<PAGE>
As filed with the Securities and Exchange Commission on April 27, 2000
Registration No. 333-80825
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
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
It is proposed that this filing will become effective on May 1, 2000 pursuant to
paragraph (b) of Rule 485.
Title of securities being registered: interests in the Separate Account under
Pacific Select Exec II-NY Flexible Premium Variable Life Insurance Policies.
Filing fee: None
<PAGE>
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)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C>
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
</TABLE>
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<TABLE>
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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
</TABLE>
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<CAPTION>
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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
</TABLE>
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<S> <C>
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
</TABLE>
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<TABLE>
<S> <C>
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
</TABLE>
<PAGE>
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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
</TABLE>
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<S> <C>
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
</TABLE>
<PAGE>
PACIFIC SELECT
EXEC II - NY PROSPECTUS MAY 1, 2000
Pacific Select Exec II - NY is a flexible premium
variable life insurance policy issued by Pacific Life &
Annuity Company.
This policy is not This prospectus provides information that you should
available in all know before buying a policy. It's accompanied by a
states. This current prospectus for the Pacific Select Fund, a fund
prospectus is not that provides the underlying portfolios for the
an offer in any variable investment options offered under the policy.
state or Please read these prospectuses carefully and keep them
jurisdiction where for future reference.
we're not legally
permitted to offer
the policy. Here's a list of all of the investment options
available under your policy:
The policy is
described in
detail in this VARIABLE INVESTMENT OPTIONS
prospectus. The
Pacific Select Aggressive Equity Mid-Cap Value
Fund is described
in its prospectus Emerging Markets Equity Index
and in its
Statement of Diversified Research Small-Cap Index
Additional
Information (SAI). Small-Cap Equity REIT
No one has the (formerly called
right to describe "Growth") International Value
the policy or the (formerly called
Pacific Select International "International")
Fund any Large-Cap
differently than Equity Government Securities
they have been
described in these I-Net Tollkeeper(SM) Managed Bond
documents.
Equity Income Money Market
You should be
aware that the Growth LT Large-Cap Value
Securities and
Exchange FIXED OPTIONS
Commission (SEC)
has not reviewed Fixed Account
the policy for its
investment merit, Fixed LT Account
and does not
guarantee that the
information in
this prospectus is
accurate or
complete. It's a
criminal offense
to say otherwise.
<PAGE>
YOUR GUIDE TO THIS PROSPECTUS
<TABLE>
<S> <C>
An overview of Pacific Select Exec II - NY 4
- ----------------------------------------------------------------------
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
- ----------------------------------------------------------------------
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
- ----------------------------------------------------------------------
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
- ----------------------------------------------------------------------
Your policy's accumulated value 29
Calculating your policy's accumulated value 29
Monthly deductions 29
Lapsing and reinstatement 32
- ----------------------------------------------------------------------
Your investment options 34
Variable investment options 34
Fixed options 38
Transferring among investment options 38
Transfer programs 39
- ----------------------------------------------------------------------
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
Benefits at Maturity 45
- ----------------------------------------------------------------------
General information about your policy 46
- ----------------------------------------------------------------------
Variable life insurance and your taxes 49
- ----------------------------------------------------------------------
About PL&A 53
- ----------------------------------------------------------------------
Illustrations 72
- ----------------------------------------------------------------------
Appendices 88
Appendix A: Rates per $1,000 of initial face amount 88
Appendix B: Death benefit percentages 89
- ----------------------------------------------------------------------
Where to go for more information back cover
</TABLE>
2
<PAGE>
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.
<TABLE>
<S> <C> <C> <C> <C>
Accumulated value 29 Joint owners 13
Accumulation units 36 Lapse 32
Age 13 Loan account 42
In this prospectus, Allocation 27 Maturity date 13
you and your mean Assignment 48 Modified endowment con-
the policyholder or Beneficiary 14 tract 51
owner. PL&A, we, us Business day 16 Monthly payment date 14
and our refer to Cash surrender value 44 Net amount at risk 30
Pacific Life & Cash value accumulation Net cash surrender value 44
Annuity Company. test 19 Net premium 26
The fund refers to Contingent beneficiary 14 Net single premium 19
Pacific Select Cost of insurance rate 29 Outstanding loan amount 42
Fund. Policy means Death benefit 18 Planned periodic premium 26
a Pacific Select Death benefit percentage 19 Policy anniversary 14
Exec II - NY Death benefit qualifica- Policy date 14
variable life tion test 19 Policy year 14
insurance policy, Face amount 18 Portfolio 34
unless we state Fixed account 38 Proper form 16
otherwise. Pacific Fixed LT account 38 Reinstatement 33
Life and the Fixed options 38 Riders 24
administrator mean General account 54 Separate account 54
Pacific Life Guideline minimum death Seven-pay limit 51
Insurance Company, benefit 19 Tax code 49
our parent company. Guideline premium limit 28 Unit value 36
Guideline premium test 19 Variable account 34
Illustration 15 Variable investment op-
In force 12 tion 34
Income benefit 46
</TABLE>
3
<PAGE>
AN OVERVIEW OF PACIFIC SELECT EXEC II - NY
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.
---------------------------------------------------------
Pacific Select Exec
II - NY basics Pacific Select Exec II - NY is a flexible premium
variable life insurance policy.
This policy may be . Flexible premium means you can vary the amount and
appropriate if you frequency of your premium payments.
want to provide a
death benefit for . Variable means the policy's value depends on the
family members or performance of the investment options you choose.
others or to help
meet other long- . Life insurance means the policy provides a death
term financial benefit to the beneficiary you choose.
objectives. It may
not be the right
kind of policy if In addition to providing a death benefit that is
you plan to generally free of federal income tax, any growth in
withdraw money for your policy's accumulated value is tax-deferred. You
short-term needs. can choose from 20 variable investment options, each of
which invests in a corresponding portfolio of the
Please discuss your Pacific Select Fund, and two fixed options, both of
insurance needs and which provide a guaranteed minimum rate of interest.
financial
objectives with
your registered
representative. You may choose to allocate net premiums and accumulated
value to no more than 20 investment options at any one
time.
You'll find more When the person insured by this policy reaches age 100,
about the basics of the policy will mature. We'll pay you the policy's net
Pacific Select Exec cash surrender value on the maturity date if the person
II - NY starting on insured by the policy is still living.
page 12.
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.
4
<PAGE>
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The death benefit
You can choose one of three death benefit options
Your policy depending on what is more important to you: a larger
provides a death death benefit or building the accumulated value of your
benefit for your policy.
beneficiary after
the person insured The death benefit will always be the greater of the
by the policy has death benefit under the option you choose or the
died, as long as guideline minimum death benefit.
your policy is in
force. This policy offers two ways to calculate the guideline
minimum death benefit: the cash value accumulation test
You'll find more and the guideline premium test. These are called death
about the death benefit qualification tests. The test you choose will
benefit starting on generally depend on the amount of premiums you want to
page 18. 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 seven optional riders that provide extra
benefits, some at additional cost.
---------------------------------------------------------
How premiums work
Deductions from your premiums
Your policy gives We deduct a premium load from each premium payment you
you the flexibility make. The premium load is made up of a sales load, a
to choose the state and local tax charge, and a federal tax charge.
amount and
frequency of your Limits on the premium payments you can make
premium payments Federal tax law puts limits on the premium payments you
within certain can make in relation to your policy's death benefit. We
limits. Each may refuse all or part of a premium payment you make,
premium payment or remove all or part of a premium from your policy and
must be at least return it to you under certain circumstances.
$50.
---------------------------------------------------------
You'll find more
about how premiums
work starting on
page 26.
Your policy's
accumulated value
Accumulated value is the value of your policy on any
Accumulated value business day. It is not guaranteed - it depends on the
is used as the performance of the investment options you've chosen,
basis for the premium payments you've made, policy charges, and
determining policy how much you've borrowed or withdrawn from the policy.
benefits and
charges. If there Monthly deductions
is not enough We deduct a monthly charge from your policy's
accumulated value accumulated value on each monthly payment date. The
to cover policy charge is made up of cost of insurance, an
charges, your administrative charge, and a mortality and expense risk
policy could lapse. charge. If you add any riders, we'll add any charges
for them to your monthly charge.
You'll find more
about accumulated Lapsing and reinstatement
value starting on If there is not enough accumulated value to cover the
page 29. 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. You cannot
reinstate your policy after its maturity date.
5
<PAGE>
AN OVERVIEW OF PACIFIC SELECT EXEC II - NY
---------------------------------------------------------
Your investment
options
The investment You can choose from 20 variable investment options,
options you choose each of which invests in a corresponding portfolio of
will affect your the Pacific Select Fund. Pacific Life is the investment
policy's adviser for the Pacific Select Fund. It oversees the
accumulated value, management of all the fund's portfolios and manages two
and may affect the of the portfolios directly. It has retained other
death benefit. portfolio managers to manage the other portfolios. The
value of each portfolio will fluctuate with the value
of the investments it holds, and returns are not
guaranteed.
Your policy's
accumulated value You can also choose from two fixed options, the Fixed
may be allocated to account and the Fixed LT account, both of which provide
up to 20 investment a guaranteed minimum annual interest rate of 3% during
options at any one the first 10 policy years, and 3.3% thereafter. We may
time. offer a higher interest rate. If we do, we'll guarantee
that rate for one year.
Please review the
investment options
carefully and ask We allocate your premium payments and accumulated value
your registered to the investment options you choose. Your policy's
representative to accumulated value will fluctuate depending on the
help you choose the investment options you've chosen. You bear the
right ones for your investment risk of any variable investment options you
goals and risk choose.
tolerance.
We'll hold your premium payments in the Money Market
investment option until the free look transfer date.
You'll find more Please turn to Your right to cancel for details.
about the
investment options
starting on page
34.
You'll find out Transferring among investment options
more about our You can transfer among the investment options during
automatic transfer the life of your policy without paying any current
programs starting income tax. There is currently no charge for transfers.
on page 39.
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 LT account 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.
---------------------------------------------------------
Withdrawals, You can take out all or part of your policy's
surrenders and accumulated value while your policy is in force by
loans making withdrawals or surrendering your policy. You can
take out a loan from us using your policy as security.
Making a You can also use your policy's loan and withdrawal
withdrawal, taking features to supplement your income, for example, during
out a loan or retirement.
surrendering your
policy can change Making withdrawals
your policy's tax You can withdraw part of your policy's net cash
status, generate surrender value starting on your policy's first
taxable income, or anniversary. This reduces your policy's accumulated
make your policy value and could affect the face amount and death
more susceptible to benefit.
lapsing. Be sure to
plan carefully
before using these
policy benefits.
You'll find more
about withdrawals,
surrenders and
loans starting on
page 41.
6
<PAGE>
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.
---------------------------------------------------------
Variable life Your beneficiary generally will not have to pay federal
insurance and your income tax on death benefit proceeds. You'll also
taxes generally not be taxed on any or all of your policy's
accumulated value unless you receive a cash
There are tax distribution by making a withdrawal or surrendering
issues to consider your policy.
when you own a life
insurance policy. If your policy is a modified endowment contract, all
These are described distributions you receive during the life of the policy
in detail starting may be subject to tax and a 10% penalty.
on page 49.
---------------------------------------------------------
About PL&A
When you buy a life PL&A is a life insurance company based in Arizona. We
insurance policy, issue the policies. Pacific Select Distributors, Inc.,
you're relying on our affiliate, is the distributor of the policies.
the insurance
company that issues How our accounts work
it to be able to We put your premium payments in our general and
meet its financial separate accounts. We own the assets in our accounts
obligations to you. and make the allocations to the investment options
you've chosen.
You'll find more Amounts allocated to the fixed options are held in our
about PL&A, and our general account. Our general account includes all of
strength as a our assets, except for those held in our separate
company, starting accounts. Our ability to meet our obligations under the
on page 53. policy is backed by our strength as an insurance
company.
We may use any Amounts allocated to the variable investment options
profit derived from are held in our separate account. The assets in this
any charges under account are kept separate from the assets in our
the policy for any general account and our other separate accounts, and
lawful purpose, are protected from our general creditors.
including our
distribution and
administrative
expenses.
7
<PAGE>
<TABLE>
<CAPTION>
AN OVERVIEW OF PACIFIC SELECT EXEC II - NY
<S> <C>
This section of the overview explains the fees and expenses associated with your
Pacific Select Exec II - NY policy.
---------------------------------------------------------------------------------------
Understanding policy expenses and YOUR PREMIUM
cash flow You make a
premium
The chart to the right illustrates how cash payment
normally flows through a Pacific Select
Exec II - NY policy. We deduct a
premium load
The dark shaded boxes show the fees and
expenses you pay directly or indirectly NET PREMIUM
under your policy. These are explained in We allocate the
the pages that follow. net premium to
the investment
We'll hold your net premium payments in the options you
Money Market investment option until the choose
free look transfer date. Please turn to
Your right to cancel for details. FIXED OPTIONS VARIABLE PACIFIC SELECT The fund
We hold INVESTMENT FUND deducts advisory
amounts you OPTIONS The variable fees and other
allocate to these We hold investment fund expenses from
options in our amounts you options invest the portfolios
general account allocate to these in the fund's
options in our portfolios
separate account
We deduct:
. cost of
insurance
. administrative
We make monthly deductions charge
. mortality and
expense risk
charge
. rider charges
LOAN ACCOUNT ACCUMULATED We deduct a
Accumulated VALUE If you make a withdrawal withdrawal charge
value set aside The total value
to secure a of your policy
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
</TABLE>
8
<PAGE>
---------------------------------------------------------
Deductions from
your premiums
We deduct a premium load from each premium payment you
The premium load is make. The load is made up of three charges:
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.
---------------------------------------------------------
Deductions from We deduct a monthly charge from your policy's
your policy's accumulated value in the investment options on each
accumulated value monthly payment date. This charge is made up of three
charges:
The monthly charge
is explained in Cost of insurance - We deduct a cost of insurance
more detail charge based on the cost of insurance rate for your
starting on page policy's initial face amount and for each increase you
29. make to the face amount. We calculate this charge by
multiplying the current cost of insurance rate by a
An example discounted net amount at risk at the beginning of each
For a policy that policy month.
insures a male non-
smoker who is age Administrative charge - We deduct a charge of $7.50 a
45 when the policy month.
is issued, with:
Mortality and expense risk charge - The mortality and
expense risk charge varies depending on your policy's
face amount, the age of the person insured by the
. a face amount of policy, and accumulated value. We deduct a charge based
$350,000 on your policy's initial face amount and on each
. accumulated value increase to the face amount. The charge is made up of
of $30,000 in the two separate charges:
variable options.
The monthly charge . The M&E risk face amount charge, which we deduct
for the M&E risk every month during the first 10 policy years at a
face amount charge rate that is based on the age of the person insured
is: by the policy on the policy date and each $1,000 of
the initial face amount of your policy. If you
. $44.45 (($350,000 increase your policy's face amount, the charge for
/ 1,000) X 0.127) the amount of the increase is based on the age of the
person insured by the policy on the day of the
The monthly charge increase.
for the M&E risk
asset charge is
$17.09 in policy
years 1 through 10 . The M&E risk asset charge, which we deduct every
(($25,000 X month of policy years 1 through 10 at an annual rate
0.0625%) plus of:
($5,000 X
0.0292%)). . 0.75% (0.0625% monthly), of the first $25,000 of your
policy's accumulated value in the variable investment
The monthly charge options, plus
for the M&E risk
asset charge is . 0.35% (0.0292% monthly), of the accumulated value in
$9.58 in policy the investment options that exceeds $25,000
year 11 and
thereafter and which we deduct every month of policy years 11 and
(($25,000 X thereafter at an annual rate of:
0.0375%) plus
($5,000 X . 0.45% (0.0375% monthly), of the first $25,000 of your
0.0042%)). policy's accumulated value in the variable investment
options, plus
. 0.05% (0.0042% monthly) of the accumulated value in
Sample rates for the variable investment options that exceeds $25,000.
the M&E risk face
amount charge For the purposes of this charge, accumulated value is
appear in Appendix calculated on the monthly payment date before we deduct
A. the monthly charge, but after we deduct any outstanding
loan amount or allocate any new net premiums,
withdrawals or loans.
Riders - If you add any riders to your policy, we add
any charges for them to your monthly charge.
9
<PAGE>
AN OVERVIEW OF PACIFIC SELECT EXEC II - NY
---------------------------------------------------------
Withdrawal and
surrender charges
You can withdraw part of your policy's net cash
Withdrawal and surrender value at any time starting on your policy's
surrender charges first anniversary. There is a $25 charge for each
are explained in withdrawal you make. We deduct this charge
more detail on proportionately from all of your investment options.
pages 41 and 44.
If you surrender or cash in your policy during the
An example first 10 years of owning the policy, we'll deduct a
For a policy: surrender charge. If you increase your policy's face
. that insures a amount and surrender your policy during the first 10
male non-smoker years after the increase, we'll apply a surrender
who is age 45 charge to the amount of the increase.
when the policy
is issued The surrender charge is assessed at a rate that is
. with an initial based on the age and risk class of the person insured
face amount of by the policy on the policy date, and each $1,000 of
$350,000. the initial face amount of your policy. The amount of
the surrender charge does not change during the first
The surrender policy year. Starting on the first policy anniversary,
charge is: we reduce the charge by 0.9259% a month until it
reaches zero at the end of 10 policy years.
. $8,757.00 in the
first policy year
(($350,000 /
$1,000) X 25.02) Your policy's surrender charge will never be greater
than the maximum surrender charge. The maximum
. $2,919.16 at the surrender charge is calculated at a rate that is based
end of the on the age and risk class of the person insured by the
seventh policy policy on the policy date, and each $1,000 of the
year ($8,757.00 - initial face amount of your policy. It does not change
($8,757.00 X during the first 10 policy years, and then is reduced
.9259% X 72 to zero at the end of the 10th policy year.
months))
If you increase your policy's face amount, each
increase has a surrender charge and maximum surrender
However, we will charge based on the amount of the increase. If you
never deduct more decrease the face amount, the decrease will not affect
than the maximum your policy's surrender charge or maximum surrender
surrender charge charge.
for this policy,
which is $4,426.10.
The most we will
assess on any
surrendered policy
is $32.752 per
$1,000 of face
amount.
Sample rates for
the surrender
charge and the
maximum surrender
charge appear in
Appendix A.
10
<PAGE>
---------------------------------------------------------
Fees and expenses The Pacific Select Fund pays advisory fees and other
paid by the Pacific expenses. These are deducted from the assets of the
Select Fund fund's portfolios and may vary from year to year. They
are not fixed and are not part of the terms of your
You'll find more policy. If you choose a variable investment option,
about the Pacific these fees and expenses affect you indirectly because
Select Fund they reduce portfolio returns.
starting on page
34, and in the Advisory fee
fund's prospectus, Pacific Life is the investment adviser to the fund. The
which accompanies fund pays an advisory fee to them for these services.
this prospectus. 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 the fund expenses for each
portfolio in 1999. To help limit fund expenses, Pacific
Life has 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, 2001. In 1999, Pacific Life
reimbursed the Small-Cap Index Portfolio $96,949.
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Portfolio Advisory fee Other expenses Total expenses+
--------------------------------------------------------------------
As an annual % of average daily net assets
<S> <C> <C> <C>
Aggressive Equity 0.80 0.05 0.85
Emerging Markets/1/ 1.10 0.32 1.42
Diversified Research/2/ 0.90 0.05 0.95
Small-Cap Equity 0.65 0.05 0.70
International Large-
Cap/2/ 1.05 0.15 1.20
Equity 0.65 0.04 0.69
I-Net Tollkeeper/2/ 1.50 0.15 1.65
Multi-Strategy 0.65 0.05 0.70
Equity Income 0.65 0.05 0.70
Growth LT 0.75 0.04 0.79
Mid-Cap Value 0.85 0.12 0.97
Equity Index/3/ 0.25 0.05 0.30
Small-Cap Index/4/ 0.50 0.44 0.94
REIT 1.10 0.18 1.28
International Value 0.85 0.16 1.01
Government Securities 0.60 0.06 0.66
Managed Bond/1/ 0.60 0.06 0.66
Money Market/1/ 0.35 0.05 0.40
High Yield Bond/1/ 0.60 0.06 0.66
Large-Cap Value 0.85 0.12 0.97
----------------------------------------------------------------
</TABLE>
/1/ Total net expenses for these portfolios in 1999,
after deduction of an offset for custodian credits,
were: 1.41% for Emerging Markets Portfolio, 0.65% for
Managed Bond Portfolio, 0.39% for Money Market
Portfolio, and 0.65% for High Yield Bond Portfolio.
/2/ Expenses are estimated. There were no actual
advisory fees or other expenses for these portfolios in
1999 because the portfolios started after December 31,
1999.
/3/ The advisory fee for the Equity Index Portfolio has
been adjusted to reflect the advisory fee increase
effective January 1, 2000. The actual advisory fee, and
total net expenses for this portfolio in 1999 after
deduction of an offset for custodian credit, were 0.16%
and 0.20%, respectively.
/4/ Total net expenses for the Small-Cap Index
Portfolio in 1999, after the advisor's reimbursement
and deduction of an offset for custodian credits were
0.75%.
+ The fund has adopted a brokerage enhancement 12b-1
plan, under which brokerage transactions may be placed
with broker-dealers in return for credits or other
compensation that may be used to help promote
distribution of fund shares. There are no fees or
charges to any portfolio under this plan, although the
fund's distributor may defray expenses of approximately
$300,000 for the year 2000, which it might otherwise
incur for distribution. If such defrayed amount were
considered a fund expense, it would represent
approximately .0023% or less of any portfolio's average
daily net assets.
11
<PAGE>
PACIFIC SELECT EXEC II - NY BASICS
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 When we approve your signed application, we'll issue
and endorsements your policy. If your application does not meet our
are a part of your underwriting requirements, we can reject it or ask you
policy and confirm for more information. Once we receive your first
changes you or we premium payment, the policy has been delivered to you
make to the policy. and any delivery requirements have been met, we'll
consider your policy to be in force. That's when our
Specification pages obligations under the policy begin.
summarize
information Your policy will be in force until one of the following
specific to your happens:
policy at the time . the person insured by the policy dies
the policy is . your policy matures
issued. . the grace period expires and your policy lapses, or
. you surrender your policy.
Riders provide If your policy is not in force when the person insured
extra benefits, by the policy dies, we are not obligated to pay the
some at additional death benefit proceeds to your beneficiary.
cost. Some riders
may only be added
when you apply for
your policy.
This policy may be Pacific Select Exec II - NY is a flexible premium
appropriate if you variable life insurance policy that insures the life of
want to provide a one person and pays death benefit proceeds after that
death benefit for person has died.
family members or
others or to help Under a flexible premium life insurance policy, you
meet other long- have the flexibility to choose the amount and frequency
term financial of your premium payments. You must, however, pay enough
objectives. It may premiums to cover the ongoing cost of policy benefits.
not be the right
kind of policy if A premium load is deducted from each premium payment
you plan to you make. The resulting net premium is allocated to the
withdraw money for investment options you choose, and becomes part of your
short-term needs. policy's accumulated value.
Please discuss your Charges are deducted from the accumulated value each
insurance needs and month to help cover the cost of the policy's death
financial benefit and other expenses. If there is not enough
objectives with accumulated value to cover the monthly charge on the
your registered day we make the deduction, your policy may lapse after
representative. a grace period - which means you'll no longer have any
insurance coverage.
We'll hold your net
premium payments in Investment earnings will increase your policy's
the Money Market accumulated value, while investment losses will
investment option decrease it. The premium payments you'll be required to
until the free look make to keep your policy in force will be influenced by
transfer date. the investment results of the investment options you've
Please turn to Your chosen.
right to cancel for
details.
12
<PAGE>
---------------------------------------------------------
Owners, person Owners
insured by the The owner is the person named on the application who
policy, and makes the decisions about the policy and its benefits
beneficiaries while it's in force. You can own a policy by yourself
or with someone else. Two or more owners are called
Please consult your joint owners. You need the signatures of all owners for
financial advisor all policy transactions.
or a lawyer about
designating If one of the joint owners dies, the surviving owners
ownership will hold all rights under the policy. If the last
interests. joint owner dies, his or her estate will own the policy
unless you've given us other instructions.
If you would like
to change the owner A policy can also be owned by an institution, trust,
of your policy, corporation or group or sponsored arrangement. These
please contact us owners often buy more than one policy, which may
or your registered qualify them for reduced charges or lower premium
representative for payments.
a change of owner
form. We can We may reduce or waive the sales load or surrender
process the change charges on policies sold to our directors or employees,
only if we receive to any of our affiliates, or to trustees, employees or
your instructions affiliates of the fund.
in writing.
You can change the owner of your policy by completing a
change of owner form. Once we've received 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 This policy insures the life of one person who is age
usually based on 85 or younger at the time you apply for your policy,
age, gender, health and who has given us satisfactory evidence of
and whether or not insurability. Your policy refers to this person as the
the person to be insured. The policy pays death benefit proceeds after
insured by the this person has died.
policy smokes. Most
insurance companies The person to be insured by the policy is assigned an
use similar risk underwriting or insurance risk class which we use to
classification calculate cost of insurance and other charges. We
criteria. normally use the medical or paramedical underwriting
method to assign underwriting or insurance risk
When we refer to classes, which may require a medical examination. We
age throughout this may, however, use other forms of underwriting if we
prospectus, we're think it's appropriate.
using the word as
we've defined it When we use a person's age in policy calculations, we
here, unless we generally use his or her age as of the nearest policy
tell you otherwise. date, and we add one year to this age on each policy
anniversary date. For example, when we talk about
The maturity date someone "reaching age 100", we're referring to the
of the policy is policy anniversary date closest to that person's 100th
the policy birthday, not to the day when he or she actually turns
anniversary on 100.
which the insured
is age 100.
13
<PAGE>
PACIFIC SELECT EXEC II - NY BASICS
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.
. You can also name a contingent beneficiary for each
primary beneficiary you name. The contingent
beneficiary will receive the death benefit proceeds
if the primary beneficiary dies.
. You can choose to make your beneficiary permanent
If you would like (sometimes called irrevocable). You cannot change a
to change the permanent beneficiary's rights under the policy
beneficiary of your without his or her permission.
policy, please
contact us or your . If none of your beneficiaries is still living when
registered the death benefit proceeds are payable, you as the
representative for policy owner will receive the proceeds. If you're no
a change of longer living, the proceeds will go to your estate.
beneficiary form.
We can process the . You can change your beneficiary at any time while the
change only if we person insured by the policy is still living, and
receive your while the policy is in force. The change will be
instructions in effective as of the day you signed the change of
writing. beneficiary form.
---------------------------------------------------------
Policy date, Your policy date
monthly payment This is usually the day we approve your policy
date, policy application. It's also the beginning of your first
anniversary date 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.
14
<PAGE>
---------------------------------------------------------
Statements and We send the following statements and reports to policy
reports we'll send owners:
you
. a confirmation for many financial transactions,
usually including premium payments and transfers,
loans, loan repayments, withdrawals and surrenders.
Monthly deductions and scheduled transactions made
We can create under the dollar cost averaging, portfolio
customized rebalancing and first year transfer programs are
hypothetical reported on your quarterly policy statement.
illustrations of
benefits under your . a quarterly policy statement. The statement will tell
policy based on you the accumulated value of your policy by
different investment options, cash surrender value, the amount
assumptions. You'll of the death benefit, the policy's face amount, and
find sample any outstanding loan amount. It will also include a
illustrations summary of all transactions that have taken place
starting on page since the last quarterly statement, as well as any
72. other information required by law.
We'll send you one
policy illustration . supplemental schedules of benefits and planned
free of charge each periodic premiums. We'll send these to you if you
policy year if you change your policy's face amount or change any of the
ask for one. We policy's other benefits.
reserve the right
to charge $25 for . financial statements, at least annually or as
additional required by law, of the separate account and Pacific
illustrations. Select Fund, that include a listing of securities for
each portfolio of the Pacific Select Fund.
---------------------------------------------------------
Your right to
cancel
During the free look period, you have the right to
Please call us or cancel your policy and return it to us or your
your registered registered representative for a refund.
representative if
you have questions The amount of your refund will be the amount of the
about your right to premium payments you've made. We'll always deduct any
cancel your policy. outstanding loan amount from the amount we refund 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:
. 10 days after we issue your policy
. when we consider your policy to be in force.
15
<PAGE>
PACIFIC SELECT EXEC II - NY BASICS
---------------------------------------------------------
Timing of payments, Effective date
forms and requests The effective date of payments, forms and requests you
send us is usually determined by the day and time we
A business day, receive the item in proper form at the mailing address
called a valuation that appears on the back cover of this prospectus.
date in your
policy, is any day Planned periodic premium payments, loan requests,
that the New York transfer requests, loan payments or withdrawal or
Stock Exchange and surrender requests that we receive in proper form
our life insurance before 4:00 p.m. Eastern time on a business day will
client services normally be effective as of the end of that day, unless
offices are open. the transaction is scheduled to occur on another
It usually ends at business day. If we receive your payment or request on
4:00 p.m. Eastern or after 4:00 p.m. Eastern time on a business day, your
time. payment or request will be effective as of the end of
the next business day. If a scheduled transaction falls
The New York Stock on a day that is not a business day, we'll process it
Exchange is usually as of the end of the next business day.
closed on weekends
and on the Other forms, notices and requests are normally
following days: effective as of the next business day after we receive
them in proper form, unless the transaction is
. New Year's Day, scheduled to occur on another business day. Change of
Martin Luther owner and beneficiary forms are effective as of the day
King, Jr. Day, you sign the change form, once we receive them in
President's Day, proper form.
