<PAGE>
Registration No. 333-94359
As Filed with the Securities and Exchange Commission on March 31, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-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
E. Title and amount of securities being registered:
Last Survivor 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.
The Registrant hereby amends this Registration Statement on such
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
<TABLE>
<CAPTION>
Item No. of
Form N-8B-2 Caption in Prospectus
- ----------- ---------------------
<S> <C>
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, --Accessing Your Account Value, --Maturity
17. Summary of Policy; About the Policy--Account Value, --Accessing
Your 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
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
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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
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
</TABLE>
<PAGE>
<TABLE>
<S> <C>
55. Not applicable
56. Not applicable
57. Not applicable
58. Not applicable
59. Not applicable
</TABLE>
<PAGE>
Part I
<PAGE>
[LOGO]
PROSPECTUS
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
(800) 700-6554
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
A LAST SURVIVOR FLEXIBLE PREMIUM COMBINATION FIXED AND
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
This prospectus describes the variable portions of a last survivor
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.
March 31, 2000
<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 Series
THE ALGER AMERICAN FUND Massachusetts Investors Trust Series
Alger American Growth Portfolio New Discovery Series
Alger American Income and Growth Portfolio Total Return Series
Alger American Small Capitalization Portfolio Utilities Series
GOLDMAN SACHS VARIABLE INSURANCE TRUST OCC ACCUMULATION TRUST
Goldman Sachs VIT CORE-SM- Large Cap Growth Fund Equity Portfolio
Goldman Sachs VIT CORE-SM- Small Cap Equity Fund Managed Portfolio
Goldman Sachs VIT CORE-SM- U.S. Equity Fund Mid Cap Portfolio
Goldman Sachs VIT Growth and Income Fund Small Cap Portfolio
Goldman Sachs VIT International Equity Fund SUN CAPITAL ADVISERS TRUST
Sun Capital Blue Chip Mid Cap Fund
Sun Capital Investment Grade Bond Fund
Sun Capital Investors Foundation 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 SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Summary of Policy........................................... 1
Sun Life Assurance Company of Canada (U.S.)................. 8
The Variable Account........................................ 9
The Funds................................................... 10
Fees and Expenses of the Funds.............................. 15
Our General Account......................................... 15
Investment Programs......................................... 16
Dollar Cost Averaging..................................... 16
Asset Rebalancing......................................... 16
Asset Allocation.......................................... 16
About the Policy............................................ 17
Policy Application, Issuance and Initial Premium.......... 17
Right of Return Period.................................... 18
Premium Payments.......................................... 18
Premium................................................. 18
Net Premiums............................................ 19
Allocation of Net Premium............................... 19
Planned Periodic Premiums............................... 19
Death Benefit............................................. 20
Changes in Specified Face Amount.......................... 21
Minimum Changes......................................... 21
Increases............................................... 21
Decreases............................................... 21
Accessing Your Account Value.............................. 22
Surrenders and Surrender Charges........................ 22
Partial Surrenders...................................... 24
Policy Loans............................................ 24
Transfer Privileges....................................... 25
Account Value............................................. 27
Variable Account Value.................................. 27
Net Investment Factor................................... 28
Fixed Account Value..................................... 29
Insufficient Value...................................... 30
Minimum Premium Test (No-Lapse Guarantee)............... 30
Grace Period............................................ 31
Splitting Units......................................... 31
Charges and Deductions.................................... 31
Expense Charges Applied to Premium...................... 31
Mortality and Expense Risk Charge....................... 32
Monthly Face Amount Charge.............................. 32
Monthly Cost of Insurance............................... 32
Monthly Cost of Insurance Rates......................... 33
</TABLE>
iii FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
<TABLE>
<S> <C>
Basis of Computation.................................... 33
Waivers; Reduced Charges.................................. 33
Maturity.................................................. 33
Maturity Date Extension................................... 34
Supplemental Benefits..................................... 34
Estate Preservation Rider............................... 34
Maturity Extension With Full Death Benefit Rider........ 34
Termination of Policy..................................... 35
Reinstatement............................................. 35
Deferral of Payment....................................... 36
Rights of Owner........................................... 36
Rights of Beneficiary..................................... 37
Other Policy Provisions................................... 37
