<PAGE>
Registration No. 333-68601
As Filed with the Securities and Exchange Commission on August 12, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 1
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
A. Exact name of trust: Sun Life of Canada (U.S.) Variable Account I
B. Name of depositor: Sun Life Assurance Company of Canada (U.S.)
C. Complete address of depositor's principal executive offices:
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
D. Name and complete address of agent for service:
Ellen B. King
Secretary
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
Copies to:
Michael Berenson, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
Suite 400 East
1025 Thomas Jefferson St. N.W.
Washington, D.C. 20007-0805
It is proposed that this filing will become effective (check appropriate
box)
__ immediately upon filing pursuant to paragraph (b)
X on August 12, 1999 pursuant to paragraph (b)
__ 60 days after filing pursuant to paragraph (a)(l)
__ on (date) pursuant to paragraph (a)(l) of Rule 485.
E. Title and amount of securities being registered:
Flexible Premium Combination Fixed and Variable Life Insurance
Policies.
F. Approximate date of proposed public offering:
As soon as practicable after the effective date of this
Registration Statement.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
1. Cover page
2. Cover page
3. Not applicable
4. Distribution of Policy
5. The Variable Account
6. The Variable Account
7. Not applicable
8. Other Information -- Financial Statements
9. Other Information -- Legal Proceedings
10. Summary of Policy; The Variable Account; The Funds;
About the Policy; Voting Rights; Federal Income Tax
Considerations
11. Summary of Policy; The Variable Account; The Funds
12. Summary of Policy; The Funds
13. Summary of Policy; Expenses of the Funds; About the
Policy -- Charges and Deductions; Distribution of
Policy; Federal Income Tax
Considerations
14. About the Policy -- Policy Application, Issuance and
Initial Premium
15. About the Policy -- Policy Application, Issuance and
Initial Premium, -- Right of Return Period, -- Premium
Payments, -- Account Value, -- Transfer Privileges
16. The Funds; About the Policy -- Premium Payments,
-- Account Value, -- Transfer Privileges,
-- Surrenders and Surrender Charges, -- Partial
Surrenders, -- Policy Loans
17. Summary of Policy; About the Policy -- Account Value,
-- Surrenders and Surrender Charges, -- Right of
Return Period
18. The Variable Account; About the Policy -- Account
Value
19. About the Policy -- Other Policy Provisions -- Reports
to Owner
20. Not applicable
I-2
<PAGE>
21. About the Policy -- Policy Loans, -- Death Benefit,
-- Account Value
22. Not applicable
23. Our Directors and Executive Officers
24. Not applicable
25. Sun Life Assurance Company of Canada (U.S.)
26. Not applicable
27. Sun Life Assurance Company of Canada (U.S.)
28. Sun Life Assurance Company of Canada (U.S.); Our
Directors and Executive Officers
29. Sun Life Assurance Company of Canada (U.S.)
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of Policy
36. Not applicable
37. Not applicable
38. Distribution of Policy
39. Sun Life Assurance Company of Canada (U.S.);
Distribution of Policy
40. Not applicable
41. Sun Life Assurance Company of Canada (U.S.);
Distribution of Policy
42. Not applicable
43. Not applicable
44. About the Policy -- Application, Issuance and
Initial Premium, -- Right of Return Period, -- Premium
Payments, -- Account Value, -- Transfer Privileges,
-- Charges and Deductions
45. Not applicable
46. About the Policy -- Application, Issuance and
Initial Premium, -- Right of Return Period, -- Premium
Payments, -- Account Value, -- Transfer Privileges
I-3
<PAGE>
47. The Funds
48. Cover page; Sun Life Assurance Company of Canada
(U.S.); The Variable Account
49. Not applicable
50. The Variable Account
51. Summary of Policy; Sun Life Assurance Company of Canada
(U.S.); About the Policy
52. The Funds; The Variable Account; About the Policy
-- Other Policy Provisions -- Addition, Deletion or
Substitution of Investments, -- Modification
53. Federal Income Tax Considerations
54. Not applicable
55. Not applicable
56. Not applicable
57. Not applicable
58. Not applicable
59. Not applicable
I-4
<PAGE>
PART I
<PAGE>
[LOGO]
PROSPECTUS
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
(800) 700-6554
FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
A FLEXIBLE PREMIUM COMBINATION FIXED AND VARIABLE UNIVERSAL LIFE INSURANCE
POLICY
This prospectus describes the variable portions of a combination fixed and
variable universal life insurance policy (the "POLICY") issued by Sun Life
Assurance Company of Canada (U.S.) ("WE" or "US"). The Policy allows "YOU," the
policyowner, within certain limits, to:
- choose the type and amount of insurance coverage you need and
increase or decrease that coverage as your insurance needs
change;
- choose the amount and timing of premium payments;
- allocate net premium payments among 32 investment options
(including 31 variable investment options and one fixed
account investment option) and transfer Account Value among
available investment options as your investment objectives
change; and
- access your Policy's Account Value through loans and partial
or total surrenders.
This prospectus contains important information you should understand before
purchasing a Policy. We use certain special terms which are defined in Appendix
A. You should read this prospectus carefully and keep it for future reference.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
August 12, 1999
<PAGE>
VARIABLE SUB-ACCOUNT INVESTMENT OPTIONS
The assets of Sun Life of Canada (U.S.) Variable Account I (the "Variable
Account") are divided into 31 variable Sub-Accounts. Each Sub-Account uses its
assets to purchase, at their net asset value, shares of the following mutual
funds or series thereof (the "Funds").
<TABLE>
<S> <C>
AIM VARIABLE INSURANCE FUNDS, INC. MFS/SUN LIFE SERIES TRUST
AIM V.I. Capital Appreciation Fund Capital Appreciation Series
AIM V.I. Growth Fund Emerging Growth Series
AIM V.I. Growth and Income Fund Government Securities Series
AIM V.I. International Equity Fund High Yield Series
Massachusetts Investors Growth Stock
THE ALGER AMERICAN FUND Series
Alger American Growth Portfolio Massachusetts Investors Trust Series
Alger American Income and Growth Portfolio New Discovery Series
Alger American Small Capitalization Portfolio Total Return Series
Utilities Series
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Goldman Sachs VIT CORE Large Cap Growth Fund OCC ACCUMULATION TRUST
Goldman Sachs VIT CORE Small Cap Equity Fund Equity Portfolio
Goldman Sachs VIT CORE U.S. Equity Fund Managed Portfolio
Goldman Sachs VIT Growth and Income Fund Mid Cap Portfolio
Goldman Sachs VIT International Equity Fund Small Cap Portfolio
SUN CAPITAL ADVISERS TRUST
Sun Capital Blue Chip Mid Cap Fund
Sun Capital Investors Foundation Fund
Sun Capital Investment Grade Bond Fund
Sun Capital Money Market Fund
Sun Capital Real Estate Fund
Sun Capital Select Equity Fund
</TABLE>
FIXED ACCOUNT OPTION
We periodically credit interest on amounts allocated to the fixed account
option at an effective annual rate guaranteed to be at least 3%.
II FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
TOPIC PAGE
------------------------------------------------------------ ----
<S> <C>
Summary of Policy........................................... 1
Sun Life Assurance Company of Canada (U.S.)................. 7
The Variable Account........................................ 7
The Funds................................................... 8
Fees and Expenses of the Funds.............................. 13
Our General Account......................................... 14
About the Policy............................................ 14
Policy Application, Issuance and Initial Premium.......... 14
Right of Return Period.................................... 15
Premium Payments.......................................... 16
Premium................................................. 16
Net Premiums............................................ 16
Allocation of Net Premium............................... 16
Planned Periodic Premiums............................... 17
Death Benefit............................................. 17
Changes in Specified Face Amount.......................... 18
Minimum Changes......................................... 18
Increases............................................... 18
Decreases............................................... 19
Surrenders and Surrender Charges.......................... 19
Partial Surrenders........................................ 21
Policy Loans.............................................. 22
Investment Programs....................................... 23
Dollar Cost Averaging................................... 23
Asset Rebalancing....................................... 23
Asset Allocation........................................ 23
Transfer Privileges....................................... 24
Account Value............................................. 25
Variable Account Value.................................. 25
Net Investment Factor................................... 26
Fixed Account Value..................................... 27
Insufficient Value...................................... 28
Minimum Premium Test (No-Lapse Guarantee)............... 29
Grace Period............................................ 29
Splitting Units......................................... 29
Charges and Deductions.................................... 29
Expense Charges Applied to Premium...................... 29
Mortality and Expense Risk Charge....................... 30
Monthly Expense Charge.................................. 30
</TABLE>
III FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
<TABLE>
<CAPTION>
TOPIC PAGE
------------------------------------------------------------ ----
<S> <C>
Monthly Cost of Insurance............................... 30
Monthly Cost of Insurance Rates......................... 30
Basis of Computation.................................... 30
Waivers; Reduced Charges; Credits; Bonus Guaranteed
Interest Rates.......................................... 31
Maturity Date Extension................................... 31
Supplemental Benefits..................................... 32
Accelerated Benefits Rider.............................. 32
Accidental Death Benefit Rider.......................... 33
Waiver of Monthly Deductions Rider...................... 33
Payment of Stipulated Amount Rider...................... 35
Termination of Policy..................................... 36
Reinstatement............................................. 36
Deferral of Payment....................................... 38
Rights of Owner........................................... 38
Rights of Beneficiary..................................... 39
Other Policy Provisions................................... 39
Addition, Deletion or Substitution of Investments....... 39
Entire Contract......................................... 39
Alteration.............................................. 39
Modification............................................ 39
Assignments............................................. 40
Nonparticipating........................................ 40
Misstatement of Age or Sex (Non-Unisex Policy).......... 40
Suicide................................................. 40
Incontestability........................................ 41
Report to Owner......................................... 41
Illustrations........................................... 41
Performance Information..................................... 41
Portfolio Performance..................................... 41
Adjusted Portfolio Performance............................ 42
Other Information......................................... 42
Federal Income Tax Considerations........................... 43
Tax Status of the Policy.................................. 44
Diversification of Investments............................ 44
Tax Treatment of Policy Benefits.......................... 44
Life Insurance Death Benefit Proceeds................... 44
Tax Deferred Accumulation............................... 45
Distributions........................................... 45
Modified Endowment Contracts............................ 46
Distributions under Modified Endowment Contracts........ 46
Distributions under a Policy That Is Not a MEC.......... 47
</TABLE>
IV FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
<TABLE>
<CAPTION>
TOPIC PAGE
------------------------------------------------------------ ----
<S> <C>
Policy Loan Interest.................................... 47
Multiple Policies....................................... 47
Federal Income Tax Withholding.......................... 48
Our Taxes................................................. 48
Distribution of Policy...................................... 48
Voting Rights............................................... 49
Our Directors and Executive Officers........................ 50
Other Information........................................... 54
State Regulation.......................................... 54
Legal Proceedings......................................... 54
Experts................................................... 55
Accountants............................................... 55
Registration Statements................................... 55
Year 2000 Compliance...................................... 55
Financial Statements...................................... 57
Appendix A--Glossary of Policy Terms........................ A-1
Appendix B--Table of Death Benefit Percentages.............. B-1
Appendix C--Sample Hypothetical Illustrations............... C-1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION WHERE THE OFFERING WOULD NOT BE LAWFUL. YOU SHOULD RELY
ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR IN THE
PROSPECTUS OR STATEMENT OF ADDITIONAL INFORMATION OF THE FUNDS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT.
V FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUMMARY OF POLICY
RIGHT OF RETURN PERIOD
You may return your Policy to us for any reason and
receive a refund within 10 days from the date of receipt
of your Policy. A longer period may apply in some states.
PREMIUM PAYMENTS
- You must make a minimum initial premium payment, the
amount of which will vary based on various factors,
including your age and the death benefit you select.
- Thereafter, you choose the amount and timing of
premium payments, within certain limits.
- You may allocate your net premium payments among the
Policy's available investment options.
DEATH BENEFIT
- You have a choice of two death benefit options--
SPECIFIED FACE - the SPECIFIED FACE AMOUNT; or
AMOUNT is the - the sum of the Specified Face Amount and the life
minimum amount of insurance in your Policy.
Account Value of - For each option, the death benefit may be greater if
your Policy. necessary to satisfy federal tax laws.
- After the first Policy Year, you may:
- change your death benefit option;
- increase the Specified Face Amount,
subject to satisfactory evidence of
insurability; or
- decrease the Specified Face Amount,
provided that the Specified Face
Amount after the decrease is not less
than an amount we specify in your
Policy.
THE VARIABLE ACCOUNT
- We have established a variable separate account to
fund the variable benefits under the Policy.
- The assets of the variable separate account are
insulated from the claims of our general creditors.
FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
INVESTMENT OPTIONS
- You may allocate your net premium payments among the
31 variable Sub-Accounts and the fixed account option
listed on the front cover of this prospectus.
- Each Sub-Account invests exclusively in shares of a
mutual fund portfolio.
- You may transfer amounts from one Sub-Account to
another or to the Fixed Account Value, subject to any
limits that may be imposed by the Funds.
- You may transfer amounts from the fixed account
option, subject to our rules as they may exist from
time to time.
SUPPLEMENTAL BENEFITS
- The following riders are available--
- accelerated benefits;
- accidental death benefit;
- waiver of monthly deductions; and
- payment of stipulated amount.
- We will deduct the cost, if any, of the rider(s) from
your Policy's Account Value on a monthly basis.
- Some riders may not be available in some states.
ACCESSING YOUR POLICY'S ACCOUNT VALUE
CASH SURRENDER VALUE -
is Account Value You may borrow from us using your Account Value as
minus any surrender collateral. Loans may be taxable events if your Policy
charges and the is a "modified endowment contract" for federal income
amount of any Policy tax purposes and the value of your Policy exceeds its
Debt. cost.
The SURRENDER CHARGE - You may surrender your Policy for its CASH SURRENDER
PERIOD ends 10 years VALUE. If you surrender your Policy during the
after you purchase SURRENDER CHARGE PERIOD, you will incur any applicable
or increase the surrender charges.
Specified Face - You may make a partial surrender of some of your
Amount of your Amount of your Policy's Cash Surrender Value after the
Policy. Policy been in force for one year. A partial surrender
will cause a decrease in the Specified Face Amount of
your Policy if your death benefit option is the
Specified Face Amount.
2 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
ACCOUNT VALUE
ACCOUNT VALUE is the -
sum of the amounts Your Policy's ACCOUNT VALUE will reflect--
in each Sub- Account - the premiums you pay;
and the Fixed - the investment performance of the Sub-Accounts
Account Value with you select, and/or the interest credited in the
respect to your fixed account option;
Policy. - any loans or partial surrenders;
- the charges we deduct under the Policy.
POLICY CHARGES AND DEDUCTIONS
- EXPENSE CHARGES APPLIED TO PREMIUMS--We will deduct a
charge from your premium payments not to exceed 7.25%
for sales load and our federal, state and local tax
obligations. The current charge is 5.25%.
- MORTALITY AND EXPENSE RISK CHARGE--We deduct a daily
charge from your Variable Account Value for the
mortality and expense risks we assume with respect to
the Policy. The guaranteed maximum daily rate is
equivalent to an annual rate of 0.90% of the Variable
Account Value. Our current daily rates are equivalent
to annual rates of--
- 0.80% for Policy Years 1 through 10;
and
- 0.50% thereafter.
- MONTHLY COST OF INSURANCE CHARGE--We will deduct a
monthly charge from your Account Value for the cost
of insurance. For standard risks, our guaranteed
monthly cost of insurance rates are based on the 1980
Commissioner's Standard Ordinary Smoker and Nonsmoker
Mortality Tables. The applicable charge will vary
based on the amount of insurance coverage you request
and other factors, including the insured's age, sex
and health.
- MONTHLY COST OF SUPPLEMENTAL BENEFITS--We will deduct
a monthly charge from your Account Value for the
cost, if any, of any supplemental benefit riders
issued with your Policy. The applicable charge will
vary based on various factors which may include,
among others, the amount of coverage and the
insured's age, sex and health.
- MONTHLY EXPENSE CHARGE--We deduct a monthly charge of
$8.00 from your Account Value for the administration
of your Policy.
- SURRENDER CHARGES--Within the first 10 Policy Years
or the 10 Policy Years following an increase in
Specified Face Amount, we will deduct a surrender
charge if you surrender your Policy or request a
decrease in the Specified Face Amount. The charge
will be 100% of the base surrender charge in the
first five Policy Years, or the first five Policy
Years after an increase
3 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
in Specified Face Amount, scaling down to zero after
10 Policy Years. The base surrender charge will be an
amount based on certain factors, including the
Specified Face Amount and the insured's age, sex and
rating class. The following are examples of surrender
charges at representative Issue Ages.
FIRST YEAR SURRENDER CHARGES
PER $1,000 OF SPECIFIED FACE AMOUNT
(Non-tobacco Male)
<TABLE>
<CAPTION>
ISSUE AGE 25 ISSUE AGE 35 ISSUE AGE 45
- ------------- ------------- -------------
<S> <C> <C>
$ 4.63 $ 5.77 $ 7.74
<CAPTION>
ISSUE AGE 55 ISSUE AGE 65 ISSUE AGE 75
- ------------- ------------- -------------
<S> <C> <C>
$ 11.25 $ 22.38 $ 31.38
</TABLE>
- INTEREST ON POLICY LOANS--Policy loans accrue
interest daily at 4% annually during Policy Years 1
through 10 and 3% annually thereafter.
FEES AND EXPENSES OF THE FUNDS
You should read the You will indirectly bear the costs of investment
Funds' prospectuses management fees and other expenses paid from the assets
before investing. of the Funds you select. The following table shows the
fees and expenses paid by the Funds as a percentage of
average net assets based on information for the year
ended December 31, 1998. This information was provided
by the Funds and we have not independently verified it.
The Funds' fees and expenses are more fully described in
the current prospectuses for the Funds. You should read
them before investing.
ANNUAL FUND EXPENSES
(as a percentage of Fund average net assets)
<TABLE>
<CAPTION>
TOTAL ANNUAL
FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ------------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
(after expense reimbursement or waiver) (1)
- --------------------------------------------
AIM V.I. Capital Appreciation Fund 0.62 0.05 0.67
AIM V.I. Growth Fund 0.64 0.08 0.72
AIM V.I. Growth and Income Fund 0.61 0.04 0.65
AIM V.I. International Equity Fund 0.75 0.16 0.91
THE ALGER AMERICAN FUND
- --------------------------------------------
Alger American Growth Portfolio 0.75 0.04 0.79
Alger American Income and Growth Portfolio 0.62 0.12 0.74
Alger American Small Capitalization
Portfolio 0.85 0.04 0.89
</TABLE>
4 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
<TABLE>
<CAPTION>
TOTAL ANNUAL
FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ------------
<S> <C> <C> <C>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
(after expense reimbursement or waiver) (2)
- --------------------------------------------
Goldman Sachs VIT CORE Large Cap Growth
Fund 0.70 0.10 0.80
Goldman Sachs VIT CORE Small Cap Equity
Fund 0.75 0.15 0.90
Goldman Sachs VIT CORE U.S. Equity Fund 0.70 0.10 0.80
Goldman Sachs VIT Growth and Income Fund 0.75 0.15 0.90
Goldman Sachs VIT International Equity
Fund 1.00 0.25 1.25
MFS/SUN LIFE SERIES TRUST
- --------------------------------------------
Capital Appreciation Series 0.73 0.04 0.77
Emerging Growth Series 0.72 0.06 0.78
Government Securities Series 0.55 0.07 0.62
High Yield Series 0.75 0.07 0.82
Massachusetts Investors Growth Stock
Series 0.75 0.22 0.97
Massachusetts Investor Trust Series 0.55 0.04 0.59
New Discovery Series 0.90 0.35 1.25
(after expense reimbursement or waiver)
(2)
Total Return Series 0.65 0.05 0.70
Utilities Series 0.75 0.11 0.86
OCC ACCUMULATION TRUST
- --------------------------------------------
Equity Portfolio 0.80 0.14 0.94
Managed Portfolio 0.78 0.04 0.82
Mid Cap Portfolio 0.80 0.25 1.05
(after expense reimbursement or waiver)
(2)
Small Cap Portfolio 0.80 0.08 0.88
SUN CAPITAL ADVISERS TRUST
(after expense reimbursement or waiver) (2)
- --------------------------------------------
Sun Capital Blue Chip Mid Cap Fund (3) 0.80 0.20 1.00
Sun Capital Investors Foundation Fund (3) 0.75 0.15 0.90
Sun Capital Investment Grade Bond Fund 0.60 0.15 0.75
Sun Capital Money Market Fund 0.50 0.15 0.65
Sun Capital Real Estate Fund 0.95 0.30 1.25
Sun Capital Select Equity Fund (3) 0.75 0.15 0.90
NOTES
- ------------------------
</TABLE>
(1) AIM Advisors, Inc. may from time to time voluntarily waive or reduce
its respective fees. The indicated Funds reimburse the investment
adviser in an amount up to 0.25% of the average net asset value of each
Fund for expenses incurred in providing, or assuring that participating
insurance companies provide, certain administrative services.
(2) "Other Expenses" are based on actual expenses for the last fiscal year
ended December 31, 1998, including any applicable expense reimbursement
or waiver. The investment advisers for the indicated Funds have
voluntarily agreed to waive or reimburse a portion of the management
fees and/or operating expenses resulting in a reduction of the total
operating expenses. Absent any such waiver or reimbursement,
"Management Fees," "Other Expenses" and "Total Annual Fund Operating
Expenses" were --
0.70%, 2.17% and 2.87% for the Goldman Sachs VIT CORE Large Cap Growth
Fund;
0.75%, 3.17% and 3.92% for the Goldman Sachs VIT CORE Small Cap
Equity Fund;
0.70%, 2.13% and 2.83% for the Goldman Sachs VIT CORE U.S. Equity
Fund;
0.75%, 1.94% and 2.69% for the Goldman Sachs VIT CORE Growth and
Income Fund;
1.00%, 1.97% and 2.97% for the Goldman Sachs VIT International
Equity Fund;
5 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
0.90%, 0.70% and 1.60% for the MFS/Sun Life New Discovery Series;
0.80%, 3.48% and 4.28% for the OCC Mid Cap Portfolio;
0.80%, 3.50% and 4.10% for the Sun Capital Investment Grade Bond
Fund;
0.50%, 11.79% and 12.29% for the Sun Capital Money Market Fund;
and
0.95%, 6.49% and 7.44% for the Sun Capital Real Estate Fund.
(3) These Funds will commence operations in 1999. Accordingly, "Other
Expenses" are based on estimates for the fiscal year ended December 31,
1999, net of any applicable expense reimbursement or waiver. The
investment advisers for the indicated Funds have voluntarily agreed to
waive or reimburse a portion of the management fees and/or operating
expenses resulting in a reduction of the total expenses.
To the extent that the expense ratio of any Fund of Sun Capital Advisers
Trust falls below the Fund's expenses limit, the Fund's investment
adviser reserves the right to be reimbursed for management fees waived
and Fund expenses paid by it during the prior two years.
WHAT IF CHARGES AND DEDUCTIONS EXCEED CASH SURRENDER
VALUE?
- Your Policy will terminate if your Cash Surrender
Value at the beginning of any Policy Month is less
than the charges and deductions then due.
- We will send you notice and allow you a 61 day Grace
Period.
- If, within the Grace Period, you do not make a
premium payment sufficient to cover all accrued and
unpaid charges and deductions, your Policy will
terminate at the end of the Grace Period without
further notice.
MINIMUM PREMIUM TEST (NO-LAPSE GUARANTEE)
Your insurance coverage will remain in force during
the first five Policy Years even if your Policy's Cash
Surrender Value is insufficient to keep the Policy in
force, provided that your Policy meets certain
requirements.
REINSTATEMENT
If your Policy terminates due to insufficient value,
we will reinstate it within five years at your request,
subject to certain conditions.
MATURITY
Your Policy will terminate when the insured reaches
Attained Age 100. If the insured is living and your
Policy is in force on the Maturity date, your Policy's
Cash Surrender Value will be payable to you.
6 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
MATURITY EXTENSION
The Maturity date may be extended at your request.
The death benefit will be your Account Value on the date
of the insured's death.
FEDERAL TAX CONSIDERATIONS
Your purchase of, and transactions under, your Policy
may have tax consequences that you should consider before
purchasing a Policy. You may wish to consult a tax
adviser. In general, the beneficiary will receive Policy
Proceeds without there being taxable income. Increases in
Account Value will not be taxable as earned, although
there may be income tax due on a full or partial
surrender of your Policy or on policy loans.
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
We are an indirect Sun Life Assurance Company of Canada (US) is a
wholly- owned stock life insurance company incorporated under the laws
subsidiary of Sun of Delaware on January 12, 1970. We are authorized to do
Life Assurance business in forty-eight states, the District of Columbia
Company of Canada, a and Puerto Rico, and anticipate that we will eventually
Canadian mutual life be authorized to do business in all states except New
insurance company. York. We issue individual and group life insurance
policies and annuity contracts.
We are an indirect, wholly-owned subsidiary of Sun
Life Assurance Company of Canada, a Canadian mutual life
insurance company located at 150 King Street West,
Toronto, Ontario, Canada.
THE VARIABLE ACCOUNT
We established Sun Life of Canada (U.S.) Variable
Account I in accordance with Delaware law on December 1,
1998. The Variable Account may also be used to fund
benefits payable under other life insurance policies
issued by us.
We own the assets of the Variable Account. The
income, gains or losses, realized or unrealized, from
assets allocated to the Variable Account are credited to
or charged against the Variable Account without regard to
our other income, gains or losses.
The assets of the We will at all times maintain assets in the
Variable Account are Variable Account with a total market value at least
insulated from our equal to the reserves and other liabilities relating to
general liabilities. the variable benefits under all policies participating
in the Variable Account. Those assets may not be charged
with our liabilities from our other business. Our
obligations under those policies are, however, our
general corporate obligations.
7 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
The Variable Account The Variable Account is registered with the
is registered with Securities and Exchange Commission (the "SEC") under the
the SEC. Investment Company Act of 1940 ("1940 Act") as a unit
investment trust. Registration under the 1940 Act does
not involve any supervision by the SEC of the management
or investment practices or policies of the Variable
Account.
The Variable Account The Variable Account is divided into 31
has 31 Sub-Accounts. Sub-Accounts. Each Sub- Account invests exclusively in
Each Sub- Account shares of a corresponding investment portfolio of a
invests exclusively registered investment company (commonly known as a
in shares of a mutual fund). We may in the future add new or delete
single mutual fund existing Sub-Accounts. The income, gains or losses,
portfolio. realized or unrealized, from assets allocated to each
Sub-Account are credited to or charged against that
Sub-Account without regard to the other income, gains or
losses of the other Sub-Accounts. All amounts allocated
to a Sub-Account will be used to purchase shares of the
corresponding mutual fund. The Sub-Accounts will at all
times be fully invested in mutual fund shares.
THE FUNDS
The Fund The Policy offers a number of Fund options,
Prospectuses have which are briefly discussed below. Each Fund is a mutual
more information fund registered under the 1940 Act, or a separate series
about the Funds, and of shares of such a mutual fund. More comprehensive
may be obtained from information, including a discussion of potential risks,
us without charge. is found in the current prospectuses for the Funds (the
"Fund Prospectuses"). The Fund Prospectuses should be
read in connection with this prospectus. A copy of each
Fund Prospectus may be obtained without charge by
calling (800) 700-6554, or writing to Sun Life Assurance
Company of Canada (U.S.), One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481.
The Funds currently available are:
AIM VARIABLE INSURANCE FUNDS, INC. (advised by AIM
Advisors, Inc.)
AIM V.I. CAPITAL APPRECIATION FUND seeks to provide
capital appreciation through investments in common
stocks, with emphasis on medium-sized and smaller
emerging growth companies.
AIM V.I. GROWTH FUND seeks to provide growth of
capital through investments primarily in common stocks of
seasoned and better capitalized U.S. companies considered
by AIM to have strong earnings momentum.
AIM V.I. GROWTH AND INCOME FUND seeks to provide
growth of capital, with current income as a secondary
objective by investing primarily in dividend paying
common stocks which have prospects for both growth of
capital and dividend income.
8 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
AIM V.I. INTERNATIONAL EQUITY FUND seeks to provide
long-term growth of capital by investing in diversified
international equity securities, the issuers of which are
considered by AIM to have strong earnings momentum.
THE ALGER AMERICAN FUND (advised by Fred Alger
Management, Inc.)
ALGER AMERICAN GROWTH PORTFOLIO seeks long-term
capital appreciation by investing primarily in equity
securities of companies with market capitalizations of $1
billion or more.
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO seeks
primarily to provide a high level of dividend income by
investing in dividend paying equity securities. Capital
appreciation is a secondary objective.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO seeks
long-term capital appreciation by investing primarily in
equity securities of companies with market
capitalizations within the range of the Russell 2000
Growth Index or the S&P SmallCap 600 Index.
GOLDMAN SACHS VARIABLE INSURANCE TRUST (advised by
Goldman Sachs Asset Management, a separate operating
division of Goldman, Sachs & Co., except for Goldman
Sachs International Equity Fund, which is advised by
Goldman Sachs Asset Management International, an
affiliate of Goldman, Sachs & Co.)
GOLDMAN SACHS VIT CORE LARGE CAP GROWTH FUND seeks
long-term growth of capital through a broadly diversified
portfolio of equity securities of large cap U.S. issuers
that are expected to have better prospects for earnings
growth than the growth rate of the general domestic
economy. Dividend income is a secondary consideration.
GOLDMAN SACHS VIT CORE SMALL CAP EQUITY FUND seeks
long-term growth of capital through a broadly diversified
portfolio of equity securities of U.S. issuers which are
included in the Russell 2000 Index at the time of
investment.
GOLDMAN SACHS VIT CORE U.S. EQUITY FUND seeks
long-term growth of capital and dividend income through a
broadly diversified portfolio of large cap and blue chip
equity securities representing all major sectors of the
U.S. economy.
GOLDMAN SACHS VIT GROWTH AND INCOME FUND seeks
long-term growth of capital and growth of income through
investments in equity securities that
9 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
are considered to have favorable prospects for capital
appreciation and/or dividend paying ability.
GOLDMAN SACHS VIT INTERNATIONAL EQUITY FUND seeks
long-term capital appreciation through investments in
equity securities of companies that are organized outside
the U.S. or whose securities are principally traded
outside the U.S.
MFS/SUN LIFE SERIES TRUST (advised by our affiliate
Massachusetts Financial Services Company)
CAPITAL APPRECIATION SERIES seeks capital
appreciation by investing in securities of all types,
with a major emphasis on common stocks.
EMERGING GROWTH SERIES seeks to provide long-term
growth of capital by investing primarily (i.e. at least
80% of all its assets under normal circumstances) in
common stocks of emerging growth companies, including
companies that the series' investment adviser believes
are early in their life cycle but which have the
potential to become major enterprises. Dividend and
interest income from portfolio securities, if any, is
incidental to its objective of long-term growth of
capital.
GOVERNMENT SECURITIES SERIES seeks current income and
preservation of capital by investing in U.S. Government
and U.S. Government-related Securities.
HIGH YIELD SERIES seeks high current income and
capital appreciation by investing primarily in fixed
income securities of U.S. and foreign issuers which may
be in the lower rated categories or unrated (commonly
known as "junk bonds") and which may include equity
features. The series may invest up to 100% of its net
assets in these securities, which generally involve
greater risks, including volatility of price, risk of
principal and income, default risks and less liquidity,
than securities in the higher rated categories.
MASSACHUSETTS INVESTORS GROWTH STOCK SERIES seeks to
provide long-term growth of capital and future income
rather than current income. The series invests, under
normal market conditions, at least 80% of its total
assets in common stocks and related securites, such as
preferred stocks, convertible securities and depositary
receipts for those securities, of companies which the
series' adviser believes offer better than average
prospects for long-term growth.
MASSACHUSETTS INVESTORS TRUST SERIES seeks long-term
growth of capital and future income while providing more
current dividend income than is normally obtainable from
a portfolio of only growth stocks. The series invests,
10 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
under normal market conditions, at least 65% of its total
assets in common stock and related securities, such as
preferred stocks, convertible securities and depositary
receipts for those securities. While the series may
invest in companies of any size, the series generally
focuses on companies with larger market capitalizations
that the series' adviser believes have sustainable growth
prospects and attractive valuations based on current and
expected earnings of cash flow. This series was formerly
known as the Conservative Growth Series.
NEW DISCOVERY SERIES seeks capital appreciation. The
series invests, under normal market conditions, at least
65% of its total assets in common stocks and related
securities, such as preferred stocks, convertible
securities and depositary receipts for those securities,
of emerging growth companies. These companies are
companies that the series' adviser believes are either
early in their life cycle but have the potential to
become major enterprises or are major enterprises whose
rates of earnings growth are expected to accelerate.
TOTAL RETURN SERIES seeks to obtain above-average
income (compared to a portfolio entirely invested in
equity securities) consistent with prudent employment of
capital; its secondary objective is to take advantage of
opportunities for growth of capital and income since many
securities offering a better than average yield may also
possess growth potential. The series is a "balanced
fund," and invests in a combination of equity and fixed
income securities. Under normal market conditions, the
series invests (i) at least 40%, but not more than 75%,
of its net assets in common stocks and related
securities, such as preferred stocks, bonds, warrants or
rights convertible into stock, and depositary receipts
for those securities; and (ii) at least 25% of its net
assets in non-convertible fixed income securities.
UTILITIES SERIES seeks capital growth and current
income (income above that available from a portfolio
invested entirely in equity securities) by investing
under normal market conditions, at least 65% of its
assets in equity and debt securities issued by both
domestic and foreign utility companies.
OCC ACCUMULATION TRUST (advised by OpCap Advisors)
EQUITY PORTFOLIO seeks long-term capital appreciation
through investment in a diversified portfolio of equity
securities selected on the basis of a value oriented
approach to investing.
MANAGED PORTFOLIO seeks to achieve growth of capital
over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the
percentages of which will vary based on the portfolio
manager's assessments of the relative outlook for such
investments.
11 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
MID CAP PORTFOLIO seeks long-term capital
appreciation through investment in a diversified
portfolio of equity securities. The portfolio will invest
primarily in companies with market capitalizations of
between $500 million and $5 billion.
SMALL CAP PORTFOLIO seeks capital appreciation
through investment in a diversified portfolio of equity
securities of companies with market capitalizations of
under $1 billion.
SUN CAPITAL ADVISERS TRUST (advised by our affiliate Sun
Capital Advisers, Inc.)
SUN CAPITAL BLUE CHIP MID CAP FUND seeks long-term
capital growth by investing primarily in a diversified
portfolio of common stocks and other equity securities of
U.S. companies with market capitalizations within the
range represented by the Standard & Poor's (S&P) Mid Cap
400 Index.
SUN CAPITAL INVESTORS FOUNDATION FUND seeks long-term
capital growth by investing primarily in a diversified
portfolio of common stocks and other equity securities of
U.S. companies. The fund will generally hold stocks of
companies with market capitalizations within the range
represented by the S&P 500 Index.
SUN CAPITAL INVESTMENT GRADE BOND FUND seeks high
current income consistent with relative stability of
principal by investing primarily in investment grade
bonds, including those issued by U.S. and foreign
companies (including companies in emerging market
countries), the U.S. Government and its agencies and
instrumentalities (including those which issue
mortgage-backed securities), foreign governments
(including those of emerging market countries), and
multinational organizations such as the World Bank.
SUN CAPITAL MONEY MARKET FUND seeks to maximize
current income, consistent with maintaining liquidity and
preserving capital, by investing exclusively in high
quality U.S. dollar-denominated money market securities,
including those issued by U.S. and foreign banks
corporate issuers, the U.S. Government and its agencies
and instrumentalities, foreign governments and
multinational organizations such as the World Bank. The
fund may invest in all types of money market securities,
including commercial paper, certificates of deposit,
bankers' acceptances, mortgage-backed and asset-backed
securities, repurchase agreements and other short-term
debt securities.
SUN CAPITAL REAL ESTATE FUND primarily seeks
long-term capital growth and, secondarily, seeks current
income and growth of income. The fund invests at least
80% of its assets in securities of real estate trusts and
other real estate companies. The fund generally focuses
its investments in equity REITs, which
12 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
invest most of their assets directly in U.S. or foreign
real property, receive most of their income from rents
and may also realize gains by selling appreciated
properties.
SUN CAPITAL SELECT EQUITY FUND seeks long-term
capital growth. The fund will normally invest in twenty
to forty common stocks and other equity securities of
large capitalization U.S. companies. These investments
are selected primarily from the S&P 500 Index.
Although the investment objectives and policies of
the Funds may be similar to those of other mutual funds
managed by the Funds' investment advisers, the investment
results of the Funds can differ significantly from those
of such other mutual funds.
The Funds may also be available to separate accounts
offering variable annuity and variable life products of
other affiliated and unaffiliated insurance companies, as
well as our other separate accounts. Although we do not
anticipate any disadvantages in this, there is a
possibility that a material conflict may arise between
the interests of the Variable Account and one or more of
the other separate accounts participating in the Funds. A
conflict may occur due to a change in law affecting the
operations of variable life and variable annuity separate
accounts, differences in the voting instructions of
policyowners and those of other companies, or some other
reason. In the event of conflict, we will take any steps
necessary to protect policyowners, including withdrawal
of the Variable Account from participation in the Funds
which are involved in the conflict or substitution of
shares of other Funds.
FEES AND EXPENSES OF THE FUNDS
Fund shares are purchased at net asset value, which
reflects the deduction of investment management fees and
certain other expenses. The management fees are charged
by each Fund's investment adviser for managing the Fund
and selecting its portfolio of securities. Other Fund
expenses can include such items as interest expense on
loans and contracts with transfer agents, custodians, and
other companies that provide services to the Fund.
The Fund expenses are assessed at the Fund level and
are not direct charges against Variable Account assets or
reductions from Cash Values. These expenses are taken
into consideration in computing each Fund's net asset
value, which is the share price used to calculate the
Unit Values of the Variable Account. The table contained
in the front part of this prospectus shows annual
expenses paid by the Funds as a percentage of average net
assets.
13 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
The management fees and other expenses of the Funds
are more fully described in the Fund Prospectuses. The
information relating to the Fund expenses was provided by
the Fund and was not independently verified by us.
OUR GENERAL ACCOUNT
Our general account consists of all of our assets
other than those in our variable separate accounts.
Subject to applicable law, we have sole discretion over
the investment of our general account assets.
Fixed account Interests in our general account offered through
investments are not the fixed account investment option have not been
securities and we registered under the Securities Act of 1933 and our
are not an general account has not been registered as an investment
investment company. company under the 1940 Act.
You may allocate net premiums to the fixed account
investment option and may transfer any portion of your
investments in the Sub-Accounts to the fixed account. You
may also transfer a portion of your investment in the
fixed account to any of the variable Sub-Accounts.
Transfers may be subject to certain restrictions.
Fixed account An investment in the fixed account option does
investments earn at not entitle you to share in the investment experience of
least 3% interest. our general account. Instead, we guarantee that your
fixed account investment will accrue interest daily at
an effective annual rate of at least 3%, without regard
to the actual investment experience of our general
account. We may, at our sole discretion, credit a higher
rate of interest, but are not obligated to do so.
ABOUT THE POLICY
POLICY APPLICATION, ISSUANCE AND INITIAL PREMIUM
To purchase a Policy, you must first submit an
application to our Principal Office. We may then follow
certain underwriting procedures designed to determine the
insurability of the proposed insured. We offer the Policy
on a regular (medical) underwriting basis and may require
medical examinations and further information before the
proposed application is approved. Proposed insureds must
be acceptable risks based on our underwriting limits and
standards. A Policy cannot be issued until the
underwriting process has been completed to our
satisfaction. We reserve the right to reject an
application that does not meet our underwriting
requirements or to "rate" an insured as a substandard
risk, which will result in increased Monthly Cost of
Insurance charges.
14 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
You must specify certain information in the
application, including the Specified Face Amount, the
death benefit option and supplemental benefits, if any.
The Specified Face Amount generally may not be decreased
below $100,000-- the "Minimum Specified Face Amount."
While your application is being reviewed, we may make
available to you temporary life insurance coverage if you
have signed a Policy Application and, at that same time,
submitted a separate signed application for temporary
coverage and made an advance payment. The temporary
coverage, if available, begins on the date that separate
application for it is signed, has a maximum amount and is
subject to other conditions.
Pending approval of your application, any advance
payments will be held in our general account. Upon
approval of the application, we will issue to you a
Policy on the life of the insured. A specified initial
premium is due and payable as of the date of issue for
the Policy. The Effective Date of Coverage for your
Policy will be the later of--
The ISSUE DATE is - the ISSUE DATE, OR
the date we produce - the date a premium is paid equal to or in excess
your Policy on our of the specified initial premium.
system and is
specified in your
Policy.
If an application is not approved, we will promptly
return all advance payments to you.
RIGHT OF RETURN PERIOD
If you are not satisfied with your Policy, it may be
returned by delivering or mailing it to our Principal
Office or to the representative from whom the Policy was
purchased within 10 days from the date of receipt of your
Policy (the "Right of Return Period"). A longer period
may apply in some states.
A Policy returned under this provision will be deemed
void. You will receive a refund equal to the sum of all
premium payments made, if required by applicable state
insurance law; otherwise, your refund will equal the sum
of--
- the difference between any premium
payments made, including fees and
charges, and the amounts allocated to
the Variable Account;
- the value of the amounts allocated to
the Variable Account on the date the
cancellation request is received by us
at our Principal Office; and
- any fees or charges imposed on amounts
allocated to the Variable Account.
15 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Unless you are entitled under applicable law to
receive a full refund of premiums paid, you bear all of
the investment risks with respect to the amount of any
net premiums allocated to the Variable Account during the
Right of Return Period.
During the Right of Return Period, we will allocate
the net premium payments to the Sun Capital Money Market
Sub-Account or to the fixed account investment option,
whichever we specify in your Policy. Upon expiration of
the Right of Return Period, the Account Value in that
Sub-Account or in the fixed account option, as
applicable, will be transferred to the Sub-Accounts of
the Variable Account and to the fixed account option in
accordance with your allocation instructions.
PREMIUM PAYMENTS
All premium payments must be made payable to Sun Life
Assurance Company of Canada (U.S.) and mailed to our
Principal Office. An initial premium will be due and
payable as of your Policy's Issue Date. Additional
premium payments may be paid to us subject to the
limitations described below.
PREMIUM. We reserve the right to limit the number of
premium payments we accept in a year. No premium payment
may be less than $50 without our consent, although we
will accept a smaller premium payment if necessary to
keep your Policy in force. We reserve the right not to
accept a premium payment that causes the death benefit to
increase by an amount that exceeds the premium received.
Evidence of insurability satisfactory to us may be
required before we accept any such premium.
We will not accept premium payments that would, in
our opinion, cause your Policy to fail to qualify as life
insurance under applicable federal tax law. If a premium
payment is made in excess of these limits, we will accept
only that portion of the premium within those limits, and
will refund the remainder to you.
NET PREMIUMS. The net premium is the amount you pay
as the premium less the Expense Charges Applied to
Premium.
ALLOCATION OF NET PREMIUM. Except as otherwise
described herein, net premium will be allocated in
accordance with your allocation percentages. You must
allocate at least 5% of net premium to any Sub-Account
you choose. Percentages must be in whole numbers. We
reserve the right to limit the number of Sub-Accounts to
which you may allocate your Account Value to not more
than 20 Sub-Accounts.
16 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Premiums received prior to the end of the Right of
Return Period will be credited to the Sun Capital Money
Market Sub-Account or to the fixed account investment
option, whichever we specify in your Policy. Your initial
allocation percentages will take effect at the end of the
Right of Return Period.
You may change your allocation percentages at any
time by telephone or written request to our Principal
Office. Telephone requests will be honored only if we
have a properly completed telephone authorization form
for you on file. We, our affiliates and the
representative from whom you purchased your Policy will
not be responsible for losses resulting from acting upon
telephone requests reasonably believed to be genuine. We
will use reasonable procedures to confirm that
instructions communicated by telephone are genuine. You
will be required to identify yourself by name and a
personal identification number for transactions initiated
by telephone. An allocation change will be effective as
of the date we receive the request for that change.
