person executing it
specifies therein the length of time for which such proxy is to continue in
force, which in no case shall exceed seven years from the date of its execution.
SECTION 9. INSPECTORS OF ELECTION.
In advance of any meeting of shareholders, the board of directors may
appoint any persons, other than nominees for office, inspectors of election to
act at such meeting or any adjournment thereof. If inspectors of election be not
so appointed, the chairman of any such meeting may, and on the request of any
shareholder or his proxy shall, make such appointment at the meeting. The
number of inspectors shall be either one or three. If appointed at a meeting on
the request of one or more shareholders or proxies, the majority of shares
present shall determine whether one or three inspectors are to be appointed. In
case any person appointed as inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment by the board of directors in
advance of the meeting, or at the meeting by the chairman.
The duties of such inspectors shall include: determining the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies; receiving votes, ballots or consents, hearing and determining all
challenges and questions in any way arising in connection with the right to
vote; counting and tabulating all votes or consents; determining the result; and
such acts as may be proper to conduct the election or vote with fairness to all
shareholders.
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<PAGE>
ARTICLE III
DIRECTORS; MANAGEMENT
SECTION 1. POWERS.
Subject to the articles of incorporation, the bylaws and the laws of the
State of Arizona as to action to be authorized or approved by the shareholders,
all corporate powers shall be exercised by or under authority of, and the
business and affairs of this corporation shall be controlled by, a board of
directors.
SECTION 2. NUMBERS AND QUALIFICATION OF DIRECTORS.
The authorized number of directors of the corporation shall be not less
than five (5) nor more than fifteen (15). The exact number of directors shall
be five (5) until changed, within the limits specified herein, by a bylaw
amending this Section 2, duly adopted by the board of directors or by the
shareholders.
SECTION 3. ELECTION AND TENURE OF OFFICE.
The directors shall be elected by ballot at the annual meeting of the
shareholders, to serve for one (1) year and until their successors are elected
and have qualified. Their term of office shall begin immediately after
election.
SECTION 4. VACANCIES.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining director,
and each director so elected shall hold office until his successor is elected at
an annual meeting of shareholders or at a special meeting called for that
purpose.
The shareholders may at any time elect a director to fill any vacancy not
filled by the directors, and may elect the additional directors at the meeting
at which an amendment of the bylaws is voted authorizing an increase in the
number of directors.
A vacancy or vacancies shall be deemed to exist in case of the death,
resignation or removal of any director, or if the shareholders shall increase
the authorized number of directors but shall fail at the meeting at which such
increase is authorized, or at an adjournment thereof, to elect the additional
director so provided for, or in case the shareholders fail at any time to elect
the full number of authorized directors.
If the board of directors accepts the resignation of a director tendered to
take effect at a future time, the board, or the shareholders, shall have power
to elect a successor to take office when the resignation shall become effective.
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No reduction of the number of directors shall have the effect of removing
any director prior to the expiration of his term of office.
SECTION 5. REMOVAL OF DIRECTORS.
The entire board of directors or any individual director may be removed
from office as provided by A.R.S. S 10-039.
SECTION 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
Meetings of the board of directors shall be held at the principal office of
the corporation in the State of California, or at any place within or without
the State of California as may be designated for that purpose, from time to
time, by resolution of the board of directors, or written consent of all of the
members of the board. Any meeting shall be valid, wherever held, if held by the
written consent of all members of the board of directors, given either before or
after the meeting and filed with the secretary of the corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, as long as all directors participating in the
meeting can hear one another, and all such directors shall be deemed to be
present in person at the meeting.
SECTION 7. ORGANIZATION MEETINGS AND REGULAR MEETINGS.
The organization meetings of the board of directors shall be held
immediately following the adjournment of the annual meetings of the shareholders
at the place where the annual meeting of the shareholders was held or at any
other place that shall have been designated by the board of directors, for the
purpose of organization, any desired election of officers, and the transaction
of other business. Notice of this meeting shall not be required. Regular
meetings of the board of directors as scheduled by the board of directors may be
held without notice.
SECTION 8. SPECIAL MEETINGS--NOTICES.
Special meetings of the board of directors for any purpose or purposes
shall be called at any time by the chairman of the board, the president or by
any vice president, or by any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to the directors or sent to each director by letter
or by telegram, charges prepaid, addressed to him at his address as it is shown
upon the records of the corporation, or if it is not so shown on such records or
is not readily ascertainable, at the place in which the meetings of the
directors are regularly held. In case such notice is mailed or telegraphed, it
shall be deposited in the United States mail or delivered to the telegraph
company in the place in which the principal office of the corporation is located
at least ninety-six (96) hours prior to the time of the holding of the meeting
if sent by mail and at least forty-eight (48) hours prior to the time of the
holding of the meeting if sent by telegram or if personally delivered, it shall
be so delivered at least forty-eight (48) hours prior to the time of the holding
of the meeting. Such mailing, telegraphing,
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<PAGE>
personal delivery, or telephonic notice above provided shall be due, legal and
personal notice to such director.
SECTION 9. WAIVER OF NOTICE.
When all the directors are present at any directors' meeting, however
called or noticed, and sign a written consent thereto on the records of such
meeting, or, if a quorum of the directors are present, and if those not present
sign in writing a waiver of notice of such meeting, whether prior to or after
the holding of such meeting, which said waiver shall be filed with secretary of
the corporation, the transactions thereof are as valid as if had at a meeting
regularly called and noticed. Any such waiver of notice of consent need not
specify the purpose of the meeting.
SECTION 10. NOTICE OF ADJOURNMENT.
Notice of the time and place of holding an adjourned meeting need not be
given to absent directors if the time and place be fixed at the meeting
adjourned, unless the meeting is adjourned for more than twenty-four (24) hours,
in which case notice of the time and place shall be given to the absent
directors in the manner specified in Section 8 of this Article III.
SECTION 11. QUORUM.
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business. The action of a majority of the directors
present at any meeting at which there is a quorum, when duly assembled, is valid
as a corporate act; provided that the directors present in the absence of a
quorum, may adjourn from time to time, but may not transact any business.
SECTION 12. ACTION WITHOUT MEETING BY UNANIMOUS CONSENT.
Notwithstanding anything to the contrary contained in these bylaws, any
action required or permitted to be taken by the board of directors may be taken
without a meeting, if all members of the board of directors shall individually
or collectively consent in writing to such action. Such written consent or
consents shall be filed with the minutes of the proceedings of the board. Such
action by written consent shall have the same force and effect as a unanimous
vote of such directors.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS.
The officers shall be a chairman of the board, a president, one or more
vice presidents, a secretary, a chief financial officer/treasurer, and such
other officers as the board of directors may from time to time determine, which
officers shall be elected by, and hold office at the pleasure of, the board of
directors.
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SECTION 2. ELECTION.
After their election, the directors shall meet and organize by electing a
chairman of the board, a president, one or more vice presidents, a secretary and
a chief financial officer/treasurer, who may, but need not be, members of the
board of directors. The directors shall also elect such other officers as they
may from time to time determine. Any two or more of such offices, except those
of president and secretary, may be held by the same person.
SECTION 3. COMPENSATION AND TENURE OF OFFICE.
The compensation and tenure of office of all the officers of the
corporation shall be fixed by the board of directors.
SECTION 4. REMOVAL AND RESIGNATION.
Any officer may be removed, either with or without cause, by a majority of
the directors at the time in office, at any regular or special meeting of the
board, or, except in case of any officer chosen by the board of directors, by
any officer upon whom such power of removal may be conferred by the board of
directors.
Any officer may resign at any time by giving written notice to the board of
directors, or to the chairman of the board, or to the president, or to the
secretary of the corporation. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 5. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the bylaws for regular appointments to such office.
SECTION 6. CHAIRMAN OF THE BOARD.
The chairman of the board shall preside at all meetings of the board of
directors, shall preside at all meetings of the shareholders, shall be an ex-
officio member of all standing committees, including the executive committee, if
any, shall be the chief executive officer of the corporation and shall exercise
and perform such other powers and duties as may be from time to time assigned to
him by the board of directors or prescribed by the bylaws.
SECTION 7. PRESIDENT.
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, the president shall have general
supervision, direction and control of the business and affairs of the
corporation, subject only to the control of the board of directors
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and subject to any supervisory power granted the chairman of the board. In the
absence of the chairman of the board, he shall preside at meetings of the
shareholders and at meetings of the board of directors. He shall be ex-officio a
member of all the standing committees, including the executive committee, if
any, and shall have the general powers and duties of management usually vested
in the office of president of a corporation, and shall have such other powers
and duties as may be prescribed by the board of directors or the bylaws.
SECTION 8. VICE PRESIDENTS.
In the absence or disability of the president, the vice presidents in order
of their rank as fixed by the board of directors or, if not ranked, the 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. The vice-presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors or by the bylaws.
SECTION 9. SECRETARY.
The secretary shall keep or cause to be kept, at the principal office or
such other place as the board of directors may order, a book of minutes of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special, and, if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or a
duplicate share register, showing the names of the shareholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the board of directors required by the bylaws or by
law to be given, and shall keep the seal of the corporation in safe custody, and
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or by the bylaws.
SECTION 10. CHIEF FINANCIAL OFFICER/TREASURER.
The chief financial officer/treasurer shall keep and maintain, or cause to
be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts disbursements, gains, losses, capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all reasonable times be
open to inspection by any director.
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The chief financial officer/treasurer shall deposit all monies and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as treasurer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or the bylaws.
SECTION 11. ASSISTANTS.
Any assistant secretary or assistant treasurer, respectively, may exercise
any of the powers of secretary or treasurer, respectively, as provided in these
bylaws or as directed by the board of directors, and shall perform such other
duties as may be prescribed by the bylaws or the board of directors.
SECTION 12. OTHER.
The board of directors may from time to time appoint such other officers or
agents as the business of the corporation may require, fix their tenure of
office and allow them suitable compensation.
ARTICLE V
EXECUTIVE AND OTHER COMMITTEES
The board of directors may appoint an executive committee, and such other
committees as may be necessary from time to time, consisting of such number of
its members and with such powers as it may designate, consistent with the
articles of incorporation and bylaws and the general corporation laws of the
State of Arizona. Such committees shall hold office at the pleasure of the
board.
ARTICLE VI
CORPORATE RECORDS AND REPORTS--INSPECTION
SECTION 1. RECORDS.
The corporation shall maintain adequate and correct accounts, books and
records of its business and properties. All of such books, records and accounts
shall be kept at its principal place of business in the State of California, as
fixed by the board of directors from time to time.
SECTION 2. INSPECTION BY DIRECTORS.
Every director shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the corporation and each of
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its subsidiary corporations. This inspection by a director may be made in person
or by an agent or attorney and the right of inspection includes the right to
copy and make extracts of documents.
SECTION 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
The accounting books and records and minutes of proceedings of the
shareholders and the board of directors and any committee or committees of the
board of directors shall be kept at such place or places designated by the board
of directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept either in written form or
in any other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interest as a shareholder or as the holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
SECTION 4. MAINTENANCE AND INSPECTION OF BYLAWS.
The corporation shall keep at its principal business office in California,
the original or a copy of these bylaws as amended to date, which shall be open
to inspection by the shareholders at all reasonable times during office hours.
SECTION 5. INSURANCE POLICIES -- HOW SIGNED.
All policies issued by the corporation shall be signed by the president and
countersigned by the secretary either personally or by facsimile.
SECTION 6. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation,
shall be signed or endorsed by such person or persons and in such manner as
shall be determined from time to time by resolution of the board of directors.
SECTION 7. CONTRACTS, ETC. -- HOW EXECUTED.
The board of directors, except as in the bylaws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation, and
this authority may be general or confined to specific instances; and, unless so
authorized or ratified by the board of directors or within the authority of an
officer, no office, agent or employee shall have any power or authority to bind
the corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.
10
<PAGE>
SECTION 8. ANNUAL REPORTS.
Unless dispensed with by resolution of the board of directors as to any
calendar year or waived by written consent of all shareholders entitled to vote
as to any calendar year, the board of directors shall cause annual reports to be
made to the shareholders as provided by the general corporation law of Arizona.
If made, the board of directors shall cause such annual reports to be sent to
the shareholders not later than one hundred twenty (120) days after the close of
the calendar year.
ARTICLE VII
INVESTMENTS
SECTION 1. INVESTMENTS IN THE CORPORATION'S NAME.
All investments of the corporation shall be made in the name of the
corporation or its nominee.
SECTION 2. INVESTMENTS BY THE CORPORATION.
All investments of the corporation shall be authorized or approved by the
board of directors or by a committee of the board charged with the duty of
supervising or making such investments. If authorized or approved by such a
committee, a report shall be submitted to the board of directors at its next
meeting. The approval of investments shall be entered on the records of the
corporation in such form and detail as required by the general corporation law
of Arizona.
ARTICLE VIII
CERTIFICATES AND TRANSFER OF SHARES
SECTION 1. CERTIFICATES FOR SHARES.
Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; the par value; a statement of the rights, privileges,
preferences and restrictions, if any; a statement as to redemption or
conversion, if any; a statement of liens or restrictions upon transfer or
voting, if any; if the shares be assessable, or, if assessments are collectible
by personal action, a plain statement of such facts.
Every certificate for shares must be signed in the name of the corporation
by the president, or a vice president and the secretary or an assistant
secretary or must be authenticated by facsimiles of the signatures of the
president and secretary or by a facsimile of the signature of its president and
the written signature of its secretary or an assistant secretary.
11
<PAGE>
SECTION 2. TRANSFER ON THE BOOKS.
Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
SECTION 3. LOST OR DESTROYED CERTIFICATES.
Any person claiming a certificate of stock to be lost or destroyed shall
make an affidavit or affirmation of that fact and advertise the same in such
manner as the board of directors may require, and shall, if the directors so
require, give the corporation a bond of indemnity, in form and with one or more
sureties satisfactory to the board, in at least double the value of the stock
represented by said certificate, whereupon, a new certificate may be issued of
the same tenor and for the same number of shares as the one alleged to be lost
or destroyed.
SECTION 4. TRANSFER AGENTS AND REGISTRARS.
The board of directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, which shall be an incorporated bank or trust
company--either domestic or foreign, who shall be appointed at such times and
places as the requirements of the corporation may necessitate and the board of
directors may designate.
SECTION 5. CLOSING STOCK TRANSFER BOOKS.
The board of directors may close the transfer books in their discretion for
a period not exceeding thirty (30) days preceding any meeting, annual or
special, of the shareholders, or the day appointed for the payment of a
dividend.
ARTICLE IX
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the corporation, the date of its incorporation, and the word
Arizona.
ARTICLE X
AMENDMENTS TO BYLAWS
SECTION 1. BY SHAREHOLDERS.
New bylaws may be adopted or these bylaws may be repealed or amended at
their annual meeting, or at any other meeting of the shareholders called for
that purpose, by a vote of
12
<PAGE>
shareholders entitled to exercise a majority of the voting power of the
corporation, or by written assent of such shareholders.
SECTION 2. POWERS OF DIRECTORS.
Subject to the rights of the shareholders to adopt, amend or repeal bylaws,
as provided in Section 1 of this Article X, the board of directors may adopt,
amend or repeal any of these bylaws or amendment thereof, provided, however that
the board of directors may adopt a bylaw or amendment of a bylaw changing the
authorized number of directors only for the purpose of fixing the exact number
of directors within the limits specified in Section 2 of Articles III of the
bylaws.
SECTION 3. RECORD OF AMENDMENTS.
Whenever an amendment or new bylaw is adopted, it shall be copied in the
Book of Bylaws with the original bylaw, in the appropriate place. If any bylaw
is repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or written assent was filed shall be stated in said book.
13
<PAGE>
AMENDED AND RESTATED
ARTICLES OF REDOMESTICATION
OF
PM GROUP LIFE INSURANCE COMPANY
The Articles of Redomestication of PM Group Life Insurance Company are
hereby amended and restated, effective as of September 30, 1990, to read as
follows:
We, the undersigned, acting as incorporators for the purpose of redomesticating
PM Group Life Insurance Co., a California corporation, which intends to
simultaneously redomesticate to Arizona and merge with Pacific Financial Life
Insurance Company of Arizona, an Arizona corporation, without interruption, as a
corporation organized under the laws of the State of Arizona pursuant to Arizona
Revised Statutes Section 20-231.A, do hereby adopt the following Articles of
Redomestication for said corporation.
ARTICLE I
---------
The name of the corporation shall be PM Group Life Insurance Company.
ARTICLE II
----------
The corporation was incorporated in the State of California on
September 20, 1982.
ARTICLE III
-----------
The existence of the corporation shall be perpetual.
ARTICLE IV
----------
Upon the approval of these Articles of Redomestication, PM Group Life
Insurance Company shall be and continue to be possessed of all privileges,
franchises and powers to the same extent as if it had been originally
incorporated under the laws of the State of Arizona; and all privileges,
franchises and powers belonging to said corporation, and all property, real,
personal and mixed, and all debts due on whatever account, all Certificates of
Authority, agent appointments, outstanding insurance policies, and all choses in
action, shall be and the same are hereby ratified, approved, confirmed and
assured to PM Group Life Insurance Company, with like effect and to all intents
and purposes as if it had been originally incorporated under the laws of the
State of Arizona. Said corporation shall be given recognition as a domestic
insurer of the State of Arizona from and after September 20, 1982, the date of
its initial incorporation under the laws of the State of California.
<PAGE>
ARTICLE V
---------
The purpose for which this corporation is organized is the
transaction, direct and as a reinsurer, of life and disability insurance and
such other lines of insurance as it may be authorized to transact.
In no event shall the corporation incur indebtedness in excess of the
amount authorized by law.
ARTICLE VI
----------
The authorized amount of capital stock of the corporation shall be
Five Million (5,000,000) shares of common stock with a par value of One Dollar
($1.00) per share. Two Million Nine Hundred Thousand (2,900,000) shares have
been issued, and are fully paid and non-assessable. Any additional shares of
common stock shall be issued and paid for at such time or times and in such
manner as the Board of Directors shall determine and, when issued and paid for
shall be non-assessable, except as provided by Article 14, Section 11 of the
Constitution of Arizona.
ARTICLE VII
-----------
The affairs of the corporation shall be conducted by a Board of
Directors consisting of not less than five (5) nor more than fifteen (15)
directors as fixed by the Bylaws, and such officers as the said directors may at
any time elect or appoint. No officer or director need be a shareholder of this
corporation.