Good Friday,
Memorial Day, Proper form
July Fourth, We'll process your requests once we receive all
Labor Day, letters, forms or other necessary documents, completed
Thanksgiving Day to our satisfaction. Proper form may require, among
and Christmas Day other things, a signature guarantee or some other proof
of authenticity. We do not generally require a
signature guarantee, but we may ask for one if it
. the Friday before appears that your signature has changed, if the
New Year's Day, signature does not appear to be yours, if we have not
July Fourth or received a properly completed application or
Christmas Day if confirmation of an application, or for other reasons to
that holiday protect you and us.
falls on a
Saturday
. the Monday
following New
Year's Day, July
Fourth or
Christmas Day if
that holiday
falls on a Sunday
Unless unusual
business conditions
exist, such as the
ending of a monthly
or the yearly
accounting period.
Our client services
offices are also
usually closed on
the following days:
. the Monday before
New Year's Day,
July Fourth, or
Christmas Day, if
any of these
holidays falls on
a Tuesday
. the Tuesday
before Christmas
Day if that
holiday falls on
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.
16
<PAGE>
When we make payments and transfers
We'll normally send the proceeds of transfers,
To request payment withdrawals, loans, surrenders, exchanges and death
of death benefit benefit payments within seven days after the effective
proceeds, send us date of the request. We may delay payments and
proof of death and transfers, or the calculation of payments and transfers
payment 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
. 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.
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.
---------------------------------------------------------
Telephone You can make loans or transfers by telephone any time
transactions 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, the administrator, 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.
17
<PAGE>
THE DEATH BENEFIT
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 This policy offers three death benefit options, Options
initial amount of A, B and C. The option you choose will generally depend
insurance coverage on which is more important to you: a larger death
is its initial face benefit or building the accumulated value of your
amount. We policy.
determine the face
amount based on This policy offers two ways to calculate the guideline
instructions minimum death benefit: the cash value accumulation test
provided in your and the guideline premium test. These are called death
application. benefit qualification tests. The test you choose will
generally depend on the amount of premiums you want to
The minimum face pay.
amount when a
policy is issued is Here are some things you need to know about the death
usually $50,000, benefit:
but we may reduce . You choose your death benefit option and death
this in some benefit qualification test on your policy
circumstances. application.
. If you do not choose a death benefit option, we'll
assume you've chosen Option A.
You'll find your . If you do not choose a death benefit qualification
policy's face test, we'll assume you've chosen the guideline
amount, which premium test.
includes any . The death benefit will always be the greater of the
increases or death benefit under the option you choose or the
decreases, in the guideline minimum death benefit, calculated using the
specification pages death benefit qualification test you've chosen.
in your policy. . 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.
---------------------------------------------------------
Choosing your death
benefit option You can choose one of the following three options for
the death benefit on your application.
Option A - the Option B - the face amount of
face amount of your policy plus its accumulated
your policy. value.
[OPTION A ARTWORK [OPTION B ARTWORK APPEARS HERE]
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.
[OPTION C ARTWORK
APPEARS HERE]
The more premiums
you pay and the
less you withdraw,
the larger the
death benefit will
be.
18
<PAGE>
---------------------------------------------------------
Choosing a death This policy offers two death benefit qualification
benefit tests, which we use to calculate the guideline minimum
qualification test death benefit. You choose one of these tests on your
application. Once you choose a test, you cannot change
The guideline it.
minimum death
benefit is the In general, you should choose the cash value
minimum death accumulation test if you do not want to limit the
benefit needed for amount of premiums you can pay into your policy. If you
your policy to want to pay a premium that increases the net amount at
qualify as life risk, however, you need to provide us with satisfactory
insurance under evidence of insurability before we can increase the
Section 7702 of the death benefit.
Internal Revenue
Code. The guideline minimum death benefit will generally be
smaller under the guideline premium test than under the
Net amount at risk cash value accumulation test.
is the difference
between the death Cash value accumulation test
benefit that would If you choose the cash value accumulation test, your
be payable if the policy's guideline minimum death benefit will be the
person insured by greater of:
the policy died and
the accumulated . the minimum death benefit amount that's needed for
value of your the policy to qualify as life insurance under the tax
policy. code or
. 101% of the policy's accumulated value.
There are other This test determines what the death benefit should be
limits on premiums in relation to your policy's accumulated value. In
you can pay into general, as your policy's accumulated value increases,
your policy, which the death benefit must also increase to ensure that
are described in your policy qualifies as life insurance under the tax
How premiums work. code.
The cash value Under the test, a policy's death benefit must be large
accumulation test enough to ensure that its cash surrender value, as
is defined in defined in Section 7702 of the tax code (and which is
Section 7702(b) of based on accumulated value, among other things), is
the tax code. never larger than the net single premium that's needed
to fund future benefits under the policy. The net
An example single premium under your policy varies according to
For a policy that the age, sex, and risk class of the person insured by
insures a male, age your policy. It's calculated using an interest rate of
45 when the policy at least 4% and the guaranteed mortality charges as of
was issued, with a the time the policy is issued. We'll use a higher
standard nonsmoking interest rate if we've guaranteed it under your policy.
risk class, in
Policy Year 6 the The death benefit determined by your policy's net
guideline minimum single premium will be at least equal to the amount
death benefit under required for the policy to qualify as life insurance
the cash value under the tax code.
accumulation test
is calculated by
multiplying each
$1,000 of
accumulated value
by a "net single
premium factor" of
2.4728.
Guideline premium test
The guideline If you choose the guideline premium test, we calculate
premium test is the guideline minimum death benefit by multiplying your
defined in Section policy's accumulated value by a death benefit
7702(a)(2) of the percentage.
tax code.
Death benefit
percentages are You'll find a table of death benefit percentages in
defined in Section Appendix B and in your policy. The death benefit
7702(d) of the tax percentage is based on the guideline premium limit and
code. 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.
19
<PAGE>
THE DEATH BENEFIT
---------------------------------------------------------
Comparing the death The tables below compare the death benefits provided by
benefit options 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)
<TABLE>
-------------------------------------------------------------------------------------
<CAPTION> 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
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
-------------------------------------------------------------------------------------
</TABLE>
<TABLE>
-------------------------------------------------------------------------------------
<CAPTION> 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
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
-------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
If the death Here's the same example, but with an accumulated value
benefit equals the of $75,000. Because accumulated value has increased,
guideline minimum the guideline minimum death benefit is now:
death benefit, any
increase in . $138,750 for the guideline premium test
accumulated value . $185,460 for the cash value accumulation test.
will cause an
automatic increase
in the death
benefit.
<TABLE>
-------------------------------------------------------------------------------------
<CAPTION> 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
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
-------------------------------------------------------------------------------------
</TABLE>
<TABLE>
-------------------------------------------------------------------------------------
<CAPTION> 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
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
-------------------------------------------------------------------------------------
</TABLE>
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.
21
<PAGE>
THE DEATH BENEFIT
---------------------------------------------------------
When we pay the
death benefit
We calculate the amount of the death benefit proceeds
Your beneficiary as of the end of the day the person insured by the
can choose to policy dies. If that person dies on a day that is not a
receive the death business day, we calculate the proceeds as of the next
benefit proceeds in business day.
a lump sum or use
it to buy an income Your policy's beneficiary must send us proof that the
benefit. Please see person insured by the policy died while the policy was
the discussion in force, along with payment instructions.
about income
benefits in General Death benefit proceeds equal the total of the death
information about benefits provided by your policy and any riders you've
your policy. added, minus any outstanding loan amount, minus any
overdue charges.
It is important
that we have a We'll pay interest at an annual rate of at least 3% on
current address for the death benefit proceeds, calculated from the day the
your beneficiary so person insured by the policy dies to the day we pay the
that we can pay proceeds.
death benefit
proceeds promptly.
If we cannot pay
the proceeds to
your beneficiary
within five years
of the death of the
person insured by
the policy, we'll
be required to pay
them to the state.
---------------------------------------------------------
Changing your death
benefit option
You can change your death benefit option while your
We will not change policy is in force. Here's how it works:
your death benefit
option if it means . You can change the death benefit option once in any
your policy will be policy year.
treated as a
modified endowment . You must send us your request in writing.
contract, unless
you've told us in . You can change to Option A or Option B.
writing that this
would be acceptable . You cannot change from any death benefit option to
to you. Modified Option C.
endowment contracts
are discussed in . The change will become effective on the first monthly
Variable life payment date after we receive your request. If we
insurance and your receive your request on a monthly payment date, we'll
taxes. 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.
Net amount at risk We may waive this minimum amount under certain
is the difference circumstances.
between the death
benefit that would . Changing the death benefit option can also affect the
be payable if the monthly cost of insurance charge since this charge
person insured by varies with the net amount at risk.
the policy died and
the accumulated . The new death benefit option will be used in all
value of your future calculations.
policy.
22
<PAGE>
---------------------------------------------------------
Changing the face
amount
You can increase or decrease your policy's face amount
If you change the as long as we approve it. Here's how it works:
face amount, we'll
send you a . You can change the face amount as long as the person
supplemental insured by the policy is still living.
schedule of
benefits and . You can only change the face amount once in any
premiums. policy year.
. You must send us your request in writing while your
policy is in force.
. The change will become effective on the first monthly
If your policy's payment date after we receive your request. If we
death benefit is receive your request on a monthly payment date, we'll
equal to the process it that day.
guideline minimum
death benefit, and . The person insured by the policy will also need to
the net amount at agree to the change in face amount, if that person is
risk is more than someone other than you.
three times the
death benefit on . Increasing the face amount may increase the death
the policy date, we benefit, and decreasing the face amount may decrease
may reduce the the death benefit. The amount the death benefit
death benefit by changes will depend, among other things, on the death
requiring you to benefit option you've chosen and whether, and by how
make a withdrawal much, the death benefit is greater than the face
from your policy. amount before you make the change.
If we require you . Changing the face amount can affect the net amount at
to make a risk, which affects the cost of insurance charge. An
withdrawal, we will increase in the face amount may increase the cost of
not charge you our insurance charge, while a decrease may decrease the
usual $25 charge.
withdrawal fee, but
the withdrawal may . We can refuse your request to make the face amount
be taxable. Please less than $50,000. We can waive this minimum amount
turn to in certain situations, such as group or sponsored
Withdrawals, arrangements.
surrenders and
loans for Increasing the face amount
information about Here are some additional things you should know about
making withdrawals. increasing the face amount:
. You may request an increase in your policy's face
amount starting on the first policy anniversary.
. You must give us satisfactory evidence of
insurability.
. Each increase you make to the face amount must be
$25,000 or more.
. 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.
23
<PAGE>
THE DEATH BENEFIT
Decreasing the face Decreasing the face amount
amount may affect Here are some additional things you should know about
your policy's tax decreasing the face amount:
status. To ensure
your policy . You may not decrease your policy's face amount prior
continues to to the fifth anniversary of:
qualify as life . your policy date
insurance, we might . the effective date of any increase
be required to . We'll apply any decrease in the face amount in the
return part of your following order:
premium payments to . to the most recent increases you made to the face
you if you've amount in the order you made them
chosen the . to the original face amount.
guideline premium . We do not charge you for a decrease in face amount.
test, or make . We can refuse your request to decrease the face
distributions from amount if making the change means:
the accumulated . your policy will end because it no longer qualifies
value, which may be as life insurance
taxable. . 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
For more contract and you have not told us in writing that
information, please this is acceptable to you.
see Variable life
insurance and your
taxes.
---------------------------------------------------------
Optional riders
Ask your registered There are seven optional riders that provide extra
representative for benefits, some at additional cost. Not all riders are
more information available in every state, and some riders may only be
about the riders added when you apply for your policy.
available with the
policy. . Accidental death rider
Provides additional insurance coverage in the event
of the accidental death of the person insured by the
There may be tax policy.
consequences if you
exercise your . Children's term rider
rights under the Provides term insurance for the children of the
Accelerated living person insured by the policy.
benefits rider.
Please see Variable . Annual renewable term rider
life insurance and Provides annual renewal term insurance on the person
your taxes for more insured by the policy until age 80.
information.
. Annual renewable and convertible term rider
Provides annual renewal term insurance on members of
the immediate family of the person insured by the
policy.
Samples of the . Guaranteed insurability rider
provisions for the Gives the right to buy additional insurance on the
extra optional life of the person insured by the policy on certain
benefits are specified dates without proof of insurability.
available from us
upon written . Waiver of charges rider
request. Waives certain charges if the person insured by the
policy becomes totally disabled before age 60.
. 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'll add any rider charges to the monthly charge we
deduct from your policy's accumulated value.
24
<PAGE>
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.
25
<PAGE>
HOW PREMIUMS WORK
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.
We deduct a premium load from each premium payment, and
then allocate your net premium to the investment
options you've chosen. Depending on the performance of
The amount, your investment options, and on how many withdrawals,
frequency, and loans or other policy features you've taken advantage
period of time over of, you may need to make additional premium payments to
which you make keep your policy in force.
premium payments
may affect whether If we do not receive your first premium payment within
your policy will be 20 days after we issue your policy, we can cancel the
classified as a policy and refund any partial premium payment you've
modified endowment made. We may waive the 20 day requirement in some
contract, or no cases.
longer qualifies as
life insurance for
tax purposes. See
Variable life
insurance and your
taxes for more
information.
---------------------------------------------------------
Planned periodic You can schedule the amount and frequency of your
premium payments premium payments. We refer to scheduled premium
payments as your planned periodic premium. Here's how
Even if you pay all it works:
your premiums when
they're scheduled, . On your application, you choose a fixed amount of at
your policy could least $50 for each premium payment.
lapse if the
accumulated value, . You indicate whether you want to make premium
less any payments annually, semi-annually, or quarterly. You
outstanding loan can also choose monthly payments using our monthly
amount, is not Uni-check plan, which is described below.
enough to pay your
monthly charges. . We send you a notice to remind you of your scheduled
Turn to Your premium payment (except for monthly Uni-check
policy's payments, which are paid automatically). If you own
accumulated value more than one policy, we'll send one notice -- called
for more a listbill -- that reminds you of your payments for
information. 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.
26
<PAGE>
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.
---------------------------------------------------------
Deductions from
your premiums
We deduct a premium load from each premium payment you
Your net premium is make. The load is made up of three charges:
your premium
payment less the Sales load
premium 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.
---------------------------------------------------------
Allocating your
premiums We generally allocate your net premiums to the
investment options you've chosen on your application on
There are special the day we receive them. We currently limit your
restrictions when allocations to 20 investment options at one time.
allocating premiums
to the Fixed LT
account.
We allocate your first premium on the free look
transfer date. We'll hold your net premiums in the
Please turn to Your Money Market investment option until the free look
investment transfer date, and then transfer them to the investment
optionsfor more options you've chosen.
information about
the investment
options.
27
<PAGE>
HOW PREMIUMS WORK
---------------------------------------------------------
Limits on the Federal tax law puts limits on the amount of premium
premium payments payments you can make in relation to your policy's
you can make death benefit. These limits apply in the following
situations:
Before you buy a
policy, you can ask . If you've chosen the guideline premium test as your
us or your death benefit qualification test and accepting the
registered premium means your policy will no longer qualify as
representative for life insurance for federal income tax purposes.
a personalized
illustration that The total amount you can pay in premiums and still have
will show you the your policy qualify as life insurance is your policy's
guideline single guideline premium limit. The sum of the premiums paid,
premium and less any withdrawals, at any time cannot exceed the
guideline level guideline premium limit, which is the greater of:
annual premiums.
. 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 . If applying the premium in that policy year means your
detailed discussion policy will become a modified endowment contract.
of modified
endowment contracts A life insurance policy will become a modified
in Variable life endowment contract if the sum of premium payments made
insurance and your during the first seven contract years, less a portion
taxes. 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 . If applying the premium payment to your policy will
is the difference increase the net amount at risk. This will happen if
between the death your policy's death benefit is equal to the guideline
benefit that would minimum death benefit or would be equal to it once we
be payable if the applied your premium payment.
person insured by
the policy died and We may choose to accept your premium payment in this
the accumulated situation, but before we do so, we may require
value of your satisfactory evidence of the insurability of the person
policy. insured by the policy.
28
<PAGE>
YOUR POLICY'S ACCUMULATED VALUE
Accumulated value Accumulated value is the value of your policy on any
is used as the business day.
basis for
determining policy We use it to calculate how much money is available to
benefits and you for loans and withdrawals, and how much you'll
charges. 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.
---------------------------------------------------------
Calculating your Your policy's accumulated value is the total amount
policy's allocated to the variable investment options and the
accumulated value fixed options, plus the amount in the loan account.
Please see Taking We determine the value allocated to the variable
out a loan for investment options on any business day by multiplying
information about the number of accumulation units for each variable
loans and the loan investment option credited to your policy on that day,
account. 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.
---------------------------------------------------------
Monthly deductions We deduct a monthly charge from your policy's
accumulated value in the investment options each
If there is not monthly payment date.
enough accumulated
value to pay the Unless you tell us otherwise, we deduct the monthly
monthly charge, charge from the investment options that make up your
your policy could policy's accumulated value, in proportion to the
lapse. The accumulated value you have in each option. This charge
performance of the is made up of three charges:
investment options
you choose, not Cost of insurance
making planned
premium payments, This charge is for providing you with life insurance
or taking out a protection. Like other policy charges, we may profit
loan all affect the from the cost of insurance charge and may use these
accumulated value profits for any lawful purpose such as the payment of
of your policy. distribution and administrative expenses.
We deduct a cost of insurance charge based on the cost
You'll find a of insurance rate for your policy's initial face amount
discussion about and for each increase you make to the face amount.
when your policy
might lapse, and There are maximum or guaranteed cost of insurance rates
what you can do to associated with your policy. These rates are shown in
reinstate it, later your policy's specification pages.
in this section.
The guaranteed rates include the insurance risks
Unisex rates are associated with insuring one person. They are
used when a policy calculated using 1980 Commissioners Standard Ordinary
is owned by an Mortality Tables or the 1980 Commissioners Ordinary
employer in Mortality Table B, which are used for unisex cost of
connection with insurance rates. The rates are also based on the age,
employment-related gender and risk class of the person insured by the
or benefit policy unless unisex rates are required.
programs.
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.
29
<PAGE>
YOUR POLICY'S ACCUMULATED VALUE
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.
---------------------------------------------------------
If you add an How we calculate cost of insurance
annual renewable We calculate cost of insurance by multiplying the
term rider to your current cost of insurance rate by a discounted net
policy, we will amount at risk at the beginning of each policy month.
include the face
amount of the rider Net amount at risk for the cost of insurance
in this calculation calculation is the difference between a discounted
of cost of death benefit that would be payable if the person
insurance. 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.
30
<PAGE>
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.
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
expenses we expected.
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.
---------------------------------------------------------
An example How we calculate the mortality and expense risk charge
For a policy that The mortality and expense risk charge has two separate
insures a male non- charges:
smoker who is age
45 when the policy . M&E risk face amount charge We deduct a face amount
is issued, with: charge every month during the first 10 policy years,
at a rate that is based on the age of the person
insured by the policy on the policy date and on a
face amount component factor per $1,000 of the
. a face amount of initial face amount of your policy. The rates for the
$350,000 face amount component are shown in Appendix A.
. accumulated value
of $30,000 in the
variable options If you increase the face amount, each increase will
after deducting have a corresponding face amount charge related to
any outstanding the amount of the increase. We'll specify these
loan amount. charges in a supplemental schedule of benefits at the
time of the increase. We'll apply each charge for 10
The monthly charge years from the day of the increase. If you decrease
for the M&E risk the face amount, the charge will remain the same.
face amount charge
is: . M&E risk asset charge We deduct a risk asset charge
every month.
During policy years 1 through 10, we charge an annual
. $44.45 (($350,000 rate 0.75% (0.000625 monthly), of the first $25,000
/ 1,000) X 0.127). of your policy's accumulated value in the variable
investment options, plus an annual rate of 0.35%
The monthly charge (0.000292 monthly), of the accumulated value in the
for the M&E risk variable investment options that exceeds $25,000.
asset charge is
$17.09 in policy During policy years 11 and thereafter, we charge an
years 1 through 10 annual rate of 0.45% (0.0375% monthly) on the first
(($25,000 X $25,000 of your policy's accumulated value in the
0.0625%) plus variable investment options plus an annual rate of
($5,000 X 0.05% (0.0042% monthly) of the accumulated value in
0.0292%)). the variable investment options that exceeds $25,000.
The monthly charge For the purposes of this charge, the amount of
for the M&E risk accumulated value is calculated on the monthly
asset charge is payment date before we deduct the monthly charge, but
$9.58 in policy after we deduct any outstanding loan amount or
year 11 and allocate any new net premiums, withdrawals or loans.
thereafter
(($25,000 x
0.0375%) plus
($5,000 x
0.0042%)).
Sample rates for Charges for optional riders
the M&E risk face If you add any riders to your policy, we add any
amount charge charges for them to your monthly charge.
appear in Appendix
A.
31
<PAGE>
YOUR POLICY'S ACCUMULATED VALUE
---------------------------------------------------------
Lapsing and Your policy will lapse if there is not enough
reinstatement 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 you make the minimum payment
if your payment is
a premium payment. If we receive your payment within the grace period,
Otherwise, we'll we'll allocate your net premium to the investment
treat it as a loan options you've chosen and deduct the monthly charge
repayment. 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.
32
<PAGE>
Reinstating a lapsed policy
If your policy lapses, you have five years from the end
of the grace period but before the maturity date 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. When 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.
33
<PAGE>
YOUR INVESTMENT OPTIONS
This section tells you about the investment options
available under your policy and how they work.
We put your premium payments in our general and
You can change your separate accounts. We own the assets in our accounts
premium allocation and allocate your premiums, less any charges, to the
instructions by investment options you've chosen. Amounts allocated to
writing, sending a the fixed options are held in our general account.
fax, or, if we have Amounts allocated to the variable investment options
your completed are held in our separate account.
telephone
authorization form You choose your initial investment options on your
on file, by calling application. If you choose more than one investment
us at 1-888-595- option, you must tell us the dollar amount or
6997. Or you can percentage you want to allocate to each option. You can
ask your registered change your premium allocation instructions at any
representative to time.
contact us.
You'll find The investment options you choose, and how they
information about perform, will affect your policy's accumulated value
when we allocate and may affect the death benefit. Please review the
premium payments to investment options carefully and ask your registered
your investment representative to help you choose the right ones for
options in How your goals and tolerance for risk. Make sure you
premiums work. understand any costs you may pay directly and
indirectly on your investment options because they will
affect the value of your policy.
Your policy's
accumulated value
may be allocated to
up to 20 investment
options at any one
time.
---------------------------------------------------------
Variable investment
options
Variable investment You can choose from 20 variable investment options.
options are also Each variable investment option is set up as a variable
known as variable account under our separate account and invests in a
accounts. These corresponding portfolio of the Pacific Select Fund.
variable accounts Each portfolio invests in different securities and has
are divisions of its own investment goals, strategies and risks. The
our separate value of each portfolio will fluctuate with the value
account. We bear of the investments it holds, and returns are not
the direct guaranteed. Your policy's accumulated value will
operating expenses fluctuate depending on the investment options you've
of our separate chosen. You bear the investment risk of any variable
account. For more investment options you choose.
information about
how these accounts The following chart is a summary of the Pacific Select
work, see About Fund portfolios. You'll find detailed descriptions of
PL&A. the portfolios in the Pacific Select Fund prospectus
that accompanies this prospectus. There's no guarantee
that a portfolio will achieve its investment objective.
Pacific Life is the You should read the fund prospectus carefully before
investment adviser investing.
for the Pacific
Select Fund. They
oversee the
management of all
the fund's
portfolios, and
manage two of the
portfolios
directly. They've
retained other
portfolio managers
to manage the other
portfolios.
34
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO THE PORTFOLIO'S THE PORTFOLIO'S PORTFOLIO
INVESTMENT GOAL MAIN INVESTMENTS MANAGER
<S> <C> <C> <C>
Aggressive Equity Capital appreciation. Equity securities of small Alliance Capital
emerging-growth companies and Management L.P.
medium-sized companies.
Emerging Markets Long-term growth of Equity securities of companies Alliance Capital
capital. that are located in countries Management L.P.
generally regarded as "emerging
market" countries.
Diversified Research Long-term growth of Equity securities of U.S. Capital Guardian
capital. companies and securities whose Trust Company
principal markets are in the U.S.
Small-Cap Equity Growth of capital. Equity securities of smaller and Capital Guardian
(formerly called medium-sized companies. Trust Company
Growth)
International Large-Cap Long-term growth of Equity securities of non-U.S. Capital Guardian
capital. companies and securities whose Trust Company
principal markets are outside
of the U.S.
Equity Capital appreciation. Equity securities of large U.S. Goldman Sachs Asset
Current income is of growth-oriented companies. Management
secondary importance.
I-Net Tollkeeper Long-term growth of Equity securities of companies Goldman Sachs Asset
capital. which use, support, or relate Management
directly or indirectly to use of
the Internet. Such companies
include those in the media,
telecommunications, and
technology sectors.
Multi-Strategy High total return. A mix of equity and fixed income J.P. Morgan
securities. Investment
Management Inc.
Equity Income Long-term growth of capital Equity securities of large and J.P. Morgan
and income. medium-sized dividend-paying U.S. Investment
companies. Management Inc.
Growth LT Long-term growth of capital Equity securities of a large Janus Capital
consistent with the number of companies of any size. Corporation
preservation of capital.
Mid-Cap Value Capital appreciation. Equity securities of medium-sized Lazard Asset
U.S. companies believed to be Management
undervalued.
Equity Index Investment results that Equity securities of companies Mercury Asset
correspond to the total that are included in the Standard Management US
return of common stocks & Poor's 500 Composite Stock
publicly traded in the U.S. Price Index.
Small-Cap Index Investment results that Equity securities of companies Mercury Asset
correspond to the total that are included in the Russell Management US
return of an index of small 2000 Small Stock Index.
capitalization companies.
REIT Current income and long- Equity securities of real estate Morgan Stanley
term capital appreciation. investment trusts. Asset Management
International Value Long-term capital Equity securities of companies of Morgan Stanley
(formerly called appreciation primarily any size located in developed Asset Management
International) through investment in countries outside of the U.S.
equity securities of
corporations domiciled in
countries other than the
United States.
Government Securities Maximize total return Fixed income securities that are Pacific Investment
consistent with prudent issued or guaranteed by the U.S. Management Company
investment management. government, its agencies or
government-sponsored enterprises.
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.
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.
Large-Cap Value Long-term growth of Equity securities of large U.S. Salomon Brothers
capital. Current income is companies. Asset Management
of secondary importance. Inc
</TABLE>
35
<PAGE>
YOUR INVESTMENT OPTIONS
An example Calculating unit values
You ask us to When you choose a variable investment option, we credit
allocate $6,000 to your policy with accumulation units. The number of
the Government units we credit equals the amount we've allocated
Securities divided by the unit value of the variable account.
investment option Similarly, the number of accumulation units in your
on a business day. policy will be reduced when you make a transfer,
At the end of that withdrawal or loan from a variable investment option,
day, the unit value and when your monthly charges are deducted.
of the variable
account is $15. The value of an accumulation unit is the basis for all
We'll credit your financial transactions relating to the variable
policy with 400 investment options. We calculate the unit value for
units ($6,000 each variable account once every business day, usually
divided by $15). at or about 4:00 p.m. Eastern time.
The value of an Generally, for any transaction, we'll use the next unit
accumulation unit value calculated after we receive your written request.
is not the same as If we receive your written request before 4:00 p.m.
the value of a Eastern time, we'll use the unit value calculated as of
share in the the end of that business day. If we receive your
underlying request on or after 4:00 p.m. Eastern time, we'll use
portfolio. the unit value calculated as of the end of the next
business day.
For information
about timing of If a scheduled transaction falls on a day that is not a
transactions, see business day, we'll process it as of the end of the
Pacific Select Exec next business day. For your monthly charge, we'll use
II - NY basics. 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.
36
<PAGE>
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 Fees and expenses paid by the Pacific Select Fund
about Pacific The Pacific Select Fund pays advisory fees and other
Select Fund fees expenses. These are deducted from the assets of the
and expenses in An fund's portfolios and may vary from year to year. They
overview of Pacific are not fixed and are not part of the terms of your
Select Exec II - policy. If you choose a variable investment option,
NY. these fees and expenses affect you indirectly because
they reduce portfolio returns. The fund is governed by
its own Board of Trustees.
37
<PAGE>
YOUR INVESTMENT OPTIONS
---------------------------------------------------------
Fixed options You can also choose from two fixed options: the Fixed
account and the Fixed LT account. The fixed options
The fixed options provide a guaranteed minimum annual rate of interest.
are not securities, The amounts allocated to the fixed options are held in
so they do not fall our general account. We have contracted with Pacific
under any Life to manage our general account assets, subject to
securities act. For investment policies, objectives, directions and
this reason, the guidelines established by our Board.