PLANNED PERIODIC PREMIUMS. While you are not
required to make additional premium payments according to
a fixed schedule, you may select a planned periodic
premium schedule and corresponding billing period,
subject to our limits. We will send you reminder notices
for the planned periodic premium at each billing period
as specified in your Policy, unless reminder notices have
been suspended as described below. You are not required,
however, to pay the planned periodic premium; you may
increase or decrease the planned periodic premium subject
to our limits, and you may skip a planned payment or make
unscheduled payments. You may change your planned payment
schedule or the billing period, subject to our approval.
Depending on the investment performance of the
Sub-Accounts you select, the planned periodic premium may
not be sufficient to keep your Policy in force, and you
may need to change your planned payment schedule or make
additional payments in order to prevent termination of
your Policy. We will suspend reminder notices at your
written request, and we reserve the right to suspend
reminder notices if premiums are not being paid (except
for notices in connection with the Grace Period). We will
notify you prior to suspending reminder notices.
DEATH BENEFIT
If your Policy is in force at the time of the
insured's death, we will pay the beneficiary an amount
based on the death benefit option you select once we have
received due proof of the insured's death. The amount
payable will be:
- the amount of the selected death
benefit option, PLUS
- any amounts payable under any
supplemental benefits added to your
Policy, LESS
- the value of any Policy Debt on the
date of the insured's death, LESS
17 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- any Unpaid Policy Charges.
We will pay this amount to the beneficiary in one
lump sum, unless we and the beneficiary agree on another
form of settlement.
You may select The policy has two death benefit options. You
between two death may change the death benefit option after the first
benefit options. Policy Year.
OPTION A. Under this option, the death benefit is--
- the Policy's Specified Face Amount on
the date of the insured's death; OR,
IF GREATER,
- the Policy's Account Value on the date
of death multiplied by the applicable
percentage shown in the table set
forth in Appendix B.
This death benefit option should be selected if you
want to minimize your cost of insurance.
OPTION B. Under this option, the death benefit is--
- the sum of the Specified Face Amount
and Account Value of the Policy on the
date of the insured's death; OR, IF
GREATER,
- the Policy's Account Value on the date
of death multiplied by the applicable
percentage shown in the table set
forth in Appendix B.
This death benefit option should be selected if you
want your death benefit to increase with your Policy's
Account Value.
CHANGES IN SPECIFIED FACE AMOUNT
You may increase or You may increase or decrease the Specified Face
decrease the Amount of your Policy after the first Policy Year within
Specified Face certain limits.
Amount within MINIMUM CHANGES. Each increase in the Specified Face
certain limits. Amount must be at least $20,000. We reserve the right to
change the minimum amount by which you may change the
Specified Face Amount.
INCREASES. To request an increase, you must provide
satisfactory evidence of the insured's insurability. Once
requested, an increase will become effective at the next
policy anniversary following our approval of your
request. The Policy does not allow for an increase if the
insured's Attained Age is greater than 80 on the
effective date of the increase.
18 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
DECREASES. A decrease will become effective at the
beginning of the next Policy Month following our approval
of your request. The Specified Face Amount after the
decrease must be at least $100,000. Surrender charges
will apply to decreases in the Specified Face Amount
during the surrender charge period except for decreases
in the Specified Face Amount resulting from a change in
the death benefit option or a partial surrender.
For purposes of determining surrender charges and
later cost of insurance charges, we will apply a decrease
in Specified Face Amount in the following order--
- first, to the most recent increase;
- second, to the next most recent
increases, in reverse chronological
order; and
- finally, to the initial Specified Face
Amount.
SURRENDERS AND SURRENDER CHARGES
If you surrender You may surrender your Policy for its Cash
your Policy and Surrender Value at any time while the insured is living.
receive its Cash If you do, the insurance coverage and all other benefits
Surrender Value, you under the Policy will terminate. Also, surrender charges
may incur surrender will be deducted if you surrender your Policy during the
charges, taxes, and surrender charge period.
tax penalties. CASH SURRENDER VALUE is your Policy's Account
Value less the sum of--
- the outstanding balance of any Policy
Debt; and
- any surrender charges
We will determine your Cash Surrender Value at the
next close of business on the New York Stock Exchange
after we receive your written request for surrender at
our Principal Office.
If you surrender your Policy, we will apply a
surrender charge to the initial Specified Face Amount and
to each increase in the Specified Face Amount other than
an increase resulting from a change in the death benefit
option. The surrender charge will be calculated
separately for the initial Specified Face Amount and each
increase in the Specified Face Amount. The base surrender
charge will be an amount based on certain factors,
including the Policy's Specified Face Amount and the
insured's age, sex and rating class. The following are
examples of surrender charges at representative Issue
Ages.
19 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
FIRST YEAR SURRENDER CHARGES
PER $1,000 OF SPECIFIED FACE AMOUNT
(Non-tobacco Male)
<TABLE>
<CAPTION>
ISSUE AGE 25 ISSUE AGE 35 ISSUE AGE 45
- ------------- ------------- -------------
<S> <C> <C>
$ 4.63 $ 5.77 $ 7.74
<CAPTION>
ISSUE AGE 55 ISSUE AGE 65 ISSUE AGE 75
- ------------- ------------- -------------
<S> <C> <C>
$ 11.25 $ 22.38 $ 31.38
</TABLE>
The surrender charge will be calculated based on the
surrender charge percentages for the initial Specified
Face Amount and each increase in the Specified Face
Amount as shown in the table below.
<TABLE>
<CAPTION>
SURRENDER CHARGE
(AS A PERCENTAGE OF
THE
FIRST YEAR
YEAR SURRENDER CHARGE)
- ------------------------------------------------------------------------- ---------------------
<S> <C>
1 100.000
2 100.000
3 100.000
4 100.000
5 100.000
6 83.333
7 66.667
8 50.000
9 33.333
10 16.667
11 and thereafter 0.000
</TABLE>
A surrender charge will be applied for each decrease
in the Specified Face Amount except for decreases in
Specified Face Amount resulting from a change in death
benefit option or partial surrender. These surrender
charges will be applied in the following order:
- first, to the most recent increase;
- second, to the next most recent
increases, in reverse chronological
order; and
- third, to the initial Specified Face
Amount.
On a decrease in the initial Specified Face Amount,
you will pay a proportion of the full surrender charge
based on the ratio of the Face Amount decrease to the
Initial Face Amount. The surrender charge you pay on a
decrease that is less than the full amount of an increase
in Specified Face Amount will be calculated on the same
basis. Future surrender charges will be
20 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
reduced by any applicable surrender charges for a
decrease in the Specified Face Amount.
You may allocate any surrender charges resulting from
a decrease in the Specified Face Amount among the
Sub-Accounts and the Fixed Account Value. If you do not
specify the allocation, then the surrender charges will
be allocated proportionally among the Sub-Accounts and
the Fixed Account Value in excess of any Policy Debt.
PARTIAL SURRENDERS
If the applicable You may make a partial surrender of your Policy
death benefit option once each Policy Year after the first Policy Year by
is Option A and you written request to us. Each partial surrender must be
make a partial for at least $200, and no partial surrender may be
surrender of your made--
Policy, the - during the first ten Policy Years for more than 20
Specified Face percent of your Cash Surrender Value at the end of the
Amount will be first Valuation Date after we receive your request or
decreased. - thereafter for more than your Cash Surrender Value.
A partial surrender If the applicable death benefit option is Option
may result in taxes A, the Specified Face Amount will be decreased by the
and tax penalties. amount of the partial surrender. We will apply the
decrease to the initial Specified Face Amount and to
each increase in Specified Face Amount in the following
order --
- first, to the most recent increase;
- second, to the next most recent
increases, in reverse chronological
order; and
- finally, to the initial Specified Face
Amount.
We will not accept requests for a partial surrender
if the Specified Face Amount remaining in force after the
partial surrender would be less than the Minimum
Specified Face Amount. We will effect a partial surrender
at the next close of business on the New York Stock
Exchange after we receive your written request for
surrender.
21 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
POLICY LOANS
You may borrow from You may request a policy loan of up to 90% of
us using your Policy your Policy's Cash Value, decreased by the amount of any
as collateral. outstanding Policy Debt on the date the policy loan is
made. You may allocate the policy loan among the
Sub-Accounts and the Fixed Account Value. If you do not
specify the allocation, then the policy loan will be
allocated proportionally among the Sub-Accounts and the
Fixed Account Value in excess of any Policy Debt. Loan
amounts allocated to the Sub-Accounts will be
transferred to the Fixed Account Value. Your Policy will
terminate for no value subject to a Grace Period if the
Policy Debt exceeds the Cash Value. During the first
five Policy Years, however, your Policy will not
terminate if it satisfies the minimum premium test.
Interest on the policy loan will accrue daily at 4%
annually during Policy Years 1 through 10 and 3% annually
thereafter. This interest will be due and payable to us
in arrears on each policy anniversary. Any unpaid
interest will be added to the principal amount as an
additional policy loan and will bear interest at the same
rate and will be assessed in the same manner as the prior
policy loan.
There is no definitive guidance concerning the tax
treatment of a policy loan when the interest rate
credited to the loan is the same as the interest rate
charged against the loan. You should consult your tax
adviser regarding loan amounts in Policy Years 11 and
thereafter.
All funds we receive from you will be credited to
your Policy as premium unless we have received written
notice, in a form satisfactory to us, that the funds are
for loan repayment. In the event you have a loan against
the Policy, it is generally advantageous to repay the
loan rather than make a premium payment because premium
payments incur expense charges whereas loan repayments do
not. Loan repayments will first reduce the outstanding
balance of the policy loan and then accrued but unpaid
interest on such loans. We will accept repayment of any
policy loan at any time before Maturity.
A policy loan, whether or not repaid, will affect the
Policy Proceeds payable upon the insured's death and the
Account Value because the investment results of the
Sub-Accounts will apply only to the non-loaned portion of
the Account Value. The longer a loan is outstanding, the
greater the effect is likely to be and, depending on the
investment results of the Sub-Accounts or the Fixed
Account Value while the loan is outstanding, the effect
could be favorable or unfavorable.
22 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
INVESTMENT PROGRAMS
DOLLAR COST AVERAGING. You may select, at no extra
charge, a dollar cost averaging program by allocating a
minimum of $5,000 to a Sub-Account designated by us. Each
month or quarter, a level amount will be transferred
automatically, at no cost, to one or more Sub-Accounts
chosen by you, up to a maximum of twelve. The program
continues until your Account Value allocated to the
program is depleted or you elect to stop the program.
The main objective of a dollar cost averaging program
is to minimize the impact of short-term price
fluctuations. Since the same dollar amount is transferred
to other available investment options at set intervals,
dollar cost averaging allows you to purchase more Units
(and, indirectly, more Fund shares) when prices are low
and fewer Units (and, indirectly, fewer Fund shares) when
prices are high. Therefore, a lower average cost per Unit
may be achieved over the long-term. A dollar cost
averaging program allows you to take advantage of market
fluctuations. However, it is important to understand that
a dollar cost averaging program does not assure a profit
or protect against loss in a declining market.
ASSET REBALANCING. Once your money has been
allocated among the investment options, the earnings may
cause the percentage invested in each investment option
to differ from your allocation instructions. You can
direct us to automatically rebalance your contract to
return to your allocation percentages by selecting our
asset rebalancing program. The rebalancing will be on a
calendar quarter, semi-annual or annual basis, depending
on your instructions. The minimum amount of each
rebalancing is $1,000.
There is no charge for asset rebalancing. In
addition, rebalancing will not be counted against any
limit we may place on your number of transfers in a
Policy Year. You may not select dollar cost averaging and
asset rebalancing at the same time. We reserve the right
to modify, suspend or terminate this program at anytime.
We also reserve the right to waive the $1,000 minimum
amount for asset rebalancing.
ASSET ALLOCATION. One or more asset allocation
investment programs may be made available in connection
with your Policy, at no extra charge. An asset allocation
program provides for the allocation of your Account Value
among the available investment options. These programs
will be fully described in a separate brochure. You may
elect to enter into an asset allocation investment
program under the terms and conditions described in the
brochure.
23 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
TRANSFER PRIVILEGES
Subject to our rules as they may exist from time to
time and to any limits that may be imposed by the Funds,
you may at any time transfer to another Sub-Account all
or a portion of the Account Value allocated to a
Sub-Account or to the Fixed Account Value. We will make
transfers pursuant to an authorized written or telephone
request to us. Telephone requests will be honored only if
we have a properly completed telephone authorization form
for you on file. We, our affiliates and the
representative from whom you purchased your Policy will
not be responsible for losses resulting from acting upon
telephone requests reasonably believed to be genuine. We
will use reasonable procedures to confirm that
instructions communicated by telephone are genuine. For
transactions initiated by telephone, you will be required
to identify yourself by name and a personal
identification number.
Transfers may be requested by indicating the transfer
of either a specified dollar amount or a specified
percentage of the Fixed Account Value or the Sub-
Account's value from which the transfer will be made. If
you request a transfer based on a specified percentage of
the Fixed Account Value or the Sub-Account's value, that
percentage will be converted into a request for the
transfer of a specified dollar amount based on
application of the specified percentage to the Fixed
Account Value or the Sub-Account's value at the time the
request is received. We reserve the right to limit the
number of Sub-Accounts to which you may allocate your
Account Value to not more than 20 Sub-Accounts.
Transfer privileges are subject to our consent. We
reserve the right to impose limitations on transfers,
including, but not limited to: (1) the minimum amount
that may be transferred; and (2) the minimum amount that
may remain in a Sub-Account following a transfer from
that Sub-Account.
We reserve the right to restrict amounts transferred
to the Variable Account from the Fixed Account Value to
20% of that portion of the Account Value attributable to
the Fixed Account Value as of the end of the previous
Policy Year.
We reserve the right to restrict amounts transferred
to the Fixed Account Value from the Variable Account to
20% of that portion of the Account Value attributable to
the Variable Account as of the end of the previous Policy
Year. We further reserve the right to restrict amounts
transferred to the Fixed Account Value from the Variable
Account in the event the portion of the Account Value
attributable to the Fixed Account Value would exceed 30%
of the Account Value.
24 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
ACCOUNT VALUE
Your Account Value is the sum of the amounts in each
Sub-Account of the Variable Account with respect to your
Policy, plus the amount of the Fixed Account Value. The
Account Value varies depending upon the Premiums paid,
Expense Charges Applied to Premium, Mortality and Expense
Risk Percentage charges, Monthly Expense Charges, Monthly
Cost of Insurance charges, partial surrenders, fees,
policy loans and the net investment factor (described
below) for the Sub-Accounts to which your Account Value
is allocated.
A VALUATION DATE is VARIABLE ACCOUNT VALUE. We measure the amounts
any day on which we, in the Sub- Accounts in terms of Units and Unit Values.
the applicable Fund, On any given date, the amount you have in a Sub-Account
and the NYSE are is equal to the Unit Value multiplied by the number of
open for business. Units credited to you in that Sub-Account. Amounts
THE VALUATION PERIOD allocated to a Sub-Account will be used to purchase
is the period of Units of that Sub-Account. Units are redeemed when you
time from one make partial surrenders, undertake policy loans or
determination of transfer amounts from a Sub-Account, and for the payment
Unit Values to the of Monthly Expense Charges, and Monthly Cost of
next. Insurance charges and other fees. The number of Units of
each Sub- Account purchased or redeemed is determined by
dividing the dollar amount of the transaction by the
Unit Value for the Sub-Account. The Unit Value for each
Sub-Account is established at $10.00 for the first
VALUATION DATE of the Sub- Account. The Unit Value for
any subsequent Valuation Date is equal to the Unit Value
for the preceding Valuation Date multiplied by the net
investment factor (determined as provided below). The
Unit Value of a Sub-Account for any Valuation Date is
determined as of the close of the VALUATION PERIOD
ending on that Valuation Date.
Transactions are processed on the date we receive a
premium at our Principal Office or any acceptable written
or telephonic request is received at our Principal
Office. If your premium or request is received on a date
that is not a Valuation Date, or after the close of the
New York Stock Exchange on a Valuation Date, the
transaction will be processed on the next Valuation Date.
The INVESTMENT START The Account Value attributable to each
DATE is the date we Sub-Account of the Variable Account on the INVESTMENT
apply your first START DATE equals:
premium payment, - that portion of net premium received and allocated to
which will be the the Sub-Account, LESS
later of the Issue - that portion of the Monthly Expense Charges due on the
Date, the Policy policy date and subsequent Monthly Anniversary Days
Date or the through the Investment Start Date charged to the
Valuation Date we Sub-Account, LESS
receive a premium
equal to or in
excess of the
initial premium.
- that portion of the Monthly Cost of
Insurance deductions due from the
policy date through the Investment
Start Date charged to the Sub-Account.
25 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
The Account Value attributable to each Sub-Account of
the Variable Account on subsequent Valuation Dates is
equal to:
- the Account Value attributable to the
Sub-Account on the preceding Valuation
Date multiplied by that Sub-Account's
net investment factor, PLUS
- that portion of net premium received
and allocated to the Sub-Account
during the current Valuation Period,
PLUS
- any amounts transferred by you to the
Sub-Account from another Sub-Account
or from the Fixed Account Value during
the current Valuation Period, LESS
- any amounts transferred by you from
the Sub-Account to another Sub-Account
or to the Fixed Account Value during
the current Valuation Period, LESS
- that portion of any partial surrenders
deducted from the Sub-Account during
the current Valuation Period, LESS
- that portion of any policy loan
transferred from the Sub-Account to
the Fixed Account Value during the
current Valuation Period, LESS
- that portion of any surrender charges
associated with a decrease in the
Specified Face Amount charged to the
Sub-Account during the current
Valuation Period, LESS
- if a Monthly Anniversary Day occurs
during the current Valuation Period,
that portion of the Monthly Expense
Charge for the Policy Month just
beginning charged to the Sub-Account,
LESS
- if a Monthly Anniversary Day occurs
during the current Valuation Period,
that portion of the Monthly Cost of
Insurance for the Policy Month just
ending charged to the Sub-Account.
NET INVESTMENT FACTOR. The NET INVESTMENT FACTOR for
each Sub-Account for any Valuation Period is determined
by deducting the Mortality and Expense Risk Charge for
each day in the Valuation Period from the quotient of (1)
and (2) where:
(1) is the net result of --
- the net asset value of a Fund share
held in the Sub-Account determined as
of the end of the Valuation Period,
PLUS
- the per share amount of any dividend
or other distribution declared on Fund
shares held in the Sub-Account
26 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
if the "ex-dividend" date occurs
during the Valuation Period, PLUS OR
MINUS
- a per share credit or charge with
respect to any taxes reserved for by
us, or paid by us if not previously
reserved for, during the Valuation
Period which are determined by us to
be attributable to the operation of
the Sub-Account; and
(2) is the net asset value of a Fund share held in the
Sub-Account determined as of the end of the preceding
Valuation Period.
The Mortality and Expense Risk Charge for the
Valuation Period is the Daily Risk Charge times the
number of days in the Valuation Period.
The net investment factor may be greater or less than
one.
FIXED ACCOUNT VALUE. The Fixed Account Value on the
Investment Start Date equals:
- that portion of net premium received
and allocated to the Fixed Account
Value accrued at interest, LESS
- that portion of the Monthly Expense
Charges due on the policy date and
subsequent Monthly Anniversary Days
through the Investment Start Date
charged to the Fixed Account Value
accrued at interest, LESS
- that portion of the Monthly Cost of
Insurance deductions due from the
policy date through the Investment
Start Date charged to the Fixed
Account Value accrued at interest.
The Fixed Account Value on subsequent Valuation Dates
is equal to:
- the Fixed Account Value on the
preceding Valuation Date accrued at
interest, PLUS
- that portion of net premium received
and allocated to the Fixed Account
Value during the current Valuation
Period accrued at interest, PLUS
- any amounts transferred by you to the
Fixed Account Value from the Variable
Account during the current Valuation
Period accrued at interest, LESS
- any amounts transferred by you from
the Fixed Account Value to the
Variable Account during the current
Valuation Period accrued at interest,
LESS
27 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- that portion of any partial surrenders
deducted from the Fixed Account Value
during the current Valuation Period
accrued at interest, PLUS
- any policy loan transferred from the
Variable Account to the Fixed Account
Value during the current Valuation
Period accrued at interest, LESS
- that portion of any surrender charges
associated with a decrease in the
Specified Face Amount charged to the
Fixed Account Value during the current
Valuation Period, LESS
- if a Monthly Anniversary Day occurs
during the current Valuation Period,
that portion of the Monthly Expense
Charge for the Policy Month just
beginning charged to the Fixed Account
Value accrued at interest, LESS
- if a Monthly Anniversary Day occurs
during the current Valuation Period,
that portion of the Monthly Cost of
Insurance for the Policy Month just
ending charged to the Fixed Account
Value accrued at interest.
The minimum guaranteed interest rate applicable to
the Fixed Account Value is 3% annually. Interest in
excess of the guaranteed rate may be applied in the
calculation of the Fixed Account Value at such increased
rates and in such manner as we may determine, based on
our expectations of future interest, mortality costs,
persistency, expenses and taxes. Interest credited will
be computed on a compound interest basis.
INSUFFICIENT VALUE. Your Policy will terminate for
no value, subject to a Grace Period described below if,
on a Valuation Date, a Monthly Anniversary Day occurred
during the Valuation Period and--
- your Policy's Cash Surrender Value is
equal to or less than zero or
- the Policy Debt exceeds the Cash
Value.
During the first five Policy Years, a policy will not
terminate by reason of insufficient value if it satisfies
the "minimum premium test," described below.
If on a Valuation Date a Monthly Anniversary Day
occurred during the Valuation Period and the Monthly
Expense Charge plus the Monthly Cost of Insurance plus
the Policy Debt exceed your Account Value, any Unpaid
Policy Charges will be increased by the amount in excess
of your Account Value. Any Unpaid Policy Charges will
accumulate interest at an annual rate of 3%.
28 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
MINIMUM PREMIUM TEST (NO-LAPSE GUARANTEE). A Policy
satisfies the minimum premium test if the premiums paid
less any partial surrenders less any Policy Debt exceed
the sum of the "Minimum Monthly Premiums" which applied
to the Policy in each Policy Month from the policy date
to the Valuation Date.
The applicable Minimum Monthly Premiums are specified
in your Policy. We will revise the Minimum Monthly
Premiums as a result of any of the following changes to a
Policy:
- an increase in the Specified Face
Amount;
- an increase in the cost of any rider;
- when requested by you, the addition of
any rider.
The revised Minimum Monthly Premiums will be
effective as of the effective date of the change to the
Policy and will remain in effect until again revised by
any of the above changes.
GRACE PERIOD. If, on a Valuation Date, your Policy
will terminate by reason of insufficient value, we will
allow a Grace Period. This Grace Period will allow 61
days from that Valuation Date for the payment of a
premium sufficient to keep the Policy in force. Notice of
premium due will be mailed to your last known address or
the last known address of any assignee of record. We will
assume that your last known address is the address shown
on your Policy Application (or notice of assignment),
unless we receive written notice of a change in address
in a form satisfactory to us. If the premium due is not
paid within 61 days after the beginning of the Grace
Period, then the Policy and all rights to benefits will
terminate without value at the end of the 61 day period.
The Policy will continue to remain in force during this
Grace Period. If the Policy Proceeds become payable by us
during the Grace Period, then any Unpaid Policy Charges
will be deducted from the amount payable by us.
SPLITTING UNITS. We reserve the right to split or
combine the value of Units. In effecting any such change,
strict equity will be preserved and no change will have a
material effect on the benefits or other provisions of
your Policy.
CHARGES AND DEDUCTIONS
EXPENSE CHARGES APPLIED TO PREMIUM. We will deduct a
charge from each premium payment as a sales load and for
our federal, state and local tax obligations, which we
will determine from time to time. The current charge is
5.25%. The maximum charge is guaranteed not to exceed
7.25%.
29 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
MORTALITY AND EXPENSE RISK CHARGE. This charge is
for the mortality and expense risks we assume with
respect to the Policy. It is based on an annual rate that
we apply against the Variable Account on a daily basis.
The Mortality and Expense Risk Charge will be determined
by us from time to time based on our expectations of
future interest, mortality costs, persistency, expenses
and taxes, but will not exceed 0.90% annually. Currently,
the charge is 0.80% for Policy Years 1 through 10 and
0.50% thereafter.
The mortality risk we assume is that the group of
lives insured under the Policies may, on average, live
for shorter periods of time than we estimated. The
expense risk we assume is that our costs of issuing and
administering Policies may be more than we estimated.
MONTHLY EXPENSE CHARGE. We will deduct a charge of
$8.00 from your Policy's Account Value each Policy Month
to cover our administrative costs. The Monthly Expense
Charge will be deducted proportionally from the Sub-
Accounts and the Fixed Account Value in excess of any
Policy Debt.
MONTHLY COST OF INSURANCE. We deduct a Monthly Cost
of Insurance charge from your Account Value to cover
anticipated costs of providing insurance coverage. The
Monthly Cost of Insurance deduction will be charged
proportionally to the amounts in the Sub-Accounts and the
Fixed Account Value in excess of any Policy Debt.
The Monthly Cost of Insurance equals the sum of (1),
(2) and (3) where:
(1) is the cost of insurance charge equal to the Monthly
Cost of Insurance rate (described below) multiplied
by the net amount at risk divided by 1,000;
(2) is the monthly rider cost for any riders which are a
part of your Policy (with the monthly rider cost, if
any riders are added, as described in the rider
itself); and
(3) is any additional insurance charge calculated as
specified in your Policy, for, among other reasons,
occupational or avocational risks.
The NET AMOUNT AT RISK equals:
- the death benefit divided by 1.00247;
LESS
- your Account Value on the Valuation
Date prior to assessing the monthly
expense charge and the cost of
insurance charges.
30 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
If there are increases in the Specified Face Amount
other than increases caused by changes in the death
benefit option, the cost of insurance charge described
above is determined separately for the initial Specified
Face Amount and each increase in the Specified Face
Amount. In calculating the net amount at risk, your
Account Value will first be allocated to the initial
death benefit and then to each increase in the Specified
Face Amount in the order in which the increases were
made.
MONTHLY COST OF INSURANCE RATES. The Monthly Cost of
Insurance rates (except for any such rate applicable to
an increase in the Specified Face Amount) are based on
the length of time your Policy has been in force and the
insured's sex (in the case of non-unisex Policies), Issue
Age, Class and underwriting rating, if any. The Monthly
Cost of Insurance rates applicable to each increase in
the Specified Face Amount are based on the length of time
the increase has been in force and the insured's sex (in
the case of non-unisex Policies), Issue Age, Class and
underwriting rating, if any. The Monthly Cost of
Insurance rates will be determined by us from time to
time based on our expectations of future experience with
respect to mortality costs, persistency, interest rates,
expenses and taxes, but will not exceed the Guaranteed
Maximum Monthly Cost of Insurance Rates based on the 1980
Commissioner's Standard Ordinary Smoker and Nonsmoker
Mortality Tables.
BASIS OF COMPUTATION. Guaranteed Maximum Monthly
Cost of Insurance Rates are based on the 1980
Commissioner's Standard Ordinary Smoker and Nonsmoker
Mortality Tables. The Guaranteed Maximum Monthly Cost of
Insurance Rates reflect any underwriting rating
applicable to the Policy. We have filed a detailed
statement of our methods for computing Cash Values with
the insurance department in each jurisdiction where the
Policy was delivered. These values equal or exceed the
minimum required by law.
WAIVERS; REDUCED CHARGES; CREDITS; BONUS GUARANTEED
INTEREST RATES
We may reduce or waive the sales load or surrender
charge, credit additional amounts, or grant bonus
interest rates in situations where selling and/or
maintenance costs associated with the Policies are
reduced, sales of large Policies, and certain group or
sponsored arrangements. In addition, we may waive
charges, credit additional amounts, or grant bonus
interest rates in connection with Policies sold to our or
our affiliates' officers, directors and employees.
MATURITY DATE EXTENSION
The Maturity date of your Policy will be extended
beyond the original Maturity date shown in your Policy,
if you so request in writing at our Principal
31 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Office prior to the original Maturity date and the Policy
has a Cash Value on the original Maturity date. The new
Maturity date will be the one you request.
After the original Maturity date (if you have
requested a new Maturity date):
- We will not accept any more premium
payments for your Policy.
- No more deductions for the Monthly
Expense Charges or for Monthly Cost of
Insurance charges will be made from
your Account Value.
- The death benefit will be your Account
Value on the date of the insured's
death.
- Your Policy's reinstatement provisions
will not apply.
Except as provided above, an extension of the
Maturity date does not alter your Policy.
If the Maturity date is extended, your Policy may not
qualify as life insurance beyond the original Maturity
date and may be subject to tax consequences. We recommend
that you receive counsel from your tax adviser. We will
not be responsible for any adverse tax consequences
resulting from the extension of the Maturity date of your
Policy.
SUPPLEMENTAL BENEFITS
The following supplemental benefit riders are
available, subject to certain limitations described
below. There is no charge for the accelerated benefits
rider. An additional cost of insurance will be charged
for each of the other riders which is in force as a part
of the Monthly Cost of Insurance charge.
ACCELERATED BENEFITS RIDER. Under this rider, we
will pay you, at your written request in a form
satisfactory to us, an "accelerated benefit" if the
insured is terminally ill. An insured is considered
"terminally ill" if the insured has a life expectancy of
12 months or less due to illness or physical condition.
We will require proof, satisfactory to us, of the
insured's terminal illness, including, but not limited
to, certification by an independent physician. No
accelerated benefit is payable, however, unless your
Policy has been in force for at least two years following
its Issue Date or the date of its last reinstatement.
The accelerated benefit payment will be equal to that
portion of your Policy's death benefit requested by you,
not to exceed the lesser of (a) 75% of the amount of the
death benefit or (b) $250,000 (the "Accelerated Amount"),
subject to the following adjustments:
32 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- We will discount the Accelerated
Amount based on an annual interest
rate, not to exceed the greater of:
(a) the yield on 90-day Treasury bills
on the day we receive your request; or
(b) the statutory maximum policy loan
interest rate.
- If you have an outstanding policy loan
on the date we approve your request,
we will reduce the Accelerated Amount
in partial payment of the policy loan
by an amount equal to the amount of
the policy loan multiplied by the
ratio of the Accelerated Amount to the
amount of your Policy's death benefit
(the "Eligible Amount").
- We will reduce the Accelerated Amount
by the amount of any administrative
fee, not to exceed $150, in effect at
the time we receive your request.
You may request only one accelerated benefit payment.
This rider will terminate upon payment of an accelerated
benefit, and the Specified Face Amount and Account Value
of your Policy will be reduced by the ratio of the
Accelerated Amount to the Eligible Amount.
ACCIDENTAL DEATH BENEFIT RIDER. Under this rider, we
will pay the accidental death benefit specified in your
Policy when we receive due proof of the insured's
accidental death and that death occurred while this rider
was in force, on or after the insured's first birthday
and within ninety days after the date of the accident.
"Accidental death" means that the insured died as a
direct result, independent of all other causes, (a) from
an injury sustained solely by external or violent
accident, or (b) by an accidental drowning, excluding
death caused by certain specified risks. If you change
your Policy's Specified Face Amount, the accidental death
benefit will not change unless you specifically request
such a change. This rider will terminate on the earliest
of (a) the nearest policy anniversary to the insured's
70th birthday or (b) when the Policy lapses because of
insufficient Cash Value.
MONTHLY RIDER COST. The cost of this rider will be
part of the Monthly Cost of Insurance charge described in
this prospectus. The total monthly rider cost will equal
a rate which varies by the insured's issue age, sex and
rating class multiplied by the amount of the accidental
death benefit.
WAIVER OF MONTHLY DEDUCTIONS RIDER. Under this
rider, we will waive the monthly deductions under your
Policy retroactive to the date of total disability when
the insured suffers a total disability, if the insured's
total disability commences while this rider is in force
and continues for six months. We will continue to waive
the monthly deduction for as long as the disability
continues. We must receive written notice and due proof
before we will waive the monthly
33 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
deductions. We may require from time to time additional
proof that the disability is continuing, but not more
frequently than once per year after the disability has
continued for two years. We will not waive the monthly
deductions--
- for any month before the insured's
fifth birthday;
- for any month which is more than one
year before we receive a notice of the
total disability; or
- if the total disability is caused by
or results from certain specified
risks.
A "total disability" is any incapacity resulting from
bodily injury or disease which--
- during the first 24 months of the
incapacity prevents the insured from
performing substantially all of the
major duties of the insured's
occupation; and
- if the incapacity continues beyond 24
months, prevents the insured from
doing any work for which the insured
is reasonably qualified to perform by
reason of training, education or
experience.
Even if the insured can work, the following
constitutes a total disability:
- total and permanent loss of sight of
both eyes or total and permanent loss
of hearing in both ears;
- severance of both hands, both feet, or
one hand and one foot.
While the insured's total disability is continuing,
you cannot change your Policy's--
- Specified Face Amount, unless
otherwise permitted under the
provisions of another rider to your
policy; or
- your death benefit option.
This rider will terminate on the earliest of:
- the nearest policy anniversary to the
insured's 65th birthday, unless the
insured's total disability is
continuing, and if the total
disability commences before the policy
anniversary nearest to the insured's
60th birthday; or
- the nearest policy anniversary to the
insured's 65th birthday, if the total
disability commenced on or after the
policy anniversary nearest to the
insured's 60th birthday; or
34 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- the date that the Policy terminates in
accordance with its Grace Period
provision.
If this rider terminates because your Policy lapses,
we will reinstate the rider if certain specified
conditions are met.
MONTHLY RIDER COST. The cost of this rider will be
part of the Monthly Cost of Insurance charge described in
this prospectus. The total monthly rider cost will equal
a rate based on the insured's issue age, sex and rating
class multiplied by the net amount at risk.
PAYMENT OF STIPULATED AMOUNT RIDER. Under this
rider, we will make a monthly payment of the "stipulated
amount" when the insured suffers a total disability, if
the insured's total disability commences while this rider
is in force and continues for six months. We will
continue to make a payment of that amount for as long as
the disability continues. We must receive written notice
and due proof before we will make a payment. We may
require from time to time additional proof that the
disability is continuing, but not more frequently than
once per year after the disability has continued for five
years. We will not make payments under this rider if the
total disability is caused by or results from certain
specified risks. This rider will not apply to any Monthly
Anniversary Day that occurs before the insured's fifth
birthday or that was due more than one year before we
first received notice of the insured's total disability.
A "total disability" is any incapacity resulting from
bodily injury or disease which--
- during the first 60 months of the
incapacity prevents the insured from
performing substantially all of the
major duties of the insured's
occupation; and
- if the incapacity continues beyond 60
months, prevents the insured from
doing any work for which the insured
is reasonably qualified to perform by
reason of training, education or
experience.
Even if the insured can work, the following
constitutes a total disability:
- total and permanent loss of sight of
both eyes or total and permanent loss
of hearing in both ears;
- severance of both hands, both feet, or
one hand and one foot.
You may change the stipulated amount by written
request to our Principal Office. An increase in the
stipulated amount is subject to our underwriting and
administrative rules in effect at the time. If we make a
change to this Policy at
35 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
your request and if that change results in a reduction of
the amount of premium you may pay for this Policy under
applicable tax law, we will reduce the stipulated amount
to conform to that reduction. We will reduce the cost of
insurance for this rider appropriately. We will inform
you in writing of these reductions.
You may not change the frequency of premium payment
for your Policy or increase the stipulated amount while
the insured's total disability is continuing.
This rider will terminate on the earliest of:
- The policy anniversary nearest to the
insured's 65th birthday. However, if
the insured's total disability
commenced before that policy
anniversary, the benefit provided by
this rider will continue until the end
of the benefit period specified in
your policy. No total disability of
the insured's that commences on or
after the policy anniversary nearest
to the insured's 65th birthday is
covered under this rider.
- The date your Policy lapses because of
insufficient value.
- The date your Policy is surrendered
for its Cash Surrender Value.
- The date of death of the insured.
- The date we receive your written
request that it be terminated.
MONTHLY RIDER COST. The monthly cost for this rider
is equal to the stipulated amount times a rate which
varies by factors including the insured's Issue Age, sex,
and rating class.
TERMINATION OF POLICY
Your Policy will terminate on the earlier of the date
we receive your request to surrender, the expiration date
of the Grace Period due to insufficient value, the date
of death of the insured, or the Maturity date.
REINSTATEMENT
Before the insured's death, we will reinstate your
Policy prior to its Maturity date, provided that the
Policy has not been surrendered and you--
- make a request for reinstatement
within five years from the date of
termination;
- submit satisfactory evidence of
insurability to us; and
36 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- pay an amount sufficient to put your
Policy in force.
To put your Policy in Force, you must pay an amount
of at least--
- the Unpaid Policy Charges at the end
of the Grace Period; plus
- any excess of the Policy Debt over the
Cash Value at the end of the Grace
Period; plus
- three times the Monthly Cost of
Insurance charges applicable at the
date of reinstatement; plus
- three times the Monthly Expense
Charge.
During the first five Policy Years, an amount is
sufficient to put your Policy in force if it meets the
minimum premium test.
A reinstated Policy's Specified Face Amount may not
exceed the Specified Face Amount at the time of
termination. Your Account Value on the reinstatement date
will reflect:
- the Account Value at the time of
termination; PLUS
- net premiums attributable to premiums
paid to reinstate the Policy; LESS
- the Monthly Expense Charge; LESS
- the Monthly Cost of Insurance charge
applicable on the date of
reinstatement.
The effective date of reinstatement will be the
Monthly Anniversary Day that falls on or next follows the
date we approve your request.
Any Policy Debt at the time of termination must be
repaid upon the reinstatement of the Policy or carried
over to the reinstated Policy.
If your Policy was subject to surrender charges when
it lapsed, the reinstated Policy will be subject to
surrender charges as if it had not terminated.
The incontestability provision of the Policy will
apply to the Policy after reinstatement as regards
statements made in the application for reinstatement. The
suicide provision of the Policy will apply to the policy
after reinstatement. In those provisions of a reinstated
Policy, "Issue Date" means the effective date of
reinstatement.
37 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
DEFERRAL OF PAYMENT
We will usually pay any amount due from the Variable
Account within seven days after the Valuation Date
following our receipt of written notice satisfactory to
us giving rise to such payment or, in the case of death
of the insured, due proof of such death. Payment of any
amount payable from the Variable Account on death,
surrender, partial surrender, or policy loan may be
postponed whenever:
- the New York Stock Exchange is closed
other than customary weekend and
holiday closing, or trading on the
NYSE is otherwise restricted;
- the Securities and Exchange
Commission, by order, permits
postponement for the protection of
policyowners; or
- an emergency exists as determined by
the Securities and Exchange
Commission, as a result of which
disposal of securities is not
reasonably practicable, or it is not
reasonably practicable to determine
the value of the assets of the
Variable Account.
RIGHTS OF OWNER
While the insured is alive, unless you have assigned
any of these rights, you may:
- transfer ownership to a new owner;
- name a contingent owner who will
automatically become the owner of the
Policy if you die before the insured;
- change or revoke a contingent owner;
- change or revoke a beneficiary;
- exercise all other rights in the
Policy;
- increase or decrease the Specified
Face Amount, subject to the other
provisions of the Policy;
- change the death benefit option,
subject to the other provisions of the
Policy.
When you transfer your rights to a new owner, you
automatically revoke any prior contingent owner
designation. When you want to change or revoke a prior
beneficiary designation, you have to specify that action.
You do not affect a prior beneficiary when you merely
transfer ownership, or change or revoke a contingent
owner designation.
38 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
You do not need the consent of a beneficiary or a
contingent owner in order to exercise any of your rights.
However, you must give us written notice satisfactory to
us of the requested action. Your request will then,
except as otherwise specified herein, be effective as of
the date you signed the form, subject to any action taken
before we received it.
RIGHTS OF BENEFICIARY
The beneficiary has no rights in the Policy until the
death of the insured. If a beneficiary is alive at that
time, the beneficiary will be entitled to payment of the
Policy Proceeds as they become due.
OTHER POLICY PROVISIONS
ADDITION, DELETION OR SUBSTITUTION OF
INVESTMENTS. We may decide to add new Sub-Accounts at
any time. Also, shares of any or all of the Funds may not
always be available for purchase by the Sub-Accounts of
the Variable Account, or we may decide that further
investment in any such shares is no longer appropriate.
In either event, shares of other registered open-end
investment companies or unit investment trusts may be
substituted both for Fund shares already purchased by the
Variable Account and/or as the security to be purchased
in the future, provided that these substitutions have
been approved by the Securities and Exchange Commission,
to the extent necessary. In addition, the investment
policies of the Sub-Accounts will not be changed without
the approval of the Insurance Commissioner of the State
of Delaware. We also reserve the right to eliminate or
combine existing Sub-Accounts or to transfer assets
between Sub-Accounts. In the event of any substitution or
other act described in this paragraph, we may make
appropriate amendments to the Policy to reflect the
substitution.
ENTIRE CONTRACT. Your entire contract with us
consists solely of the Policy, including the attached
copy of your Policy Application and any attached copies
of supplemental applications for increases in the
Specified Face Amount.
ALTERATION. Sales representatives do not have any
authority to either alter or modify your Policy or to
waive any of its provisions. The only persons with this
authority are our president, actuary, secretary, or one
of our vice presidents.
MODIFICATION. Upon notice to you, we may modify the
Policy if such a modification--
- is necessary to make the Policy or the
Variable Account comply with any law
or regulation issued by a governmental
agency to which we are or the Variable
Account is subject;
39 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- is necessary to assure continued
qualification of the Policy under the
Internal Revenue Code or other federal
or state laws as a life insurance
policy;
- is necessary to reflect a change in
the operation of the Variable Account
or the Sub-Accounts; or
- adds, deletes or otherwise changes
Sub-Account options.
We also reserve the right to modify certain
provisions of the Policy as stated in those provisions.
In the event of any such modification, we may make
appropriate amendments to the Policy to reflect such
modification.
ASSIGNMENTS. During the lifetime of the insured, you
may assign all or some of your rights under the Policy.
All assignments must be filed at our Principal Office and
must be in written form satisfactory to us. The
assignment will then be effective as of the date you
signed the form, subject to any action taken before we
received it. We are not responsible for the validity or
legal effect of any assignment.
NONPARTICIPATING. The Policy does not pay dividends.
The Policy does not share in our profits or surplus
earnings.
MISSTATEMENT OF AGE OR SEX (NON-UNISEX POLICY). If
the age or sex (in the case of a non-unisex Policy) of
the insured is stated incorrectly, the amounts payable by
us will be adjusted as follows:
Misstatement discovered at death--The death benefit
will be recalculated to that which would be purchased
by the most recently charged Monthly Cost of
Insurance rate for the correct age or sex (for a
non-unisex Policy).
Misstatement discovered prior to death--Your Account
Value will be recalculated from the policy date using
the Monthly Cost of Insurance Rates based on the
correct age or sex (for a non-unisex Policy).
SUICIDE. If the insured, whether sane or insane,
commits suicide within two years after your Policy's
Issue Date, we will not pay any part of the Policy
Proceeds. We will refund the premiums paid, less the
amount of any Policy Debt and any partial surrenders.
If the insured, whether sane or insane, commits
suicide within two years after the effective date of an
increase in the Specified Face Amount, then our liability
as to that increase will be the cost of insurance for
that increase.
40 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
INCONTESTABILITY. All statements made in the
application or in a supplemental application are
representations and not warranties. We relied and will
rely on those statements when approving the issuance,
increase in face amount, increase in death benefit over
premium paid, or change in death benefit option of the
Policy. No statement can be used by us in defense of a
claim unless the statement was made in the application or
in a supplemental application. In the absence of fraud,
after the Policy has been in force during the lifetime of
the insured for a period of two years from its Issue
Date, we cannot contest it except for non-payment of
premiums. However, any increase in the face amount which
is effective after the Issue Date will be incontestable
only after such increase has been in force during the
lifetime of the insured for two years from the Effective
Date of Coverage of such increase. Any increase in death
benefit over premium paid or increase in death benefit
due to a death benefit option change will be
incontestable only after such increase has been in force
during the lifetime of the insured for two years from the
date of the increase.