The directors shall be elected by the shareholders during the annual
meeting of each year, beginning in 1990. The annual meeting shall be held at
the principal office of the corporation in Phoenix, Arizona, or at any place
determined by the Board of Directors at an hour to be named in the Notice of
Meeting or Waiver of Notice of Meeting. If the date of the annual meeting falls
on a legal holiday, the meeting shall be held on the next succeeding business
day. A director shall serve until his successor is duly elected and qualified.
The Board of Directors shall have the power to adopt, amend, alter and
repeal the Bylaws. Bylaws made by the Board may be altered or repealed and new
Bylaws made by the shareholders, in accordance with the provisions contained in
said Bylaws and these Articles. The Board of Directors shall have the power to
manage the corporate affairs and make all rules and regulations necessary for
the management of the affairs of the corporation, to appoint or remove any
officer and to fill all vacancies occurring on the Board or in any office for
any cause, and to appoint from their own number an Executive Committee and other
committees and invest said committee with all the powers permitted by the
Bylaws.
2
<PAGE>
ARTICLE VIII
------------
The private property of the shareholders, directors and officers of
the corporation shall be forever exempt from debts and obligations of the
corporation.
ARTICLE IX
----------
Subject to the further provisions hereof, the corporation shall
indemnify and hold harmless any and all of its existing and former directors and
officers against all expenses incurred by them, including but not limited to
legal fees, judgments and penalties which may be incurred, rendered or levied in
any legal action brought against any of them, for or on account of any action or
omission alleged to have been committed while acting within the scope of
employment as director or officer of the corporation. Whenever any such person
has ground to believe that he may incur any such aforementioned expense he shall
promptly make a full report of the matter to the president and the secretary of
the corporation. Thereafter, the Board of Directors of the corporation shall,
within a reasonable time, determine if such person acted, or failed to act, in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interest of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. If
the Board of Directors determines that such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, then indemnification shall
be mandatory and shall be automatically extended as specified herein, provided,
however, that the corporation shall have the right to refuse indemnification,
wholly or partially, in any instance in which the person to which
indemnification would have otherwise been applicable, shall have unreasonably
refused to permit the corporation, at its own expense and through counsel of its
own choosing, to defend him in the action, or shall have unreasonably refused to
cooperate in the defense of such action.
To the fullest extent permitted by Title 10, Chapter 1 of the Arizona
Revised Statutes as the same exists or may hereafter be amended, no director
shall be liable to the corporation or its shareholders for monetary damages for
breach of fiduciary duties as director.
ARTICLE X
---------
The fiscal year of the corporation shall be the calendar year.
3
<PAGE>
ARTICLE XI
----------
J. Michael Low, of Low & Childers, P.C., whose address is 1221 East
Osborn Road, Suite 104, Phoenix, Arizona 85014, having been a bonafide resident
of Arizona for at least three (3) years is hereby appointed statutory agent of
the corporation in the State of Arizona, upon whom notices and processes,
including service of summons may be served, and which, when so served, shall
have lawful personal service on the corporation. The Board of Directors may
revoke this appointment at any time, and shall fill the vacancy in such position
whenever one exists.
ARTICLE XII
-----------
The corporation reserves the right to amend, alter, change or repeal
any provisions contained in these Articles of Redomestication in the manner now
or hereafter prescribed by law, and all rights and powers conferred herein on
shareholders, directors or officers are subject to this reserve power.
ARTICLE XIII
------------
The incorporators of the corporation are:
J. Michael Low
1221 East Osborn Road
Suite 104
Phoenix, Arizona 85014
S. David Childers
1221 East Osborn Road
Suite 104
Phoenix, Arizona 85014
Steven R. Henry
1221 East Osborn Road
Suite 104
Phoenix, Arizona 85014
Carrie M. McDonald
1221 East Osborn Road
Suite 104
Phoenix. Arizona 850l4
Robin Bradshaw
1221 East Osborn Road
Suite 104
Phoenix, Arizona 85104
4
<PAGE>
The initial Directors of the corporation are:
Mr. William L. Ferris
PM Group Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Ms. Audrey L. Milfs
PM Group Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Mr. Thomas C. Sutton
PM Group Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Mr. Harold G. Joanning
PM Group Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Mr. Glenn S. Schafer
PM Group Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
All individual incorporators are eighteen (18) years of age or older.
All powers, duties and responsibilities of the incorporators shall
cease at the time of delivery of these Articles of Redomestication to the
Arizona Corporation Commission for filing.
WHEREOF, we have hereunto affixed our signatures this 29th day of October, 1990.
(signed) (signed)
- ------------------------ ------------------------
J. Michael Low S. David Childers
(signed) (signed)
- ------------------------ ------------------------
Steven R. Henry Carrie M. McDonald
(signed)
- ------------------------
Robin G. Bradshaw
******************************************************
5
<PAGE>
STATE OF ARIZONA )
) ss.
County of Maricopa )
IN WITNESS WHEREOF, I, Lori M. Barker, hereby place my hand and
official seal as acknowledgement that J. Michael Low, S. David Childers, Steven
R. Henry, Carrie M. McDonald and Robin R. Bradshaw, being the persons
represented herein, placed their hand as of the 29th day of October, 1970.
(signed)
--------------------------
Lori M. Barker
My Commission~Expires:
8/15/91
- -------------------------
6
<PAGE>
ACCEPTANCE OF NOTIFICATION
OF
APPOINTMENT AS STATUTORY AGENT
I, J. Michael Low, hereby acknowledge that I have been notified of my
appointment as Statutory Agent for PM Group Life Insurance Company, an Arizona
corporation, and I hereby agree to serve in such capacity until removal by
Company or written resignation as permitted by Arizona Revised Statute.
(signed)
--------------------------------
J. Michael Low, Esq.
1221 East Osborn Road, Suite 104
Phoenix, Arizona 85014
pacific art.red
7
<PAGE>
AMENDED & RESTATED
ARTICLES OF INCORPORATION FOR
PM GROUP LIFE INSURANCE COMPANY
William L Ferris and Audrey L. Milfs certify that:
1. They are the President and Chief Executive Officer, and Secretary,
respectively, of PM Group Life Insurance Company, an Arizona corporation.
2. Article I of the restated articles of incorporation of this corporation is
amended to read as follows: "the name of this Corporation shall be
PACIFIC LIFE & ANNUITY COMPANY."
3. The foregoing amendment of the Amended and Restated Articles of
Redomestication was duly approved by the board of directors on November 1,
1998.
4. The foregoing amendment of the restated articles of incorporation has been
duly approved by the required vote of shareholders in accordance with
Section 10-1006 of the Arizona Revised Statutes. The total number of
outstanding shares of the corporation is 2,900,000. The total number of
shares voting in favor of the amendment equaled or exceeded the vote
required. The percentage vote required was more than 50%.
We further declare under penalty of perjury under the laws of the State of
Arizona that the matters set forth in this certificate are true and correct of
our own knowledge.
Dated: January 4, 1999
/s/ WILLIAM L. FERRIS
____________________________________
William L. Ferris
President & Chief Executive Officer
/s/ AUDREY L. MILFS
____________________________________
Audrey L. Milfs
Secretary
<PAGE>
FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this _____ day of _______, 199__, by and between Pacific
Life & Annuity Company (the "Company"), a life insurance company domiciled in
Arizona, on its behalf and on behalf of the segregated asset accounts of the
Company listed on Exhibit A to this Agreement (the "Separate Accounts"); Pacific
Select Fund (the "Fund"), a Massachusetts business trust; and Pacific Mutual
Distributors, Inc. ("Distributor"), a California corporation.
WITNESSETH:
WHEREAS, the Fund is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended ("1940 Act") and the Fund is authorized to issue
separate classes of shares of beneficial interests ("shares"), each representing
an interest in a separate portfolio of assets known as a "portfolio" and each
portfolio has its own investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its portfolios
to separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts") and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is currently
comprised of fourteen separate portfolios and other portfolios may be
established in the future; and
WHEREAS, the Fund has obtained an order from the SEC granting Participating
Insurance Companies, separate accounts funding Variable Contracts of
Participating Insurance Companies, and the Fund exemptions from the provisions
of sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and paragraph (b)(15)
of Rule 6e-3(T) under the 1940 Act, to the extent necessary to permit such
persons to rely on the exemptive relief provided under paragraph (b)(15) of Rule
6e-3(t), even though shares of the Fund may be offered to and held by separate
accounts funding variable annuity contracts or scheduled or flexible premium
variable life insurance contracts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended ("1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the company wishes to purchase shares of one or more of the Fund's portfolios on
behalf of its Separate Accounts to serve as an investment medium for Variable
Contracts funded by the Separate Accounts, and the Distributor is authorized to
sell shares of the Fund's portfolios;
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Distributor agrees to sell to the Company those shares of the
portfolios offered and made available by the Fund and identified on
Exhibit B ("Portfolios") that the Company orders on behalf of its Separate
Accounts, and agrees to execute such orders on each day on which the Fund
calculates its net asset value pursuant to rules of the SEC ("business
day") at the net asset value next computed after receipt and acceptance by
the Fund or its agent of the order for the shares of the Fund.
1.2. The Fund agrees to make available on each business day shares of the
Portfolios for purchase at the applicable net asset value per share by the
Company on behalf of its Separate Accounts provided, however, that the
Board of Trustees of the Fund may refuse to sell shares of any Portfolio
to any person, or suspend or terminate the offering of shares of any
Portfolio, if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees, acting
in good faith and in light of the Trustees' fiduciary duties under
applicable law, necessary in the best interests of the shareholders of any
Portfolio.
1.3. The Fund and the Distributor agree that shares of the Portfolios of the
Fund will be sold only to Participating Insurance Companies, their
separate accounts, and other persons consistent with each Portfolio being
adequately diversified pursuant to Section 817(h) of the Internal Revenue
Code of 1986, as amended ("Code") and the regulations thereunder. No
shares of any Portfolio will be sold directly to the general public.
1.4. The Fund and the Distributor will not sell shares of the Portfolios to any
insurance company or separate account unless an agreement containing
provisions substantially the same as this Agreement is in effect to govern
such sales.
1.5. Upon receipt of a request for redemption in proper form from the Company,
the Fund agrees to redeem any full or fractional shares of the Portfolios
held by the Company, ordinarily executing such requests on each business
day at the net asset value next computed after receipt and acceptance by
the Fund or its agent of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption, consistent with
Section 22(e) of the 1940 Act and any rules thereunder. Such redemption
shall be paid consistent with applicable rules of the SEC and procedures
and policies of the Fund as described in the current prospectus.
1.6. The Company agrees to purchase and redeem the shares of each Portfolio in
accordance with the provisions of the current prospectus for the Fund.
1.7. The Company shall pay for shares of the Portfolios on the same day that it
places an order to purchase shares of the Portfolios. Payment shall be in
federal funds transmitted by wire.
1.8. Issuance and transfer of shares of the Portfolios will be by book entry
only unless otherwise agreed by the Fund. Stock certificates will not be
issued to the Company or the Separate
<PAGE>
Accounts unless otherwise agreed by the Fund. Shares ordered from the Fund
will be recorded in an appropriate title for the Separate Accounts or the
appropriate subaccounts of the Separate Accounts.
1.9. The Fund shall promptly furnish notice (by wire or telephone, followed by
written confirmation) to the Company of any income dividends or capital
gain distributions payable on the shares of the Portfolios. The Company
hereby elects to reinvest in the Portfolios all such dividends and
distributions as are payable on a Portfolio's shares and to receive such
dividends and distributions in additional shares of the Portfolio. The
Company reserves the right to revoke this election in writing and to
receive all such dividends and distributions in cash. The Fund shall
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.10. The Fund shall instruct its recordkeeping agent to advise the Company on
each business day of the net asset value per share for each Portfolio as
soon as reasonably practical after the net asset value per share is
calculated.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it is taxed
as an insurance company under Subchapter L of the Code.
2.2. The Company represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account
under the Arizona Insurance Code, and that each of the Separate Accounts
is a validly existing segregated asset account under applicable federal
and state law.
2.3. The Company represents and warrants that the Variable Contracts issued by
the Company or interests in the Separate Accounts under such Variable
Contracts (1) are or, prior to issuance, will be registered as securities
under the Securities Act of 1933 ("1933 Act") or, alternatively (2) are
not registered because they are properly exempt from registration under
the 1933 Act or will be offered exclusively in transactions that are
properly exempt from registration under the 1933 Act.
2.4. The Company represents and warrants that each of the Separate Accounts (1)
has been registered as a unit investment trust in accordance with the
provisions of the 1940 Act or, alternatively (2) has not been registered
in proper reliance upon an exclusion from registration under the 1940 Act.
2.5. The Company represents that it believes, in good faith, that the Variable
Contracts issued by the Company are currently treated as annuity contracts
or life insurance policies (which may include modified endowment
contracts), whichever is appropriate, under applicable provisions of the
Code.
<PAGE>
2.6. The Company represents and warrants that any of its Separate Accounts that
fund variable life insurance contracts and that are registered with the
SEC as investment companies rely on the exemptions provided by Rule 6e-
3(T), or any successor thereto, and not on Rule 6e-2 under the 1940 Act.
2.7. The Fund represents and warrants that it is duly organized as a business
trust under the laws of the Commonwealth of Massachusetts, and is in good
standing under applicable law.
2.8. The Fund represents and warrants that the shares of the Portfolios are
duly authorized for issuance in accordance with applicable law and that
the Fund is registered as an open-end management investment company under
the 1940 Act.
2.9. The Fund represents that it believes, in good faith, that the Portfolios
currently comply with the diversification provisions of Section 817(h) of
the Code and the regulations issued thereunder relating to the
diversification requirements for variable life insurance policies and
variable annuity contracts.
2.10. The Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. General Duties
3.1. The Fund shall take all such actions as are necessary to permit the sale
of the shares of each Portfolio to the Separate Accounts, including
maintaining its registration as an investment company under the 1940 Act,
and registering the shares of the Portfolios sold to the Separate Accounts
under the 1933 Act for so long as required by applicable law. The Fund
shall amend its Registration Statement filed with the SEC under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of the shares of the Portfolios. The Fund shall
register and qualify the shares for sale in accordance with the laws of
the various states to the extent deemed necessary by the Fund or the
Distributor.
3.2. The Fund shall make every effort to maintain qualification of each
Portfolio as a Regulated Investment Company under Subchapter M of the Code
(or any successor or similar provision) and shall notify the Company
immediately upon having a reasonable basis for believing that a Portfolio
has ceased to so qualify or that it might not so qualify in the future.
3.3. The Fund shall make every effort to enable each Portfolio to comply with
the diversification provisions of Section 817(h) of the Code and the
regulations issued thereunder relating to the diversification requirements
for variable life insurance policies and variable annuity contracts and
any prospective amendments or other modifications to Section 817 or
regulations thereunder, and shall notify the Company immediately upon
having a reasonable basis for believing that any Portfolio has ceased to
comply.
3.4. The Fund shall be entitled to receive and act upon advice of its General
Counsel or its outside counsel in meeting the requirements specified in
Sections 3.2 and 3.3 hereof.
<PAGE>
3.5. The Company shall take all such actions as are necessary under applicable
federal and state law to permit the sale of the Variable Contracts issued
by the Company, including registering each Separate Account as an
investment company to the extent required under the 1940 Act, and
registering the Variable Contracts or interests in the Separate Accounts
under the Variable Contracts to the extent required under the 1933 Act,
and obtaining all necessary approvals to offer the Variable Contracts from
state insurance commissioners.
3.6. The Company shall make every effort to maintain the treatment of the
Variable Contracts issued by the Company as annuity contracts or life
insurance policies, whichever is appropriate, under applicable provisions
of the Code, and shall notify the Fund and the Distributor immediately
upon having a reasonable basis for believing that such Variable Contracts
have ceased to be so treated or that they might not be so treated in the
future.
3.7. The Company shall offer and sell the Variable Contracts issued by the
Company in accordance with applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Rules of Fair Practice, and state law
respecting the offering of variable life insurance policies and variable
annuity contracts.
3.8. The Distributor shall sell and distribute the shares of the Portfolios of
the Fund in accordance with the applicable provisions of the 1933 Act, the
1934 Act, the 1940 Act, the NASD Rules of Fair Practice, and state law.
3.9. A majority of the Board of Trustees of the Fund shall consist of persons
who are not "interested persons" of the Fund ("disinterested Trustees"),
as defined by Section 2(a)(19) of the 1940 Act, except that if this
provision of this Section 3.9 is not met by reason of the death,
disqualification, or bona fide resignation of any Trustee or Trustees,
then the operation of this provision shall be suspended (a) for a period
of 45 days if the vacancy or vacancies may be filled by the Fund's Board;
(b) for a period of 60 days if a vote of shareholders is required to fill
the vacancy or vacancies; or (c) for such longer period as the SEC may
prescribe by order upon application.
3.10. The Company agrees to provide, as promptly as possible, notice to the Fund
and to the Distributor if the Company has reason to know about a meeting
of some or all of the owners of the Variable Contracts or shareholders of
the Fund, where the agenda or purpose of the meeting relates, in whole or
in part, to the Fund and that has not been called by the Fund's Board of
Trustees (and which shall not include a vote of Variable Contract Owners
having an interest in a Separate Account to substitute shares of another
investment company for corresponding shares of the Fund or a Portfolio, as
described in Section 9(e) and to which the notice provision of Section 9.2
shall apply). In such an event, the Company agrees to distribute proxy
statements and any additional solicitation materials upon the request of
the Fund or the Distributor to the owners of the Variable Contracts issued
by the Company at least 30 days prior to the meeting. The Company further
agrees that it shall take no action, directly or indirectly, in
furtherance of shareholders of the Fund or Contract Owners taking any
action with respect to the Fund by written consent and without a meeting.
<PAGE>
3.11. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including,
without limitation, the SEC, the NASD, and state insurance regulators) and
shall permit such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this Agreement
or the transactions contemplated hereby.
ARTICLE IV. Potential Conflicts
4.1. The Fund's Board of Trustees shall monitor the Fund for the existence of
any material irreconcilable conflict (1) between the interests of owners
of variable annuity contracts and variable life insurance policies, and
(2) between the interests of owners of Variable Contracts ("Variable
Contract Owners") issued by different Participating Insurance Companies
that invest in the Fund. An irreconcilable material conflict may arise for
a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretive letter, or any similar
action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of the Fund or any Portfolio are being
managed; or (e) a decision by a Participating Insurance Company to
disregard the voting instructions of Variable Contract Owners.
4.2. The Company agrees that it shall be responsible for reporting any
potential or existing conflicts to the Fund's Board of Trustees. The
Company will be responsible for assisting the Board of Trustees of the
Fund in carrying out its responsibilities under this agreement, by
providing the Board with all information reasonably necessary for the
Board to consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Board whenever Variable
Contract Owner voting instructions are disregarded. The Company shall
carry out its responsibility under this Section 4.2 with a view only to
the interests of the Variable Contract Owners.