SEC has not
reviewed the Here are some things you need to know about the fixed
disclosure in this options:
prospectus about . Accumulated value allocated to the fixed options
these options. earns interest on a daily basis, using a 365-day
However, other year. Our minimum annual interest rate is 3% during
federal securities the first 10 policy years, and 3.3% thereafter.
laws may apply to . We may offer a higher annual interest rate on the
the accuracy and fixed options. If we do, we'll guarantee the higher
completeness of the rate for one year.
disclosure about . If we offer a higher annual interest rate on a fixed
these options. option, we may also pay additional interest on
accumulated value in excess of $25,000 in that fixed
option. Ask your registered representative for
For more current interest rates.
information about . There are no investment risks or direct charges.
the general . There are limitations on when and how much you can
account, see About transfer from the fixed options. These limitations
PL&A. are described below, in Transferring among investment
options.
. We may limit the total amount you allocate to the
Fixed LT account for all PL&A 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.
---------------------------------------------------------
Transferring among
investment options You can transfer among your investment options any time
during the life of your policy without triggering any
You can make current income tax. You can make transfers by writing
transfers and use to us, by making a telephone transfer, or by signing up
transfer programs for one of our automatic transfer programs. You'll find
only after the free more information about making telephone transfers in
look transfer date. Pacific Select Exec II - NY basics.
For more
information, please Transfers will normally be effective as of the end of
see Pacific Select the business day we receive your written or telephone
Exec II - NY request.
basics.
Here are some things you need to know about making
transfers:
You'll find more
about the first . Your policy's accumulated value may be invested in up
year transfer to 20 investment options at one time.
program later in . If you're making transfers between variable
this section. investment options, there is no minimum amount
required and you can make as many transfers as you
like.
. You can make transfers from the variable investment
options to the Fixed account at any time.
. You can make transfers from the variable investment
options to the Fixed LT account only in the policy
month right before each policy anniversary.
. If you have transferred accumulated value out of the
fixed options, you must wait 90 days before making a
transfer to the Fixed account. However, you can make
transfers to the Fixed account any time during the
first 18 months of your policy.
. 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.
38
<PAGE>
. Currently, there is no charge for making a transfer
but we may charge you in the future. You will always
be permitted at least 12 free transfers per year.
. There is no minimum required value for the investment
option you're transferring to or from.
. 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.
---------------------------------------------------------
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 Dollar cost averaging program
accumulation units Our dollar cost averaging program allows you to make
can change, more scheduled transfers of $50 or more between variable
units are credited investment options without paying a transfer fee. It
for a scheduled does not allow you to make transfers to or from either
transfer when unit of the fixed options. Here's how the program works:
values are lower,
and fewer units . You can set up this program at any time while your
when unit values policy is in force.
are higher. This
allows you to . You need to complete a request form to enroll in the
average the cost of program.
investments over
time. Investing . You must have at least $5,000 in a variable
this way does not investment option to start the program.
guarantee profits
or prevent losses. . 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.
39
<PAGE>
YOUR INVESTMENT OPTIONS
Because the portfolio Portfolio rebalancing program
rebalancing program As the value of the underlying portfolios changes, the
matches your value of the allocations to the variable investment
original percentage options will also change. The portfolio rebalancing
allocations, we may program automatically transfers your policy's
transfer money from accumulated value among the variable investment options
an investment according to your original percentage allocations.
option with
relatively higher Here's how the program works:
returns to one with
relatively lower . You can set up this program at any time while your
returns. 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 First year transfer program
you to average the Our first year transfer program allows you to make
cost of investments monthly transfers during the first policy year from the
over your first Fixed account to the variable investment options or the
policy year. Fixed LT account. It does not allow you to transfer
Investing this way among variable investment options.
does not guarantee
profits or prevent Here's how the program works:
losses. . 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.
40
<PAGE>
WITHDRAWALS, SURRENDERS AND LOANS
Making a You can take out all or part of your policy's
withdrawal, taking accumulated value while your policy is in force by
out a loan or making withdrawals or surrendering your policy. You can
surrendering your take out a loan from us using your policy as security.
policy can change You can also use your policy's loan and withdrawal
your policy's tax features to supplement your income, for example, during
status, generate retirement.
taxable income, or
make your policy
more susceptible to
lapsing. Be sure to
plan carefully
before 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.
---------------------------------------------------------
Making withdrawals You can withdraw part of your policy's net cash
surrender value starting on your policy's first
You can choose to anniversary. Here's how it works:
receive your
withdrawal in a
lump sum or use it . You must send us a written request that's signed by
to buy an income all owners.
benefit. Please see . Each withdrawal must be at least $500, and the net
the discussion cash surrender value of your policy after the
about income withdrawal must be at least $500.
benefits in General
information about . If your policy has an outstanding loan amount, the
your policy. maximum withdrawal you can take is the amount, if
any, by which the cash surrender value just before
the withdrawal exceeds the outstanding loan amount
divided by 90%.
We will not accept
your request to . We'll charge you $25 for each withdrawal you make.
make a withdrawal
if it will cause . If you do not tell us which investment options to
your policy to take the withdrawal from, we'll deduct the withdrawal
become a modified and the withdrawal charge from all of your investment
endowment contract, options in proportion to the accumulated value you
unless you've told have in each option.
us in writing that
you want your . The accumulated value, cash surrender value and net
policy to become a cash surrender value of your policy will be reduced
modified endowment by the amount of each withdrawal.
contract.
. 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. 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. If
there have been prior increases in face amount, the
original face amount and any increase(s) in face amount
will be reduced proportionately.
41
<PAGE>
WITHDRAWALS, SURRENDERS AND LOANS
---------------------------------------------------------
Taking out a loan
You can borrow money from us any time while your policy
The amount in the is in force either by sending us a request in writing,
loan account, plus or over the telephone. You'll find more information
any interest you about requesting a loan by telephone in Pacific Select
owe, is referred to Exec II - NY basics.
throughout this
prospectus as your When you borrow money from us, we use your policy's
outstanding loan accumulated value as security. You pay interest on the
amount. Your policy amount you borrow. The accumulated value set aside to
refers to this secure your loan also earns interest. Here's how it
amount as policy works:
debt.
. To secure the loan, we transfer an amount equal to
Taking out a loan the amount you're borrowing from your accumulated
will affect the value in the investment options to the loan account.
growth of your We'll transfer this amount from your investment
policy's options in proportion to the accumulated value you
accumulated value, have in each option, unless you tell us otherwise.
and may affect the . Interest owing on the amount you've borrowed accrues
death benefit. daily at an annual rate of 3.55%. Interest that has
accrued during the policy year is due on your policy
An example anniversary. If you do not pay the interest when it's
For a policy with: due, we'll add it to the amount of your loan and
. accumulated value begin accruing interest on it from the day it was
of $100,000 due. We'll also transfer an amount equal to the
. an outstanding interest that was due, from your policy's accumulated
loan amount of value to the loan account. We'll transfer this amount
$60,000 from your investment options in proportion to the
. a most recent accumulated value you have in each option, unless you
monthly charge of tell us otherwise.
$225
. The amount in the loan account earns interest daily
The maximum amount at an annual rate of 3% during the first 10 policy
you can borrow years, and 3.3% thereafter. On your policy
during policy years anniversary, we transfer the interest that's been
1 through 10 is the credited to the loan account proportionately to your
greater of: investment options according to your most recent
allocation instructions.
$25,500
((90% X ($100,000 - How much you can borrow
$5,000)) - The minimum amount you can borrow is $200. You can
$60,000) borrow up to the larger of the following amounts:
or
. 90% of the accumulated value in the investment
$31,809.75 options, less any surrender charges that would apply
(a X (b / c)) - d, if you surrendered your policy on the day you took
where: out the loan.
. the result of a X (b / c) - d, where:
a = $92,300 a = the accumulated value of your policy less any
($100,000 - surrender charges that would have applied if you
$5,000 - ($12 X surrendered your policy on the day you took out the
$225)) loan, and less 12 times the most recent monthly
b = 1.03 charge
c = 1.0355
d = $60,000)
b = 1.03 during policy years 1 through 10, and
The maximum amount 1.033 during policy year 11 and thereafter
you can borrow c = 1.0355
during policy year d = any outstanding loan amount.
11 and thereafter
is the greater of: Paying off your loan
You can pay off all or part of the loan any time while
your policy is in force. Unless you tell us otherwise,
$25,500 we'll generally transfer any loan payments you make
((90% X ($100,000 - proportionately to your investment options according to
$5,000)) - your most recent allocation instructions. We may,
$60,000) however, first transfer any loan payments you make to
the fixed options, up to the amount originally
or transferred from the fixed options to the loan account.
We'll then transfer any excess amount to your variable
$32,077.16 investment options according to your most recent
(a X (b / c)) - d, allocation instructions.
where:
a = $92,300
($100,000 - While you have an outstanding loan, we'll treat any
$5,000 - ($12 X money you send us as a loan payment unless you tell us
$225)) otherwise in writing.
b = 1.033
c = 1.0355
d = $60,000)
42
<PAGE>
Your outstanding What happens if you do not pay off your loan
loan amount could If you do not pay off your loan, we'll deduct the
result in taxable amount in the loan account, including any interest you
income if you owe, from one of the following:
surrender your
policy, if your . the death benefit proceeds before we pay them to your
policy lapses, or beneficiary
if your policy is a . the cash surrender value if you surrender your policy
modified endowment . the amount we refund if you exercise your right to
contract. You cancel
should talk to your . the endowment benefit if your policy matures.
tax advisor before
taking out a loan Taking out a loan, whether or not you repay it, will
under your policy. have a permanent effect on the value of your policy.
See Taking out a For example, while your policy's accumulated value is
loan in Variable held in the loan account, it will miss out on the
life insurance and potential earnings available through the variable
your taxes. 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.
---------------------------------------------------------
Ways to use your You can use your policy's loan and withdrawal features
policy's loan and to supplement your income, for example, during
withdrawal retirement.
features
Using your policy to supplement your income does not
If you're change your rights or our obligations under the policy.
interested in The terms for loans and withdrawals described in this
using your life prospectus remain the same.
insurance policy
to supplement your Here are some things you should consider when setting
retirement income, up an income stream:
please contact us
for more . the rate of return you expect to earn on your
information. investment options
. how long you would like to receive regular income
. the amount of accumulated value you want to maintain
in your policy.
Understanding the risks
Setting up an income stream may not be suitable for all
policy owners. It's important to understand the risks
We can provide you that are involved in using your policy's loan and
with illustrations withdrawal features.
that give you
examples of how You must always leave enough accumulated value in your
this could affect policy to help ensure your policy will continue to
the accumulated qualify as life insurance and will not lapse. Your
value, net cash policy will lapse if there is not enough accumulated
surrender value value, after subtracting any outstanding loan amount,
and death benefit to cover the monthly charge on the day we make the
of your policy deduction and the grace period expires. If your policy
based on different lapses, we'll end your life insurance coverage.
hypothetical gross
rates of return. There are also charges associated with reinstating a
We will not use a lapsed policy.
higher rate than
12%, and will You should consult with your financial adviser and
always compare it carefully consider how much you can withdraw and borrow
with a rate of 0% from your policy each year to set up your income
based on stream.
guaranteed
insurance costs. Remember that the performance of your investment
You'll find sample options also affects your policy's accumulated value.
illustrations and Poor performance can increase the danger of your policy
the assumptions lapsing. And as the cost of insurance generally
they're based on increases with the age of the person insured by the
starting on page policy, this can also reduce the accumulated value.
72.
The hypothetical
rates of return
are illustrative
of past or future
results. Policy
values and
benefits would be
different from
those shown in the
illustrations if:
. the gross annual
rates of return
are different
from the
hypothetical
rates
. premiums were not
paid as
illustrated
. loan interest was
paid when due.
43
<PAGE>
WITHDRAWALS, SURRENDERS AND LOANS
You can also ask In addition, you should carefully review the policy
for accompanying statements we send you. Your statements will allow you
charts and graphs to monitor your policy's accumulated value, less your
that compare outstanding loan amount, to ensure your policy can
results from continue to support the income stream you have chosen.
various retirement
strategies. If your policy lapses or you surrender your policy
after you have taken out a loan, you could face
You can ask your significant income tax liability in the year of the
registered lapse or surrender. Any outstanding loan amount will
representative for automatically be repaid when your policy lapses or you
illustrations surrender your policy. You could be taxed to the extent
showing how policy that the net surrender value plus the outstanding loan
charges may affect amount repaid exceeds the cost basis of your policy.
existing
accumulated value Interest on a loan is due to us on each policy
and how future anniversary. If we do not receive the interest when
withdrawals and due, we'll add it to the outstanding loan amount and
loans may affect begins accruing interest on it from the day it was due.
the accumulated This has a compounding effect and can add to your
value and death income tax liability.
benefit.
If the person insured by the policy dies, we'll deduct
Tax issues are any outstanding loan amount from the death benefit.
described in detail This means the death benefit proceeds will be less than
in Variable the death benefit and may be less than the face amount.
insurance and your
taxes.
---------------------------------------------------------
Surrendering your You can surrender or cash in your policy at any time
policy while the person insured by the policy is still living.
Your policy's cash surrender value is its accumulated
You can choose to value less any surrender charge that applies. The net
receive your money cash surrender value equals your policy's cash
in a lump sum or surrender value after deducting any outstanding loan
use it to buy an amount.
income benefit.
Please see the Here are some things you need to know about
discussion about surrendering your policy:
income benefits in
General information . You must send us your policy and a written request.
about your policy. . We'll send you the policy's net cash surrender value.
If you surrender your policy during the first 10
If you increase policy years, we'll deduct a surrender charge that
your policy's face helps cover our costs for underwriting, issuing and
amount, we'll send distributing our policies.
you a supplemental
schedule of . Your policy's surrender charge is based on the
benefits that shows initial face amount of your policy and will never be
the surrender greater than the maximum surrender charge. The
charge associated maximum surrender charge is calculated at a rate that
with the increase. 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.
44
<PAGE>
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How we calculate the surrender charge
A table of The surrender charge and the maximum surrender charge
surrender charges are assessed against your policy's accumulated value.
for your policy They are based on the age and risk class of the person
will be shown in insured by the policy for each $1,000 of the initial
your policy face amount of your policy.
specification
pages.
The amount of the surrender charge does not change
Sample rates for during the first policy year. Starting on the first
the surrender policy anniversary, we reduce the charge by 0.9259%
charge and the each month until it reaches zero at the end of
maximum surrender 10 policy years.
charge appear in
Appendix A. The maximum surrender charge does not change during the
first 10 policy years, and then is reduced to zero at
An example the end of the 10th policy year. The maximum surrender
For a policy: charge on the initial face amount of your policy will
. that insures a never be more than $32.752 per $1,000 of initial face
male non-smoker amount.
who is age 45
when the policy
is issued
. with an initial
face amount of
$350,000.
The surrender
charge is:
. $8,757.00 in the
first policy year
(($350,000 /
$1,000) X 25.02)
. $2,919.16 at the
end of the
seventh 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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Benefits at maturity If the insured is living on your maturity date, we will
pay you an endowment benefit equal to your accumulated
value, less any outstanding loan amount.
Payment of your endowment benefit will usually be made
within 7 days of your policy anniversary. Payments may
be postponed in certain circumstances. See Timing of
payments, forms and requests.
45
<PAGE>
GENERAL INFORMATION ABOUT YOUR POLICY
This section tells you some additional things you
should know about your policy.
---------------------------------------------------------
Income benefit If you surrender or make a withdrawal from your policy,
or your policy matures, 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-NY 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.
---------------------------------------------------------
Reduced Paid-Up You may use the net cash surrender value of your policy
Benefit 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, your policy and any riders
attached to it will terminate and 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.
---------------------------------------------------------
Substituting the Starting on your policy's first anniversary, you can
person insured by apply to substitute the person insured by your policy.
your policy You must apply in writing and we must receive
satisfactory evidence of insurability of the new person
If you substitute to be insured by the policy. You can only add riders on
the person insured the new person insured by the policy if we approve the
by the policy, addition of the riders.
we'll send you a
revised schedule of The substitution will become effective on the first
benefits. 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.
46
<PAGE>
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Paying the death If the person insured by the policy commits suicide
benefit in the case within two years of the policy date, death benefit
of suicide 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 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.
---------------------------------------------------------
Replacement of life The term replacement has a special meaning in the life
insurance or insurance industry. Before you make a decision to buy,
annuities 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.
---------------------------------------------------------
Errors on your
application If the age of the person insured by your policy is
stated incorrectly on your application, the death
benefit under your policy will be the greater of the
following:
. the amount of death benefit that would be purchased
by the most recent cost of insurance charge for the
correct age or
. the guideline minimum death benefit for the correct
age.
We'll adjust the accumulated value by recalculating all
previous cost of insurance charges and other monthly
deductions based on the correct age.
47
<PAGE>
GENERAL INFORMATION ABOUT YOUR POLICY
---------------------------------------------------------
Contesting the We have the right to contest the validity of your
validity of your policy for two years from the policy date. Once your
policy 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.
---------------------------------------------------------
Assigning your
policy as
collateral
You can assign your policy as collateral to secure a
Assigning a policy loan, mortgage, or other kind of debt. Here's how it
that's a modified works:
endowment contract
may generate . An assignment does not change the ownership of the
taxable income and policy.
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 a copy of the original assignment
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.
---------------------------------------------------------
Non-participating This policy will not share in any of our surplus
earnings.
48
<PAGE>
VARIABLE LIFE INSURANCE AND YOUR TAXES
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
(the tax code) and does not cover any state or local
tax laws.
The tax This is not a complete discussion of all federal income
consequences of tax questions that may arise under the policy. There
owning a policy or are special rules that we do not include here that may
receiving proceeds apply in certain situations.
from it may vary by
jurisdiction and We do not know whether the current treatment of life
according to the insurance policies under current federal income tax or
circumstances of estate or gift tax laws will continue. We also do not
each owner or know whether the current interpretations of the laws by
beneficiary. the IRS or the courts will remain the same. Future
legislation may adversely change the tax treatment of
Speak to a life insurance policies, other tax consequences
qualified tax described in this discussion or tax consequences that
adviser for relate directly or indirectly to life insurance
complete policies.
information about
federal, state and We do not make any guarantees about the tax status of
local taxes that your policy, and you should not consider the discussion
may apply to you. that follows to be tax advice.
---------------------------------------------------------
Tax treatment of Definition of life insurance
life insurance We believe that the policy qualifies as life insurance.
policies That means it will receive the same tax advantages as a
conventional fixed life insurance policy. The two main
tax advantages are:
In order to qualify
as a life insurance
contract for . In general, your policy's beneficiary will not be
federal income tax subject to federal income tax when he or she receives
purposes, the the death benefit proceeds. This is true regardless
policy must meet of whether the beneficiary is an individual,
the statutory corporation, or other entity.
definition of life
insurance. . You'll generally not be taxed on your policy's
accumulated value unless you receive a cash
Death benefits may distribution when the policy matures, or by making a
be excluded from withdrawal, surrendering your policy, or in some
income under instances, taking a loan from your policy.
Section 101(a) of
the tax code. 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.
The tax code and tax regulations impose limitations on
unreasonable mortality and expense charges for purposes
of determining whether a policy qualifies as life
insurance for federal tax purposes. 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.
49
<PAGE>
VARIABLE LIFE INSURANCE AND YOUR TAXES
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 Diversification rules and ownership of the separate
the tax code account
describes the Your policy will not qualify for the tax benefit of a
diversification life insurance contract unless the separate account
rules. follows certain rules requiring diversification of
investments underlying the policy. In addition, the IRS
For more requires that the policyholder does not have control
information about over the underlying assets.
diversification
rules, please see The Treasury Department has announced that the
Managing the diversification rules "do not provide guidance
Pacific Select Fund concerning the circumstances in which it will treat an
in the accompanying investor, rather than the insurance company, as the
Pacific Select Fund owner of the assets in a separate account." The IRS
prospectus. 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.
The ownership rights under your policy are similar to,
but different in certain respects from, those described
by the IRS in rulings in which it was determined that
policyowners were not owners of separate account
assets. Since you have greater flexibility in
allocating premiums and policy values than was the case
in those rulings, 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 Policy exchanges
fall under Section
1035(a) of the tax If you exchange your policy for another one that
code. 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 Corporate owners
rules for There are special tax issues for corporate owners:
corporate-owned
policies. You . using your policy to fund deferred compensation
should consult your arrangements for employees has special tax
tax adviser. consequences
. corporate ownership of a policy may affect your
exposure to the alternative minimum tax and the
Section 59A of the environmental tax.
tax code deals with
the environmental
tax.
50
<PAGE>
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Conventional life The tax treatment of your policy will depend upon
insurance policies whether it is a type of contract known as a modified
endowment contract. We describe modified endowment
Under Section 7702A contracts later in this section. If your policy is not
of the tax code, a modified endowment contract, it will be treated as a
policies that are conventional life insurance policy and will have the
not classified as following tax treatment:
modified endowment
contracts are taxed
as conventional Surrendering your policy or policy maturity
life insurance
policies. When you surrender, or cash in, your policy, or your
policy matures, you'll generally be taxed on the
difference, if any, between the cash surrender value
The cost basis in and the cost basis in your policy.
your policy is
generally the Making a withdrawal
premiums you've If you make a withdrawal after your policy has been in
paid plus any force for 15 years, you'll only be taxed on the amount
taxable you withdraw that exceeds the cost basis in the policy.
distributions less
any withdrawals or Special rules apply if you make a withdrawal within the
premiums previously first 15 policy years and it's accompanied by a
recovered that were reduction in benefits. In this case, there is a special
not taxable. 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, matures
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.
---------------------------------------------------------
Modified endowment A modified endowment contract is a special type of life
contracts insurance policy. If your policy is a modified
endowment contract, it will have the tax treatment
Section 7702A of described below. Any distributions you receive during
the tax code the life of the policy are treated differently than
defines a class of under conventional life insurance policies.
life insurance Withdrawals, loans, pledges, assignments and the
policies known as surrender or maturity of your policy are all considered
modified endowment distributions and may be subject to tax on an income-
contracts. Like first basis and a 10% penalty.
other life
insurance policies, When a policy becomes a modified endowment contract
the death benefit A life insurance policy becomes a modified endowment
proceeds paid to contract if, at any time during the first seven policy
your beneficiary years, the sum of actual premiums paid exceeds the
generally are not seven-pay limit. The seven-pay limit is the cumulative
subject to federal total of the level annual premiums (or seven-pay
income tax and your premiums) required to pay for the policy's future death
policy's and endowment benefits.
accumulated value
grows on a tax-
deferred basis
until you receive a
cash distribution.
If there is a
material change to
your policy, like a
change in the death
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.
51
<PAGE>
VARIABLE LIFE INSURANCE AND YOUR TAXES
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 or policy maturity
If you surrender your policy or it matures, 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.
---------------------------------------------------------
Accelerated living benefits rider
Policy riders Amounts received under this rider should be generally
excluded from taxable income under Section 101(g) of
Please see the the tax code.
discussion of
optional riders in Benefits under the rider will be taxed, however, if
The death benefit. they are paid to someone other than a person insured by
the policy, and the person insured by the policy:
Please consult with
your tax adviser if . is a director, officer or employee of the person
you want to receiving the benefit, or
exercise your . has a financial interest in a business of the person
rights under this receiving the benefit.
rider.
In some cases, there may be a question as to whether a
life insurance policy that has an accelerated living
benefit rider can meet technical aspects of the
definition of "life insurance contract" under the tax
code. We may reserve the right (but are not obligated)
to modify the rider to conform under tax code
requirements.
52
<PAGE>
ABOUT PL&A
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 1999, we had total
assets of $403.3 million.
PL&A is authorized to conduct life insurance and
annuity business in Arizona, New York and certain other
states. Our principal office is located at 700 Newport
Center Drive, Newport Beach, California 92660.
---------------------------------------------------------
How we're organized PL&A was incorporated in 1982 under the name of Pacific
Financial Life Insurance Company. We 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.
---------------------------------------------------------
How policies are
administered Pacific Life Insurance Company administers the policies
sold under this prospectus. At the end of 1999, Pacific
Life had over $101 billion of individual life insurance
and total admitted assets of approximately $48.2
billion. It is ranked the 16th largest life insurance
carrier in the U.S. in terms of 1999 admitted assets.
The Pacific Life family of companies has total assets
under management of $315 billion. Pacific Life's
principal office is at 700 Newport Center Drive,
Newport Beach, CA 92660.
---------------------------------------------------------
How policies are
distributed Pacific Select Distributors, Inc. (PSD), our affiliate,
is the distributor of our policies. PSD is located at
700 Newport Center Drive, Newport Beach, California
92660.
PSD is registered as a broker-dealer with the SEC and
is a member of the National Association of Securities
Dealers (NASD). We pay PSD for its services as our
distributor.
The policies are sold by registered representatives of
broker-dealers who have signed agreements with us and
PSD. 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
A target premium is determine. The commission we pay will vary with the
a hypothetical agreement, but the most common schedule of commissions
premium that is we pay is:
used only to
calculate
commissions. It . 55% of premiums paid up to the first target premium
varies with the in the first policy year
death benefit . 4% of premiums paid up to the first target premium
option you choose, after the first policy year
the age of the . 4% of the premiums paid under targets 2-10
person insured by . 2% of premiums paid in excess of the 10th target
the policy on the premium.
policy date, and
the gender (unless
unisex rates are
required) and risk
class of the person
insured by the
policy.
53
<PAGE>
ABOUT PL&A
We may pay broker-dealers an annual renewal commission
of up to 0.20% of a policy's accumulated value less any
outstanding loan amount. We calculate the renewal
A policy's target amount monthly and it becomes payable on each policy
premium will be anniversary.
less than the
policy's guideline We may also pay override payments, expense and
level premiums. 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.
---------------------------------------------------------
How our accounts We own the assets in our general account and our
work separate account. We allocate your net premiums to
these accounts according to the investment options
you've chosen.
General account
We can provide you Our general account includes all of our assets, except
with reports of our for those held in our separate accounts. We guarantee
ratings as an you an interest rate for up to one year on any amount
insurance company allocated to the fixed options. The rate is reset
and our ability to annually. The fixed options are part of our general
pay claims with account, which we may invest as we wish, according to
respect to our any laws that apply. We'll credit the guaranteed rate
general account even if the investments we make earn less. Our ability
assets. 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.
Separate account
Amounts allocated to the variable investment options
You'll find the are held in our separate account. The assets in this
audited account are kept separate from the assets in our
consolidated general account and our other separate accounts, and
financial are protected from our general creditors.
statements for PL&A
later in this The separate account was established on September 24,
section of the 1998 under Arizona law under the authority of our Board
prospectus. We of Directors. It's registered with the SEC as a type of
include these investment company called a unit investment trust. The
financial SEC does not oversee the administration or investment
statements to show practices or policies of the account.
our strength as a
company and our The separate account is divided into variable accounts.
ability to meet our Each variable account invests in shares of a designated
obligations under portfolio of the Pacific Select Fund. We may add
the policies. variable accounts that invest in other portfolios of
the fund or in other securities.
The separate
account is not the We're the legal owner of the assets in the separate
only investor in account, and pay its operating expenses. The separate
the Pacific Select account is operated only for our variable life
Fund. Investment in insurance policies. We must keep enough money in the
the fund by other account to pay anticipated obligations under the
separate accounts insurance policies funded by the account, but we can
for variable transfer any amount that's more than these anticipated
annuity contracts obligations to our general account. Some of the money
and variable life in the separate account may include charges we collect
insurance contracts from the account and any investment results on those
could cause charges.
conflicts. For more
information, please We cannot charge the assets in the separate account
see the Statement attributable to our reserves and other liabilities
of Additional under the policies funded by the account with any
Information for the liabilities from our other business.
Pacific Select
Fund.
54
<PAGE>
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.
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 you receive 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.
55
<PAGE>
ABOUT PL&A
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.
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.
56
<PAGE>
---------------------------------------------------------
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 We've filed a registration statement with the SEC for
statement 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.
The business address of each of these people is c/o
Pacific Life & Annuity Company, 700 Newport Center
Drive, Newport Beach, California 92660.
57
<PAGE>
ABOUT PL&A
<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
Director, President Cancer Society of Orange County; the Health Insurance Association of America; and
and Chief Executive former director of California Health Decisions.
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 and President of Pacific Life Insurance Company;
Director 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.
President
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.
</TABLE>
---------------------------------------------------------
Financial
statements The next several pages contain the financial
statements-statutory basis of PL&A as of December 31,
1999 and 1998 and for the two years ended December 31,
1999, which are included in this prospectus only so you
can assess our ability to meet our obligations under
the policies.
---------------------------------------------------------
Experts
The financial statements-statutory basis for PL&A as of
December 31, 1999 and 1998 and for each of the two
years in the period ended December 31, 1999 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.