REPORT TO OWNER. We will send you a report at least
once each Policy Year. The report will show current
policy values, premiums paid, and deductions made since
the last report. It will also show the balance of any
outstanding policy loans and accrued interest on such
loans. There is no charge for this report.
ILLUSTRATIONS. After the first Policy Year, we will
provide you with an illustration of future Account Values
and death benefits upon request. We may charge a nominal
fee not to exceed $25 per illustration.
PERFORMANCE INFORMATION
We may present We may sometimes publish performance information
mutual fund related to the Fund, the Variable Account or the Policy
portfolio in advertising, sales literature and other promotional
performance and materials. This information is based on past investment
hypothetical Policy results and is not an indication of future performance.
illustrations in
sales literature.
PORTFOLIO PERFORMANCE
We may publish a mutual fund portfolio's TOTAL RETURN
or AVERAGE ANNUAL TOTAL RETURN. Total return is the
change in value of an investment over a given period,
assuming reinvestment of any dividends and capital gains.
Average annual total return is a hypothetical rate of
return that, if achieved annually, would have produced
the same total return over a stated period if performance
had been constant over the entire period. Average annual
total returns smooth variations in performance, and are
not the same as actual year-by-year results.
41 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
We may also publish a mutual fund portfolio's YIELD.
Yield refers to the income generated by an investment in
a portfolio over a given period of time, expressed as an
annual percentage rate. When a yield assumes that income
earned is reinvested, it is called an EFFECTIVE YIELD.
SEVEN-DAY YIELD illustrates the income earned by an
investment in a money market fund over a recent seven-day
period.
TOTAL RETURNS AND YIELDS QUOTED FOR A MUTUAL FUND
PORTFOLIO INCLUDE THE INVESTMENT MANAGEMENT FEES AND
OTHER EXPENSES OF THE PORTFOLIO, BUT DO NOT INCLUDE
CHARGES AND DEDUCTIONS ATTRIBUTABLE TO YOUR POLICY. These
expenses would reduce the performance quoted.
ADJUSTED PORTFOLIO PERFORMANCE
We may publish a mutual fund portfolio's total return
and yields adjusted for charges against the assets of the
Variable Account.
We may publish total return and yield quotations
based on the period of time that a mutual fund portfolio
has been in existence. The results for any period prior
to any Policy being offered will be calculated as if the
Policy had been offered during that period of time, with
all charges assumed to be those applicable to the Policy.
OTHER INFORMATION
Performance information may be compared, in reports
and promotional literature, to:
- the S&P 500, Dow Jones Industrial
Average, Lehman Brothers Aggregate
Bond Index or other unmanaged indices
so that investors may compare the
Sub-Account results with those of a
group of unmanaged securities widely
regarded by investors as
representative of the securities
markets in general;
- other groups of variable life variable
accounts or other investment products
tracked by Lipper Analytical Services,
a widely used independent research
firm which ranks mutual funds and
other investment products by overall
performance, investment objectives,
and assets, or tracked by other
services, companies, publications, or
persons, such as Morningstar, Inc.,
who rank such investment products on
overall performance or other criteria;
or
42 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- the Consumer Price Index (a measure
for inflation) to assess the real rate
of return from an investment in the
Sub-Account. Unmanaged indices may
assume the reinvestment of dividends
but generally do not reflect
deductions for administrative and
management expenses.
We may provide policy information on various topics
of interest to you and other prospective policyowners.
These topics may include:
- the relationship between sectors of
the economy and the economy as a whole
and its effect on various securities
markets;
- investment strategies and techniques
(such as value investing, market
timing, dollar cost averaging, asset
allocation, constant ratio transfer
and account rebalancing);
- the advantages and disadvantages of
investing in tax-deferred and taxable
investments;
- customer profiles and hypothetical
purchase and investment scenarios;
- financial management and tax and
retirement planning; and
- investment alternatives to
certificates of deposit and other
financial instruments, including
comparisons between a Policy and the
characteristics of, and market for,
such financial instruments.
FEDERAL INCOME TAX CONSIDERATIONS
We do not make any The following summary provides a general
guarantees about the description of the federal income tax considerations
Policy's tax status. associated with the Policy and does not purport to be
complete or to cover all situations. This discussion is
NOT intended as tax advice. You should consult counsel
or other competent tax advisers for more complete
information. This discussion is based upon our
understanding of the present federal income tax laws as
they are currently interpreted by the Internal Revenue
Service (the "IRS"). We make no representation as to the
likelihood of continuation of the present federal income
tax laws or of the current interpretations by the IRS.
WE DO NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF
ANY POLICY OR ANY TRANSACTION REGARDING THE POLICY.
The Policy may be used in various arrangements,
including non-qualified deferred compensation or salary
continuance plans, split dollar insurance plans,
43 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
executive bonus plans, retiree medical benefit plans and
others. The tax consequences of such plans may vary
depending on the particular facts and circumstances of
each individual arrangement. Therefore, if the use of the
Policy in any such arrangement is contemplated, you
should consult a qualified tax adviser for advice on the
tax attributes of the particular arrangement.
TAX STATUS OF THE POLICY
We believe the A Policy has certain tax advantages when treated
Policy will be as a life insurance contract within the meaning of
treated as a life Section 7702 of the Internal Revenue Code of 1986, as
insurance contract amended (the "Code"). We believe that the Policy meets
under federal tax the Section 7702 definition of a life insurance contract
laws. and will take whatever steps are appropriate and
reasonable to attempt to cause the Policy to comply with
Section 7702.
DIVERSIFICATION OF INVESTMENTS
Section 817(h) of the Code requires that the Variable
Account's investments be "adequately diversified" in
accordance with certain Treasury regulations. We believe
that the Variable Account will be adequately diversified.
In certain circumstances, the owner of a variable
life insurance policy may be considered, for federal
income tax purposes, the owner of the assets of the
variable account used to support the policy. In those
circumstances, income and gains from the variable account
assets would be includible in the variable policyowner's
gross income. We do not know what standards will be
established, if any, in the regulations or rulings which
the Treasury has stated it expects to issue on this
question. We therefore reserve the right to modify the
Policy as necessary to attempt to prevent a policyowner
from being considered the owner of a pro-rata share of
the assets of the Variable Account.
The following discussion assumes that your Policy
will qualify as a life insurance contract for federal
income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
Death benefits do LIFE INSURANCE DEATH BENEFIT PROCEEDS. In
not incur federal general, the amount of the death benefit payable under
income tax. your Policy is excludible from your gross income under
the Code.
44 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Investment gains are TAX DEFERRED ACCUMULATION. Any increase in your
normally not taxed Account Value is generally not taxable to you unless you
unless distributed receive or are deemed to receive amounts from the Policy
to you before the before the insured dies.
insured dies. DISTRIBUTIONS. If you surrender your Policy,
the amount you will receive as a result will be subject
to tax as ordinary income to the extent that amount
exceeds the "investment in the contract," which is
generally the total of premiums and other consideration
paid for the Policy, less all amounts previously
received under the Policy to the extent those amounts
were excludible from gross income.
Depending on the circumstances, any of the following
transactions may have federal income tax consequences:
- the exchange of a Policy for a life
insurance, endowment or annuity
contract;
- a change in the death benefit option;
- a policy loan;
- a partial surrender;
- a surrender;
- a change in the ownership of a Policy;
- the addition of an accelerated death
benefit rider; or
- an assignment of a Policy.
In addition, federal, state and local transfer and
other tax consequences of ownership or receipt of Policy
Proceeds will depend on your circumstances and those of
the named beneficiary. Whether partial surrenders (or
other amounts deemed to be distributed) constitute income
subject to federal income tax depends, in part, upon
whether your Policy is considered a "modified endowment
contract."
45 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
If you pay more MODIFIED ENDOWMENT CONTRACTS. Section 7702A of
premiums than the Code treats certain life insurance contracts as
permitted under the "modified endowment contracts" ("MECs"). The Code
seven-pay test, your defines MECs as those Policies issued or materially
Policy will be a changed after June 21, 1988 on which the total premiums
MEC. paid during the first seven years exceed the amount that
would have been paid if the Policy provided for paid-up
benefits for seven annual premiums ("seven-pay test").
We will monitor the Policy to determine whether
additional premium payments would cause the Policy to
become a MEC and will take certain steps in an attempt to
avoid this result.
Further, if a transaction occurs which decreases the
face amount of your Policy during the first seven years,
we will retest your Policy, as of the date of its
purchase, based on the lower face amount to determine
compliance with the seven-pay test. Also, if a decrease
in face amount occurs within seven years of a "material
change," we will retest your Policy for compliance as of
the date of the "material change." Failure to comply in
either case would result in the Policy's classification
as a MEC regardless of our efforts to provide a payment
schedule that would not otherwise violate the seven-pay
test.
The rules relating to whether a Policy will be
treated as a MEC are complex and cannot be fully
described in the limited confines of this summary.
Therefore, you should consult with a competent tax
adviser to determine whether a particular transaction
will cause your Policy to be treated as a MEC.
If your Policy DISTRIBUTIONS UNDER MODIFIED ENDOWMENT
becomes a MEC, CONTRACTS. If treated as a MEC, your Policy will be
partial surrenders, subject to the following tax rules:
loans and surrenders - First, partial surrenders are treated as ordinary
may incur taxes and income subject to tax up to the amount equal to the
tax penalties. excess (if any) of your Account Value immediately
before the distribution over the "investment in the
contract" at the time of the distribution.
- Second, policy loans and loans secured by a Policy
are treated as partial surrenders and taxed
accordingly. Any past-due loan interest that is added
to the amount of the loan is treated as a loan.
- Third, a 10 percent additional income tax is imposed
on that portion of any distribution (including
distributions upon surrender), policy loan, or loan
secured by a Policy, that is included in income,
except where the distribution or loan is:
- made when you are age 59 1/2 or older;
- attributable to your becoming
disabled; or
46 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- is part of a series of substantially
equal periodic payments for the
duration of your life (or life
expectancy) or for the duration of the
longer of your or the beneficiary's
life (or life expectancies).
DISTRIBUTIONS UNDER A POLICY THAT IS NOT A MEC. If
your Policy is not a MEC, a distribution is generally
treated first as a tax-free recovery of the "investment
in the contract," and then as a distribution of taxable
income to the extent the distribution exceeds the
"investment in the contract." An exception is made for
cash distributions that occur in the first 15 Policy
Years as a result of a decrease in the death benefit or
other change which reduces benefits under the Policy
which are made for purposes of maintaining compliance
with Section 7702. Such distributions are taxed in whole
or part as ordinary income (to the extent of any gain in
the Policy) under rules prescribed in Section 7702.
If your Policy is not a MEC, policy loans and loans
secured by the Policy are generally not treated as
distributions. Such loans are instead treated as your
indebtedness.
Finally, if your Policy is not a MEC, distributions
(including distributions upon surrender), policy loans
and loans secured by the Policy are not subject to the 10
percent additional tax.
POLICY LOAN INTEREST. Generally, no tax deduction is
allowed for interest paid or accrued on any indebtedness
under a Policy. In addition, if the policyowner is not a
natural person, or is a direct or indirect beneficiary
under the Policy, Section 264(f) of the Code disallows a
pro-rata portion of the taxpayer's otherwise allowable
interest expense deduction. This rule may not, however,
apply if you are such a policyowner engaged in a trade
business and the Policy covers an officer, director,
employee, or 20 percent owner of your business, within
the meaning of Section 264(f)(4). You should consult your
tax adviser for further guidance on these issues.
Also, there is no definitive guidance concerning the
tax treatment of a policy loan when the interest rate
credited to the loan is the same as the interest rate
charged against the loan, as is the case for loan amounts
in Policy Years 11 and thereafter. You should consult
your tax adviser regarding loan amounts in those Policy
Years.
MULTIPLE POLICIES. All modified endowment contracts
issued by us (or our affiliates) to you during any
calendar year will be treated as a single MEC for
purposes of determining the amount of a policy
distribution which is taxable to you.
47 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
We may be required FEDERAL INCOME TAX WITHHOLDING. We will
to withhold taxes withhold and remit to the federal government the amount
from certain dis- of any tax due on that portion of a policy distribution
tributions to you. which is taxable if we do not have a valid social
security number for you, unless you direct us otherwise
in writing at or before the time of the distribution. As
the policyowner, however, you will be responsible for
the payment of any taxes and early distribution
penalties that may be due on policy distributions,
regardless of whether those amounts are subject to
withholding.
OUR TAXES
As a result of the Omnibus Budget Reconciliation Act
of 1990, we are currently and are generally required to
capitalize and amortize certain policy acquisition
expenses over a 10-year period rather than currently
deducting such expenses. This so-called "deferred
acquisition cost" tax ("DAC tax") applies to the deferred
acquisition expenses of a Policy and results in a
significantly higher corporate income tax liability for
us.
At present, we do not assess any charge against the
assets of the Variable Account for any federal, state or
local taxes that we incur which may be attributable to
the Variable Account or any Policy. We, however, reserve
the right in the future to assess a charge against the
assets of the Variable Account for any such taxes or
other economic burdens resulting from the application of
any tax laws that we determine to be properly
attributable to the Variable Account or any Policy.
DISTRIBUTION OF POLICY
The Policy will be sold by licensed insurance agents
in those states where the Policy may be lawfully sold.
Such agents will be registered representatives of
broker-dealers registered under the Securities Exchange
Act of 1934 who are members of the National Association
of Securities Dealers, Inc. and who have entered into
distribution agreements with us and our general
distributor, Clarendon Insurance Agency, Inc.
("Clarendon"), One Sun Life Executive Park, Wellesley
Hills, Massachusetts 02481. Clarendon is our wholly-owned
subsidiary and is registered with the Securities and
Exchange Commission under the Securities Exchange Act of
1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Clarendon also
acts as the general distributor of certain variable
annuity contracts and other variable life insurance
contracts we issue.
Gross first year commissions plus any expense
allowance payments we pay on the sale of the Policy may
vary with the sales agreement with broker-dealers
depending on the particular circumstances, but is not
expected to exceed 90%
48 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
of the target premium, which will vary based on the
insured's age, sex and rating Class, plus 3% of any
excess premium payments. Gross renewal commissions in
Policy Years 2 through 10 will not exceed 3% of actual
premium payment, and will not exceed 1% in Policy Years
11 and thereafter. In addition, we may also pay override
payments, expense allowances, bonuses, wholesaler fees,
and training allowances. In Policy Year 3 and thereafter,
0.10% of the Variable Account Value per annum will be
paid to broker-dealers.
VOTING RIGHTS
We are the legal owner of all shares of the Funds
held in the Sub-Accounts of the Variable Account, and as
such have the right to vote upon matters that are
required by the 1940 Act to be approved or ratified by
the shareholders of the Funds and to vote upon any other
matters that may be voted upon at a shareholders'
meeting. We will, however, vote shares held in the
Sub-Accounts in accordance with instructions received
from policyowners who have an interest in the respective
Sub-Accounts.
We will vote shares held in each Sub-Account for
which no timely instructions from policyowners are
received, together with shares not attributable to a
Policy, in the same proportion as those shares in that
Sub-Account for which instructions are received. Should
the applicable federal securities laws change so as to
permit us to vote shares held in the Variable Account in
our own right, we may elect to do so.
The number of shares in each Sub-Account for which a
policyowner may give instructions is determined by
dividing the portion of the Account Value derived from
participation in that Sub-Account, if any, by the value
of one share of the corresponding Fund. We will determine
the number as of a date we choose, but not more than 90
days before the shareholders' meeting. Fractional votes
are counted. Voting instructions will be solicited in
writing at least 14 days prior to the shareholders'
meeting.
We may, if required by state insurance regulators,
disregard voting instructions if those instructions would
require shares to be voted so as to cause a change in the
sub-classification or investment policies of one or more
of the Funds, or to approve or disapprove an investment
management contract. In addition, we may disregard voting
instructions that would require changes in the investment
policies or investment adviser, provided that we
reasonably disapprove of those changes in accordance with
applicable federal regulations. If we disregard voting
instructions, we will advise you of that action and our
reasons for it in our next communication to policyowners.
49 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
OUR DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers are listed
below, together with information as to their ages, dates
of election and principal business occupations during the
last five years (if other than their present business
occupations). Except as otherwise indicated, those
directors and officers who are associated with Sun Life
Assurance Company of Canada and/or its subsidiaries have
been associated with Sun Life Assurance Company of Canada
for more than five years either in the position shown or
in other positions. The asterisks below denote the year
that the indicated director was elected to our board of
directors.
DONALD A. STEWART, 52, Chairman and Director (1996*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Chairman, Chief Executive Officer and a
Director of Sun Life Assurance Company of Canada;
Chairman and a Director of Sun Life Insurance and Annuity
Company of New York; and a Director of Massachusetts
Financial Services Company, Sun Life Financial Services
Limited, Spectrum United Holdings, Inc. and Sun Life of
Canada UK Holdings, plc.
C. JAMES PRIEUR, 47, President and Director (1998*)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is President of Sun Life Assurance Company of
Canada; President and a Director of Sun Life Insurance
and Annuity Company of New York; Chairman and a Director
of Sun Life of Canada (U.S.) Distributors, Inc. and Sun
Capital Advisers, Inc.; Chairman of the Board and
Executive Vice President, Sun Capital Advisers Trust,
President and a Director of Sun Life of Canada (U.S.)
Holdings, Inc., Sun Life Assurance Company of
Canada--U.S. Operations Holdings, Inc., Sun Life of
Canada (U.S.) Financial Services Holdings, Inc., Sun
Canada Financial Co., Sun Life of Canada (U.S.) SPE 97-1,
Inc., and Sun Benefit Services Company; and a Director of
Clarendon Insurance Agency, Inc., Sun Life Financial
Services, Ltd and Sun Life Information Services Ireland
Limited.
JOHN D. MCNEIL, 65, Director (1982*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is a Director of Sun Life Assurance Company of
Canada; a Director of Massachusetts Financial Services
Company and Sun Life Insurance and Annuity Company of New
York; a Trustee of MFS/Sun Life Series Trust; Chairman
and
50 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
a Member of the Boards of Managers of Money Market
Variable Account, High Yield Variable Account, Capital
Appreciation Variable Account, Government Securities
Variable Account, World Governments Variable Account,
Total Return Variable Account and Managed Sectors
Variable Account; and a Director of Shell (Canada)
Limited, Canadian Pacific, Ltd. and Canadian Pacific
Securities (Ontario) Limited.
DAVID D. HORN, 57, Director (1985*)
Strong Road
New Vineyard, ME 04956
He was formerly Senior Vice President and General
Manager for the United States of Sun Life Assurance
Company of Canada, retiring in December, 1997. He is a
Director of Sun Life Insurance and Annuity Company of New
York; a Trustee of MFS/Sun Life Series Trust; and a
Member of the Boards of Managers of Money Market Variable
Account, High Yield Variable Account, Capital
Appreciation Variable Account, Government Securities
Variable Account, World Governments Variable Account,
Total Return Variable Account and Managed Sectors
Variable Account.
ANGUS A. MACNAUGHTON, 67, Director (1985*)
Metro Tower, Suite 1170
950 Tower Lane
Foster City, California 94404
He is President of Genstar Investment Corporation and
a Director of Sun Life Assurance Company of Canada, Sun
Life Insurance and Annuity Company of New York, Canadian
Pacific, Ltd., Varian Associates, Inc., Diversified
Collection Services, Inc., the San Francisco Opera,
Genstar Investment LLC and Genstar Capital Corporation;
and Vice Chairman and a Director of Barrick Gold
Corporation.
JOHN S. LANE, 64, Director (1991*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Senior Vice President, Investments of Sun Life
Assurance Company of Canada; and a Director of Sun Life
Insurance and Annuity Company of New York.
51 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
RICHARD B. BAILEY, 72, Director (1983*)
63 Atlantic Ave
Boston, Massachusetts 02116
He is a Director of Sun Life Insurance and Annuity
Company of New York and a Director/Trustee of certain
Funds in the MFS Family of Funds.
M. COLYER CRUM, 66, Director (1986*)
104 Westcliff Street
Weston, Massachusetts 02193
He is Professor Emeritus of the Harvard Business
School; Chairman and a Director of Phaeton International
N.V.; a Director of Sun Life Assurance Company of Canada,
Sun Life Insurance and Annuity Company of New York,
Cambridge Bancorp, Cambridge Trust Company, Merrill Lynch
Ready Assets Trust, Merrill Lynch Basic Value Fund, Inc.,
Merrill Lynch Global Growth Fund, Inc., Merrill Lynch
U.S. Treasury Money Fund, Merrill Lynch Special Value
Fund, Inc., Merrill Lynch Capital Fund, Inc., Merrill
Lynch U.S.A. Government Reserves, MuniVest Florida Fund,
MuniVest Michigan Insured Fund, Inc., MuniVest New Jersey
Fund, Inc., MuniYield Michigan Insured Fund, Inc., and
MuniYield New Jersey Insured Fund, Inc.; and a Trustee of
Merrill Lynch Global Resources Trust, Merrill Lynch Ready
Assets Trust, MuniYield Florida Insured Fund, and
MuniYield Pennsylvania Fund. Prior to July, 1996, he was
a Professor at the Harvard Business School.
S. CAESAR RABOY, 62, Director (1996*)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is a former Senior Vice President and Deputy
General Manager for the United States of Sun Life
Assurance Company of Canada; a Director of Sun Life
Insurance and Annuity Company of New York; Vice President
and a Director of Sun Life Financial Services Limited;
and a Director of Sun Life of Canada (U.S.) Distributors,
Inc. and Clarendon Insurance Agency, Inc.
JAMES M.A. ANDERSON, 49, Vice President, Investments
(1998)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President, Investments of Sun Life
Assurance Company of Canada and Sun Life Insurance and
Annuity Company of New York; President and Chief
Executive Officer of Sun Capital Advisers Trust;
President and a Director of Sun Capital Advisers, Inc.;
Vice President and a Director of Sun Life of Canada
(U.S.) Holdings, Inc., Sun Life of Canada (U.S.)
Financial
52 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Services Holdings, Inc. and Sun Life Assurance Company of
Canada--U.S. Operations Holdings, Inc.; Vice President of
Sun Life of Canada (U.S.) Distributors, Inc. and Sun
Canada Financial Co.; and a Director of Clarendon
Insurance Agency, Inc. and Sun Benefit Services Company
Inc.
ROBERT P. VROLYK, 45, Vice President, Finance, Actuary
and Treasurer (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President, Finance of Sun Life Assurance
Company of Canada; Vice President, Actuary and Controller
of Sun Life Insurance and Annuity Company of New York;
Vice President and a Director of Sun Life of Canada
(U.S.) Holdings, Inc., Sun Life of Canada (U.S.)
Financial Services Holdings, Inc., Sun Life Assurance
Company of Canada--U.S. Operations Holdings, Inc., Sun
Life of Canada (U.S.) Distributors, Inc. and Sun Canada
Financial Co.; Vice President, Treasurer and a Director
of Sun Capital Advisers, Inc.; Treasurer and a Director
of Sun Life of Canada (U.S.) SPE 97-1, Inc.; and a
Director of Clarendon Insurance Agency, Inc., Sun Benefit
Services Company, Inc. and Sun Life Information Services
Ireland, Ltd.
PETER F. DEMUTH, 41, Vice President, Chief Counsel and
Assistant Secretary (1998)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President and Chief Counsel of U.S.
Operations for Sun Life Assurance Company of Canada; Vice
President and Chief Counsel for Sun Life Insurance and
Annuity Company of New York; a Director of Sun Life of
Canada (U.S.) Holdings, Inc., Sun Life of Canada (U.S.)
Financial Services Holdings, Inc. and Sun Life Assurance
Company of Canada--U.S. Operations Holdings, Inc. Prior
to February, 1998, he was a partner at the firm of Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
ELLEN B. KING, 42, Assistant Counsel and Secretary (1998)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
She is Assistant Counsel and Secretary of Sun Life
Assurance Company of Canada and Secretary of Sun Life
Insurance and Annuity Company of New York.
53 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
ROBERT K. LEACH, 43, Vice President, Finance and Product
(1996)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He has been affiliated with Sun Life Assurance
Company of Canada since January, 1987 in various
management positions. In July, 1996 he was appointed Vice
President, Annuities. Prior to 1987 he was a 2nd Vice
President at New England Life Insurance Company.
EDWARD J. RONAN, 45, Vice President, Retirement Products
and Services (1997)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He has been affiliated with Sun Life Assurance
Company of Canada since August, 1997. From June, 1987 to
July, 1997 he was Vice President, Division Manager at
First Data Investor Services Group.
Our directors, officers and employees are covered
under a commercial blanket bond and a liability policy.
The directors, officers and employees of Clarendon
Insurance Agency, Inc. are covered under a fidelity bond.
OTHER INFORMATION
STATE REGULATION
We are subject to the laws of Delaware governing life
insurance companies and to regulation by Delaware's
Commissioner of Insurance, whose agents periodically
conduct an examination of our financial condition and
business operations. We are also subject to the insurance
laws and regulations of the jurisdictions in which we are
authorized to do business.
We are required to file an annual statement with the
insurance regulatory authority of those jurisdictions
where we are authorized to do business relating to our
business operations and financial condition as of
December 31st of the preceding year.
LEGAL PROCEEDINGS
There are no pending legal proceedings which would
have a material adverse effect on the Variable Account.
We are engaged in various kinds of routine litigation
which, in our judgment, is not material to the Variable
Account.
54 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
EXPERTS
Actuarial matters concerning the policy have been
examined by Georges C. Rouhart, FSA, MAAA, Product
Officer.
ACCOUNTANTS
Deloitte & Touche LLP have audited our statutory
statements of admitted assets, liabilities and capital
stock and surplus as of December 31, 1998 and 1997, and
the related statutory statements of operations, change in
capital stock and surplus, and cash flow for each of the
three years in the period ended December 31, 1998
included in this prospectus. There are no financial
statements for the Variable Account because it had not
commenced operations as of the date of this prospectus.
REGISTRATION STATEMENTS
This prospectus is part of a registration statement
that has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 with respect
to the Policy. It does not contain all of the information
set forth in the registration statement and the exhibits
filed as part of the registration statement. You should
refer to the registration statement for further
information concerning the Variable Account, Sun Life of
Canada (U.S.), the mutual fund investment options, and
the Policy.
YEAR 2000 COMPLIANCE
During the fourth quarter of 1996, we began a
comprehensive analysis of our information technology (IT)
and non-IT systems, including our hardware, software,
data, data feed products, and internal and external
supporting services, to address the ability of these
systems to process date calculations through the year
2000 and beyond correctly. We created a full-time year
2000 project team in early 1997 to manage this endeavor
across the company. This team, which works with dedicated
personnel from all business units and with the legal and
audit departments, reports directly to the our senior
management on a monthly basis. In addition, our year 2000
project is periodically reviewed by internal and external
auditors.
To date, relevant systems have been identified and
their components inventoried, needed resolutions have
been documented, timelines and project plans have been
developed, and remediation and testing are in process.
Over 90% of the components have been remediated and
tested and are certified as year 2000 compliant. The
majority of the remaining components are in the testing
phase and are expected to be certified over the course of
this year.
55 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
In mid-1997, the project team contacted all key
vendors to obtain either their certification for the
products and services provided or their plan to make
those products and services compliant. Approximately 95%
of these vendors have responded and the project team has
reviewed the responses and conducted test with the
vendors where appropriate. In addition, the project
continues to work with critical business partners, such
as third-party administrators, investment property
managers, investment mortgage correspondents and others,
with the goal that these partners will continue to be
able to support our objective of assuring year 2000
compliance.
Non-IT applications, including building security,
HVAC systems, and other such systems, will be tested.
Compliant client server and mainframe environments have
been built which allow for testing of critical dates such
as December 31, 1999, January 1, 2000, February 28, 2000,
February 29, 2000 and March 1, 2000 without impact to
current production.
Although we expect all critical systems to be year
2000 compliant before the end of 1999, there can be no
assurance that this result will be completely achieved.
Factors giving rise to this uncertainty include possible
loss of technical resources to perform the work, failure
to identify all susceptible systems, non-compliance by
third-parties whose systems and operations affect our
operations, and other similar uncertainties. A possible
worst-case scenario might include one or more of our
significant systems being non-compliant. Such a scenario
could result in material disruption to our operations.
Consequences of such disruptions could include, among
other possibilities, the inability to update customers'
accounts; process payments and other financial
transactions; and report accurate data to management,
customers, regulators and others. Consequences could also
include business interruptions or shutdowns, harm to our
reputation, increased regulatory scrutiny by regulators,
and litigation related to year 2000 issues. Such
potential consequences, depending on their nature and
duration, could have material impact on our results of
operations and financial position.
In order to mitigate our risks of material adverse
operational or financial impacts from failure to achieve
planned year 2000 compliance, we have established
contingency planning at the business unit and corporate
levels. Each business unit has ranked its applications as
being of high, medium or low business risk to ensure that
the most critical are addressed first. The business units
also have developed alternate plans of action where
possible and established dates for them to be enacted. On
the corporate level, we are in the process of enhancing
our business continuation plan, by identifying minimum
requirements for facilities, computing, staffing, and
other factors, and we are developing a plan to support
those requirements.
56 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Statements contained in this prospectus regarding our
year 2000 compliance that are not historical fact are
forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Those
statements are subject to risks and uncertainties that
could cause actual results to differ materially from
those anticipated at the time those statement were made,
including, without limitation, uncertainties relating to
our ability to identify and address year 2000 issues
successfully and in a timely manner and at costs that are
reasonably in line with our estimates, and the ability of
our vendors, suppliers, other service providers, and
customers to identify and address successfully their own
year 2000 issues in a timely manner.
FINANCIAL STATEMENTS
Our financial statements, which are included in this
prospectus, should be considered only as bearing on our
ability to meet our obligations with respect to the death
benefit and our assumption of the mortality and expense
risks. They should not be considered as bearing on the
investment performance of the Fund shares held in the
Variable Account.
57 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND
CAPITAL STOCK AND SURPLUS
DECEMBER 31, 1998 AND 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
ADMITTED ASSETS
Bonds $ 1,763,468 $ 1,910,699
Common stocks 128,445 117,229
Mortgage loans on real estate 535,003 684,035
Properties acquired in satisfaction of debt 17,207 22,475
Investment real estate 78,021 78,426
Policy loans 41,944 40,348
Cash and short-term investments 265,226 544,418
Other invested assets 64,177 55,716
Life insurance premiums and annuity considerations due and uncollected -- 9,203
Investment income due and accrued 35,706 39,279
Federal income tax recoverable and interest thereon 1,110 --
Receivable from parent, subsidiaries and affiliates -- 27,136
Funds withheld on reinsurance assumed -- 982,653
Other assets 1,928 1,842
------------- -------------
General account assets 2,932,235 4,513,459
Separate account assets:
Unitized 11,774,745 9,068,021
Non-unitized 2,195,641 2,343,877
------------- -------------
Total Admitted Assets $ 16,902,621 $ 15,925,357
------------- -------------
------------- -------------
LIABILITIES
Aggregate reserve for life policies and contracts $ 1,216,107 $ 2,188,243
Supplementary contracts 1,885 2,247
Policy and contract claims 369 2,460
Provision for policyholders' dividends and coupons payable -- 32,500
Liability for premium and other deposit funds 1,000,875 1,450,705
Surrender values on cancelled policies 5 215
Interest maintenance reserve 40,490 33,830
Commissions to agents due or accrued 2,615 2,826
General expenses due or accrued 5,932 6,238
Transfers from Separate Accounts due or accrued (361,863) (284,078)
Taxes, licenses and fees due or accrued, excluding FIT 401 105
Federal income taxes due or accrued 25,019 56,384
Unearned investment income 23 34
Amounts withheld or retained by company as agent or trustee 529 47
Remittances and items not allocated 5,176 1,363
Borrowed money -- 110,142
Asset valuation reserve 44,392 47,605
Payable to parent, subsidiaries, and affiliates 30,381 --
Payable for securities 428 27,104
Other liabilities 9,770 2,924
------------- -------------
General account liabilities 2,022,534 3,680,894
Separate account liabilities:
Unitized 11,774,522 9,067,891
Non-unitized 2,195,641 2,343,877
------------- -------------
Total liabilities 15,992,697 15,092,662
------------- -------------
CAPITAL STOCK AND SURPLUS
Common capital stock 5,900 5,900
------------- -------------
Surplus notes 565,000 565,000
Gross paid in and contributed surplus 199,355 199,355
Unassigned funds 139,669 62,440
------------- -------------
Surplus 904,024 826,795
------------- -------------
Total common capital stock and surplus 909,924 832,695
------------- -------------
Total Liabilities, Capital Stock and Surplus $ 16,902,621 $ 15,925,357
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
58 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (IN 000'S)
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
INCOME:
Premiums and annuity considerations $ 210,198 $ 254,066 $ 266,942
Deposit-type funds 2,140,604 2,155,297 1,775,230
Considerations for supplementary
contracts without life
contingencies and dividend
accumulations 2,086 1,615 2,340
Net investment income 184,532 270,249 303,753
Amortization of interest maintenance
reserve 2,282 1,166 1,557
Income from fees associated with
investment management and
administration and contract
guarantees from Separate Account 141,211 109,757 83,278
Net gain from operations from
Separate Account -- 5 --
Other income 87,364 102,889 87,532
---------- ---------- ----------
Total 2,768,277 2,895,044 2,520,632
---------- ---------- ----------
BENEFITS AND EXPENSES:
Death benefits 15,335 17,284 12,394
Annuity benefits 153,636 148,135 146,654
Disability benefits and benefits
under accident and health policies 104 132 105
Surrender benefits and other fund
withdrawals 1,933,833 1,854,004 1,507,263
Interest on policy or contract funds (140) 699 2,205
Payments on supplementary contracts
without life contingencies and
dividend accumulations 2,528 1,687 2,120
Increase (decrease) in aggregate
reserves for life and accident and
health policies and contracts (972,135) 127,278 162,678
Decrease in liability for premium
and other deposit funds (449,831) (447,603) (392,348)
Increase (decrease) in reserve for
supplementary contracts without
life contingencies and for
dividend and coupon accumulations (362) 42 327
---------- ---------- ----------
Total 682,968 1,701,658 1,441,398
Commissions on premiums and annuity
considerations (direct business
only) 137,718 132,700 109,894
Commissions and expense allowances
on reinsurance assumed 13,032 17,951 18,910
General insurance expenses 58,132 46,624 37,206
Insurance taxes, licenses and fees,
excluding federal income taxes 7,388 8,267 8,431
Increase (decrease) in loading on
and cost of collection in excess
of loading on deferred and
uncollected premiums (1,663) 523 901
Net transfers to Separate Accounts 722,851 844,130 761,941
Reserve and fund adjustments on
reinsurance terminated 1,017,112 -- --
---------- ---------- ----------
Total 2,637,538 2,751,853 2,378,681
---------- ---------- ----------
Net gain from operations before
dividends to policyholders and
Federal Income Taxes 130,739 143,191 141,951
Dividends to policyholders (5,981)] 33,316 29,189
---------- ---------- ----------
Net gain from operations after
dividends to policyholders and
before Federal Income Taxes 136,720 109,875 112,762
Federal income tax expense
(benefit), (excluding tax on
capital gains) 11,713 7,339 (5,400)
---------- ---------- ----------
Net gain from operations after
dividends to policyholders and
federal income taxes and before
realized capital gains 125,007 102,536 118,162
Net realized capital gains less
capital gains tax and transferred
to the IMR 394 26,706 4,862
---------- ---------- ----------
NET INCOME $ 125,401 $ 129,242 $ 123,024
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
59 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (IN 000'S)
<TABLE>
<CAPTION>
1998 1997 1996
---------- ----------- -----------
<S> <C> <C> <C>
Capital and surplus, Beginning of year $ 832,695 $ 567,143 $ 792,452
---------- ----------- -----------
Net income 125,401 129,242 123,024
Change in net unrealized capital gains (losses) (384) 1,152 (1,715)
Change in non-admitted assets and related items (1,086) (463) 67
Change in reserve on account of change in valuation basis -- 39,016 --
Change in asset valuation reserve 3,213 6,307 (11,812)
Surplus (contributed to) withdrawn from Separate Accounts
during period 82 -- 100
Other changes in surplus in Separate Accounts Statements 10 -- --
Change in surplus notes -- 250,000 (335,000)
Dividends to stockholders (50,000) (159,722) --
Aggregate write-ins for gains and losses in surplus (7) 20 27
---------- ----------- -----------
Net change in capital and surplus for the year 77,229 265,552 (225,309)
---------- ----------- -----------
Capital and surplus, End of year $ 909,924 $ 832,695 $ 567,143
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
60 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF CASH FLOW
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash Provided by Operations:
Premiums, annuity considerations and
deposit funds received $ 2,361,669 $ 2,410,919 $ 2,059,577
Considerations for supplementary
contracts and dividend accumulations
received 2,086 1,615 2,340
Net investment income received 236,944 345,279 324,914
Other income received 253,147 208,223 88,295
----------- ----------- -----------
Total receipts 2,853,846 2,966,036 2,475,126
----------- ----------- -----------
Benefits paid (other than dividends) 2,107,736 2,020,747 1,671,483
Insurance expenses and taxes paid (other
than federal income and capital gains
taxes) 217,023 203,650 172,015
Net cash transferred to Separate
Accounts 800,636 895,465 755,605
Dividends paid to policyholders 26,519 28,316 22,689
Federal income tax payments
(recoveries),(excluding tax on capital
gains) 46,965 1,397 (15,363)
Other--net (138) 698 2,205
----------- ----------- -----------
Total payments 3,198,741 3,150,273 2,608,634
----------- ----------- -----------
Net cash used in operations (344,895) (184,237) (133,508)
----------- ----------- -----------
Proceeds from long-term investments
sold, matured or repaid (after
deducting taxes on capital gains of
$2,038 for 1998, $750 for 1997 and
$1,555 for 1996) 1,261,396 1,343,803 1,768,147
Issuance (repayment) of surplus notes -- 250,000 (335,000)
Other cash provided (used) (40,529) 71,095 147,956
----------- ----------- -----------
Total cash provided 1,220,867 1,664,898 1,581,103
----------- ----------- -----------
Cash Applied:
Cost of long-term investments acquired (967,901) (773,783) (1,318,880)
Other cash applied (187,263) (310,519) (177,982)
----------- ----------- -----------
Total cash applied (1,155,164) (1,084,302) (1,496,862)
Net change in cash and short-term
investments (279,192) 396,359 (49,267)
Cash and short-term investments:
Beginning of year 544,418 148,059 197,326
----------- ----------- -----------
End of year $ 265,226 $ 544,418 $ 148,059
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
61 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Sun Life Assurance Company of Canada (U.S.) (the "Company") is incorporated as a
life insurance company and is currently engaged in the sale of individual
variable life insurance, individual fixed and variable annuities, group fixed
and variable annuities and group pension contracts.
Effective May 1, 1997, the Company became a wholly-owned subsidiary of the newly
established Sun Life of Canada (U.S.) Holdings, Inc. ("Life Holdco"). On
December 18, 1997, Life Holdco became a wholly-owned subsidiary of the Sun Life
Assurance Company of Canada - U.S. Operations Holdings, Inc. ("US Holdco"). US
Holdco is a wholly-owned subsidiary of Sun Life Assurance Company of Canada
("SLOC"). Prior to December 18, 1997, Life Holdco was a direct wholly-owned
subsidiary of SLOC.
The Company, which is domiciled in the State of Delaware, prepares its financial
statements in accordance with statutory accounting practices prescribed or
permitted by the State of Delaware Insurance Department. Prescribed accounting
practices include practices described in a variety of publications of the
National Association of Insurance Commissioners ("NAIC"), as well as state laws,
regulations and general administrative rules. Permitted accounting practices
encompass all accounting practices not so prescribed. The permitted accounting
practices adopted by the Company are not material to the financial statements.
Prior to 1996, statutory accounting practices were recognized by the insurance
industry and the accounting profession as generally accepted accounting
principles for mutual life insurance companies and stock life insurance
companies wholly-owned by mutual life insurance companies. In April 1993, the
Financial Accounting Standards Board ("FASB") issued an interpretation (the
"Interpretation"), that became effective in 1996, which changed the previous
practice of mutual life insurance companies (and stock life insurance companies
that are wholly-owned subsidiaries of mutual life insurance companies) with
respect to utilizing statutory basis financial statements for general purposes,
in that it will no longer allow such financial statements to be described as
having been prepared in conformity with generally accepted accounting principles
("GAAP"). Consequently, these financial statements prepared in conformity with
statutory accounting practices, as described above, vary from and are not
intended to present the Company's financial position, results of operations or
cash flow in conformity with generally accepted accounting principles. (See Note
20 for further discussion relative to the Company's basis of financial statement
presentation.) The effects on the financial statements of the variances between
the statutory basis of accounting and GAAP, although not reasonably
determinable, are presumed to be material.
INVESTED ASSETS
Bonds are carried at cost, adjusted for amortization of premium or accrual of
discount. Investments in non-insurance subsidiaries are carried on the equity
basis. Investments in mortgage backed securities are generally carried at
amortized cost. Changes in prepayment assumptions and resulting cash flows are
evaluated periodically. The adjusted yield is used to calculate investment
income in future periods. If current book value exceeds future undiscounted cash
flows, a realized capital loss is recorded and amortized through IMR.
62 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED):
Investments in insurance subsidiaries are carried at their statutory surplus
values. Mortgage loans acquired at a premium or discount are carried at
amortized values and other mortgage loans are carried at the amounts of the
unpaid balances. Real estate investments are carried at the lower of cost,
adjusted for accumulated depreciation or appraised value, less encumbrances.
Short-term investments are carried at amortized cost, which approximates fair
value. Depreciation of buildings and improvements is calculated using the
straight-line method over the estimated useful life of the property, generally
40 to 50 years.
POLICY AND CONTRACT RESERVES
The reserves for life insurance and annuity contracts, developed by accepted
actuarial methods, have been established and maintained on the basis of
published mortality tables using assumed interest rates and valuation methods
that will provide reserves at least as great as those required by law and
contract provisions.
INCOME AND EXPENSES
For life and annuity contracts, premiums are recognized as revenues over the
premium paying period, whereas commissions and other costs applicable to the
acquisition of new business are charged to operations as incurred.
SEPARATE ACCOUNTS
The Company has established unitized separate accounts applicable to various
classes of contracts providing for variable benefits. Contracts for which funds
are invested in separate accounts include variable life insurance and individual
and group qualified and non-qualified variable annuity contracts.
Assets and liabilities of the separate accounts, representing net deposits and
accumulated net investment earnings less fees, held primarily for the benefit of
contract holders, are shown as separate captions in the financial statements.
Assets held in the separate accounts are carried at market value as determined
by quoted market prices of the underlying investments.
The Company has also established a non-unitized separate account for amounts
allocated to the fixed portion of certain combination fixed/variable deferred
annuity contracts. The assets of this account are available to fund general
account liabilities, and general account assets are available to fund
liabilities of this account.
Gains (losses) from mortality experience and investment experience of the
separate accounts, not applicable to contract owners, are transferred to (from)
the general account. Accumulated gains (losses) that have not been transferred
are recorded as a payable (receivable) to (from) the general account. Amounts
payable to the general account of the Company were $361,863,000 in 1998 and
$284,078,000 in 1997.
CHANGES IN ACCOUNTING PRINCIPLES AND REPORTING
As described more fully in Note 10, during 1997 the Company changed certain
assumptions used in determining actuarial reserves.
63 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED):
In March 1998, the National Association of Insurance Commissioners 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 Delaware will require adoption of Codification for the
preparation of statutory financial statements. The Company has not finalized the
quantification of the effects of Codification on its statutory financial
statements.