4.3 The Company agrees that in the event that it is determined by a majority
of the Board of Trustees of the Fund or a majority of the Fund's
disinterested Trustees that a material irreconcilable conflict exists, the
Company shall, to the extent reasonably practicable (as determined by a
majority of the disinterested Trustees of the Board of the Fund), take
whatever steps are necessary to eliminate the irreconcilable material
conflict, including: (1) withdrawing the assets allocable to some or all
of the Separate Accounts from the Fund or any Portfolio and reinvesting
such assets in a different investment medium, which may include another
portfolio of the Fund, or submitting the question of whether such
segregation should be implemented to a vote of all affected Variable
Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., contract Owners of Variable Contracts issued by
one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Variable Contract Owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account. If a material
irreconcilable conflict arises because of the Company's decision to
disregard Variable Contract Owners' voting instructions and
<PAGE>
that decision represents a minority position or would preclude a majority
vote, the Company shall be required, at the Fund's election, to withdraw
the Separate Accounts' investment in the Fund, and no charge or penalty
will be imposed as a result of such withdrawal. The Fund shall neither be
required to bear the costs of remedial actions taken to remedy a material
irreconcilable conflict nor shall it be requested to pay a higher
investment advisory fee for the sole purpose of covering such costs. In
addition, no Variable Contract Owner shall be required directly to
indirectly to bear the direct or indirect costs of remedial actions taken
to remedy a material irreconcilable conflict. A new funding medium for any
Variable Contract need not be established pursuant to this Section 4.3, if
an offer to do so has been declined by vote of a majority of Variable
Contract Owners materially adversely affected by the irreconcilable
material conflict. All reports received by the Fund's Board of Trustees of
potential or existing conflicts, and all Board action with regard to
determining the existence of a conflict, notifying Participating Insurance
Companies and the Fund's investment adviser of a conflict, and determining
whether any proposed action adequately remedies a conflict,, shall be
properly recorded life insurance policies, and (2) between the interests
of owners of Variable Contracts ("Variable Contract Owners") issued by
different Participating Insurance Companies that invest in the Fund. An
irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b)
a change in applicable federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling, no-action or
interpretive letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of the Fund or any Portfolio are being managed; or (e) a
decision by a Participating Insurance Company to disregard the voting
instructions of Variable Contract Owners.
4.2 The Company agrees that it shall be responsible for reporting any
potential or existing conflicts to the Fund's Board of Trustees. The
Company will be responsible for assisting the Board of Trustees of the
Fund in carrying out its responsibilities under this Agreement, by
providing the Board with all information reasonably necessary for the
Board to consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Board whenever Variable
Contract Owner voting instructions are disregarded. The Company shall
carry out its responsibility under this Section 4.2 with a view only to
the interests of the Variable Contract Owners.
4.3 The Company agrees that in the event that it is determined by a majority
of the Board of Trustees of the Fund or a majority of the Fund's
disinterested Trustees that a material irreconcilable conflict exists, the
Company shall, to the extent reasonably practicable (as determined by a
majority of the disinterested Trustees of the Board of the Fund), take
whatever steps are necessary to eliminate the irreconcilable material
conflict, including: (1) withdrawing the assets allocable to some or all
of the Separate Accounts from the Fund or any Portfolio and reinvesting
such assets in a different investment medium, which may include another
portfolio of the Fund, or submitting the question of whether such
segregation should be implemented to a vote of all affected Variable
Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., Contract Owners of Variable Contracts issued by
one or more Participating Insurance Companies) that votes in
<PAGE>
favor of such segregation, or offering to the affected Variable Contract
Owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. If a
material irreconcilable conflict arises because of the Company's decision
to disregard Variable Contract Owners' voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company shall be required, at the Fund's election, to withdraw the
Separate Accounts' investment in the Fund, and no charge or penalty will
be imposed as a result of such withdrawal. The Fund shall neither be
required to bear the costs of remedial actions taken to remedy a material
irreconcilable conflict nor shall it be requested to pay a higher
investment advisory fee for the sole purpose of covering such costs. In
addition, no Variable Contract Owner shall be required directly or
indirectly to bear the direct or indirect costs of remedial actions taken
to remedy a material irreconcilable conflict. A new funding medium for any
Variable Contract need not be established pursuant to this Section 4.3, if
an offer to do so has been declined by vote of a majority of Variable
Contract Owners materially adversely affected by the irreconcilable
material conflict. All reports received by the Fund's Board of Trustees of
potential or existing conflicts, and all Board action with regard to
determining the existence of a conflict, notifying Participating Insurance
Companies and the Fund's investment adviser of a conflict, and determining
whether any proposed action adequately remedies a conflict, shall be
properly recorded in the minutes of the Board of Trustees of the Fund or
other appropriate records, and such minutes or other records shall be made
available to the SEC upon request. The Company and the Fund shall carry
out their responsibilities under this Section 4.3 with a view only to the
interests of the Variable Contract Owners.
4.4 The Board of Trustees of the Fund shall promptly notify the Company in
writing of its determination of the existence of an irreconcilable
material conflict and its implications.
ARTICLE V. Prospectuses and Proxy Statements; Voting
5.1 The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by
the Company as required to be distributed to such Variable Contract Owners
under applicable federal or state law.
5.2 The Distributor shall provide the Company with as many copies of the
current prospectus of the Fund as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in
type or in camera-ready copy) and other assistance as is reasonably
necessary in order for the Company to print together in one document the
current prospectus for the Variable Contracts issued by the Company and
the current prospectus for the Fund. The Fund shall bear the expense of
printing copies of its current prospectus that will be distributed to
existing Variable Contract Owners, and the Company shall bear the expense
of printing copies of the Fund's prospectus that are used in connection
with offering the Variable Contracts issued by the Company.
5.3 The Fund and the Distributor shall provide (1) at the Fund's expense, one
copy of the Fund's current Statement of Additional Information ("SAI") to
the Company and to any owner of
<PAGE>
a Variable Contract issued by the Company who requests such SAI, (2) at
the Company's expense, such additional copies of the Fund's current SAI as
the Company shall reasonably request and that the Company shall require in
accordance with applicable law in connection with offering the Variable
Contracts issued by the Company.
5.4 The Fund, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other communications
to shareholders in such quantity as the Company shall reasonably require
for purposes of distributing to owners of Variable Contracts issued by the
Company. The Fund, at the Company's expense, shall provide the Company
with copies of its periodic reports to shareholders and other
communications to shareholders in such quantity as the Company shall
reasonably request for use in connection with offering the Variable
Contracts issued by the Company. If requested by the Company in lieu
thereof, the Fund shall provide such documentation (including a final copy
of the Fund's proxy materials, periodic reports to shareholders and other
communications to shareholders, as set in type or in camera-ready copy)
and other assistance as reasonably necessary in order for the Company to
print such shareholder communications for distribution to owners of
Variable Contracts issued by the Company.
5.5 For so long as the SEC interprets the 1940 Act to require pass-through
voting by Participating Insurance Companies whose Separate Accounts are
registered as investment companies under the 1940 Act, the Company shall
vote shares of each Portfolio of the Fund held in a Separate Account or a
subaccount thereof, whether or not registered under the 1940 Act, at
regular and special meetings of the Fund in accordance with instructions
timely received by the Company (or its designated agent) from owners of
Variable Contracts funded by such Separate Account or subaccount thereof
having a voting interest in the Portfolio. The Company shall vote shares
of a Portfolio of the Fund held in a Separate Account or a subaccount
thereof that are attributable to the Variable Contracts as to which no
timely instructions are received, as well as shares held in such Separate
Account or subaccount thereof that are not attributable to the Variable
Contracts and owned beneficially by the Company (resulting from charges
against the Variable Contracts or otherwise), in the same proportion as
the votes cast by owners of the Variable Contracts funded by that Separate
Account or subaccount thereof having a voting interest in the Portfolio
from whom instructions have been timely received. The Company shall vote
shares of each Portfolio of the Fund held in its general account, if any,
in the same proportion as the votes cast with respect to shares of the
Portfolio held in all Separate Accounts of the Company or subaccounts
thereof, in the aggregate.
5.6 The Fund shall disclose in its prospectus that (1) shares of the
Portfolios of the Fund are offered to affiliated or unaffiliated insurance
company separate accounts which fund both annuity and life insurance
contracts, (2) due to differences in tax treatment or other
considerations, the interests of various Variable Contract Owners
participating in the Fund or a Portfolio might at some time be in
conflict, and (3) the Board of Trustees of the Fund will monitor for any
material conflicts and determine what action, if any, should be taken. The
Fund hereby notifies the Company that prospectus disclosure may be
appropriate regarding potential risks of offering shares of the Fund to
separate accounts funding both
<PAGE>
variable annuity contracts and variable life insurance policies and to
separate accounts funding Variable Contracts of unaffiliated life
insurance companies.
ARTICLE VI. Sales Material and Information
6.1 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material
in which the Fund (or any Portfolio thereof) or its investment adviser or
the Distributor is named, and no such sales literature or other promotional
material shall be used without the approval of the Fund and the Distributor
or the designee of either.
6.2 The Company agrees that neither it nor any of its affiliates or agents
shall give any information or make any representations or statements on
behalf of the Fund or concerning the Fund other than the information or
representations contained in the Registration Statement or prospectus for
the Fund shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee and by the Distributor or its
designee, except with the permission of the Fund or its designee and the
Distributor or its designee.
6.3 The Fund or the Distributor or the designee of either shall furnish to the
Company or its designee, each piece of sales literature or other
promotional material in which the Company or its Separate accounts are
named, and no such material shall be used without the approval of the
Company or its designee.
6.4 The Fund and the Distributor agree that each and the affiliates and agents
of each shall not give any information or make any representations on
behalf of the Company or concerning the Company, the Separate Accounts, or
the Variable Contracts issued by the Company, other than the information or
representations contained in a registration statement or prospectus for
such Variable Contracts, as such registration statement and prospectus may
be amended or supplemented from time to time, or in reports for the
Separate Accounts or prepared for distribution to owners of such Variable
Contracts, or in sales literature or other promotional material approved by
the Company or its designee, except with the permission of the Company.
6.5 The Fund will provide to the Company at least one complete copy of all
prospectuses, Statements of Additional Information, reports, proxy
statements and other voting solicitation materials, and all amendments and
supplements to any of the above, that relate to the Fund or its shares,
promptly after the filing of such document with the SEC or other regulatory
authorities.
6.6 The Company will provide to the Fund at least one complete copy of all
prospectuses (which shall include an offering memorandum if the Variable
Contracts issued by the Company or interests therein are not registered
under the 1933 Act), Statements of Additional Information, reports,
solicitations for voting instructions, and all amendments or supplements
<PAGE>
to any of the above, that relate to the Variable Contracts issued by the
Company or the Separate Accounts promptly after the filing of such document
with the SEC or other regulatory authority.
6.7 For purposes of this Article VI, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such
as periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, computerized media, or other
public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public,
including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials
or other communications distributed or made generally available to some or
all agents or employees.
ARTICLE VII. Indemnification
7.1 Indemnification By The Company
7.1(a). The Company agrees to indemnify and hold harmless the Fund, each of
its Trustees and officers, any affiliated person of the Fund within
the meaning of Section 2(a)(3) of the 1940 Act, and the Distributor
(collectively, the "Indemnified Parties" for purposes of this
Section 7.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation expenses (including legal and
other expenses), to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or litigation
expenses are related to the sale or acquisition of the Fund's
shares or the Variable Contracts issued by the Company and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus (which shall include
an offering memorandum) for the Variable Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Company by or on behalf of the Fund for use in the
registration statement or prospectus for the Variable
Contracts issued by the Company or sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of such Variable Contracts or Fund shares; or
(ii) arise out of or as a result of any statement or
representation (other than statements or representations
contained in the registration statement,
<PAGE>
prospectus or sales literature of the Fund not supplied by the
Company or persons under its control) or wrongful conduct of the
Company or any of its affiliates, employees or agents with
respect to the sale or distribution of the Variable Contracts
issued by the Company or the Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of his or her duties or by reason of his or her reckless
disregard of obligations or duties under this Agreement or to the
Fund.
7.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless
such Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Party shall have received notice
of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
7.1(d). The Indemnified Parties shall promptly notify the Company of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the
Variable Contracts issued by the Company or the operation of the Fund.
<PAGE>
7.2 Indemnification By The Distributor
7.2(a). The Distributor agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who
is an affiliated person of the Company within the meaning of
Section 2(a)(3) of the 1940 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7.2) against any and all
losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Distributor) or
litigation expenses (including legal and other expenses) to which
the Indemnified Parties may become subject under any statute, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or litigation expenses are related to the sale or
acquisition of the Fund's shares or the Variable Contracts issued
by the Company and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus or sales literature
of the Fund (or any amendment or supplement to any of the
foregoing),or arise out of or are based upon the omission or
the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Distributor or the Fund or the
designee of either by or on behalf of the Company for use in
the registration statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable
Contracts issued by the Company or Fund shares; or
(ii) arise out of or as a result of any statement or
representation (other than statements or representations
contained in the registration statement, prospectus or sales
literature for the Variable Contracts not supplied by the
Distributor or any employees or agents thereof) or wrongful
conduct of the Fund or Distributor, or the affiliates,
employees, or agents of the Fund or the Distributor with
respect to the sale or distribution of the Variable Contracts
issued by the Company or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature covering the Variable
Contracts issued by the Company, or any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund;
<PAGE>
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
7.2(b). The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities
or litigation expenses to which an Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of his or her duties or by
reason of his or her reckless disregard of obligations and duties
under this Agreement or to the Company or the Separate Accounts.
7.2(c). The Distributor shall not be liable under this indemnification
provision with respect to any claim made against the Indemnified
Party unless such Party shall have notified the Distributor in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such Party
shall have received notice of such service on any designated
agent), but failure to notify the Distributor of any such claim
shall not relieve the Distributor from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this Indemnification Provision. In
case any such action is brought against the Indemnified Parties,
the Distributor will be entitled to participate, at its own
expense, in the defense thereof. The Distributor also shall be
entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Distributor
to such party of the Distributor's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Distributor will not
be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.2(d). The Company shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of
its officers or directors in connection with the issuance or sale
of the Variable Contracts issued by the Company or the operation of
the Separate Accounts.
ARTICLE VIII. Applicable Law
8.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Arizona.
8.2 This Agreement shall be subject to the provisions of the 1933, 1934, and
1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant (including, but not limited to, the Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE IX. Termination
<PAGE>
9.1. This Agreement shall terminate:
(a) at the option of any party upon 180 days advance written notice to the
other parties; or
(b) at the option of the Company if shares of the Portfolios are not
reasonably available to meet the requirements of the Variable Contracts
issued by the Company, as determined by the Company, and upon prompt
notice by the Company to the other parties; or
(c) at the option of the Fund or the Distributor upon institution of formal
proceedings against the Company or its agent by the NASD, the SEC, or
any state securities or insurance department or any other regulatory
body regarding the Company's duties under this Agreement or related to
the sale of the Variable Contracts issued by the Company, the operation
of the Separate Accounts, or the purchase of the Fund shares; or
(d) at the option of the Company upon institution of formal proceedings
against the Fund or the Distributor by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body; or
(e) upon requisite vote of the Variable Contract Owners having an interest
in the Separate Accounts (or any subaccounts thereof) to substitute the
shares of another investment company for the corresponding shares of
the Fund or a Portfolio in accordance with the terms of the Variable
Contracts for which those shares had been selected to serve as the
underlying investment media; or
(f) in the event any of the shares of a Portfolio are not registered,
issued or sold in accordance with applicable state and/or federal law,
or such law precludes the use of such shares as the underlying
investment media of the Variable Contracts issued or to be issued by
the Company; or
(g) by any party to the Agreement upon a determination by a majority of the
Trustees of the Fund, or a majority of its disinterested Trustees, that
an irreconcilable conflict exists; or
(h) at the option of the Company if the Fund or a Portfolio fails to meet
the diversification requirements specified in Section 3.3 hereof.
9.2 Each party to this Agreement shall promptly notify the other parties to the
Agreement of the institution against such party of any such formal
proceedings as described in Sections 9.1(c) and (d) hereof. The Company
shall give 60 day's prior written notice to the Fund of the date of any
proposed vote of Variable Contract Owners to replace the Fund's shares as
described in Section 9.1(e) hereof.
<PAGE>
9.3 Except as necessary to implement Variable Contract Owner initiated
transactions, or as required by state insurance laws or regulations, the
Company shall not redeem Fund shares attributable to the Variable Contracts
issued by the Company (as opposed to Fund shares attributable to the
Company's assets held in the Separate Accounts), and the Company shall not
prevent Variable Contract Owners from allocating payments to a Portfolio,
until 60 days after the Company shall have notified the Fund or Distributor
of its intention to do so.
9.4 If this Agreement terminates, any provision of this Agreement necessary to
the orderly windup of business under it will remain in effect as to that
business, after termination.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to the Fund:
Pacific Select Fund
Attn: SEC Regulatory Compliance Department
700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92260
If to the Distributor:
Pacific Mutual Distributors, Inc.
Attn: Compliance Officer
700 Newport Center Drive, NB-3
Newport Beach, CA 92660
If to the Company:
Pacific Life & Annuity Company
c/o Pacific Life Insurance Company
700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92260
ARTICLE XI. Miscellaneous
11.1 The Fund and the Company agree that if and to the extent Rule 6e-3(T) under
the 1940 Act is amended or if Rule 6e-3 is adopted in final form, to the
extent applicable, the Fund and the Company shall each take such steps as
may be necessary to comply with the Rule as amended or adopted in final
form.
<PAGE>
11.2 A copy of the Fund's Agreement and Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts and notice is hereby given
that the Agreement has been executed on behalf of the Fund by a Trustee of
the Fund in his or her capacity as Trustee and not individually. The
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any Trustee, officer or
shareholder of the Fund individually.
11.3 Nothing in this Agreement shall impede the Fund's Trustees or shareholders
of the shares of the Fund's Portfolios from exercising any of the rights
provided to such Trustees or shareholders in the Fund's Agreement and
Declaration of Trust, as amended, a copy of which will be provided to the
Company upon request.
11.4 It is understood that the name "Pacific", "Pacific Mutual", "Pacific Life",
or "Pacific Select" or any derivative thereof or logo associated with that
name is the valuable property of the Distributor and its affiliates, and
that the Company has the right to use such name (or derivative or logo)
only so long as this Agreement is in effect. Upon termination of this
Agreement the Company shall forthwith cease to use such name (or derivative
or logo).