58
<PAGE>
INDEPENDENT AUDITORS' REPORT
Pacific Life & Annuity Company:
We have audited the accompanying statements of admitted assets, liabilities
and capital and surplus- statutory basis of Pacific Life & Annuity Company
(the "Company") as of December 31, 1999 and 1998, 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 Pacific Life & Annuity Company as of
December 31, 1999 and 1998, 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 Pacific Life & Annuity Company as of December 31, 1999 and 1998,
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, 2000
59
<PAGE>
Pacific Life & Annuity Company
STATEMENTS OF ADMITTED ASSETS,
LIABILITIES AND CAPITAL AND SURPLUS-STATUTORY BASIS
<TABLE>
<CAPTION>
December 31,
1999 1998
- -------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ADMITTED ASSETS
Bonds $239,981 $217,096
Preferred stocks 6,536 5,662
Common stocks 7,963 17,372
Mortgage loans 15,409 11,118
Cash and short-term investments 73,725 36,922
Other invested assets 29,453 16,460
Premiums due and unpaid 19,824 26,186
Other assets 10,421 7,095
- -------------------------------------------------------------------------------------
TOTAL ADMITTED ASSETS $403,312 $337,911
- -------------------------------------------------------------------------------------
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Policy reserves $102,041 $119,743
Policy benefits payable 50,738 83,792
Deposit funds 6,300 7,748
Accrued general expenses 9,433 11,640
Other liabilities 28,561 31,027
Asset valuation reserve 5,291 7,262
- -------------------------------------------------------------------------------------
TOTAL LIABILITIES 202,364 261,212
- -------------------------------------------------------------------------------------
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 134,607 37,607
Unassigned surplus 63,441 36,192
- -------------------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS 200,948 76,699
- -------------------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL AND SURPLUS $403,312 $337,911
- -------------------------------------------------------------------------------------
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis
60
<PAGE>
Pacific Life & Annuity Company
STATEMENTS OF OPERATIONS-STATUTORY BASIS
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
- -----------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
REVENUES
Premiums $ 359,936 $ 499,481
Net investment income 24,786 23,795
Other income 246 4,510
- -----------------------------------------------------------------------------------------------
TOTAL REVENUES 384,968 527,786
- -----------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future policy benefits 250,328 404,671
Operating expenses 87,013 114,774
- -----------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 337,341 519,445
- -----------------------------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 47,627 8,341
Federal income taxes 16,196 2,237
- -----------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 31,431 6,104
Net realized capital losses (405) (1,014)
- -----------------------------------------------------------------------------------------------
NET INCOME $ 31,026 $ 5,090
- -----------------------------------------------------------------------------------------------
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis
61
<PAGE>
Pacific Life & Annuity 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, 1998 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
Net income 31,026 31,026
Capital contribution 97,000 97,000
Other surplus transactions (3,777) (3,777)
- -----------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1999 2,900 $2,900 $134,607 $63,441 $200,948
- -----------------------------------------------------------------------
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis
62
<PAGE>
Pacific Life & Annuity Company
STATEMENTS OF CASH FLOWS-STATUTORY BASIS
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
- -------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FROM OPERATIONS
Receipts
Premiums $ 366,624 $ 500,017
Net investment income 22,917 22,048
Payments
Policy benefit payments (301,317) (408,288)
Operating expenses (92,375) (117,981)
Federal income taxes (4,268) (4,062)
Other, net (6,263) (3,018)
- -------------------------------------------------------------------------------
NET CASH FROM OPERATIONS (14,682) (11,284)
- -------------------------------------------------------------------------------
CASH FROM INVESTMENTS
Proceeds
Bonds 84,064 72,754
Stocks 5,918 3,736
Mortgage loans 7,017 3,274
Other 4,210 8,180
Payments for the purchase of
Bonds (108,883) (63,816)
Stocks (3,550) (7,608)
Mortgage loans (11,000)
Other (17,407) (8,440)
Net tax on capital (gains) losses (2,561) 685
- -------------------------------------------------------------------------------
NET CASH FROM INVESTMENTS (42,192) 8,765
- -------------------------------------------------------------------------------
CASH FROM FINANCING AND MISCELLANEOUS SOURCES
Capital contribution 97,000
Other, net (3,323) 6,256
- -------------------------------------------------------------------------------
NET CASH FROM FINANCING AND MISCELLANEOUS SOURCES 93,677 6,256
- -------------------------------------------------------------------------------
Net change in cash and short-term investments 36,803 3,737
Cash and short-term investments, beginning of year 36,922 33,185
- -------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 73,725 $ 36,922
- -------------------------------------------------------------------------------
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis
63
<PAGE>
Pacific Life & Annuity Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Pacific Life & Annuity Company ("PL&A"), formerly 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"). PL&A offers group health, dental and life
products to three principal market segments in the United States. Its Group
Employee Benefits Operation serves labor-management groups and unions with
300 or more participants and other employer groups with 50 or more
employees. The Multiple Employer Trust unit insures smaller employer groups
with less than 50 lives per group. The Pacific Risk Management Services
unit offers stop loss products through Pacific Life and companion group
life insurance through PL&A to self-funded plan sponsors. Through December
31, 1998, all group life and health business sold by Pacific Life,
including stop loss business, was assumed by PL&A through a reinsurance and
service agreement. This agreement was terminated on January 1, 1999 (Note
5).
During the first quarter of 1999, PL&A received approval from the Insurance
Department of the State of Arizona to change its name from PM Group Life
Insurance Company to Pacific Life & Annuity Company and to amend its
certificate of authority to allow the sale of variable annuities and
variable life insurance. During the second quarter of 1999, PL&A received
approval from the State of New York Insurance Department to transact
business in the State of New York. In conjunction with this approval,
Pacific Life contributed $97.0 million of additional paid-in surplus to
PL&A. Certain product approvals are still pending.
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. GAAP stockholder's equity as of December
31, 1999 and 1998 was $221.9 million and $104.1 million, respectively,
compared to statutory capital and surplus as included herein of $200.9
million and $76.7 million, respectively. GAAP net income for the years
ended December 31, 1999 and 1998 was $30.0 million and $5.8 million,
respectively, compared to statutory net income included herein of $31.0
million and $5.1 million, respectively. 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.
64
<PAGE>
Pacific Life & Annuity Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
In 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 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. PL&A has not finalized the quantification of the
effects of Codification on its statutory financial statements.
PL&A'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. The
cost of bonds, and preferred and common stocks is adjusted for impairments
in value deemed to be other than temporary.
Mortgage loans are stated at unpaid principal balances.
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.
Other invested assets, which consist principally of joint venture and
partnership interests, are primarily accounted for using the equity method.
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 $1.2 million and $1.4 million as of December
31, 1999 and 1998, 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.
Derivatives that qualify for hedge accounting are valued consistently with
the hedged items. Realized hedged gains and losses on fixed income
contracts are deferred and amortized over the average life of the related
hedged assets or insurance liabilities. Derivatives that do not qualify for
hedge accounting are valued at market value through surplus while still
held and when realized through income.
POLICY RESERVES AND DEPOSIT FUNDS
Medical expense claim reserves are based on PL&A'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.
65
<PAGE>
Pacific Life & Annuity Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
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
PL&A's operations are included in the consolidated Federal income tax
return of Pacific Mutual Holding Company, PL&A's ultimate parent. PL&A is
allocated an income tax expense based on the effect of including its
operations in the consolidated return. 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 PL&A 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 the risk-based capital results 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, 1999 and 1998, PL&A
exceeded the minimum risk-based capital requirements.
BUSINESS RISKS
PL&A operates in a business environment which is subject to various risks
and uncertainties. PL&A'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 PL&A.
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.
66
<PAGE>
Pacific Life & Annuity Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1999
financial statement presentation.
2. INVESTMENTS IN DEBT AND EQUITY SECURITIES
The amortized cost, gross unrealized gains and losses, and estimated fair
value of debt and equity securities are shown below. Debt securities
include bonds, redeemable preferred stocks and short-term investments.
Equity securities include perpetual preferred stocks and common stocks.
Short-term investments amounted to $75.8 million and $38.0 million as of
December 31, 1999 and 1998, 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.
PL&A 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
Amortized ---------------- Estimated
Cost Gains Losses Fair Value
-------------------------------------
<S> <C> <C> <C> <C>
(In Thousands)
December 31, 1999:
------------------
U.S. Treasury securities and obligations
of U.S. government authorities and
agencies $ 6,029 $ 7 $ 22 $ 6,014
Obligations of states, political
subdivisions 8,290 141 40 8,391
Foreign governments 1,000 37 1,037
Corporate securities 231,786 1,241 2,624 230,403
Mortgage-backed and asset-backed
securities 68,657 28 1,602 67,083
Redeemable preferred stock 6,111 22 6 6,127
------------------------------------
Total debt securities $321,873 $ 1,476 $ 4,294 $319,055
------------------------------------
Equity securities $ 5,999 $ 3,843 $ 1,454 $ 8,388
------------------------------------
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 7,409 345 1 7,753
Foreign governments 1,000 15 985
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 debt securities $259,990 $ 5,275 $ 1,202 $264,063
------------------------------------
Equity securities $ 8,061 $ 10,633 $ 522 $ 18,172
------------------------------------
</TABLE>
67
<PAGE>
Pacific Life & Annuity Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
2. INVESTMENTS IN DEBT AND EQUITY SECURITIES (Continued)
The amortized cost and estimated fair value of debt securities as of
December 31, 1999, 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>
Amortized Estimated
Cost Fair Value
--------------------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 74,634 $ 74,685
Due after one year through five years 144,158 142,918
Due after five years through ten years 25,212 25,304
Due after ten years 9,212 9,065
--------------------
253,216 251,972
Mortgage-backed and asset-backed securities 68,657 67,083
--------------------
Total $321,873 $319,055
--------------------
</TABLE>
Proceeds from sales of investments in debt securities were $23.3 million
and $35.8 million for the years ended December 31, 1999 and 1998,
respectively. Gross gains of $0.1 million and $3.0 million and gross losses
of $0.9 and $0 were realized on those sales for the years ended December
31, 1999 and 1998, respectively.
3. FINANCIAL INSTRUMENTS
The estimated fair values of PL&A's financial instruments, including debt
and equity securities (Note 2), are as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -------------------
Statement Estimated Statement Estimated
Value Fair Value Value Fair Value
-----------------------------------------
<S> <C> <C> <C> <C>
(In Thousands)
Assets:
Debt securities $321,873 $319,055 $259,990 $264,063
Equity securities 8,388 8,388 18,172 18,172
Mortgage loans 15,409 17,131 11,118 12,396
Liabilities:
Deposit funds 6,300 6,300 7,748 7,748
</TABLE>
The following methods and assumptions were used to estimate the fair value
of these financial instruments as of December 31, 1999 and 1998:
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.
DEPOSIT FUNDS
The estimated fair value of deposit funds with no defined maturities is the
amount payable on demand.
68
<PAGE>
Pacific Life & Annuity Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
3. FINANCIAL INSTRUMENTS (Continued)
FOREIGN CURRENCY DERIVATIVES
PL&A enters into foreign exchange forward contracts to hedge against
fluctuations in foreign currency exposure. Foreign currency derivatives
involve the exchange of foreign currency denominated payments for U.S.
dollar denominated payments. Gains and losses on foreign exchange forward
contracts offset losses and gains, respectively, on the related foreign
currency denominated assets. Foreign currency derivatives expire during the
year 2000.
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,
1999 1998
------------------
(In Thousands)
<S> <C> <C>
Balance at January 1 $137,181 $140,288
Less reinsurance recoverables 119 755
------------------
Net balance at January 1 137,062 139,533
------------------
Incurred related to:
Current year 279,002 412,912
Prior years (33,283) (18,278)
------------------
Total incurred 245,719 394,634
------------------
Paid related to:
Current year 213,682 303,532
Prior years 77,623 93,573
------------------
Total paid 291,305 397,105
------------------
Net balance at December 31 91,476 137,062
Plus reinsurance recoverables 107 119
------------------
Balance at December 31 $ 91,583 $137,181
------------------
</TABLE>
As a result of payment of prior years' estimated claims, the provision for
claims and claim adjustment expenses decreased by $33.3 million and $18.3
million for the years ended December 31, 1999 and 1998, 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 PL&A. 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 $11.9 million and $12.1 million for the years ended December
31, 1999 and 1998, respectively, and are included in operating expenses on
the accompanying statements of operations - statutory basis.
PL&A 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 $400,811 and $312,375 for
the years ended December 31, 1999 and 1998, respectively.
69
<PAGE>
Pacific Life & Annuity Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
5. RELATED PARTY TRANSACTIONS (Continued)
Under a reinsurance and service agreement, which terminated on January 1,
1999, PL&A assumed substantially all of Pacific Life's group life and
health insurance. Premiums of $0.4 million and $99.6 million and benefits
of ($0.6) million and $95.1 million were assumed for the years ended
December 31, 1999 and 1998, respectively. Amounts payable under this
agreement were $1.3 million and $25.0 million as of December 31, 1999 and
1998, respectively. Effective January 1, 1999, PL&A began to provide
underwriting and administrative services for this business under an
administrative services agreement. Fees earned amounted to $10.2 million
for the year ended December 31, 1999 and are included as an offset to
operating expenses on the accompanying statements of operations - statutory
basis.
6. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE PLANS
PL&A 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 PL&A 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. PL&A has elected to amortize the
transition obligation, which has been allocated from Pacific Life, of $3.7
million over 20 years. The transition obligation amortization amounted to
$183,000 for each of the years ended December 31, 1999 and 1998.
The postretirement obligation included in other liabilities on the
accompanying statements of assets, liabilities and capital and surplus -
statutory basis reflects the amortized balance less reductions due to
payouts under the plan. The balance as of December 31, 1999 and 1998 is
$1.0 million and $1.1 million, respectively.
7. DIVIDEND RESTRICTIONS
Dividend payments by PL&A to its parent cannot exceed the lesser of 10% of
surplus as of the preceding year-end, in regards to policyholders, or the
statutory net gain from operations for the previous calendar year, without
prior approval from the Insurance Commissioner of the State of Arizona. No
dividends were paid during 1999 and 1998. During 2000, PL&A can pay
dividends amounting to approximately $19.8 million without prior approval
from the Insurance Commissioner of the State of Arizona. PL&A is not
anticipating the payment of any shareholder dividends in 2000.
70
<PAGE>
Pacific Life & Annuity Company
NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
8. COMMITMENTS AND CONTINGENCIES
PL&A has outstanding commitments to make investments in bonds, mortgage
loans and other invested assets as follows (In Thousands):
<TABLE>
<CAPTION>
Year Ending December 31:
-----------------------
<S> <C>
2000 $17,337
2001 through 2004 22,722
2005 and thereafter 15,511
-------
Total $55,570
-------
</TABLE>
PL&A 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>
2000 $2,010
2001 1,521
2002 1,430
------
Total $4,961
------
</TABLE>
PL&A 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 or results of operations of PL&A.
71
<PAGE>
ILLUSTRATIONS
<TABLE>
<S> <C>
---------------------------------------------------------
If you ask us, Illustrations 1 through 14, which appear on the
we'll provide you following pages, illustrate how the death benefit,
with different accumulated value and net cash surrender value of a
kinds of hypothetical policy may vary over an extended period of
illustrations: time, based on certain hypothetical rates of return.
.Illustrations These illustrations are based on a hypothetical policy
similar to the ones with the following characteristics:
in this prospectus,
but based on . the annual premium is $10,000
information you . on the policy date, the person insured by the policy
give us about the is a 45-year old male select non-smoker
age of the person
to be insured by The death benefit option, death benefit qualification
the policy, their test and the cost of insurance rates vary by
risk class, the illustration, as follows:
face amount, the
death benefit and -----------------------------------------------------------------------------------------
premium payments. Face amount Death benefit Qualification test Cost of insurance rate
-----------------------------------------------------------------------------------------
.Illustrations that <S> <C> <C> <C> <C>
show the allocation Illustration 1 $451,948 Option A Guideline premium Current
of premium payments Illustration 2 $451,948 Option A Guideline premium Guaranteed
to specified Illustration 3 $181,829 Option B Guideline premium Current
variable accounts. Illustration 4 $181,829 Option B Guideline premium Guaranteed
These will reflect Illustration 5 $451,948 Option C Guideline premium Current
the expenses of the Illustration 6 $451,948 Option C Guideline premium Guaranteed
portfolio of the Illustration 7 $451,948 Option A Cash value accumulation Current
fund in which the Illustration 8 $451,948 Option A Cash value accumulation Guaranteed
variable account Illustration 9 $181,829 Option B Cash value accumulation Current
invests. Illustration 10 $181,829 Option B Cash value accumulation Guaranteed
Illustration 11 $451,948 Option C Cash value accumulation Current
.Illustrations that Illustration 12 $451,948 Option C Cash value accumulation Guaranteed
use a hypothetical Illustration 13 $451,948 Option A Guideline premium Current
gross rate of Illustration 14 $451,948 Option A Guideline premium Guaranteed
return that's
greater than 12%. Assumptions
These are available Here are the assumptions we're using:
only to certain
large institutional . The hypothetical rates of return are equal to
investors. 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.
The fund's . Illustrations 1 through 12 assume total annual
investment advisory advisory fees and expenses of .86% of total average
fees and expenses daily net assets of the fund. This reflects average
are shown in An advisory fees of .76% and average expenses of .10%
overview of Pacific based upon fees and expenses of portfolios available
Select Exec II - NY. as investment options under the policy.
</TABLE>
72
<PAGE>
. Illustrations 13 and 14 assume total annual advisory
fees and expenses of .68% of total average daily net
assets of the fund. This reflects weighted average
advisory fees of .62% and weighted average expenses
of .06% 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 -.86%, 5.09%, and 11.04% for illustrations
1 through 12 and -.68%, 5.28%, and 11.24% 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, 1999:
<TABLE>
<CAPTION>
-----------------------------------------------------
Percentage of average
Portfolio daily net assets
-----------------------------------------------------
<S> <C>
Emerging Markets 0.17%
Equity Income 0.01%
Growth LT 0.01%
Equity Index 0.01%
International Value 0.17%
Large-Cap Value 0.03%
-----------------------------------------------------
</TABLE>
73
<PAGE>
ILLUSTRATIONS
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $451,948 $451,948 $451,948
surrender values. 2 $21,525 $451,948 $451,948 $451,948
3 $33,101 $451,948 $451,948 $451,948
All premium 4 $45,256 $451,948 $451,948 $451,948
payments are 5 $58,019 $451,948 $451,948 $451,948
illustrated as if 6 $71,420 $451,948 $451,948 $451,948
made at the 7 $85,491 $451,948 $451,948 $451,948
beginning of the 8 $100,266 $451,948 $451,948 $451,948
policy year. 9 $115,779 $451,948 $451,948 $451,948
10 $132,068 $451,948 $451,948 $451,948
This illustration 15 $226,575 $451,948 $451,948 $451,948
assumes no policy 20 $347,192 $451,948 $451,948 $632,405
loans or partial 25 $501,134 $451,948 $451,948 $1,076,835
withdrawals have 30 $697,607 $451,948 $554,280 $1,726,117
been made. 35 $948,362 $451,948 $747,115 $2,901,682
------------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ------------------------------------------------------------------
amounts or 1 $6,943 $7,423 $7,905 $1,227 $1,708 $2,190
frequencies. 2 $13,704 $15,097 $16,549 $7,989 $9,381 $10,833
3 $20,368 $23,115 $26,098 $14,652 $17,399 $20,383
The hypothetical 4 $26,930 $31,505 $36,670 $21,215 $25,789 $30,955
investment rates 5 $33,406 $40,291 $48,379 $27,691 $34,576 $42,663
shown above and 6 $39,796 $49,495 $61,351 $34,770 $44,469 $56,325
elsewhere in this 7 $46,100 $59,138 $75,727 $42,331 $55,369 $71,958
prospectus are 8 $52,320 $69,243 $91,666 $49,807 $66,730 $89,153
illustrative only 9 $58,456 $79,836 $109,341 $57,200 $78,579 $108,085
and should not be 10 $64,510 $90,942 $128,950 $64,510 $90,942 $128,950
interpreted as a 15 $98,212 $161,311 $272,923 $98,212 $161,311 $272,923
representation of 20 $128,525 $251,234 $518,364 $128,525 $251,234 $518,364
past or future 25 $152,730 $366,840 $928,306 $152,730 $366,840 $928,306
investment results. 30 $168,397 $518,018 $1,613,194 $168,397 $518,018 $1,613,194
Actual rates of 35 $172,698 $711,538 $2,763,507 $172,698 $711,538 $2,763,507
return may be more ------------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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>
74
<PAGE>
<TABLE>
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
--------------------------------------------------------------------
Flexible premium Total
variable universal premiums
life End of paid plus End of year DEATH BENEFIT assuming
Illustration of policy interest at hypothetical gross annual investment return of
death benefits, year 5% 0% 6% 12%
accumulated values --------------------------------------------------------------------
and net cash 1 $10,500 $451,948 $451,948 $451,948
surrender values. 2 $21,525 $451,948 $451,948 $451,948
3 $33,101 $451,948 $451,948 $451,948
All premium 4 $45,256 $451,948 $451,948 $451,948
payments are 5 $58,019 $451,948 $451,948 $451,948
illustrated as if 6 $71,420 $451,948 $451,948 $451,948
made at the 7 $85,491 $451,948 $451,948 $451,948
beginning of the 8 $100,266 $451,948 $451,948 $451,948
policy year. 9 $115,779 $451,948 $451,948 $451,948
10 $132,068 $451,948 $451,948 $451,948
This illustration 15 $226,575 $451,948 $451,948 $451,948
assumes no policy 20 $347,192 $451,948 $451,948 $555,957
loans or partial 25 $501,134 $451,948 $451,948 $938,382
withdrawals have 30 $697,607 $451,948 $451,948 $1,487,442
been made. 35 $948,362 $0* $507,478 $2,476,911
--------------------------------------------------------------------
*Additional payment End of year End of year
will be required to ACCUMULATED VALUE NET CASH SURRENDER VALUE
prevent policy End of assuming hypothetical gross assuming hypothetical gross
termination. policy annual investment return of annual investment return of
year 0% 6% 12% 0% 6% 12%
The death benefits, --------------------------------------------------------------------
accumulated values 1 $6,943 $7,423 $7,905 $1,227 $1,708 $2,190
and cash surrender 2 $13,704 $15,097 $16,549 $7,989 $9,381 $10,833
values will differ 3 $20,368 $23,115 $26,098 $14,652 $17,399 $20,383
if premiums are 4 $26,930 $31,505 $36,670 $21,215 $25,789 $30,955
paid in different 5 $33,406 $40,291 $48,379 $27,691 $34,576 $42,663
amounts or 6 $38,640 $48,326 $60,175 $33,614 $43,300 $55,149
frequencies. 7 $43,605 $56,555 $73,076 $39,836 $52,786 $69,306
8 $48,282 $64,974 $87,197 $45,769 $62,461 $84,684
The hypothetical 9 $52,641 $73,567 $102,666 $51,385 $72,310 $101,409
investment rates 10 $56,651 $82,319 $119,626 $56,651 $82,319 $119,626
shown above and 15 $75,368 $134,545 $242,627 $75,368 $134,545 $242,627
elsewhere in this 20 $81,583 $194,303 $455,702 $81,583 $194,303 $455,702
prospectus are 25 $66,322 $263,724 $808,950 $66,322 $263,724 $808,950
illustrative only 30 $10,231 $351,817 $1,390,132 $10,231 $351,817 $1,390,132
and should not be 35 $0* $483,313 $2,358,963 $0* $483,313 $2,358,963
interpreted as a --------------------------------------------------------------------
representation of
past or future
investment results.
Actual rates of
return may be more
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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.
75
</TABLE>
<PAGE>
ILLUSTRATIONS
<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:$181,829
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
-----------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values -----------------------------------------------------------------
and net cash 1 $10,500 $190,065 $190,587 $191,109
surrender values. 2 $21,525 $198,131 $199,681 $201,295
3 $33,101 $206,062 $209,171 $212,533
All premium 4 $45,256 $213,884 $219,094 $224,955
payments are 5 $58,019 $221,597 $229,471 $238,684
illustrated as if 6 $71,420 $229,203 $240,324 $253,860
made at the 7 $85,491 $236,702 $251,674 $270,637
beginning of the 8 $100,266 $244,096 $263,544 $289,184
policy year. 9 $115,779 $251,385 $275,959 $309,690
10 $132,068 $258,570 $288,943 $332,363
This illustration 15 $226,575 $295,772 $367,442 $493,358
assumes no policy 20 $347,192 $329,884 $466,197 $762,628
loans or partial 25 $501,134 $359,151 $588,661 $1,211,687
withdrawals have 30 $697,607 $381,755 $739,090 $1,960,828
been made. 35 $948,362 $395,799 $922,790 $3,212,622
-----------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ------------------------------------------------------------------
amounts or 1 $8,236 $8,758 $9,280 $5,937 $6,458 $6,980
frequencies. 2 $16,302 $17,852 $19,466 $14,003 $15,553 $17,166
3 $24,233 $27,342 $30,704 $21,934 $25,042 $28,405
The hypothetical 4 $32,055 $37,265 $43,126 $29,755 $34,966 $40,826
investment rates 5 $39,768 $47,642 $56,855 $37,469 $45,343 $54,556
shown above and 6 $47,374 $58,495 $72,031 $45,352 $56,473 $70,009
elsewhere in this 7 $54,873 $69,845 $88,808 $53,357 $68,328 $87,291
prospectus are 8 $62,267 $81,715 $107,355 $61,256 $80,704 $106,344
illustrative only 9 $69,556 $94,130 $127,861 $69,051 $93,624 $127,356
and should not be 10 $76,741 $107,114 $150,534 $76,741 $107,114 $150,534
interpreted as a 15 $113,943 $185,613 $311,529 $113,943 $185,613 $311,529
representation of 20 $148,055 $284,368 $580,799 $148,055 $284,368 $580,799
past or future 25 $177,322 $406,832 $1,029,858 $177,322 $406,832 $1,029,858
investment results. 30 $199,926 $557,261 $1,778,999 $199,926 $557,261 $1,778,999
Actual rates of 35 $213,970 $740,961 $3,030,793 $213,970 $740,961 $3,030,793
return may be more ------------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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>
76
<PAGE>
<TABLE>
<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:$181,829
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
----------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ----------------------------------------------------------------
and net cash 1 $10,500 $190,065 $190,587 $191,109
surrender values. 2 $21,525 $198,131 $199,681 $201,295
3 $33,101 $206,062 $209,171 $212,533
All premium 4 $45,256 $213,884 $219,094 $224,955
payments are 5 $58,019 $221,597 $229,471 $238,684
illustrated as if 6 $71,420 $228,693 $239,797 $253,318
made at the 7 $85,491 $235,596 $250,501 $269,396
beginning of the 8 $100,266 $242,296 $261,586 $287,059
policy year. 9 $115,779 $248,779 $273,054 $306,460
10 $132,068 $255,030 $284,905 $327,762
This illustration 15 $226,575 $285,198 $354,044 $476,193
assumes no policy 20 $347,192 $307,862 $435,380 $718,047
loans or partial 25 $501,134 $319,348 $527,707 $1,111,983
withdrawals have 30 $697,607 $314,082 $627,226 $1,754,451
been made. 35 $948,362 $281,654 $723,130 $2,801,411
----------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ----------------------------------------------------------------
amounts or 1 $8,236 $8,758 $9,280 $5,937 $6,458 $6,980
frequencies. 2 $16,302 $17,852 $19,466 $14,003 $15,553 $17,166
3 $24,233 $27,342 $30,704 $21,934 $25,042 $28,405
The hypothetical 4 $32,055 $37,265 $43,126 $29,755 $34,966 $40,826
investment rates 5 $39,768 $47,642 $56,855 $37,469 $45,343 $54,556
shown above and 6 $46,864 $57,968 $71,489 $44,842 $55,946 $69,467
elsewhere in this 7 $53,767 $68,672 $87,567 $52,250 $67,155 $86,050
prospectus are 8 $60,467 $79,757 $105,230 $59,456 $78,746 $104,219
illustrative only 9 $66,950 $91,225 $124,631 $66,445 $90,720 $124,125
and should not be 10 $73,201 $103,076 $145,933 $73,201 $103,076 $145,933
interpreted as a 15 $103,369 $172,215 $294,364 $103,369 $172,215 $294,364
representation of 20 $126,033 $253,551 $536,218 $126,033 $253,551 $536,218
past or future 25 $137,519 $345,878 $930,154 $137,519 $345,878 $930,154
investment results. 30 $132,253 $445,397 $1,572,622 $132,253 $445,397 $1,572,622
Actual rates of 35 $99,825 $541,301 $2,619,582 $99,825 $541,301 $2,619,582
return may be more ----------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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.