OTHER
Preparation of the financial statements requires management to make estimates
and assumptions that affect reported amounts of assets, liabilities, revenues
and expenses. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform to amounts as
presented in the current year.
2. INVESTMENTS IN SUBSIDIARIES
The Company owns all of the outstanding shares of Sun Life Insurance and Annuity
Company of New York ("Sun Life (N.Y.)"), Massachusetts Casualty Insurance
Company ("MCIC"), Sun Life of Canada (U.S.) Distributors, Inc. (formerly Sun
Investment Services Company) ("Sundisco"), New London Trust, F.S.B. ("NLT"), Sun
Life Financial Services Limited ("SLFSL"), Sun Benefit Services Company, Inc.
("Sunbesco"), Sun Capital Advisers, Inc. ("Sun Capital"), Sun Life Finance
Corporation ("Sunfinco"), Sun Life of Canada (U.S.) SPE 97-1, Inc. ("SPE 97-1"),
Clarendon Insurance Agency, Inc. ("Clarendon") and Sun Life Information Services
Ireland Ltd. ("SLISL").
On February 5, 1999, the Company finalized the sale of MCIC, a disability
insurance company which issues primarily individual disability income policies,
to Centre Solutions (U.S.) Limited, a wholly-owned subsidiary of Centre
Reinsurance Holdings Limited for approximately $34 million. The impact of this
sale to the ongoing operations of the Company is not expected to be material.
On September 28, 1998, the Company formed SLISL as an offshore technology center
for the purpose of completing systems projects for affiliates.
On October 30, 1997, the Company established a wholly-owned special purpose
corporation, SPE 97-1, for the purpose of engaging in activities incidental to
securitizing mortgage loans.
On December 31, 1997, the Company purchased from Massachusetts Financial
Services ("MFS") all of the outstanding shares of Clarendon, a registered
broker-dealer that acts as the general distributor of certain annuity and life
insurance contracts issued by the Company and its affiliates.
Prior to December 24, 1997, the Company owned 93.6% of the outstanding shares of
MFS. On December 24, 1997, the Company transferred all of its shares of MFS to
Life Holdco in the form of a dividend valued at
64 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
2. INVESTMENTS IN SUBSIDIARIES (CONTINUED):
$159,722,000. As a result of this transaction, the Company realized a gain of
$21,195,000 of undistributed earnings.
MFS, a registered investment adviser, serves as investment adviser to the mutual
funds in the MFS family of funds as well as certain mutual funds and separate
accounts established by the Company. The MFS Asset Management Group provides
investment advice to substantial private clients.
Sun Life (N.Y.) is engaged in the sale of individual fixed and variable annuity
contracts and group life and disability insurance contracts in the State of New
York.
Sundisco is a registered investment adviser and broker-dealer.
NLT is a federally chartered savings bank.
SLFSL serves as the marketing administrator for the distribution of the offshore
products of Sun Life Assurance Company of Canada (Bermuda), an affiliate.
Sun Capital is a registered investment adviser.
Sunfinco and Sunbesco are currently inactive.
On September 28, 1998 a $500,000 note was issued by SLISL to the Company at a
rate of 6.0%, maturing on September 28, 2002.
A $110,000,000 note was issued to the Company by MFS on February 11, 1998 at an
interest rate of 6.0% due February 11, 1999. Another $110,000,000 note was
issued to the Company by MFS on December 22, 1998 at an interest rate of 5.55%
due February 11, 1999.
On December 23, 1997, the Company issued a $110,000,000 note to US Holdco at an
interest rate of 5.80%, which was repaid on March 1, 1998. A $110,000,000 note
was also issued to the Company by MFS on December 23, 1997 at an interest rate
of 5.85% and was repaid on February 11, 1998.
On December 31, 1996, the Company issued a $58,000,000 note to SLOC at an
interest rate of 5.70% which was repaid on February 10, 1997. Also on December
31, 1996, the Company was issued a $58,000,000 note by MFS at an interest rate
of 5.76%. This note was repaid to the Company on February 10, 1997. On December
31, 1998, 1997 and 1996, the Company had an additional $20,000,000 in notes
issued by MFS, scheduled to mature in 2000.
65 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
2. INVESTMENTS IN SUBSIDIARIES (CONTINUED):
During 1998, 1997, and 1996, the Company contributed capital in the following
amounts to its subsidiaries:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
MCIC -- $ 2,000 $ 10,000
SLFSL $ 750 1,000 1,500
SPE 97-1 -- 20,377 --
Sundisco 10,000 -- --
Sun Capital 500 -- --
Clarendon 10 -- --
SLISL 502 -- --
</TABLE>
Summarized combined financial information of the Company's subsidiaries as of
December 31, 1998, 1997 and 1996 and for the years then ended, follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Intangible assets $ -- $ -- $ 9,646
Other assets 1,315,317 1,190,951 1,376,014
Liabilities (1,186,872) (1,073,966) (1,241,617)
------------- ------------- -------------
Total net assets $ 128,445 $ 116,985 $ 144,043
------------- ------------- -------------
------------- ------------- -------------
Total revenues $ 222,853 $ 750,364 $ 717,280
Operating expenses (221,933) (646,896) (624,199)
Income tax expense (1,222) (43,987) (42,820)
------------- ------------- -------------
Net income (loss) $ (302) $ 59,481 $ 50,261
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
On December 24, 1997, the Company transferred all of its shares of MFS to its
parent, Life Holdco.
66 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
3. BONDS
Investments in debt securities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS (LOSSES) VALUE
------------ ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Long-term bonds:
United States government and government agencies and
authorities $ 140,417 $ 7,635 $ (177) $ 147,875
States, provinces and political subdivisions 16,632 2,219 -- 18,851
Public utilities 397,670 38,740 (238) 436,172
Transportation 197,207 22,481 (18) 219,670
Finance 144,958 12,542 (494) 157,006
All other corporate bonds 866,584 50,814 (6,419) 910,979
------------ ----------- ----------- ------------
Total long-term bonds 1,763,468 134,431 (7,346) 1,890,553
------------ ----------- ----------- ------------
Short-term bonds:
U.S. Treasury Bills, bankers acceptances and commercial
paper 43,400 -- -- 43,400
Affiliates 220,000 -- -- 220,000
------------ ----------- ----------- ------------
Total short-term bonds 263,400 -- -- 263,400
------------ ----------- ----------- ------------
Total bonds $ 2,026,868 $ 134,431 $ (7,346) $ 2,153,953
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>
67 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
3. BONDS (CONTINUED):
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS (LOSSES) VALUE
------------ ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Long-term bonds:
United States government and government agencies and
authorities $ 126,923 $ 5,529 $ -- $ 132,452
States, provinces and political subdivisions 22,361 2,095 -- 24,456
Public utilities 398,939 35,338 (91) 434,186
Transportation 214,130 22,000 (390) 235,740
Finance 157,891 5,885 (120) 163,656
All other corporate bonds 990,455 52,678 (5,456) 1,037,677
------------ ----------- ----------- ------------
Total long-term bonds 1,910,699 123,525 (6,057) 2,028,167
------------ ----------- ----------- ------------
Short-term bonds:
U.S. Treasury Bills, bankers acceptances and commercial
paper 431,032 -- -- 431,032
Affiliates 110,000 -- -- 110,000
------------ ----------- ----------- ------------
Total short-term bonds 541,032 -- -- 541,032
------------ ----------- ----------- ------------
Total bonds $ 2,451,731 $ 123,525 $ (6,057) $ 2,569,199
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>
The amortized cost and estimated fair value of bonds at December 31, 1998 are
shown below by contractual maturity. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call and/or prepayment penalties.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Maturities:
Due in one year or less $ 459,631 $ 460,787
Due after one year through five years 329,625 336,516
Due after five years through ten years 264,372 283,840
Due after ten years 703,341 781,253
------------ ------------
1,756,969 1,862,396
Mortgage-backed securities 269,899 291,557
------------ ------------
Total bonds $ 2,026,868 $ 2,153,953
------------ ------------
------------ ------------
</TABLE>
68 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
3. BONDS (CONTINUED):
Proceeds from sales and maturities of investments in debt securities during
1998, 1997, and 1996 were $1,016,811,000, $980,264,000, and $1,554,016,000,
gross gains were $17,025,000, $10,732,000, and $16,975,000 and gross losses were
$866,000, $2,446,000, and $10,885,000, respectively.
Bonds included above with an amortized cost of approximately $2,572,000,
$2,578,000 and $2,060,000 at December 31, 1998, 1997 and 1996, respectively,
were on deposit with governmental authorities as required by law.
Excluding investments in U.S. government and agencies securities, the Company is
not exposed to significant concentration of credit risk in its portfolio.
4. SECURITIES LENDING
The Company has a securities lending program operated on its behalf by the
Company's primary custodian, Chase Manhattan Bank of New York. The custodian has
indemnified the Company against losses arising from this program. There were no
securities out on loan as of December 31, 1998 and 1997. Income resulting from
this program was $94,000, $200,000 and $137,000 for the years ended December 31,
1998, 1997 and 1996, respectively.
5. MORTGAGE LOANS
The Company invests in commercial first mortgage loans throughout the United
States. The Company monitors the condition of the mortgage loans in its
portfolio. In those cases where mortgages have been restructured, appropriate
allowances for losses have been made. In those cases where, in management's
judgment, the mortgage loans' values are impaired, appropriate losses are
recorded.
The following table shows the geographical distribution of the mortgage loan
portfolio.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1997
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
California $ 82,397 $ 119,122
Massachusetts 53,528 58,981
Michigan 34,357 42,912
New York 21,190 45,696
Ohio 36,171 51,862
Pennsylvania 93,587 97,949
Washington 36,548 54,948
All other 177,225 212,565
---------- ----------
$ 535,003 $ 684,035
---------- ----------
---------- ----------
</TABLE>
The Company has restructured mortgage loans totaling $30,743,000 and $26,284,000
at December 31, 1998 and 1997, respectively, against which there are allowances
for losses of $2,120,000 and $3,026,000, respectively.
69 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
5. MORTGAGE LOANS (CONTINUED):
The Company has made commitments of mortgage loans on real estate into the
future.The outstanding commitments for these mortgages amount to $18,005,000 and
$12,300,000 at December 31, 1998 and 1997, respectively.
6. INVESTMENT GAINS AND LOSSES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Net realized gains (losses):
Bonds $ 5,659 $ 2,882 $ 5,631
Common stock of affiliates -- 21,195 --
Common stocks 48
Mortgage loans 2,374 3,837 763
Real estate 955 2,912 599
Other invested assets (3,827) (717) 567
---------- ---------- ---------
Subtotal 5,209 30,109 7,560
Capital gains tax expense 4,815 3,403 2,698
---------- ---------- ---------
Total $ 394 $ 26,706 $ 4,862
---------- ---------- ---------
---------- ---------- ---------
Changes in unrealized gains (losses):
Common stock of affiliates $ (302) $ (2,894) $ (5,739)
Mortgage loans (1,312) 1,524 (600)
Real estate 403 3,377 4,624
Other invested assets 827 (855) --
---------- ---------- ---------
Total $ (384) $ 1,152 $ (1,715)
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
Realized capital gains and losses on bonds and mortgages and interest rate swaps
which relate to changes in levels of interest rates are charged or credited to
an interest maintenance reserve ("IMR") and amortized into income over the
remaining contractual life of the security sold. The net realized capital gains
credited to the interest maintenance reserve were $8,943,000 in 1998, $6,321,000
in 1997, and $7,710,000 in 1996. All gains and losses are transferred net of
applicable income taxes.
70 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
7. NET INVESTMENT INCOME
Net investment income consisted of:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income from bonds $ 167,436 $ 188,924 $ 178,695
Income from investment in common stock of affiliates 3,675 41,181 50,408
Interest income from mortgage loans 53,269 76,073 92,591
Real estate investment income 15,932 17,161 16,249
Interest income from policy loans 2,881 3,582 2,790
Other investment income (loss) (641) (193) 1,710
---------- ---------- ----------
Gross investment income 242,552 326,728 342,443
---------- ---------- ----------
Interest on surplus notes and notes payable (44,903) (42,481) (23,061)
Investment expenses (13,117) (13,998) (15,629)
---------- ---------- ----------
Net investment income $ 184,532 $ 270,249 $ 303,753
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
8. DERIVATIVES
The Company uses derivative instruments for interest rate risk management
purposes, including hedges against specific interest rate risk and to minimize
the Company's exposure to fluctuations in interest rates. The Company's use of
derivatives has included U.S. Treasury futures, conventional interest rate
swaps, and forward spread lock interest rate swaps.
In the case of interest rate futures, gains or losses on contracts that qualify
as hedges are deferred until the earliest of the completion of the hedging
transaction, determination that the transaction will no longer take place, or
determination that the hedge is no longer effective. Upon completion of the
hedge, where it is impractical to allocate gains or losses to specific hedged
assets or liabilities, gains or losses are deferred in IMR and amortized over
the remaining life of the hedged assets. At December 31, 1998 and 1997 there
were no futures contracts outstanding.
In the case of interest rate and foreign currency swap agreements and forward
spread lock interest rate swap agreements, gains or losses on terminated swaps
are deferred in the IMR and amortized over the shorter of the remaining life of
the hedged asset sold or the remaining term of the swap contract. The net
differential to be paid or received on interest rate swaps is recorded monthly
as interest rates change.
71 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
8. DERIVATIVES (CONTINUED):
Options are used to hedge the stock market interest exposure in the mortality
and expense risk charges and guaranteed minimum death benefit features of the
Company's variable annuities. The Company's open positions are as follows:
<TABLE>
<CAPTION>
SWAPS OUTSTANDING
AT DECEMBER 31, 1998
---------------------------------
NOTIONAL MARKET VALUE
PRINCIPAL AMOUNTS OF POSITIONS
------------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Conventional interest rate swaps $ 45,000 $ 508
Foreign currency swap 1,178 263
</TABLE>
<TABLE>
<CAPTION>
SWAPS OUTSTANDING
AT DECEMBER 31, 1997
---------------------------------
NOTIONAL MARKET VALUE
PRINCIPAL AMOUNTS OF POSITIONS
------------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Conventional interest rate swaps $ 80,000 $ (2,891)
Foreign currency swap 1,700 208
Forward spread lock swaps 50,000 274
Asian Put Option S & P 500 75,000 693
</TABLE>
The market value of swaps is the estimated amount that the Company would receive
or pay on termination or sale, taking into account current interest rates and
the current credit worthiness of the counterparties. The Company is exposed to
potential credit loss in the event of nonperformance by counterparties. The
counterparties are major financial institutions and management believes that the
risk of incurring losses related to credit risk is remote.
9. LEVERAGED LEASES
The Company is a lessor in a leveraged lease agreement entered into on October
21, 1994, under which equipment having an estimated economic life of 25-40 years
was leased for a term of 9.75 years. The Company's equity investment represented
22.9% of the purchase price of the equipment. The balance of the purchase price
was furnished by third-party long-term debt financing, collateralized by the
equipment and non-recourse to the Company. At the end of the lease term, the
Master Lessee may exercise a fixed price purchase option to purchase the
equipment.
72 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
9. LEVERAGED LEASES (CONTINUED):
The Company's net investment in leveraged leases is composed of the following
elements:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1997
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Lease contracts receivable $ 78,937 $ 92,605
Less non-recourse debt (78,920) (92,589)
---------- ----------
17 16
Estimated residual value of leased assets 41,150 41,150
Less unearned and deferred income (8,932) (10,324)
---------- ----------
Investment in leveraged leases 32,235 30,842
Less fees (138) (163)
---------- ----------
Net investment in leveraged leases $ 32,097 $ 30,679
---------- ----------
---------- ----------
</TABLE>
The net investment is included in "other invested assets" on the balance sheet.
10. REINSURANCE
The Company has agreements with SLOC which provide that SLOC will reinsure the
mortality risks of the individual life insurance contracts sold by the Company.
Under these agreements basic death benefits and supplementary benefits are
reinsured on a yearly renewable term basis and coinsurance basis, respectively.
Reinsurance transactions under these agreements had the effect of decreasing
income from operations by approximately $2,128,000, $1,381,000 and $1,603,000
for the years ended December 31, 1998, 1997 and 1996, respectively.
Effective January 1, 1991, the Company entered into an agreement with SLOC under
which certain individual life insurance contracts issued by SLOC were reinsured
by the Company on a 90% coinsurance basis. During 1997 SLOC changed certain
assumptions used in determining the gross and the ceded reserve balance. The
Company reflected the effect of the changes in assumptions to its assumed
reserves as a direct credit to surplus. The effect of the change was a
$39,016,000 decrease in reserves. Also, the agreement required SLOC to reinsure
the mortality risks in excess of $500,000 per policy for the individual life
insurance contracts assumed by the Company. Such death benefits are reinsured on
a yearly renewable term basis. The life reinsurance assumed agreement required
the reinsurer to withhold funds in amounts equal to the reserves assumed. These
agreements had the effect of increasing income from operations by approximately
$24,579,000, $37,050,000 and $35,161,000 for the years ended December 31, 1998,
1997 and 1996, respectively. The Company terminated this agreement effective
October 1, 1998, resulting in an increase in income from operations of
$65,679,000 which included a cash settlement.
73 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
10. REINSURANCE (CONTINUED):
The following are summarized pro-forma results of operations of the Company for
the years ended December 31, 1998, 1997 and 1996 before the effect of
reinsurance transactions with SLOC:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income:
Premiums, annuity deposits and other revenues $ 2,377,364 $ 2,340,733 $ 1,941,423
Net investment income and realized gains 187,208 298,120 310,172
------------ ------------ ------------
Subtotal 2,564,572 2,638,853 2,251,595
------------ ------------ ------------
Benefits and Expenses:
Policyholder benefits 2,312,247 2,350,354 2,011,998
Other expenses 203,238 187,591 155,531
------------ ------------ ------------
Subtotal 2,515,485 2,537,945 2,167,529
------------ ------------ ------------
Income from operations $ 49,087 $ 100,908 $ 84,066
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The Company has an agreement with an unrelated company which provides
reinsurance of certain individual life insurance contracts on a modified
coinsurance basis and under which all deficiency reserves related to these
contracts are reinsured. Reinsurance transactions under this agreement had the
effect of increasing income from operations by $3,008,000 in 1998, and
decreasing income from operations by $2,658,000 in 1997 and $46,000 in 1996.
74 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
11. WITHDRAWAL CHARACTERISTICS OF ANNUITY ACTUARIAL RESERVES AND DEPOSIT
LIABILITIES
The withdrawal characteristics of general account and separate account annuity
reserves and deposits are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------
AMOUNT % OF TOTAL
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Subject to discretionary withdrawal-with adjustment:
With market value adjustment $ 2,896,529 19
At book value less surrender charges (surrender charge LESS THAN5%) 10,227,212 66
At book value (minimal or no charge or adjustment) 1,264,453 8
Not subject to discretionary withdrawal provision 1,106,197 7
------------- ---
Total annuity actuarial reserves and deposit liabilities $ 15,494,391 100
------------- ---
------------- ---
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------
AMOUNT % OF TOTAL
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Subject to discretionary withdrawal-with adjustment:
With market value adjustment $ 3,415,394 25
At book value less surrender charges (surrender charge LESS THAN5%) 7,672,211 57
At book value (minimal or no charge or adjustment) 1,259,698 9
Not subject to discretionary withdrawal provision 1,164,651 9
------------- ---
Total annuity actuarial reserves and deposit liabilities $ 13,511,954 100
------------- ---
------------- ---
</TABLE>
12. SEGMENT INFORMATION
The Company offers financial products and services such as fixed and variable
annuities, retirement plan services and life insurance on an individual basis.
Within these areas, the Company conducts business principally in two operating
segments and maintains a corporate segment to provide for the capital needs of
the various operating segments and to engage in other financing related
activities.
The Individual Insurance segment markets and administers a variety of life
insurance products sold to individuals and corporate owners of individual life
insurance. The products include whole life, universal life and variable life
products.
The Retirement Products and Services ("RPS") segment markets and administers
individual and group variable annuity products, individual and group fixed
annuity products which include market value adjusted annuities, and other
retirement benefit products.
75 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
12. SEGMENT INFORMATION (CONTINUED):
The following amounts pertain to the various business segments:
<TABLE>
<CAPTION>
FEDERAL
TOTAL TOTAL PRETAX INCOME TOTAL
(IN THOUSANDS) REVENUES EXPENDITURES INCOME TAXES ASSETS
- ----------------------------------------------------- ------------ ------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
1998
Individual Insurance $ 229,710 $ 144,800 $ 84,910 $ (4,148) $ 199,683
RPS 2,527,608 2,483,715 43,893 12,486 16,123,905
Corporate 10,959 3,042 7,917 3,375 579,033
------------ ------------- ---------- ---------- -------------
Total $ 2,768,277 $ 2,631,557 $ 136,720 $ 11,713 $ 16,902,621
------------ ------------- ---------- ---------- -------------
1997
Individual Insurance 304,141 272,333 31,808 13,825 1,143,697
RPS 2,533,006 2,507,591 25,414 10,667 14,043,221
Corporate 57,897 5,244 52,653 (17,153) 738,439
------------ ------------- ---------- ---------- -------------
Total $ 2,895,044 $ 2,785,169 $ 109,875 $ 7,339 $ 15,925,357
------------ ------------- ---------- ---------- -------------
1996
Individual Insurance 281,309 255,846 25,463 13,931 817,115
RPS 2,174,602 2,151,126 23,476 1,203 12,057,572
Corporate 64,721 898 63,823 (20,534) 689,266
------------ ------------- ---------- ---------- -------------
Total $ 2,520,632 $ 2,407,870 $ 112,762 $ (5,400) $ 13,563,953
------------ ------------- ---------- ---------- -------------
</TABLE>
- ------------------------
* Total expenditures include dividends to policyholders of $(5,981) for 1998,
$33,316 for 1997 and $29,189 for 1996.
13. RETIREMENT PLANS
The Company participates with SLOC in a noncontributory defined benefit pension
plan covering essentially all employees. The benefits are based on years of
service and compensation.
The funding policy for the pension plan is to contribute an amount which at
least satisfies the minimum amount required by ERISA; currently, the plan is
fully funded. The Company is charged for its share of the pension cost based
upon its covered participants. Pension plan assets consist principally of
separate accounts of SLOC.
The Company's share of the group's accrued pension cost was $1,178,000 and
$593,000 at December 31, 1998 and 1997, respectively. The Company's share of net
periodic pension cost was $586,000, $146,000 and $27,000, for 1998, 1997 and
1996, respectively.
The Company also participates with SLOC and certain affiliates in a 401(k)
savings plan for which substantially all employees are eligible. The Company
matches, up to specified amounts, employees' contributions to the plan. Company
contributions were $231,000, $259,000 and $233,000 for the years ended December
31, 1998, 1997 and 1996, respectively.
76 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
13. RETIREMENT PLANS (CONTINUED):
OTHER POST-RETIREMENT BENEFIT PLANS
In addition to pension benefits the Company provides certain health, dental, and
life insurance benefits ("post-retirement benefits") for retired employees and
dependents. Substantially all employees may become eligible for these benefits
if they reach normal retirement age while working for the Company, or retire
early upon satisfying an alternate age plus service condition. Life insurance
benefits are generally set at a fixed amount.
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employer's Accounting for Postretirement Benefits
Other Than Pensions." SFAS No. 106 requires an accrual of the estimated cost of
retiree benefit payments during the years the employee provides services. SFAS
No. 106 allows recognition of the cumulative effect of the liability in the year
of adoption or the amortization of the obligation over a period of up to 20
years. The obligation of approximately $455,000 is recognized over a period of
ten years. The Company's cash flows are not affected by implementation of this
standard, but implementation decreased net income by $95,000, $117,000, and
$8,000 for the years ended December 31, 1998, 1997, and 1996, respectively. The
Company's post retirement health, dental and life insurance benefits currently
are not funded.
77 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
13. RETIREMENT PLANS (CONTINUED):
OTHER POST-RETIREMENT BENEFIT PLANS CONTINUED
The following table sets forth the change in the pension and other
postretirement benefit plans' benefit obligations and assets as well as the
plans' funded status reconciled with the amount shown in the Company's financial
statements at December 31:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
1998 1997 1998 1997
---------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 79,684 $ 70,848 $ 9,845 $ 9,899
Service cost 4,506 4,251 240 306
Interest cost 6,452 5,266 673 725
Amendments -- 1,000 -- --
Actuarial loss (gain) 21,975 -- 308 (801)
Benefits paid (1,825) (1,681) (647) (284)
---------- ---------- ---------- ---------
Benefit obligation at end of year $ 110,792 $ 79,684 $ 10,419 $ 9,845
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
The Company's share:
Benefit obligation at beginning of year $ 5,094 $ 4,529 $ 385 $ 384
Benefit obligation at end of year $ 9,125 $ 5,094 $ 416 $ 385
Change in plan assets:
Fair value of plan assets at beginning of year $ 136,610 $ 122,807 $ -- $ --
Actual return on plan assets 16,790 15,484 -- --
Employer contribution -- -- 647 284
Benefits paid (1,825) (1,681) (647) (284)
---------- ---------- ---------- ---------
Fair value of plan assets at end of year $ 151,575 $ 136,610 $ -- $ --
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Funded status $ 40,783 $ 56,926 $ (10,419) $ (9,845)
Unrecognized net actuarial gain (loss) (2,113) (18,147) 586 257
Unrecognized transition obligation (asset) (24,674) (26,730) 185 230
Unrecognized prior service cost 7,661 8,241 -- --
---------- ---------- ---------- ---------
Prepaid (accrued) benefit cost $ 21,657 $ 20,290 $ (9,648) $ (9,358)
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
The Company's share of accrued benefit cost $ (1,178) $ (593) $ (195) $ (102)
Weighted-average assumptions as of December 31:
Discount rate 6.75% 7.50% 6.75% 7.50%
Expected return on plan assets 8.00% 7.50% N/A N/A
Rate of compensation increase 4.50% 4.50% N/A N/A
</TABLE>
78 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
13. RETIREMENT PLANS (CONTINUED):
For measurement purposes, a 10.1% annual rate of increase in the per capita cost
of covered health care benefits was assumed for 1998 (5.7% for dental benefits).
The rates were assumed to decrease gradually to 5% for 2005 and remain at that
level thereafter.
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
--------------------- --------------------
1998 1997 1998 1997
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Components of net periodic benefit cost:
Service cost $ 4,506 $ 4,251 $ 240 $ 306
Interest cost 6,452 5,266 673 725
Expected return on plan assets (10,172) (9,163) -- --
Amortization of transition obligation (asset) (2,056) (2,056) 45 45
Amortization of prior service cost 580 517 -- --
Recognized net actuarial (gain) loss (677) (789) (20) 71
---------- --------- --------- ---------
Net periodic benefit cost $ (1,367) $ (1,974) $ 938 $ 1,147
---------- --------- --------- ---------
---------- --------- --------- ---------
The Company's share of net periodic benefit cost $ 586 $ 146 $ 95 $ 117
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage-point change in assumed
health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
1-PERCENTAGE-POINT 1-PERCENTAGE-POINT
INCREASE DECREASE
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
Effect on total of service and interest cost components $ 210 $ (170)
Effect on postretirement benefit obligation 2,026 (1,697)
</TABLE>
79 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values of
the Company's financial instruments at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
---------------------------------------
CARRYING AMOUNT ESTIMATED FAIR VALUE
----------------- --------------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Bonds $ 2,026,868 $ 2,153,953
Mortgages 535,003 556,143
Derivatives -- 771
LIABILITIES:
Insurance reserves $ 121,100 $ 121,100
Individual annuities 274,448 271,849
Pension products 1,104,489 1,145,351
<CAPTION>
DECEMBER 31, 1997
---------------------------------------
CARRYING AMOUNT ESTIMATED FAIR VALUE
----------------- --------------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Bonds $ 2,451,731 $ 2,569,199
Mortgages 684,035 706,975
LIABILITIES:
Insurance reserves $ 123,128 $ 123,128
Individual annuities 307,668 302,165
Pension products 1,527,433 1,561,108
Derivatives -- (1,716)
</TABLE>
The major methods and assumptions used in estimating the fair values of
financial instruments are as follows:
The fair values of short-term bonds are estimated to be the amortized cost. The
fair values of long-term bonds which are publicly traded are based upon market
prices or dealer quotes. For privately placed bonds, fair values are estimated
by taking into account prices for publicly traded bonds of similar credit risk
and maturity and repayment and liquidity characteristics.
The fair values of the Company's general account insurance reserves and
liabilities under investment-type contracts (insurance, annuity and pension
contracts that do not involve mortality or morbidity risks) are estimated using
discounted cash flow analyses or surrender values. Those contracts that are
deemed to have short-term guarantees have a carrying amount equal to the
estimated market value.
The fair values of mortgages are estimated by discounting future cash flows
using current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
The fair values of derivative financial instruments are estimated using the
process described in Note 8.
80 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
15. STATUTORY INVESTMENT VALUATION RESERVES
The asset valuation reserve ("AVR") provides a reserve for losses from
investments in bonds, stocks, mortgage loans, real estate and other invested
assets with related increases or decreases being recorded directly to surplus.
Realized capital gains and losses on bonds and mortgages which relate to changes
in levels of interest rates are charged or credited to an interest maintenance
reserve ("IMR") and amortized into income over the remaining contractual life of
the security sold.
The table shown below presents changes in the major elements of the AVR and IMR.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1998 1997
-------------------- --------------------
AVR IMR AVR IMR
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance, beginning of year $ 47,605 $ 33,830 $ 53,911 $ 28,675
Net realized investment gains, net of tax 256 8,942 17,400 6,321
Amortization of net investment gains -- (2,282) -- (1,166)
Unrealized investment losses (6,550) -- (2,340) --
Required by formula 3,081 -- (21,366) --
--------- --------- --------- ---------
Balance, end of year $ 44,392 $ 40,490 $ 47,605 $ 33,830
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
16. FEDERAL INCOME TAXES
The Company and its subsidiaries file a consolidated federal income tax return.
Federal income taxes are calculated for the consolidated group based upon
amounts determined to be payable as a result of operations within the current
year. No provision is recognized for timing differences which may exist between
financial statement and taxable income. Such timing differences include
reserves, depreciation and accrual of market discount on bonds. Cash payments
for federal income taxes were approximately $48,144,000, $31,000,000 and
$19,264,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
The Company is currently undergoing an audit by the Internal Revenue Service.
The Company believes that there will be no material audit adjustments for the
periods under examination.
17. SURPLUS NOTES AND NOTES RECEIVABLE (PAYABLE)
On December 22, 1997, the Company issued a $250,000,000 surplus note to Life
Holdco. This note has an interest rate of 8.625% and is due on or after November
6, 2027.
On May 9, 1997, the Company issued a short-term note of $600,000,000 to Life
Holdco at an interest rate of 5.10%, which was extended at various interest
rates. This note was repaid on December 22, 1997.
On December 19, 1995, the Company issued surplus notes totaling $315,000,000 to
an affiliate, Sun Canada Financial Co., at interest rates between 5.75% and
7.25%. Of these notes, $157,500,000 will mature in the year 2007 and
$157,500,000 will mature in the year 2015. Interest on these notes is payable
semiannually.
81 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
17. SURPLUS NOTES AND NOTES RECEIVABLE (PAYABLE) (CONTINUED):
Principal and interest on surplus notes are payable only to the extent that the
Company meets specified requirements regarding free surplus exclusive of the
principal amount and accrued interest, if any, on these notes and with the
consent of the Delaware Insurance Commissioner.
The Company accrued $4,259,000 and $964,000 for interest on surplus notes for
the years ended December 31, 1998 and 1997, respectively.
The Company expensed $44,903,000, $42,481,000 and $23,061,000 for interest on
surplus notes and notes payable for the years ended December 31, 1998, 1997 and
1996, respectively.
18. TRANSACTIONS WITH AFFILIATES
The Company has an agreement with SLOC which provides that SLOC will furnish, as
requested, personnel as well as certain services and facilities on a
cost-reimbursement basis. Expenses under this agreement amounted to
approximately $16,344,000 in 1998, $15,997,000 in 1997, and $20,192,000 in 1996.
The Company leases office space to SLOC under lease agreements with terms
expiring in September, 1999 and options to extend the terms for each of thirteen
successive five-year terms at fair market rental not to exceed 125% of the fixed
rent for the term which is ending. Rent received by the Company under the leases
for 1998 amounted to approximately $6,856,000.
19. RISK-BASED CAPITAL
Effective December 31, 1993, the NAIC adopted risk-based capital requirements
for life insurance companies. The risk-based capital requirements provide a
method for measuring the minimum acceptable amount of adjusted capital that a
life insurer should have, as determined under statutory accounting practices,
taking into account the risk characteristics of its investments and products.
The Company has met the minimum risk-based capital requirements at December 31,
1998, 1997 and 1996.
20. ACCOUNTING POLICIES AND PRINCIPLES
The financial statements of the Company have been prepared on the basis of
statutory accounting practices which, prior to 1996, were considered by the
insurance industry and the accounting profession to be in accordance with GAAP
for mutual life insurance companies. The primary differences between statutory
accounting practices and GAAP are described as follows. Under statutory
accounting practices, financial statements are not consolidated and investments
in subsidiaries are shown at net equity value. Accordingly, the assets,
liabilities and results of operations of the Company's subsidiaries are not
consolidated with the assets, liabilities and results of operations,
respectively, of the Company. Changes in net equity value of the common stock of
the Company's United States life insurance subsidiaries are directly reflected
in the Company's surplus. Changes in the net equity value of the common stock of
all other subsidiaries are directly reflected in the Company's Asset Valuation
Reserve. Dividends paid by subsidiaries to the Company are included in the
Company's net investment income.
82 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
20. ACCOUNTING POLICIES AND PRINCIPLES (CONTINUED):
Other differences between statutory accounting practices and GAAP include the
following: statutory accounting practices do not recognize the following assets
or liabilities which are reflected under GAAP: deferred policy acquisition
costs, deferred federal income taxes and statutory nonadmitted assets. Asset
Valuation Reserves and Interest Maintenance Reserves are established under
statutory accounting practices but not under GAAP. Methods for calculating real
estate depreciation and investment valuation allowances differ under statutory
accounting practices and GAAP. Actuarial assumptions and reserving methods
differ under statutory accounting practices and GAAP. Premiums for universal
life and investment-type products are recognized as income for statutory
purposes and as deposits to policyholders' accounts for GAAP.
Because the Company's management uses financial information prepared in
conformity with accounting principles generally accepted in Canada in the normal
course of business, the management of Sun Life Assurance Company of Canada
(U.S.) has determined that the cost of complying with Statement No. 120,
"Accounting and Reporting by Mutual Insurance Enterprises and by Insurance
Enterprises for Certain Long Duration Participating Contracts", exceeds the
benefits that the Company, or the users of its financial statements, would
experience. Consequently, the Company has elected not to apply such standards in
the preparation of these financial statements.
83 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
We have audited the accompanying statutory statements of admitted assets,
liabilities and capital stock and surplus of Sun Life Assurance Company of
Canada (U.S.) (the "Company") as of December 31, 1998 and 1997, and the related
statutory statements of operations, changes in capital stock and surplus, and
cash flow for each of the three years in the period ended December 31, 1998.
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 Notes 1 and 20 to the financial statements, the
Company prepared these financial statements using accounting practices
prescribed or permitted by the Insurance Department of the State of Delaware,
which is a comprehensive basis of accounting other than generally accepted
accounting principles. The effects on the financial statements of the
differences between the statutory basis of accounting and generally accepted
accounting principles, although not reasonably determinable, are presumed to be
material.
In our opinion, the statutory financial statements referred to above present
fairly, in all material respects, the admitted assets, liabilities, and capital
stock and surplus of Sun Life Assurance Company of Canada (U.S.) as of December
31, 1998 and 1997, and the results of its operations and its cash flow for each
of the three years in the period ended December 31, 1998 on the basis of
accounting described in Notes 1 and 20.
However, because of the differences between the two bases of accounting referred
to in the second preceding paragraph, in our opinion, the statutory financial
statements referred to above do not present fairly, in conformity with generally
accepted accounting principles, the financial position of Sun Life Assurance
Company of Canada (U.S.) as of December 31, 1998 and 1997 or the results of its
operations or its cash flow for each of the three years in the period ended
December 31, 1998.
As management has stated in Note 20, because the Company's management uses
financial information prepared in accordance with accounting principles
generally accepted in Canada in the normal course of business, the management of
Sun Life Assurance Company of Canada (U.S.) has determined that the cost of
complying with Statement No. 120, ACCOUNTING AND REPORTING BY MUTUAL LIFE
INSURANCE ENTERPRISES AND BY INSURANCE ENTERPRISES FOR CERTAIN LONG-DURATION
PARTICIPATING CONTRACTS, would exceed the benefits that the Company, or the
users of its financial statements, would experience. Consequently, the Company
has elected not to apply such standards in the preparation of these financial
statements.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 5, 1999
84 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(wholly-owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND
CAPITAL STOCK AND SURPLUS
MARCH 31, 1999 AND DECEMBER 31, 1998 (IN 000'S)
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
ADMITTED ASSETS
Bonds $ 1,572,715 $ 1,763,468
Common stocks 83,972 128,445
Mortgage loans on real estate 609,535 535,003
Properties acquired in satisfaction of debt 17,126 17,207
Investment real estate 77,590 78,021
Policy loans 42,673 41,944
Cash & short-term investments 292,317 265,226
Other invested assets 65,147 64,177
Investment income due and accrued 35,185 35,706
Federal income tax recoverable and interest thereon 2,183 1,110
Other assets 0 1,928
------------- -------------
General account assets 2,798,443 2,932,235
Separate account assets
Unitized 12,084,019 11,774,745
Non-unitized 2,262,722 2,195,641
------------- -------------
Total admitted assets $ 17,145,184 $ 16,902,621
------------- -------------
------------- -------------
LIABILITIES
Aggregate reserve for life policies and contracts $ 1,211,227 $ 1,216,107
Supplementary contracts 1,896 1,885
Policy and contract claims 1,670 369
Liability for premium and other deposit funds 875,219 1,000,875
Surrender values on cancelled policies 71 5
Interest maintenance reserve 41,373 40,490
Commissions to agents due or accrued 2,281 2,615
General expenses due or accrued 6,371 5,932
Transfers from Separate Accounts due or accrued (402,407) (361,863)
Taxes, licenses and fees due or accrued, excluding FIT 438 401
Federal income taxes due or accrued 25,260 25,019
Unearned investment income 43 23
Amounts withheld or retained by company as agent or trus tee 1,293 529
Remittances and items not allocated 3,177 5,176
Asset valuation reserve 43,663 44,392
Payable to parent, subsidiaries, and affiliates 13,703 30,381
Payable for securities 10,376 428
Dividends to stockholders declared and unpaid 75,000 0
Other liabilities 24,217 9,770
------------- -------------
General account liabilities 1,934,871 2,022,534
Separate account liabilities
Unitized 12,083,808 11,774,522
Non-unitized 2,262,722 2,195,641
Total liabilities 16,281,401 15,992,697
------------- -------------
CAPITAL STOCK AND SURPLUS
Common capital stock 5,900 5,900
------------- -------------
Surplus notes 565,000 565,000
Gross paid in and contributed surplus 199,355 199,355
Unassigned funds 93,528 139,669
------------- -------------
Surplus 857,883 904,024
------------- -------------
Total common capital stock and surplus 863,783 909,924
------------- -------------
Total liabilities, capital stock and surplus $ 17,145,184 $ 16,902,621
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO UNAUDITED STATUTORY FINANCIAL STATEMENTS.
85 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (IN 000'S)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
INCOME:
Premiums and annuity considerations $ 17,210 $ 63,791
Deposit-type funds 626,370 475,605
Considerations for supplementary
contracts without life
contingencies and dividend
accumulations 266 298
Net investment income 46,587 49,602
Amortization of interest maintenance
reserve 911 571
Net gain from operations from
Separate Accounts Statement 0 1
Income from fees associated with
investment management
administration and contract
guarantees from Separate Account 40,453 32,211
Other income 5,651 26,002
--------- ---------
Total 737,448 648,081
--------- ---------
BENEFITS AND EXPENSES:
Death benefits 813 7,943
Annuity benefits 37,483 35,038
Disability benefits and benefits
under accident and health policies 0 22
Surrender benefits and other fund
withdrawals 566,820 457,081
Interest on policy or contract funds 100 67
Payments on supplementary contracts
without life contingencies and of
dividend accumulations 329 252
Increase (decrease) in aggregate
reserves for life and accident and
health policies and contracts (4,880) 29,070
Decrease in liability for premium
and other deposit funds (125,656) (117,221)
Increase in reserve for
supplementary contracts without
life contingencies and for
dividend and coupon accumulations 11 68
--------- ---------
Total 475,020 412,320
Commissions on premiums and annuity
considerations (direct business
only) 38,381 29,778
Commissions and expense allowances
on reinsurance assumed 0 4,242
General insurance expenses 14,068 12,013
Insurance taxes, licenses and fees,
excluding federal income taxes 2,253 2,153
Decrease in loading on and cost of
collection in excess of loading on
deferred and uncollected premiums 0 (50)
Net transfers to Separate Accounts 168,456 155,605
--------- ---------
Total 698,178 616,061
--------- ---------
Net gain from operations before
dividends to policyholders and fit 39,270 32,020
Dividends to policyholders 0 9,790
--------- ---------
Net gain from operations after
dividends to policyholders and
before fit 39,270 22,230
Federal income tax expense
(excluding tax on capital gains) 7,893 7,522
--------- ---------
Net gain from operations after
dividends to policyholders and fit
and before realized capital gains 31,377 14,708
Net realized capital gains less
capital gains tax and transferred
to the IMR 6,278 217
--------- ---------
NET INCOME $ 37,655 $ 14,925
--------- ---------
--------- ---------
</TABLE>
SEE NOTES TO UNAUDITED STATUTORY FINANCIAL STATEMENTS.
86 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (IN 000'S)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Capital and surplus, Beginning of period $ 909,924 $ 832,695
---------- ----------
Net income 37,655 14,925
Change in net unrealized capital gains (9,736) 396
Change in non-admitted assets and related items 261 447
Change in asset valuation reserve 729 733
Surplus (contributed to) withdrawn from Separate Accounts during period (35) 48
Other changes in surplus in Separate Accounts Statement (14) 0
Dividends to stockholder (75,000) 0
---------- ----------
Net change in capital and surplus for the period (46,140) 16,549
---------- ----------
Capital and surplus, End of period $ 863,784 $ 849,244
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO UNAUDITED STATUTORY FINANCIAL STATEMENTS.
87 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
STATUTORY STATEMENTS OF CASH FLOW
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (IN 000'S)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash Provided:
Premiums, annuity considerations and
deposit funds received $ 643,579 $ 539,684
Considerations for supplementary
contracts and dividend accumulations
received 266 298
Net investment income received 58,505 60,680
Other income received 46,105 28,973
----------- -----------
Total receipts 748,455 629,635
----------- -----------
Benefits paid (other than dividends) 604,079 499,732
Insurance expenses and taxes paid (other
than federal income and capital gains
taxes) 54,560 49,495
Net cash transfers to Separate Accounts 209,000 146,539
Dividends paid to policyholders 0 8,290
Federal income tax (recoveries) payments
(excluding tax on capital gains) (3,169) 4,098
Other--net 99 67
----------- -----------
Total payments 864,569 708,221
----------- -----------
Net cash from operations (116,114) (78,586)
----------- -----------
Proceeds from long-term investments
sold, matured or repaid (after
deducting taxes on capital gains of
$965,960 for 1999, $1,797,495 for
1998) 293,812 370,476
Other cash provided 30,844 87,052
----------- -----------
Total cash provided 324,656 457,528
----------- -----------
Cash Applied:
Cost of long-term investments acquired 149,814 428,604
Other cash applied 31,637 158,122
----------- -----------
Total cash applied 181,451 586,726
Net change in cash and short-term
investments 27,091 (207,784)
Cash and short-term investments:
Beginning of period 265,226 544,418
----------- -----------
End of period $ 292,317 $ 336,634
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO UNAUDITED STATUTORY FINANCIAL STATEMENTS.