Addition, Deletion or Substitution of Investments....... 37
Entire Contract......................................... 38
Alteration.............................................. 38
Modification............................................ 38
Assignments............................................. 38
Nonparticipating........................................ 38
Misstatement of Age or Sex.............................. 38
Suicide................................................. 39
Incontestability........................................ 39
Report to Owner......................................... 39
Illustrations........................................... 39
Performance Information..................................... 39
Portfolio Performance..................................... 40
Adjusted Portfolio Performance............................ 40
Other Information......................................... 40
Federal Income Tax Considerations........................... 42
Tax Status of The Policy.................................. 42
Diversification of Investments............................ 42
Tax Treatment of Policy Benefits.......................... 43
Life Insurance Death Benefit Proceeds................... 43
Tax Deferred Accumulation............................... 43
Distributions........................................... 43
Modified Endowment Contracts............................ 44
Distributions Under Modified Endowment Contracts........ 44
Distributions Under a Policy That Is Not a MEC.......... 45
Policy Loan Interest.................................... 45
Multiple Policies....................................... 45
Federal Income Tax Withholding.......................... 46
Our Taxes................................................. 46
Distribution of Policy...................................... 47
Voting Rights............................................... 47
</TABLE>
iv FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
<TABLE>
<S> <C>
Our Directors and Executive Officers........................ 48
Other Information........................................... 52
State Regulation.......................................... 52
Legal Proceedings......................................... 53
Experts................................................... 53
Accountants............................................... 53
Registration Statements................................... 53
Financial Statements...................................... 53
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 SURVIVORSHIP 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 the age, sex and rating class of each
Insured.
- 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
- The Policy's death benefit is payable upon the death
of the last of two Insureds to die.
- 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 Account
minimum amount of Value of your Policy.
life insurance in - 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.
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- The assets of the variable separate account are
insulated from the claims of our general creditors.
INVESTMENT OPTIONS
- You may allocate your net premium payments among the
31 variable Sub-Accounts and the fixed account option
listed on page ii 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
- You may supplement your Policy with the following
riders, where available--
- estate preservation; and
- maturity extension with full death
benefit.
- We will deduct the cost, if any, of the rider(s) from
your Policy's Account Value on a monthly basis.
ACCESSING YOUR ACCOUNT VALUE
CASH SURRENDER VALUE - You may borrow from us using your Account Value as
is Account Value collateral. Loans may be taxable events if your Policy
minus any surrender is a "modified endowment contract" for federal income
charges and the tax purposes and the value of your Policy exceeds its
amount of any Policy cost.
Debt. - You may surrender your Policy for its CASH SURRENDER
The SURRENDER CHARGE VALUE. If you surrender your Policy during the SURRENDER
PERIOD ends CHARGE PERIOD, you will incur any applicable surrender
generally 15 years charges.
after you purchase - You may make a partial surrender of some of your
or increase the Policy's Cash Surrender Value after the Policy has been
Specified Face in force for one year. A partial surrender will cause a
Amount of your decrease in the Specified Face Amount of your Policy if
Policy. your death benefit option is the Specified Face Amount.
2 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
ACCOUNT VALUE
ACCOUNT VALUE is the - Your Policy's ACCOUNT VALUE will reflect--
sum of the amounts - the premiums you pay;
in each Sub- Account - the investment performance of the Sub-Accounts
and the Fixed you select, and/or the interest credited in the
Account Value with fixed account option;
respect to your - any loans or partial surrenders;
Policy. - 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 as a sales load and
for our federal, state and local tax obligations. For
the first Policy Year, the charge is 10% of premiums
up to an amount specified in the policy which is based
on certain factors, including the Specified Face
Amount and the age, sex and rating class of each
Insured. The charge on premiums in excess of that
amount is guaranteed not to exceed 7.25%. The current
charge is 5.25%. For Policy Year 2 and thereafter, the
charge on all premiums is guaranteed not to exceed
7.25%. 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 0.80% of the Variable
Account Value. Our current daily rate is equivalent to
an annual rate of 0.50%.
- MONTHLY COST OF INSURANCE CHARGE--We will deduct a
monthly charge from your Account Value for the cost of
insurance. 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 age, sex and rating class of each
Insured.