77
</TABLE>
<PAGE>
ILLUSTRATIONS
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $461,948 $461,948 $461,948
surrender values. 2 $21,525 $471,948 $471,948 $471,948
3 $33,101 $481,948 $481,948 $481,948
All premium 4 $45,256 $491,948 $491,948 $491,948
payments are 5 $58,019 $501,948 $501,948 $501,948
illustrated as if 6 $71,420 $511,948 $511,948 $511,948
made at the 7 $85,491 $521,948 $521,948 $521,948
beginning of the 8 $100,266 $531,948 $531,948 $531,948
policy year. 9 $115,779 $541,948 $541,948 $541,948
10 $132,068 $551,948 $551,948 $551,948
This illustration 15 $226,575 $601,948 $601,948 $601,948
assumes no policy 20 $347,192 $651,948 $651,948 $651,948
loans or partial 25 $501,134 $701,948 $701,948 $1,034,732
withdrawals have 30 $697,607 $751,948 $751,948 $1,661,270
been made. 35 $948,362 $801,948 $801,948 $2,795,163
------------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ------------------------------------------------------------------
amounts or 1 $6,909 $7,389 $7,869 $1,194 $1,673 $2,154
frequencies. 2 $13,599 $14,986 $16,432 $7,883 $9,270 $10,717
3 $20,154 $22,886 $25,853 $14,439 $17,171 $20,137
The hypothetical 4 $26,570 $31,111 $36,240 $20,855 $25,396 $30,524
investment rates 5 $32,860 $39,682 $47,699 $27,144 $33,966 $41,983
shown above and 6 $39,021 $48,614 $60,348 $33,996 $43,589 $55,322
elsewhere in this 7 $45,055 $57,927 $74,319 $41,286 $54,157 $70,550
prospectus are 8 $50,961 $67,636 $89,758 $48,448 $65,123 $87,245
illustrative only 9 $56,737 $77,763 $106,827 $55,480 $76,507 $105,571
and should not be 10 $62,383 $88,327 $125,708 $62,383 $88,327 $125,708
interpreted as a 15 $93,223 $154,546 $263,498 $93,223 $154,546 $263,498
representation of 20 $118,088 $235,997 $496,819 $118,088 $235,997 $496,819
past or future 25 $130,788 $333,250 $892,010 $130,788 $333,250 $892,010
investment results. 30 $122,912 $449,247 $1,552,588 $122,912 $449,247 $1,552,588
Actual rates of 35 $81,549 $592,239 $2,662,060 $81,549 $592,239 $2,662,060
return may be more ------------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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>
78
<PAGE>
<TABLE>
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
---------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ---------------------------------------------------------------------
and net cash 1 $10,500 $461,948 $461,948 $461,948
surrender values. 2 $21,525 $471,948 $471,948 $471,948
3 $33,101 $481,948 $481,948 $481,948
All premium 4 $45,256 $491,948 $491,948 $491,948
payments are 5 $58,019 $501,948 $501,948 $501,948
illustrated as if 6 $71,420 $511,948 $511,948 $511,948
made at the 7 $85,491 $521,948 $521,948 $521,948
beginning of the 8 $100,266 $531,948 $531,948 $531,948
policy year. 9 $115,779 $541,948 $541,948 $541,948
10 $132,068 $551,948 $551,948 $551,948
This illustration 15 $226,575 $601,948 $601,948 $601,948
assumes no policy 20 $347,192 $651,948 $651,948 $651,948
loans or partial 25 $501,134 $0* $701,948 $809,556
withdrawals have 30 $697,607 $0* $751,948 $1,292,414
been made. 35 $948,362 $0* $0* $2,160,772
---------------------------------------------------------------------
*Additional payment End of year End of year
will be required to ACCUMULATED VALUE NET CASH SURRENDER VALUE
prevent policy End of assuming hypothetical gross assuming hypothetical gross
termination. policy annual investment return of annual investment return of
year 0% 6% 12% 0% 6% 12%
The death benefits, ---------------------------------------------------------------------
accumulated values 1 $6,909 $7,389 $7,869 $1,194 $1,673 $2,154
and cash surrender 2 $13,599 $14,986 $16,432 $7,883 $9,270 $10,717
values will differ 3 $20,154 $22,886 $25,853 $14,439 $17,171 $20,137
if premiums are 4 $26,570 $31,111 $36,240 $20,855 $25,396 $30,524
paid in different 5 $32,860 $39,682 $47,699 $27,144 $33,966 $41,983
amounts or 6 $37,695 $47,268 $58,990 $32,669 $42,243 $53,964
frequencies. 7 $42,155 $54,914 $71,212 $38,386 $51,145 $67,443
8 $46,202 $62,584 $84,443 $43,689 $60,072 $81,930
The hypothetical 9 $49,785 $70,234 $98,758 $48,528 $68,978 $97,501
investment rates 10 $52,846 $77,809 $114,244 $52,846 $77,809 $114,244
shown above and 15 $63,124 $118,839 $222,057 $63,124 $118,839 $222,057
elsewhere in this 20 $50,467 $151,294 $396,072 $50,467 $151,294 $396,072
prospectus are 25 $0* $156,001 $697,893 $0* $156,001 $697,893
illustrative only 30 $0* $87,384 $1,207,864 $0* $87,384 $1,207,864
and should not be 35 $0* $0* $2,057,878 $0* $0* $2,057,878
interpreted as a ---------------------------------------------------------------------
representation of
past or future
investment results.
Actual rates of
return may be more
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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.
79
</TABLE>
<PAGE>
ILLUSTRATIONS
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $451,948 $451,948 $451,948
surrender values. 2 $21,525 $451,948 $451,948 $451,948
3 $33,101 $451,948 $451,948 $451,948
All premium 4 $45,256 $451,948 $451,948 $451,948
payments are 5 $58,019 $451,948 $451,948 $451,948
illustrated as if 6 $71,420 $451,948 $451,948 $451,948
made at the 7 $85,491 $451,948 $451,948 $451,948
beginning of the 8 $100,266 $451,948 $451,948 $451,948
policy year. 9 $115,779 $451,948 $451,948 $451,948
10 $132,068 $451,948 $451,948 $451,948
This illustration 15 $226,575 $451,948 $451,948 $553,729
assumes no policy 20 $347,192 $451,948 $451,948 $912,833
loans or partial 25 $501,134 $451,948 $582,349 $1,429,848
withdrawals have 30 $697,607 $451,948 $724,051 $2,186,661
been made. 35 $948,362 $451,948 $885,537 $3,328,094
------------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ------------------------------------------------------------------
amounts or 1 $6,943 $7,423 $7,905 $1,227 $1,708 $2,190
frequencies. 2 $13,704 $15,097 $16,549 $7,989 $9,381 $10,833
3 $20,368 $23,115 $26,098 $14,652 $17,399 $20,383
The hypothetical 4 $26,930 $31,505 $36,670 $21,215 $25,789 $30,955
investment rates 5 $33,406 $40,291 $48,379 $27,691 $34,576 $42,663
shown above and 6 $39,796 $49,495 $61,351 $34,770 $44,469 $56,325
elsewhere in this 7 $46,100 $59,138 $75,727 $42,331 $55,369 $71,958
prospectus are 8 $52,320 $69,243 $91,666 $49,807 $66,730 $89,153
illustrative only 9 $58,456 $79,836 $109,341 $57,200 $78,579 $108,085
and should not be 10 $64,510 $90,942 $128,950 $64,510 $90,942 $128,950
interpreted as a 15 $98,212 $161,311 $272,463 $98,212 $161,311 $272,463
representation of 20 $128,526 $251,234 $508,972 $128,526 $251,234 $508,972
past or future 25 $152,730 $363,014 $891,312 $152,730 $363,014 $891,312
investment results. 30 $168,397 $497,860 $1,503,556 $168,397 $497,860 $1,503,556
Actual rates of 35 $172,698 $659,514 $2,478,634 $172,698 $659,514 $2,478,634
return may be more ------------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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 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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $451,948 $451,948 $451,948
surrender values. 2 $21,525 $451,948 $451,948 $451,948
3 $33,101 $451,948 $451,948 $451,948
All premium 4 $45,256 $451,948 $451,948 $451,948
payments are 5 $58,019 $451,948 $451,948 $451,948
illustrated as if 6 $71,420 $451,948 $451,948 $451,948
made at the 7 $85,491 $451,948 $451,948 $451,948
beginning of the 8 $100,266 $451,948 $451,948 $451,948
policy year. 9 $115,779 $451,948 $451,948 $451,948
10 $132,068 $451,948 $451,948 $451,948
This illustration 15 $226,575 $451,948 $451,948 $492,533
assumes no policy 20 $347,192 $451,948 $451,948 $779,502
loans or partial 25 $501,134 $451,948 $451,948 $1,153,633
withdrawals have 30 $697,607 $451,948 $503,427 $1,640,539
been made. 35 $948,362 $0* $575,634 $2,268,310
------------------------------------------------------------------
*Additional payment End of year End of year
will be required to ACCUMULATED VALUE NET CASH SURRENDER VALUE
prevent policy End of assuming hypothetical gross assuming hypothetical gross
termination. policy annual investment return of annual investment return of
year 0% 6% 12% 0% 6% 12%
The death benefits, ------------------------------------------------------------------
accumulated values 1 $6,943 $7,423 $7,905 $1,227 $1,708 $2,190
and cash surrender 2 $13,704 $15,097 $16,549 $7,989 $9,381 $10,833
values will differ 3 $20,368 $23,115 $26,098 $14,652 $17,399 $20,383
if premiums are 4 $26,930 $31,505 $36,670 $21,215 $25,789 $30,955
paid in different 5 $33,406 $40,291 $48,379 $27,691 $34,576 $42,663
amounts or 6 $38,640 $48,326 $60,175 $33,614 $43,300 $55,149
frequencies. 7 $43,605 $56,555 $73,076 $39,836 $52,786 $69,306
8 $48,282 $64,974 $87,197 $45,769 $62,461 $84,684
The hypothetical 9 $52,641 $73,567 $102,666 $51,385 $72,310 $101,409
investment rates 10 $56,651 $82,319 $119,626 $56,651 $82,319 $119,626
shown above and 15 $75,368 $134,545 $242,351 $75,368 $134,545 $242,351
elsewhere in this 20 $81,583 $194,303 $434,630 $81,583 $194,303 $434,630
prospectus are 25 $66,322 $263,724 $719,130 $66,322 $263,724 $719,130
illustrative only 30 $10,231 $346,158 $1,128,041 $10,231 $346,158 $1,128,041
and should not be 35 $0* $428,709 $1,689,349 $0* $428,709 $1,689,349
interpreted as a ------------------------------------------------------------------
representation of
past or future
investment results.
Actual rates of
return may be more
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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.
81
</TABLE>
<PAGE>
ILLUSTRATIONS
<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:$181,829
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $190,065 $190,587 $191,109
surrender values. 2 $21,525 $198,131 $199,681 $201,295
3 $33,101 $206,062 $209,171 $212,533
All premium 4 $45,256 $213,884 $219,094 $224,955
payments are 5 $58,019 $221,597 $229,471 $238,684
illustrated as if 6 $71,420 $229,203 $240,324 $253,860
made at the 7 $85,491 $236,702 $251,674 $270,637
beginning of the 8 $100,266 $244,096 $263,544 $289,184
policy year. 9 $115,779 $251,385 $275,959 $309,690
10 $132,068 $258,570 $288,943 $350,289
This illustration 15 $226,575 $295,772 $377,171 $628,745
assumes no policy 20 $347,192 $329,884 $508,309 $1,021,350
loans or partial 25 $501,134 $359,151 $646,225 $1,587,986
withdrawals have 30 $697,607 $381,755 $795,177 $2,418,558
been made. 35 $948,362 $395,799 $965,697 $3,672,275
------------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ------------------------------------------------------------------
amounts or 1 $8,236 $8,758 $9,280 $5,937 $6,458 $6,980
frequencies. 2 $16,302 $17,852 $19,466 $14,003 $15,553 $17,166
3 $24,233 $27,342 $30,704 $21,934 $25,042 $28,405
The hypothetical 4 $32,055 $37,265 $43,126 $29,755 $34,966 $40,826
investment rates 5 $39,768 $47,642 $56,855 $37,469 $45,343 $54,556
shown above and 6 $47,374 $58,495 $72,031 $45,352 $56,473 $70,009
elsewhere in this 7 $54,873 $69,845 $88,808 $53,357 $68,328 $87,291
prospectus are 8 $62,267 $81,715 $107,355 $61,256 $80,704 $106,344
illustrative only 9 $69,556 $94,130 $127,861 $69,051 $93,624 $127,356
and should not be 10 $76,741 $107,114 $150,498 $76,741 $107,114 $150,498
interpreted as a 15 $113,943 $185,587 $309,374 $113,943 $185,587 $309,374
representation of 20 $148,055 $283,420 $569,478 $148,055 $283,420 $569,478
past or future 25 $177,322 $402,832 $989,889 $177,322 $402,832 $989,889
investment results. 30 $199,926 $546,767 $1,663,009 $199,926 $546,767 $1,663,009
Actual rates of 35 $213,970 $719,213 $2,734,967 $213,970 $719,213 $2,734,967
return may be more ------------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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>
82
<PAGE>
<TABLE>
<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:$181,829
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $190,065 $190,587 $191,109
surrender values. 2 $21,525 $198,131 $199,681 $201,295
3 $33,101 $206,062 $209,171 $212,533
All premium 4 $45,256 $213,884 $219,094 $224,955
payments are 5 $58,019 $221,597 $229,471 $238,684
illustrated as if 6 $71,420 $228,693 $239,797 $253,318
made at the 7 $85,491 $235,596 $250,501 $269,396
beginning of the 8 $100,266 $242,296 $261,586 $287,059
policy year. 9 $115,779 $248,779 $273,054 $306,460
10 $132,068 $255,030 $284,905 $339,576
This illustration 15 $226,575 $285,198 $354,044 $587,863
assumes no policy 20 $347,192 $307,862 $453,076 $909,547
loans or partial 25 $501,134 $319,348 $547,290 $1,330,222
withdrawals have 30 $697,607 $314,082 $632,008 $1,878,636
been made. 35 $948,362 $281,654 $707,330 $2,586,315
------------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ------------------------------------------------------------------
amounts or 1 $8,236 $8,758 $9,280 $5,937 $6,458 $6,980
frequencies. 2 $16,302 $17,852 $19,466 $14,003 $15,553 $17,166
3 $24,233 $27,342 $30,704 $21,934 $25,042 $28,405
The hypothetical 4 $32,055 $37,265 $43,126 $29,755 $34,966 $40,826
investment rates 5 $39,768 $47,642 $56,855 $37,469 $45,343 $54,556
shown above and 6 $46,864 $57,968 $71,489 $44,842 $55,946 $69,467
elsewhere in this 7 $53,767 $68,672 $87,567 $52,250 $67,155 $86,050
prospectus are 8 $60,467 $79,757 $105,230 $59,456 $78,746 $104,220
illustrative only 9 $66,950 $91,225 $124,631 $66,445 $90,720 $124,125
and should not be 10 $73,201 $103,076 $145,895 $73,201 $103,076 $145,895
interpreted as a 15 $103,369 $172,215 $289,258 $103,369 $172,215 $289,258
representation of 20 $126,033 $252,624 $507,140 $126,033 $252,624 $507,140
past or future 25 $137,519 $341,160 $829,209 $137,519 $341,160 $829,209
investment results. 30 $132,253 $434,571 $1,291,757 $132,253 $434,571 $1,291,757
Actual rates of 35 $99,825 $525,501 $1,926,186 $99,825 $525,501 $1,926,186
return may be more ------------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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.
83
</TABLE>
<PAGE>
ILLUSTRATIONS
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $461,948 $461,948 $461,948
surrender values. 2 $21,525 $471,948 $471,948 $471,948
3 $33,101 $481,948 $481,948 $481,948
All premium 4 $45,256 $491,948 $491,948 $491,948
payments are 5 $58,019 $501,948 $501,948 $501,948
illustrated as if 6 $71,420 $511,948 $511,948 $511,948
made at the 7 $85,491 $521,948 $521,948 $521,948
beginning of the 8 $100,266 $531,948 $531,948 $531,948
policy year. 9 $115,779 $541,948 $541,948 $541,948
10 $132,068 $551,948 $551,948 $551,948
This illustration 15 $226,575 $601,948 $601,948 $601,948
assumes no policy 20 $347,192 $651,948 $651,948 $885,726
loans or partial 25 $501,134 $701,948 $701,948 $1,390,346
withdrawals have 30 $697,607 $751,948 $751,948 $2,128,733
been made. 35 $948,362 $801,948 $801,948 $3,242,119
------------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ------------------------------------------------------------------
amounts or 1 $6,909 $7,389 $7,869 $1,194 $1,673 $2,154
frequencies. 2 $13,599 $14,986 $16,432 $7,883 $9,270 $10,717
3 $20,154 $22,886 $25,853 $14,439 $17,171 $20,137
The hypothetical 4 $26,570 $31,111 $36,240 $20,855 $25,396 $30,524
investment rates 5 $32,860 $39,682 $47,699 $27,144 $33,966 $41,983
shown above and 6 $39,021 $48,614 $60,348 $33,996 $43,589 $55,322
elsewhere in this 7 $45,055 $57,927 $74,319 $41,286 $54,157 $70,550
prospectus are 8 $50,961 $67,636 $89,758 $48,448 $65,123 $87,245
illustrative only 9 $56,737 $77,763 $106,827 $55,480 $76,507 $105,571
and should not be 10 $62,383 $88,327 $125,708 $62,383 $88,327 $125,708
interpreted as a 15 $93,223 $154,546 $263,498 $93,223 $154,546 $263,498
representation of 20 $118,088 $235,997 $493,858 $118,088 $235,997 $493,858
past or future 25 $130,788 $333,250 $866,688 $130,788 $333,250 $866,688
investment results. 30 $122,912 $449,248 $1,463,725 $122,912 $449,248 $1,463,725
Actual rates of 35 $81,549 $592,240 $2,414,603 $81,549 $592,240 $2,414,603
return may be more ------------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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>
84
<PAGE>
<TABLE>
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
--------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values --------------------------------------------------------------------
and net cash 1 $10,500 $461,948 $461,948 $461,948
surrender values. 2 $21,525 $471,948 $471,948 $471,948
3 $33,101 $481,948 $481,948 $481,948
All premium 4 $45,256 $491,948 $491,948 $491,948
payments are 5 $58,019 $501,948 $501,948 $501,948
illustrated as if 6 $71,420 $511,948 $511,948 $511,948
made at the 7 $85,491 $521,948 $521,948 $521,948
beginning of the 8 $100,266 $531,948 $531,948 $531,948
policy year. 9 $115,779 $541,948 $541,948 $541,948
10 $132,068 $551,948 $551,948 $551,948
This illustration 15 $226,575 $601,948 $601,948 $601,948
assumes no policy 20 $347,192 $651,948 $651,948 $709,220
loans or partial 25 $501,134 $0* $701,948 $1,058,197
withdrawals have 30 $697,607 $0* $751,948 $1,511,862
been made. 35 $948,362 $0* $0* $2,096,448
--------------------------------------------------------------------
*Additional payment End of year End of year
will be required to ACCUMULATED VALUE NET CASH SURRENDER VALUE
prevent policy End of assuming hypothetical gross assuming hypothetical gross
termination. policy annual investment return of annual investment return of
year 0% 6% 12% 0% 6% 12%
The death benefits, --------------------------------------------------------------------
accumulated values 1 $6,909 $7,389 $7,869 $1,194 $1,673 $2,154
and cash surrender 2 $13,599 $14,986 $16,432 $7,883 $9,270 $10,717
values will differ 3 $20,154 $22,886 $25,853 $14,439 $17,171 $20,137
if premiums are 4 $26,570 $31,111 $36,240 $20,855 $25,396 $30,524
paid in different 5 $32,860 $39,682 $47,699 $27,144 $33,966 $41,983
amounts or 6 $37,695 $47,268 $58,990 $32,669 $42,243 $53,964
frequencies. 7 $42,155 $54,914 $71,213 $38,386 $51,145 $67,443
8 $46,202 $62,584 $84,443 $43,689 $60,072 $81,930
The hypothetical 9 $49,785 $70,234 $98,758 $48,528 $68,978 $97,501
investment rates 10 $52,846 $77,809 $114,244 $52,846 $77,809 $114,244
shown above and 15 $63,124 $118,839 $222,058 $63,124 $118,839 $222,058
elsewhere in this 20 $50,468 $151,294 $395,443 $50,468 $151,294 $395,443
prospectus are 25 $0* $156,001 $659,639 $0* $156,001 $659,639
illustrative only 30 $0* $87,384 $1,039,562 $0* $87,384 $1,039,562
and should not be 35 $0* $0* $1,561,352 $0* $0* $1,561,352
interpreted as a --------------------------------------------------------------------
representation of
past or future
investment results.
Actual rates of
return may be more
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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.
85
</TABLE>
<PAGE>
ILLUSTRATIONS
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable premiums End of year DEATH BENEFIT assuming
universal life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $451,948 $451,948 $451,948
surrender values. 2 $21,525 $451,948 $451,948 $451,948
3 $33,101 $451,948 $451,948 $451,948
All premium 4 $45,256 $451,948 $451,948 $451,948
payments are 5 $58,019 $451,948 $451,948 $451,948
illustrated as if 6 $71,420 $451,948 $451,948 $451,948
made at the 7 $85,491 $451,948 $451,948 $451,948
beginning of the 8 $100,266 $451,948 $451,948 $451,948
policy year. 9 $115,779 $451,948 $451,948 $451,948
10 $132,068 $451,948 $451,948 $451,948
This illustration 15 $226,575 $451,948 $451,948 $451,948
assumes no policy 20 $347,192 $451,948 $451,948 $648,376
loans or partial 25 $501,134 $451,948 $451,948 $1,111,982
withdrawals have 30 $697,607 $451,948 $574,410 $1,796,247
been made. 35 $948,362 $451,948 $779,065 $3,044,139
------------------------------------------------------------------
The death benefits, End of year End of year
accumulated values ACCUMULATED VALUE NET CASH SURRENDER VALUE
and cash surrender End of assuming hypothetical gross assuming hypothetical gross
values will differ policy annual investment return of annual investment return of
if premiums are year 0% 6% 12% 0% 6% 12%
paid in different ------------------------------------------------------------------
amounts or 1 $6,957 $7,439 $7,922 $1,242 $1,724 $2,207
frequencies. 2 $13,745 $15,142 $16,599 $8,030 $9,427 $10,884
3 $20,447 $23,206 $26,204 $14,732 $17,491 $20,488
The hypothetical 4 $27,061 $31,661 $36,856 $21,345 $25,946 $31,141
investment rates 5 $33,598 $40,531 $48,676 $27,883 $34,816 $42,961
shown above and 6 $40,061 $49,840 $61,795 $35,036 $44,814 $56,769
elsewhere in this 7 $46,450 $59,610 $76,361 $42,681 $55,841 $72,592
prospectus are 8 $52,765 $69,869 $92,540 $50,252 $67,356 $90,027
illustrative only 9 $59,007 $80,642 $110,516 $57,750 $79,386 $109,259
and should not be 10 $65,176 $91,959 $130,494 $65,176 $91,959 $130,494
interpreted as a 15 $99,645 $163,988 $277,940 $99,645 $163,988 $277,940
representation of 20 $131,021 $256,970 $531,456 $131,021 $256,970 $531,456
past or future 25 $156,591 $377,886 $958,605 $156,591 $377,886 $958,605
investment results. 30 $173,966 $536,832 $1,678,735 $173,966 $536,832 $1,678,735
Actual rates of 35 $180,438 $741,967 $2,899,180 $180,438 $741,967 $2,899,180
return may be more ------------------------------------------------------------------
or less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made to
variable accounts
by the owner and
the experience of
the accounts. No
representation can
be made by us, the
separate account or
the fund that these
hypothetical rates
of return can be
achieved for any
one year or
sustained over any
period of time.
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>
86
<PAGE>
<TABLE>
<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:$451,948
MALE SELECT NONSMOKER ISSUE AGE 45
ANNUAL PREMIUM:$10,000
------------------------------------------------------------------
Flexible premium Total
variable universal premiums End of year DEATH BENEFIT assuming
life End of paid plus hypothetical gross annual investment
Illustration of policy interest at return of
death benefits, year 5% 0% 6% 12%
accumulated values ------------------------------------------------------------------
and net cash 1 $10,500 $451,948 $451,948 $451,948
surrender values. 2 $21,525 $451,948 $451,948 $451,948
3 $33,101 $451,948 $451,948 $451,948
All premium 4 $45,256 $451,948 $451,948 $451,948
payments are 5 $58,019 $451,948 $451,948 $451,948
illustrated as if 6 $71,420 $451,948 $451,948 $451,948
made at the 7 $85,491 $451,948 $451,948 $451,948
beginning of the 8 $100,266 $451,948 $451,948 $451,948
policy year. 9 $115,779 $451,948 $451,948 $451,948
10 $132,068 $451,948 $451,948 $451,948
This illustration 15 $226,575 $451,948 $451,948 $451,948
assumes no policy 20 $347,192 $451,948 $451,948 $571,510
loans or partial 25 $501,134 $451,948 $451,948 $971,143
withdrawals have 30 $697,607 $451,948 $451,948 $1,550,819
been made. 35 $948,362 $0* $546,630 $2,602,926
------------------------------------------------------------------
*Additional End of year End of year
payment will be ACCUMULATED VALUE NET CASH SURRENDER VALUE
required to End of assuming hypothetical gross assuming hypothetical gross
prevent policy policy annual investment return of annual investment return of
termination. year 0% 6% 12% 0% 6% 12%
------------------------------------------------------------------
The death 1 $6,957 $7,439 $7,922 $1,242 $1,724 $2,207
benefits, 2 $13,745 $15,142 $16,599 $8,030 $9,427 $10,884
accumulated values 3 $20,447 $23,206 $26,204 $14,732 $17,491 $20,488
and cash surrender 4 $27,061 $31,661 $36,856 $21,345 $25,946 $31,141
values will differ 5 $33,598 $40,531 $48,676 $27,883 $34,816 $42,961
if premiums are 6 $38,905 $48,670 $60,619 $33,879 $43,644 $55,593
paid in different 7 $43,952 $57,025 $73,708 $40,183 $53,256 $69,939
amounts or 8 $48,720 $65,592 $88,066 $46,207 $63,080 $85,553
frequencies. 9 $53,178 $74,359 $103,827 $51,921 $73,103 $102,571
10 $57,294 $83,313 $121,148 $57,294 $83,313 $121,148
The hypothetical 15 $76,684 $137,097 $247,544 $76,684 $137,097 $247,544
investment rates 20 $83,772 $199,750 $468,451 $83,772 $199,750 $468,451
shown above and 25 $69,564 $274,519 $837,192 $69,564 $274,519 $837,192
elsewhere in this 30 $14,710 $373,271 $1,449,363 $14,710 $373,271 $1,449,363
prospectus are 35 $0* $520,600 $2,478,977 $0* $520,600 $2,478,977
illustrative only ------------------------------------------------------------------
and should not be
interpreted as a
representation of
past or future
investment
results. Actual
rates of return
may be more or
less than those
shown and will
depend on a number
of factors,
including the
investment
allocations made
to variable
accounts by the
owner and the
experience of the
accounts. No
representation can
be made by us, the
separate account
or the fund that
these hypothetical
rates of return
can be achieved
for any one year
or sustained over
any period of
time.
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.
87
</TABLE>
<PAGE>
APPENDIX A - RATES PER $1,000 OF INITIAL FACE AMOUNT
<TABLE>
<CAPTION>
Face amount component of M&E Risk Charge
- -----------------------------------------------------------------------------------------
Issue Age Male Female Unisex Issue 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.
88
<PAGE>
APPENDIX B - DEATH BENEFIT PERCENTAGES
<TABLE>
<CAPTION>
- ---------------- --------------- --------------- -----------------
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 >93 101
- ---------------- --------------- --------------- -----------------
</TABLE>
89
<PAGE>
PACIFIC SELECT
EXEC II - NY WHERE TO GO FOR MORE INFORMATION
The Pacific Select
Exec II - NY For more information about Pacific Select Exec II - NY,
variable life please call or write to us at the address below. You
insurance policy is should also use this address to send us any notices,
underwritten by forms or requests about your policy.
Pacific Life &
Annuity Company.
---------------------------------------------------------
How to contact us Pacific Life & Annuity Company
Client Services Department
700 Newport Center Drive
P.O. Box 6530
Newport Beach, California 92658-7500
1-888-595-6997
7 a.m. through 5 p.m. Pacific time
---------------------------------------------------------
How to contact the You can also find reports and other information about
SEC 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
<PAGE>
Underwritten by:
[LOGO OF PACIFIC LIFE & ANNUITY COMPANY APPEARS HERE]
Pacific Life & Annuity Company
700 Newport Center Drive
Newport Beach, CA 92660
(888) 595-6997
Visit us at our website: www.pacificlifeandannuity.com
85-21870-00
<PAGE>
PACIFIC SELECT EXEC II - NY
Flexible Premium Variable Insurance Policy
Issued by Pacific Life & Annuity Company
Supplement dated May 1, 2000 to
Prospectus dated May 1, 2000
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 several riders under "The death benefit:
Optional riders". As of the date of this supplement to the prospectus, these
riders are 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 89 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 /1/
(b) Memorandum Establishing Separate Account /1/
(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) /1/
(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 /1/
(b) Articles of Incorporation of PM Group Life Insurance Company /1/
(c) Amended & Restated Articles of Incorporation for PM Group Life
Insurance Company /1/
<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) /2/
(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 /1/
3. Inapplicable
4. Inapplicable
5. Inapplicable
6. (a) Consent of Deloitte & Touche LLP
(b) Consent of Dechert Price & Rhoads /1/
7. Opinion of Actuary
8. Memorandum Describing Issuance, Transfer and Redemption Procedures /1/
9. Powers of Attorney /1/
10. Inapplicable
11. Inapplicable
12. Inapplicable
13. Inapplicable
14. Inapplicable
15. Inapplicable
16. Inapplicable
17. Inapplicable
____________________
/1/ Filed as part of Registration Statement on Form S-6 via EDGAR on June 16,
1999, File No. 333-80825, Accession Number 0001017062-99-001158.
/2/ Filed as part of Pre-Effective Amendment No. 1 to the Registration Statement
of Form S-6 via EDGAR on September 22, 1999, File No. 333-80825, Accession
Number 0001017062-99-001625.
<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,
certifies that it meets the requirements of Securities Act Rule 485(b) for
effectiveness and has caused this Post-Effective Amendment No. 1 to the
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 27th day of April, 2000.
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
(Powers of Attorney are contained as Exhibit 9 in the Registration Statement on
Form S-6 for the Pacific Select Exec Separate Account, File No. 333-80825,
Accession Number 0001017062-99-001158.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Pacific Life &
Annuity Company certifies that it meets all of the requirements for
effectiveness pursuant to Rule 485(b) under the Securities Act of 1933 and has
caused this Post-Effective Amendment No. 1 to the 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 27th day of April, 2000.