11.5 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.6 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
11.7 If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.8 This Agreement may not be assigned by any party to the Agreement except
with the written consent of the other parties to the Agreement.
Notwithstanding the forgoing, the Company may assign some or all of its
duties under this Agreement to Pacific Life Insurance Company upon such
terms and conditions as are deemed appropriate between the Company and
Pacific Life Insurance Company.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC SELECT FUND
Attest: By:
- ---------------------------------- ---------------------------------
Name: Name: Thomas C. Sutton
Title: President
PACIFIC MUTUAL DISTRIBUTORS, INC.
Attest: By:
- ---------------------------------- ---------------------------------
Name: Name:
Title: President
PACIFIC LIFE & ANNUITY COMPANY
Attest: By:
- ---------------------------------- ---------------------------------
Name: Name:
Title: President
<PAGE>
EXHIBIT A
PACIFIC SELECT EXEC SEPARATE ACCOUNT
SEPARATE ACCOUNT A
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to be executed
by their Officers designated below on this ____ day of ____________, 1998.
PACIFIC SELECT FUND
Attest: By:
- ---------------------------------- ---------------------------------
Name: Name: Thomas C. Sutton
Title: President
PACIFIC MUTUAL DISTRIBUTORS, INC.
Attest: By:
- ---------------------------------- ---------------------------------
Name: Name:
Title: President
PACIFIC LIFE & ANNUITY COMPANY
Attest: By:
- ---------------------------------- ---------------------------------
Name: Name:
Title: President
<PAGE>
EXHIBIT B
MONEY MARKET PORTFOLIO
MANAGED BOND PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
HIGH YIELD BOND PORTFOLIO
GROWTH PORTFOLIO
GROWTH LT PORTFOLIO
EQUITY INCOME PORTFOLIO
MULTI-STRATEGY PORTFOLIO
EQUITY PORTFOLIO
BOND AND INCOME PORTFOLIO
EQUITY INDEX PORTFOLIO
INTERNATIONAL PORTFOLIO
EMERGING MARKETS PORTFOLIO
AGGRESSIVE EQUITY PORTFOLIO
MID-CAP VALUE PORTFOLIO
LARGE-CAP VALUE PORTFOLIO
SMALL-CAP INDEX PORTFOLIO
REIT PORTFOLIO
<PAGE>
SERVICES AGREEMENT
THIS Services Agreement ("Agreement") is made this day of 1999, by
and between Pacific Life & Annuity Co. ("PL&A"), an Arizona corporation, and
Pacific Life Insurance Company (PLIC), a California corporation.
WHEREAS, PL&A desires to provide such administrative services for certain
individual life, individual annuity, and institutional product contracts; and
WHEREAS, PLIC desires to provide certain administrative services for PL&A
on the following terms and conditions;
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties do mutually agree as follows:
1. Services. Subject to the terms and conditions set forth in this Agreement,
PLIC agrees with respect to certain PL&A contracts, specifically, any and
all individual life, individual annuity, and institutional product contracts
(collectively "the Contracts"), to provide the administrative services
described in Schedule A, attached hereto and made a part hereof, together
with such other services that PL&A may reasonably request (collectively "the
Services") with respect to the Contracts.
2. Charges for Services. As consideration for the Services provided by PLIC
pursuant to this Agreement, PL&A agrees to pay PLIC a fee based on an
estimation of actual costs, determined in a fair and reasonable manner,
which costs will not include a profit factor and which will be allocated
equitably in accordance with customary insurance accounting practices, where
applicable, consistently applied.
3. Subcontractors. PLIC may subcontract with any subsidiary or affiliate of
PLIC to provide Services; provided that subcontracting shall not result in
an increase in the amount charged for such Services or a decrease in the
quality of such Services provided.
4. Indemnification. PL&A agrees to defend, indemnify and hold PLIC harmless
from and against all costs, reasonable expenses, losses, damages, attorneys'
fees, claims, obligations and liabilities imposed upon, incurred or asserted
against PLIC which arise out of or in any manner are connected with
Contracts administered by PLIC under this Agreement, except if the conduct
of PLIC constitutes an intentional tort, reckless conduct, gross negligence
or bad faith, or if PLIC issues a Contract which is inconsistent with the
approved policy specifications.
<PAGE>
Page 2
Services Agreement
5. Underwriting and Claims Services. All underwriting and claims services
provided to PL&A under this Agreement are to be based upon the written
criteria, standard and guidelines of PL&A. PL&A shall have the ultimate and
final authority over decisions and policies relating to the Contracts; to
include but not be limited to the acceptance, rejection or canceling of
risks relating to or with respect to such Contracts.
6. Supervision by the Company. PLIC acknowledges that (a) the Board of
Directors and officers of PL&A are vested with the power, authority, and
responsibility for managing the business and affairs of PL&A, and (b) any
and all actions taken or advice or services provided pursuant to this
Agreement by PLIC are subject to the continuous supervision and approval of
the Board of Directors and the officers of PL&A.
7. Billing. All charges and advances made pursuant to this Agreement shall be
billed by PLIC on a timely basis in the ordinary course of business and
shall be 100 percent repaid to PLIC in the ordinary course of business, as
soon as practicable. Interest may be assessed by PLIC at a market-based
short-term borrowing rate. Billings shall be accompanied by sufficient
documentation to support the charges and to meet all state insurance
regulatory requirements. Statements are subject to final adjustment only if
mutually agreed upon by both parties.
8. Accounting Records and Documents.
(a) PLIC shall be responsible for maintaining full and accurate accounts and
records of all services rendered pursuant to this Agreement. PLIC shall keep
such account and records insofar as they pertain to the computation of
charges hereunder available at its principal offices for audit, inspection,
and copying, during reasonable business hours, by PL&A and persons
authorized by it and any governmental agency having jurisdiction over PL&A.
(b) All books, records and files established and maintained by PLIC by reason of
its performance under this Agreement which, absent this Agreement, would
have been held by PL&A, shall be deemed the property of PL&A, and shall be
subject to audit, inspection, and copying, during reasonable business hours,
by PL&A and persons authorized by it and any governmental agency having
jurisdiction over PL&A. All such books, records and files shall be promptly
transferred to PL&A by PLIC upon termination of this Agreement, at PL&A's
expense.
<PAGE>
Page 3
Services Agreement
9. Notices. All written notices, requests, and other communications hereunder
shall be delivered to the addresses set forth on the signature page of this
Agreement, or any address hereinafter agreed upon by the parties.
10. Governing Law. This Agreement shall be construed and governed in accordance
with the laws of the State of Arizona.
11. Entire Agreement; Amendment. This Agreement shall constitute the entire
agreement among the parties and supersedes all prior agreements and
understandings, whether written or verbal, to the extent such agreements
pertain to the rights and responsibilities set forth herein.
Notwithstanding the foregoing, this Agreement does not supersede either of
the Pacific Life Insurance Company Administrative Services Agreement with
Pacific Life Insurance Company and its Subsidiaries and Affiliates dated
September 1, 1997 and the Investment Management Agreement dated January 1,
1990. This Agreement may be amended only in a writing executed by all
parties.
12. Arbitration. In the event any dispute arises between the parties related in
any way to this Agreement on which agreement between the parties cannot be
reached, the dispute shall be decided by arbitration in accordance with
procedures agreed upon by the parties after such dispute arises.
13. Termination. This Agreement may be terminated upon 60 days written notice
by written agreement of the parties hereto. PL&A may terminate the contract
in the event PLIC fails to perform its responsibilities hereunder in a
satisfactory manner.
14. Assignment. Except as set forth in Section 3 hereof, PLIC cannot assign its
duties or obligation, in whole or in part, under this Agreement to any
other firm, organization or individuals without the express written consent
of PL&A, which consent shall not be unreasonably withheld.
15. Severability. To the extent this Agreement may be in conflict with any
applicable law or regulation, this Agreement shall be construed in a manner
consistent with such law or regulation. The invalidity or illegality of any
provision of this Agreement shall not be deemed to affect the validity or
legality of any other provision of this Agreement.
<PAGE>
Page 4
Services Agreement
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
PACIFIC LIFE & ANNUITY CO.
17360 Brookhurst
Fountain Valley, CA 92708
By: _____________________ By: _________________________
Title: __________________ Title: ______________________
PACIFIC LIFE INSURANCE COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
By: _____________________ By: _________________________
Title: __________________ Title: ______________________
<PAGE>
SCHEDULE A
SERVICES PROVIDED BY PLIC
PURSUANT TO THIS AGREEMENT FOR THE CONTRACTS
1. Marketing
Preparation and distribution of illustrations and marketing materials.
Communications with the field.
Contest qualification and production credit tracking.
2. Compliance
Provide contracts and policies in compliance with applicable state and
federal laws.
File PL&A contracts and policies with insurance departments and other
regulatory agencies.
3. Policy Administration
Prepare, in accordance with Section 5, and deliver and maintain contracts
and policies.
Obtain clients acceptance of contracts and policies.
Maintain originals of all contracts and policies.
Provide customer service in relation to all contracts and policies.
Prepare and issue reports required by state and federal law.
4. Accounting and Financial Reporting
Prepare billings and collect premiums and other fees in relation to
contracts and policies.
Provide accounting for contracts and policies.
Provide financial reporting results for inclusion in PL&A financial
statements.
Provide valuation and compliance with valuation and actuarial requirements
for business subject to this Agreement.
Provide support for PL&A examinations and audits.
5. Claims Processing
In accordance with Section 5, process all claims arising under policies and
contracts.
Maintain claim documents, files and related information.
Maintain and update beneficiary designations and life assignments.
Control and maintain all draft and check stock, claim forms and other forms
and documents incidental to claims processing.
Maintain claims procedural manuals and other instructions.
Monitor claims for possible fraud.
<PAGE>
Page 2
Schedule A
6. Licensing and Commission Payment
Process and issue licenses and commission agreements, and pay applicable
fees.
Calculate and pay commissions.
Maintain commission payment information, and report such information as
required by applicable laws.
7. Separate Accounts
Provide services necessary for the maintenance of separate accounts,
including but not limited to state and federal regulations as applicable.
<PAGE>
Pacific Life & Annuity Company [Logo of PL&A]
Service Center
700 Newport Center Drive
Newport Beach, CA 92660
APPLICATION FOR LIFE INSURANCE
INSTRUCTIONS TO SOLICITING AGENT(S)
GENERAL INSTRUCTIONS
. Every appropriate section of the application must be fully completed prior to
signing the application. A blank application must never be signed.
. The application is color coded for easy completion. The following indicates
who must complete the various colored sections:
Blue Applicant
Gray Applicant or Agent must complete for NON-VARIABLE life products
only
Green Applicant or Agent must complete for VARIABLE life products
only
Burgundy Agent
. Changes noted on this application must be lined out and the new information
must be indicated and initialed by the Applicant in Sections A-E, Proposed
Insured(s) in Section F and Agent in Sections G-J. Changes made any other way
will be amended.
. The DISCLOSURE NOTICE TO APPLICANTS must be detached and given to the
Applicant. If the DISCLOSURE NOTICE TO APPLICANTS is not detached when the
application is received at PL&A, written verification that the Notice was
given to the Applicant will be required before the underwriting process can
begin.
. For "Survivor Life" type policies, the Second Insured is considered the
Additional Insured. All Additional Insured sections must be completed.
IMPORTANT SIGNATURE REQUIREMENTS
. The party initiating the application for life insurance is considered the
Applicant. Depending on the situation, the Applicant may also be the Insured
or Owner.
. The following parties must sign page 6 of the application:
Applicant
Proposed Insured (if other than Applicant)
Other Adult Proposed Insured (if applicable)
Child of age 18 and older (required in Pennsylvania)
Owner (if other than Proposed Insured or Applicant)
Soliciting Agent
. The Authorization on page 7 must be signed and dated by the Proposed Insured
and Other Adult Proposed Insured (if applicable). Underwriting cannot begin
without a signed Authorization.
. The Soliciting Agent(s) must sign on pages 6 and 10.
. If multiple Owners, then all Owners must sign on page 6 of the application.
. For corporate signatures, the signature and title of any authorized officer
other than the Proposed Insured is required and the full name of the
corporation must be shown on page 6.
. If policy is trust owned, trustee(s) must sign on page 6 of application on
the Signature of Applicant line indicating the title "Trustee" after the
signature. Owner designation, on page 1, must include name of trust, date of
trust, trustee(s) name, with the wording "successor or successors in trust".
UNDERWRITING REQUIREMENTS
. Underwriting requirements are based on the age of the Proposed Insured(s) and
amount applied for. Refer to the Life Underwriting Requirements Chart (not
attached) to determine the appropriate requirements.
. The Non-Medical is NOT part of this application. APPLICATION, PART II, Non-
Medical (AP9500-P2-NY) must be obtained separately. Note: Certain states will
have their own version.
AP9500-NY 85-21245-00 9/98
<PAGE>
INSTRUCTIONS TO SOLICITING AGENT(S)
________________________________________________________________________________
SECTION A - CLIENT INFORMATION
. Complete all Questions, unless a Question does not apply.
. If submitting money with the application, complete question 31A, B and C on
page 1. Also submit a Temporary Insurance Agreement (TIA) with the
application. The date on the application, check and TIA must all be the same
date.
. Money and the TIA must not be taken if:
(a) any health question on the TIA is answered "yes;"
(b) the proposed insured is under 15 days of age or is over 70 years old
(nearest birthday) on the date of the application.
If the face amount applied for is greater than the TIA maximum binding limit,
complete the application in the following manner:
1) Indicate the total face amount as applied for in question 31C. Also
indicate all applied for Optional Benefits here. If additional space is
needed, use Remarks section on page 2 or 3.
2) On page 2 (for non-variable products) or page 3 (for variable products),
question 3, complete with the maximum binding limit as noted on the TIA.
Leave question 5 "Optional Benefits" blank.
SECTION B - POLICY INFORMATION FOR NON-VARIABLE LIFE PRODUCTS
. Indicate product desired, base face amount, initial APB amount (if applied
for) and Total Initial Coverage in question 3. Whether APB is level or
varying, always indicate initial APB amount. This information can be found on
the Producer/Home Office Administration Worksheet page of the illustration.
. Indicate all other optional benefits in question 5.
. Complete only those questions that relate to the product (term/fixed or
flexible premium) applied for.
. If requesting an alternate or additional policy, complete the
Alternate/Additional Policy section on page 2.
SECTION C - POLICY INFORMATION FOR VARIABLE LIFE PRODUCTS
. Indicate product desired, base face amount, initial APB amount (if applied
for) and Total Initial Coverage in question 3. Whether APB is level or
varying, always indicate initial APB amount. This information can be found on
the Producer/Home Office Administration Worksheet page of the illustration.
. Indicate all other optional benefits in question 5.
. Answer all Suitability questions and include the date of the current Separate
Account Prospectus and Fund prospectus.
. If requesting an alternate or additional policy, complete the
Alternate/Additional Policy section on page 3. All suitability questions must
also be completed.
SECTION D - MEDICAL CERTIFICATION
. Complete only when submitting a medical examination from another insurance
company.
SECTION E - ADDITIONAL INSURED
. Complete if requesting an optional benefit such as APB, ART or SITR on an
Additional Insured. This section is also completed for "Survivor Life" type
policies.
SECTION F - GENERAL INFORMATION
. Complete every question of this section for the Proposed Insured and
Additional Insured (if applicable).
. If proposed Insured or Additional Insured (if applicable) participates in a
hazardous occupation/sport, complete a General Questionnaire form (not
attached) for each Insured that participates.
SECTION G - UNI-CHECK (AUTOMATIC BANK WITHDRAWAL)
. The Uni-Check billing method is available on a monthly payment frequency for
automatic checking account deductions. Complete this section if electing Uni-
Check. Also complete Uni-Check method and monthly mode on page 1, questions
30A and 30B. A voided check must be submitted with the application.
SECTION H - BUSINESS INSURANCE
. Complete only if applying for Business Insurance.
SECTION I - FOR PROPOSED INSURED UNDER THE AGE OF 16
. Complete this section if the application is submitted on a non-medical basis
and the Proposed Insured is under age 16. If the application is submitted on
a medical basis, a medical exam is necessary. Refer to the Life Underwriting
Requirements Chart to determine the appropriate requirements.
SECTION J - AGENT INFORMATION
. Complete every question of this section.
. The signature of the Soliciting Agent(s) is required at the bottom of page
10.
. Commissions are paid in accordance with the information presented at the
bottom of page 10. The Agent listed first is the Servicing Agent, unless
indicated otherwise in the remarks section. Always include Agent Code for
prompt payment of commission.
________________________________________________________________________________
AP9500-NY 85-21245-00 9/98
<PAGE>
APPLICATION FOR LIFE INSURANCE, PART I NEWBSAPPLC
Any person who knowingly and with intent to defraud [Logo of PL&A]
any insurance company or other person files an Service Center
application for insurance or statement of claim 700 Newport Center Drive
containing any materially false information or Newport Beach, CA 92660
conceals for the purpose of misleading, information
concerning any fact material thereto commits a
fraudulent insurance act, which is a crime and
subjects such person to criminal and civil penalties. NO.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION A CLIENT INFORMATION
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
1. Full Name (PRINT AS TO APPEAR IN POLICY/FIRST,MIDDLE,LAST) 2. Sex: 3. State of Birth 4. Date of Birth
___ Male MO. DAY YR.
___ Female
- ------------------------------------------------------------------------------------------------------------------------------------
5. Insurance Age 6. Drivers License No. & State 7. Social Security No. or Taxpayer I.D. No. 8. Telephone No.
( )
- ------------------------------------------------------------------------------------------------------------------------------------
9. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 10. How Long
- ------------------------------------------------------------------------------------------------------------------------------------
11. Employer Name and Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 12. How Long
- ------------------------------------------------------------------------------------------------------------------------------------
13. Occupation 14. Type of Business
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER IF OTHER THAN PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
15. Full Name (PRINT AS TO APPEAR IN POLICY/FIRST,MIDDLE,LAST) 16. Date of Birth 17. Relationship 18. Telephone No.
( )
- ------------------------------------------------------------------------------------------------------------------------------------
19. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 20. Social Security No. or Taxpayer I.D. No.