88 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) GENERAL
In management's opinion all adjustments, which include only normal recurring
adjustments, necessary for a fair presentation of the financial statements have
been made.
The accompanying unaudited financial statements should be read in conjunction
with the audited financial statements for the year ended December 31, 1998.
(2) TRANSACTIONS WITH AFFILIATES
The Company has an agreement with its ultimate parent, Sun Life Assurance
Company of Canada ('SLOC') which provides that SLOC will furnish, as requested,
personnel as well as certain services and facilities on a cost-reimbursement
basis. Expenses under this agreement amounted to approximately $4,487,000 and
$4,284,000, respectively, for the three month period ending March 31 in 1999 and
1998.
The Company leases office space to SLOC under lease agreements with terms
expiring in September, 1999 and options to extend the terms for each of thirteen
successive five-year terms at fair market rental not to exceed 125% of the fixed
rent for the term which is ending. Rent received by the Company under the leases
for the three month period amounted to approximately $1,762,000.
(3) INVESTMENTS IN SUBSIDIARIES
The following is combined unaudited summarized financial information of the
subsidiaries as of:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------ --------------
(000'S)
<S> <C> <C>
Assets $ 1,073,226 $ 1,315,317
Liabilities (987,268) (1,186,872)
------------ --------------
Total equity $ 85,958 $ 128,445
------------ --------------
------------ --------------
</TABLE>
In determining the equity of subsidiaries for the periods, the Company has
excluded approximately $1,986,000 for the three month period in 1999 and
$566,000 for the year ended December 1998 representing deferred taxes.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
---------- ----------
(000'S)
<S> <C> <C>
Total revenue $ 26,191 $ 62,467
Operating expenses (26,662) (59,936)
Income tax expense (405) ( 1,065)
---------- ----------
Net income $ (876) $ 1,466
---------- ----------
---------- ----------
</TABLE>
In determining the equity in income of subsidiaries for the periods, the Company
has excluded expenses of approximately $33,000 for the three month period in
1999 and $1,105,000 for the same period in 1998, representing payables to the
Company in lieu of federal income taxes.
89 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS IN SUBSIDIARIES (CONTINUED):
SALE OF SUBSIDIARY
In February 1999, the Company completed the sale of its wholly-owned subsidiary,
Massachusetts Casualty Insurance company (MCIC) to Centre Solutions (U.S.)
Limited, a wholly-owned subsidiary of Centre Reinsurance Holdings, Limited for
approximately $34 million. MCIC sold individual disability insurance throughout
the U.S. This transaction is not expected to have a significant effect on the
ongoing operations of the Company.
(4) INVESTMENT INCOME
Net investment income consisted of:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
---------- ----------
(000'S)
<S> <C> <C>
Interest income from bonds $ 36,794 $ 46,523
Income from investment in common stocks of affiliates 6,409 0
Interest income from mortgage loans 12,033 14,380
Real estate investment income 3,908 3,967
Interest income from policy loans 995 534
Other investment income (loss) 300 (192)
---------- ----------
Gross investment income 60,439 65,212
Interest on surplus notes (10,816) (12,454)
Investment expenses (3,036) (3,156)
---------- ----------
Net investment income $ 46,587 $ 49,602
---------- ----------
---------- ----------
</TABLE>
(5) SEGMENT INFORMATION
The Company currently offers financial products and services such as fixed and
variable annuities, and life insurance on an individual basis including
corporate owned life insurance. Within these areas, the Company conducts
business principally in two operating segments and maintains a corporate segment
to provide for the capital needs of the various operating segments and to engage
in other financing related activities.
The Individual Insurance segment markets and administers a variety of life
insurance products sold to individuals and corporate owners of individual life
insurance. The in force products include whole life, universal life and variable
life.
90 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
(5) SEGMENT INFORMATION (CONTINUED):
The Retirement Products and Services ("RPS") segment markets and administers
individual and group variable annuity products, individual and group fixed
annuity products which include market value adjusted annuities, and other
retirement benefit products.
<TABLE>
<CAPTION>
FEDERAL
TOTAL TOTAL PRETAX INCOME
THREE MONTHS ENDED MARCH 31, REVENUES EXPENDITURES INCOME TAXES
- ----------------------------------------------------------------- ---------- ------------- --------- ---------
(000'S)
<S> <C> <C> <C> <C>
1999
Individual Ins. $ 10,319 $ 10,047 $ 272 $ (6)
RPS 719,791 688,279 31,512 9,887
Corporate 7,338 (148) 7,486 (1,988)
---------- ------------- --------- ---------
Total $ 737,448 $ 698,178 $ 39,270 $ 7,893
---------- ------------- --------- ---------
1998
Individual Ins. $ 70,912 $ 66,910 $ 4,002 $ 1,694
RPS 573,985 557,985 16,000 3,921
Corporate 3,184 956 2,228 1,907
---------- ------------- --------- ---------
Total $ 648,081 $ 625,851 $ 22,230 $ 7,522
---------- ------------- --------- ---------
</TABLE>
SUBSEQUENT EVENT
In April 1999, the Company announced plans to sell its wholly owned
subsidiary, New London trust F.S.B., to Phoenix Home Life Mutual Insurance
Company. The Company anticipates that the sale will be completed in late 1999,
subject to state and federal regulatory approvals. This transaction is not
expected to have a significant effect on the ongoing operations of the Company.
91 FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
APPENDIX A
GLOSSARY OF POLICY TERMS
ACCOUNT VALUE--The sum of the amounts in each Sub-Account of the Variable
Account and the Fixed Account Value with respect to a Policy.
ANNIVERSARY--The same day in each succeeding year as the day of the year
corresponding to the policy date.
ATTAINED AGE--The insured's Issue Age plus the number of completed Policy
Years.
BUSINESS DAY--Any day that we are open for business.
CASH VALUE--Account Value less any surrender charges.
CASH SURRENDER VALUE--The Cash Value decreased by the balance of any
outstanding Policy Debt.
CLASS--The risk and underwriting classification of the insured.
DAILY RISK PERCENTAGE--The daily rate for deduction of the Mortality and
Expense Risk Charge.
DUE PROOF--Such evidence as we may reasonably require in order to establish
that a benefit is due and payable.
EFFECTIVE DATE OF COVERAGE--Initially, the Investment Start Date; with
respect to any increase in the Specified Face Amount, the Anniversary that falls
on or next follows the date we approve the supplemental application for that
increase; with respect to any decrease in the Specified Face Amount, the Monthly
Anniversary Day that falls on or next follows the date we receive your request.
EXPENSE CHARGES APPLIED TO PREMIUM--A percentage charge deducted from each
premium payment.
FIXED ACCOUNT VALUE--The portion of the Account Value funded by the assets
of our general account.
FUND--A mutual fund portfolio in which a Sub-Account invests.
INITIAL PREMIUM--The initial premium amount specified in a Policy.
INSURED--The person on whose life a Policy is issued.
INVESTMENT START DATE--The date the first premium is applied, which will be
the later of the Issue Date, the Policy Date or the Valuation Date we receive a
premium equal to or in excess of the initial premium.
ISSUE AGE--The insured's age as of the insured's birthday nearest the policy
date.
ISSUE DATE--The date we produce a Policy from our system as specified in the
Policy.
MATURITY--The Anniversary on which the insured's Attained Age is 100.
MONTHLY ANNIVERSARY DAY--The same day in each succeeding month as the day of
the month corresponding to the policy date.
MONTHLY COST OF INSURANCE--A deduction made on a monthly basis for the
insurance coverage provided by the Policy.
MONTHLY EXPENSE CHARGE--A per Policy deduction made on a monthly basis for
administration and other expenses.
<PAGE>
MORTALITY AND EXPENSE RISK CHARGE--The annual rate deducted from the Account
Value in the Sub-Accounts for the mortality and expense risk we assume by
issuing the Policy. This annual rate is converted to a daily rate, the Daily
Risk Percentage, and deducted from the Unit Values of the Sub-Accounts on a
daily basis.
POLICY APPLICATION--The application for a Policy, a copy of which is
attached to and incorporated in the Policy.
POLICY DEBT--The principal amount of any outstanding loan against the
Policy, plus accrued but unpaid interest on such loan.
POLICY MONTH--A Policy Month is a one-month period commencing on the policy
date or any Monthly Anniversary Day and ending on the next Monthly Anniversary
Day.
POLICY PROCEEDS--The amount determined in accordance with the terms of the
Policy which is payable at the death of the insured prior to the Policy Maturity
date. This amount is the death benefit, decreased by the amount of any
outstanding Policy Debt and any Unpaid Policy Charges, and increased by the
amounts payable under any supplemental benefits.
POLICY YEAR--A Policy Year is a one-year period commencing on the policy
date or any Anniversary and ending on the next Anniversary.
PRINCIPAL OFFICE--Sun Life Assurance Company of Canada (U.S.), One Sun Life
Executive Park, Wellesley Hills, Massachusetts, 02481, or such other address as
we may hereafter specify to you by written notice.
SPECIFIED FACE AMOUNT--The amount of life insurance coverage you request as
specified in your Policy.
SUB-ACCOUNTS--Sub-accounts into which the assets of the Variable Account are
divided, each of which corresponds to an investment choice available to you.
UNIT--A unit of measurement that we use to calculate the value of each
Sub-Account.
UNIT VALUE--The value of each Unit of assets in a Sub-Account.
UNPAID POLICY CHARGES--The amounts by which the Monthly Expense Charges plus
the Monthly Costs of Insurance plus the Policy Debt exceed the Account Value.
VALUATION DATE--Any day that benefits vary and on which we, the applicable
Fund, and the New York Stock Exchange are open for business and any other day as
may be required by the applicable rules and regulations of the Securities and
Exchange Commission.
VALUATION PERIOD--The period of time from one determination of Unit Values
to the next following determination of Unit Values. We will determine Unit
Values for each Valuation Date as of the close of the New York Stock Exchange on
that Valuation Date.
VARIABLE ACCOUNT--Sun Life of Canada (U.S.) Variable Account I.
A-2
<PAGE>
APPENDIX B
TABLE OF DEATH BENEFIT PERCENTAGES
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE
AGE PERCENTAGE AGE PERCENTAGE
--- ----------- --- -----------
<S> <C> <C> <C>
20 250% 60 130%
21 250% 61 128%
22 250% 62 126%
23 250% 63 124%
24 250% 64 122%
25 250% 65 120%
26 250% 66 119%
27 250% 67 118%
28 250% 68 117%
29 250% 69 116%
30 250% 70 115%
31 250% 71 113%
32 250% 72 111%
33 250% 73 109%
34 250% 74 107%
35 250% 75 105%
36 250% 76 105%
37 250% 77 105%
38 250% 78 105%
39 250% 79 105%
40 250% 80 105%
41 243% 81 105%
42 236% 82 105%
43 229% 83 105%
44 222% 84 105%
45 215% 85 105%
46 209% 86 105%
47 203% 87 105%
48 197% 88 105%
49 191% 89 105%
50 185% 90 105%
51 178% 91 104%
52 171% 92 103%
53 164% 93 102%
54 157% 94 101%
55 150% 95 100%
56 146% 96 100%
57 142% 97 100%
58 138% 98 100%
59 134% 99 100%
</TABLE>
<PAGE>
APPENDIX C
SAMPLE HYPOTHETICAL ILLUSTRATIONS
HYPOTHETICAL ILLUSTRATIONS OF CASH SURRENDER VALUES,
ACCOUNT VALUES AND DEATH BENEFITS
The illustrations in this prospectus have been prepared to help show how
values under the Policy change with investment performance. The illustrations on
the following pages illustrate the way in which a Policy's death benefit,
Account Value and Cash Surrender Value could vary over an extended period of
time. They assume that all premiums are allocated to and remain in the Variable
Account for the entire period shown and are based on hypothetical gross annual
investment returns for the Funds (i.e., investment income and capital gains and
losses, realized or unrealized) equivalent to constant gross annual rates of 0%,
6% and 12% over the periods indicated.
The Account Values and death benefits would be different from those shown if
the gross annual investment rates of return averaged 0%, 6% and 12% over a
period of years, but fluctuated above or below such averages for individual
Policy Years. The values would also be different depending on the allocation of
a Policy's total Account Value among the Sub-Accounts, if the actual rates of
return averaged 0%, 6% or 12%, but the rates of each Fund varied above and below
such averages.
The amounts shown for the death benefits and Account Values take into
account all charges and deductions imposed under the Policy based on the
assumptions set forth in the tables below. These include the Expense Charges
Applied to Premium, the Daily Risk Percentage charged against the Variable
Account for mortality and expense risks, the Monthly Expense Charge and the
Monthly Cost of Insurance. The Expense Charges Applied to Premium are equal to a
5.25% charge as a sales load and for our federal, state and local tax
obligations and are guaranteed not to exceed 7.25%. The Daily Risk Percentage
charge is an annual effective rate of 0.80% for the first 10 Policy Years and
0.50% thereafter and is guaranteed not to exceed an annual effective rate of
.90%. The Monthly Expense Charge is $8.00 per month for all Policy Years.
The amounts shown in the tables also take into account the Funds' advisory
fees and operating expenses, which are assumed to be at an annual rate of 0.86%
of the average daily net assets of each Fund. This is based upon a simple
average of the advisory fees and expenses of all the Funds for the most recent
fiscal year taking into account any applicable expense caps or expense
reimbursement arrangements. Actual fees and expenses of the Funds may be more or
less than 0.86%, will vary from year to year, and will depend upon how Account
Value is allocated among the Sub-Accounts. See the Fund Prospectuses for more
information on Fund expenses. The gross annual rates of investment return of 0%,
6% and 12% correspond to net annual rates of -1.66%, 4.34% and 10.34%,
respectively, during the first 10 Policy Years; -1.36%, 4.64% and 10.64%,
respectively, thereafter taking into account the current Daily Risk Percentage
charge and the assumed 0.86% charge for the Funds' advisory fees and operating
expenses; and -1.76%, 4.24% and 10.24%, respectively, taking into account the
guaranteed Daily Risk Percentage charge.
The hypothetical returns shown in the tables do not reflect any charges for
income taxes against the Variable Account since no charges are currently made.
If, in the future, such charges are made, in order to produce the illustrated
death benefits and Cash Values, the gross annual investment rate of return would
have to exceed 0%, 6% or 12% by a sufficient amount to cover the tax charges.
The second column of each table shows the amount which would accumulate if
an amount equal to each premium were invested and earned interest, after taxes,
at 5% per year, compounded annually.
We will furnish upon request a comparable table using any specific set of
circumstances. In addition to a table assuming policy charges at their maximum,
we will furnish a table assuming current policy charges.
<PAGE>
TABLE 1
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
MALE, PREFERRED, AGE 45, NON TOBACCO
$250,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM $3,500.00
DEATH BENEFIT OPTION A
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6% HYPOTHETICAL 12%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS NET -1.66% NET 4.34% NET 10.34%
PAID PLUS ----------------------------------- ------------------------------ ---------------------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------ --------- --------- --------- --------- --------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,675 608 2,543 250,000 784 2,719 250,000 960 2,895 250,000
2 7,534 3,053 4,988 250,000 3,564 5,499 250,000 4,096 6,031 250,000
3 11,585 5,394 7,329 250,000 6,400 8,335 250,000 7,493 9,428 250,000
4 15,840 7,652 9,587 250,000 9,316 11,251 250,000 11,197 13,132 250,000
5 20,307 9,829 11,764 250,000 12,317 14,252 250,000 15,246 17,181 250,000
6 24,997 12,255 13,867 250,000 15,735 17,347 250,000 20,004 21,617 250,000
7 29,922 14,609 15,899 250,000 19,254 20,544 250,000 25,194 26,484 250,000
8 35,093 16,886 17,854 250,000 22,875 23,842 250,000 30,858 31,825 250,000
9 40,523 19,081 19,726 250,000 26,594 27,239 250,000 37,039 37,684 250,000
10 46,224 21,180 21,502 250,000 30,403 30,726 250,000 43,785 44,108 250,000
11 52,210 23,211 23,211 250,000 34,365 34,365 250,000 51,257 51,257 250,000
12 58,495 24,762 24,762 250,000 38,052 38,052 250,000 59,077 59,077 250,000
13 65,095 26,125 26,125 250,000 41,765 41,765 250,000 67,624 67,624 250,000
14 72,025 27,292 27,292 250,000 45,497 45,497 250,000 76,987 76,987 250,000
15 79,301 28,253 28,253 250,000 49,244 49,244 250,000 87,263 87,263 250,000
16 86,941 28,933 28,933 250,000 52,944 52,944 250,000 98,522 98,522 250,000
17 94,963 29,431 29,431 250,000 56,688 56,688 250,000 110,974 110,974 250,000
18 103,387 29,728 29,728 250,000 60,470 60,470 250,000 124,771 124,771 250,000
19 112,231 29,810 29,810 250,000 64,284 64,284 250,000 140,089 140,089 250,000
20 121,517 29,655 29,655 250,000 68,120 68,120 250,000 157,133 157,133 250,000
Age 60 79,301 28,253 28,253 250,000 49,244 49,244 250,000 87,263 87,263 250,000
Age 65 121,517 29,655 29,655 250,000 68,120 68,120 250,000 157,133 157,133 250,000
Age 70 175,397 24,284 24,284 250,000 87,203 87,203 250,000 276,498 276,498 320,738
Age 75 244,163 7,108 7,108 250,000 104,506 104,506 250,000 473,736 473,736 506,898
</TABLE>
(1) Assumes a $3,500.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
C-2
<PAGE>
TABLE 2
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
MALE, PREFERRED, AGE 55, NON TOBACCO
$250,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM $5,675.00
DEATH BENEFIT OPTION A
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6% HYPOTHETICAL 12%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS NET -1.66% NET 4.34% NET 10.34%
PAID PLUS ----------------------------------- ------------------------------ ---------------------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------ --------- --------- --------- --------- --------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,959 1,195 4,007 250,000 1,476 4,289 250,000 1,758 4,571 250,000
2 12,215 5,052 7,864 250,000 5,867 8,679 250,000 6,718 9,530 250,000
3 18,785 8,759 11,572 250,000 10,364 13,176 250,000 12,107 14,920 250,000
4 25,683 12,303 15,116 250,000 14,958 17,770 250,000 17,960 20,773 250,000
5 32,926 15,681 18,493 250,000 19,648 22,461 250,000 24,325 27,137 250,000
6 40,531 19,361 21,704 250,000 24,911 27,254 250,000 31,730 34,074 250,000
7 48,516 22,855 24,730 250,000 30,262 32,137 250,000 39,754 41,629 250,000
8 56,901 26,155 27,562 250,000 35,700 37,107 250,000 48,464 49,870 250,000
9 65,705 29,245 30,182 250,000 41,215 42,153 250,000 57,930 58,868 250,000
10 74,949 32,081 32,549 250,000 46,773 47,241 250,000 68,211 68,680 250,000
11 84,655 34,709 34,709 250,000 52,474 52,474 250,000 79,582 79,582 250,000
12 94,846 36,651 36,651 250,000 57,816 57,816 250,000 91,619 91,619 250,000
13 105,547 38,319 38,319 250,000 63,229 63,229 250,000 104,908 104,908 250,000
14 116,783 39,672 39,672 250,000 68,692 68,692 250,000 119,609 119,609 250,000
15 128,581 40,656 40,656 250,000 74,176 74,176 250,000 135,909 135,909 250,000
16 140,969 40,614 40,614 250,000 79,139 79,139 250,000 153,725 153,725 250,000
17 153,976 40,124 40,124 250,000 84,083 84,083 250,000 173,699 173,699 250,000
18 167,634 39,142 39,142 250,000 88,999 88,999 250,000 196,204 196,204 250,000
19 181,974 37,613 37,613 250,000 93,876 93,876 250,000 221,690 221,690 250,000
20 197,032 35,466 35,466 250,000 98,695 98,695 250,000 250,522 250,522 268,058
Age 60 128,581 15,681 18,493 250,000 19,648 22,461 250,000 24,325 27,137 250,000
Age 65 197,032 32,081 32,549 250,000 46,773 47,241 250,000 68,211 68,680 250,000
Age 70 284,394 40,656 40,656 250,000 74,176 74,176 250,000 135,909 135,909 250,000
Age 75 395,892 35,466 35,466 250,000 98,695 98,695 250,000 250,522 250,522 268,058
</TABLE>
(1) Assumes a $5,675.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
C-3
<PAGE>
TABLE 3
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
MALE, PREFERRED, AGE 45, NON TOBACCO
$250,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $3,500.00
DEATH BENEFIT OPTION A
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6% HYPOTHETICAL 12%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS NET -1.76% NET 4.24% NET 10.24%
PAID PLUS ----------------------------------- ------------------------------ ---------------------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------ --------- --------- --------- --------- --------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,675 348 2,283 250,000 514 2,449 250,000 680 2,615 250,000
2 7,534 2,533 4,468 250,000 3,007 4,942 250,000 3,502 5,437 250,000
3 11,585 4,618 6,553 250,000 5,544 7,479 250,000 6,551 8,486 250,000
4 15,840 6,600 8,535 250,000 8,123 10,058 250,000 9,847 11,782 250,000
5 20,307 8,742 10,407 250,000 10,737 12,672 250,000 13,410 15,345 250,000
6 24,997 10,556 12,169 250,000 13,709 15,321 250,000 17,587 19,200 250,000
7 29,922 12,515 13,805 250,000 16,702 17,992 250,000 22,075 23,365 250,000
8 35,093 14,335 15,303 250,000 19,704 20,672 250,000 26,894 28,862 250,000
9 40,523 16,007 16,652 250,000 22,704 23,349 250,000 32,072 32,717 250,000
10 46,224 17,512 17,835 250,000 25,685 26,008 250,000 37,633 37,955 250,000
11 52,210 18,836 18,836 250,000 28,631 28,631 250,000 43,609 43,609 250,000
12 58,495 19,644 19,644 250,000 31,206 31,206 250,000 49,718 49,718 250,000
13 65,095 20,250 20,250 250,000 33,723 33,723 250,000 56,333 56,333 250,000
14 72,025 20,640 20,640 250,000 36,169 36,169 250,000 63,510 63,510 250,000
15 79,301 20,791 20,791 250,000 38,518 38,518 250,000 71,304 71,304 250,000
16 86,941 20,676 20,676 250,000 40,744 40,744 250,000 79,782 79,782 250,000
17 94,963 20,266 20,266 250,000 42,817 42,817 250,000 89,018 89,018 250,000
18 103,387 19,521 19,521 250,000 44,698 44,698 250,000 99,102 99,102 250,000
19 112,231 18,392 18,392 250,000 46,336 46,336 250,000 110,133 110.133 250,000
20 121,517 16,824 16,824 250,000 47,677 47,677 250,000 122,234 122,234 250,000
Age 60 79,301 20,791 20,791 250,000 38,518 38,518 250,000 71,304 71,304 250,000
Age 65 121,517 16,824 16,824 250,000 47,677 47,677 250,000 122,234 122,234 250,000
Age 70 175,397 471 471 250,000 47,900 47,900 250,000 205,732 205,732 250,000
Age 75 244,163 -- -- 250,000 26,998 26,996 250,000 348,448 348,448 372,839
</TABLE>
(1) Assumes a $3,500.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
C-4
<PAGE>
TABLE 4
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
FUTURITY VARIABLE UNIVERSAL LIFE INSURANCE
MALE, PREFERRED, AGE 55, NON TOBACCO
$250,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $5,675.00
DEATH BENEFIT OPTION A
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6% HYPOTHETICAL 12%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS NET -1.76% NET 4.24% NET 10.24%
PAID PLUS ----------------------------------- ------------------------------ ---------------------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------ --------- --------- --------- --------- --------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,959 363 3,175 250,000 614 3,427 250,000 867 3,680 250,000
2 12,215 3,312 6,124 250,000 4,014 6,826 250,000 4,749 7,561 250,000
3 18,785 6,029 8,842 250,000 7,378 10,190 250,000 8,849 11,662 250,000
4 25,683 8,506 11,318 250,000 10,693 13,506 250,000 13,183 15,995 250,000
5 32,926 10,719 13,532 250,000 13,936 16,748 250,000 17,756 20,569 250,000
6 40,531 13,118 15,461 250,000 17,549 19,893 250,000 23,048 25,391 250,000
7 48,516 15,205 17,080 250,000 21,034 22,909 250,000 28,596 30,471 250,000
8 56,901 16,949 18,355 250,000 24,352 25,758 250,000 34,408 35,815 250,000
9 65,705 18,306 19,244 250,000 27,455 28,392 250,000 40,485 41,423 250,000
10 74,949 19,227 19,696 250,000 30,287 30,756 250,000 46,830 47,299 250,000
11 84,655 19,669 19,669 250,000 32,797 32,797 250,000 53,458 53,458 250,000
12 94,846 19,123 19,123 250,000 34,468 34,468 250,000 59,931 59,931 250,000
13 105,547 18,011 18,011 250,000 35,712 35,712 250,000 66,753 66,753 250,000
14 116,783 16,281 16,281 250,000 36,466 36,466 250,000 73,972 73,972 250,000
15 128,581 13,861 13,861 250,000 36,645 36,645 250,000 81,637 81,637 250,000
16 140,969 10,639 10,639 250,000 36,125 36,125 250,000 89,793 89,793 250,000
17 153,976 6,330 6,330 250,000 34,619 34,619 250,000 98,396 98,396 250,000
18 167,634 1,031 1,031 250,000 32,172 32,172 250,000 107,688 107,688 250,000
19 181,974 -- -- 250,000 28,403 28,403 250,000 117,667 117,667 250,000
20 197,032 -- -- 250,000 23,009 23,009 250,000 128,465 128,465 250,000
Age 60 128,581 10,719 13,532 250,000 13,936 16,748 250,000 17,756 20,569 250,000
Age 65 197,032 19,227 19,696 250,000 30,287 30,756 250,000 46,830 47,299 250,000
Age 70 284,394 13,861 13,861 250,000 36,645 36,645 250,000 81,637 81,637 250,000
Age 75 395,892 -- -- 250,000 23,009 23,009 250,000 128,465 128,465 250,000
</TABLE>
(1) Assumes a $5,675.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or partial
surrenders may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY
OWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL
SURRENDERS WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL
INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
C-5
<PAGE>
You can review and copy the complete registration statement which contains
additional information about us, the Policy and the Variable Account at the
SEC's Public Reference Room in Washington, D.C. To find out more about this
public service, call the SEC at 1-800-SEC-0330. Reports and other information
about the Policy and its mutual fund investment options are also available on
the SEC's website (www.sec.gov), or you can receive copies of this information,
for a fee, by writing the Public Reference Section, Securities and Exchange
Commission, Washington, D.C. 20549-6009.
Investment Company Act File No. 811-9137
<PAGE>
PART II
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 OF REASONABLENESS OF FEES
Sun Life Assurance Company of Canada (U.S.) ("Sun Life of Canada (U.S.)")
hereby represents that the aggregate fees and charges under the Policy are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Sun Life of Canada (U.S.).
UNDERTAKING ON INDEMNIFICATION
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
depositor pursuant to its certificate of incorporation, bylaws, or otherwise,
the depositor has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
depositor of expenses incurred or paid by a director, officer or controlling
person of the depositor in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the depositor will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the act and will
be governed by the final adjudication of such issue.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectuses consisting of 101 pages.
The undertaking to file reports.
Representation of reasonableness of fees.
The Rule 484 undertaking.
The signatures.
Written consents of the following persons:
Roy P. Creedon, Esq. (Exhibit 2)
Georges C. Rouhart, FSA, MAAA (Exhibit 6)
Deloitte & Touche LLP (Exhibit 7)
The following exhibits:
1. Copies of all exhibits required by paragraph A of instructions for Exhibits
to Form N-8B-2:
(1)(a) Resolutions of the Board of Directors of Sun Life Assurance
Company of Canada (U.S.), dated October 29, 1998, authorizing
the establishment of one or more separate accounts*
(1)(b) Record of Action, dated December 1, 1998, authorizing the
establishment of Sun Life of Canada (U.S.) Variable Account I*
(1)(c) Record of Action, dated March 30, 1999, relating to the
establishment of Sun Life of Canada (U.S.) Variable Account I**
(2) Not applicable
(3)(a) Form of Marketing Coordination Agreement**
(3)(b) Specimen Sales Operations and General Agent Agreement**
(3)(c) Schedule of Sales Commissions
(4) Not applicable
(5)(a) Form of Flexible Premium Combination Fixed and Variable Life
Insurance Policy
(5)(b) Form of Accelerated Benefits Rider**
(5)(c) Form of Accidental Death Benefit Rider**
(5)(d) Form of Payment of Stipulated Amount Rider**
II-2
<PAGE>
(5)(e) Form of Waiver of Monthly Deductions Rider**
(6)(a) Certificate of Incorporation of Sun Life of Canada (U.S.)***
(6)(b) Bylaws of Sun Life of Canada (U.S.)***
(7) Not applicable
(8)(a)(i) Form of Participation Agreement by and among AIM Variable
Insurance Funds, Inc., AIM Distributors, Inc., Sun Life Assurance
Company of Canada (U.S.), and Clarendon Insurance Agency, Inc.**
(8)(a)(ii) Amendment No. 1 to Participation Agreement by and among AIM
Variable Insurance Funds, Inc., AIM Distributors, Inc., Sun Life
Assurance Company of Canada (U.S.), and Clarendon Insurance
Agency, Inc.**
(8)(a)(iii) Amendment No. 2 to Participation Agreement by and among AIM
Variable Insurance Funds, Inc., AIM Distributors, Inc., Sun Life
Assurance Company of Canada (U.S.), and Clarendon Insurance
Agency, Inc.**
(8)(b) Form of Participation Agreement by and among The Alger American
Fund, Sun Life Assurance Company of Canada (U.S.), and Fred Alger
and Company, Incorporated**
(8)(c) Form of Participation Agreement by and among Goldman Sachs
Variable Insurance Trust, Goldman, Sachs & Co., and Sun Life
Assurance Company of Canada (U.S.)**
(8)(d) Form of Participation Agreement by and among MFS/Sun Life Series
Trust, Sun Life Assurance Company of Canada (U.S.), and
Massachusetts Financial Services Company**
(8)(e) Form of Participation Agreement by and among Sun Life Assurance
Company of Canada (U.S.), OCC Accumulation Trust, and OCC
Distributors**
(8)(f) Form of Participation Agreement by and among Sun Life Assurance
Company of Canada (U.S.), Sun Capital Advisers Trust, and Sun
Capital Advisers, Inc.**
(9) Not applicable
(10) Form of Application for Flexible Premium Combination Fixed and
Variable Life Insurance Policy
(11) Memorandum describing Sun Life of Canada (U.S.)'s Issuance,
Transfer and Redemption Procedures
2. Opinion and Consent of Counsel as to the Legality of the Securities Being
Registered**
3. None
4. Not applicable
5. Not applicable
6. Opinion and Consent of Georges C. Rouhart, FSA, MAAA
7. Consent of Deloitte & Touche LLP, Independent Public Accountants
8. Powers of Attorney*
__________
* Incorporated herein by reference to the Registration Statement of Sun
Life of Canada (U.S.) Variable Account I on Form S-6, File
No. 333-68601, filed with the Securities and Exchange Commission on
December 9, 1998
** Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Registration Statement of Sun Life of Canada (U.S.) Variable Account I on
Form S-6, File No. 333-68601, filed with the Securities and Exchange
Commission on April 27, 1999
*** Incorporated by reference to the Registration Statement of Sun Life of
Canada (U.S.) Variable Account F on Form N-4, File No. 333-37907, filed
with the Securities and Exchange Commission on October 14, 1997
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it meets all of the requirements for effectiveness
of this registration statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this registration statement to be signed on
its behalf by the undersigned thereunto duly authorized, and attested, all in
the Town of Wellesley, and the Commonwealth of Massachusetts, on the 12th day
of August, 1999.
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
(Registrant)
By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
(Depositor)
By: /s/ C. James Prieur
---------------------------
C. James Prieur, President
Attest: /s/ Ellen B. King
-------------------------
Ellen B. King, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons and in the
capacities and on the dates indicated.
/s/ C. James Prieur President and Director
------------------------- (Principal Executive Officer)
C. James Prieur
/s/ Robert P. Vrolyk Vice President and Actuary
------------------------- (Principal Financial &
Robert P. Vrolyk Accounting Officer)
*/s/ Donald A. Stewart Chairman and Director
-------------------------
Donald A. Stewart
*/s/ John D. McNeil Director
-------------------------
John D. McNeil
*/s/ M. Colyer Crum Director
-------------------------
M. Colyer Crum
*/s/ Richard B. Bailey Director
-------------------------
Richard B. Bailey
*/s/ David D. Horn Director
-------------------------
David D. Horn
*/s/ John S. Lane Director
-------------------------
John S. Lane
*/s/ Angus A. MacNaughton Director
-------------------------
Angus A. MacNaughton
*/s/ S. Caesar Raboy Senior Vice President and
------------------------- Deputy General Manager and
S. Caesar Raboy Director
By: /s/ Ellen B. King August 12, 1999
------------------------------
Ellen B. King, Attorney-In-Fact
* By Ellen B. King pursuant to Powers of Attorney filed with the
Registration Statement of Sun Life of Canada (U.S.) Variable Account I
on Form S-6, File No. 333-68601, filed with the Securities and Exchange
Commission on December 9, 1998.
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
1.A(1)(a) Resolution of the Board of Directors of Sun Life Assurance
Company of Canada (U.S.), dated October 29, 1998, authorizing
the establishment of one or more separate accounts*
1.A(1)(b) Record of Action, dated December 1, 1998, authorizing the
establishment of Sun Life of Canada (U.S.) Variable Account I*
1.A(1)(c) Record of Action, dated March 30, 1999, relating to the
establishment of Sun Life of Canada (U.S.) Variable Account I*
1.A(3)(a) Form of Marketing Coordination Agreement*
1.A(3)(b) Specimen Sales Operations and General Agent Agreement*
1.A(3)(c) Schedule of Sales Commissions
1.A(5)(a) Form of Flexible Premium Combination Fixed and Variable Life
Insurance Policy
1.A(5)(b) Form of Accelerated Benefits Rider*
1.A(5)(c) Form of Accidental Death Benefit Rider*
1.A(5)(d) Form of Payment of Stipulated Amount Rider*
1.A(5)(e) Form of Waiver of Monthly Deductions Rider*
1.A(6)(a) Certificate of Incorporation of Sun Life Assurance Company of
Canada (U.S.)*
1.A(6)(b) Bylaws of Sun Life Assurance Company of Canada (U.S.)*
1.A(8)(a)(i) Form of Participation Agreement by and among AIM Variable
Insurance Funds, Inc., AIM Distributors, Inc., Sun Life
Assurance Company of Canada (U.S.), and Clarendon Insurance
Agency, Inc.*
1.A(8)(a)(ii) Amendment No. 1 to Participation Agreement by and among AIM
Variable Insurance Funds, Inc., AIM Distributors, Inc., Sun
Life Assurance Company of Canada (U.S.), and Clarendon
Insurance Agency, Inc.*
1.A(8)(a)(iii) Amendment No. 2 to Participation Agreement by and among AIM
Variable Insurance Funds, Inc., AIM Distributors, Inc., Sun
Life Assurance Company of Canada (U.S.), and Clarendon
Insurance Agency, Inc.*
1.A(8)(b) Form of Participation Agreement by and among The Alger American
Fund, Sun Life Assurance Company of Canada (U.S.), and Fred Alger
and Company, Incorporated*
1.A(8)(c) Form of Participation Agreement by and among Goldman Sachs
Variable Insurance Trust, Goldman, Sachs & Co., and Sun Life
Assurance Company of Canada (U.S.)*
1.A(8)(d) Form of Participation Agreement by and among MFS/Sun Life Series
Trust, Sun Life Assurance Company of Canada (U.S.), and
Massachusetts Financial Services Company*
1.A(8)(e) Form of Participation Agreement by and among Sun Life Assurance
Company of Canada (U.S.), OCC Accumulation Trust, and OCC
Distributors*
1.A(8)(f) Form of Participation Agreement by and among Sun Life Assurance
Company of Canada (U.S.), Sun Capital Advisers Trust, and Sun
Capital Advisers, Inc.*
1.A(10) Form of Application for Flexible Premium Combination Fixed and
Variable Life Insurance Policy
1.A(11) Memorandum describing Sun Life Assurance Company of Canada
(U.S.)'s Issuance, Transfer and Redemption Procedures
2. Opinion and Consent of Counsel as to the Legality of the
Securities Being Registered*
6. Opinion and Consent of Georges Rouhart, FSA, MAAA
7. Consent of Deloitte & Touche LLP, Independent Public Accountants
8. Powers of Attorney*
- --------------
* Incorporated herein by reference.
<PAGE>
SALES OPERATIONS AND GENERAL AGENT AGREEMENT
COMMISSIONS SCHEDULE A
This Schedule A is to be attached to and made a part of the Sales Operations and
General Agent Agreement between Sun Life Assurance Company of Canada (U.S.) [Sun
Life of Canada (U.S.)], Clarendon Insurance Agency, Inc. (Clarendon), Selling
Broker-Dealer and General Agent.
This Commission Schedule is not intended to replace any Commission Schedule,
whether currently in effect or subsequently issued, between General Agent and
Sun Life of Canada (U.S.) covering the sale of products issued by Sun Life of
Canada (U.S.) other than those listed below. This Commission Schedule shall
remain in effect until such time as Sun Life of Canada (U.S.) notifies General
Agent in writing that a new Commission Schedule shall take effect with respect
to the Plan(s) listed below.
Commissions will be paid to the General Agent (or to Broker-Dealer if required
by law) in the percentages shown below.
<TABLE>
<CAPTION>
First Year Excess Renewal
Plan Premium Premium Premium
- ---- ------- ------- -------
yrs. 2- 10
<S> <C> <C> <C>
Futurity Variable
Universal Life Insurance 75% 1.5 1.5
</TABLE>
Trail Commission: Trail Commissions will be computed at an annual rate of
.10% of the average variable account value for the previous policy year and
paid annually beginning when the policy has been in effect for 25 months.
Trail Commissions will be paid only if the contract is in force on the date the
commission is payable.
Commission Chargeback: In the event that a contract for which a commission has
been paid is surrendered by the contract owner, is lapsed or returned pursuant
to the so-called "right of return period" provision of the contract, the
following percentage of commission will be due to Sun Life of Canada (U.S.) from
all entities which received commissions.
<TABLE>
<CAPTION>
Chargeback Schedule
Month Percentage
<S> <C>
1-6 100
7-12 50
</TABLE>
<PAGE>
SUN LIFE ASSURANCE
COMPANY OF CANADA (U.S.)
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
<TABLE>
<S> <C>
Insured John Doe
Policy Number VL0000001
This Policy is a legal contract
in which We, Sun Life Assurance Company Signed at
of Canada (U.S.), promise to provide the Wellesley Hills
kind of insurance described below. Upon Massachusetts, on
death of the Insured prior to Maturity, the Issue Date.
We agree to pay the Beneficiary such
amounts as then become due and payable. C. James Prieur, President
Until that time, We agree to provide
You, as Owner, the other rights and
benefits of the Policy. These rights Ellen B. King
and benefits are subject to the Secretary
provisions on the pages which follow.
</TABLE>
THE AMOUNT OF THE DEATH BENEFIT OR THE DURATION OF THE DEATH BENEFIT MAY
INCREASE OR DECREASE TO REFLECT THE INVESTMENT EXPERIENCE OF THE VARIABLE
ACCOUNT, AS DESCRIBED IN SECTION 8.
THE ACCOUNT VALUE IN EACH SUB-ACCOUNT OF THE VARIABLE ACCOUNT MAY INCREASE OR
DECREASE IN ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THAT SUB-ACCOUNT OF THE
VARIABLE ACCOUNT. THERE IS NO MINIMUM GUARANTEED ACCOUNT VALUE FOR AMOUNTS IN
THE SUB-ACCOUNTS OF THE VARIABLE ACCOUNT.
THE POLICY PROCEEDS ARE PAYABLE AT THE DEATH OF THE INSURED PRIOR TO MATURITY
AND WHILE THE POLICY IS IN FORCE. THE CASH SURRENDER VALUE, IF ANY, IS PAYABLE
ON THE DATE OF MATURITY.
THE POLICY DOES NOT PARTICIPATE IN DIVIDENDS.
FLEXIBLE PREMIUMS ARE PAYABLE DURING THE LIFETIME OF THE INSURED PRIOR TO
MATURITY.
RIGHT TO RETURN POLICY.
PLEASE READ YOUR POLICY CAREFULLY. IF YOU ARE NOT SATISFIED WITH IT, YOU MAY
RETURN IT BY DELIVERING OR MAILING IT TO US AT ONE SUN LIFE EXECUTIVE PARK,
WELLESLEY HILLS, MASSACHUSETTS 02481, OR TO THE SALES REPRESENTATIVE THROUGH
WHOM YOU PURCHASED THE POLICY WITHIN 10 DAYS FROM THE DATE OF RECEIPT (THE
"FREE LOOK PERIOD"). THE POLICY WILL THEN BE DEEMED VOID AS THOUGH IT HAD
NEVER BEEN APPLIED FOR. YOU WILL RECEIVE A REFUND EQUAL TO THE SUM OF (1) THE
DIFFERENCE BETWEEN ANY PREMIUM PAYMENTS MADE, INCLUDING FEES AND CHARGES, AND
THE AMOUNTS ALLOCATED TO THE VARIABLE ACCOUNT, (2) THE VALUE OF THE AMOUNTS
ALLOCATED TO THE VARIABLE ACCOUNT ON THE DATE THE CANCELLATION REQUEST IS
RECEIVED BY THE COMPANY OR THE SALES REPRESENTATIVE THROUGH WHOM YOU
PURCHASED THE POLICY, AND (3) ANY FEES OR CHARGES IMPOSED ON AMOUNTS
ALLOCATED TO THE VARIABLE ACCOUNT.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. POLICY SPECIFICATIONS...........................................................................Page 4
2. TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000 OF NET AMOUNT AT RISK....Page 5
3. DEFINITIONS.....................................................................................Page 6
Account Value..................................................................................Page 6
Anniversary....................................................................................Page 6
Application....................................................................................Page 6
Attained Age...................................................................................Page 6
Beneficiary....................................................................................Page 6
Business Day...................................................................................Page 6
Cash Value.....................................................................................Page 6
Cash Surrender Value...........................................................................Page 6
Class..........................................................................................Page 6
Company........................................................................................Page 6
Daily Risk Percentage..........................................................................Page 6
Due Proof......................................................................................Page 6
Effective Date of Coverage.....................................................................Page 6
Expense Charge Applied to Premium..............................................................Page 6
Fixed Account Value............................................................................Page 6
Fund...........................................................................................Page 6
General Account................................................................................Page 6
Initial Premium................................................................................Page 6
Insured........................................................................................Page 6
Investment Start Date..........................................................................Page 6
Issue Age......................................................................................Page 6
Issue Date.....................................................................................Page 6
Maturity.......................................................................................Page 6
Minimum Monthly Premium........................................................................Page 7
Monthly Anniversary Day........................................................................Page 7
Monthly Cost of Insurance......................................................................Page 7
Monthly Expense Charge.........................................................................Page 7
Mortality and Expense Risk Percentage..........................................................Page 7
Net Premium....................................................................................Page 7
Our Principal Office...........................................................................Page 7
Owner..........................................................................................Page 7
Partial Surrender..............................................................................Page 7
Policy.........................................................................................Page 7
Policy Debt....................................................................................Page 7
Policy Month...................................................................................Page 7
Policy Proceeds................................................................................Page 7
Policy Year....................................................................................Page 7
Premium........................................................................................Page 7
Specified Face Amount..........................................................................Page 7
Sub-Accounts...................................................................................Page 7
Unit...........................................................................................Page 7
Unit Value.....................................................................................Page 7
Valuation Date.................................................................................Page 8
Valuation Period...............................................................................Page 8
Variable Account...............................................................................Page 8
We, Our and Us................................................................................Page 8
You , Your and Yourself........................................................................Page 8
4. GENERAL PROVISIONS..............................................................................Page 9
Entire Contract................................................................................Page 9
Alteration.....................................................................................Page 9
Modification...................................................................................Page 9
TABLE OF CONTENTS (CONTINUED)
<CAPTION>
Assignments.........................................................................................Page 9
Nonparticipating....................................................................................Page 9
Misstatement of Age or Sex (Non-Unisex Policy)......................................................Page 9
Suicide.............................................................................................Page 9
Incontestability...................................................................................Page 10
Report to Owner....................................................................................Page 10
Illustrations......................................................................................Page 10
Maturity Date Extension............................................................................Page 10
5. RIGHTS OF OWNERS AND BENEFICIARIES..............................................................Page 11
Rights of Owner...............................................................................Page 11
Procedure.....................................................................................Page 11
Rights of Beneficiary.........................................................................Page 11
6. THE VARIABLE ACCOUNT...........................................................................Page 12
Sub-Accounts..................................................................................Page 12
Addition, Deletion or Substitution of Investments.............................................Page 12
Transfers Between Sub-Accounts................................................................Page 12
7. PREMIUMS.......................................................................................Page 13
Premium.......................................................................................Page 13
Net Premiums..................................................................................Page 13
Allocation of Net Premium.....................................................................Page 13
Planned Periodic Premiums.....................................................................Page 14
8. DEATH BENEFIT..................................................................................Page 14
Death Benefit and Death Benefit Option........................................................Page 14
Changes in Specified Face Amount..............................................................Page 14
Decreases in Specified Face Amount............................................................Page 14
Increases in Specified Face Amount............................................................Page 14
Changes in the Death Benefit Option...........................................................Page 14
9. ACCOUNT VALUE..................................................................................Page 15
Account Value.................................................................................Page 15
Variable Account Value........................................................................Page 15
Variable Account Value in the Sub-Accounts....................................................Page 15
Net Investment Factor.........................................................................Page 16
Mortality and Expense Risk Charge.............................................................Page 16
Fixed Account Value...........................................................................Page 17
Monthly Expense Charge........................................................................Page 17
Monthly Cost of Insurance.....................................................................Page 18
Monthly Cost of Insurance Rates...............................................................Page 18
Basis of Computation..........................................................................Page 18
Insufficient Value............................................................................Page 18
Minimum Premium Test..........................................................................Page 19
Grace Period..................................................................................Page 19
Splitting Units...............................................................................Page 19
10. POLICY BENEFITS...............................................................................Page 19
Benefits at Death.............................................................................Page 19
Cash Surrender Value..........................................................................Page 19
Surrender Charges.............................................................................Page 19
Surrender Charge on Decrease in Specified Face Amount.........................................Page 20
Partial Surrender.............................................................................Page 20
Allocation of Partial Surrender...............................................................Page 20
Policy Loan...................................................................................Page 21
Deferral of Payment...........................................................................Page 21
Termination...................................................................................Page 21
Reinstatement.................................................................................Page 22
<PAGE>
<CAPTION>
RIDERS AND ENDORSEMENTS...................................................................................