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
(Powers of Attorney are contained as Exhibit 9 in the Registration Statement on
Form S-6 for the Pacific Select Exec Separate Account, File No. 333-80825,
Accession Number 0001017062-99-001158.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 1 to the 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 ___________ , 2000
William L. Ferris* Executive Officer
____________________ Director and Chairman of the Board ___________ , 2000
Thomas C. Sutton*
____________________ Director, Senior Vice President and ___________ , 2000
David R. Carmichael* General Counsel
____________________ Director and Secretary ___________ , 2000
Audrey L. Milfs*
____________________ Director ___________ , 2000
Glenn S. Schafer*
____________________ Chief Financial Officer and ___________ , 2000
Khanh T. Tran* Treasurer
____________________ Executive Vice President ___________ , 2000
Lynn C. Miller*
____________________ Senior Vice President ___________ , 2000
William J. Doomey*
____________________ Vice President ___________ , 2000
Gary L. Falde*
*By: /s/ DAVID R. CARMICHAEL April 27, 2000
------------------------------
David R. Carmichael
as attorney-in-fact
</TABLE>
(Powers of Attorney are contained as Exhibit 9 in the Registration Statement on
Form S-6 of Pacific Select Exec Separate Account, File No. 333-80825, Accession
Number 0001017062-99-001158.)
<PAGE>
DRAFT
DISTRIBUTION AGREEMENT
AGREEMENT made this ____ day of ____________, 2000, 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 Select Distributors, Inc., a
California corporation, ("PSD").
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 PSD, 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, PSD 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 PSD 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 PSD 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 PSD, 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 PSD 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. PSD shall offer the Contracts for sale and distribution
at premium rates set by PL&A.
2. Selling Agreements. PSD is hereby authorized to enter into separate
------------------
written agreements, on such terms and conditions as PSD 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. PSD 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. PSD shall be responsible for
ensuring that Broker and general agent supervise its agents,
representatives, or sub-agents.
PSD is also authorized to enter into separate written agreements, on such
terms and conditions as PSD 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. PSD 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, PSD 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. PSD 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. PSD
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, PSD 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 PSD in connection with
the distribution or sale of the Contracts; and
(b) any compensation paid to employees of PSD 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 PSD.
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 PSD, 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. PSD shall be responsible for exercising reasonable care
----------------
in carrying out the provisions of this Agreement.
9. Reports. PSD 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. PSD 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 PSD 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 PSD in the amounts set forth in Schedule A, which schedule is
incorporated herein. PL&A shall arrange for the payment of commissions,
through PSD, 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 PSD specified in such written agreements.
12. Investigation and proceedings. PSD 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.
PSD 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. PSD and PL&A further agree to cooperate fully in any
securities regulatory investigation or proceeding with respect to PL&A,
PSD, 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) PSD 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 PSD 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) PSD will promptly notify PL&A of any customer complaint or notice of
any regulatory investigation or proceeding received by PSD or its
affiliates with respect to PSD 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, PSD 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 PSD 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
PSD.
PSD 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 PSD, Broker or general agent; or 4) any willful misfeasance, bad faith,
negligence, misconduct or wrongful act. PSD 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 PSD
("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 PL&A or Separate Accounts. Any person, even though also an
----------------------------------
officer, director, employee, or agent of PSD, 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 PSD even thought paid by PSD. 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
PSD shall be deemed, when rendering services to PSD or acting in any
business of PSD, to be rendering such services to or acting solely for PSD
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 PSD 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 PSD. During the term of this
Agreement and for a period of three years from the date of termination of
this Agreement, PSD 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 PSD 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. PSD 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. PSD 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 PSD:
(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. PSD shall act as an independent contractor and
----------------------
nothing herein contained shall constitute PSD 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 PSD 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 PSD at 700 Newport Center Drive, Newport
Beach, California 92660, or at such other address or to such individual as
shall be specified by PSD. 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 SELECT 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 ____________, 2000.
PACIFIC SELECT DISTRIBUTORS, INC.
Attest: By:
- ------------------------------------- --------------------------------
Name: Name:
Title: President
PACIFIC LIFE & ANNUITY COMPANY
Attest: By:
- ------------------------------------- --------------------------------
Name: Name:
Title: President
<PAGE>
EXHIBIT 1.(3)(B)
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 SELECT 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
1
<PAGE>
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;
2
<PAGE>
(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,
3
<PAGE>
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
<PAGE>
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
5
<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 SELECT 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:___________________________________
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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:___________________________________
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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:___________________________________
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AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
AGENCY:__________________________________
Address__________________________________
__________________________________
__________________________________
By:______________________________________
Title:___________________________________
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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.
13
<PAGE>
SCHEDULE D-1
COMPENSATION SCHEDULE FOR
PACIFIC PORTFOLIOS-NY - INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ACCUMULATION DEFERRED ANNUITY
<PAGE>
SCHEDULE D-2
COMPENSATION SCHEDULE FOR
PACIFIC SELECT EXEC II-NY - INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICY
<PAGE>
[LOGO OF PACIFIC LIFE & ANNUITY COMPANY]
700 Newport Center Drive . Newport Beach, CA 92660
- -------------------------------------------------------------------------------
FLEXIBLE READ YOUR POLICY CAREFULLY. This is a legal
PREMIUM contract between you, the Owner, and us, Pacific
VARIABLE LIFE Life & Annuity Company, a stock insurance company.
INSURANCE We agree to pay the benefits of this policy
according to its provisions. The consideration for
. Death Benefit Payable this policy is the application for it, a copy of
if the Insured Dies which is attached, and payment of the premiums.
Before the Maturity Date
. Accumulated Value Less Premiums are flexible, subject to minimums required
Policy Debt Payable if to keep the policy in force. Variable Account
the Insured Lives Until Values may increase or decrease depending upon
the Maturity Date Variable Account investment experience. There is no
. Adjustable Face Amount guaranteed Variable Account Value. Policy loan
. Benefits May Vary Based value is less than one hundred percent (100%) of
on Investment Experience the policy's cash surrender value.
. Non-Participating
The method for determining the death benefit is
described in the Death Benefit section of this
policy. The amount of the death benefit may be
fixed or variable according to the Death Benefit
Option selected and may increase or decrease. The
duration this policy remains in force may vary,
depending on the premiums paid and the 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,
/s/ WES FERRIS /s/ AUDREY L. MILFS
----------------------- ----------------------
President and Chief Secretary
Executive Officer
P98-52-NY
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
NOTE: IT IS POSSIBLE THAT THE POLICY MAY NOT MATURE (THAT IS, IT MAY LAPSE
BEFORE MATURITY OR IT MAY HAVE AN ACCUMULATED VALUE AT MATURITY LESS THAN THE
FACE AMOUNT) EVEN IF PLANNED PREMIUMS ARE PAID DUE TO CHANGE IN THE CURRENT
INTEREST RATE BEING CREDITED ON THE FIXED OPTIONS, THE INVESTMENT PERFORMANCE OF
THE FUNDS IN THE SEPARATE ACCOUNT, CHANGES IN EXPENSE LOADS OR COST OF INSURANCE
RATES, LOANS AND WITHDRAWALS OR CHANGES IN THE DEATH BENEFIT OPTION.
P98-52-NY GP (P)
<PAGE>
GUIDE TO POLICY PROVISIONS
SECTION PAGE
POLICY SPECIFICATIONS................................................. 3
DEFINITIONS........................................................... 5
OWNER AND BENEFICIARY................................................. 6
PREMIUMS.............................................................. 6
DEATH BENEFIT......................................................... 7
ACCUMULATED VALUE..................................................... 9
TRANSFERS............................................................. 13
SURRENDER AND WITHDRAWAL OF VALUES.................................... 14
TIMING OF PAYMENTS AND TRANSFERS...................................... 15
INCOME BENEFITS....................................................... 16
POLICY LOANS.......................................................... 16
SEPARATE ACCOUNT PROVISIONS........................................... 17
SUBSTITUTION OF INSURED............................................... 18
GENERAL PROVISIONS.................................................... 18
INDEX................................................................. 22
<PAGE>
POLICY NUMBER: VP999999990
POLICY SPECIFICATIONS
BASIC POLICY: FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PREMIUMS: PLANNED [ANNUAL] PREMIUM = $ 1,354.97
GUIDELINE SINGLE PREMIUM = $ 15,569.00
GUIDELINE LEVEL PREMIUM = $ 1,354.97
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 EQUITY]
[MULTI-STRATEGY] [EQUITY INDEX] [MID-CAP VALUE]
[SMALL CAP EQUITY] [GROWTH LT] [LARGE-CAP VALUE]
[MANAGED BOND] [EQUITY] [REIT]
[INTERNATIONAL VALUE] [EMERGING MARKETS] FIXED
[EQUITY INCOME] [AGGRESSIVE EQUITY] FIXED LT
[HIGH YIELD BOND] [BOND AND INCOME] [INTERNATIONAL LARGE-CAP]
[DIVERSIFIED RESEARCH]
INTEREST ON THE FIXED OPTIONS AND ON THE LOAN ACCOUNT IS GUARANTEED TO BE NOT
LESS THAN 3.00% ANNUALLY FOR THE FIRST 10 POLICY YEARS AND 3.30% THEREAFTER. ANY
EXCESS INTEREST RATE DECLARED BY US AT THE BEGINNING OF EACH POLICY YEAR WILL BE
GUARANTEED UNTIL THE END OF THAT YEAR. BEFORE SUCH DECLARATION, EXCESS AMOUNTS
ARE NOT GUARANTEED. THERE IS NO EXCESS INTEREST PAID ON THE LOAN ACCOUNT.
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 THAN WAS ILLUSTRATED 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.
ADMINISTRATIVE CHARGE: $7.50 PER MONTH
WITHDRAWAL FEE: $25
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 M&E RISK CHARGE PROVISION FOR DETAILS.
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
NOTE: IT IS POSSIBLE THAT THE POLICY MAY NOT MATURE (THAT IS, IT MAY LAPSE
BEFORE MATURITY OR IT MAY HAVE AN ACCUMULATED VALUE AT MATURITY LESS THAN THE
FACE AMOUNT) EVEN IF PLANNED PREMIUMS ARE PAID DUE TO CHANGE IN THE CURRENT
INTEREST RATE BEING CREDITED ON THE FIXED OPTIONS, THE INVESTMENT PERFORMANCE OF
THE FUNDS IN THE SEPARATE ACCOUNT, CHANGES IN EXPENSE LOADS OR COST OF INSURANCE
RATES, LOANS AND WITHDRAWALS OR CHANGES IN THE DEATH BENEFIT OPTION.
P98-52-NY GP Page 3.0
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE
P98-52-NY: BASIC COVERAGE
FACE AMOUNT: $50,000.00
AGE AT ISSUE: 35
RISK CLASSIFICATION: MALE SELECT NONSMOKER
COVERED PERSON: LELAND STANFORD
- --------------------------------------------------------------------------------
R98-ART-NY: ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER
INITIAL FACE AMOUNT: $50,000.00
AGE AT ISSUE: 35
RISK CLASSIFICATION: MALE SELECT NONSMOKER
COVERED PERSON: LELAND STANFORD
- --------------------------------------------------------------------------------
P98-52-NY GP Page 3.1
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE
ANNUAL RENEWABLE AND CONVERTIBLE 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 GP Page 3.2
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF SURRENDER CHARGES
<TABLE>
<CAPTION>
POLICY SURRENDER POLICY SURRENDER POLICY SURRENDER
MONTH CHARGE MONTH CHARGE MONTH CHARGE
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $315.10 41 $315.10 81 $259.28
2 315.10 42 315.10 82 252.63
3 315.10 43 315.10 83 245.98
4 315.10 44 315.10 84 239.33
5 315.10 45 315.10 85 232.69
6 315.10 46 315.10 86 226.04
7 315.10 47 315.10 87 219.39
8 315.10 48 315.10 88 212.74
9 315.10 49 315.10 89 206.09
10 315.10 50 315.10 90 199.44
11 315.10 51 315.10 91 192.80
12 315.10 52 315.10 92 186.15
13 315.10 53 315.10 93 179.50
14 315.10 54 315.10 94 172.85
15 315.10 55 315.10 95 166.20
16 315.10 56 315.10 96 159.56
17 315.10 57 315.10 97 152.91
18 315.10 58 315.10 98 146.26
19 315.10 59 315.10 99 139.61
20 315.10 60 315.10 100 132.96
21 315.10 61 315.10 101 126.31
22 315.10 62 315.10 102 119.67
23 315.10 63 315.10 103 113.02
24 315.10 64 315.10 104 106.37
25 315.10 65 315.10 105 99.72
26 315.10 66 315.10 106 93.07
27 315.10 67 315.10 107 86.43
28 315.10 68 315.10 108 79.78
29 315.10 69 315.10 109 73.13
30 315.10 70 315.10 110 66.48
31 315.10 71 315.10 111 59.83
32 315.10 72 315.10 112 53.19
33 315.10 73 312.46 113 46.54
34 315.10 74 305.81 114 39.89
35 315.10 75 299.17 115 33.24
36 315.10 76 292.52 116 26.59
37 315.10 77 285.87 117 19.94
38 315.10 78 279.22 118 13.30
39 315.10 79 272.57 119 6.65
40 315.10 80 265.93 120+ 0.00
</TABLE>
P98-52-NY GP 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 0.08333333
49 0.00051898 74 0.00498352 99 0.08333333
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 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 GP Page 4.0
<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 LELAND
STANFORD.
<TABLE>
<CAPTION>
MONTHLY MONTHLY
AGE RATE AGE RATE
- -----------------------------------------------------
<S> <C> <C> <C>
35 0.00017600 61 0.00147355
36 0.00018686 62 0.00161341
37 0.00020022 63 0.00177217
38 0.00021526 64 0.00194909
39 0.00023280 65 0.00214342
40 0.00025202 66 0.00235100
41 0.00027458 67 0.00257276
42 0.00029715 68 0.00280882
43 0.00032307 69 0.00306532
44 0.00034984 70 0.00335367
45 0.00037996 71 0.00368199
46 0.00041093 72 0.00406029
47 0.00044442 73 0.00449620
48 0.00047960 74 0.00498352
49 0.00051898 75 0.00551331
50 0.00056089 76 0.00607653
51 0.00061038 77 0.00666569
52 0.00066577 78 0.00727588
53 0.00072875 79 0.00792387
54 0.00080018
55 0.00087672
56 0.00096005
57 0.00104684
58 0.00113962
59 0.00123925
60 0.00134998
</TABLE>
P98-52-NY GP Page 4.1
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF INSURANCE CHARGES - ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER
CURRENT MONTHLY COST OF INSURANCE RATES PER $1.00 OF COVERAGE APPLICABLE TO THE
ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER COVERING LELAND STANFORD.
<TABLE>
<CAPTION>
MONTHLY MONTHLY
AGE RATE AGE RATE
- ---------------------------------------------------------------
<S> <C> <C> <C>
35 0.00004974 61 0.00046426
36 0.00005370 62 0.00050854
37 0.00006100 63 0.00055575
38 0.00006629 64 0.00060224
39 0.00007092 65 0.00066841
40 0.00007422 66 0.00073680
41 0.00008019 67 0.00081326
42 0.00008615 68 0.00089854
43 0.00009279 69 0.00099994
44 0.00010009 70 0.00109855
45 0.00011073 71 0.00120530
46 0.00012030 72 0.00131951
47 0.00013153 73 0.00144640
48 0.00014522 74 0.00157332
49 0.00016002 75 0.00170638
50 0.00017662 76 0.00185880
51 0.00019182 77 0.00202697
52 0.00020846 78 0.00221026
53 0.00022655 79 0.00239465
54 0.00024682
55 0.00026708
56 0.00029244
57 0.00031997
58 0.00035112
59 0.00038738
60 0.00042364
</TABLE>
P98-52-NY GP Page 4.2
<PAGE>
POLICY NUMBER: VP99999990
POLICY SPECIFICATIONS
TABLE OF GUARANTEED MAXIMUM M&E RISK FACE AMOUNT CHARGES
ANNUAL RENEWABLE AND CONVERTIBLE TERM RIDER
M&E RISK FACE AMOUNT CHARGE APPLICABLE TO THE ANNUAL RENEWABLE AND CONVERTIBLE
TERM RIDER: MONTHLY CHARGE EQUAL TO THE AMOUNTS SHOWN BELOW. REFER TO THE RIDER
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 GP Page 4.3
<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. ALSO EXPLAINED IN THE M&E RISK CHARGE
PROVISION.
<TABLE>
<CAPTION>
ATTAINED % OF FIRST PLUS % OF AV ATTAINED % OF FIRST PLUS % 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
66 0.0375 0.0042
67 0.0375 0.0042
68 0.0375 0.0042
69 0.0375 0.0042
</TABLE>
<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 10 days after the policy is issued, or if later,
the date all requirements necessary to place the policy in force are delivered
to the Home Office.
Home Office - means our service office located at 700 Newport Center Drive,
Newport Beach, CA 92660.
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.
Maturity Date - is the policy anniversary when the Insured becomes Age 100. At
the Maturity Date, we will pay you the Accumulated Value less any Policy Debt
and the policy will terminate.
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.
NAR - stands for the Net Amount at Risk. The NAR 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. Also, the Accumulated Value section describes how the NAR is
used to calculate the Cost of Insurance charge.
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 sum of outstanding policy loans plus accrued 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.
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 Home Office is
open.
Valuation Period - is the period of time between successive Valuation Dates.
P98-52-NY Page 5 (P)
<PAGE>
Variable Account - is a subaccount of a separate account of ours in which assets
are segregated from assets in our general account and from assets in other
subaccounts. 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 received by us at
our Home Office.
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 you change the owner, the change is effective on the
date the Written Request is signed, subject to our receipt of it. 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 Home Office. When received, 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 beneficiary may be one or more persons. If the
beneficiary is more than one person, they will share the death benefit proceeds
equally or as otherwise specified by you in a Written Request. The interest of
any beneficiary will be subject to any assignment. If you have named a
contingent beneficiary, that person becomes the beneficiary if the beneficiary
dies before the Insured. A beneficiary may not, at or after the Insured's death,
assign, transfer or encumber any benefit payable. To the extent allowed by law,
policy benefits will not be subject to the claims of any creditor of any
beneficiary.
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, subject to our receipt of the request. 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 written 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 Home Office or to our agent.
Additional premiums, if any, are payable in advance at our Home Office. 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. The Planned
Premium is the amount identified in the application, or later changed by Written
Request, which you plan to pay. Payment of the Planned Premium does not
guarantee that the policy will mature. The amount of Planned Premium at policy
issue is shown on Page 3.0.
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.
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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.
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 date.
The amounts of the Guideline Premiums are shown on the Policy Specification
pages. The Guideline Premiums may change whenever there is a change to the
policy or riders. In such case, the new Guideline Premium will be shown in the
supplemental schedule of benefits and premiums we will send to you at the time
of the change. See the Tax Qualification as Life Insurance subsection of the
General Provisions section for details. Also, see the Tax Qualification as Life
Insurance and MEC Status subsections of the General Provisions section to see
how premium payments can affect the federal tax treatment of your policy.
DEATH BENEFIT
Death Benefit - This policy provides a death benefit on the death of the Insured
before the Maturity Date. 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 Minimum Death Benefit calculated under the Death Benefit Qualification
Test elected; or
. 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 Minimum Death Benefit will be the
greater of the amount required for this policy to be deemed life insurance
for federal tax purposes or 101% of the Accumulated Value (AV). 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 changed, we will send you a supplemental schedule of NSP's.
2. Guideline Premium Test - The Minimum Death Benefit at any time is the
Accumulated Value multiplied by the death benefit percentage shown in the
following table:
Death Benefit Death Benefit Death Benefit Death Benefit
Age Percentage Age Percentage Age Percentage Age Percentage
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
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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
at 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 which results in the death benefit after
the change being equal to the death benefit before the change. For this purpose,
death benefit is the amount calculated under the Death Benefit Options,
disregarding the Minimum Death Benefit. The change will be effective on the
Monthly Payment Date on or next following the day we receive your Written
Request at our Home Office. If an option change causes a decrease in Face
Amount, and there have been prior increases in Face Amount, the original Face
Amount and any increases will be decreased in reverse order.
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 Home Office, due proof of the Insured's death (a certified copy of the death
certificate or, if unavailable, other legal documentation which we accept) and
information sufficient to identify the beneficiary. 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 as described in the Timing of Payments
and Transfers section.
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 - An increase in Face Amount is subject to evidence of
insurability and will be effective date on 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
. if the Guideline Premium Test is used, the new Guideline Premiums.
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.
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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. If
there have been prior increases in Face Amount, the original Face Amount and any
increase(s) in Face Amount will be decreased in reverse order.
A supplemental schedule of benefits and premiums will be issued. This schedule
will include the following information: o 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.
Paid-Up Insurance - On each policy anniversary you have the option to 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 entire Net Cash Surrender Value as the net single
premium based upon the Insured's Age and Risk Classification, 1980 CSO mortality
and 3% interest. If the amount of paid-up insurance so determined would exceed
the death benefit of the policy immediately prior to purchase of the paid-up
insurance, we will apply only a portion of the Net Cash Surrender Value to
purchase paid-up insurance, and the remainder will be paid to you. In this case,
we will determine the amount of paid-up insurance so that the paid-up insurance
plus the Net Cash Surrender Value paid to you will equal the policy's death
benefit immediately prior to the purchase of the paid-up insurance. This policy
and any riders attached to it 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.
Change in Benefits - Under the Guideline Premium Test, any change in policy or
rider benefits will require an adjustment to the guideline premium limitation.
See the Tax Qualification as Life Insurance subsection of the General Provisions
section for details.
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 3.00% in the first 10 policy years and
3.30% thereafter. At our discretion, we may credit a higher rate of interest.
Once credited, interest is nonforfeitable, except indirectly due to any
applicable Surrender Charge. 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
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. 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 your
policy's Accumulated Value in each Variable Account.
This subsection describes how we calculate your policy's Accumulated Value in
each Variable Account. 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 policy's 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 adjusted on each Valuation Date. To calculate the
Unit Value of a Variable Account on any Valuation Date, we multiply the Unit
Value from the previous Valuation Date by the Net Investment Factor. The Net
Investment Factor for a Variable Account on any Valuation Date is (a) minus (b),
divided by (c), where:
(a) is the Net Asset Value of the Variable Account as of the close of the
business day, excluding the impact of any policy transactions since the
prior Valuation Date;
(b) is the value of charges assessed by us since the prior Valuation Date for
taxes attributable to the operation of the Variable Account; and
(c) is the Net Asset Value of the Variable Account as of the close of the
previous Valuation Date.
The Net Asset Value of a Variable Account on any Valuation Date is the Net Asset
Value per share for the Variable Account on the Valuation Date multiplied by the
number of shares in the Variable Account on the Valuation Date. For each
Variable Account, the Net Asset Value per share and the number of shares
outstanding are reported to us each Valuation Date by the investment company in
whose shares the Variable Account is invested.
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:
. 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.
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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.
If there have been increases of Face Amount, then the NAR 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 expense recoveries 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. Guaranteed Maximum Cost of Insurance rates after the
initial 5-year guarantee are based on the 1980 Commissioners' Standard Ordinary
Mortality Table.
Change in Policy Cost Factors - Any change in policy cost factors, including
credited interest on the Fixed Options, cost of insurance rates, risk and
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 of New York. Cost of
insurance rates and other expense factors will be reviewed no more frequently
than annually and no less frequently than once every five years to determine
whether an adjustment is necessary. Interest to be credited to the Fixed Options
will be reviewed at least annually to determine whether an adjustment is
necessary. The interest rate in effect at the beginning of the policy year will
be effective for the duration of that year.
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 the sum of the M&E Risk
Asset Charge and the M&E Risk Face Amount Charge.
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. The percentages are also shown in the Policy Specifications.
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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 and only if any such increase is first approved by the
Insurance Department of the state of New York. 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, but only if any such
charge is first approved by the Insurance Department of the state of New York.
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-one 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.
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 and the Policy Debt will be extinguished. If the policy is
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reinstated on the first Monthly Payment Date following lapse, any Policy Debt on
the date of lapse will also be reinstated. At reinstatement, the surrender
charge will be that in effect at the beginning of the grace period, and will
then decrease each policy month thereafter according to the successive month-by-
month surrender charges shown in the Policy Specifications pages.
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. Each transfer 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. Each transfer 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 Account: If you have transferred out of either Fixed
Option within the last 90 days, you cannot transfer into the Fixed Account,
except that during the first 18 policy months transfers into the Fixed Account
are unlimited (see below),
Transfers into the Fixed LT Account: Transfers into the Fixed LT Account can be
made only during the policy month prior to a 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.
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 you
receive 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 disallow a transfer from any account if the balance would be a non-zero
amount less than $500;
. to assess a $25 charge for each transfer exceeding 12 per policy year.
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Automatic Transfer Programs - Dollar Cost Averaging, the First Year
Transfer Program and Automatic Portfolio Rebalancing, as described below,
are optional programs available under this policy. No more than one of
these may be in effect at any one time. Transfers pursuant to these
programs will occur on Monthly Payment Dates or the next succeeding
business day if the Monthly Payment Date falls on a non-business day.
Automatic transfers will not take place before the end of the Free Look
Period or during the Grace Period. We must receive your Written Request in
order for these programs to begin. Except as noted below, these programs
may be elected at any time. These programs neither guarantee investment
gains nor protection from investment losses. Transfers under these programs
do not count toward the limitations on the number of transfers, nor of free
transfers, allowed per policy year. We reserve the right to modify the
terms and conditions of these programs, upon 30 days advance notice to you.
Dollar Cost Averaging - Under this program, automatic transfers from any one
Variable Account of a percentage or a fixed dollar amount will be made to any
combination of other Variable Accounts on a monthly, quarterly, semi-annual, or
annual basis. You may elect Dollar Cost Averaging at any time by sending us a
Written Request. Your policy's Accumulated Value in the Variable Account from
which the transfer is made must be at least $5,000 at the time the first
transfer is to be made. Automatic transfers will continue until you give us a
Written Request to stop, or until your policy's Accumulated Value in the
Variable Account from which the transfers are made has been depleted.
First Year Transfer Program - This program is identical to Dollar Cost
Averaging, with the differences described in this subsection. Transfers are made
from the Fixed Account and occur in the 12 policy months following the policy
month when the Free Look Period ends. Transfers may be made to the Fixed LT
Account as well as to the Variable Accounts. Transfers are for the dollar amount
in your Written Request. For this program, we waive the limitation that no more
than the greater of $5,000 or 25% of the Fixed Account can be transferred out of
the Fixed Account in a policy year.
Automatic Portfolio Rebalancing - Under this program, we automatically transfer
on a quarterly, semi-annual, or annual basis, your policy's Accumulated Value
among the Variable Accounts to re-establish the portfolio allocation that you
specify in your Written Request. With your Written Request, you may change the
portfolio balance that will be used for the rebalancing. Automatic Portfolio
Rebalancing will continue until you make a Written Request to cancel the
program. If you cancel the program, you must wait 30 days to begin it again.
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 AV 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
Surrender Charge varies each policy month and is shown in the Table of Surrender
Charges in the Policy Specifications.
If there have been increases in the Face Amount, each increase will have a
corresponding Surrender Charge related to the amount of the increase. At the
time of the increase, we will send you a supplemental schedule of benefits
containing the Table of Surrender Charges for the increase. If there have been
decreases in the Face Amount, including decreases in Face Amount due to
withdrawals, the Surrender Charge will be unchanged as a result of such decrease
in Face Amount.
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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 $500 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.
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
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 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 Minimum Death Benefit and the
Face Amount will reduce the Face Amount by the amount of the excess. If a
withdrawal requires a decrease in Face Amount and if there have been prior
increases in Face Amount, then the decrease will be applied proportionately to
the various coverage amounts. A withdrawal will never increase the NAR.
TIMING OF PAYMENTS AND TRANSFERS
Variable Accounts - With respect to allocations made to the Variable Accounts,
we will pay death benefit proceeds, withdrawals and Net Cash Surrender Value on
surrender and withdrawals 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
. 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.
Fixed Options - With respect to payments or transfers to be made from the Fixed
Options (or from the policy, if this policy is continued under a fixed
non-forfeiture benefit), we may defer such payment or transfer for up to six
months after we receive your Written Request. If deferred more than 10 days
after we receive such request, we will pay interest at the rate which is the
current rate payable on the interest settlement option for income benefits.
Policy Loans - We reserve the right to defer any policy loan payment, except for
loans used to pay premiums to us, for up to six months after we receive your
loan application.
P98-52-NY Page 15 (P)
<PAGE>
Interest on Death and Maturity Proceeds - We will pay interest on death proceeds
from the date of death and on maturity proceeds from the maturity date, in both
cases to the date of payment, at the rate which is the current rate payable on
the Interest Settlement Option described under Income Benefits.
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.
Other Income Options - Surrender, withdrawal or death benefits may be used under
any other payment plans that we make available at that time. We will make an
Interest Settlement Option available under which we will credit interest
monthly. Amounts left on deposit under this plan, and credited interest, will be
accumulated until you request a withdrawal.
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 + rate of loan interest credited at the time of the
loan; 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.
P98-52-NY Page 16 (P)
<PAGE>
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 Pacific Life & Annuity Company, herein called the "Separate Account".