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY
- ------------------------------------------------------------------------------------------------------------------------------------
21. Primary Beneficiary (PRINT FULL NAME/FIRST, MIDDLE, LAST) 22. Relationship
- ------------------------------------------------------------------------------------------------------------------------------------
23. Address (STREET, CITY, COUNTY, STATE, ZIP CODE)
- ------------------------------------------------------------------------------------------------------------------------------------
24. Contingent Beneficiary (PRINT FULL NAME/FIRST, MIDDLE, LAST) 25. Relationship
- ------------------------------------------------------------------------------------------------------------------------------------
26. Address (STREET, CITY, COUNTY, STATE, ZIP CODE)
- ------------------------------------------------------------------------------------------------------------------------------------
PREMIUM NOTICES
- ------------------------------------------------------------------------------------------------------------------------------------
27. Send to: ___ Insured ___ Owner at ___ Residence ___ Business or Other (INDICATE BELOW)
- ------------------------------------------------------------------------------------------------------------------------------------
28. Name 29. Address (STREET, CITY, COUNTY, STATE, ZIP CODE)
- ------------------------------------------------------------------------------------------------------------------------------------
BILLING INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
30A. Method 30B. Frequency of Premium Reminder Notice
___ Single Premium or Premium Payment
___ Direct (annual, semi-annual or quarterly only) ___ Annual
___ List Bill (3 or more lives) ___ Semi-Annual
___ Uni-Check - Attach a Voided Check and complete Uni-check Section on Page 6. ___ Quarterly
(monthly only.) ___ Monthly
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT PAID WITH THIS APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
31A. Is cash or check tendered with this application? ___ Yes ___ No If Yes, show amount $______________________
If No, do not complete question below
B. Do you understand, accept and agree to the terms of the Temporary Insurance Agreement (TIA)? ___ Yes ___ No
C. If Yes, and a policy face amount is applied for which is larger than that which PL&A will insure under the TIA,
complete the following statement:
If approved, please issue a policy for a face amount of $______________________
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL DATING REQUEST
- ------------------------------------------------------------------------------------------------------------------------------------
32.
___ Date To Save Age ___ Specific Date Month ____________________ Day _______________ Year __________
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP9500-NY -1- 85-21245-00 9/98
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION B POLICY INFORMATION (COMPLETE FOR NON-VARIABLE LIFE INSURANCE)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Check one: ___ TERM/FIXED PREMIUM ___ FLEXIBLE PREMIUM
- ------------------------------------------------------------------------------------------------------------------------------------
1. Policy Name 2. Total Modal Premium or Expected Annual Premium
$
- ------------------------------------------------------------------------------------------------------------------------------------
3. Face Amount (Base only) $ _________ Plus Initial APB Amount $ _________ = Total Initial Coverage $_________
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED PREMIUM LIFE INSURANCE ONLY FLEXIBLE PREMIUM LIFE INSURANCE ONLY
Yes No
4A. Automatic Premium Loan: ___ ___ 4A. Check one: ___ Option A (Level)
___ Option B (Increasing)
B. Variable Loan Interest Rate: ___ ___ B. Dividend Option (Check one):
___ Cash ___ Increase Accumulated Value ___ Other
C. Dividend Option (Check one):
___ Cash ___ Add to Policy Value ___ Other
5. OPTIONAL BENEFITS 5. OPTIONAL BENEFITS
A. ___ ADB $________________ A. ___ ADB $________________
B. ___ AVR/AVP $________________ B. ___ ART/APB/SITR on Other Covered Person for $__________
C. ___ ART on Other Covered Person $_____________ C. ___ ART on Proposed Insured for $___________ for ____ years
D. ___ Children's Term (units) _____ D. ___ Children's Term (units) _____ (Complete Part 11, Section C)
(Complete Part 11, Section C) E. ___ Exchange of Insured
E. ___ Exchange of Insured F. ___ Guaranteed Insurability $_________________
F. ___ Guaranteed Insurability $_________________ G. ___ Disability Benefit $____________
G. ___ Increasing Death Benefit H. ___ Preliminary Term ___ 1 Yr. ___ 2 Yr. ______ No. of Months
H. ___ Preliminary Term ___ 1 Yr. ___ 2 Yr. Effective Date __________________
______ No. of Months I. ___ Waiver of Charges
Effective Date __________________ J. ___ Payor Waiver of Charges (Complete Part 11, Section C)
I. ___ Premium Waiver K. ___ Owner Waiver of Charges (Complete Part 11, Section C)
J. ___ Payor Premium Waiver (Complete Part 11, Section C) L. ___ Other _______________________________
K. ___ Owner Premium Waiver (Complete Part 11, Section C) M. ___ Other _______________________________
L. ___ Other _______________________________ N. ___ Other _______________________________
M. ___ Other _______________________________ O. ___ Other _______________________________
N. ___ Other _______________________________
O. ___ Other _______________________________
- ------------------------------------------------------------------------------------------------------------------------------------
6. If any optional benefit applied for cannot be approved, should the policy be issued without it? ___ Yes ___ No
- ------------------------------------------------------------------------------------------------------------------------------------
COMPLETE THIS SECTION IF APPLYING FOR (Check one): ___ ADDITIONAL POLICY or ___ ALTERNATE POLICY
- ------------------------------------------------------------------------------------------------------------------------------------
7. Policy Name 8. Total Modal Premium or Expected Annual Premium
$
- ------------------------------------------------------------------------------------------------------------------------------------
9. Face amount (Base only) $ _____________ Plus Initial APB Amount $ _____________ = Total Initial Coverage $ _____________
- ------------------------------------------------------------------------------------------------------------------------------------
10. Optional Benefits:
A. __________________________________ B. _________________________________ C. ________________________________
B.
- ------------------------------------------------------------------------------------------------------------------------------------
11. Complete for FIXED PREMIUM LIFE INSURANCE ONLY 12. Complete for FLEXIBLE PREMIUM INSURANCE ONLY
Yes No A. Check one:
___ Option A (Level)
A. Automatic Premium Loan: ___ ___ ___ Option B (Increasing)
B. Variable Loan Interest Rate: ___ ___
C. Dividend Option: ___________________ B. Dividend Option: ___________________
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
AP9500-NY -2- 85-21245-00 9/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION C POLICY INFORMATION (COMPLETE FOR VARIABLE LIFE INSURANCE)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S>
VARIABLE LIFE
- ------------------------------------------------------------------------------------------------------------------------------------
1. Policy Name 2. Planned Annual Premium
$
- ------------------------------------------------------------------------------------------------------------------------------------
3. Face Amount (Base only) $ _____________ Plus Initial APB Amount $ _____________ = Total Initial Coverage $ _____________
- ------------------------------------------------------------------------------------------------------------------------------------
4. Check one: ___ Option A (Level) ___ Option B (Increasing)
- ------------------------------------------------------------------------------------------------------------------------------------
5. A. ___ ART on Other Covered Person for $ _____________ E. ___ Guaranteed Insurability $ _____________
B. ___ ADB $ _____________ F. ___ Waiver of Charges
C. ___ Children's Term (units) _____________ (Complete Part 11, Section C) G. ___ Other ____________________
D. ___ Disability Benefit $ _____________ H. ___ Other ____________________
- ------------------------------------------------------------------------------------------------------------------------------------
6. If any optional benefit applied for cannot be approved, should the policy be issued without it? ___ Yes ___ No
<CAPTION>
PREMIUM ALLOCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
7. INDICATE ALLOCATIONS. THE TOTAL OF THE PERCENTAGES MUST BE 100%. USE WHOLE NUMBERS.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity: _______% Growth LT: _______% Multi-Strategy: _______% Small-Cap Index: _______%
Equity Income: _______% High Yield Bond: _______% Emerging Markets: _______% Mid-Cap Value: _______%
Equity Index: _______% International: _______% Aggressive Equity: _______% Large-Cap Value: _______%
Gov. Securities: _______% Managed Bond: _______% Bond & Income: _______% Fixed: _______%
Growth: _______% Money Market: _______% REIT: _______% Fixed LT: _______%
Other: _______% Other: _______% Other: _______% Other: _______%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUITABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Yes No
8. DO YOU BELIEVE THAT THIS POLICY WILL MEET YOUR INSURANCE NEEDS AND FINANCIAL OBJECTIVES?___________________ _____ _____
9. DO YOU UNDERSTAND THAT THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY VARY, DEPENDING ON THE INVESTMENT
PERFORMANCE OF THE VARIABLE ACCOUNTS IN THE SEPARATE ACCOUNT?______________________________________________ _____ _____
10. DO YOU UNDERSTAND THAT THE POLICY VALUES MAY INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNTS IN THE SEPARATE ACCOUNT?_______________________________________________ _____ _____
11. DID YOU RECEIVE THE SEPARATE ACCOUNT PROSPECTUS AND THE FUND PROSPECTUS FOR THE POLICY APPLIED FOR?________
If Yes, give date shown on prospectuses: Separate Account Fund _____ _____
- ------------------------------------------------------------------------------------------------------------------------------------
POLICY VALUES MAY INCREASE OR DECREASE, AND MAY EVEN BE REDUCED TO ZERO, IN ACCORDANCE WITH THE EXPERIENCE OF THE VARIABLE ACCOUNTS
IN THE SEPARATE ACCOUNT (SUBJECT TO ANY SPECIFIED MINIMUM GUARANTEES). THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER SPECIFIED
CONDITIONS. CURRENT ILLUSTRATIONS OF BENEFITS, INCLUDING DEATH BENEFITS AND CASH SURRENDER VALUES, ARE AVAILABLE UPON REQUEST.
- ------------------------------------------------------------------------------------------------------------------------------------
COMPLETE THIS SECTION IF APPLYING FOR (Check one): ___ ADDITIONAL POLICY or ___ ALTERNATE POLICY
(COMPLETE SUITABILITY QUESTIONS ABOVE)
- ------------------------------------------------------------------------------------------------------------------------------------
12. Policy Name 13. Planned Annual Premium
$
- ------------------------------------------------------------------------------------------------------------------------------------
14. Face Amount (Base only) $_____________ Plus Initial ART Amount $_____________ = Total Initial Coverage $_____________
- ------------------------------------------------------------------------------------------------------------------------------------
15. Optional Benefits 16. Death Benefit Options (Check one):
A. __________________________________________ Option A (Level) __________
B. __________________________________________ Option B (Includes Account Value) __________
C. __________________________________________ Option C (Includes Premiums less Distributions) __________
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP9500-NY -3- 85-21245-00 9/98
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION D MEDICAL CERTIFICATION (NOT APPLICABLE IN THE STATE OF PENNSYLVANIA)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPLETE WHEN SUBMITTING MEDICAL EXAMINATION OF ANOTHER INSURANCE COMPANY
1. The attached examination is on the life of:
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Name Name of the other Insurance Company Date of Examination
- ------------------------------------------------------------------------------------------------------------------------------------
Additional Insured Name Name of the other Insurance Company Date of Examination
- ------------------------------------------------------------------------------------------------------------------------------------
Additional Insured Name Name of the other Insurance Company Date of Examination
- ------------------------------------------------------------------------------------------------------------------------------------
Additional Insured Name Name of the other Insurance Company Date of Examination
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Additional Insured
2. To the best of your knowledge and belief, are the statements in the examination
true as of today? ___ Yes ___ No ___ Yes ___ No
3. Has the person who was examined consulted a doctor or their practitioner or
received medical or surgical advice since the date of the examination:
(If yes, explain in remarks) ___ Yes ___ No ___ Yes ___ No
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION E ADDITIONAL INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
1. Full Name (PRINT AS TO APPEAR IN POLICY/FIRST, MIDDLE, LAST) 2. Sex: ___ Male 3. State of Birth 4. Date of Birth
___ Female MO. DAY YR.
- ------------------------------------------------------------------------------------------------------------------------------------
5. Insurance Age 6. Drivers License No. & State 7. Social Security No. or Taxpayer I.D. No. 8. Telephone No.
( )
- ------------------------------------------------------------------------------------------------------------------------------------
9. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 12. How Long
- ------------------------------------------------------------------------------------------------------------------------------------
10. Employer Name and Address (STREET, CITY, COUNTY, STATE, ZIP CODE) 14. How Long
- ------------------------------------------------------------------------------------------------------------------------------------
13. Occupation 14. Type of Business
- ------------------------------------------------------------------------------------------------------------------------------------
15. Relationship to Primary Insured
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY TO ADDITIONAL INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
16. Primary Beneficiary (PRINT FULL NAME/FIRST, MIDDLE, LAST) 17. Relationship
- ------------------------------------------------------------------------------------------------------------------------------------
18. Contingent Beneficiary (PRINT FULL NAME/FIRST, MIDDLE, LAST) 19. Relationship
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION F GENERAL INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
1. Give details of life insurance in force in other companies on PROPOSED INSURED. If none (or if conversion application) check
this box ___
Company Year Taken Plan Life Amount Acc. Death Amount
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1. Give details of life insurance in force in other companies on ADDITIONAL INSURED. If none (or if conversion application) check
this box ___
Company Year Taken Plan Life Amount Acc. Death Amount
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP9500-NY -4- 85-21245-00 9/98
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION F GENERAL INFORMATION CONTINUED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PROPOSED INSURED 3. COMPLETE EACH QUESTION BELOW FOR THE PROPOSED INSURED AND ANY ADDITIONAL INSURED
YES NO ADDITIONAL INSURED. YES NO
- ------------------------------------------------------------------------------------------------------------------------------------
$ A. Is the Proposed/Additional Insured married? $
- ------------------------------------------------------------------------------------------------------------------------------------
$ B. Income of spouse, if any. $
- ------------------------------------------------------------------------------------------------------------------------------------
$ C. Amount of insurance in force on spouse. $
- ------------------------------------------------------------------------------------------------------------------------------------
$ D. Annual earned income from occupation (after deduction of business expenses). $
- ------------------------------------------------------------------------------------------------------------------------------------
$ E. Other Income (state source in remarks). $
- ------------------------------------------------------------------------------------------------------------------------------------
$ F. Net Worth $
- ------------------------------------------------------------------------------------------------------------------------------------
PROPOSED INSURED ADDITIONAL INSURED
YES NO 4. Does any Proposed Insured/Additional Insured contemplate leaving the U.S.A. for YES NO
___ ___ travel or residence? (If yes, explain in remarks) ___ ___
- ------------------------------------------------------------------------------------------------------------------------------------
5. Within the last 2 years has any Proposed/Additional Insured:
___ ___ A. Flown or plan to fly as a pilot, student pilot or crew member? ___ ___
B. Engaged in parachute jumping, scuba diving, auto, motor boat or motorcycle racing,
___ ___ hang gliding, mountain climbing or other hazardous sport? ___ ___
(if yes to A or B, complete a separate General Questionnaire for each Proposed/
Additional Insured)
- ------------------------------------------------------------------------------------------------------------------------------------
6. Has any Proposed/Additional Insured ever had insurance declined, rated, modified
___ ___ canceled or not renewed: (DO NOT ANSWER THIS QUESTION IN MISSOURI) ___ ___
(If yes, explain in remarks)
- ------------------------------------------------------------------------------------------------------------------------------------
___ ___ 7. Has any Proposed/Additional Insured been convicted of a felony within the past 5 ___ ___
years? (If yes, explain in remarks)
- ------------------------------------------------------------------------------------------------------------------------------------
8. Has any Proposed/Additional Insured had a drivers license restricted or revoked or
___ ___ been charged with 3 or more moving violations within the past 5 years? ___ ___
(If yes, explain in remarks)
- ------------------------------------------------------------------------------------------------------------------------------------
10. Will the policy applied for replace or change any existing insurance or annuity
___ ___ on any Proposed/Additional Insured? (If yes, agent must complete state replacement ___ ___
notice, if applicable)
- ----------------------- -----------------
___ ___ A. Is this a 1035 Exchange? ___ ___
- ----------------------- -----------------
___ ___ B. Will a loan be carried over? ___ ___
- ------------------------------------------------------------------------------------------------------------------------------------
___ ___ 11. Have you smoked a cigarette(s) in the last 12 months? ___ ___
Date: ____________ If yes, give date last smoked. Date: ____________
- ------------------------------------------------------------------------------------------------------------------------------------
___ ___ 12. Have you used tobacco in any other form within the last 24 months? ___ ___
Type: ___________ If yes, specify type and date last used. Type: ____________
---------------------------------------------------------------------------------------------
Date: ___________ Date: ____________
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP9500-NY -5- 85-21245-00
<PAGE>
- --------------------------------------------------------------------------------
SECTION G UNI-CHECK
- --------------------------------------------------------------------------------
1. ___ Bank Account No. ____________ 1. Bank Account in Name of ____________
3. ___ If other than policy date, complete day of the month you want draft to
draw from bank account.
(Must be between the 4th and 28th) ____________
As a convenience to me, I request and authorize you to pay and charge to the
above account any debit entries on that account by and payable to the order of
Pacific Life & Annuity Company, provided there are sufficient collected funds
in said account to pay the same upon presentation. I agree that your rights in
respect to each such debit shall be the same as if it were a debit drawn on you
and signed personally by me. This authority is to remain in effect until
revoked by me in writing, and until you actually receive such notice I agree
that you shall be fully protected in honoring any such debit.
- --------------------------------------------------------------------------------
REMARKS
- --------------------------------------------------------------------------------
HOME OFFICE ENDORSEMENT (NOT APPLICABLE IN KENTUCKY,
PENNSYLVANIA, WEST VIRGINIA)
- --------------------------------------------------------------------------------
DECLARATIONS
- --------------------------------------------------------------------------------
I represent that the foregoing answers and statements contained in Parts I and
II are correctly recorded, complete, and true to the best of my knowledge and
belief. I understand that:
1. EXCEPT AS OTHERWISE PROVIDED IN ANY TEMPORARY INSURANCE AGREEMENT, NO
INSURANCE WILL TAKE EFFECT BEFORE THE POLICY FOR SUCH INSURANCE IS DELIVERED
AND THE FIRST PREMIUM PAID DURING THE LIFETIME(S) AND BEFORE ANY CHANGE IN
THE HEALTH OF THE PROPOSED INSURED(S). UPON SUCH DELIVERY AND PAYMENT,
INSURANCE WILL TAKE EFFECT IF THE ANSWERS AND STATEMENTS IN THIS APPLICATION
ARE THEN TRUE.
2. Acceptance of a life insurance policy will be ratification of any
administrative change with respect to such policy made by Pacific Life
& Annuity Company, the "Company", in the space entitled "Home Office
Endorsements," where permitted by state law. All other changes, including
policy type and amount of insurance, benefits, classification or age at
issue, must be accepted in writing.
3. No agent or medical examiner is authorized to make or modify contracts or to
waive any of the Company's rights or requirements.