- MONTHLY FACE AMOUNT CHARGE--We will deduct a monthly
charge from your Account Value for the first 10 Policy
Years following the issuance of your Policy based on
the initial Specified Face Amount and for the first 10
Policy Years following the effective date of each
increase in the Specified Face Amount, if any, based
on the amount of increase. The applicable charge is
equal to the initial Specified Face Amount or the
amount of increase, as the case may be, times a rate
that varies based on the age, sex and rating class of
each Insured.
- MONTHLY COST OF SUPPLEMENTAL BENEFITS--We will deduct
an increased cost of insurance charge monthly for the
cost, if any, of any supplemental benefit
3 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 age, sex
and rating class of each Insured.
- SURRENDER CHARGES--We will deduct a surrender charge
from your Account Value if you surrender your Policy
or request a decrease in the Specified Face Amount
during the surrender charge period. There is a
separate surrender charge period for the initial
Specified Face Amount and each increase in the
Specified Face Amount you request, which starts on the
date we issue your Policy and on the effective date of
the increase, respectively. Each surrender charge
period will generally end after 15 Policy Years, but
may end sooner under certain circumstances. The
surrender charge will be an amount based on certain
factors, including the Specified Face Amount and the
age, sex and rating class of each Insured. The
following are examples of surrender charges at
representative Issue Ages.
FIRST YEAR SURRENDER CHARGES
PER $1,000 OF SPECIFIED FACE AMOUNT
(Male/Female Insured Pair, Non-Tobacco)
<TABLE>
<CAPTION>
ISSUE AGES ISSUE AGES ISSUE AGES
35 & 35 45 & 45 55 & 55
---------- ----------- -----------
<S> <C> <C>
$ 8.48 $19.19 $27.22
<CAPTION>
ISSUE AGES ISSUE AGES ISSUE AGES
65 & 65 75 & 75 85 & 85
---------- ----------- -----------
<S> <C> <C>
$40.02 $45.00 $45.00
</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, 1999. 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.
4 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
UNDERLYING FUND ANNUAL EXPENSES (1)
(as a percentage of Fund net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER ANNUAL
FEES (AFTER EXPENSES (AFTER EXPENSES (AFTER
REIMBURSEMENT)(2) REIMBURSEMENT)(2) REIMBURSEMENT)(2)
----------------- ----------------- -----------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund............... 0.62% 0.11% 0.73%
AIM V.I. Growth Fund............................. 0.63% 0.10% 0.73%
AIM V.I. Growth and Income Fund.................. 0.61% 0.16% 0.76%
AIM V.I. International Equity Fund............... 0.75% 0.22% 0.97%
Alger American Growth Portfolio.................. 0.75% 0.04% 0.79%
Alger American Income and Growth Portfolio....... 0.62% 0.08% 0.70%
Alger American Small Capitalization Portfolio.... 0.85% 0.05% 0.90%
Goldman Sachs VIT CORE-SM- Large Cap Growth
Fund(3)......................................... 0.70% 0.20% 0.90%
Goldman Sachs VIT CORE-SM- Small Cap Equity
Fund(3)......................................... 0.75% 0.25% 1.00%
Goldman Sachs VIT CORE-SM- U.S. Equity Fund(3)... 0.70% 0.20% 0.90%
Goldman Sachs VIT Growth and Income Fund(3)...... 0.75% 0.25% 1.00%
Goldman Sachs VIT International Equity Fund(3)... 1.00% 0.35% 1.35%
MFS/Sun Life Capital Appreciation Series(4)...... 0.71% 0.05% 0.76%
MFS/Sun Life Emerging Growth Series.............. 0.70% 0.05% 0.75%
MFS/Sun Life Government Securities Series........ 0.55% 0.06% 0.61%
MFS/Sun Life High Yield Series(4)................ 0.75% 0.08% 0.83%
MFS/Sun Life Massachusetts Investors Growth Stock
Series.......................................... 0.75% 0.08% 0.83%