APPLICATION...............................................................................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1. POLICY SPECIFICATIONS
<S> <C>
Insured John Doe
Policy Number VL0000001
Office ABC Insurance Agency
Issue Age, Sex 35 Male
Class Non Tobacco Preferred
Specified Face Amount $250,000
Minimum Specified Face Amount $100,000
Initial Premium $ 360
Planned Periodic Premium $1,500
Billing Period Annual
Issue Date January 1, 1999
Policy Date January 1, 1999
Maturity January 1, 2054
Protected Period 60 Months
Minimum Monthly Premium $ 120
Currency United States Dollars
Owner John Doe
Beneficiary As stated in the Application unless
subsequently changed
Death Benefit Option Option A: Specified Face Amount
Variable Account
Name Sun Life of Canada (U.S.) Variable Account I
Securities & Exchange Commission Registration Unit Investment Trust
Allocation of premiums during Free Look Period Fixed Account
Expense Charge Applied to Premium
Current Charge 5.25%
Guaranteed Maximum Charge 7.25%
Monthly Expense Charge in All Months $8.00
Mortality and Expense Risk Percentage
Current percentage .80% (annual effective rate) during Policy Years 1-10
Current percentage .50% (annual effective rate) during Policy Years 11 and after
Maximum guaranteed percentage .90% (annual effective rate)
Daily Risk Percentage
Current percentage .0021831% (daily effective rate) during Policy Years 1-10
Current percentage .0013665% (daily effective rate) during Policy Years 11 and after
Maximum guaranteed percentage .0024548% (daily effective rate)
</TABLE>
Policy Loan Interest Rate (payable in arrears) 4.00% annually during Policy
years 1-10 3.00% annually in Policy years 11 and after Interest Credited
on Fixed Account 3.00% annually
- -------------------------------------------------------------------------------
Supplemental Benefits and Changes
- -------------------------------------------------------------------------------
THE PLANNED PERIODIC PREMIUM SHOWN ABOVE MAY BE INSUFFICIENT TO CONTINUE
COVERAGE TO MATURITY. THE PERIOD FOR WHICH THE POLICY WILL REMAIN IN FORCE
DEPENDS ON THE AMOUNT AND TIMING OF PREMIUMS PAID, DEDUCTIONS FOR
BENEFITS AND RIDERS, CHANGES IN THE SPECIFIED FACE AMOUNT AND DEATH
BENEFIT OPTION, SUB-ACCOUNT PERFORMANCE, POLICY LOANS, PARTIAL
SURRENDERS AND FEES.
<PAGE>
1. POLICY SPECIFICATIONS (CONTINUED)
John Doe VL0000001
SURRENDER CHARGE ON THE SPECIFIED FACE AMOUNT ON THE POLICY DATE
SURRENDER
POLICY YEAR CHARGE
1 1,442.50
2 1,442.50
3 1,442.50
4 1,442.50
5 1,442.50
6 1,202.08
7 961.67
8 721.25
9 480.83
10 240.42
11 and after none
NET PREMIUM ALLOCATION PERCENTAGE
<TABLE>
SUB- ACCOUNTS
<S> <C>
MFS/Sun Life Series Trust
____% MFS/Sun Life Capital Appreciation Series
AIM Variable Insurance Funds, Inc. ____% MFS/Sun Life Conservative Growth Series
____% AIM V.I. Capital Appreciation Fund ____% MFS/Sun Life Emerging Growth Series
____% AIM V.I. Growth Fund ____% MFS/Sun Life Government Securities Series
____% AIM V.I. Growth and Income Fund ____% MFS/Sun Life High Yield Series
____% AIM V.I. International Equity Fund ____% MFS/Sun Life Investors Growth Stock Series
____% MFS/Sun Life New Discovery Series
The Alger American Fund ____% MFS/Sun Life Total Return Series
____% Alger American Growth Portfolio ____% MFS/Sun Life Utilities Series
____% Alger American Income and Growth Portfolio
____% Alger American Small Capitalization Portfolio OOC Accumulation Trust
____% OCC Accumulation Trust Equity Portfolio
Goldman Sachs Variable Insurance Trust ____% OCC Accumulation Trust Mid Cap Portfolio
____% Goldman Sachs V.I.T. CORE Large Cap Growth Fund ____% OCC Accumulation Trust Small Cap Portfolio
____% Goldman Sachs V.I.T. CORE Small Cap Equity Fund ____% OCC Accumulation Trust Managed Portfolio
____% Goldman Sachs V.I.T. CORE U.S. Equity Fund
____% Goldman Sachs V.I.T. Growth and Income Fund Sun Capital Advisers Trust, Inc.
____% Goldman Sachs V.I.T. International Equity Fund ____% Sun Capital Money Market Fund
____% Sun Capital Investment Grade Bond Fund
____% Sun Capital Real Estate Fund
____% Sun Capital Blue Chip Mid Cap Fund
____% Sun Capital Investors Foundation Fund
____% Sun Capital Select Equity Fund
SUN LIFE OF CANADA (U.S.)
____% Fixed Account Guarantee Option
</TABLE>
<PAGE>
1. POLICY SPECIFICATIONS (CONTINUED)
John Doe VL0000001
DESCRIPTION OF VARIABLE ACCOUNT I SUB-ACCOUNTS
Variable Account I is divided into 31 Sub-Accounts. Each Sub-Account invests in
a series, portfolio or fund of AIM Variable Insurance Funds, Inc., The Alger
American Fund, Goldman Sachs Variable Insurance Trust, MFS/Sun Life Series
Trust, OCC Accumulation Trust, Sun Capital Advisers Trust, Inc. The names and
investment objectives of these series, portfolios or funds follow:
AIM VARIABLE INSURANCE FUNDS, INC. (advised by AIM Advisors, Inc.) (AIM) is a
wholly owned subsidiary of AIM Management. Established in 1976, AIM Management
Group, Inc. (AIM Management) is headquartered in Houston , Texas. AIM Management
is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its
subsidiary are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific Region. AIM and its subsidiaries act as
manager or advisor of 55 investment company portfolios.
AIM V.I. CAPITAL APPRECIATION FUND seeks to provide capital
appreciation through investments in common stocks, with emphasis on
medium-sized and smaller emerging growth companies.
AIM V.I. GROWTH FUND seeks to provide growth of capital through
investments primarily in common stocks of seasoned and better
capitalized U.S. companies considered by AIM to have strong earnings
momentum.
AIM V.I. GROWTH AND INCOME FUND seeks to provide growth of capital,
with current income as a secondary objective by investing primarily in
dividend paying common stocks which have prospects for both growth of
capital and dividend income.
AIM V.I. INTERNATIONAL EQUITY FUND seeks to provide long-term growth of
capital by investing in diversified international equity securities,
the issuers of which are considered by AIM to have strong earnings
momentum.
THE ALGER AMERICAN FUND (advised by Fred Alger Management, Inc.) Founded in
1964, Fred Alger Management is committed to investing in America's fastest
growing companies. Alger believes in bottom-up research and gives its large and
talented team of research analysts a key role in making investment decisions.
The firm strives for superior long-term performance, and feels that the
self-reliance and decision-making capabilities of its research analysts will
help it achieve that goal.
ALGER AMERICAN GROWTH PORTFOLIO seeks long-term capital appreciation
by investing primarily in equity securities of companies with market
capitalizations of $1 billion or more.
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO seeks primarily to provide a
high level of dividend income by investing in dividend paying equity
securities. Capital appreciation is a secondary objective.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO seeks long-term capital
appreciation by investing primarily in equity securities of companies
with market capitalizations within the range of the Russell 2000 Growth
Index or the S&P SmallCap 600 Index
GOLDMAN SACHS VARIABLE INSURANCE TRUST (advised by Goldman Sachs Asset
Management, a separate operating division of Goldman, Sachs & Co., except for
Goldman Sachs International Equity Fund, which is advised by Goldman Sachs Asset
Management International, an affiliate of Goldman, Sachs & Co.). Since its
founding in 1869, Goldman Sachs has served many of the world's largest
corporations and governments, as well as numerous high net worth individuals.
Its investment management arm utilizes the worldwide resources, fundamental
research and sophisticated risk management capabilities of one of the world's
premier global financial services firms to meet the investment and wealth
management needs of its clients.
GOLDMAN SACHS V.I.T. CORE LARGE CAP GROWTH FUND seeks long-term growth
of capital through a broadly diversified portfolio of equity
securities of large cap U.S. issuers that are expected to have better
prospects for earnings growth than the growth rate of the general
domestic economy. Dividend income is a secondary consideration.
GOLDMAN SACHS V.I.T. CORE SMALL CAP EQUITY FUND seeks long-term growth
of capital through a broadly diversified portfolio of equity
securities of U.S. issuers which are included in the Russell 2000
Index at the time of investment.
GOLDMAN SACHS V.I.T. CORE U.S. EQUITY FUND seeks long-term growth
of capital and dividend income through a broadly diversified portfolio
of large cap and blue chip equity securities representing all major
sectors of the U.S. economy.
GOLDMAN SACHS V.I.T. GROWTH AND INCOME FUND seeks long-term growth of
capital and growth of income through investments in equity securities
that are considered to have favorable prospects for capital
appreciation and/or dividend paying ability.
GOLDMAN SACHS V.I.T. INTERNATIONAL EQUITY FUND seeks long-term capital
appreciation through investments in equity securities of companies
that are organized outside the U.S. or whose securities are principally
traded outside the U.S.
MFS/SUN LIFE SERIES TRUST (advised by our affiliate Massachusetts Financial
Services Company) . MFS is an indirect subsidiary of Sun Life Assurance Company
of Canada, the parent company of Sun Life of Canada (U.S.), and has been in the
Sun Life of Canada family since 1982. MFS has a long history of money management
dating back to 1924 - when it established the nation's first mutual fund - and
is the oldest fund company in the United States. This Boston-based firm
emphasizes research and site visits in its securities selections.
MFS/SUN LIFE CAPITAL APPRECIATION SERIES seeks capital appreciation by
investing in securities of all types, with a major emphasis on common
stocks.
MFS/SUN LIFE EMERGING GROWTH SERIES seeks to provide long-term growth
of capital by investing primarily (i.e. at least 80% of all its assets
under normal circumstances) in common stocks of emerging growth
companies, including companies that the series' investment adviser
believes are early in their life cycle but which have the potential to
become major enterprises. Dividend and interest income from portfolio
securities, if any, is incidental to its objective of long-term growth
of capital.
MFS/SUN LIFE GOVERNMENT SECURITIES SERIES seeks current income and
preservation of capital by investing in U.S. Government and U.S.
Government-related Securities.
MFS/SUN LIFE HIGH YIELD SERIES seeks high current income and capital
appreciation by investing primarily in fixed income securities of U.S.
and foreign issuers which may be in the lower rated categories or
unrated (commonly known as "junk bonds") and which may include equity
features. The series may invest up to 100% of its net assets in these
securities, which generally involve greater risks, including volatility
of price, risk of principal and income, default risks and less
liquidity, than securities in the higher rated categories.
MFS/SUN LIFE MASSACHUSETTS INVESTORS GROWTH STOCK SERIES seeks to
provide long-term growth of capital and future income rather than
current income. The series invests, under normal market conditions,
at least 80% of its total assets in common stocks and related
securities, such as preferred stocks, convertible securities and
depositary receipts for those securities, of companies which the
series' adviser believes offer better than average prospects for
long-term growth.
MFS/SUN LIFE MASSACHUSETTS INVESTORS TRUST SERIES seeks long-term
growth of capital and future income while providing more current
dividend income than is normally obtainable from a portfolio of
only growth stocks. The series invests, under normal market
conditions, at least 65% of its total assets in common stocks and
related securities, such as preferred stocks, convertible
securities and depositary receipts for those securities. While the
series may invest in companies of any size, the series generally
focuses on companies with larger market capitalizations that the
series' adviser believes have sustainable growth prospects and
attractive valuations based on current and expected earnings of
cash flow. This series was formerly known as the Conservative
Growth Series.
MFS/SUN LIFE NEW DISCOVERY SERIES seeks capital appreciation. The
series invests, under normal market conditions, at least 65% of its
total assets in common stocks and related securities, such as
preferred stocks, convertible securities and depositary receipts
for those securities, of emerging growth companies. These companies
are companies that the series' adviser believes are either early in
their life cycle but have the potential to become major enterprises
or are major enterprises whose rates of earnings growth are
expected to accelerate.
MFS/SUN LIFE TOTAL RETURN SERIES seeks to obtain above-average
income (compared to a portfolio entirely invested in equity
securities) consistent with prudent employment of capital; its
secondary objective is to take advantage of opportunities for
growth of capital and income since many securities offering a
better than average yield may also possess growth potential. The
series is a "balanced fund," and invests in a combination of equity
and fixed income securities. Under normal market conditions, the
series invests (i) at least 40%, but not more than 75%, of its net
assets in common stocks and related securities, such as preferred
stocks, bonds, warrants or rights convertible into stock, and
depositary receipts for those securities; and (ii) at least 25% of
its net assets in non-convertible fixed income securities.
MFS/SUN LIFE UTILITIES SERIES seeks capital growth and current income
(income above that available from a portfolio invested entirely in
equity securities) by investing under normal market conditions, at
least 65% of its assets in equity and debt securities issued by both
domestic and foreign utility companies.
OCC ACCUMULATION TRUST (advised by OpCap Advisors). OpCap Advisors is a
subsidiary of Oppenheimer Capital. All investment management services performed
by OpCap Advisors are performed by employees of Oppenheimer Capital. OpCap
Advisors is a well-known value investor employing a disciplined philosophy which
seeks to achieve both superior long-term performance and capital preservation.
OpCap Advisors employs a bottom-up style which it uses across market
capitalizations. It focuses on individual companies rather than particular
industries or sectors, and seeks to invest in companies that are
shareholder-oriented, generate high returns on assets, and have excess free cash
flows.
OCC ACCUMULATION TRUST EQUITY PORTFOLIO seeks long-term capital
appreciation through investment in a diversified portfolio of equity
securities selected on the basis of a value oriented approach to
investing.
OCC ACCUMULATION TRUST MID CAP PORTFOLIO seeks long-term capital
appreciation through investment in a diversified portfolio of equity
securities. The portfolio will invest primarily in companies with
market capitalizations of between $500 million and $5 billion.
OCC ACCUMULATION SMALL CAP PORTFOLIO seeks capital appreciation through
investment in a diversified portfolio of equity securities of companies
with market capitalizations of under $1 billion.
OCC ACCUMULATION TRUST MANAGED PORTFOLIO seeks to achieve growth of
capital over time through investment in a portfolio consisting of
common stocks, bonds and cash equivalents, the percentages of which
will vary based on the portfolio manager's assessments of the relative
outlook for such investments.
SUN CAPITAL ADVISERS TRUST, INC. (advised by our affiliate Sun Capital Advisers,
Inc.) Drawing on over 70 years of combined investment management experience,
the five portfolio managers of Sun Capital Advisers, Inc. provide investment
research and portfolio management for the Sun Capital Funds. Sun Capital
Advisers, Inc. is an indirect wholly owned subsidiary of Sun Life of Canada,
which is a diversified financial services organization with total assets under
management of $144 billion as of September 30, 1998. Sun Life provides a broad
range of financial products and services to individuals and groups located in
the United States, Canada, the United Kingdom and the Asia Pacific Region.
SUN CAPITAL BLUE CHIP MID CAP FUND seeks long-term capital growth by
investing primarily in a diversified portfolio of common stocks and
other equity securities of U.S. companies with market
capitalizations within the range represented by the S&P Mid Cap 400
Index.
SUN CAPITAL INVESTORS FOUNDATION FUND seeks long-term capital growth
by investing primarily in a diversified portfolio of common stocks
and other equity securities of U.S. companies. The fund will
generally hold stocks of companies with market capitalizations
within the range represented by the Standard & Poor's (S&P) 500
Index.
SUN CAPITAL INVESTMENT GRADE BOND FUND seeks high current income
consistent with relative stability of principal by investing
primarily in investment grade bonds, including those issued by U.S.
and foreign companies (including companies in emerging market
countries), the U.S. Government and its agencies and
instrumentalities (including those which issue mortgage-backed
securities), foreign governments (including those of emerging
market countries), and multinational organizations such as the
World Bank.
SUN CAPITAL MONEY MARKET FUND seeks to maximize current income,
consistent with maintaining liquidity and preserving capital, by
investing exclusively in high quality U.S. dollar-denominated money
market securities, including those issued by U.S. and foreign
banks, corporate issuers, the U.S. Government and its agencies and
instrumentalities, foreign governments and multinational
organizations such as the World Bank. The fund may invest in all
types of money market securities, including commercial paper,
certificates of deposit, bankers' acceptances, mortgage-backed and
asset-backed securities, repurchase agreements and other short-term
debt securities.
SUN CAPITAL REAL ESTATE FUND primarily seeks long-term capital
growth and, secondarily, seeks current income and growth of income.
The fund invests at least 80% of its assets in securities of real
estate trusts and other real estate companies. The fund generally
focuses its investments in equity REITs, which invest most of their
assets directly in U.S. or foreign real property, receive most of
their income from rents and may also realize gains by selling
appreciated properties.
SUN CAPITAL SELECT EQUITY FUND seeks long-term capital growth. The
fund will normally invest in twenty to forty common stocks and
other equity securities of large capitalization U.S. companies.
These investments are selected primarily from the S&P 500 Index.
<PAGE>
1. POLICY SPECIFICATIONS (CONTINUED)
TABLE OF DEATH BENEFIT PERCENTAGES
<TABLE>
<CAPTION> <S> <C> <C> <C>
APPLICABLE APPLICABLE
AGE PERCENTAGE AGE PERCENTAGE
20 250% 60 130%
21 250% 61 128%
22 250% 62 126%
23 250% 63 124%
24 250% 64 122%
25 250% 65 120%
26 250% 66 119%
27 250% 67 118%
28 250% 68 117%
29 250% 69 116%
30 250% 70 115%
31 250% 71 113%
32 250% 72 111%
33 250% 73 109%
34 250% 74 107%
35 250% 75 105%
36 250% 76 105%
37 250% 77 105%
38 250% 78 105%
39 250% 79 105%
40 250% 80 105%
41 243% 81 105%
42 236% 82 105%
43 229% 83 105%
44 222% 84 105%
45 215% 85 105%
46 209% 86 105%
47 203% 87 105%
48 197% 88 105%
49 191% 89 105%
50 185% 90 105%
51 178% 91 104%
52 171% 92 103%
53 164% 93 102%
54 157% 94 101%
55 150% 95 100%
56 146% 96 100%
57 142% 97 100%
58 138% 98 100%
59 134% 99 100%
</TABLE>
2. TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000 OF
NET AMOUNT AT RISK.
<TABLE>
<CAPTION>
Guaranteed Bi Monthly Rates per $1,000 NAR
POLICY MONTHLY POLICY MONTHLY
Year Rate Year Rate
<S> <C> <C> <C>
1 0.14083 36 2.89417
2 0.14750 37 3.25333
3 0.15667 38 3.55917
4 0.16667 39 3.96917
5 0.17833 40 4.42917
6 0.19083 41 4.92417
7 0.20583 42 5.45083
8 0.22083 43 6.00583
9 0.23833 44 6.58250
10 0.25583 45 7.19500
11 0.27667 46 7.86750
12 0.29917 47 8.61667
13 0.32333 48 9.46583
14 0.34917 49 10.42333
15 0.37833 50 11.47250
16 0.40917 51 12.59000
17 0.44583 52 13.75333
18 0.48833 53 14.95250
19 0.53583 54 16.16500
20 0.59083 55 17.40500
21 0.65250 56 18.69250
22 0.72000 57 20.04750
23 0.79167 58 21.51583
24 0.86917 59 23.16000
25 0.95667 60 25.26000
26 1.05417 61 28.27417
27 1.16333 62 33.10667
28 1.28667 63 41.68500
29 1.42750 64 58.01250
30 1.58750 65 83.33333
31 1.76417
32 1.95417
33 2.16000
34 2.38083
35 2.62167
</TABLE>
<PAGE>
3. DEFINITIONS
ACCOUNT VALUE: The sum of the amounts in each Sub-Account of the Variable
Account with respect to the Policy plus the amount of the Fixed Account Value.
ANNIVERSARY: The same day in each succeeding year as the day of the year
corresponding to the policy date shown in section 1.
APPLICATION: Your application for the Policy, a copy of which is attached
hereto and incorporated herein.
ATTAINED AGE: The Insured's Issue Age plus the number of completed Policy
Years.
BENEFICIARY: The person or entity entitled to receive the Policy Proceeds as
they become due at death.
BUSINESS DAY: Any day that We are open for business.
CASH VALUE: The Account Value less any Surrender Charges.
CASH SURRENDER VALUE: The Cash Value decreased by the balance of any
outstanding Policy Debt.
CLASS: The risk and underwriting classification of the Insured, as specified
in Section 1.
COMPANY: Sun Life Assurance Company of Canada (U.S.).
DAILY RISK PERCENTAGE: The daily rate for deduction of the mortality and
expense risk charge as specified in Section 1.
DUE PROOF: Such evidence as we may reasonably require in order to establish
that Policy Proceeds or any other benefits are due and payable.
EFFECTIVE DATE OF COVERAGE: Initially, the Investment Start Date; with respect
to any increase in the Specified Face Amount, the Anniversary that falls on or
next follows the date We approve the supplemental application for such increase;
with respect to any decrease in the Specified Face Amount, the Monthly
Anniversary Day that falls on or next follows the date We receive Your request.
EXPENSE CHARGE APPLIED TO PREMIUM: The expense charge applied to Premium
specified in Section 1.
FIXED ACCOUNT VALUE: The portion of the Account Value funded by the assets
of the General Account.
FUND: A mutual fund portfolio in which a Sub-Account invests.
GENERAL ACCOUNT: The assets held by Us, other than those allocated to the
Sub-Accounts of the Variable Account or any other separate account of the
Company.
INITIAL PREMIUM: The Premium amount specified as such in Section 1.
INSURED: The person on whose life the Policy is issued.
INVESTMENT START DATE: The date the first Premium is applied, which will be
the later of the Issue Date, the Policy Date or the Valuation Date We receive
a Premium equal to or in excess of the Initial Premium.
ISSUE AGE: The Insured's age as of the Insured's birthday nearest the policy
date shown in Section 1.
ISSUE DATE: The date We produce this policy from our systems and specified
as such in Section 1,
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<PAGE>
MATURITY: The Anniversary on which the Insured's Attained Age is 100. If the
Insured is living and the Policy is in force on this date, the Cash Surrender
Value is payable to You. It is possible that insurance coverage may not
continue to Maturity as described in the Insufficient Value Provision of
Section 9, even if Planned Periodic Premiums are paid in a timely manner.
MINIMUM MONTHLY PREMIUM: The premium amount specified as such in Section 1.
MONTHLY ANNIVERSARY DAY: The same day in each succeeding month as the day of
the month corresponding to the policy date shown in Section 1.
MONTHLY COST OF INSURANCE: An amount deducted from the Account Value on a
monthly basis for the insurance coverage provided by the Policy, as specified
in Section 9.
MONTHLY EXPENSE CHARGE: An amount deducted from the Account Value on a
monthly basis for administration and other expenses, as specified in Section
1.
MORTALITY AND EXPENSE RISK CHARGE : An amount deducted from the Account Value
in the Sub-Accounts for the mortality and expense risk charge annual rate
specified in Section 1. This annual rate is converted to a daily rate, the
Daily Risk Percentage, and deducted from the Unit Values of the Sub Accounts
on a daily basis.
NET PREMIUM: A Premium less the Expense Charge Applied to Premium.
OUR PRINCIPAL OFFICE: Sun Life Assurance Company of Canada (U.S.) One Sun
Life Executive Park, Wellesley Hills, Massachusetts, 02481, or such other
address as We may hereafter specify to You by written notice.
OWNER: The person, persons or entity entitled to the ownership rights stated
in the Policy while the Insured is alive.
PARTIAL SURRENDER: A surrender of a portion of the Account Value in exchange
for a payment to the Owner in accordance with the terms of Section 10.
POLICY: This life insurance contract, including the attached copy of the
Application and any attached copies of supplemental applications for
increases in the face amount.
POLICY DATE: The date specified as such in Section 1.
POLICY DEBT: The principal amount of any outstanding loan against the
Policy, plus accrued but unpaid interest on such loan.
POLICY MONTH: A one-month period commencing on the policy date or any
Monthly Anniversary Day and ending on the next Monthly Anniversary Day.
POLICY PROCEEDS: The amount determined in accordance with the terms of the
Policy which is payable at the death of the Insured prior to Maturity. This
amount is the Death Benefit as described in Section 8, decreased by the
amount of any outstanding Policy Debt, and increased by the amounts payable
under any supplemental benefits.
POLICY YEAR: A one-year period commencing on the policy date or any
Anniversary and ending on the next Anniversary.
PREMIUM: An amount paid to Us by the Owner or on the Owner's behalf as
consideration for the benefits provided by the Policy.
PROTECTED PERIOD: The period during which the Policy will not terminate
without value as long as it satisfies the minimum premium test described in
Section 9. The Protected Period begins on the Policy Date
Page 7
<PAGE>
shown in Section 1.
SPECIFIED FACE AMOUNT: The amount of life insurance coverage You request as
specified in Section 1.
SUB-ACCOUNTS: Sub-accounts into which the assets of the Variable Account are
divided, each of which corresponds to an investment choice available to You.
UNIT: A unit of measurement that We use to calculate the value of each
Sub-Account.
UNIT VALUE: The value of each Unit of assets in a Sub-Account.
UNPAID POLICY CHARGES: The amounts by which the Monthly Expense Charges plus
the Monthly Costs of Insurance plus the Policy Debt exceed the Account Value.
VALUATION DATE: Any day on which the New York Stock Exchange, We, and the
relevant Fund are open for business. A Valuation Date will also include any
day that may be required by any applicable Securities and Exchange Commission
Rules and Regulations.
VALUATION PERIOD: The period of time from one determination of Unit Values to
the next, subsequent determination of Unit Values. We will determine Unit
Values for each Valuation Date as of the close of the New York Stock Exchange
on that Valuation Date.
VARIABLE ACCOUNT: Sun Life Assurance Company of Canada (U.S.) Variable
Account I , a separate account of the Company consisting of assets set aside
by the Company, the investment performance of which is kept separate from
that of the general assets of the Company (also referred to as "Variable
Account I").
WE, OUR and US: We, Our and Us refer to Sun Life Assurance Company of
Canada (U.S.).
YOU, YOUR and YOURSELF: In this Policy, You, Your and Yourself refer to the
Owner of the Policy.
Page 8
<PAGE>
4. GENERAL PROVISIONS
ENTIRE CONTRACT. Your entire contract with Us consists of the Policy,
including the attached copy of the Application and any attached copies of
supplemental applications for increases in the face amount.
ALTERATION. Sales Representatives do not have the authority either to alter
or modify the Policy or to waive any of its provisions. The only persons
with this authority are Our president, actuary, secretary, or one of Our
vice presidents.
MODIFICATION. Upon notice to You, We may modify the Policy if such
modification (1) is necessary to make the Policy or the Variable Account
comply with any law or regulation issued by a governmental agency to which
the Company or the Variable Account is subject; or (2) is necessary to
assure continued qualification of the Policy under the Internal Revenue Code
or other federal or state laws as a life insurance policy; or (3) is
necessary to reflect a change in the operation of the Variable Account or
the Sub-Accounts; or (4) adds, deletes or otherwise changes Sub-Account
options. We also reserve the right to modify certain provisions of the
Policy as stated in those provisions. We may make appropriate amendment to
the Policy to reflect any such modification.
ASSIGNMENTS. During the lifetime of the Insured, You may assign all or some
of Your rights under the Policy. All Assignments must be filed at Our
Principal Office and must be in written form satisfactory to Us. The
Assignment will then be effective as of the date You signed the form,
subject to any action taken before it was received by Us. We are not
responsible for the validity or legal effect of any Assignment.
NONPARTICIPATING. The Policy does not pay dividends.
MISSTATEMENT OF AGE OR SEX (NON-UNISEX POLICY). If the age or sex (in the
case of a non-unisex Policy) of the Insured is stated incorrectly, the
amounts payable by Us will be adjusted as follows:
- - Misstatement discovered at death: The Death Benefit will be recalculated
to that which would be purchased by the most recently charged Monthly Cost
of Insurance Rate for the correct age or sex (for a non-unisex Policy).
- - Misstatement discovered prior to death: The Account Value will be
recalculated from the Policy Date using the Monthly Cost of Insurance Rates
based on the correct age or sex (for a non-unisex Policy).
If Your Policy is unisex, it is so indicated in Section 1.
SUICIDE. If the Insured, whether sane or insane, commits suicide within two
years after the Issue Date, We will not pay any part of the Policy Proceeds.
We will refund to You the Premiums paid, less the amount of any Policy Debt
and any Partial Surrenders.
If the Insured, whether sane or insane, commits suicide within two years
after the effective date of an increase in the specified amount, then our
liability as to that increase will be the cost of insurance for that
increase.
INCONTESTABILITY. All statements made in the Application or in a supplemental
application are representations and not warranties. We relied and will rely
on these statements when approving the issuance, increase in face amount,
increase in Death Benefit over Premium paid, or change in Death Benefit
Option of the Policy. No statement can be used by Us in defense of a claim
unless the statement was made in the Application or in a supplemental
application. In the absence of fraud, after the Policy has been in force
during the lifetime of the Insured for a period of two years from its Issue
Date, We cannot contest it except for non-payment of Premiums in accordance
with the Insufficient Value provision of Section 9. However, any increase in
the face amount which is effective after the Issue Date will be incontestable
only after such increase has been in force during the lifetime of the Insured
for two years from the Effective Date of Coverage of such increase. Any
increase in Death Benefit over Premium paid or increase in Death Benefit due to
a Death Benefit Option change will be incontestable only after such increase
has been in force during the lifetime of the Insured for two years from the
date of the increase.
Page 9
<PAGE>
REPORT TO OWNER. We will send You a report at least once each Policy Year.
The report will show current Policy values, Premiums paid, and deductions
made since the last report. It will also show the balance of any outstanding
Policy loans and accrued interest on such loans. There is no charge for this
report.
ILLUSTRATIONS. Upon request, after the first Policy Year, We will provide
You with an illustration of future Account Value and Death Benefits. We may
charge a nominal fee (not to exceed $25) for this illustration.
MATURITY DATE EXTENSION. The maturity date of this policy will be extended
beyond the maturity date shown in section 1 (the original maturity date), if
you so request and this policy has a Cash Value on the original maturity
date. The new maturity date will be the one you request.
After the original maturity date (if you have requested a new maturity date):
1. We will not accept any more premium payments for this policy.
2. No more deductions for the Monthly Expense Charge or for the Monthly Cost
of Insurance will be made from the Account Value.
3. The Death Benefit will be the Account Value on the Date of Death.
4. The Reinstatement provision will not apply.
Except as provided in this Maturity Date Extension provision, an extension of
the maturity date does not alter this policy.
Page 10
<PAGE>
5. RIGHTS OF OWNERS AND BENEFICIARIES
RIGHTS OF OWNER. While the Insured is alive, unless You have assigned any of
these rights, You may:
1. transfer ownership to a new Owner;
2. name a contingent Owner who will automatically become the Owner of the
Policy if You die before the Insured;
3. change or revoke a contingent Owner;
4. change or revoke a Beneficiary;
5. exercise all other rights in the Policy;
6. increase or decrease the Specified Face Amount, subject to the other
Provisions of the Policy;
7. change the Death Benefit Option, subject to the Changes in the Death
Benefit Option Provisions of Section 8 of the Policy.
When You transfer Your rights to a new Owner, You automatically revoke any
prior contingent Owner designation. When You want to change or revoke a prior
Beneficiary designation, You have to specify that action. You do not affect a
prior Beneficiary when You merely transfer ownership, or change or revoke a
contingent Owner designation.
PROCEDURE. You do not need the consent of a Beneficiary or a contingent Owner
in order to exercise any of Your rights. However, You must give Us written
notice satisfactory to Us of the requested action. Your request will then,
except as otherwise specified, be effective as of the date You signed the
form, subject to any action taken before We received it.
RIGHTS OF BENEFICIARY. The Beneficiary has no rights in the Policy until the
death of the Insured. If a Beneficiary is alive at that time, the Beneficiary
will be entitled to payment of the Policy Proceeds as they become due.
Page 11
<PAGE>
6. THE VARIABLE ACCOUNT
The assets of the Variable Account shall be kept separate from Our other
assets. We have the right to transfer to the General Account any assets of
the Variable Account which are in excess of the reserves and other Policy
liabilities of the Variable Account. The income, gains and losses, realized
or unrealized, from assets allocated to the Variable Account shall be
credited to or charged against the Variable Account without regard to any
other income, gains or losses. Also, the income gains and losses, realized or
unrealized, from assets allocated to any Sub-Account shall be credited to or
charged against that Sub-Account, without regard to other income, gains or
losses of Us or of any other Sub-Account. The portion of the assets of the
Variable Account equal to the reserves and other Policy liabilities with
respect to the Variable Account will not be chargeable with liabilities
arising out of any other business the Company may conduct. Although the
assets maintained in the Variable Account will not be charged with any
liabilities arising out of any other business conducted by Us, all
obligations arising under the Policy, including the promise to make all
benefit payments, are Our general corporate obligations.
At Our election, and subject to any necessary vote by those having voting
rights, the Variable Account may be operated as a unit investment trust or a
management company under the Investment Company Act of 1940. It may be
registered under the Investment Company Act of 1940 or de-registered in the
event registration is no longer required. In the event of any change in the
operation of the Variable Account pursuant to this provision, We may make
appropriate amendment to the contract to reflect the change and take such
other action as may be necessary and appropriate to effect the change.
SUB-ACCOUNTS. The assets of the Variable Account are divided into
Sub-Accounts. Each Sub-Account corresponds to an investment choice described
in Section 1. Each Sub-Account invests exclusively in a different investment
portfolio. Income, gains and losses, whether or not realized, from the assets
of each Sub-Account are credited or charged against that Sub-Account without
regard to income, gains or losses in other Sub-Accounts of the Variable
Account. All amounts allocated to the Variable Account will be used to
purchase shares of one or more of the Funds, as You designate. Deductions and
surrenders from the Variable Account will, in effect, be made by redeeming
the number of Fund shares at net unit value equal in total value to the
amount to be deducted. The Variable Account will be fully invested in Fund
shares at all times.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS. We may decide to add
Sub-Accounts at any time. Also, shares of any or all of the portfolios may
not always be available for purchase by the Sub-Accounts of the Variable
Account, or We may decide that further investment in any such shares is no
longer appropriate. In either event, shares of other registered open-end
investment companies or unit investment trusts may be substituted both for
portfolio shares already purchased by the Variable Account and/or as the
security to be purchased in the future, provided that to the extent necessary
these substitutions have been approved by the Securities and Exchange
Commission. The investment policies of the Sub-Accounts will not be changed
without the approval of the Insurance Commissioner of the State of Delaware.
We also reserve the right to eliminate or combine existing Sub-Accounts or to
transfer assets between Sub-Accounts. In the event of any act pursuant to
this provision, We may make appropriate amendment to the Policy to reflect
the substitution.
TRANSFERS BETWEEN SUB-ACCOUNTS. Subject to Our rules as they may exist from
time to time and to any limits that may be imposed by the Funds, including
those set forth in Section 1, You may at any time transfer to another
Sub-Account all or a portion of the Account Value allocated to a Sub-Account.
We will make transfers pursuant to an authorized written or telephone request
to Us. Telephone requests will be honored only if We have a properly
completed telephone authorization form for You on file. We, our affiliates
and the representative from whom You purchased Your Policy will not be
responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. We will use reasonable procedures to
confirm that instructions communicated by telephone are genuine. The
procedures We follow for transactions initiated by telephone include
requirements that You identify Yourself by name and identify a personal
identification number.
Transfers may be requested by indicating the transfer of either a specified
dollar amount or a specified percentage of the Sub-Account's value from which
the transfer will be made. If You request a transfer
Page 12
<PAGE>
based on a specified percentage of the Sub-Account's value, that percentage
will be converted into a request for the transfer of a specified dollar
amount based on application of the specified percentage to the Sub-Account's
value at the time the request is received. We reserve the right to limit the
number of Sub Accounts to which you may allocate your Account Value to not
more than 20 Sub Accounts.
Transfer privileges are subject to Our consent. We reserve the right to
impose limitations on transfers, including, but not limited to: (1) the
minimum amount that may be transferred; and (2) the minimum amount that may
remain in a Sub-Account following a transfer from that Sub-Account.
We reserve the right to restrict amounts transferred to the Variable Account
from the Fixed Account to 20% of that portion of the Account Value
attributable to the Fixed Account Value as of the end of the previous Policy
Year.
We reserve the right to restrict amounts transferred to the Fixed Account
Value from the Variable Account to 20% of that portion of the Account Value
attributable to the Variable Account as of the end of the previous Policy
Year. We further reserve the right to restrict amounts transferred to the
Fixed Account Value from the Variable Account in the event the portion of the
Account Value attributable to the Fixed Account Value would exceed 30% of the
Account Value.
7. PREMIUMS
All Premium payments are payable to Us, and should be mailed to Our Principal
Office. The Initial Premium is due and payable as of the Issue date of the
Policy. Subsequent premiums may be paid to Us subject to the limitations
described below. All premiums are to be paid to us at Our Principal Office.
PREMIUM. We reserve the right to limit the number of Premium payments We
accept during a year . No Premium payment may be less than $50 without Our
consent, although We will accept any Premium payment if it is necessary to
keep Your Policy in force. We reserve the right not to accept a Premium
payment that causes the Death Benefit to increase by an amount that exceeds
the Premium received. Evidence of insurability satisfactory to Us may be
required before We accept such a Premium.
We will not accept Premium payments that would, in Our opinion, cause the
Policy to fail to qualify as life insurance under applicable tax law. If a
Premium payment is made in excess of these limits, We will accept only that
portion of the Premium within those limits, and will refund the remainder to
You.
NET PREMIUMS. The Net Premium is the amount paid as the Premium less the
Expense Charge Applied to Premium. The Expense Charge Applied to Premium will
be determined by Us from time to time based on Our expectations of future
expenses and taxes. However, the Expense Charge Applied to Premium will not
be greater than that specified in Section 1.
ALLOCATION OF NET PREMIUM. Except as otherwise provided herein, Net Premium
will be allocated to the Sub-Accounts in accordance with the allocation
percentages specified by You. Your initial allocation percentages are shown
in Section 1. The minimum allocation for any Sub-Account to which You choose
to allocate Account Value is 5% of Net Premium, and percentages must be in
whole numbers. We reserve the right to limit the number of Sub Accounts to
which you may allocate your Account Value to not more than 20 Sub Accounts.
Net Premiums will first be applied to reduce any Unpaid Policy Charges.
Premiums received prior to the end of the Right to Return Policy Period will
be credited as shown in Section 1 for allocation of Premiums during the Right
to Return Period. Your initial allocation percentages will take effect at the
end of the Right to Return Policy Period.
Page 13
<PAGE>
You may change the allocation percentages at any time pursuant to written or
telephone request to Our Principal Office. Telephone requests will be honored
only if We have a properly completed telephone authorization form for You on
file. We, our affiliates and the representative from whom You purchased Your
Policy will not be responsible for losses resulting from acting upon
telephone requests reasonably believed to be genuine. We will use reasonable
procedures to confirm that instructions communicated by telephone are
genuine. The procedures We follow for transactions initiated by telephone
include requirements that You identify Yourself by name and identify a
personal identification number.
An allocation change will be effective as of the date We receive the request
for that change.
PLANNED PERIODIC PREMIUMS. While You are not required to make subsequent
Premium payments according to a fixed schedule, You may select a planned
periodic Premium schedule and corresponding billing period, subject to Our
limits. We will send You reminder notices for the planned periodic Premium at
each billing period as specified in Section 1 unless reminder notices have
been suspended as described below. However, You are not required to pay the
planned periodic Premium; You may increase or decrease the planned periodic
Premium subject to Our limits, and You may skip a planned payment or make
unscheduled payments. You may change Your planned payment schedule or the
billing period, subject to Our approval. Depending on the investment
performance of the Sub-Accounts You select, the planned periodic Premium may
not be sufficient to keep the Policy in force, and You may need to change
Your planned payment schedule or make additional payments in order to prevent
termination of Your Policy. We will suspend reminder notices at Your written
request, and We reserve the right to suspend reminder notices if Premiums are
not being paid (except for notices in connection with the grace period). We
will notify You prior to suspending reminder notices.
8. DEATH BENEFIT
DEATH BENEFIT and DEATH BENEFIT OPTION. The death benefit depends upon the
death benefit option in effect at that time. The death benefit option in
effect on the Issue Date is specified in Section 1. The two options are:
Option A - Specified Face Amount. The death benefit is the greater of:
1) the Specified Face Amount; or 2) the Account Value multiplied by the
applicable death benefit percentage shown in Section 1.