Signed and Dated by Applicant in:
On
- --------------------------------- -----------------------------------------
City State Mo. Day Year Signature of Applicant
-----------------------------------------
Signature of Proposed Insured (IF OTHER
THAN APPLICANT OR PARENT IF PROPOSED
INSURED IS UNDER AGE 16 OR AGE 18 IN
PENNSYLVANIA)
-----------------------------------------
Signature of Other Adult Proposed Insured
-----------------------------------------
Signature of Child age 18 and older
(REQUIRED IN PENNSYLVANIA)
-----------------------------------------
Signature of Owner (IF OTHER THAN
PROPOSED INSURED OR APPLICANT)
IF OWNER IS A CORPORATION THE SIGNATURE AND TITLE OF ANY AUTHORIZED OFFICER
OTHER THAN THE PROPOSED INSURED IS REQUIRED AND THE FULL NAME OF THE CORPORATION
MUST BE SHOWN.
I certify that I have truly and accurately recorded hereon the information
supplied.
- --------------------- ------------------------- ---------------------------
Signature of Please Print State License ID
Soliciting Agent Soliciting Agent Name Number (Required in Florida)
AP9500-NY -6- 85-21245-00 9/98
<PAGE>
AUTHORIZATION TO OBTAIN INFORMATION
I authorize any physician, medical practitioner, hospital, clinic, other medical
or medically related facility, insurance company, the Medical Information
Bureau, consumer reporting agency or employer to release to Pacific Life &
Annuity Company, its subsidiaries, its reinsurer(s) or its legal representative
any information they may have as to diagnosis, treatment and prognosis of any
physical or mental condition including drug and/or alcohol abuse and/or any
other information of me, my spouse and my minor children.
I understand that any information obtained will be used to determine eligibility
for insurance and will not be released to any person or organization except
reinsurer(s), the Medical Information Bureau, and other persons or organizations
performing business or legal services in connection with my application, or as
may be otherwise lawfully required, or as I may further authorize. I also
understand that I may revoke this authorization as it applies to drug and/or
alcohol abuse information at anytime, except to the extent it will not affect
any action taken or information released prior to the revocation. Such
revocation may cause the denial of this application. I know that I may request
to receive a copy of this authorization. I also acknowledge receipt of
Disclosure Notice to Applicants for Insurance.
A photographic copy of this Authorization shall be as valid as the original and
shall be valid for two years from the date shown below.
Signed and Dated by Proposed Insured in:
On
- --------------------------------- -----------------------------------------
City State Mo. Day Year Signature of Proposed Insured (OR PARENT
IF PROPOSED INSURED IS UNDER AGE 16 OR
AGE 18 IN PENNSYLVANIA)
-----------------------------------------
Signature of Other Adult Proposed Insured
-----------------------------------------
Signature of Child age 18 and older
(REQUIRED IN PENNSYLVANIA)
AP9500-NY
- ----
(DETACH-LEAVE WITH APPLICANT)
DISCLOSURE NOTICE TO APPLICANTS FOR INSURANCE
This brief description of our underwriting process is designed to help you to
understand how an application for insurance is handled, the types and sources of
information we may collect about you, the circumstances under which we may
disclose that information to others and your right to learn the nature and
substance of that information upon written request. The purpose of the
underwriting process is to make sure you qualify for insurance under our rules,
and assuming you do, establish the proper premium charge for that insurance.
This process - the evaluation of risks - assures that the cost of insurance is
distributed equitably among all policyowners, and that each individual pays his
or her fair share. To determine your insurability, we must consider such
factors as your medical history, physical condition, occupation and hazardous
avocations. We get this information from various sources.
SOURCES OF INFORMATION
APPLICATION AND MEDICAL RECORDS - Your application, including the medical
history, is the primary source of information in the evaluation process. In
addition, we may ask you to take a physical examination or other special test
such as an electrocardiogram. We may also ask for a report from your doctor or
hospital, another insurance company, or the Medical Information Bureau. When we
do so, we will use the authorization form you signed with your application.
MEDICAL INFORMATION BUREAU, INC. (MIB) is a non-profit corporation which
operates an information exchange on behalf of member life insurance companies.
As a member company, we will ask MIB if it has a record concerning you. If you
previously applied to a member company for insurance, MIB may have information
about you in its file. The purpose of the MIB is to protect member companies
and their policyowners from those who would conceal significant facts relevant
to their insurability. The information which is obtained from MIB may be used
only as an alert to the possible need for further independent investigation. It
cannot be used as a basis in making a final underwriting decision.
Information regarding your insurability will be treated as confidential. PL, its
subsidiaries or its reinsurer(s) may, however, make a brief report to the MIB.
If you later apply to another MIB member company for life or health insurance
coverage, or a claim for benefits is submitted to such a company, the MIB, upon
request, will supply the company with the information it may have about you in
its file. PL&A, its subsidiaries or its reinsurer(s) may also release
information in its file to other life insurance companies to whom you may apply
for life or health insurance, or to whom a claim for benefits may be submitted.
At your request, the MIB will arrange disclosure of any information it may have
about you in its file. If you question the accuracy of information on file, you
may contact the MIB and seek a correction in accordance with the procedures set
forth in the federal Fair Credit Reporting Act. The address of the information
office of MIB, Inc. is Post Office Box 105, Essex Station, Boston, Massachusetts
02112, telephone number (617) 426-3660.
INVESTIGATIVE CONSUMER REPORT - As part of our underwriting procedure, we may
request an investigative consumer report from a consumer reporting agency.
Because you may want to know more about the nature and scope of such a report,
we are providing this information on the reverse side as part of this Notice.
(Continued on reverse side)
AP9500-NY -7- 85-21245-00 9/98
<PAGE>
___
DISCLOSURE NOTICE TO APPLICANTS FOR INSURANCE (CONTINUED)
A consumer report confirms and supplements the information of your application
pertaining to employment and residence verification, smoking habits, marital
status, occupation, hazardous avocations and general health. This report may
also cover information concerning your general reputation, personal
characteristics and mode of living (except as may be related directly or
indirectly to your sexual orientation) including drug and alcohol use, motor
vehicle driving record and any criminal activity. This information may be
obtained through personal interviews with you, your family, friends, neighbors
and business associates. If a report is required and you wish to be personally
interviewed, please let us know and we will notify the consumer reporting
agency.
The information contained in the report may be retained by the consumer
reporting agency and subsequently disclosed to other companies to the extent
permitted by the Fair Credit Reporting Act.
Investigative consumer reports are held in strict confidence and used only to
evaluate your application on a fair and equitable basis. You have a right to
inspect and obtain a copy of the report from the consumer reporting agency.
These reports may have an adverse affect on an individual's eligibility for
insurance. If it should, however, we will notify you in writing and identify
the reporting agency.
DISCLOSURE TO OTHERS
Personal information obtained about you during the underwriting process is
confidential and will not be disclosed to other persons or organizations without
your written authorization except to the extent necessary for the conduct of our
business. Examples of situations where we may share information about you are
as follows:
1. The agent may retain a copy of your application.
2. If reinsurance is required, the reinsurance company would have access to
our application file.
3. We may release information to another life insurance company to whom you
have applied for life or health insurance or to whom you have submitted
a claim for benefits, if you have authorized it to obtain such
information.
4. As stated earlier, we may report information to the Medical Information
Bureau.
5. We will disclose information to government regulatory officials, law
enforcement authorities and others where required by law.
DISCLOSURE TO YOU
In general, you have a right to learn the nature and substance of any personal
information about you in our file upon written request. Whenever an adverse
underwriting decision is made, we will notify you of the reason(s) for the
decision and the source of the information upon which our action is based.
Medical record information, however, will normally be given only to a licensed
physician of your choice. Please refer to the section on MIB, Inc., for that
organization's disclosure procedure.
Should you feel that any information we have is inaccurate or incomplete, please
write to the Manager, Risk Selection Department, Pacific Life & Annuity Company,
Service Center, 700 Newport Center Drive, Newport Beach, California 92660. Your
comments will be carefully considered and corrections made where justified.
We hope this Notice will help you to understand how we obtain and use personal
information in the underwriting process, and the ways you can learn about this
information. We are concerned with insuring privacy as well as lives, and the
collection, use and disclosure of personal information is limited to those
specified in this Notice.
AP9500-NY -8- 85-21245-00 9/98
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SECTION H BUSINESS INSURANCE (COMPLETE THIS SECTION IF APPLYING FOR BUSINESS INSURANCE)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purpose of this Insurance:
A. ___ Buy & Sell D. ___ Split Dollar
B. ___ Employee Fringe Benefit E. ___ Key Employee
C. ___ Deferred Compensation F. ___ Other (Explain in remarks)
- ----------------------------------------------------------------------------------------------------------------------------------
2. Name of Principal Officers, Amount of Insurance
Partners or Key Employees Position % of Business Owned Owned By Business
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
3. What is the current fair market value of the business? $
-------------------
4. What was the annual net profit (before taxes) of business? Last Year $ 2 Years Ago $
5. Are other officers, partners or key employees proportionately insured? ___ Yes ___ No (If no, explain in remarks)
- ----------------------------------------------------------------------------------------------------------------------------------
SECTION I COMPLETE THIS SECTION IF PROPOSED INSURED IS UNDER AGE 16
- ----------------------------------------------------------------------------------------------------------------------------------
1. Did you personally observe the Proposed Insured? ___ Yes ___ No (If no, explain in remarks)
- ----------------------------------------------------------------------------------------------------------------------------------
2. Are Proposed Insured's brothers and sisters insured for equal amounts? ___ Yes ___ No (If no, explain in remarks)
- ----------------------------------------------------------------------------------------------------------------------------------
3. Person on whom Proposed Insured depends for support:
A. Name B. Relationship
- ----------------------------------------------------------------------------------------------------------------------------------
C. Estimated annual income D. Estimated net worth E. Estimated amount of life insurance
$ $ $
- ----------------------------------------------------------------------------------------------------------------------------------
4. Information on Applicant:
A. Name B. Relationship
- ----------------------------------------------------------------------------------------------------------------------------------
C. Purpose of Insurance D. Amount of life insurance in force
$
- ----------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP9500-NY -9- 85-21245-00 9/98
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SECTION J COMPLETE FOR ALL APPLICATIONS - AGENT INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. How well do you know proposed insured? 2. How well do you know Additional Insured?
(or Applicant if Proposed Insured is under age 16)
- -----------------------------------------------------------------------------------------------------------------------------
3. Have you personally asked all applicable questions in this application? Proposed Insured Additional Insured
(If no, explain in remarks) ___ Yes ___ No ___ Yes ___ No
- -----------------------------------------------------------------------------------------------------------------------------
4. Are you aware of any information not given in the application which might affect the insurability of:
Proposed Insured ___ Yes ___ No Additional Insured ___ Yes ___ No (If yes, explain in remarks)
- -----------------------------------------------------------------------------------------------------------------------------
5. Did the Proposed Insured or Applicant make the initial inquiry which led to the sale of this insurance?
___ Yes ___ No (If yes, explain in remarks)
- -----------------------------------------------------------------------------------------------------------------------------
6. Has the Proposed Insured changed name within the last 5 years? ___ Yes ___ No
7. Has the Additional Insured changed name within the last 5 years? ___ Yes ___ No (If yes, give former name in remarks)
- -----------------------------------------------------------------------------------------------------------------------------
8. To the best of your knowledge, does any policy applied for either replace, involve a change in, or involve use of value
from any existing life insurance policy or annuity?
(IF "YES" GIVE COMPANY AND POLICY NUMBER IN "REMARKS" ON PAGE 5. IF PMG POLICY, Proposed Insured Additional Insured
THEN GIVE POLICY NUMBER AND HOW VALUES ARE TO BE APPLIED IN REMARKS".) ___ Yes ___ No ___ Yes ___ No
- -----------------------------------------------------------------------------------------------------------------------------
9. If this policy is a tax qualified plan indicate type: ___ Pension/Profit sharing ___ HR-10 ___ Other
- -----------------------------------------------------------------------------------------------------------------------------
10. If application submitted on a* Proposed Insured Additional Insured
Yes No Yes No
(A) Medical Basis? ___ ___ ___ ___
(B) Non-Medical Basis? (Submit Part 2) ___ ___ ___ ___
(C) Guaranteed Issue Basis? ___ ___ ___ ___
(D) Guaranteed to Issue Basis? ___ ___ ___ ___
- -----------------------------------------------------------------------------------------------------------------------------
11. Check appropriate items which have been ordered:
Proposed Insured Additional Insured Proposed Insured Additional Insured
Yes No Yes No Yes No Yes No
Medical Exam ___ ___ ___ ___ H.O. Specimen ___ ___ ___ ___
Paramedical Exam ___ ___ ___ ___ APS ____________ ___ ___ ___ ___
EKG ___ ___ ___ ___ ________________ ___ ___ ___ ___
Blood Profile ___ ___ ___ ___ ________________ ___ ___ ___ ___
- -----------------------------------------------------------------------------------------------------------------------------
REMARKS
- -----------------------------------------------------------------------------------------------------------------------------
I certify that to the best of my knowledge and belief: Yes No
A. I have presented to the Company all pertinent facts and have correctly and completely recorded all
required answers.____________________________________________________________________________________ ___ ___
- -----------------------------------------------------------------------------------------------------------------------------
B. I have given the Proposed Insured (or Parent for Juvenile insurance) a copy of the Fair Credit
Reporting Act and MIB Disclosure Notice, and any other disclosure notice or statement required by
state or federal law.________________________________________________________________________________ ___ ___
- -----------------------------------------------------------------------------------------------------------------------------
C. I have fully explained the terms and conditions of the Temporary Insurance Agreement(s) to the
Proposed Insured (or Applicant) and have given it to him/her (them)._________________________________ ___ ___
- -----------------------------------------------------------------------------------------------------------------------------
D. I have complied with state and federal laws on disclosure, cost comparison and replacement.__________ ___ ___
- -----------------------------------------------------------------------------------------------------------------------------
E. I have reviewed the purchase of this insurance policy as to suitability._____________________________ ___ ___
- -----------------------------------------------------------------------------------------------------------------------------
Signature(s) Of Soliciting Agent(s). Pay Commission as Indicated Below.
- -----------------------------------------------------------------------------------------------------------------------------
X X
- ----------------------------------------------------------------- -----------------------------------------------------
First Name Listed Below Will Be The Servicing Agent
- -----------------------------------------------------------------------------------------------------------------------------
PHONE FAX AGENCY AGENT
AGENT NAME NUMBER NUMBER NUMBER CODE COMM%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Broker/Dealer Name (IF APPLICABLE): ____________________________________________
</TABLE>
AP9500-NY -10- 85-21245-00 9/98
<PAGE>
APPLICATION, PART II RS NONMED
TO PACIFIC LIFE & ANNUITY COMPANY [LOGO OF PL&A]
NON-MEDICAL SERVICE CENTER 700 Newport Center Drive, Newport Beach, California
92660
SECTION A COMPLETE ON PROPOSED INSURED (AGE 16 OR OVER)
- --------------------------------------------------------------------------------
1. Full Name 2a. Date of Birth 2b. Height 2c. Weight
MO. DAY YR. FT. IN. LBS.
- --------------------------------------------------------------------------------
3.a. Name and address of personal physician, practitioner or health facility
last visited:
---------------------------------------------------------------------------
(IF NONE, SO STATE)
b. Date: _______________________ c. Reason consulted: ___________________
MO. YR.
<TABLE>
<CAPTION>
<S> <C>
Yes No Details of "Yes" answers. (Identify question,
and include diagnoses, dates, duration and
d. Did any symptoms prompt consultation?________________________ ___ ___ names and addresses of all attending
e. Was any treatment given or medication prescribed?____________ ___ ___ physicians and medical facilities. Use an
(IF "D" OR "E" ANSWERED "YES", GIVE DETAILS) additional sheet if necessary.)
4. To the best of your knowledge and belief, during the past
10 years, have you had, or been told that you had, or been
treated by a member of the medical profession for:
(CIRCLE APPLICABLE ITEMS AND GIVE DETAILS)
a. Disorder of the eyes, ears, nose, or throat?_________________ ___ ___
b. Dizziness, fainting, convulsions, headaches, speech defect,
paralysis or stroke, or mental or nervous condition?_________ ___ ___
c. Hoarseness or cough, blood spitting, asthma, pneumonia,
emphysema, tuberculosis, or other respiratory system
disorder? ___________________________________________________ ___ ___
d. Chest pain, high blood pressure, rheumatic fever, murmur,
heart attack or other disorder of the heart or blood
vessels? ____________________________________________________ ___ ___
e. Jaundice, intestinal bleeding, ulcer, colitis,
diverticulitis, hepatitis, or other disorder of the liver,
gallbladder, stomach or intestines? _________________________ ___ ___
f. Sugar, albumin, or blood in urine, venereal disease, stone
or other disorder of kidney, bladder, prostate, breasts or
reproductive organs? ________________________________________ ___ ___
g. Diabetes; thyroid or other endocrine disorders?______________ ___ ___
h. Neuritis, sciatica, arthritis, gout, or disorder of the
muscles or bones, including the spine, back or joints?_______ ___ ___
i. Cancer, cyst, tumor or disorder of skin, blood or lymph
glands? _____________________________________________________ ___ ___
j. Any disorder(s) of the Immune System, including AIDS
(Acquired Immune Deficiency Syndrome) and ARC (AIDS
Related Complex)? ___________________________________________ ___ ___
5.a. Have you within the past 5 years been a patient in a
hospital, clinic, sanitarium or other medical facility?______ ___ ___
b. Are you now under regular medical observation or taking
treatment? __________________________________________________ ___ ___
6.a. Except as prescribed by a physician, have you used heroin,
morphine or other narcotic drugs in the last 10 years?_______ ___ ___
b. Except as prescribed by a physician, have you used cocaine,
LSD, marijuana or other hallucinogenic agents, or
barbiturates, sedatives, tranquilizers or any amphetamines
in the last 5 years? ________________________________________ ___ ___
c. In the last 5 years have you received treatment for or
joined an organization because of alcoholism or drug
addiction? __________________________________________________ ___ ___
7. Other than as stated in answers above, have you within the
past 5 years:
a. Had a checkup, consultation, illness, injury or operation?_ ___ ___
b. Had an electrocardiogram, blood test, other test or X-ray?_ ___ ___
c. Been advised to have any diagnostic test, hospitalization
or surgery which was not completed? _______________________ ___ ___
8. Have you had any change in weight in the past year? __________ ___ ___
9. Have either of your parents, brothers or sisters had
diabetes, cancer, high blood pressure, heart disease, or
mental illness? ______________________________________________ ___ ___
(IF "YES", STATE CONDITION, GIVE RELATIONSHIP AND AGE AT ONSET)
10. Parents' Record (COMPLETE BELOW)
- ------------------------------------------------------------------------------------------------------------------------------
IF LIVING IF DECEASED
- ----------------------------------------------------------------------------------
AGE AT
AGE STATE OF HEALTH DEATH CAUSE OF DEATH
- ----------------------------------------------------------------------------------
Father
- ----------------------------------------------------------------------------------
Mother
- ----------------------------------------------------------------------------------
Yes No
11.a. Do you currently smoke cigarettes?__________________________ ___ ___
b. If "Yes", how many a day?___________________________________ ____________
c. Did you ever smoke cigarettes?______________________________ ___ ___
d. If "Yes" on 11(c), give date last cigarette smoked: ____________
e. Do you use tobacco in any other form?_______________________ ___ ___
(If "Yes", specify type in "Remarks")
f. Have you used tobacco in any other form within the
last 24 months?_____________________________________________ ___ ___
(If "Yes", specify type in "Remarks")
</TABLE>
The above statements are true and complete to the best of my knowledge and
belief. I agree that such statements and answers shall be a part of the
application.