MFS/Sun Life Massachusetts Investors Trust
Series.......................................... 0.55% 0.04% 0.59%
MFS/Sun Life New Discovery Series(4)............. 0.90% 0.16% 1.06%
MFS/Sun Life Total Return Series................. 0.65% 0.04% 0.69%
MFS/Sun Life Utilities Series(4)................. 0.75% 0.06% 0.81%
OCC Equity Portfolio(5).......................... 0.80% 0.11% 0.91%
OCC Managed Portfolio(5)......................... 0.77% 0.06% 0.83%
OCC Mid Cap Portfolio(5)......................... 0.10% 0.93% 1.03%
OCC Small Cap Portfolio(5)....................... 0.80% 0.09% 0.89%
Sun Capital Blue Chip Mid Cap Fund(6)(7)......... 0.80% 0.20% 1.00%
Sun Capital Investment Grade Bond Fund(6)........ 0.60% 0.15% 0.75%
Sun Capital Investors Foundation Fund(6)(7)...... 0.75% 0.15% 0.90%
Sun Capital Money Market Fund(6)................. 0.50% 0.15% 0.65%
Sun Capital Real Estate Fund(6).................. 0.95% 0.30% 1.25%
Sun Capital Select Equity Fund(6)(7)............. 0.75% 0.15% 0.90%
</TABLE>
5 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
(1) The information relating to Fund expenses was
provided by the Funds and we have not independently
verified it. You should consult the Fund prospectuses
for more information about Fund expenses.
(2) For all Funds, the "Management Fees," "Other
Expenses" and "Total Fund Annual Expenses" are based
on actual expenses for the fiscal year ended December
31, 1999, net of any applicable expense reimbursement
or waiver.
(3) The investment advisers for the Goldman Sachs VIT
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. In particular, the investment advisers to
the Goldman Sachs VIT CORE-SM- Large Capital Growth
Fund, the Goldman Sachs VIT CORE-SM- Small Cap Equity
Fund, the Goldman Sachs VIT CORE-SM- U.S. Equity
Fund, the Goldman Sachs VIT Growth and Income Fund
and the Goldman Sachs VIT International Equity Fund
have voluntarily agreed to reduce or limit certain
"Other Expenses" of such Funds (excluding management
fees, taxes, interest and brokerage fees, litigation,
indemnification and other extraordinary expenses) to
the extent such expenses exceed 0.20%, 0.25%, 0.20%,
0.25%, and 0.35% per annum of such Funds' average
daily net assets, respectively. The expenses of the
Goldman Sachs VIT Funds are estimated for the fiscal
year ended December 31, 2000. Absent any such waiver
or reimbursement, estimated "Management Fees,"
estimated "Other Expenses," and estimated "Total Fund
Annual Expenses" for the year ended December 31, 2000
will be: 0.70%, 0.42%, and 1.12% for the Goldman
Sachs VIT CORE-SM- Large Cap Growth Fund; 0.75%,
0.75%, and 1.50% for the Goldman Sachs VIT CORE-SM-
Small Cap Equity Fund; 0.70%, 0.20%, and 0.90% for
the Goldman Sachs VIT CORE-SM- U.S. Equity Fund;
0.75%, 0.47%, and 1.22% for the Goldman Sachs VIT
Growth and Income Fund; and 1.00%, 0.77%, and 1.77%
for the Goldman Sachs VIT International Equity Fund.
Fee waivers and expense reimbursements for the
Goldman Sachs VIT Funds may be discontinued at any
time.
(4) The Fund has an expense offset arrangement which
reduces the Fund's custodian fee based upon the
amount of cash maintained by the Fund with its
custodian and dividend disbursing agent, and may
enter into such other arrangements and directed
brokerage arrangement (which would also have the
effect of reducing the Fund's expenses). Any such fee
reductions are not reflected in the table. Had these
fees been taken into account, "Total Fund Annual
Expenses" would have been: 0.75% for the MFS/Sun Life
Capital Appreciation Series; 0.82% for the MFS/Sun
Life High Yield Series; 1.05% for the MFS/Sun Life
New Discovery Series; and 0.80% for the MFS/Sun Life
Utilities Series.