The assets of the Separate Account shall be valued at least as often as any
policy benefits vary, but at least monthly. We established the Separate Account
and maintain it under the laws and regulations of Arizona and New York. The
Separate Account is divided into subaccounts, called Variable Accounts. Income
and 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 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;
P98-52-NY Page 17 (P)
<PAGE>
. 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.
In spite of the above, we will not transfer any investment, or asset held for
investment, between separate accounts or between separate and other accounts,
provided that the superintendent of the New York Insurance Department may
authorize transfers in circumstances where such transfers would not be
inequitable. 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 of the state of Arizona, our state of domicile, and without the
approval of the Insurance Department of the state of New York. The process for
such approval is on file.
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.
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 written application
for a change in policy terms allowed by the policy after issue 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 our president,
chief executive officer or secretary is authorized to change this contract or
extend the time for paying premiums. Any such change must be in writing.
All statements in the application shall 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
misrepresentation 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:
P98-52-NY Page 18 (P)
<PAGE>
. 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, which was applied for and 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; and
. If this policy was issued under a term insurance conversion option, the
converted amount cannot be contested after the policy has been in force
during the Insured's lifetime for two years from the later of the issue of
the term policy or any reinstatement date of the term policy or of this
policy.
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 within two years of the
Policy 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 within two years of the effective date of any
increase in the Face Amount which was applied for after the Policy Date, 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.
If any insurance amount of this policy was issued under a term insurance
conversion option, the two-year period for excluding death by suicide for such
amount does not start anew, but is effective as of the issue date of the term
policy.
Misstatement - If the Insured's age has been misstated, the death benefit will
be adjusted so that the NAR after adjustment is the NAR before the adjustment
multiplied by the ratio of the incorrect Cost of Insurance (COI) rate to the
correct COI rate. If the Minimum Death Benefit after adjustment is larger, the
death benefit will be this larger amount.
Evidence of Insurability - We reserve the right to require evidence of
insurability for any policy change or any premium payment which would result in
an increase in NAR.
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
. 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 and
applicable law and regulation of the state of New York.
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.
P98-52-NY Page 19 (P)
<PAGE>
Basis of Values - A detailed statement showing how values are determined has
been filed with the Insurance Department of the state of New York. 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%.
Ownership of Assets - We have the exclusive and absolute control of our assets,
including all assets in the Separate Account.
Tax Qualification as Life Insurance - This policy is intended to qualify as a
life insurance contract for federal tax purposes, and the death benefit under
this policy is intended to qualify for federal income tax exclusion. The policy,
including any other rider, benefit or endorsement, shall be interpreted to
ensure and maintain such tax qualification, despite any other provision to the
contrary. We will not accept a premium payment which would cause the policy to
fail to qualify as a life insurance contract for federal tax purposes.
If at any time the premiums paid under the policy exceed the amount allowable
for such tax qualification, the excess amount, including any associated
investment gains or losses, shall be removed from the policy as of the date of
its payment in accordance with federal tax law, and any appropriate adjustment
in the death benefit shall be made as of such date. The excess amount, including
any associated investment gains or losses, shall be refunded no later than 60
days after the end of the applicable contract year as determined under federal
tax law. For any such refund, any premium load originally assessed will be
refunded and no surrender charges will apply.
If this excess amount is not refunded by the end of such 60-day period, the
death benefit shall be increased retroactively to the minimum extent necessary
so that at no time is the death benefit ever less than the amount necessary to
ensure or maintain such tax qualification, and the Accumulated Value will be
reduced to reflect the increased Monthly Deductions as a result of such death
benefit increase.
If you request a decrease in policy or rider benefits, it may cause a reduction
in any applicable limitations on premiums or cash values for the policy under
federal tax law. Such a reduction in these limits may require us to make a
distribution from the policy equal to the greatest amount by which the premiums
paid or cash values for the policy, as determined under federal tax, exceed any
such reduced limits, in order to maintain the policy's tax qualification. If
such a distribution is made, the distribution will be paid to you and the
Accumulated Value will be reduced by the amount of the distribution. However, no
request for a decrease in policy or rider benefits will be allowed to the extent
that the resulting reduction in such tax limits would require us to distribute
more than the Net Cash Surrender Value for the policy.
MEC Status - Unless you have given us Written Notice to the contrary, the
provisions of this MEC Status subsection apply. MEC stands for Modified
Endowment Contract. Under federal tax law, if the funding of a life insurance
contract occurs too rapidly, it becomes a MEC and fails to qualify for certain
favorable treatment as a result. This policy is intended to qualify as a life
insurance contract that is not a MEC for federal tax purposes. This policy,
including any other rider, benefit or endorsement, shall be interpreted to
prevent the policy from being subject to such MEC treatment, despite any other
provision to the contrary. We will not accept a payment as premium or otherwise
which would cause the policy to become a MEC.
If at any time the amounts paid under the policy exceed the limit for avoiding
such MEC treatment, the excess amount, including any associated investment gains
or losses, shall be removed from the policy as of the date of its payment in
accordance with federal tax law, and any appropriate adjustment in the death
benefit shall be made as of such date. The excess amount, including any
associated investment gains or losses, shall be refunded no later than 60 days
after the end of the applicable contract year as determined under federal tax
law. For any such refund, any premium load originally assessed will be refunded
and no surrender charges will apply.
P98-52-NY Page 20 (P)
<PAGE>
If this excess amount is not refunded by the end of such 60-day period, the
death benefit shall be increased retroactively to the minimum extent necessary
so that at no time is the death benefit ever less than the amount necessary to
avoid such MEC treatment, and the Accumulated Value will be reduced to reflect
the increased Monthly Deductions as a result of such death benefit increase.
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. 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.
Other Distributions of Accumulated Value - If the NAR ever exceeds three times
the original Face Amount, we reserve the right to make a distribution of
Accumulated Value to make the NAR equal three times the original Face Amount. In
such case, the distribution will be treated as a premium refund and no surrender
charge will be imposed. By treating the distribution as a premium refund, we
mean that, in addition to the distribution of Accumulated Value which you will
receive, we will also pay you an amount representing a return of premium load
associated with the distribution. The amount representing the return of premium
load will be equal to the reduction in Accumulated Value multiplied by
(1/(1-premium load rate))-1, provided that such amount can never exceed the
total premium load paid under the policy.
Termination - This policy will terminate on the earliest of :
. the death of the Insured;
. the lapse or surrender of this policy; and
. the Maturity Date.
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 those of the state of New York and including the
requirements for life insurance contracts under the Code. After filing with, and
approval by, the Department of the state of New York, we will provide you with a
copy of any such change. You have the right to refuse the change.
P98-52-NY Page 21 (P)
<PAGE>
<TABLE>
<CAPTION>
INDEX
<S> <C> <C> <C>
Accumulated Value (AV) 9 Loan Interest 16
Administrative Charge 12 Loan Repayment 17
Age 5 M&E Risk Charge 11
Assignment 6 Maturity Date 5
Automatic Portfolio Rebalancing 14 MEC 20
Automatic Transfer Programs 14 MEC Status 20
Basis of Values 20 Misstatement 19
Beneficiary 6 Modified Endowment Contract 20
Cash Surrender Value 14 Monthly Deduction 11
Cash Value Accumulation Test 7 Monthly Payment Date 5
Change in Policy Cost Factors 11 Mortality and Expense Risk Charge 11
Code 5 NAR 5
Compliance 21 Net Asset Value 10
Cost of Insurance Charge 11 Net Cash Surrender Value 14
Cost of Insurance Rates 11 Net Investment Factor 10
Death Benefit 7 Net Premium 5
Death Benefit Options 8 Net Single Premium (NSP) 7
Death Benefit Proceeds 8 Non-Participating 19
Death Benefit Qualification Test 7 Owner 6
Dollar Cost Averaging 14 Paid-Up Benefit 9
Entire Contract 18 Planned Premium 6
Evidence of Insurability 5, 19 Policy Date 5
Face Amount 5 Policy Debt 5
Face Amount Change 8 Policy Illustrations 19
Face Amount Decrease 9 Policy Loans 16
Face Amount Increase 8 Premium Allocation 6
First Year Transfer Program 14 Premium Limitation 7
Fixed Accumulated Value 9 Premium Load 3, 12
Fixed Options 5, 15 Premiums 6
Free Look Transfer Date 5 Reinstatement 12
Grace Period 12 Reports 19
Guideline Premium Limitation 7 Risk Classification 3
Guideline Premium Test 7 Separate Account 5, 17
Home Office 5 Suicide Exclusion 19
Income Benefits 16 Surrender 14
Incontestability 18 Surrender Charges 14
Insured 5 Tax Qualification as Life Insurance 20
Interest on Death and Maturity Proceeds 16 Termination 21
Interest Settlement Option 16 Transfers 13
Investment Options 5 Valuation Date 5
Juvenile Insured 19 Valuation Period 5
Lapse 12 Variable Account 6, 17
Limits on Face Amount Increase 8 Variable Accumulated Value 10
Loan Account 10, 17 Withdrawals 15
Loan Amount Available 16 Written Request 6
</TABLE>
P98-52-NY Page 22 (P)
<PAGE>
[LOGO]
PACIFIC LIFE
& ANNUITY COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
- --------------------------------------------------------------------------------
FLEXIBLE
PREMIUM
VARIABLE LIFE
INSURANCE
. Death Benefit Payable if the Insured Dies Before the Maturity Date
. Accumulated Value Less Policy Debt Payable if the Insured Lives Until the
Maturity Date
. Adjustable Face Amount
. Benefits May Vary Based on Investment Experience
. Non-Participating
P98-52-NY (P)
<PAGE>
EXHIBIT 1.(5)(b)
ANNUAL RENEWABLE AND CONVERTIBLE TERM INSURANCE 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 Minimum Death Benefit or the death
benefit as calculated under one of the options below:
. Option A: The death benefit is the Face Amount of the policy plus the ART
Face Amount;
. Option B: The death benefit is the Face Amount of the policy plus the ART
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.
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
R98-ART-NY
Page 1
<PAGE>
Specifications. Any changes in the Cost of Insurance Rates will apply uniformly
to all members of the same class and based on changes in our expectations of
future 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 of New York. Cost of insurance rates and other expense
factors will be reviewed no more frequently than annually and no less frequently
than once every five years to determine whether an adjustment is necessary.
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.
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
. conversion of this rider; 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>
EXHIBIT 1.(5)(d)
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>
EXHIBIT 1.(5)(e)
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.
Limits on Coverage - The state of New York imposes limits on the amount of
coverage on the lives of minors. Coverage may not exceed the following amounts:
Child's age Limit (includes amounts
in years inforce in all companies)
-------- -------------------------
0 to 2.5 $1,000
2.5 to 9.5 2,000
9.5 to 11.5 3,000
11.5 to 14.5 5,000
There are 2 exceptions, as listed below.
Exception 1
If the person effectuating the insurance:
. has an insurable interest; and
. the minor is dependent on such person;
then the limits are:
Child's age Limit (includes amounts
in years inforce in all companies)
-------- -------------------------
1 to 4.5 Greater of $5,000 or 25% of the insurance on the life of the
person effectuating the insurance
4.5 to 14.5 Greater of $10,000 or 50% of the insurance on the life of the
person effectuating the insurance
Exception 2
If the person effectuating the insurance:
. has an insurable interest; and
. the minor is not dependent on such person;
then there is no explicit limit.
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 2 years from its issue
date during the Insured's lifetime. Any paid-up term insurance issued under
this rider will be incontestable from its issue date.
R98-CT-NY
Page 1 of 2
<PAGE>
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
R98-CT-NY Page 2 of 2
<PAGE>
EXHIBIT 1(5)(f)
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>
EXHIBIT 1.(5)(G)
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>
EXHIBIT 1.(5)(h)
GUARANTEED INSURABILITY RIDER
BENEFIT - You may, without providing evidence of insurability, buy a new policy
on the life of the Insured on each option date shown in the Policy Specification
pages. To do this, you must make a written request on a form we provide and you
must pay the initial premium for the new policy:
. 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.
NEW POLICY - The amount of insurance on the new policy may not exceed the
maximum shown in the Policy Specifications pages.
The new policy will be dated on the option date. It will take effect on that
date, if the Insured is then living and the first premium is paid.
The new policy will be on any plan of insurance we regularly issue on the option
date. It will be issued in the same underwriting class and contain the same
restrictions, if any, as apply to this policy. It will be issued at our
published premium rates, which apply at the Insured's age on the new policy's
date.
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>
EXHIBIT 1.(5)(i)
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>
EXHIBIT 1.(9)(a)
FUND PARTICIPATION AGREEMENT
----------------------------
This Agreement is made the 1st day of January, 2000, by and among PACIFIC
LIFE INSURANCE COMPANY (formerly Pacific Mutual Life Insurance Company)
("Pacific Life"), a life insurance company domiciled in California, on its
behalf and on behalf of its segregated asset accounts listed on Exhibit A to
this Agreement; PACIFIC LIFE & ANNUITY COMPANY (formerly PM Group Life Insurance
Company) ("PL&A", and, together with Pacific Life, the "Companies"), a life
insurance company domiciled in Arizona, on its behalf and on behalf of its
segregated asset accounts listed on Exhibit A to this Agreement (the segregated
asset accounts of the Companies are referred to collectively as the "Separate
Accounts"); PACIFIC SELECT FUND (the "Fund"), a Massachusetts business trust;
and PACIFIC MUTUAL DISTRIBUTORS, INC. (formerly Pacific Equities Network )
("Distributor"), a California corporation.
W I T N E S S E T H
-------------------
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 "series" and each
series has its own investment objective, policies, and limitations; and
WHEREAS, Pacific Life, the Fund and the Distributor are currently parties
to a Fund Participation Agreement dated November 6, 1992, as amended by an
Addendum to the Agreement dated January 4, 1994, an Addendum to the Agreement
dated August 15, 1994, an
1
<PAGE>
Addendum to the Agreement dated November 20, 1995, and an Addendum to the
Agreement dated December 18, 1998 (the "Current Agreement"), pursuant to which
Fund shares are offered and sold to certain segregated asset accounts of Pacific
Life; and
WHEREAS, the Fund is available to offer shares of one or more of its series
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 ("Participating Insurance Companies")
substantially similar to the Current Agreement, and the Fund is currently
comprised of multiple separate series, and other series 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, inter alia, 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
2
<PAGE>
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Companies wish to purchase shares of one or more of the Fund's
series on behalf of their 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 series; and
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth, the parties hereby agree to amend and
restate the Current Agreement as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Distributor agrees to sell to the Companies those shares of the
series offered and made available by the Fund and identified in Exhibit B
("Series"), that a 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
Series for purchase at the applicable net asset value per share by the Companies
on behalf of their Separate Accounts; provided, however, that the Board of
Trustees of the Fund may refuse to sell shares of any Series to any person, or
suspend or terminate the offering of shares of any Series, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole
3
<PAGE>
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 Series.
1.3. The Fund and Distributor agree that shares of the Series of the Fund
will be sold only to Participating Insurance Companies, their separate accounts,
and other persons consistent with each Series being adequately diversified
pursuant to Section 817(h) of the Internal Revenue Code of 1986, as amended
("Code") and the regulations thereunder.
1.4. The Fund and the Distributor will not sell shares of the Series to any
insurance company other than the Companies or to the separate account of any
such other insurance company unless an agreement containing provisions
substantially the same as those in Article IV and Sections 5.5 and 5.6 of
Article V of this Agreement is in effect to govern such sales.
1.5. Upon receipt of a request for redemption in proper form from a
Company, the Fund agrees to redeem any full or fractional shares of the Series
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. Each Company agrees to purchase and redeem the shares of each Series
in accordance with the provisions of the current prospectus for the Fund.
4
<PAGE>
1.7. Each Company shall pay for shares of the Series in federal funds
transmitted by wire no later than 11:00 a.m. Eastern time the next following
business day after it places an order to purchase shares.
1.8. Issuance and transfer of shares of the Series will be by book entry
only unless otherwise agreed by the Fund. Stock certificates will not be issued
to the Companies or the Separate 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 each Company of any income dividends or capital gain
distributions payable on the shares of the Series. Each Company hereby elects
to reinvest in the Series all such dividends and distributions as are payable on
a Series' shares and to receive such dividends and distributions in additional
shares of that Series. Each Company reserves the right to revoke this election
in writing and to receive all such dividends and distributions in cash. The
Fund shall notify each 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 each
Company on each business day of the net asset value per share for each Series as
soon as reasonably practicable after the net asset value per share is
calculated.
5
<PAGE>
ARTICLE II. Representations and Warranties
------------------------------
2.1. Pacific Life 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. PL&A 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.
2.3. Pacific Life represents and warrants that it has legally and validly
established each of its Separate Accounts as a segregated asset account under
the California Insurance Code, and that each of its Separate Accounts is a
validly existing segregated asset account under applicable federal and state
law.
2.4. PL&A represents and warrants that it has legally and validly
established each of its 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.
2.5. Pacific Life represents and warrants that the Variable Contracts
issued by it or interests in its 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.
6
<PAGE>
2.6. PL&A represents and warrants that the Variable Contracts issued by it
or interests in its 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.
2.7. Each Company represents and warrants that each of its 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.
2.8. Each Company represents that it believes, in good faith, that the
Variable Contracts issued by that 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.
2.9. 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.
2.10. The Fund represents and warrants that the shares of the Series 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.
7
<PAGE>
2.11. The Fund represents that it believes, in good faith, that the Series
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.
2.12. 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 Series to the Separate Accounts, including
maintaining its registration as an investment company under the 1940 Act, and
registering the shares of 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 Series. 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
Series as a Regulated Investment Company under Subchapter M of the Code (or any
successor or similar provision) and shall notify the Companies immediately upon
having a reasonable basis for believing that a Series has ceased to so qualify
or that it might not so qualify in the future.
8
<PAGE>
3.3. The Fund shall make every effort to enable each Series 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 Companies immediately upon having reasonable basis for believing
that any Series 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
Section 3.2 and 3.3 hereof.
3.5. Each 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 that 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. Each Company shall make every effort to maintain the treatment of the
Variable Contracts issued by that 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.
9
<PAGE>
3.7. Each Company shall offer and sell the Variable Contracts issued by
that Company in accordance with applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Conduct Rules, 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 Series of
the Fund in accordance with the applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Conduct Rules, 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, as defined by Section
2(a)(19) of the 1940 Act ("disinterested Trustees"), 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. Each Company agrees to provide, as promptly as possible, notice to
the Fund and to the Distributor if that 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
10
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corresponding shares of the Fund or a Series, as described in Section 9.1(e) and
to which the notice provision of Section 9.2 shall apply). In such an event,
that 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 that Company at least 30 days prior
to the meeting. That 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.
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
scheduled premium variable life insurance policies and owners of flexible
premium variable life insurance policies; (2) between the interests of owners of
variable annuity contracts and owners of scheduled premium or flexible premium
variable life insurance policies, and (3) 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
11
<PAGE>
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
Series are being managed; (e) a decision by a Participating Insurance Company to
disregard the voting instructions of Variable Contract Owners.
4.2. Each Company agrees that it shall be responsible for reporting any
potential or existing conflict to the Fund's Board of Trustees. Each 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 each Company to inform
the Board whenever Variable Contract Owner voting instructions are disregarded.
Each Company shall carry out its responsibility under this Section 4.2 with a
view only to the interests of its Variable Contract Owners.
4.3. Each 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, that
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 Series and reinvesting such assets in a different investment
medium, which may include another Series of
12
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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 a Company's
decision to disregard Variable Contract Owners' voting instructions and that
decision represents a minority position or would preclude a majority vote, that
Company shall be required, at the Fund's election, to withdraw its 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 or 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
13
<PAGE>
records, and such minutes or other records shall be made available to the SEC
upon request. Each 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 each 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. Each Company shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by that
Company as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
5.2. The Distributor shall provide each Company with as many copies of the
current prospectus of the Fund as that Company may reasonably request. If
requested by a Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type,
electronic file 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 each Company shall bear the expense of printing copies of the Fund's
prospectus that are used in connection with offering those Variable Contracts
issued by that Company.
14
<PAGE>
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
each Company and to any owner of a Variable Contract issued by a Company who
requests such SAI, (2) at a Company's expense, such additional copies of the
Fund's current SAI as that Company shall reasonably request and that that
Company shall require in accordance with applicable law in connection with
offering the Variable Contracts issued by that Company.
5.4. The Fund, at its expense, shall provide a Company with copies of its
proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as that Company shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by that Company.
The Fund, at a Company's expense, shall provide that Company with copies of its
periodic reports to shareholders and other communications to shareholders in
such quantity as that Company shall reasonably request for use in connection
with offering the Variable Contracts issued by that Company. If requested by a
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 that Company to print
such shareholder communications for distribution to owners of Variable Contracts
issued by that 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, each Company shall vote
shares of each Series of the Fund held
15
<PAGE>
in a Separate Account or a subaccount thereof that is registered as an
investment company under the 1940 Act, at regular and special meetings of the
Fund in accordance with instructions timely received by that Company (or its
designated agent) from owners of Variable Contracts funded by such Separate
Account or subaccount thereof having a voting interest in the Series. Each
Company shall vote shares of a Series of the Fund held in a such a registered
Separate Account or a subaccount thereof that are attributable to its 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
its 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 Series from whom
instructions have been timely received. Each Company shall vote shares of each
Series of the Fund held in its general account, if any, in the same proportion
as the votes cast with respect to shares of the Series held in all Separate
Accounts of that Company or subaccounts thereof, whether or not registered, in
the aggregate.
5.6. The Fund shall disclose in its prospectus or Statement of Additional
Information, to the extent pertinent, that (1) shares of the Series of the Fund
are offered to affiliated or unaffiliated insurance company separate accounts
which fund both annuity and life insurance contracts and, (2) due to differences
in tax treatment or other considerations, the interests of various Variable
Contract Owners participating in the Fund or a Series 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 Companies that
16
<PAGE>
prospectus disclosure may be appropriate, to the extent pertinent, regarding
potential risks of offering shares of the Fund to separate accounts funding both
variable annuity contracts and variable life insurance policies, to separate
accounts funding Variable Contracts of unaffiliated life insurance companies.
ARTICLE VI. Sales Material and Information
------------------------------
6.1. Each 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 Series thereof) or its investment advisers 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. Each 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 or by the Distributor or its designee, except with the permission of
the Fund or its designee or the Distributor or its designee.
6.3. The Fund or the Distributor or the designee of either shall furnish to
each Company or its designee, each piece of sales literature or other
promotional material in which
17
<PAGE>
that Company or its Separate Accounts are named, and no such material shall be
used without the approval of that 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 a Company or concerning that Company, its Separate Accounts, or the
Variable Contracts issued by that 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 that Company or its
designee, except with the permission of that Company.
6.5. The Fund will provide to each 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. Each 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 that 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 to any of the above, that
relate to the Variable Contracts issued by that Company or
18
<PAGE>
its 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
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, 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, 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 Pacific Life
-------------------------------
7.1(a). Pacific Life 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 and Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of Pacific Life) 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,
19
<PAGE>
liabilities or litigation expenses are related to the sale or acquisition of the
Fund's shares or the Variable Contracts issued by Pacific Life 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 issued by Pacific Life or sales literature for such 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 Pacific Life by or on behalf of the Fund for use in the registration
statement or prospectus for the Variable Contracts issued by Pacific Life 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, prospectus or sales literature for the Variable Contracts not
supplied by Pacific Life or persons under its control) or wrongful conduct of
Pacific Life or any of its affiliates, employees or agents with respect to the
sale or distribution of the Variable Contracts issued by Pacific Life 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 Pacific Life;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof.
7.1(b). Pacific Life 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.
20
<PAGE>
7.1(c). Pacific Life shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Party shall have notified Pacific Life 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 Pacific Life of any such claim shall not relieve Pacific Life
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, Pacific Life
shall be entitled to participate, at its own expense, in the defense of such
action. Pacific Life also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from
Pacific Life to such party of Pacific Life's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and Pacific Life 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 Pacific Life 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
Pacific Life or the operation of the Fund.
21
<PAGE>
7.2. Indemnification by PL&A
-----------------------
7.2(a). PL&A agrees to indemnify and hold harmless the Indemnified
Parties against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of PL&A) or litigation
expenses (including legal and other expenses), to which the Indemnified Parties
may become subject under any statue, 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 PL&A 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 issued by PL&A or sales literature for such 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 PL&A by or on behalf of the Fund for use in the registration statement or
prospectus for the Variable Contracts issued by PL&A 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, prospectus or sales literature for the Variable Contracts not
supplied by PL&A or persons under its control) or wrongful conduct of PL&A or
any of its affiliates, employees or agents with respect to the sale or
distribution of the Variable Contracts issued by PL&A 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 PL&A;
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
22
<PAGE>
7.2(b). PL&A 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.
7.2(c). PL&A shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such Party
shall have notified PL&A 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
PL&A of any such claim shall not relieve PL&A 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, PL&A shall be entitled to participate,
at its own expense, in the defense of such action. PL&A also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from PL&A to such party of PL&A's election to assume
the defense thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and PL&A 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.
23
<PAGE>
7.2(d). The Indemnified Parties shall promptly notify PL&A 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 PL&A
or the operation of the Fund.
7.3. Indemnification by the Distributor
----------------------------------
7.3(a). The Distributor agrees to indemnify and hold harmless the
Fund and each Company and each of their trustees, directors and officers and
each person, if any, who is an affiliated person of the Fund or that Company
within the meaning of Section 2(a)(3) the 1940 Act (collectively, the
"Indemnified Parties" for purposes of this Section 7.3) 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 that
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 or either by or on behalf of that 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 that 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
24
<PAGE>
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 that 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 that 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 that Company by or
on behalf of the Fund;
except to the extent provided in Sections 7.3(b) and 7.3(c) hereof.
7.3(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 a Company or its
Separate Accounts.
7.3(c). The Distributor 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 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
25
<PAGE>
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.
7.3(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 California.
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 Amended Shared Funding Order) and the terms
hereof shall be interpreted and construed in accordance therewith.
26
<PAGE>
ARTICLE IX. Termination
-----------
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) as to a Company, at the option of that Company if shares of the
Series are not reasonably available to meet the requirements of the Variable
Contracts issued by that Company, as determined by that Company, and upon prompt
notice by that Company to the other parties; or
(c) as to a Company, at the option of the Fund or the Distributor
upon institution of formal proceedings against that Company or its agent by the
NASD, the SEC, or any state securities or insurance department or any other
regulatory body regarding that Company's duties under this Agreement or related
to the sale of the Variable Contracts issued by that Company, the operation of
the Separate Accounts, or the purchase of the Fund shares; or
(d) as to a Company, at the option of that 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) as to a Company, upon requisite vote of the Variable Contract
Owners having an interest in its Separate Accounts (or any subaccounts thereof)
to substitute the shares of another investment company for the corresponding
shares of the Fund or a Series in
27
<PAGE>
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 Series are not registered,
issued or sold in accordance with the 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 a 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) as to any Company, at the option of that Company if the Fund or a
Series 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 8.1(c) and (d) hereof. Each Company shall
give 60 days prior written notice to the Fund of the date of any proposed vote
of its Variable Contract Owners to replace the Fund's shares as described in
Section 9.1(e) hereof.
9.3. 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.
28
<PAGE>
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: If to PL&A:
Pacific Select Fund Pacific Life and Annuity Company
Attn: Variable Regulatory Attn: Variable Regulatory Compliance
Compliance Department Department
700 Newport Center Drive 700 Newport Center Drive
P.O. Box 7500 P.O. Box 7500
Newport Beach, CA 92660 Newport Beach, CA 92660
If to the Distributor: If to Pacific Life:
Pacific Mutual Distributors Pacific Life Insurance Company
Attn: Compliance Officer Attn: Variable Regulatory Compliance
700 Newport Center Drive, NB-4 Department
Newport Beach, CA 92660 700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92660
ARTICLE XI. Miscellaneous
-------------
11.1. The Fund and the Company agree that if and to the extent Rule 6e-2 or
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 those Rules, as may be applicable, as
amended or adopted in final form.
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
29
<PAGE>
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 Series 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 Life", "Pacific
Select" or any derivative thereof or logo associated with that name is the
valuable property of Pacific Life, and that the Fund 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 Companies 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.
30
<PAGE>
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.
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: /s/ AUDREY L. MILFS BY: /s/ THOMAS C. SUTTON
----------------------- -----------------------
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: Chairman of the Board & Trustee
PACIFIC MUTUAL DISTRIBUTORS, INC.