Dated at on X
------------------- ------------- ------------------------------
CITY STATE MO. DAY YR. SIGNATURE OF PROPOSED INSURED
- ---------------------------------------------
WITNESS
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim containing
any materially false information or conceals for the purpose of misleading,
information concerning any fact material thereto commits a fraudulent insurance
act, which is a crime and subjects such person to criminal and civil penalties.
AP9500-P2-NY -1- 85-21246-00 9/98
<PAGE>
APPLICATION, PART II RS NONMED
TO PACIFIC LIFE & ANNUITY COMPANY [LOGO OF PL&A]
NON-MEDICAL SERVICE CENTER 700 Newport Center Drive, Newport Beach, California
92660
SECTION B COMPLETE ON ADDITIONAL INSURED (AGE 16 OR OVER)
- --------------------------------------------------------------------------------
1. Full Name 2a. Date of Birth 2b. Height 2c. Weight
MO. DAY YR. FT. IN. LBS.
- --------------------------------------------------------------------------------
3.a. Name and address of personal physician, practitioner or health facility
last visited:
---------------------------------------------------------------------------
(IF NONE, SO STATE)
b. Date: _______________________ c. Reason consulted: ___________________
MO. YR.
<TABLE>
<CAPTION>
<S> <C>
Yes No Details of "Yes" answers. (Identify question
and include diagnoses, dates, duration and
d. Did any symptoms prompt consultation?________________________ ___ ___ names and addresses of all attending
e. Was any treatment given or medication prescribed?____________ ___ ___ physicians and medical facilities. Use an
(IF "D" OR "E" ANSWERED "YES", GIVE DETAILS) additional sheet if necessary.)
4. To the best of your knowledge and belief, during the past
10 years, have you had, or been told that you had, or been
treated by a member of the medical profession for:
(CIRCLE APPLICABLE ITEMS AND GIVE DETAILS)
a. Disorder of the eyes, ears, nose, or throat?_________________ ___ ___
b. Dizziness, fainting, convulsions, headaches, speech defect,
paralysis or stroke, or mental or nervous disorder?__________ ___ ___
c. Hoarseness or cough, blood spitting, asthma, pneumonia,
emphysema, tuberculosis, or other respiratory system
disorder? ___________________________________________________ ___ ___
d. Chest pain, high blood pressure, rheumatic fever, murmur,
heart attack or other disorder of the heart or blood
vessels? ____________________________________________________ ___ ___
e. Jaundice, intestinal bleeding, ulcer, colitis,
diverticulitis, hepatitis, or other disorder of the liver,
gallbladder, stomach or intestines? _________________________ ___ ___
f. Sugar, albumin, or blood in urine, venereal disease, stone
or other disorder of kidney, bladder, prostate, breasts or
reproductive organs? ________________________________________ ___ ___
g. Diabetes; thyroid or other endocrine disorders?______________ ___ ___
h. Neuritis, sciatica, arthritis, gout, or disorder of the
muscles or bones, including the spine, back or joints?_______ ___ ___
i. Cancer, cyst, tumor or disorder of skin, blood or lymph
glands? _____________________________________________________ ___ ___
j. Any disorder(s) of the Immune System, including AIDS
(Acquired Immune Deficiency Syndrome) and ARC (AIDS
Related Complex)? ___________________________________________ ___ ___
5.a. Have you within the past 5 years been a patient in a
hospital, clinic, sanitarium or other medical facility?______ ___ ___
b. Are you now under regular medical observation or taking
treatment? __________________________________________________ ___ ___
6.a. Except as prescribed by a physician, have you used heroin,
morphine or other narcotic drugs in the last 10 years?_______ ___ ___
b. Except as prescribed by a physician, have you used cocaine,
LSD, marijuana or other hallucinogenic agents, or
barbiturates, sedatives, tranquilizers or any amphetamines
in the last 5 years? ________________________________________ ___ ___
c. In the last 5 years have you received treatment for or
joined an organization because of alcoholism or drug
addiction? __________________________________________________ ___ ___
7. Other than as stated in answers above, have you within the
past 5 years:
a. Had a checkup, consultation, illness, injury or operation?_ ___ ___
b. Had an electrocardiogram, blood test, other test or X-ray?_ ___ ___
c. Been advised to have any diagnostic test, hospitalization
or surgery which was not completed? _______________________ ___ ___
8. Have you had any change in weight in the past year? __________ ___ ___
9. Have either of your parents, brothers or sisters had
diabetes, cancer, high blood pressure, heart disease, or
mental illness? ______________________________________________ ___ ___
(IF "YES", STATE CONDITION, GIVE RELATIONSHIP AND AGE AT ONSET)
10. Parents' Record (COMPLETE BELOW)
- ------------------------------------------------------------------------------------------------------------------------------
IF LIVING IF DECEASED
- ----------------------------------------------------------------------------------
AGE AT
AGE STATE OF HEALTH DEATH CAUSE OF DEATH
- ----------------------------------------------------------------------------------
Father
- ----------------------------------------------------------------------------------
Mother
- ----------------------------------------------------------------------------------
Yes No
11.a. Do you currently smoke cigarettes?__________________________ ___ ___
b. If "Yes", how many a day?___________________________________ ____________
c. Did you ever smoke cigarettes?______________________________ ___ ___
d. If "Yes" on 11(c), give date last cigarette smoked: ____________
e. Do you use tobacco in any other form?_______________________ ___ ___
(If "Yes", specify type in "Remarks")
f. Have you used tobacco in any other form within the last
24 months?__________________________________________________ ___ ___
(If "Yes", specify type in "Remarks")
</TABLE>
The above statements are true and complete to the best of my knowledge and
belief. I agree that such statements and answers shall be a part of the
application.
Dated at on X
------------------- ------------- ------------------------------
CITY STATE MO. DAY YR. SIGNATURE OF PROPOSED INSURED
- ---------------------------------------------
WITNESS
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim containing
any materially false information or conceals for the purpose of misleading,
information concerning any fact material thereto commits a fraudulent insurance
act, which is a crime and subjects such person to criminal and civil penalties.
AP9500-P2-NY -2- 85-21246-00 9/98
<PAGE>
<TABLE>
<CAPTION>
APPLICATION, PART II RS NONMED
TO PACIFIC LIFE & ANNUITY COMPANY [Logo of PL&A]
NON-MEDICAL SERVICE CENTER 700 Newport Center Drive, Newport Beach, California 92660
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION C COMPLETE IF APPLYING FOR OWNER PREMIUM WAIVER, PAYOR WAIVER, CHILDREN'S TERM RIDER OR IF
PROPOSED INSURED IS UNDER AGE 16.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RELATIONSHIP AMOUNT OF AMT. OF INS.
1. NAME OF PERSON TO TO PROPOSED DATE OF BIRTH STATE OF HEIGHT WEIGHT INSURANCE CURRENTLY
BE COVERED INSURED (MO./DAY/YR.) BIRTH (FT/IN.) (POUNDS) NOW IN FORCE APPLIED FOR
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Note: If payor or owner waiver of charges is being applied for, please indicate the individual's occupation and the employer's
name and address:
_______________________________________________________________________________________________________________
_______________________________________________________________________________________________________________
- ---------------------------------------------------------------------------------------------------------------------------------
2a. Name and address of your personal physician, practitioner or health facility
- ---------------------------------------------------------------------------------------------------------------------------------
b. Date: c. Reason for and results of last visit
- ------------------------------------------------------------------------------------------------------------------------------------
3. Has any person named in Question 1 during the past 10 years had or been told that he or she had, or been treated for:
(CIRCLE APPLICABLE ITEMS AND GIVE DETAILS)
Yes No
A. Diabetes, cancer or epilepsy? _____________________________________________________________ ___ ___
B. Heart murmur, high blood pressure or any heart condition? _________________________________ ___ ___
C. Any disorder(s) of the Immune System, including AIDS (Acquired Immune Deficiency Syndrome)
and ARC (AIDS Related Complex)? ___________________________________________________________ ___ ___
4. Has any person named in Question 1:
A. Been in a hospital, sanitarium or other institution for diagnosis, treatment or a surgical
operation within the past 5 years? ________________________________________________________ ___ ___
B. Had any medical consultation or treatment within the past 3 years, other than as stated in
any answer above? _________________________________________________________________________ ___ ___
GIVE DETAILS BELOW FOR EACH "YES" ANSWER IN QUESTIONS 3 and 4:
- ------------------------------------------------------------------------------------------------------------------------------------
QUESTION NO. FIRST NAME REASON FOR CONSULTATION DATE DURATION-RESULT NAME AND ADDRESS OF PHYSICIAN
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DECLARATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
I represent that the foregoing answers and statements are correctly recorded, complete, and true to the best of my knowledge
and belief.
I understand that:
1. EXCEPT AS OTHERWISE PROVIDED IN ANY TEMPORARY INSURANCE AGREEMENT, NO INSURANCE WILL TAKE EFFECT BEFORE THE POLICY FOR SUCH
INSURANCE IS DELIVERED AND THE FIRST PREMIUM PAID DURING THE LIFETIME(S) AND BEFORE ANY CHANGE IN THE HEALTH OF THE PROPOSED
INSURED(S). UPON SUCH DELIVERY AND PAYMENT, INSURANCE WILL TAKE EFFECT IF THE ANSWERS AND STATEMENTS IN THIS APPLICATION ARE
THEN TRUE.
2. Acceptance of a life insurance policy will be ratification of any administrative change with respect to such policy made by the
Company in the space entitled "Home Office Endorsements," where permitted by state law. All other changes, including policy
type and amount of insurance, benefits, classification or age at issue, must be accepted in writing.
3. No agent or medical examiner is authorized to make or modify contracts or to waive any of the Company's rights or requirements.
Signed and Dated in:
On
- ------------------------------------------------------- -------------------------------------------------------------------------
City State Mo. Day Year Signature of Proposed Insured (OR PARENT, IF PROPOSED INSURED
IS UNDER AGE 16)
-------------------------------------------------------------------------
Signature of Owner/Payor
IF OWNER IS A CORPORATION THE SIGNATURE AND TITLE OF AN AUTHORIZED OFFICER OTHER THAN THE PROPOSED
INSURED IS REQUIRED AND THE FULL NAME OF THE CORPORATION MUST BE SHOWN.
I certify that I have truly and accurately recorded hereon the information supplied.
- --------------------------------------------- --------------------------------------- ---------------------------------------
Signature of Soliciting Agent Please Print Soliciting Agent Name State License ID Number (Required in
Florida)
Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or
statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning
any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil
penalties.
</TABLE>
AP9500-P2-NY -3- 85-21246-00 9/98
<PAGE>
<TABLE>
<CAPTION>
GENERAL QUESTIONNAIRE RISK AVOC
PM GROUP LIFE INSURANCE COMPANY [Logo of PL&A]
Service Center
700 Newport Center Drive
Newport Beach, CA 92660
- ------------------------------------------------------------------------------------------------------------------------------------
FULL NAME (Print) DATE OF BIRTH
Mo. ____________ Day ____________ Yr. _____________
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION A AUTOMOBILE, MOTORCYCLE AND/OR POWER BOAT RACING
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Type of racing? ___ Midget ___ Go-Kart ___ Sports Car ___ Modified Stock ___ Drag Racing ___ Motorcycle
___ Powerboat ___ Other (explain) ___________________________________________________________________________________________
2. Make? ___________________________ Model ? _____________________________ Displacement? __________________________________
Class? __________________________ Engine Make & Model? _____________________________ HP? ________________________________
3. (a) Number of races 12-24 months ago? ____________________________________ (b) Past 12 months? __ ___________________________
(c) Date of last race? ______________________________ (d) Est. next 12 months? _________________________________________________
4. Type of race? ___ Midget ___ Sports Car ___ Stock Car ___ Championship ___ Drag ___ Kart ___ Hillclimb
___ Cross Country ___ Hound & Hare ___ Moto-Cross ___ Other (explain) ______________________________________________
---------------------------------------------------------------------------------------------------------------------------------
5. Type of course? ___ Paved ___ Dirt ___ Drag Strip ___ Oval ___ Other (explain) ______________________________
_________________________________________________________________________________________________________________________________
6. Where do you race? ___ Local? If not, where? ____________________________________________________________________________
7. Competition against? ___ Other Cars ___ Clock ___ Straightaway __________________________________________________
8. Average Speed? ______________________ Top Speed? _________________________ Average miles per race? ______________________
9. Is your racing? ___ Professional ___ Amateur ___ Other (explain) ____________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION B UNDERWATER DIVING (SKIN OR SCUBA)
- ------------------------------------------------------------------------------------------------------------------------------------
1. What type of equipment do you use? ______________________________________________________________________________________________
2. Location of diving activities? _________________________ Diving for pleasure? ______________________ Pay? __________________
3. Do you belong to club or association? _____________________ Do you ever dive alone? _________________________________________
---------------------------------------------------------------------------------------------
4. Depth of Dives During Past 12 Months Expected Next 12 Months
-------------- ---------------------------------------------------------------------------------------------
No. Dives Average Time No. Dives Average Time
---------------------------------------------------------------------------------
a. Less than 40 feet
---------------------------------------------------------------------------------
b. 40 feet to 60 feet
---------------------------------------------------------------------------------
c. 60 feet & over
---------------------------------------------------------------------------------
d. Maximum depth obtained
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION C PARACHUTE JUMPING AND SKY DIVING
- ------------------------------------------------------------------------------------------------------------------------------------
1. Are you now a member of any parachute or sky diving club or association? ________________________________________________________
2. Are all of your jumps made under auspices of your club or association? __________________________________________________________
3. (a) Number of jumps 12 - 24 months ago? ________________ (b) Past 12 months? _________________ (c) Next 12 months? __________
4. Do you participate in delayed chute opening competition or other stunts? ________________________________________________________
5. Location of jump areas? _______________________________________ Date of last jump? __________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS IDENTIFY SECTION AND QUESTION
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
I represent that the foregoing answers and statements are correctly recorded, complete, and true to the best of my
knowledge and belief.
Date X
---------------------------------- -----------------------------------------------------------------------------------------
Mo. Day Year Signature of Proposed Insured (or Parent if Proposed Insured is under age 15)
_______________________________________
Signature of Soliciting Agent
_______________________________________
Agency No.
</TABLE>
AP7503-NY 85-21364-00
<PAGE>
GENERAL QUESTIONNAIRE RISK AVIA
PACIFIC LIFE & ANNUITY COMPANY [Logo of PL&A]
Service Center
700 Newport Center Drive
Newport Beach, CA 92660
- --------------------------------------------------------------------------------
FULL NAME (Print) DATE OF BIRTH
Mo. ______ Day _____ Yr. _____
- --------------------------------------------------------------------------------
SECTION D AVIATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
FOR CIVILIAN AND MILITARY PILOTS:
1. Type of aviation activity
HOURS FLOWN 5.A. Type of license/certificate/rating
LAST 12 12-24 MO. ALL PRIOR EST. NEXT held (CHECK APPROPRIATE BOXES):
MONTHS AGO YEARS 12 MO. ___ Student ___ Private
Civilian Pilot ___ Commercial ___ ATR ___ IFR
Military Pilot ___ Instructor ___ Other
Member of Crew (SPECIFY "REMARKS")
B. Date of last renewal:
______________________________
2. Have you ever done or do C. Purpose of flights:
you intend to engage in ______________________________
flying for the purpose of
exhibition, endurance tests, ______________________________
racing, stunt flying, D. Total flying hours to date:
testing, air cargo ______________________________
operations, crop dusting or E. Date of last flight:
spraying, or instruction of Yes No ______________________________
student pilots? ____________ ___ __ FOR CREW MEMBERS:
3.A. Have you ever flown or do 6.A. Duties aboard aircraft:
you intend to fly outside ______________________________
of the United States? ____ ___ __
B. Have you ever been involved _____________________________
in any accident due to B. Purpose of flights:
flying activities? _______ ___ __ ______________________________
C. Have you ever been charged
with any violation of air _____________________________
regulations? _____________ ___ __ C. Date of last flight:
(IF "YES" TO QUESTIONS 2, 3A, 3B OR 3C, ______________________________
EXPLAIN IN "REMARKS") D. Do you plan to take instructions
FOR PILOTS AND CREW MEMBERS OF MILITARY as a pilot? ___ Yes ___ No
AIRCRAFT: (IF "YES", EXPLAIN IN "REMARKS".)
4. Describe type of aircraft flown in 7. If aviation activity does not
(including alphabetic & numeric code). permit standard unrestricted
coverage, please issue as follows:
___ Full aviation coverage, if
available, with appropriate
extra premium.
___ Aviation exclusion rider.
</TABLE>
- --------------------------------------------------------------------------------
REMARKS IDENTIFY SECTION & AND QUESTION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
I represent that the foregoing answers and statements are correctly recorded,
complete, and true to the best of my knowledge and belief.
Date X
-------------------------------------- ----------------------------------
Mo. Day Year Signature of Proposed Insured (or
Parent if Proposed Insured is
under age 15)
- -------------------------------------------
Signature of Soliciting Agent
- -------------------------------------------
Agency No.
AP7503-NY 85-21364-00
<PAGE>
EXHIBIT 99.2
[Letterhead of Pacific Life & Annuity Company]
June 14, 1999
Pacific Life & Annuity Company
700 Newport Center Drive
Newport Beach, CA 92660
Dear Sirs:
In my capacity as Senior Vice President and General Counsel of Pacific Life &
Annuity Company ("PL&A") I, or attorneys employed by PL&A under my general
supervision, have supervised the establishment of Pacific Select Exec Separate
Account of Pacific Life & Annuity Company on September 24, 1998, which has been
authorized by resolutions of the Board of Directors of PL&A adopted July 1,
1998, concerning Pacific Select Exec Separate Account as the separate account
for assets applicable to Pacific Select Exec II-NY Flexible Premium Variable
Universal Life Insurance Policies ("Policies"), pursuant to the provisions of
A.R.S. Sections 20-2606, 250-651, 20-515, and 20-536.01 of the Insurance Code of
the State of Arizona. Moreover, I have been associated with the preparation of
the Registration Statement on Form S-6 ("Registration Statement") filed by PL&A
and Pacific Select Exec Separate Account (File No. pending) with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, for the
registration of interests in the Pacific Select Exec Separate Account funding
the Policies.