(5) "Total Fund Annual Expenses" for the OCC Equity
Portfolio, the OCC Small Cap Portfolio, the OCC
Managed Portfolio and the OCC Mid Cap
6 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Portfolio are limited contractually by OpCap Advisers
so that the Funds' respective annualized operating
expenses (net of expense offsets) do not exceed 1% of
average daily net assets. Absent this limit,
"Management Fees", "Other Expenses" and "Total Fund
Annual Expenses" were 0.80%, 3.48%, and 4.28% for the
OCC Mid Cap Portfolio. "Other Expenses" are shown
gross of expense offsets afforded the portfolio,
which effectively lowered custody expenses.
(6) The investment adviser for the Sun Capital Funds has
voluntarily agreed to waive or reimburse a portion of
the management fees and/or operating expenses,
resulting in a reduction of the total expenses. For
the year ended December 31, 1999, the investment
adviser waived all investment advisory fees. Absent
any such waiver or reimbursement, "Management Fees,"
"Other Expenses" and "Total Fund Annual Expenses" for
the year ended December 31, 1999 were: 0.80%, 3.31%;
and 4.11% for the Sun Capital Blue Chip Mid Cap Fund;
2.70%, 1.38%; and 1.98% for the Sun Capital
Investment Grade Bond Fund; 0.75%, 4.37%; and 5.12%
for the Sun Capital Investors Foundation Fund; 0.50%,
2.20%, and 2.70% for the Sun Capital Money Market
Fund; 0.95%, 2.44%, and 3.39% for the Sun Capital
Real Estate Fund; and 0.75%, 3.50%, and 4.25% for the
Sun Capital Select Equity Fund. Fee waivers and
expense reimbursements for the Sun Capital Funds may
be discontinued at any time after May 1, 2000. To the
extent that the expense ratio of any Fund in the Sun
Capital Advisers Trust falls below the Fund's expense
limit, the Fund's adviser reserves the right to be
reimbursed for management fees waived and Fund
expenses paid by it during the prior two years.
(7) The management fee for each of the Sun Capital Blue
Chip Mid Cap Fund, the Sun Capital Investors
Foundation Fund, and the Sun Capital Select Equity
Fund decreases to 0.75%, 0.70%, and 0.70%,
respectively, as the daily net assets of each Fund
exceed $300 million.
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.
7 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 younger Insured
reaches Attained Age 100. If either Insured is living and
your Policy is in force on the Maturity date, your
Policy's Cash Surrender Value will be payable to you.
MATURITY EXTENSION
The Maturity date may be extended at your request.
The death benefit will be your Account Value on the date
of death of the last Insured to die.
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 We are a stock life insurance company
wholly-owned incorporated under the laws of Delaware on January 12,
subsidiary of Sun 1970. Our executive office mailing address is One Sun
Life Assurance Com- Life Executive Park, Wellesley Hills, Massachusetts
pany of Canada. 02481. We do business in 48 states, the District of
Columbia and Puerto Rico and we have an insurance
company subsidiary that does business in New York. We
are an indirect wholly- owned subsidiary of Sun Life
Assurance Company of Canada, ("Sun Life (Canada)").
8 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Sun Life (Canada) completed its demutualization on
March 22, 2000. As a result of the demutualization, a new
holding company, Sun Life Financial Services of Canada,
Inc. ("Sun Life Financial"), is now the ultimate parent
of Sun Life (Canada) and the Company. Sun Life Financial,
a corporation organized in Canada, is a reporting company
under the Securities Exchange Act of 1934 with common
shares listed on the Toronto, New York, London and Manila
stock exchanges.
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.
The Variable Account The Variable Account is registered with the
is registered with Securities and Exchange Commission under the Investment
the SEC. Company Act of 1940 as a unit investment trust.
Registration under the Investment Company Act does not
involve any supervision by the Securities and Exchange
Commission 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
Variable Account may contain certain sub-accounts which
are not available under the Policy.
9 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 Investment Company Act of
about the Funds, and 1940, or a separate series of shares of such a mutual
may be obtained from fund. More comprehensive information, including a
us without charge. discussion of potential risks, 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
growth of capital through investment in common stocks,
with emphasis on medium- and small-sized growth
companies.
AIM V.I. GROWTH FUND seeks to provide growth of
capital by investing primarily in seasoned and better
capitalized companies considered to have strong earnings
momentum.
AIM V.I. GROWTH AND INCOME FUND seeks to provide
growth of capital, with a secondary objective of current
income.