ATTEST: /s/ AUDREY L. MILFS BY: /s/ GERALD W. ROBINSON
----------------------- -----------------------
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: Chairman & Chief Exec. Officer
31
<PAGE>
PACIFIC LIFE INSURANCE COMPANY
ATTEST: /s/ AUDREY L. MILFS BY: /s/ THOMAS C. SUTTON
----------------------- ----------------------
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: Chairman of the Board & Chief
Exec. Officer
ATTEST: /s/ AUDREY L. MILFS BY /s/ GLENN S. SCHAFER
----------------------- -----------------------
Name: Audrey L. Milfs Name: Glenn S. Schafer
Title: Secretary Title: President
PACIFIC LIFE & ANNUITY COMPANY
ATTEST: /s/ AUDREY L. MILFS BY: /s/ LYNN C. MILLER
----------------------- ----------------------
Name: Audrey L. Milfs Name: Lynn C. Miller
Title: Secretary Title: Executive Vice President
32
<PAGE>
Exhibit A
Separate Accounts of Pacific Life Insurance Company:
Pacific Select Separate Account
Pacific Select Exec Separate Account
Pacific Select COLI Separate Account
Pacific Select Variable Annuity Separate Account
Separate Account A
Separate Account B
Pacific Select Value Separate Account
Pacific Corinthian Variable Separate Account
Pacific COLI Separate Account II
Pacific COLI Separate Account III
Separate Accounts of Pacific Life and Annuity Company:
Pacific Select Exec Separate Account
Separate Account A
33
<PAGE>
Exhibit B
Money Market Portfolio
High Yield Bond Portfolio
Managed Bond Portfolio
Government Securities Portfolio
Small-Cap Equity Portfolio
Aggressive Equity Portfolio
Growth LT Portfolio
Equity Income Portfolio
Multi-Strategy Portfolio
Large-Cap Value Portfolio
Mid-Cap Value Portfolio
Equity Portfolio
Bond and Income Portfolio
Equity Index Portfolio
Small-Cap Index Portfolio
REIT Portfolio
International Value Portfolio
Emerging Markets Portfolio
International Large-Cap Portfolio
Diversified Research Portfolio
I-Net Tollkeeper Portfolio*
*Effective 05/01/2000
34
<PAGE>
APPLICATION FOR INDIVIDUAL LIFE INSURANCE
[LOGO] PACIFIC LIFE
& ANNUITY COMPANY
PACIFIC LIFE & ANNUITY COMPANY
P.O. Box 6520
Newport Beach, CA 92656-6520
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 following indicates who must complete the various sections:
Page(s) 1 and 4-7 Applicant
Page 2 Applicant or Agent must complete
Page 3 Applicant or Agent completes for an additional or
alternate policy
Page(s) 11 and 12 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 - D, Proposed
Insured(s) in Section E and Agent in Sections F - I. 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 Pacific Life & Annuity Company, 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)
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.
. Where the Applicant, Owner or Proposed Insured is above the age of fourteen
years and six months, he or she must sign the application on his or her own
behalf. Where the Applicant, Owner or Proposed Insured is aged fourteen years
and six months or less, he or she may not sign the application or enter into a
life insurance contract.
. The Soliciting Agent(s) must sign on pages 6 and 12.
. 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 the 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.
- --------------------------------------------------------------------------------
AP9500X-NY 85-22140-00 5/2000
<PAGE>
INSTRUCTIONS TO SOLICITING AGENT(S)
- --------------------------------------------------------------------------------
SECTION A - CLIENT INFORMATION SECTION D - ADDITIONAL INSURED
. Complete all questions, unless a . Complete if requesting an optional
question does not apply. benefit such as Annual Renewable
Term on an Additional Insured. This
. If submitting money with the section is also completed for
application, complete question 31A, "Survivor Life" type policies.
B and C on page 1. Also submit a
Temporary Insurance Agreement SECTION E - GENERAL INFORMATION
(AP8112-NY) with the application.
The date on the application, check . Complete every question of this
and Temporary Insurance Agreement section for the Proposed Insured
(TIA) must all be the same date. and Additional Insured (if
applicable).
. Money and the TIA must not be taken if:
. If Proposed Insured or Additional
a) any health question on the TIA Insured (if applicable)
is answered "yes. " participates in a hazardous
b) the proposed insured is under 15 occupation/sport, complete a
days of age or is over 70 years General Questionnaire form (not
old (nearest birthday) on the attached) for each insured that
date of the application. participates.
. If the face amount applied for is SECTION F - UNI-CHECK (AUTOMATIC BANK
greater than the TIA maximum WITHDRAWAL)
binding limit, complete the
application in the following . The Uni-Check billing method is
manner: available on a monthly payment
frequency for automatic checking
1) Indicate the total face amount account deductions. Complete this
as applied for in question 31C. section if electing Uni-Check. Also
Also indicate all applied for complete Uni-Check method and
Optional Benefits here. If monthly mode on page 1, questions
additional space is needed, use 30A and 30B. A voided check must be
Remarks section on page 2 or 3. submitted with the application.
2) On page 2, question 3, complete SECTION G - BUSINESS INSURANCE
with the maximum binding limit
as noted on the TIA. Leave . Complete only if applying for
question 5 "Optional Benefits" Business Insurance.
blank.
SECTION H - FOR PROPOSED INSURED 14
SECTION B - POLICY INFORMATION FOR YEARS AND 6 MONTHS OR YOUNGER
VARIABLE LIFE PRODUCTS
. Complete this section if the
. Indicate product desired, base face application is submitted on a non-
amount, initial Annual Renewable medical basis and the Proposed
Term amount (if applied for) and Insured is 14 years and 6 months or
Total Initial Coverage in question younger. If the application is
3. Whether Annual Renewable Term is submitted on a medical basis, a
level or varying, always indicate medical exam is necessary. Refer to
initial Annual Renewable Term the Life Underwriting Requirements
amount. This information can be Chart to determine the appropriate
found on the Producer/Home Office requirements.
Administration Worksheet page of
the illustration. SECTION I - AGENT INFORMATION
. Indicate all other optional . Complete every question of this
benefits in question 5. section.
. Answer all Suitability questions . The signature of the Soliciting
and include the date of the current Agent(s) is required at the bottom
Separate Account prospectus and of page 12.
Fund prospectus.
. Commissions are paid in accordance
. If requesting an alternate or with the information presented at
additional policy, complete the the bottom of page 12. The Agent
Alternate/Additional Policy section listed first is the Servicing
on page 3. All suitability Agent, unless indicated otherwise
questions on page 2 must also be in the remarks section. Always
completed. include Agent Code for prompt
payment of commissions.
SECTION C - MEDICAL CERTIFICATION
. Complete only when submitting a
medical examination from another
insurance company.
AP9500X-NY 85-22140-005/2000
<PAGE>
NEWBS APPLC
APPLICATION FOR INDIVIDUAL LIFE INSURANCE, PART I
[LOGO] PACIFIC LIFE
& ANNUITY COMPANY
PACIFIC LIFE & ANNUITY COMPANY
P.O. Box 6520
Newport Beach, CA 92658-6520
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION A CLIENT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
1. Full Name (PRINT AS TO APPEAR IN POLICY / FIRST, MIDDLE, LAST) 2. Sex: 3. State of Birth 4. Date of Birth (MO. DAY YR.)
[_] Male
[_] 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 Pacific Life & Annuity Company will insure
under the TIA, complete the following statement:
If approved, please issue a policy for a face amount of $ _____________________________
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL DATING REQUESTED
- ------------------------------------------------------------------------------------------------------------------------------------
32. [_] Date to Save Age [_] Specific Date Month ______________________ Day __________ Year __________
- ------------------------------------------------------------------------------------------------------------------------------------
AP9500X-NY Page 1 85-22140-00 5/2000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION B POLICY INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
1. Policy Name 2a. Initial Premium 2b. Planned Annual Premium
$ $
- ------------------------------------------------------------------------------------------------------------------------------------
3. Face Amount (Base only) $
Plus Initial Annual Renewable Term Amount $_______________ = Total Initial Coverage $_______________
4. Check one: [_] Option A (Level) [_] Option B (Includes Accumulated Value) [_] Option C (Includes Premiums Less Distributions)
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIONAL BENEFITS
- ------------------------------------------------------------------------------------------------------------------------------------
5. [_] First Year Transfer Program*
[_] Dollar Cost Averaging*
[_] Automatic Portfolio Rebalancing*
* if elected, submit the proper authorization form.
- ------------------------------------------------------------------------------------------------------------------------------------
6. If any optional benefit applied for cannot be approved, should the policy be issued without it? [_] Yes [_] No
- ------------------------------------------------------------------------------------------------------------------------------------
PREMIUM ALLOCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
7. INDICATE ALLOCATIONS: THE TOTAL OF THE PERCENTAGES MUST BE 100%. (USE WHOLE NUMBERS)
Investment Options Manager Investment Options Manager
- ------------------------- ------------------------- ---------------------- -------------------
Aggressive Equity Alliance Capital _____% REIT Morgan Stanley _____%
Emerging Markets Alliance Capital _____% International Value Morgan Stanley _____%
Diversified Research Capital Guardian _____% Government Securities PIMCO _____%
Small-Cap Equity Capital Guardian _____% Managed Bond PIMCO _____%
International Large-Cap Capital Guardian _____% Money Market Pacific Life _____%
Equity Goldman Sachs _____% High Yield Bond Pacific Life _____%
I-Net Tollkeeper(SM) Goldman Sachs _____% Large-Cap Value Salomon _____%
Multi-Strategy J.P. Morgan _____% Fixed Account Pacific Life _____%
Equity Income J.P. Morgan _____% Fixed LT Account* Pacific Life _____%
Growth LT Janus _____%
Mid-Cap Value Lazard _____% * The Fixed LT Account has less transfer liquidity and
Equity Index Mercury Asset Management _____% may credit a higher current rate of interest than the
Small-Cap Index Mercury Asset Management _____% Fixed Account. Both fixed accounts credit a fixed rate,
interest guaranteeing a minimum interest rate of 3%
annually.
- ------------------------------------------------------------------------------------------------------------------------------------
SUITABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
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 dates of prospectuses: S.A. ____________________ 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 maybe variable or fixed under specified
conditions. Current illustrations of benefits, including death benefits and cash surrender values, are available upon request.
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
AP9500X-NY Page 2 85-22140-00 5/2000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION B POLICY INFORMATION (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
COMPLETE THIS PAGE IF APPLYING FOR (Check one): [_] ADDITIONAL POLICY or [_] ALTERNATE POLICY
(COMPLETE SUITABILITY QUESTIONS ON PAGE 2)
- ------------------------------------------------------------------------------------------------------------------------------------
12. Policy Name 13a. Total Modal Premium 13b. Planned Annual Premium
$ $
- ------------------------------------------------------------------------------------------------------------------------------------
14. Face Amount (Base only) $_______________
Plus Initial Annual Renewable Term Amount $_______________________ = Total Initial Coverage $_______________________
- ------------------------------------------------------------------------------------------------------------------------------------
15. Check one: [_] Option A (Level) [_] Option B (Includes Accumulated Value) [_] Option C (Includes Premiums Less Distributions)
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIONAL BENEFITS
- ------------------------------------------------------------------------------------------------------------------------------------
16. [_] First Year Transfer Program*
[_] Dollar Cost Averaging*
[_] Automatic Portfolio Rebalancing*
* if elected, submit the proper authorization form.
- ------------------------------------------------------------------------------------------------------------------------------------
17. If any optional benefit applied for cannot be approved, should the policy be issued without it? [_] Yes [_] No
- ------------------------------------------------------------------------------------------------------------------------------------
PREMIUM ALLOCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
18. INDICATE ALLOCATIONS: THE TOTAL OF THE PERCENTAGES MUST BE 100%. (USE WHOLE NUMBERS)
Investment Options Manager Investment Options Manager
- ----------------------------- ------------------------ ------------------------- ------------------
Aggressive Equity Alliance Capital _____% REIT Morgan Stanley _____%
Emerging Markets Alliance Capital _____% International Value Morgan Stanley _____%
Diversified Research Capital Guardian _____% Government Securities PIMCO _____%
Small-Cap Equity Capital Guardian _____% Managed Bond PIMCO _____%
International Large-Cap Capital Guardian _____% Money Market Pacific Life _____%
Equity Goldman Sachs _____% High Yield Bond Pacific Life _____%
I-Net Tollkeeper(SM) Goldman Sachs _____% Large-Cap Value Salomon _____%
Multi-Strategy J.P. Morgan _____% Fixed Account Pacific Life _____%
Equity Income J.P. Morgan _____% Fixed LT Account* Pacific Life _____%
Growth LT Janus _____%
Mid-Cap Value Lazard _____% * The Fixed LT Account has less transfer liquidity and may
Equity Index Mercury Asset Management _____% credit a higher current rate of interest than the Fixed
Small-Cap Index Mercury Asset Management _____% Account. Both fixed accounts credit a fixed interest rate,
guaranteeing a minimum interest rate of 3% annually.
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
AP9500X-NY Page 3 85-22140-00 5/2000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION C MEDICAL CERTIFICATION
- ------------------------------------------------------------------------------------------------------------------------------------
COMPLETE WHEN SUBMITTING MEDICAL EXAMINATION OF ANOTHER INSURANCE COMPANY
1. The attached examination, which is to be attached to and made part of the policy, 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 Additional
Insured 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? [_] Yes [_] No [_] Yes [_] No
(If yes, explain in remarks. Use an additional sheet if necessary)
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION D ADDITIONAL INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
1. Full Name (PRINT AS TO APPEAR IN POLICY / FIRST, MIDDLE, LAST) 2. Sex: 3. State of Birth 4. Date of Birth (MO. DAY YR.)
[_] Male
[_] 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
- ------------------------------------------------------------------------------------------------------------------------------------
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 E 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
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2. 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
- ------------------------------------------------------------------------------------------------------------------------------------
AP9500X-NY Page 4 85-22140-00 5/2000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION E GENERAL INFORMATION CONTINUED
- ------------------------------------------------------------------------------------------------------------------------------------
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 YES NO
[_] [_] U.S.A. for 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 cancelled or not renewed?
(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 convicted of 3 or more moving violations within the past
5 years?
(If yes, explain in remarks)
- ------------------------------------------------------------------------------------------------------------------------------------
[_] [_] 9. Has any other insurance been applied for within the last 3 months on any [_] [_]
Proposed/Additional Insured? (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: _______________
- ------------------------------------------------------------------------------------------------------------------------------------
13. If a child 14 years and 6 months of age or younger is to be insured under this policy:
A. What is the relationship of the owner to the child? ________________________
B. What is the total amount of insurance on the owner, which is in force and applied for in this and all other
companies? ___________________________
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
AP9500X-NY Page 5 85-22140-00 5/2000
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
SECTION F UNI-CHECK
- --------------------------------------------------------------------------------
COMPLETE THIS SECTION ONLY IF UNI-CHECK BILLING METHOD (AUTOMATIC MONTHLY
CHECKING ACCOUNT DEDUCTION) IS DESIRED
1. [_] Bank Account No. [__________] 2. 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GPT/CVAT DISCLOSURE:
- --------------------------------------------------------------------------------
The Internal Revenue Code has two separate tests, at least one of which must be
satisfied by a policy for it to qualify as life insurance for federal tax
purposes. As applicant, you choose which of the two tests you want to use. You
may not change the test after the policy has been issued.
The two tests are the Guideline Premium Test (GPT) and the Cash Value
Accumulation Test (CVAT). GPT limits the amount of premiums that can be paid for
a policy, and may require the death benefit to increase above the specified
amount if the cash value is large. CVAT does not limit premiums, but it also
requires the death benefit to increase above the specific amount if the cash
value is large. With CVAT the death benefit may need to be increased earlier
than with GPT and by a larger amount, assuming the same cash values under both
tests. Under either test, the cost of insurance charge is based on the total
death benefit in force, including any increases resulting from your choice of
GPT or CVAT. You should consider the CVAT test if you wish to maximize premium
payments over a short period. You should consider the GPT test if you wish to
maintain a higher level of cash value in relation to death benefit protection.
Your agent can supply you with illustrations showing the effects of each test
and explain how each affects the policy. You should consult your tax advisor for
any tax questions.
- --------------------------------------------------------------------------------
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 agree that such answers and statements shall be attached to and made
part of the policy. 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 to the best of my knowledge and belief.
2. No agent or medical examiner is authorized to make or modify contracts or to
waive any of the Company's rights or requirements.
3. Signed and Dated by Applicant in:
____________________ ON ____________ ________________________________________
CITY STATE MO. DAY YR. Signature of Applicant
________________________________________
Signature of Proposed Insured (IF OTHER
THAN APPLICANT, OR SIGNATURE OF PARENT
IF PROPOSED INSURED IS 14 YEARS AND 6
MONTHS OR YOUNGER)
________________________________________
Signature of Other Adult Proposed
Insured
________________________________________
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 Soliciting Agent Please Print Soliciting Agent Name
AP9500X-NY Page 6 85-22140-00 5/2000
<PAGE>
RISK AUTH
THIS AUTHORIZATION MUST BE SIGNED IN EVERY CASE
- --------------------------------------------------------------------------------
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 (to include an investigative consumer report)
and/or any other information on me 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 the information authorized for release may include medical
information about a communicable or venereal disease, including but not limited
to diseases such as hepatitis, syphilis, gonorrhea and the human
immunodeficiency virus, also known as Acquired Immune Deficiency Syndrome
(AIDS). I know that I may request a copy of this authorization. I also
acknowledge receipt of the 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 YR. Signature of Proposed Insured
(OR SIGNATURE OF PARENT IF PROPOSED
INSURED IS 14 YEARS AND 6 MONTHS OR
YOUNGER)
_________________________________________
Signature of Other Adult Proposed Insured
AP9500X-NY Page 7 85-22140-00 5/2000
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AP9500X-NY Page 8 85-22140-00 5/2000
<PAGE>
DETACH-LEAVE WITH CLIENT
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.
MIB, Inc., (Medical Information Bureau) - MIB, Inc., is a non-profit corporation
which operates an information exchange on behalf of member life insurance
companies. As a member company, we will ask the 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. Pacific
Life & Annuity Company, 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. Pacific Life & Annuity Company, 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 below as part of this Notice.
A consumer report confirms and supplements the information on 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, motor vehicle driving
record, criminal activity, personal characteristics and mode of living, except
as may be related directly or indirectly to your sexual orientation. 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
make a written request within a reasonable time to receive additional detailed
information about the nature and scope of this investigation. These reports may
have an adverse effect 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. If reinsurance were
required, the reinsurance company would have access to our application file.
2. 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.
3. As stated earlier, we may report information to the Medical Information
Bureau.
4. 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,
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.
NMIB-NY Page 9 85-22140-00 5/2000
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AP9500X-NY Page 10 85-22140-00 5/2000
<PAGE>
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<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION G BUSINESS INSURANCE (COMPLETE THIS SECTION IF APPLYING FOR BUSINESS INSURANCE)
- ------------------------------------------------------------------------------------------------------------------------------------
1. 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 H COMPLETE THIS SECTION IF PROPOSED INSURED IS 14 YEARS AND 6 MONTHS OR YOUNGER
- ------------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AP9500X-NY Page 11 85-22140-00 5/2000
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<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION I COMPLETE FOR ALL APPLICATIONS - AGENT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
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? Proposed Insured Additional Insured
[_] Yes [_] No [_] Yes [_] No
(IF "YES", GIVE COMPANY AND POLICY NUMBER IN "REMARKS" ON PAGE 5. IF PL POLICY,
THEN GIVE POLICY NUMBER AND HOW VALUES ARE TO BE APPLIED IN "REMARKS".)
- ------------------------------------------------------------------------------------------------------------------------------------
9. If this policy is a tax qualified plan indicate type: [_] Pension / Profit sharing [_] HR-10 [_] Other
- ------------------------------------------------------------------------------------------------------------------------------------
10. Is 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).
AP9500X-NY Page 12 85-22140-00 5/2000
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<PAGE>
Use this receipt only if a premium has been paid for a conversion policy
PACIFIC LIFE & ANNUITY COMPANY
P.O. Box 6520
Newport Beach, CA 92658-6520
Received from ____________________________________ the sum of $__________ as
payment on account of premium for policy on the life of the person named in an
application to Pacific Life & Annuity Company bearing the same number as this
receipt.
All checks must be made payable to Pacific Life & Annuity Company. Do not make
checks payable to the Agent or leave payee blank.
Date ________________________ ________________________________________ Agent
MO. DAY YR.
AP9500X-NY Page 13 85-22140-00 5/2000
<PAGE>
<TABLE>
<S> <C>
RISK CORRS
ALCOHOL QUESTIONNAIRE
[LOGO] PACIFIC LIFE
PACIFIC LIFE & ANNUITY COMPANY & ANNUITY COMPANY
Risk Selection
700 Newport Center Drive
Newport Beach, CA 92660
Name _______________________________________________________________________________ Date of Birth ______________________________
1. Do you presently use alcoholic beverages? [_] Yes [_] No
-------------------------------------------------------
BEER WINE LIQUOR
-------------------------------------------------------
Quantity: [_] Daily
-------------------------------------------------------
[_] Weekly
-------------------------------------------------------
[_] Monthly
-------------------------------------------------------
2. Did you ever drink substantially more than at present? [_] Yes [_] No
Dates: From: ___________________________ To: _____________________________
-------------------------------------------------------
BEER WINE LIQUOR
-------------------------------------------------------
Quantity: [_] Daily
-------------------------------------------------------
[_] Weekly
-------------------------------------------------------
[_] Monthly
-------------------------------------------------------
3. Why did you change your drinking habits? _____________________________________________________________________________________
______________________________________________________________________________________________________________________________
4. Name and address of doctor or organization consulted for treatment:
______________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________
Date you consulted doctor or organization: ___________________________________________________________________________________
5. Have you ever been convicted of driving while under the influence of alcohol?
If yes, give details: ________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________
6. Please add any additional information which you feel is important.
______________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________
I represent that the above answers and statements are correctly recorded, true and complete to the best of my knowledge and belief.
I agree that such statements and answers may be attached to and made part of the policy.
Signature of Proposed Insured ______________________________________________________________ Date _________________________________
Signature of Applicant _____________________________________________________________________ Date _________________________________
85-21789 85-21789-00 5/2000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
RISK FIN
FINANCIAL QUESTIONNAIRE
[LOGO] PACIFIC LIFE
PACIFIC LIFE & ANNUITY COMPANY & ANNUITY COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
Please complete questions 1 thru 6 for personal insurance or questions 1 thru 11 if the insurance is for business purposes, then
date and sign the questionnaire.
1. Proposed Insured: _______________________________________________________________________________________________________________
First Name MI Last Name
2. Income (Before Income Tax) CURRENT FISCAL PREVIOUS
YEAR TO DATE FISCAL YEAR
______ THRU ______
A. Salary or Wages ................................................................. $ _____________ $ _____________
B. Bonuses and/or Commissions....................................................... _____________ _____________
C. Net Business or Professional Income (i.e. Gross Income
less Expenses, but before Income Tax) ........................................... _____________ _____________
D. Other Earned Income (Give details in "Remarks" below) ........................... _____________ _____________
E. Unearned Income (interest and dividends, net real estate
income, etc. Give details in "Remarks" below) ................................... _____________ _____________
TOTAL: $ $
============= =============
3. What is your approximate Net Worth, i.e., assets minus liabilities? Assets $ _____________
(If necessary, give details in "Remarks" below) Liabilities $ _____________
Net Worth $ _____________
4. Estimated Tax Liabilities at Death (Include potential Estate Taxes, Inheritance
Taxes and Capital Gains Taxes, both Federal & State) $ _____________
5. If not covered on the application:
Amount of Insurance applied for with this company ............................................................... $ _____________
Amount of Insurance applied for with other companies ............................................................ $ _____________
Amount of Life Insurance already in force ....................................................................... $ _____________
Amount you intend to have in force............................................................................... $ _____________
6. How was the need for this new amount of coverage determined?
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
Remarks (Questions 2 to 6): _____________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
85-21790 Page 1 of 2 85-21790-00 5/2000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
RISK FIN
FINANCIAL QUESTIONNAIRE
7. Purpose of Business Insurance
[_] Key Executive [_] Deferred Compensation [_] Buy-Sell Agreement
Is there a written Buy/Sell Agreement in effect? [_] Yes [_] No
(If yes, attach copy.)
Is there a Buy/Sell Agreement contemplated? [_] Yes [_] No
[_] Creditor: Name of Creditor _______________________________________________________________________________________________
Is Insurance requested by Creditor? [_] Yes [_] No
Coverage amount required by Creditor: $ ___________________
Amount of loan $ ___________________________________________ Duration of Loan __________________________________________
Purpose of loan ________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
Other Purposes - Explain: ______________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
8. Are other Corporate Officers or Partners being insured?
[_] Yes [_] No
If Yes, give details. If No, explain: __________________________________________________________________________________________
________________________________________________________________________________________________________________________________
9. What Percentage of the business do you own? __________%
10. Estimated Net Worth $ ___________________
11. Financial Details of Business:
CURRENT FISCAL PREVIOUS
YEAR TO DATE FISCAL YEAR
______ THRU ______
A. Total Assets ........................................................................ $ ________________ $ ________________
B. Total Liabilities ................................................................... ________________ ________________
C. Gross Sales ......................................................................... ________________ ________________
D. Net Income (before tax) ............................................................. ________________ ________________
PLEASE SUBMIT A COPY OF THE MOST RECENT FINANCIAL STATEMENT
Remarks (Questions 7 to 11): _______________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
I understand that Pacific Life & Annuity Company will rely on the above statements in determining the need and justification for
the insurance applied for, and I represent that all answers are true and accurate statements to the best of my knowledge and belief
as of the date of the application for life insurance. A photographic copy of this statement may be attached to and made part of any
insurance contract issued.
Signature of Proposed Insured _________________________________________________________________________ Date ______________________
Signature of Applicant ________________________________________________________________________________ Date ______________________
85-21790 Page 2 of 2 85-21790-00 5/2000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
RISK CORRS
DRUG QUESTIONNAIRE
[LOGO] PACIFIC LIFE
PACIFIC LIFE & ANNUITY COMPANY & ANNUITY COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
To be completed by the applicant
NAME ________________________________________________________________________________ DATE OF BIRTH ________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
In the past 10 years, have you used: YES NO
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Opiates (codeine, heroin, methadone, etc.)? [_] [_]
(2) Barbiturates (amytal, phenobarbital, tuinal, etc.)? [_] [_]
(3) Non-Barbiturates (placidyl, doriden, parest, etc.)? [_] [_]
(4) Amphetamines (benzedrine, dexedrine, preludin, etc.)? [_] [_]
(5) Anticholinergics (belladonna), Bromides or Cocaine? [_] [_]
(6) Hallucinogens (LSD-25, peyote, psilocin, etc.)? [_] [_]
(7) Cannabis (marijuana, hashish, THC-Delta 9)? [_] [_]
(8) Others? [_] [_]
If yes, give details.
- ------------------------------------------------------------------------------------------------------------------------------------
How Often Dosage or Dates Used
Type Used Amount Used From To
- ------------------------------------------------------------------------------------------------------------------------------------
-
______________________ _______________________ ____________________________ _________________________ ____________________
-
______________________ _______________________ ____________________________ _________________________ ____________________
-
______________________ _______________________ ____________________________ _________________________ ____________________
-
______________________ _______________________ ____________________________ _________________________ ____________________
-
______________________ _______________________ ____________________________ _________________________ ____________________
-
______________________ _______________________ ____________________________ _________________________ ____________________
-
______________________ _______________________ ____________________________ _________________________ ____________________
-
______________________ _______________________ ____________________________ _________________________ ____________________
-
______________________ _______________________ ____________________________ _________________________ ____________________
____________________________________________________________________________________________________________________________________
Additional Remarks. (Include details of any medical treatment, names of physicians, side effects, etc.)
____________________________________________________________________________________________________________________________________
I represent that the above answers and statements are correctly recorded, true and complete to the best of my knowledge and belief.
I agree that such statements and answers may be attached to and made part of the policy.
_______________________________ _________________________________________________________________
Date Applicant's Signature
85-21791 85-21791-00 5/2000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
RISK TRAVL
PACIFIC LIFE & ANNUITY COMPANY [LOGO] PACIFIC LIFE
700 Newport Center Drive & ANNUITY COMPANY
Newport Beach, CA 92660
INTERNATIONAL TRAVEL AND RESIDENCY QUESTIONNAIRE
Name ________________________________________________________________________ Date of Birth_____________________________________
1. What is your city and country of primary residence? ____________________________________________________________________________
How many months a year do you reside in this country? __________________________________________________________________________
2. Name the other cities and countries in which you reside. _______________________________________________________________________
________________________________________________________________________________________________________________________________
3. Will you be traveling outside your city or country of primary residence?
YES [_] NO [_]
If YES, please provide the country/countries including specific locations, purpose of trip, and length of stay in each
location. _____________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________
I represent that the above answers and statements are correctly recorded, true and complete to the best of my knowledge and belief.
I agree that such statements and answers may be attached to and made part of the policy.
Signature of Proposed Insured _______________________________________________________________ Date ___________________________
(if other than applicant)
Signature of Soliciting Agent _______________________________________________________________ Date ___________________________
Field Office No._____________________
85-21393 85-21393-00 5/2000
</TABLE>
<PAGE>
EXHIBIT 6.(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 1 to Registration
Statement No. 333-80825 on Form S-6 related to the of our report dated February
22, 2000, related to the financial statements - statutory basis of Pacific Life
& Annuity Company as of December 31, 1999 and 1998, and for each of the two
years in the period ended December 31, 1999, 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
April 27th, 2000
<PAGE>
EXHIBIT 7
[Letterhead of Pacific Life & Annuity Company]
April 27, 2000
PACIFIC LIFE INSURANCE COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
RE: Pacific Select Exec II Flexible Premium Variable Life Insurance Policy
To whom it may concern:
In my capacity as Assistant Vice President of the Product Design Department of
Pacific Life Insurance Company, I have provided actuarial advice concerning:
The preparation of the Post-Effective Amendment No. 1 to the Registration
Statement on Form S-6 filed by Pacific Life Insurance 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 pages 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/ DARAGH O'SULLIVAN
- -----------------------------
Daragh O'Sullivan, FSA, MAAA
Assistant Vice President