I have made such examination of the law and examined such corporate records and
such other documents as in my judgment are necessary and appropriate to enable
me to render the following opinion that:
1. PL&A has been duly organized under the laws of the State of
Arizona and is a validly existing corporation.
2. Pacific Select Exec Separate Account is duly created and validly
existing as a separate account, pursuant to the aforesaid provisions
of Arizona law.
3. The portion of the assets to be held in Pacific Select Exec Separate
Account equal to the reserves and other liabilities under the
Policies and any other policies issued by PL&A that are supported
by Pacific Select Exec Separate Account is not chargeable with
liabilities arising out of any other business PL&A may conduct.
4. The Policies have been duly authorized by PL&A and, when issued
as contemplated by the Registration Statement, will constitute legal,
validly issued and binding obligations of PL&A, except as limited
by bankruptcy and insolvency laws affecting the right of creditors
generally.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/DAVID R. CARMICHAEL
David R. Carmichael
Senior Vice President and
General Counsel
DRC/kjh
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Pacific Select Exec
Separate Account of Pacific Life & Annuity Company (formerly PM Group Life
Insurance Company) on Form S-6 of our report dated February 22, 1999, related to
the financial statements - statutory basis of PM Group Life Insurance Company as
of December 31, 1998 and 1997, and for each of the two years in the period ended
December 31, 1998, appearing in the Prospectus of Pacific Select Exec II-NY,
which is part of such Registration Statement.
We also consent to the reference to us under the heading "Experts" appearing in
such Prospectus.
DELOITTE & TOUCHE LLP
Costa Mesa, California
June 16, 1999
<PAGE>
[Letterhead of Dechert Price & Rhoads]
June 16, 1999
Pacific Life & Annuity Company
700 Newport Center Drive
Newport Beach, CA 92660
Re: Registration Statement for Interests in Pacific Select
Exec Separate Account of Pacific Life & Annuity
Company Under Pacific Select Exec II-NY Flexible
Premium Variable Life Insurance Policy
Dear Gentlepersons:
We hereby consent to the reference to our firm under the caption "Legal
Proceedings and Legal Matters" in the prospectus comprising a part of the above-
referenced Registration Statement.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
Dechert Price & Rhoads
<PAGE>
EXHIBIT 99.7
[Letterhead of Pacific Life & Annuity Company]
June 9, 1999
PACIFIC LIFE & ANNUITY COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
RE: Pacific Select Exec II-NY Flexible Premium Variable Life Insurance Policy
To whom it may concern:
In my capacity as Vice President, Individual Insurance of Pacific Life & Annuity
Company, I have provided actuarial advice concerning:
The preparation of the Registration Statement on Form S-6 filed by Pacific Life
& Annuity Company with the Securities and Exchange Commission under the
Securities Act of 1933 with respect to variable life insurance policies (the
"Registration Statement") and the preparation of the policy forms for the
variable life insurance policies described in the Registration Statement (the
"Policies").
It is my professional opinion that:
The illustration of death benefits, cash values and accumulated premiums shown
in the Appendix to the prospectus, based on the assumptions stated in the
illustrations and on the page immediately preceding the illustrations, are
consistent with the provisions of the Policies. The rate structure of the
Policies has not been designed so as to make the relationship between premiums
and benefits, as shown in the illustrations, appear to be correspondingly more
favorable to the prospective purchaser of the policies at age 45 in the
underwriting classes illustrated than to prospective purchasers of Policies at
other ages or underwriting classes.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/GARY FALDE
Gary Falde, FSA, MAAA
Vice President
<PAGE>
PACIFIC LIFE & ANNUITY COMPANY'S
DESCRIPTION OF ISSUANCE, TRANSFER AND REDEMPTION
PROCEDURES FOR POLICIES PURSUANT TO
RULE 6e-3(T)(b)(12)(iii)
This document sets forth the administrative procedures that will be
followed by Pacific Life & Annuity Company ("PL&A") in connection with the
issuance of its Pacific Select Exec II-NY Flexible Premium Variable Life
Insurance Policy ("Policy"), the transfer of assets held under the Policies, and
the redemption by Policy owners of their interests in said Policies.
I. PURCHASE AND RELATED TRANSACTIONS
A. Premium Schedules and Underwriting Standards
--------------------------------------------
The Policy is a flexible premium variable life insurance policy. The
Policy provides lifetime insurance protection for the insured named in the
Policy, with a death benefit payable when the insured dies while the Policy is
in force. A Policy owner may elect one of two death benefit qualification tests
and one of three options to calculate the amount of death benefit payable under
the Policy. The Policy will be offered and sold pursuant to an established
mortality structure and underwriting standards in accordance with state
insurance laws which prohibit unfair discrimination among Policy owners, but
allow cost of insurance rates to be based upon factors such as age, health or
occupation.
A Policy owner may choose the amount and frequency of premium payments,
subject to a minimum of $50 per payment.
B. Application and Initial Premium Processing
------------------------------------------
Upon receipt of a completed application for a Policy, PM Group will follow
certain insurance underwriting (i.e., evaluation of risk) procedures designed to
determine whether the proposed insured is insurable. This process may involve
verification procedures and may require that further information be provided by
the applicant before a determination can be made. PL&A will first become
obligated under a Policy when the total initial premium is received or on the
date the application is accepted by PL&A, whichever is later.
After the Policy is issued, insurance coverage under the Policy will be
deemed to have begun as of the Policy Date. The Policy Date is usually the date
that the Policy is issued. The Policy Date is the date used to determine Policy
years, Policy months, and Policy monthly, quarterly, semi-annual and annual
anniversaries.
C. Additional Premium Payments
---------------------------
The Policy is a flexible premium policy, and it provides flexibility to pay
premiums at the Policy owner's discretion. When applying for a Policy, a Policy
owner will determine a planned periodic premium that provides for the payment of
level premiums of fixed intervals over a specified period of time. Each Policy
owner will receive a premium reminder notice or listbill on either an annual,
semi-annual, or quarterly basis (or monthly (listbill only)), at the option of
the Policy owner; however, the Policy owner is not required to pay planned
periodic premiums.
Payment of the planned periodic premium will not guarantee that a
Policy will remain in force. Instead, the duration of the Policy depends upon
the Policy's accumulated value. Even if planned periodic premiums are paid, the
Policy will lapse any time accumulated value less Policy debt is
<PAGE>
insufficient to pay the current monthly deduction and a grace period expires
without sufficient payment. Any premium payment must be for at least $50. PL&A
also may reject or limit any premium payment that would result in an immediate
increase in the net amount at risk under the Policy, although such a premium may
be accepted with satisfactory evidence of insurability.
D. Premium Allocation
------------------
A Policy owner may allocate net premiums among the variable accounts and/or
the fixed accounts. When a Policy is issued and all delivery requirements are
received at PL&A's Service Center, the Accumulated Value will be automatically
allocated according to the Policy owner's instructions in the application or
more recent instructions if any (except for amounts allocated to the Loan
Account to secure any Debt). The initial allocation must be made in the
application for the Policy. All net premiums are allocated to the Policy owner's
instructions the later of 15 days after the Policy is issued or when all
requirements for the Policy to be considered in force are delivered to the
Service Center (the Free-Look Transfer Date).
Additional net premium payments will be allocated among the investment
alternatives according to the Policy owner's instructions (after the Free-Look
Transfer Date). A Policy owner may change the allocation of accumulated value by
submitting a proper written request to PL&A's Service Center.
PL&A reserves the right to limit the amount allocated to the Fixed LT
Account to $1,000,000 during the most recent 12 months for all of a Policy
owner's policies. Allocations include net premium payments, transfers and loan
repayments. Any excess over $1,000,000 would be transferred to a Policy owner's
other Investment Options according to the Policy owner's most recent
instructions.
E. Reinstatement
-------------
PL&A will reinstate a lapsed Policy (see "Policy Lapsation", Section III.C.
of this document) at any time within five years after the end of the grace
period, provided PL&A receives the following: (1) a written application of the
Policy owner; (2) evidence of insurability satisfactory to PL&A for each
insured; and (3) payment of all monthly charges and deductions that were due and
unpaid during the grace period, and payment of a premium at least equal to three
times the most recent monthly deduction.
When the Policy is reinstated, the accumulated value will be equal to the
accumulated value on the date of the lapse subject to the following: (1) if the
Policy is reinstated after the first monthly payment date following lapse, the
accumulated value will be reduced by the amount of the Policy debt on the date
of lapse and no Policy debt will exist on the date of reinstatement; (2) if the
Policy is reinstated on the monthly payment date next following lapse, any
Policy debt on the date of lapse will also be reinstated; and (3) no interest on
amounts held in PL&A's Loan Account so secure Policy debt will be paid or
credited between lapse and reinstatement.
Reinstatement will be effective as of the monthly payment date on or next
following the date of approval by PL&A, and accumulated value minus Policy debt
will be allocated among the variable accounts and the fixed options in
accordance with the Policy owner's current premium allocation instructions.
<PAGE>
F. Policy Loans
------------
A Policy owner may borrow from PL&A an amount up to the greater of 90% of
the Policy's accumulated value, less any outstanding Policy debt and any
surrender charges, or (2) 100% of the product of (a x b/c - d) where (a) equals
the Policy's accumulated value less 12 times the current monthly deduction; (b)
equals 1 plus the annual loan interest rate credited; (c) equals 1 plus the
annual loan interest rate currently charged; and (d) equals any existing Policy
debt. The minimum loan that may be taken is $200. A Policy is the only security
required for a loan.
When a Policy owner takes a loan, an amount equal to the loan is
transferred out of the Policy owner's accumulated value in the variable accounts
and the fixed options on a proportional basis, unless the Policy owner
instructs PL&A otherwise.
The interest rate on loans is 3.55% annually for all years. PL&A will
credit interest monthly on amounts held in the Loan Account to secure the loan
at an annual rate of 3.00% in Policy years 1 through 10, and 3.3% in Policy year
11 and thereafter. The owner may repay all or a part of the loan at any time
while the Policy is in force. If not repaid, the Policy debt will reduce the
amount of death proceeds paid upon the death of the insured, the cash surrender
value paid upon surrender, or the refund of premium upon exercise of the Free-
Look Right.
A loan may affect the length of time the Policy remains in force. The Policy
will lapse when accumulated value minus Policy debt is insufficient to cover the
monthly deduction against the Policy's accumulated value on any monthly payment
date and the minimum payment required is not made during the grace period.
Moreover, the Policy may enter the grace period more quickly when a loan is
outstanding, because the loaned amount is not available to cover monthly
deductions.
II. TRANSFER AMONG INVESTMENT OPTIONS
The Pacific Select Exec Separate Account (the "Separate Account") is a
separate investment account of PL&A used to support the variable death benefits
and policy values of PL&A's life insurance policies. The Separate Account
currently is made up of eighteen variable accounts which invest in shares of a
corresponding portfolio of Pacific Select Fund (the "Fund"), the investment
vehicle of the Separate Account. The Fund is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as an open-end
management investment company of the series type. The portfolios of the Fund,
each of which has a different investment objective, are the Money Market
Portfolio, the High Yield Bond Portfolio, the Managed Bond Portfolio, the
Government Securities Portfolio, the Growth Portfolio, the Aggressive Equity
Portfolio, the Growth LT Portfolio, the Equity Income Portfolio, the Multi-
Strategy Portfolio, the Mid-Cap Value Portfolio, the Large-Cap Value Portfolio,
the Equity Portfolio, the Bond and Income Portfolio, the Equity Index Portfolio,
the Small-Cap Index Portfolio, the REIT Portfolio, the International Portfolio,
and the Emerging Markets Portfolio.
A Policy owner may allocate accumulated value from the variable accounts to
the fixed options. However, such a transfer will only be permitted in the
Policy month preceding a Policy anniversary, except that such a transfer may be
made at any time during the first 18 Policy months. Transfers from the fixed
options to the variable accounts are also permitted, subject to the following
restrictions: (1) the Policy owner may not make more than one transfer from the
fixed options to the variable accounts in any 12-month period; and (2) the
Policy owner may transfer no more than the greater of 25% of the Accumulated
Value in the Fixed Account or $5,000 to the Variable Accounts in any 12-month
period, and no more than the greater of 10% of the Accumulated Value in the
Fixed LT Account or $5,000 to the Variable Accounts.
<PAGE>
PL&A reserves the right to limit the amount allocated to the Fixed LT
Account to $1,000,000 during the most recent 12 months for all of a Policy
owner's policies. Allocations include net premium payments, transfers and loan
repayments. Any excess over $1,000,000 would be transferred to a Policy owner's
other Investment Options according to the Policy owner's most recent
instructions.
III. REDEMPTION PROCEDURES: SURRENDER AND RELATED TRANSACTIONS
A. Surrender for Net Cash Surrender Value
--------------------------------------
A Policy owner can make partial withdrawals of the net cash surrender value
of the Policy starting on the first Policy anniversary. During the first
fifteen Policy years, the portion of a partial withdrawal of up to the lesser of
$10,000 or 10% of premium paid will not reduce the face amount under the Policy.
The excess of any withdrawal over this amount may cause a reduction in Face
Amount if the Death Benefit Option is Option A, as described below.
A partial withdrawal must be for at least $200, and the Policy's net cash
surrender value after the withdrawal must be at least $500. If there is any
Policy debt, the maximum partial withdrawal amount is limited to the excess, if
any, of the cash surrender value immediately prior to the withdrawal over the
result of the Policy debt divided by 90%.
When a partial withdrawal is made on a Policy on which the owner has
selected Death benefit Option A, the face amount under the Policy is decreased
by the excess, if any, of the face amount over the result of the death benefit
immediately prior to the partial withdrawal minus the amount of the partial
withdrawal. A partial withdrawal will not change the face amount of a Policy on
which the owner has selected Death Benefit Option B or Death Benefit Option C.
However, assuming that the death benefit is not equal to accumulated value times
a death benefit percentage, the partial withdrawal will reduce the death benefit
by the amount of the partial withdrawal. To the extent the death benefit is
based upon the accumulated value times the death benefit percentage applicable
to the insureds, a partial withdrawal may cause the death benefit to decrease by
an amount greater than the amount of the partial withdrawal.
B. Death Claims
------------
Upon the death of the insured, PL&A will pay to a named beneficiary death
benefit proceeds, either in a lump sum or under a payment plan offered under the
Policy. The proceeds will be the death benefit under the Policy, plus any
insurance proceeds provided by rider, reduced by adjustments for any outstanding
Policy debt (and, if in the grace period, any overdue charges).
The death benefit will be the greater of the Guideline Minimum Death
Benefit or one of the following three options: (1) Death Benefit Option A -- the
face amount of the Policy; (2) Death Benefit Option B -- the face amount of the
Policy plus the accumulated value; or (3) Death Benefit Option C -- the face
amount of the Policy plus the total premiums paid minus total withdrawals.
Because of the Guideline Minimum Death Benefit, an increase in accumulated value
may increase the death benefit.
The face amount of the Policy may be decreased by the Policy owner. Such a
change may change the death benefit, depending, among other things, upon the
death benefit option chosen by the owner and whether, and the degree to which,
the death benefit under a Policy exceeds the face amount prior to the change. A
change in the face amount may affect the net amount at risk under a Policy,
which may affect a Policy owner's cost of insurance charge. For these purposes,
the net amount at risk is equal to the death benefit less the policy owner's
accumulated value.
<PAGE>
Any request for a change in face amount must be by written application to
PL&A's Service Center. A Policy owner may make only one such request per Policy
year.
C. Policy Lapsation
----------------
If the accumulated value less Policy debt of a Policy is insufficient to
cover deductions and charges on a monthly payment date, PL&A will give written
notice to the Policy owner that if the amount shown in the notice (which will be
sufficient to cover the deduction amount(s) due) is not paid within 61 days (the
"grace period"), the Policy owner faces a danger of lapse. The Policy will
remain in force through the grace period, but if no payment is forthcoming, it
will terminate at the end of the grace period. In order to avoid termination,
the Policy owner must pay an amount equal to three times the charges and
deductions due on the monthly payment date in which the insufficiency occurred.
If the required payment is made during the grace period, such payment will
be allocated among the variable accounts and the fixed options in accordance
with the Policy owner's allocation instructions. If the survivor dies during the
grace period, the death benefit proceeds will equal the amount of the death
benefit immediately prior to the commencement of the grace period, reduced by
any unpaid monthly deductions and charges due and any Policy debt.
A lapsed Policy may be reinstated at any time within five years after the
end of the grace period but before the maturity date. See "Reinstatement",
Section I.E. above.
D. Policy Loans
------------
See Section I.F. above.
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution for him/her in his/her name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Exec Separate Account of
Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity
Company and any amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: March 23, 1999 /s/ DAVID R. CARMICHAEL
-------------------------------
David R. Carmichael
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger and Jeffrey S. Puretz his/her true and lawful attorney-in-fact and agent,
each with full power of substitution and resubstitution for him/her in his/her
name, place, and stead, in any and all Registration Statements applicable to
Pacific Select Exec Separate Account of Pacific Life & Annuity Company and
Separate Account A of Pacific Life & Annuity Company and any amendments or
supplements thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he/she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his/her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Dated: 6/15/99 /s/ BRIAN D. KLEMENS
-------------------------------
Brian D. Klemens
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him/her in his/her name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Exec Separate Account of
Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity
Company and any amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 3/23/99 /s/ WILLIAM L. FERRIS
-------------------------------
William L. Ferris
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution for him/her in his/her name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Exec Separate Account of
Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity
Company and any amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 3/23/99 /s/ AUDREY L. MILFS
-------------------------------
Audrey L. Milfs
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution for him/her in his/her name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Exec Separate Account of
Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity
Company and any amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 4/7/99 /s/ LYNN C. MILLER
-------------------------------
Lynn C. Miller
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution for him/her in his/her name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Exec Separate Account of
Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity
Company and any amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 3/23/99 /s/ GLENN S. SCHAFER
-------------------------------
Glenn S. Schafer
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution for him/her in his/her name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Exec Separate Account of
Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity
Company and any amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 22 MAR 99 /s/ TC SUTTON
-------------------------------
Thomas C. Sutton
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution for him/her in his/her name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Exec Separate Account of
Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity
Company and any amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 3/23/99 /s/ KHANH T. TRAN
-------------------------------
Khanh T. Tran