Option B - Specified Face Amount plus Account Value. The death benefit is
the greater of: 1) the Specified Face Amount plus the Account Value; or 2)
the Account Value multiplied by the applicable death benefit percentage
shown in Section 1.
The death benefit will be determined based on the Account Value on the date
of death. The actual Policy Proceeds payable on the death of the Insured
will be the death benefit described above less any Policy Debt and less any
Unpaid Policy Charges. Under certain circumstances the Policy Proceeds may
be adjusted (see "Incontestability", "Misstatement of Age or Sex" and
"Suicide" in Section 4).
CHANGES IN SPECIFIED FACE AMOUNT. After the end of the first Policy Year,
You may request a change in the Specified Face Amount. You must send Your
request for a change to Our Principal Office in writing. Each such change
will be effective on the Effective Date of Coverage for the change.
DECREASES IN SPECIFIED FACE AMOUNT. The Specified Face Amount may not be
decreased to less than the Minimum Specified Face Amount specified in
Section 1. A decrease in Specified Face Amount will be applied to the initial
Specified Face Amount and to each increase in Specified Face Amount in the
following order:
1. first, to the most recent increase;
2. second, to the next most recent increases, in reverse chronological
order; and
3. finally, to the initial Specified Face Amount.
INCREASES IN SPECIFIED FACE AMOUNT. An increase in the Specified Face Amount
is subject to Our underwriting rules in effect at the time of the increase.
You may be required to submit evidence of the
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<PAGE>
Insured's insurability satisfactory to Us. We will not accept a request for
an increase if the age of the Insured is greater than 80 at the next
Anniversary following the request.
CHANGES IN THE DEATH BENEFIT OPTION. After the end of the first Policy Year
You may request a change in the death benefit option. Changes in the death
benefit option are subject to Our underwriting rules in effect at the time of
change. Requests for a change must be made in writing to Us. The effective
date of the change will be the Anniversary on or next following the date We
receive Your request.
If the death benefit option change is from option A to option B, the
Specified Face Amount will be reduced by the Account Value. The Specified
Face Amount after a reduction may not be less than the Minimum Specified Face
Amount shown in section 1. If the death benefit option change is from option
B to option A, the Specified Face Amount will be increased by the Account
Value. In any case, the amount of the death benefit at the time of change
will not be altered, but the change in death benefit option will affect the
determination of the death benefit from that point on.
9. ACCOUNT VALUE
ACCOUNT VALUE. The Account Value is the sum of the amounts in each
Sub-Account of the Variable Account with respect to the Policy plus the
amount of the Fixed Account Value. The Account Value varies depending upon
the Premiums paid, Expense Charge Applied to Premium, Mortality and Expense
Risk Percentage deductions, Monthly Expense Charges, Monthly Cost of
Insurance charges, Partial Surrenders, fees, policy loans and the Net
Investment Factor for the Sub-Accounts to which Your Account Value is
allocated.
VARIABLE ACCOUNT VALUE. We measure the amounts in the Sub-Accounts in terms
of Units and Unit Values. On any given date, the amount You have in a
Sub-Account is equal to the Unit Value multiplied by the number of Units
credited to You in that Sub-Account. Amounts allocated to a Sub-Account will
be used to purchase Units of that Sub-Account. Units are redeemed when You
make Partial Surrenders, undertake Policy loans or transfer amounts from a
Sub-Account, and for the deductions of the Monthly Expense Charge, fees and
the Monthly Cost of Insurance charge. The number of Units of each Sub-Account
purchased or redeemed is determined by dividing the dollar amount of the
transaction by the Unit Value for the Sub-Account. The Unit Value for each
Sub-Account is established at $10.00 for the first Valuation Date of the
Sub-Account. The Unit Value for any subsequent Valuation Date is equal to the
Unit Value for the preceding Valuation Date multiplied by the Net Investment
Factor (determined as provided below). The Unit Value of a Sub-Account for
any Valuation Date is determined as of the close of the Valuation Period
ending on that Valuation Date.
Transactions are processed on the date We receive a Premium at Our Principal
Office or any acceptable written or telephonic request is received at Our
Principal Office. If Your Premium or request is received on a date that is
not a Valuation Date, or after the close of the New York Stock Exchange on a
Valuation Date, the transaction will be processed on the next subsequent
Valuation Date.
VARIABLE ACCOUNT VALUE IN THE SUB-ACCOUNTS. The Variable Account Value
attributable to each Sub-Account of the Variable Account on the Investment
Start Date equals:
1. that portion of Net Premium received and allocated to the Sub-Account,
less
2. that portion of the Monthly Expense Charges due on the policy date and
subsequent Monthly Anniversary Days through the Investment Start Date
charged to the Sub-Account, less
3. that portion of the Monthly Cost of Insurance deductions due from the
policy date through the Investment Start Date charged to the Sub-Account.
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The Account Value attributable to each Sub-Account of the Variable Account on
subsequent Valuation Dates is equal to:
1. the Account Value attributable to the Sub-Account on the preceding
Valuation Date multiplied by that Sub-Account's Net Investment Factor,
plus
2. that portion of Net Premium received and allocated to the Sub-Account
during the current Valuation Period, plus
3. any amounts transferred by You to the Sub-Account from another Sub-
Account or from the Fixed Account Value during the current Valuation
Period, less
4. any amounts transferred by You from the Sub-Account to another
Sub-Account or to the Fixed Account Value during the current Valuation
Period, less
5. that portion of any Partial Surrenders deducted from the Sub-Account
during the current Valuation Period, less
6. that portion of any Policy loan transferred from the Sub-Account to the
Fixed Account Value during the current Valuation Period, less
7. that portion of any surrender charges associated with a decrease in the
Specified Face Amount charged to the Sub-Account during the current
Valuation Period, less
8. if a Monthly Anniversary Day occurs during the current Valuation Period,
that portion of the Monthly Expense Charge for the Policy Month just
beginning charged to the Sub-Account, less
9. if a Monthly Anniversary Day occurs during the current Valuation Period,
that portion of the Monthly Cost of Insurance for the Policy Month just
ending charged to the Sub-Account.
NET INVESTMENT FACTOR. The Net Investment Factor for each Sub-Account for any
Valuation Period is determined by deducting the Mortality and Expense Risk
Charge for each day in the Valuation Period from the quotient of (1) divided
by (2) where:
(1) is the net result of:
(a) the net asset value of a Fund share held in the Sub-Account
determined as of the end of the Valuation Period, plus
(b) the per share amount of any dividend or other distribution
declared on Fund shares held in the Sub-Account if the "ex-dividend"
date occurs during the Valuation Period, plus or minus
(c) a per share credit or charge with respect to any taxes reserved
for by the Company, or paid by the Company if not previously
reserved for, during the Valuation Period which are determined by the
Company to be attributable to the operation of the Sub-Account; and
(2) is the net asset value of a Fund share held in the Sub-Account
determined as of the end of the preceding Valuation Period.
The Mortality and Expense Risk Charge for the Valuation Period is the Daily
Risk Charge times the number of days in the Valuation Period.
The Net Investment Factor may be greater or less than one.
MORTALITY AND EXPENSE RISK CHARGE. The Mortality and Expense Risk Charge will
be determined by Us from time to time based on Our expectations of future
interest, mortality costs, persistency, expenses and taxes. However, the
Mortality and Expense Risk Charge will not be greater than that specified in
Section 1.
Page 16
<PAGE>
FIXED ACCOUNT VALUE. The Fixed Account Value on the Investment Start Date
equals:
1. that portion of Net Premium received and allocated to the Fixed Account
Value and accrued at interest, less
2. that portion of the Monthly Expense Charges due on the policy date and
subsequent Monthly Anniversary Days through the Investment Start Date
charged to the Fixed Account Value and accrued at interest, less
3. that portion of the Monthly Cost of Insurance deductions due from the
policy date through the Investment Start Date charged to the Fixed Account
Value and accrued at interest.
The Fixed Account Value on subsequent Valuation Dates is equal to:
1. the Fixed Account Value on the preceding Valuation Date accrued at
interest, plus
2. that portion of Net Premium received and allocated to the Fixed Account
Value during the current Valuation Period and accrued at interest, plus
3. any amounts transferred by You to the Fixed Account Value from the
Variable Account during the current Valuation Period and accrued at
interest, less
4. any amounts transferred by You from the Fixed Account Value to the
Variable Account during the current Valuation Period and accrued at
interest, less
5. that portion of any Partial Surrenders deducted from the Fixed Account
Value during the current Valuation Period and accrued at interest, plus
6. any Policy loan transferred from the Variable Account to the Fixed
Account Value during the current Valuation Period and accrued at
interest, less
7. that portion of any surrender charges associated with a decrease in the
Specified Face Amount charged to the Fixed Account Value during the
current Valuation Period, less
8. if a Monthly Anniversary Day occurs during the current Valuation Period,
that portion of the Monthly Expense Charge for the Policy Month just
beginning charged to the Fixed Account Value and accrued at interest, less
9. if a Monthly Anniversary Day occurs during the current Valuation Period,
that portion of the Monthly Cost of Insurance for the Policy Month just
ending charged to the Fixed Account Value and accrued at interest.
The guaranteed effective annual interest rate applicable to the Fixed Account
Value is specified in section 1. Interest in excess of the guaranteed rate
may be applied in the calculation of the Fixed Account Value at such increased
rates and in such manner as we may determine, based on our expectations of
future interest, mortality costs, persistency, expenses and taxes. Interest
credited will be computed on a compound interest basis.
MONTHLY EXPENSE CHARGE. The Monthly Expense Charge is shown in Section 1. The
Monthly Expense Charge deduction will be charged proportionally to the
amounts in the Sub-Accounts and the amount of the Fixed Account Value in
excess of the Policy Debt.
Page 17
<PAGE>
MONTHLY COST OF INSURANCE. We deduct a Monthly Cost of Insurance charge from
Your Account Value to cover anticipated costs of providing insurance coverage.
the Monthly Cost of Insurance deduction will be charged proportionally to the
amounts in the Sub-Accounts and of the Fixed Account Value in excess of the
Policy Debt .
The Monthly Cost of Insurance equals the sum of (1), (2) and (3) where
(1) is the Cost of Insurance Charges equal to the Monthly Cost of
Insurance Rate (described below) multiplied by the Net Amount at Risk
divided by 1,000;
(2) is the monthly rider cost (as described in the riders) for any
riders which are a part of the Policy; and
(3) is the Flat Extra specified in Section 1, if applicable, multiplied
by the Net Amount at Risk divided by 1,000.
The Net Amount at Risk equals:
(1) the Death Benefit divided by 1.00247 ; less
(2) the Account Value on the Valuation Date prior to assessing the
Monthly Expense Charge and the Monthly Cost of Insurance Charges.
If there are increases in the Specified Face Amount other than increases
caused by changes in the Death Benefit Option, the Cost of Insurance Charges
described above are determined separately for the initial Specified Face
Amount and each increase in the Specified Face Amount. In calculating the Net
Amount at Risk the Account Value will first be allocated to the initial
Specified Face Amount and then to each increase in the Specified Face Amount
in the order in which the increases were made.
MONTHLY COST OF INSURANCE RATES. The Monthly Cost of Insurance Rates (except
for any such rate applicable to an increase in the Specified Face Amount) are
based on the length of time the Policy has been in force and the Insured's
sex (in the case of a non-unisex Policy), Issue Age, Class and table rating,
if any. The Monthly Cost of Insurance Rates will be determined by Us from
time to time based on Our expectations of future experience with respect to
mortality costs, persistency, interest rates, expenses and taxes. However,
the Monthly Cost of Insurance Rates will not be greater than those shown in
Section 2.
The Monthly Cost of Insurance Rates applicable to each increase in the
Specified Face Amount are based on the length of time the increase has been
in force and the Insured's sex (in the case of a non-unisex Policy), Issue
Age, Class and table rating, if any. The Monthly Cost of Insurance Rates will
be determined by Us from time to time based on Our expectations of future
experience with respect to mortality costs, persistency, interest rates,
expenses and taxes. However, the Monthly Cost of Insurance Rates will not be
greater than the maximum cost of insurance rates provided by Us in Section 2
for each increase.
BASIS OF COMPUTATION. Guaranteed Maximum Monthly Cost of Insurance Rates are
based on the 1980 Commissioner's Standard Ordinary Smoker and Nonsmoker
Mortality Table (Table B applies if the Policy is issued on a unisex basis).
The Guaranteed Maximum Monthly Cost of Insurance Rates reflect any table
rating shown in Section 1. We have filed a detailed statement of Our methods
for computing Cash Values with the insurance department in the jurisdiction
where the Policy was delivered. These values are equal or exceed the minimum
required by law.
INSUFFICIENT VALUE. If on a Valuation Date a Monthly Anniversary Day occurred
during the Valuation Period and the Cash Surrender Value is equal to or less
than zero, then the Policy will terminate for no value, subject to the Grace
Period provision. During the Protected Period shown in Section 1 the Policy
will not terminate by reason of insufficient value if the Policy satisfies
the minimum premium test as described below. The Protected Period begins on
the policy date shown in Section 1.
If on a Valuation Date a Monthly Anniversary Day occurred during the
Valuation Period and the Monthly Expense Charge plus the Monthly Cost of
Insurance plus the Policy Debt exceed the Account Value then the Unpaid
Policy Charges will be increased by the excess of these amounts over the
Account Value. Any
Page 18
<PAGE>
Unpaid Policy Charges will accumulate at interest at the Fixed Account
interest rate.
MINIMUM PREMIUM TEST. The Policy satisfies the minimum premium test if the
Premiums paid less any Partial Surrenders and less any Policy Debt exceed the
sum of the minimum monthly premiums which applied to the Policy in each
Policy Month from the policy date to the Valuation Date on which the test is
applied.
The minimum monthly premium applicable to the Policy is shown in Section 1.
The minimum monthly premium will be revised as a result of any of the
following changes to the Policy:
1. an increase in the Specified Face Amount;
2. an increase in supplemental benefits ;
3. when requested by You, the addition of any supplemental benefits.
The revised minimum monthly premium will be effective as of the effective
date of the change to the Policy and will remain in effect until again
revised by any of the above changes.
GRACE PERIOD. If, on a Valuation Date, the Policy will terminate by reason of
insufficient value, We will allow a grace period. This grace period will
allow 61 days from that Valuation Date for the payment of a Premium
sufficient to keep the policy in force. Notice of Premium due will be mailed
to Your last known address or the last known address of any assignee of
record. We will assume that Your last known address is the address shown on
the Application (or notice of assignment), unless We receive notice of a
change in address in a form satisfactory to Us. If the Premium due is not
paid within 61 days after the beginning of the Grace Period, then the Policy
and all rights to benefits will terminate without value at the end of the 61
day period. The Policy will continue to remain in force during this Grace
Period. If the Policy Proceeds become payable by Us during the Grace Period,
then any overdue Monthly Cost of Insurance and Monthly Expense Charge will be
deducted from the amount payable by Us.
SPLITTING UNITS. We reserve the right to split or combine the value of Units.
In effecting any such change, strict equity will be preserved and no change
will have a material effect on the benefits or other provisions of the Policy.
10. POLICY BENEFITS
BENEFITS AT DEATH. The Policy Proceeds will be paid as they become due upon
the death of the Insured prior to Maturity, in accordance with Section 8. We
will make payment when we receive Due Proof of that death.
CASH SURRENDER VALUE. You may surrender the Policy for its Cash Surrender
Value at any time. The Cash Surrender Value is the Account Value decreased by
any surrender charges and by the balance of any Policy Debt. We will
determine the Cash Surrender Value at the end of the first Valuation Date
after we receive Your written request for surrender.
SURRENDER CHARGES. If this policy is surrendered for its Cash Surrender
Value, a surrender charge will be applied to the initial Specified Face
Amount and to each increase in the Specified Face Amount, except that a
surrender charge will not be applied to an increase in the Specified Face
Amount resulting from a change in the death benefit option. The surrender
charge will be calculated separately for the initial Specified Face Amount
and each increase in the Specified Face Amount. The surrender charges for the
initial Specified Face Amount and each increase in the Specified Face Amount
are shown in the current Section 1. We will send You a current table of
revised surrender charges resulting from an increase in the Specified Face
Amount that affects the surrender charges.
Page 19
<PAGE>
SURRENDER CHARGE ON DECREASE IN SPECIFIED FACE AMOUNT. A surrender charge
will be deducted from the Account Value for each decrease in the Specified
Face Amount, except for a decrease in the Specified Face Amount resulting
from a change of death benefit option or from a Partial Surrender. A
surrender charge will be determined for the initial Specified Face Amount and
for each increase in the Specified Face Amount . These surrender charges will
be applied in the following order:
1. first, to the most recent increase;
2. second, to the next most recent increases, in reverse chronological
order; and
3. finally, to the initial Specified Face Amount.
The amounts of the surrender charges applied will be equal to the surrender
charges shown in the current section 1, revised for any increases in the
Specified Face Amount, for the Policy Year in which the decrease is made
multiplied by (a) over (b), where: (a) is the decrease in the initial
Specified Face Amount or any subsequent increase in the Specified Face
Amount; and (b) is the Initial Specified Face Amount or any subsequent
increase in the Specified Face Amount immediately prior to the decrease.
Future surrender charges for the initial Specified Face Amount and any
increase in the Specified Face Amount will be reduced by the surrender
charges applied because of the decrease in the initial Specified Face Amount
or any subsequent increases in the Specified Face Amount. We will send You a
current table of revised surrender charges reflecting the decrease in the
initial Specified Face Amount or any subsequent increases in the Specified
Face Amount.
The surrender charge will be deducted from the Account Value. You may
allocate the surrender charges applied among the Sub-Accounts and the Fixed
Account Value pursuant to written or telephone request to Our Principal
Office. Telephone requests will be honored only if We have a properly
completed telephone authorization form for You on file. We, our affiliates
and the representative from whom You purchased Your Policy will not be
responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. We will use reasonable procedures to
confirm that instructions communicated by telephone are genuine. The
procedures We follow for transactions initiated by telephone include
requirements that You identify Yourself by name and identify a personal
identification number. If You do not specify the allocation, then the
surrender charge will be allocated among the Sub-Accounts in the proportion
the amounts in the Sub-Account and the Fixed Account Value in excess of the
Policy Debt bear to the Account Value in excess of the Policy Debt .
PARTIAL SURRENDER. You may make a Partial Surrender of the Policy once each
Policy Year after the first Policy Year by written request to Us. The amount
of any Partial Surrender must be at least $200. During the first ten Policy
Years the maximum amount of each Partial Surrender is 20% of the Cash
Surrender Value at the end of the first Valuation Date after We receive Your
request. After the first ten Policy years, the maximum amount of any Partial
Surrender is the Cash Surrender Value. If the policy's death benefit option
is option A, the Specified Face Amount will be decreased by the amount of the
Partial Surrender. The decrease in Specified Face Amount will be applied to
the initial Specified Face Amount and to each increase in Specified Face
Amount in the following order:
1. first, to the most recent increase;
2. second, to the next most recent increases, in reverse chronological
order; and
3. finally, to the initial Specified Face Amount.
The Specified Face Amount remaining in force after the Partial Surrender must
be no lower than the Minimum Specified Face Amount shown in Section 1.
We will effect a Partial Surrender at the end of the first Business Day after
we receive Your written request for surrender.
ALLOCATION OF PARTIAL SURRENDER. You may allocate the Partial Surrender among
the Sub-Accounts of the Variable Account and the Fixed Account Value. If You
do not specify the allocation, then the Partial Surrender will be allocated
among the Sub-Accounts in the proportion the amounts in the Sub-Account and
the Fixed Account Value in excess of the Policy Debt bear to the Account
Value in excess of the Policy Debt.
Page 20
<PAGE>
POLICY LOAN. You may request a Policy loan of up to 90% of the Policy's Cash
Value, decreased by the amount of any outstanding Policy Debt on the date the
Policy loan is made. You may allocate the Policy loan among the Sub-Accounts
and the Fixed Account Value. If You do not specify the allocation, then the
Policy loan will be allocated among the Sub-Accounts in the proportion the
amounts in the Sub-Account and the Fixed Account Value in excess of the
Policy loan bear to the Account Value in excess of the Policy loan. Loan
amounts allocated to the Sub-Accounts will be transferred to the Fixed
Account Value. A grace period will begin on any Monthly Anniversary Day on
which the Policy Debt exceeds the Cash Value. After the end of the protected
period shown in Section 1, the Policy will terminate without value upon the
expiration of the grace period.
Interest on the Policy Debt will accrue daily at the Policy loan interest
rate specified in Section 1. This interest shall be due and payable to Us in
arrears on each Policy Anniversary. Any unpaid interest will be added to the
principal amount of the Policy Loan.
All funds We receive from You will be credited to Your Policy as Premium
unless We have received written notice, in form satisfactory to Us, that the
funds are for loan repayment. Loan repayments will first reduce the
outstanding balance of the Policy loan and then accrued but unpaid interest
on such loans. We will accept repayment of any Policy loan at any time.
DEFERRAL OF PAYMENT. We will usually pay any amount due within seven days
after the Valuation Date following Our receipt of written notice in a form
satisfactory to us giving rise to such payment or, in the case of death of
the Insured, due proof of such death. Any special conditions that apply to a
Sub-Account are specified in the description of the Sub-Account in Section 1.
Payment of any amount payable from the Variable Account on death, surrender,
Partial Surrender, or Policy loan may be postponed whenever:
1. the New York Stock Exchange ("NYSE") is closed other than customary
weekend and holiday closing, or trading on the NYSE is otherwise
restricted,
2. the Securities and Exchange Commission, by order, permits postponement
for the protection of Policy Owners, or
3. an emergency exists as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not reasonably
practicable, or it is not reasonably practicable to determine the value of
the assets of the Variable Account.
We reserve the right to defer payment of any portion of the Cash Surrender
Value, Policy loan or Partial Surrender payable from the Fixed Account Value
for a period not exceeding six months from the date We receive Your request.
We will not defer payment of a Policy loan if the loan is to be used to pay
any premium to Us.
TERMINATION. The Policy terminates on the earlier of the date We receive Your
request to surrender it for the Cash Surrender Value, the expiration date of
the Grace Period due to insufficient value, the date of death of the Insured,
or the date of Maturity.
Page 21
<PAGE>
12. REINSTATEMENT
Prior to the death of the Insured, the Policy may be reinstated prior to the
Maturity Date, provided the Policy has not been surrendered for the Cash
Surrender Value, and provided that:
1. You make Your reinstatement request within five years from the
Policy termination date;
2. You submit satisfactory evidence of the Insured's insurability to Us;
3. You pay an amount sufficient to put the Policy in force;
An amount sufficient to put the Policy in force is not less than:
1. the Unpaid Policy Charges at the end of the grace period; plus
2. any excess of the Policy Debt over the Cash Value at the end of the
grace period; plus
3. three times the Monthly Cost of Insurance charges applicable at the
date of reinstatement; plus
4. three times the Monthly Expense Charge.
During the protected period shown in Section 1 an amount is sufficient to put
the Policy in force if it meets the minimum premium test.
The Specified Face Amount of the reinstated Policy cannot exceed the
Specified Face Amount at the time of termination. The Account Value on the
Policy reinstatement date will reflect:
1. the Account Value at the time of termination; plus
2. Net Premiums attributable to Premiums paid to reinstate the Policy;
less
3. the Monthly Expense Charge; less
4. the Monthly Cost of Insurance charge applicable on the date of
reinstatement.
The effective date of reinstatement will be the Monthly Anniversary Day that
falls on or next follows the date We approve Your request.
Any Policy Debt at the time of termination must be repaid upon the
reinstatement of the Policy or carried over to the reinstated policy.
If the Policy was subject to surrender charges when it lapsed, the reinstated
Policy will be subject to surrender charges as if the Policy had not
terminated.
The Incontestability provision of the Policy will apply to the Policy after
reinstatement as regards statements made in the application for
reinstatement. The Suicide provision of the Policy will apply to the Policy
after reinstatement. In those provisions in the reinstated Policy, "Issue
Date" means the effective date of reinstatement.
Page 22
<PAGE>
RIDERS AND ENDORSEMENTS
APPLICATION
Page 23
<PAGE>
SUN LIFE ASSURANCE
COMPANY OF CANADA (U.S.)
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) U.S HEADQUARTERS OFFICE:
One Sun Life Executive Park
Wellesley Hills, MA 02481
HEAD OFFICE:
Toronto, Canada
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
THE AMOUNT OF THE DEATH BENEFIT OR THE DURATION OF THE DEATH BENEFIT MAY
INCREASE OR DECREASE TO REFLECT THE INVESTMENT EXPERIENCE OF THE VARIABLE
ACCOUNT, AS DESCRIBED IN SECTION 8.
THE ACCOUNT VALUE IN EACH SUB-ACCOUNT OF THE VARIABLE ACCOUNT MAY INCREASE OR
DECREASE IN ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THAT SUB-ACCOUNT OF
THE VARIABLE ACCOUNT. THERE IS NO MINIMUM GUARANTEED ACCOUNT VALUE FOR
AMOUNTS IN THE SUB-ACCOUNTS OF THE VARIABLE ACCOUNT.
THE POLICY PROCEEDS ARE PAYABLE AT THE DEATH OF THE INSURED PRIOR TO MATURITY
AND WHILE THE POLICY IS IN FORCE. THE CASH SURRENDER VALUE, IF ANY, IS
PAYABLE ON THE DATE OF MATURITY.
THE POLICY DOES NOT PARTICIPATE IN DIVIDENDS.
FLEXIBLE PREMIUMS ARE PAYABLE DURING THE LIFETIME OF THE INSURED PRIOR TO
MATURITY.
Page 24
<PAGE>
FUTURITY VARIABLE UNIVERSAL LIFE
UND 14/XXX
A. PROPOSED INSURED
Name
- --------------------------------------------------------------------------------
- -----------------------------------
Address
- --------------------------------------------------------------------------------
- -----------------------------------
City State
--------------------------------------------------------
Zip
- ----------------------------------- ----------------------
Social Security Number - - or Tax Identification Number
-------- --------- --------
- -----------------------------------
Driver's License Number Driver's License State of Issue
--------------------------
- -----------------------------------
Date of Birth / / Place of Birth
------ ----- ------
- -----------------------------------
Sex o Male o Female
Permanent U.S. Resident? o Yes o No
U.S. Citizen? o Yes o No
Occupation Employer
---------------------------------------
- -----------------------------------
Employer's Address
- --------------------------------------------------------------------------------
- -----------------------------------
City State
---------------------------------------------
Zip
- ----------------------------------- -----------
B. OWNER INFORMATION
Name
---------------------------------------------
Address
------------------------------------------
City
---------------------------------------------
State Zip
------------------------------ -----------
Relationship to Insured
--------------------------
Social Security or Tax Identification No.
--------
Date of Birth / /
------ ----- -------
Trust Date / /
-------- ----- -------
State Trust Established In
-----------------------
Permanent U.S. Resident? o Yes o No
U.S. Citizen? o Yes o No
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
1 Sun Life Executive Park
Wellesley Hills, MA 02481 1-800-700-6554
C. CONTINGENT OWNER
Name
---------------------------------------------
Address
------------------------------------------
City
---------------------------------------------
State Zip
------------------------------ -----------
Relationship to Insured
--------------------------
Social Security OR Tax Identification No.
--------
Date of Birth / /
------ ------ ------
Permanent U.S. Resident? o Yes o No
U.S. Citizen? o Yes o No
PLEASE CONTINUE ON NEXT PAGE Policy #:
-----------
<PAGE>
PART ONE of APPLICATION FOR FLEXIBLE PREMIUM VARIABLE
UNIVERSAL LIFE INSURANCE
D. BENEFICIARY INFORMATION
Name/Relationship to Insured/Social Security Number
n Primary / /
- -------------------------- ---------------------------- ----------------------
- --------------
o Primary o Contingent / /
- -------------------------- ---------------------------- ----------------------
- --------------
o Primary o Contingent / /
- -------------------------- ---------------------------- ----------------------
Unless otherwise specified, the proceeds will be divided equally among all
primary Beneficiaries who survive the Insured. If no primary Beneficiary
survives the Insured, then the proceeds will be divided equally among all
contingent Beneficiaries. If no Beneficiary (primary or contingent) is living,
then the proceeds will be paid to the Insured's estate.
E. FACE AMOUNT
Specified Face Amount (excluding Supplemental Benefits)
$
-------------------------------------------------------------------------------
F. DEATH BENEFIT
o Option A (Specified Face Amount) o Option B (Specified Face Amount plus
Account Value)
G. SUPPLEMENTAL
o Payment of Stipulated Amount Rider $
------------------------------------------
o to age 65 o to age 70
o Accidental Death Benefit Rider, Face Amount $
---------------------------------
o Waiver of Monthly Deductions Rider
H. PREMIUM/ADVANCED PAYMENT
Planned Periodic Premium Amount $ (subject to Sun Life
(U.S.) limitations) ---------------------------
Frequency: o Monthly o Quarterly o Semi-Annually o Annually
If monthly, o Pre-Authorized Check (Pre-Authorized Checking Plan Form must be
completed).
o Amount paid with application $ (Refer to Temporary Life
Insurance Agreement.) ------------------------
I. CORRECTIONS OR AMENDMENTS (for Sun Life (U.S.) use only)
- --------------------------------------------------------------------------------
- ----------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------
J. OTHER INSURANCE
Does the Proposed Insured have insurance in force and/or pending with any
company including Sun Life (U.S.) and its affiliates?
o Yes o No
If yes, complete the following information:
Company/Business or Personal/Issue year or Pending/Total Amount
/ / /
- ------------------------------ -------------------- ------------------- --------
- -------
/ / /
- ------------------------------ -------------------- ------------------- --------
- -------
/ / /
- ------------------------------ -------------------- ------------------- --------
- -------
/ / /
- ------------------------------ -------------------- ------------------- --------
- -------
<PAGE>
Has an application for insurance on the Proposed Insured's life been declined or
offered on a basis other than applied for?
o Yes o No
If yes, provide details:
- --------------------------------------------------------------------------------
- -----------------------------------
- --------------------------------------------------------------------------------
- -----------------------------------
UND 14/XXX
K. REPLACEMENT INFORMATION
Will any existing life insurance or annuity with this or any other insurance
company be replaced, changed or used as a source of premium
payment for the insurance applied for? If "yes" provide details and necessary
forms o Yes o No
- --------------------------------------------------------------------------------
- -----------------------------------
- --------------------------------------------------------------------------------
- -----------------------------------
If a replacement is involved, is it intended as an IRC Section 1035 exchange?
o Yes o No
L. LIFESTYLE INFORMATION ON PROPOSED INSURED
1. Have you, the Proposed Insured, used tobacco (cigarettes, cigars, chewing
tobacco, etc.) or nicotine-containing products (nicorette gum, nicotine patch,
etc.) within the past 12 months? o Yes o No
If yes, provide details:
----------------------------------------------------
2. Have you, the Proposed Insured, previously used tobacco or nicotine products
but have o Yes o No
since stopped?
If yes, date stopped:
------------------------------------------------------
3. Do you, the Proposed Insured, plan to travel or reside outside of the U.S. in
the next two years? o Yes o No
If yes, provide details:
----------------------------------------------------
4. Have you, the Proposed Insured, within the past two years flown as a pilot or
co-pilot in any o Yes o No
type of aircraft?
If yes, an Aviation Questionnaire is required on the Proposed Insured.
5. Have you, the Proposed Insured, within the past two years participated in
scuba diving, parachuting, hang gliding, motorized racing or any hazardous
sport? o Yes o No
If yes, additional information may be required.
6. Have you, the Proposed Insured, in the last three years while operating a
motor vehicle, boat or aircraft:
A. been charged with any moving violations? o Yes o No
B. had an operator's license restricted, suspended or revoked? o Yes o No
C. been charged with operating under the influence of alcohol and/or drugs?
o Yes o No
If yes, provide details:
---------------------------------------------------
UND 14/XXX
M. FAMILY HISTORY OF THE PROPOSED INSURED
Age if Living/Age at Death/State of Health or Cause of death
Father / /
- -------------------- --------------------- -------------------------------------
- ---------------
Mother / /
- -------------------- --------------------- -------------------------------------
- ---------------
Brother(s) / /
- -------------------- --------------------- -------------------------------------
- ---------------
<PAGE>
Sister(s) / /
- -------------------- --------------------- -------------------------------------
- ---------------
2. Has any of the Proposed Insured's parents, brothers, or sisters had diabetes,
heart disease, or high blood pressure? o Yes o No
If yes, provide details:
---------------------------------------------------
N. HEALTH INFORMATION
For all yes responses to questions 1-8 give diagnosis, dates, duration, names
and addresses of attending physicians and medical
facilities in the space provided at the end of this section.
1. Proposed Insured's height: Proposed Insured's
----------------
weight:
-------------------
2. Have you, the Proposed Insured, had a change of weight of more than 10 pounds
within the past 12 months? o Yes o No
3. Are you, the Proposed Insured, being treated by diet, drugs or other means?
o Yes o No
4. Name and address of primary physician or health care provider of the Proposed
Insured:
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Date last seen:
---------------------------------------------------------
Reason for visit:
--------------------------------------------------------
5. Have you, the Proposed Insured, EVER been diagnosed with or been treated by a
physician for:
A. high blood pressure, chest discomfort, stroke, circulatory or heart disorder?
o Yes o No
B. diabetes, sugar in the urine, thyroid, or other glandular (endocrine)
disorder? o Yes o No
C. kidney, bladder, urinary, reproductive organ or prostate disorder? o Yes o No
D. protein (albumin), blood or pus in the urine, sexually transmitted disease or
venereal disease? o Yes o No
E. cancer, tumor, polyp, or disorder of the skin or breast? o Yes o No
F. asthma, pneumonia, emphysema, or any other respiratory or lung disorder? o
Yes o No
G.seizure, convulsion, fainting, loss of consciousness, tremor, paralysis, or
other disorder of the nervous system? o Yes o No
H.anxiety, depression, stress, or any other psychological or emotional condition
or disorder? o Yes o No
I. colitis, hepatitis, ulcers, or other disorders of the stomach, liver or
digestive system? o Yes o No
J. arthritis, gout, back or joint pain, bone fracture, or muscle disorder?
o Yes o No
K. anemia, bleeding, or blood disorder? o Yes o No
L. Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related complex?
o Yes o No
M. a positive blood test for antibodies to the AIDS (HIV) virus? o Yes o No
6. Have you, the Proposed Insured:
A.regularly used amphetamines, marijuana, cocaine, hallucinogens, heroin or
other drugs except as prescribed by a physician? o Yes o No
B.been treated or counseled for alcoholism or drug abuse? o Yes o No
C.been advised to reduce consumption of alcohol? o Yes o No
7. Do you, the Proposed Insured, have any health symptoms for which a physician
has not been consulted or treatment received? For example, persistent fever,
unexplained weight loss, loss of appetite, pain or swelling? o Yes o No
UND 14/XXX
DETAILS
QUESTION DATE DURATION DIAGNOSIS NAME AND ADDRESSES OF ATTENDING
NUMBER PHYSICIANS AND MEDICAL FACILITIES
8. Other than previously stated, have you, the Proposed Insured, within the past
five years:
<PAGE>
A. had a checkup, consultation, illness, surgery or been hospitalized? o Yes o
No
B. had an electrocardiogram, stress or exercise test, x-ray, blood test or other
diagnostic test? o Yes o No
C. been advised to have, or scheduled, any diagnostic test, hospitalization or
surgery which was not completed? o Yes o No
UND 14/XXX
O. PLAN USE/SUITABILITY
This policy is intended to be used primarily for (check one):
o Income Replacement o Supplemental Retirement Income o Estate Plan o Charitable
Gift
o Split Dollar o Bonus Plan o Key Person o Deferred Compensation Plan
o Business Continuity o Other
-------------------------------------------
1. Has it been explained that the values and benefits provided by this policy
are based on the investment experience of a separate account and may increase or
decrease depending upon the investment experience? o Yes o No
2. Has it been acknowledged that the policy, as applied for, is in accord with
the insurance and financial objectives which have been expressed? o Yes o No
P. SIGNATURE SECTION
DECLARATIONS
I/We understand and agree that:
1. The information provided in this Application (Part I and Part II Medical, if
required) is the basis for and becomes part of the insurance issued as a result
of this Application.
2. No registered representative or medical examiner has the authority to make or
modify a Sun Life (U.S.) policy, to decide whether anyone proposed for an
insurance policy is an acceptable risk or to waive any of Sun Life (U.S.)'s
rights or requirements.
3. In accepting a policy, I/we also accept any corrections and amendments made
by Sun Life (U.S.). No change in plan, amount, benefits, age at issue or
classification can be made without my/our written consent; however Sun Life
(U.S.) may change any non-guaranteed elements to the policy at its sole
discretion.
4. Except as provided in a Temporary Life Insurance Agreement having the same
number and date as the Application, no insurance requested in this Application
will be effective (a) until a policy is issued during the lifetime of the
insured and (b) until Sun Life (U.S.) has received the initial premium due on
the policy requested, and (c) the statements made in this Application are still
complete and true as of the date the policy is delivered.
5. Sales illustrations are used to assist in understanding how the policy could
perform over time, under a number of assumptions.
I/we acknowledge that rates of return assumed in sales illustrations are
hypothetical only and are not estimates or guarantees. The actual performance of
any such policy, including account values, cash surrender values, death benefit
and duration of coverage, will be different from what may be illustrated because
the hypothetical assumptions used in an illustration may not be indicative of
actual future performance. I/we also understand that any sales illustration used
is not a contract and will not become part of any policy issued by Sun Life
(U.S.).
6. In connection herewith, it is expressly acknowledged that the policy, as
applied for, is suitable for the insurance needs and financial objectives of the
undersigned.
I/we declare that the statements and answers in this Application are complete
and true to the best of my/our knowledge and believe
<PAGE>
that they are correctly recorded. I/we understand that any person who knowingly
and with intent to defraud any insurance company or other person files an
application for insurance or statement of claim containing any materially false
information or conceals, for the purpose of misleading, information concerning
any fact material thereto commits a fraudulent insurance act, which is a crime
and subjects that person to criminal and civil penalties.
I/we also hereby understand and agree that values and benefits provided by the
life insurance policy applied for are based on the investment experience of a
separate account and are not guaranteed, such that:
- -THE DEATH BENEFIT AMOUNT MAY INCREASE OR DECREASE TO REFLECT THE INVESTMENT
EXPERIENCE OF THE
VARIOUS SUB-ACCOUNTS.
- -THE DURATION OF COVERAGE MAY ALSO INCREASE OR DECREASE, DUE TO THE INVESTMENT
EXPERIENCE OF
THESE VARIABLE SUB-ACCOUNTS.
- -THE ACCOUNT VALUE AND CASH SURRENDER VALUE MAY INCREASE OR DECREASE TO REFLECT
THE INVESTMENT
EXPERIENCE OF THESE VARIABLE SUB-ACCOUNTS.
- -WITH RESPECT TO THE VARIABLE SUB-ACCOUNTS, THERE IS NO GUARANTEED MINIMUM
POLICY VALUE NOR ARE
ANY POLICY VALUES GUARANTEED AS TO DOLLAR AMOUNT.
I/we also acknowledge receipt of a current prospectus from Sun Life (U.S.) for a
Futurity Flexible Premium Variable Universal Life product and also from each of
the underlying investment companies for the various Sub-Accounts.
AUTHORIZATION:
I, the Proposed Insured authorize any physician, hospital or other medically
related facility, insurance company, the Medical Information Bureau or other
organization or person that has any records or knowledge of me or my health to
give such information to Sun Life Assurance Company of Canada (U.S.) or its
reinsurers. The information collected may be disclosed to other insurance
companies to which I have applied or may apply, reinsurance companies, the
Medical Information Bureau, Inc., or other persons or organizations performing
business, professional or insurance functions for Sun Life Assurance Company of
Canada (U.S.), or as otherwise legally allowed. I acknowledge receipt of copies
of the pre-notification relating to investigative consumer reports and the MIB,
Inc. (Medical Information Bureau). This authorization is valid for thirty (30)
months from its date. A photocopy of this authorization shall be as valid as the
original.
Signed at on this day of
-------------------- -------------
- ---------------------
city/state month year
X
------------------------------------------------
X
------------------------------------------------
Signature of Proposed Insured (not required if under age 15) Proposed Insured's
Daytime Telephone Number
X
------------------------------------------------
X
------------------------------------------------
Signature of Owner (if other than Proposed Insured) Owner's Daytime Telephone
Number
X
------------------------------------------------
Signature of Co-Owner
X
------------------------------------------------
X
------------------------------------------------
<PAGE>
Signature of witness/registered representative Registered Representative State
Insurance License Number
UND 14/XXX
INFORMATION EXCHANGE TO BE GIVEN TO THE PROPOSED INSURED
Information which you provide in your application will be treated as
confidential. Sun Life (U.S.) or its reinsurers may, however, make
a brief report on the information received in some applications, including
yours, to the MIB, Inc. (Medical Information Bureau), a non-profit membership
organization of life insurance companies which operates an information exchange
on behalf of its members. Upon request by another member insurance company to
which you have applied for life or health insurance coverage, or to which a
claim is submitted, the MIB, Inc., will supply such company with whatever
information it may have in its files, which may include information provided by
Sun Life (U.S.). Upon receipt of a request from you, the MIB, Inc. will arrange
disclosure of any information it may have in your file. If you question the
accuracy of any information in your file, you may contact the MIB, Inc. and seek
a correction in accordance with the procedures set forth in the Federal Fair
Credit Reporting Act. The address of the MIB, Inc. information office is P.O.
Box 105, Essex Station, Boston, Massachusetts 02112.
Telephone number: 617-426-3660. Sun Life (U.S.) or its reinsurers 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 your claim for benefits may be
submitted if you have given written authorization to release this information to
the particular company.
INVESTIGATIVE CONSUMER REPORT -- IMPORTANT NOTICE
As part of our normal procedure, an investigative consumer report may be
prepared concerning your character, general reputation, personal characteristics
and mode of living. This information will be obtained through personal
interviews with your friends, neighbors and associates. A complete and accurate
disclosure of the nature and scope of the investigative consumer report, if one
is prepared, will be provided upon request to Sun Life (U.S.).
Q. REQUEST FOR TAXPAYER IDENTIFICATION
The INTERNAL REVENUE SERVICE does not require your consent to any provision of
this document, other than the certification required to avoid backup
withholding.
ITEM 1 OWNER'S TAXPAYER IDENTIFICATION (TIN)
Enter your TIN in the appropriate box. For individuals, this is your social
security number (SSN). For sole proprietors, this is the owner's SSN. For other
entities, it is your employer identification number (EIN).
Social Security Number - -
----------- ------------ -----------
OR
Employer Identification Number -
------- ----------------------
ITEM 2 FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
- -------------------------------------------------------
Requestor's Name (Optional)
-----------------------------------------------------
- ----------------
Address
-------------------------------------------------------------------------
- ----------------
City State
---------------------------------------------------
Zip
- ------------------------ ------------
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
1. The number shown on this form is my correct taxpayer identification number
(or, I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out Item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax returns. For real estate
transactions, Item 2 does not apply. For mortgage interest paid, the acquisition
or abandonment of secured property, contributions to an individual retirement
arrangement (IRA), and generally payments other than interest and dividends, you
are not required to sign the Certification, but you must provide your correct
TIN. If you are an individual, you should use the name shown on your social
security card unless you have changed your name, in which case you should enter
the full name on the card plus your new last name. If you are a sole proprietor,
you must enter your individual name as shown on your social security card. You
may also enter your business name as it was used when you applied for your EIN.
- ----------------------------------------------------------
- --------------------------------------------
Owner/Taxpayer Signature Date
UND 14/XXX
R. FOR REGISTERED REPRESENTATIVE USE ONLY
1. If the Application was taken on a non-medical basis, were answers from the
Proposed Insured obtained personally and in your presence? o Yes o No
2. Does the Proposed Insured appear to be in good health? o Yes o No
3. Are you aware of anything about the Proposed Insured's lifestyle, habits or
driving record that would have an adverse affect on insurability? o Yes o No
If yes, provide details.
-----------------------------------------------------
4. Previous address if moved within the last two years:
- --------------------------------------------------------------------------------
- --------------------
- --------------------------------------------------------------------------------
- --------------------
5. Will any existing life insurance or annuity with this or any other company be
replaced, changed or used as a source of premium payment for the insurance
applied for? If "yes", provide details and necessary forms. o Yes o No
- --------------------------------------------------------------------------------
- --------------------
6. Based on your reasonable inquiry about the Owner's financial situation,
insurance objectives and needs, do you believe that the policy as applied for is
suitable for the insurance needs and anticipated financial objectives of the
Owner? o Yes o No
7. Proposed Insured's Marital Status: o Single o Married o Divorced o Separated
o Other
8. Proposed Insured's Annual Household Income:
o $50,000 or less o $75,001-$100,000 o $150,001-$200,000
<PAGE>
o $50,001-$75,000 o $100,001-$150,000 o $200,001 or more
9. Source of prospect:
o Existing Client o Referral o Cold Call o Orphan o Orphan Referral o Direct
mail o Client's request
10. General Agent _____________________________________________________________
11. Registered Representatives who will share commission:
REGISTERED REPRESENTATIVE/STATE INSURANCE LICENSE NO./SHARE %/SERVICING REP?
LICENSE NUMBER (SELECT ONE)
- --------------------------------------------------------------------------------
o Yes o No
- ---------------------
- --------------------------------------------------------------------------------
o Yes o No
- ---------------------
12. Broker/Dealer Address
- --------------------------------------------------------------------------------
City State
------------------------------------------------------
Zip
- ---------------------------- ---------------------------
Phone Fax
-----------------------------------------------------
Broker/Dealer Account
-------------------------------------
CERTIFICATION:
I, certify:
----------------------------------------------------------
Print Registered Representative's Name
1. (a) that the questions contained in this Application were asked of the
Proposed Insured and Owner and correctly recorded; (b) that this Application,
report and any accompanying information are complete and true to the best of my
knowledge and belief; (c) that I have given the Proposed Insured the Medical
Information Bureau, Inc. (MIB, Inc.) and Consumer Report Notices; and (d) that
the provisions of the Temporary Life Insurance Agreement, including limitations
and exclusions, have been explained to the Owner.
2. that I have reviewed with the Owner all the policy features and have given a
current prospectus for the Futurity Variable Universal Life product and also
for each of the underlying investment companies for the various Sub-Accounts.
3. that evidence as to the identities of the Proposed Insured and the Owner and
source of funds has been obtained and recorded under procedures maintained by
the institution from which payments will be made.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date/State Insurance License No./Signature of Registered Representative
UND 14/XXX
<PAGE>
FUTURITY VARIABLE UNIVERSAL LIFE
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
1 Sun Life Executive Park
Wellesley Hills, MA 02481 1-800-700-6554
PRE-AUTHORIZED CHECKING PLAN FORM
ACCOUNT INFORMATION
Sun Life (U.S.) Client Name Sun Life (U.S.) Client Number
----------------------
- ------------------------------
Account Name Name of Bank
-------------------------------------
- ------------------------------
Address
- --------------------------------------------------------------------------------
- ------------------------------
City State
---------------------------------------------
Zip
- ------------------------------ -----------------
Bank Telephone Number
----------------------------
ATTACH A VOIDED CHECK TO THIS FORM. PLEASE NOTE THAT THIS FORM CAN ONLY BE USED
FOR THE APPLICATION TO WHICH IT IS ATTACHED.
Select the day of the month the premium should be drafted from your account.
o 1st o 10th o 20th
I/we authorize (a) Sun Life (U.S.) to initiate debit entries, electronically, by
paper means or by any other commercially accepted method, to my (our) checking
account designated above, and (b) my (our) bank designated above (BANK) to debit
my (our) account for such amount. This authorization is to remain in effect
until Sun Life (U.S.) and the BANK have each received written notification from
me (or either of us) of its termination in such time and manner as to afford Sun
Life (U.S.) and the BANK a reasonable opportunity to act on it. I/we agree that
Sun Life (U.S.) shall be fully protected in initiating such a debit entry, and
that the BANK shall be fully protected from any liability in the event such a
debit entry is dishonored for any reason. Sun Life (U.S.) is instructed to
forward this authorization to the BANK.
- --------------------------------------------------
- --------------------------------------------------
Signature Date
- --------------------------------------------------
- --------------------------------------------------
Joint Signature Date
PRE-AUTHORIZED CHECKING PLAN FORM
<PAGE>
FUTURITY VARIABLE UNIVERSAL LIFE
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
1 Sun Life Executive Park
Wellesley Hills, MA 02481 1-800-700-6554
INVESTMENT DESIGNATION AND OPTIONAL PROGRAM SELECTION
A. PREMIUM PAYMENT ALLOCATION
Please indicate how you would like your premium payments allocated and use whole
percentages with a 5% minimum in any Sub-Account and/or Fixed Account Option.
Your allocation should total 100%. This allocation will be used for future
premium payments, unless otherwise specified. Make check payable to: SUN LIFE
ASSURANCE COMPANY OF CANADA (U.S.).
SUB-ACCOUNTS
AIM Variable Insurance Funds, Inc.
% AIM V.I. Capital Appreciation Fund
- ----
% AIM V.I. Growth Fund
- ----
% AIM V.I. Growth and Income Fund
- ----
% AIM V.I. International Equity Fund
- ----
The Alger American Fund
% Alger American Growth Portfolio
- ----
% Alger American Income and Growth Portfolio
- ----
% Alger American Small Capitalization Portfolio
- ----
Goldman Sachs Variable Insurance Trust
% Goldman Sachs V.I.T. CORE Large Cap Growth Fund
- ----
% Goldman Sachs V.I.T. CORE Small Cap Equity Fund
- ----
% Goldman Sachs V.I.T. CORE U.S. Equity Fund
- ----
% Goldman Sachs V.I.T. Growth and Income Fund
- ----
% Goldman Sachs V.I.T. International Equity Fund
- ----
MFS/Sun Life Series Trust
% MFS/Sun Life Capital Appreciation Series
- ----
% MFS/Sun Life Emerging Growth Series
- ----
% MFS/Sun Life Government Securities Series
- ----
% MFS/Sun Life High Yield Series
- ----
% MFS/Sun Life Massachusetts Investors Growth Stock Series
- ----
% MFS/Sun Life Massachusetts Investors Trust Series
- ----
% MFS/Sun Life New Discovery Series
- ----
% MFS/Sun Life Total Return Series
- ----
% MFS/Sun Life Utilities Series
- ----
OCC Accumulation Trust
% OCC Accumulation Trust Equity Portfolio
- ----
% OCC Accumulation Trust Mid Cap Portfolio
- ----
% OCC Accumulation Trust Small Cap Portfolio
- ----
% OCC Accumulation Trust Managed Portfolio
- ----
Sun Capital Advisers, Inc.
% Sun Capital Blue Chip Mid Cap Fund
- ----
% Sun Capital Investors Foundation Fund
- ----
% Sun Capital Money Market Fund
- ----
% Sun Capital Investment Grade Bond Fund
- ----
% Sun Capital Real Estate Fund
- ----
% Sun Capital Select Equity Fund
- ----
SUN LIFE OF CANADA (U.S.) FIXED ACCOUNT GUARANTEE OPTION
% Fixed Account
- ----
B. ASSET ALLOCATION PROGRAM
If participating in the Asset Allocation Program, the initial and any future
premium payments will be allocated entirely to the model selected.
1. Select ONE of the following programs: o Conservative Asset Allocation Model
o Moderate Asset Allocation Model
o Aggressive Asset Allocation Model
NOTE: DO NOT complete Section A, PREMIUM PAYMENT ALLOCATION.
C. PORTFOLIO REBALANCING PROGRAM
If participating in the Portfolio Rebalancing Program, exchanges will be made
among the Sub-Accounts to ensure they reflect the initial allocation chosen in
Section A of the Investment Designation Form, PREMIUM PAYMENT ALLOCATION. These
allocations will be used for future payments unless otherwise specified. Premium
payments allocated to the Fixed Account Guarantee Option will not be rebalanced.
1. Select the Sub-Accounts and percentages for rebalancing in Section A, PREMIUM
PAYMENT ALLOCATION, of the Investment Designation Form. Percentages must be
whole and total 100%.
2. Select frequency: o Quarterly o Semi-annually o Annually
NOTE: If you do not make a frequency election, your Portfolio Rebalancing
Program will default to quarterly.
D. DOLLAR COST AVERAGING PROGRAM ("DCA")
A $5000 minimum balance is required to begin a Dollar Cost Averaging Program.
1. Select frequency: o Monthly Day of Month: _________________
-----------------
(Choose from 1 to 28)
o Quarterly
NOTE: If you do not make a frequency election your Dollar Cost Averaging Program
will default to monthly.
2. Indicate the DOLLAR AMOUNT each Sub-Account is to receive. The minimum
transfer amount is $100 per Sub-Account. Transfers will continue until the
Owner elects to terminate the program or until the account value in the
designated Sub-Account is depleted.
OPTIONAL PROGRAM SELECTION
$
AIM V.I. Capital Appreciation Fund
- --------
AIM V.I. Growth Fund
- --------
AIM V.I. Growth and Income Fund
- --------
AIM V.I. International Equity Fund
- --------
Alger American Growth Portfolio
- --------
Alger American Income and Growth Portfolio
- --------
Alger American Small Capitalization Portfolio
- --------
Goldman Sachs V.I.T. CORE Large Cap Growth Fund
- --------
Goldman Sachs V.I.T. CORE Small Cap Equity Fund
- --------
Goldman Sachs V.I.T. CORE U.S. Equity Fund
- --------
Goldman Sachs V.I.T. Growth and Income Fund
- --------
Goldman Sachs V.I.T. International Equity Fund
- --------
$
MFS/Sun Life Capital Appreciation Series
- --------
MFS/Sun Life Emerging Growth Series
- --------
MFS/Sun Life Government Securities Series
- --------
MFS/Sun Life High Yield Series
- --------
MFS/Sun Life Massachusetts Investors Growth Stock Series
- --------
MFS/Sun Life Massachusetts Investors Trust Series
- --------
MFS/Sun Life New Discovery Series
- --------
MFS/Sun Life Total Return Series
- --------
MFS/Sun Life Utilities Series
- --------
OCC Accumulation Trust Equity Portfolio
- --------
OCC Accumulation Trust Mid Cap Portfolio
- --------
OCC Accumulation Trust Small Cap Portfolio
- --------
OCC Accumulation Trust Managed Portfolio
- --------
Sun Capital Blue Chip Mid Cap Fund
- --------
Sun Capital Investors Foundation Fund
- --------
Sun Capital Investment Grade Bond Fund
- --------
Sun Capital Money Makret Fund
- --------
Sun Capital Real Estate Fund
- --------
Sun Capital Select Equity Fund
- --------
In the future, we may deliver prospectus updates and annual reports to
consenting Policyowners electronically by:
o (1) mailing a diskette or CD-ROM containing the document; o (2) e-mailing the
document; or
o (3) e-mailing a notice identifying an Internet site where the document can be
viewed.
Whichever option you choose, we will supply the documents in a format compatible
with: o Microsoft Windows o Macintosh
PLEASE INDICATE YOUR CONSENT BY CHECKING THE APPROPRIATE BOXES.
You may incur online charges to receive a document under option 2 or 3. If you
would like to receive these documents in electronic format when available,
please check the box and fill in your e-mail address here
(______________________________). This consent will be in effect until you
revoke it in writing to us. You may revoke it at any time. If you consent to
electronic delivery, at any time you also may request that we send you a paper
copy.
Policy #: ___________
-----------
INVESTMENT DESIGNATION
OPTIONAL PROGRAMS ON REVERSE SIDE
TELEPHONE TRANSFER PRIVILEGE
To authorize the Company to make transfers among the various Sub-Accounts
and/or to effect changes in your Premium Payment Allocation based upon
telephone instructions, initial the box below. By this you acknowledge that
you understand and agree (i) neither the Company nor any person acting on its
behalf shall be subject to any claim, loss, liability, cost, or expense if
acting in good faith upon a telephone instruction reliant on this
authorization; (ii) transfer will be made in accordance with procedures
established in advance by the Company (details will be sent with contract);
and (iii) this authorization shall continue in force until and unless the
earlier of (a) written revocation of it is received by the Company or (b) the
Company discontinues the privilege.
INITIALS
UND 14/XXX
<PAGE>
I understand this authorization for participation in the Optional Program(s) for
the policy applied for will continue until my written, signed
revocation is received by Sun Life Assurance Company of Canada (U.S.), One Sun
Life Executive Park, Attn: ,
---------------------
Wellesley Hills, MA 02481.
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Owner Signature Date
UND 14/XXX SLPC 4943
<PAGE>
- -------------------------------------------
- -------------------------------------------
Name of Registered Representative Signature of Registered Representative
PREMIUM CHECKS MUST BE MADE PAYABLE TO SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.).
TEMPORARY LIFE INSURANCE APPLICATION
1. Within the last three years, have you, the Proposed Insured, consulted a
physician or received treatment for cancer, stroke, pneumonia, heart attack or
any disease of the heart? o Yes o No
2. Have you, the Proposed Insured, within the last 60 days had or been advised
to have any diagnostic test, treatment or surgery not yet performed? o Yes o No
3. Do you, the Proposed Insured, have health symptoms or complaints for which a
physician has not yet been consulted or treatment received? For example,
persistent fever, unexplained weight loss, loss of appetite, pain or swelling,
etc.? o Yes o No
IF ANY OF THE PREVIOUS QUESTIONS HAS A "YES" ANSWER, NO PAYMENT WILL BE
ACCEPTED. IN ADDITION, DO NOT DETACH RECEIPT.
I/we have read and understand the conditions of the Temporary Life Insurance
Agreement and agree that the above statements are complete and true to the best
of my/our knowledge and believe that they are correctly recorded.
- -------------------------------------------
- -------------------------------------------
Signature of Proposed Insured Date
- -------------------------------------------
- -------------------------------------------
Signature of Owner Date
SUN LIFE (U.S.) COPY SLPC 4943
<PAGE>
FUTURITY VARIABLE UNIVERSAL LIFE
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
1 Sun Life Executive Park
Wellesley Hills, MA 02481 1-800-700-6554
TEMPORARY LIFE INSURANCE AGREEMENT AND RECEIPT
Sun Life (U.S.) will provide temporary life insurance coverage on the person
proposed for insurance, who has signed the Temporary Life insurance Application,
made an advance payment and completed Part 1 of the application for the policy,
subject to the following:
PERSON COVERED--Coverage will be provided on the Proposed Insured.
START OF COVERAGE--Coverage begins the date you sign the Temporary Life
Insurance Application.
LIMITATIONS OF COVERAGE--No coverage will be provided if: (a) any question
material to our assessment of the risk on the Temporary Life Insurance
Application is not answered completely and truthfully; (b) any question on the
Temporary Life Insurance Application is answered "Yes"; or (c) Proposed Insured,
whether sane or insane, commits suicide.
AMOUNT AND LIMITATIONS ON AMOUNT--Amount of coverage will be the amount you
request in Part 1 of the application associated with this Temporary Life
Insurance Application subject to limitations. Coverage on the Proposed Insured
under this and all other Sun Life (U.S.) temporary life insurance agreements
will be limited to the total coverage provided by such agreements or to
$2,000,000, including Accidental Death Benefit, whichever is less. If more than
one application is pending on the Proposed Insured and the total amount of
insurance applied for exceeds $2,000,000, then the coverage under this Temporary
Life Insurance Agreement will be reduced to that proportion of $2,000,000 which
the amount applied for under Part 1 of the application associated with this
Temporary Life Insurance Application bears to the total amount applied for under
all such applications for temporary life insurance coverage.
TERMINATION OF COVERAGE--Coverage will terminate: (a) on written notice from Sun
Life (U.S.); (b) on the date a policy is issued and Sun Life (U.S.) has received
the balance of any premiums owed; or (c) on the refund of any advance payment
made with the applications associated with this Temporary Life Insurance
Application; or (d) on the date of your request; or (e) on the ninetieth
(90TH) day following the date of the Temporary Life Insurance Application.
PAYMENT OF BENEFITS--If the Proposed Insured dies while covered by this
Agreement, the benefit will be paid to the Beneficiary named in the Application
for the policy.
AMOUNT PAID--The amount paid, as listed below, will be held by the Company while
this Temporary Life Insurance coverage is provided; but this amount is not
allocated to any Sub-Account and/or Fixed Account until such date as a policy is
issued and the Company receives the balance of any premiums owed. Prior to such
date, the Company may deduct Cost of Insurance charges for the period
of this Temporary Life Insurance coverage.
Sun Life (U.S.) acknowledges receipt of $ _____________________________ paid in
connection with application for life insurance on the life of
dated this day of
- ------------------------------------------- -----------
- ------------------.
- -------------------------------------------
- -------------------------------------------
Name of Owner Signature of Owner
- ------------------------------------- --------------------------------------
Name of Registered Representative Signature of Registered Representative
<PAGE>
FUTURITY VARIABLE UNIVERSAL LIFE
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
1 Sun Life Executive Park
Wellesley Hills, MA 02481 1-800-700-6554
CLIENT COPY
Sun Life (U.S.) will provide temporary life insurance coverage on the person
proposed for insurance, who has signed the Temporary Life insurance Application,
made an advance payment and completed Part 1 of the application for the policy,
subject to the following:
PERSON COVERED--Coverage will be provided on the Proposed Insured.
START OF COVERAGE--Coverage begins the date you sign the Temporary Life
Insurance Application.
LIMITATIONS OF COVERAGE--No coverage will be provided if: (a) any question
material to our assessment of the risk on the Temporary Life Insurance
Application is not answered completely and truthfully; (b) any question on the
Temporary Life Insurance Application is answered "Yes"; or (c) Proposed Insured,
whether sane or insane, commits suicide.
AMOUNT AND LIMITATIONS ON AMOUNT--Amount of coverage will be the amount you
request in Part 1 of the application associated with this Temporary Life
Insurance Application subject to limitations. Coverage on the Proposed Insured
under this and all other Sun Life (U.S.) temporary life insurance agreements
will be limited to the total coverage provided by such agreements or to
$2,000,000, including Accidental Death Benefit, whichever is less. If more than
one application is pending on the Proposed Insured and the total amount of
insurance applied for exceeds $2,000,000, then the coverage under this Temporary
Life Insurance Agreement will be reduced to that proportion of $2,000,000 which
the amount applied for under Part 1 of the application associated with this
Temporary Life Insurance Application bears to the total amount applied for under
all such applications for temporary life insurance coverage.
TERMINATION OF COVERAGE--Coverage will terminate: (a) on written notice from Sun
Life (U.S.); (b) on the date a policy is issued and Sun Life (U.S.) has received
the balance of any premiums owed; or (c) on the refund of any advance payment
made with the applications associated with this Temporary Life Insurance
Application; or (d) on the date of your request; or (e) on the ninetieth
(90TH) day following the date of the Temporary Life Insurance Application.
PAYMENT OF BENEFITS--If the Proposed Insured dies while covered by this
Agreement, the benefit will be paid to the Beneficiary named in the Application
for the policy.
AMOUNT PAID--The amount paid, as listed below, will be held by the Company while
this Temporary Life Insurance coverage is provided; but this amount is not
allocated to any Sub-Account and/or Fixed Account until such date as a policy is
issued and the Company receives the balance of any premiums owed. Prior to such
date, the Company may deduct Cost of Insurance charges for the period
of this Temporary Life Insurance coverage.
Sun Life (U.S.) acknowledges receipt of $ _____________________________ paid in
connection with application for life insurance on
the life of dated this day of
------------------------------------- -----------
.
- --------------------
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<PAGE>
Name of Owner Signature of Owner
- -------------------------------------------------
- -------------------------------------------------
Name of Registered Representative Signature of Registered Representative
PREMIUM CHECKS MUST BE MADE PAYABLE TO SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.).
TEMPORARY LIFE INSURANCE APPLICATION
1. Within the last three years, have you, the Proposed Insured, consulted a
physician or received treatment for cancer, stroke, pneumonia, heart attack or
any disease of the heart? o Yes o No
2. Have you, the Proposed Insured, within the last 60 days had or been advised
to have any diagnostic test, treatment or surgery not yet performed? o Yes o No
3. Do you, the Proposed Insured, have health symptoms or complaints for which a
physician has not yet been consulted or treatment received? For example,
persistent fever, unexplained weight loss, loss of appetite, pain or swelling,
etc.? o Yes o No
IF ANY OF THE PREVIOUS QUESTIONS HAS A "YES" ANSWER, NO PAYMENT WILL BE
ACCEPTED. IN ADDITION, DO NOT DETACH RECEIPT.
I/we have read and understand the conditions of the Temporary Life Insurance
Agreement and agree that the above statements are complete and true to the best
of my/our knowledge and believe that they are correctly recorded.
- -------------------------------------------------
- -------------------------------------------------
Signature of Proposed Insured Date
- -------------------------------------------------
- -------------------------------------------------
Signature of Owner Date
SLPC 4943
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
Description of Issuance, transfer
and redemption procedures for
Flexible Premium variable life insurance policies
Pursuant to Rule 6e-3(T)(b)(12)(iii)
This document sets forth the administrative procedures that will be followed
by Sun Life Assurance Company of Canada (U.S.) (the "Company"), in
connection with the issuance of a Flexible Premium Variable Universal Life
Insurance Policy, (the "Policy"), the transfer of assets held thereunder, and
the redemption by Owners of their interests in such Policy.
I. PROCEDURES RELATING TO ISSUANCE AND PURCHASE OF POLICIES
A. APPLICATION, UNDERWRITING AND INITIAL PREMIUM PROCESSING
To purchase a Policy, an application must be submitted to our Principal Office
so that we may follow certain underwriting procedures designed to determine the
insurability of the proposed Insured. We offer the Policy on a regular
(medical) underwriting basis and may require medical examinations and further
information before the proposed application is approved. Proposed Insureds must
be acceptable risks based on our underwriting limits and standards. A Policy
cannot be issued until the underwriting process has been completed to our
satisfaction and we reserve the right to reject an application that does not
meet our underwriting requirements or to "rate" an Insured as a substandard
risk, which will result in the charging of increased Monthly Cost of Insurance
charges and/or flat extra charges.
The applicant must specify certain information in the application including the
Specified Face Amount, the death benefit option, supplemental benefits and
allocation instructions.
The Specified Face Amount must not be below the Minimum Specified Face Amount,
which is $100,000.
The Policy must satisfy the Guideline Premium compliance test in order to
qualify as life insurance as defined by section 7702 of the Internal Revenue
Code. Under the Guideline Premium compliance test the premiums paid may not
exceed the guideline premiums as defined by section 7702 of the Internal Revenue
Code. In addition, the Policy's death benefit may not be less than the Account
Value multiplied by the applicable Death Benefit Percentage defined by section
7702 of the Internal Revenue Code.
The Policy provides the following two death benefit options:
<PAGE>
Option A - Specified Face Amount. The death benefit is the greater of the
Specified Face Amount or the Account Value multiplied by the applicable Death
Benefit Percentage.
Option B - Specified Face Amount plus Account Value. The death benefit is the
greater of the Specified Face Amount plus the Account Value, or the Account
Value multiplied by the applicable Death Benefit Percentage.
Prior to the approval of the application, any advance payments received are
not premiums for the policy and will be held in the Company's General Account
and will not accrue interest. The Company may offer a Temporary Insurance
Agreement to the owner on the life of the proposed Insured subject to our
conditions and limitations. The Temporary Insurance Agreement provides
coverage for up to 90 days. However, this coverage will not extend beyond the
effective date of the Policy if earlier than the end of the 90 day period.
Coverage will not exceed the lesser of the specified face amount being
applied for or $2,000,000. If the proposed Insured dies during the period
when the Temporary Insurance Agreement is in effect, the full amount of the
advance payment will be retained by the Company and the coverage amount under
the Temporary Insurance Agreement will be paid to the beneficiary. If the
Temporary Insurance Agreement terminates prior to the issuance of the Policy
the total amount of the advance payment will be refunded. Upon approval of
the application, the Policy on the life of the Insured will be issued. The
initial premium is due and payable as of the Issue Date. If a Temporary
Insurance Agreement is in effect when the Policy is issued, any such advance
payment will be credited toward the initial premium for the Policy that has
been issued. At that point, appropriate adjustments for items such as cost
of insurance and other monthly charges will be made. The effective date of
coverage for the Policy will be the date the initial premium is received at
our Principal Office. If an application is not approved, any advance payment
received for a Temporary Insurance Agreement will be returned promptly.
During the Right to Return period set forth in the Policy, the Company will
allocate the net premiums received to the sub-account of the Sun Life of
Canada (U.S.) Variable Account I (the "Variable Account") that invests in the
fund option we specify in the policy such as the fixed account or the Sun
Capital Money Market Account. Upon expiration of this period, the account
value in that sub-account will be transferred, as applicable, to the
sub-accounts of the variable account and to the Fixed Account Value in
accordance with the Owner's allocation instructions.
B. PREMIUM PAYMENTS
The initial premium is an amount specified for each Policy based on the
requested Specified Face Amount, issue age, sex, class of the Insured, and any
supplemental benefits requested. Coverage under the Policy does not exist until
we have received the initial premium at the Company's Principal Office. The
initial premium for the Policy
<PAGE>
will not be the same for all owners of policies.
All premium payments are payable to the Company, at our Principal Office. The
Owner is not required to make premium payments according to a fixed schedule,
but may select a planned periodic premium amount and corresponding billing
period, subject to our Premium limits. The billing period must be annual,
semi-annual, quarterly or by pre-authorized check on a monthly basis. We will
send a billing notice for the annual, semi-annual and quarterly planned periodic
premium at the beginning of each billing period. However, the Owner is not
required to pay the planned periodic premium; he or she may increase or decrease
premium payments, subject to our limits, and may skip a planned premium payment
or make unscheduled payments. If premium payments are being made by
pre-authorized check, skipping payments may result in a billing period change to
semi-annual. The Owner may change the planned premium amount or billing period,
subject to our approval. The payment of a planned periodic premium may not be
sufficient to keep the Policy in force, and the Owner may need to change the
planned periodic premium payment amount and/or the corresponding billing period
or make additional payments in order to prevent termination of the Policy.
The Company reserves the right to limit the number of premium payments we accept
on an annual basis on each Policy. No premium payment may be less than $50
without our consent, although we will accept a smaller premium payment if it is
necessary to keep a Policy in force. We reserve the right not to accept a
premium payment that causes the death benefit to increase by an amount that
exceeds the premium received; evidence of insurability satisfactory to us may be
required before we accept such a premium.
The Company will not accept premium payments which would cause the Policy to
fail to qualify as life insurance as defined by section 7702 of the Internal
Revenue Code, or any successor provision. The maximum premium limit for each
policy year is the largest premium that can be paid such that the sum of all
premiums paid will not exceed the guideline premium limitations of section 7702
of the Internal Revenue Code, or any successor provision. If a premium is made
in excess of these limits, we will accept only that portion of the premium
within those limits, and will refund the remainder. The portion accepted will
be applied in accordance with the allocation percentages.
A Policy will remain in force as long as the Cash Surrender Value is
sufficient to cover the Policy deductions. However, during the first five
policy years the Policy will remain in force if the sum of premiums paid less
any partial surrender less the policy debt is equal or greater than the
cumulative minimum monthly premiums applicable to the Policy. Thus, the
amount of a premium, if any, that must be paid to keep the Policy in force
depends upon the Cash Surrender Value of the Policy and the Minimum Monthly
Premium applicable to the Policy each month. The Account Value and, therefore,
the Cash Surrender Value depend on such factors as the premiums paid, the
investment experience of the sub-accounts, the interest rate credited to the
Fixed Account Value,
<PAGE>
the monthly cost of insurance, the monthly expense charge and the mortality and
expense risk charge. The rate utilized in computing the cost of insurance will
not be the same for each Insured. The reason for this is that the principle of
pooling and distribution of mortality risks is based on the assumption that each
Insured incurs an insurance rate commensurate with his or her mortality risk
which is actuarially determined based on such factors as issue age, attained
age, sex (except under Unisex policies), and risk class. Accordingly, while not
all Insureds will be subject to the same cost of insurance rate, there will be a
single rate for all Insureds in a given actuarial category.
Current cost of insurance rates will be determined by the Company based upon
expectations of future experience with respect to mortality costs, persistency,
interest rates, expenses and taxes. The costs of insurance rates are guaranteed
not to exceed rates based on the 1980 CSO Mortality Tables. The Policies will
be offered and sold pursuant to established standards in accordance with state
insurance laws.
The interest rate credited to the Fixed Account Value is guaranteed to be 3.00%
annual effective rate. Interest in excess of the guaranteed rate may be applied
in the calculation of the Fixed Account Value at such increased rates and in
such manner as we may determine, based on our expectations of future interest,
mortality costs, persistency, expenses and taxes.
C. REINSTATEMENT
Before the Insured's death, we will reinstate your Policy prior to its Maturity
date, provided that the Policy has not been surrendered and you --
*make a request for reinstatement within five years from the date of
termination;
*submit satisfactory evidence of insurability to us; and
*pay an amount sufficient to put your Policy in force.
To put your Policy in Force, you must pay an amount of at least --
*the Unpaid Policy Charges at the end of the Grace Period; plus
*any excess of the Policy Debt over the Cash Value at the end of the Grace
Period; plus
*three times the Monthly Cost of Insurance charges applicable at the date
of reinstatement; plus
*three times the Monthly Expense Charge.
During the first five Policy Years, an amount is sufficient to put your
Policy in force if it meets the minimum premium test.
<PAGE>
A reinstated Policy's Specified Face Amount may not exceed the Specified Face
Amount at the time of termination. Your Account Value on the reinstatement date
will reflect:
*the Account Value at the time of termination; PLUS
*net premiums attributable to premiums paid to reinstate the Policy; LESS
*the Monthly Expense Charge; LESS
*the Monthly Cost of Insurance charge applicable on the date of
reinstatement.
The effective date of reinstatement will be the Monthly Anniversary Day that
falls on or next follows the date we approve your request.
Any Policy Debt at the time of termination must be repaid upon the reinstatement
of the Policy or carried over to the reinstated Policy.
If your Policy was subject to surrender charges when it lapsed, the reinstated
Policy will be subject to surrender charges as if it had not terminated.
The incontestability provision of the Policy will apply to the Policy after
reinstatement as regards statements made in the application for reinstatement.
The suicide provision of the Policy will apply to the policy after
reinstatement. In those provisions of a reinstated Policy, "Issue Date" means
the effective date of reinstatement.
D. UNPROCESSIBLE REQUESTS
If the Company receives a request from an Owner which is incomplete or
otherwise unprocessible, the Company will, if it is a premium payment, allocate
it in accordance with the Owner's most recent allocation instructions and
otherwise communicate with the Owner by mail and, perhaps, take other steps to
clarify the request. Except as noted above, the Company reserves the right not
to take any action until the matter is resolved.
II. REDEMPTION PROCEDURES: SURRENDER AND RELATED TRANSACTIONS
Set forth below is a summary of the principal policy provisions and
administrative procedures which might be deemed to constitute, either directly
or indirectly, a redemption transaction. The summary shows that because of the
insurance nature of the Policies, the procedures involved necessarily differ in
certain significant respects from the redemption procedures for mutual funds and
contractual plans.
<PAGE>
A. SURRENDERS AND PARTIAL SURRENDERS
The Owner may surrender the Policy for the Cash Surrender Value at any time
by sending a written request, in a form satisfactory to us, to our Principal
Office. The amount available for surrender is the Cash Surrender Value at
the end of the valuation period during which the surrender request is
received at our Principal Office. The Cash Surrender Value is the Account
Value, decreased by any Surrender Charges, and decreased by any Policy Debt.
Coverage under a Policy terminates as of the date of surrender.
After the first policy year, the Owner may make a Partial Surrender of the
Policy once each policy year. The maximum Partial Surrender in policy years
2 -10 is 20% of the Cash Surrender Value at the end of the first Valuation
Date after we receive your request, and after year 10 it is the amount of the
Cash Surrender Value. The minimum Partial Surrender is $200. The Specified
Face Amount will be reduced to the extent necessary so that the death benefit
less the Account Value immediately after the Partial Surrender does not
exceed the death benefit less the Account Value immediately before the
Partial Surrender. The Specified Face Amount remaining in force after a
Partial Surrender must not be lower than the Minimum Specified Face Amount
which is generally $100,000.
The Owner may allocate the Partial Surrender amount to the sub-accounts of the
Variable Account and the Fixed Account Value. If the allocation is not
specified, then the Partial Surrender will be allocated proportionally to the
Sub-accounts and the Fixed Account Value in excess of any Policy Debt.
Amounts payable from the Variable Account upon a Surrender or Partial Surrender
will ordinarily be paid within seven days of receipt at our Principal Office of
a written request in a form satisfactory to us and any additional requirements
deemed necessary by the state and federal governments.
The Company may delay payment (i) for any period during which the New York Stock
Exchange is closed for trading (except for normal holiday (ii) an emergency
exists, as defined by the SEC, or the SEC requires that trading be restricted;
or (iii) the SEC permits a delay for the protection of Owners. Transfers also
may be deferred under the circumstances set forth in clauses (i), (ii) and (iii)
above and in certain other circumstances.
B. CHANGES IN SPECIFIED FACE AMOUNT
After the end of the first policy year the Owner may change the Specified Face
Amount.
<PAGE>
Requests for a change in the Specified Amount must be made in writing, in a form
satisfactory to us, and submitted to our Principal Office. The effective date
of coverage for changes in Specified Face Amount is:
- For any increase in coverage, the next policy anniversary following the
date we approve the supplemental application for such increase, and
- For any decrease in coverage, the Monthly Anniversary Day that falls on
or next follows the date we receive the request.
The Specified Face Amount may not decrease to less than the Minimum Specified
Face Amount, which is generally $100,000 and is specified in the Policy. A
decrease in the Specified Face Amount will cause a Partial Surrender Charge
to be deducted from the Account Value. A decrease in the Specified Face
Amount will be applied to the initial Specified Face Amount and to each
increase in Specified Face Amount in the following order:
- First, to the most recent increase;
- Second, to the next most recent increase in reverse chronological order;
and
- Finally, to the initial Specified Face Amount.
An increase in the Specified Face Amount is subject to our underwriting rules in
effect at the time of the increase. The Owner may be required to submit
evidence of the Insured's insurability satisfactory to us.
C. CHANGES IN DEATH BENEFIT OPTION
After the end of the first policy year the Owner may change the Death Benefit
Option. Requests for a change in Death Benefit Option must be made in writing,
in a form satisfactory to us, and submitted to our Principal Office. Changes in
the Death Benefit Option are subject to our underwriting rules in effect at the
time of the change. The effective date of the change will be the Policy
Anniversary on or next following the date of receipt of the request.
If the Death Benefit Option change is from Option A to Option B, the Specified
Face Amount will be reduced by the Account Value. If the Death Benefit Option
change is from Option B to Option A, the Specified Face Amount will be increased
by the Account Value. In both cases, the amount of the Death Benefit at the
time of change will not be altered, but the change in Death Benefit Option will
affect the amount of the Death Benefit from that point on.
D. DEATH CLAIMS
<PAGE>
While the Policy remains in force the Company ordinarily will pay a death
benefit to the named beneficiary of record, subject to the rights of any
assignee, in accordance with the designated death benefit option within seven
days after receipt, in its Principal Office, of due proof of death of the
Insured. Payment of death benefits may be postponed or delayed under certain
circumstances. By example, an investigation may be warranted to verify the
validity of the claim, resolve unclear beneficiary arrangements or
investigate a death occurring during the suicide and contestability periods.
Also, the New York Stock Exchange being closed for reasons other than
customary weekend and holiday closings may impact the ability to pay a death
benefit within seven days.
Unless otherwise specified, the proceeds will be divided equally among all
primary Beneficiaries who survive the Insured. If no primary Beneficiary
survives the Insured, then the proceeds will be divided equally among all
contingent Beneficiaries. If no Beneficiary (primary or contingent) is living,
then the proceeds will be paid to the Insured's estate.
The amount of the death benefit is determined at the end of the valuation period
during which the Insured dies. The amount of the death benefit will never be
less than the Specified Face Amount of the Policy. The Policy Proceeds paid to
the beneficiary equal the death benefit plus any amounts payable under any
supplemental benefits added to the Policy decreased by any Policy Debt and
Unpaid Policy Charges.
If the Insured is living on the date of maturity and has not requested an
extension of the maturity date, the Company will then pay in a lump sum the cash
surrender value of the Policy.
E. POLICY LOANS
The Owner may request a Policy loan of up to 90% of the Cash Value, less any
outstanding debt on the date the Policy loan is made. Any amount due to an
Owner under a loan ordinarily will be paid within seven days after the Company
receives a written request in a form satisfactory to us, at its Principal
Office, although payments may be delayed or postponed under some circumstances.
The Owner may allocate the Policy loan among the Sub-Accounts and the Fixed
Account Value. If the allocation is not specified, then the loan will be
allocated proportionally to the Sub-accounts and the Fixed Account Value in
excess of any Policy Debt. The Policy loan amounts allocated to the
sub-accounts will be transferred to the Fixed Account.
The outstanding loan amounts will earn interest at an annual rate of 3.00%.
Interest on the Policy loan will accrue at the policy loan interest rate of
4% annually in policy years
<PAGE>
one through ten and 3% annually thereafter. This interest shall be due and
payable to us in arrears on each Policy Anniversary. Any unpaid interest
will be added to the principal loan amount as an additional Policy loan and
will bear interest in the same manner as the prior policy loan.
All funds we receive from the Owner will be credited to the Policy as Premium
unless we have received written notice, in a form satisfactory to us, at our
Principal Office, that the funds are for loan repayment. Loan repayments will
first reduce the outstanding balance of the Policy loan and then accrued but
unpaid interest on such loans. We will accept repayment of any Policy loan at
any time before Maturity.
III. TRANSFERS
Subject to the Company's rules as they may exist from time to time and to any
limits that may be imposed by the Funds, including those set forth in the
Policy, the Owner may at any time transfer to another sub-account all or a
portion of the Account Value allocated to a sub-account. The Owner may also
transfer amounts to or from the Fixed Account Value.
All requests for transfers must be made to our Principal Office. The Company
will make transfers pursuant to a valid request, made in writing or by
telephone, received at our Principal Office. Telephone requests will be honored
only if the Company has a properly completed and signed telephone authorization
form for the Owner on file. The Company and its agents and affiliates will not
be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. The Company will use reasonable procedures
to confirm that instructions communicated by telephone are genuine. The
procedures followed for transactions initiated by telephone include requirements
that the Owner identify himself or herself by name and identify a personal
identification number. For additional protection, all changes in allocation
percentages by telephone may be recorded.
Transfers may be requested by indicating the transfer of either a specified
dollar amount or a specified percentage of the sub-account's value from which
the transfer will be made. If a transfer is based on a specified percentage of
the sub-account's value that percentage will be converted into a request for the
transfer of a specified dollar amount based on application of the specified
percentage to the sub-accounts at the end of the valuation period during which
the request was made.
These transfer privileges are subject to the Company's consent. The Company
reserves the right to impose limitations on transfers, including but not limited
to: (1) the minimum amount that may be transferred; and (2) the minimum amount
that may remain in a sub-account following a transfer from that sub-account. In
addition, transfer privileges are subject to any restrictions that may be
imposed by the Funds.
<PAGE>
IV. REFUNDS
A. RIGHT TO RETURN POLICY
The Policy has a "Right of Return" provision which gives certain cancellation
rights. If the Owner is not satisfied with the Policy, it may be returned by
delivering or mailing it to our Principal Office or to the sales
representative from whom the Policy was purchased within 10 days from the
date of receipt. A longer period may apply in some states.
A Policy returned under this provision will be deemed void from the beginning.
The Owner will receive a refund equal to the sum of (1) the difference between
any premium payments made, including fees and charges, and the total of amounts
allocated to the Variable Account, (2) the value of the amounts allocated to the
Variable Account on the date the cancellation request is received by the Company
at our Principal Office; less (3) any fees or charges imposed on amounts
allocated to the Variable Account.
However, certain states currently require a full refund of premium. If the
Policy is issued in a state which requires a full refund under its "Right of
Return" provision, the Owner will receive a refund of all premium payments made,
with no adjustment for investment experience.
B. SUICIDE
If the Insured, whether sane or insane, commits suicide within two years after
the Issue Date, We will not pay any part of the Policy proceeds. We will refund
to You the Premiums paid, less the amount of any Policy Debt and any Partial
Surrenders.
If the Insured, whether sane or insane, commits suicide within two years after
the effective date of an increase in the specified amount, then our liability as
to that increase will be the cost of insurance for that increase.
C. INCONTESTABILITY CLAUSE
All statements made in the Application or in a supplemental application are
representations and not warranties. The Company will rely on these statements
when approving the issuance, increase in face amount, increase in Death Benefit
over Premium paid, change in Death Benefit Option, or reinstatement of the
Policy. The Company in defense of a claim can use no statement unless the
statement was made
<PAGE>
in the Application or in a supplemental application. In the absence of fraud,
after the Policy has been in force during the lifetime of the Insured for a
period of two years from its Issue Date, the Company cannot contest it except
for non-payment of Premiums in accordance with the Insufficient Value provision.
However, any increase in the face amount, which is effective after the Issue
Date, will be incontestable only after such increase has been in force during
the lifetime of the Insured for two years from the Effective Date of Coverage of
such increase. Any increase in Death Benefit over Premium paid or increases in
Death Benefit due to a Death Benefit Option change will be incontestable only
after such increase has been in force during the lifetime of the Insured for two
years from the date of the increase.
D. MISSTATEMENT OF AGE OR SEX
If the age or sex (in the case of a Non-Unisex Policy) of the Insured is stated
incorrectly in the Application, the amounts payable by the Company will be
adjusted as follows:
- Misstatement discovered at death: The Death Benefit will be
recalculated to that which would be purchased by the most recently
charged Monthly Cost of Insurance Rate for the correct age or sex
(for a Non-Unisex Policy).
- Misstatement discovered prior to death: The Account Value will
be recalculated from the Policy Effective Date using the Monthly
Cost of Insurance Rates based on the correct age or sex (for a
Non-Unisex Policy).
<PAGE>
August 12, 1999
Gentlemen:
In my capacity as Product Officer for Sun Life Assurance Company of Canada, I
have provided actuarial advice concerning: (a) the preparation of a registration
statement for Sun Life of Canada (U.S.) Variable Account I filed on Form S-6
with the Securities Exchange Commission under the Securities Act of 1933 (the
"Registration Statement") regarding the offer and sale of flexible premium
variable universal life insurance policies (the "Policies"); and (b) the
preparation of policy forms for the Policies described in the Registration
Statement.
It is my professional opinion that:
The illustrations of cash surrender values, account values, death benefits and
accumulated premiums in the Appendix to the prospectus contained in the
Registration Statement, are based on the assumptions stated in the
illustrations, and 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 more
favorable to prospective purchasers of Policies aged 45 and 55 in the rate
classes illustrated than to prospective purchasers of Policies, for male or
females, at other ages.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Experts" in the
prospectus.
Very truly yours,
/s/ Georges Rouhart
Georges Rouhart, FSA, MAAA
Product Officer
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Post-Effective Amendment No. 1 to the
Registration Statement on Form S-6 of Sun Life of Canada (U.S.) Variable
Account I (Reg. No. 333-68601) of our report dated February 5, 1999
accompanying the financial statements of Sun Life Assurance Company of Canada
(U.S.) appearing in the Prospectus, which is a part of such Registration
Statement, and to the incorporation by reference of our report dated
February 5, 1999 appearing in the Annual Report on Form 10-K of Sun Life
Assurance Company of Canada (U.S.) for the year ended December 31, 1998.
We also consent to the reference to us under the heading "Accountants"
appearing in such Prospectus.
Deloitte & Touche LLP
Boston, Massachusetts
August 9, 1999