AIM V.I. INTERNATIONAL EQUITY FUND seeks to provide
long-term growth of capital by investing in a diversified
portfolio of international equity securities, whose
issuers are considered 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.
10 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST (advised by
Goldman Sachs Asset Management, a separate business unit
of the Investment Management 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 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. The Fund intends to invest in companies
with public stock market capitalizations that are larger
than $1 billion at the time of investment.
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.
11 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 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.
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 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
12 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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 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 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
13 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
companies with market capitalizations within the range
represented by the S&P 500 Index.
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.
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.
Some of the Funds' investment advisers may compensate
us for administering the Funds as investment options
under the Policy. Such compensation is paid from the
advisers' assets.
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.
14 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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 Investment Company Act of 1940.
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.
15 FUTURITY SURVIVORSHIP 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
16 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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 Insureds. We offer the
Policy on a regular (medical) underwriting basis and may
require medical examinations and further information
before the proposed application is approved. Both
Insureds must generally be acceptable risks based on our
underwriting limits and standards. We may, however, issue
a Policy based on the health of one Insured where the
other Insured would not normally be an acceptable risk
for comparable individual life insurance coverage. 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 apply extra charges for
the underwriting classification for an Insured, which
will result in increased Monthly Cost of Insurance
charges.
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 $250,000--the "Minimum Specified Face Amount."
While your application is being reviewed, we may make
available to you temporary last survivor 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 lives of the Insureds. 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.
17 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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. The 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
18 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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
19 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 death
of the last Insured to die, we will pay the beneficiary
an amount based on the death benefit option you select
once we have received Due Proof of the death of each
Insured. 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, MINUS
- the value of any Policy Debt on the
date of the last Insured to die, MINUS
- 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.
between two death
benefit options.
OPTION A. Under this option, the death benefit is--
- the Policy's Specified Face Amount on
the date of death of the last Insured
to die; OR, IF GREATER,
- the Policy's Account Value on the date
of death of the last Insured to die
multiplied by the applicable
percentage shown in the table set
forth in Appendix B.
This death benefit option should be selected if you
want the death benefit to remain level over time.
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 death of the last Insured to
die; OR, IF GREATER,
20 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- the Policy's Account Value on the date
of death of the last Insured to die
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 change with your Policy's
Account Value.
You may change the death benefit option after the
first Policy Year. If you change from Option B to
Option A, the Specified Face Amount will be increased by
an amount equal to the Policy's Account Value on the
effective date of the change. If you change from
Option A to Option B, the Specified Face Amount will be
decreased by an amount equal to the Policy's Account
Value on the effecive date of change.
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 insurability for each Insured.
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
Attained Age of either Insured is greater than 80 on the
effective date of the increase.
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 $250,000. 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
- third, to the initial Specified Face
Amount.
21 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
ACCESSING YOUR ACCOUNT VALUE
If you surrender SURRENDERS AND SURRENDER CHARGES. You may
your Policy and surrender your Policy for its Cash Surrender Value at
receive its Cash any time while either Insured is living. If you do, the
Surrender Value, you insurance coverage and all other benefits under the
may incur surrender Policy will terminate.
charges, taxes, and CASH SURRENDER VALUE is your Policy's Account
tax penalties. Value less the sum of--
- the outstanding balance of any Policy
Debt; and
- any surrender charges.
We will deduct surrender charges from your Account
Value if you surrender your Policy or request a decrease
in the Specified Face Amount during the surrender charge
period. There are separate surrender charges for the
initial Specified Face Amount and any increase in the
Specified Face Amount you request. The surrender charge
period will start on your Policy's Issue Date and on the
effective date for the increase, respectively. The
surrender charge period will be the shortest of--
- the 15-year period following the
applicable surrender charge period
start date;
- the longer of the 9-year period
following the applicable surrender
charge period start date, and the
period ending when the younger Insured
reaches Attained Age 85; and
- the period ending when the younger
Insured reaches Attained Age 95.
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 surrender
charge will be an amount based on certain factors,
including the Policy's Specified Face Amount and the age,
sex and rating class of each Insured. The following are
examples of surrender charges at representative Issue
Ages.
22 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
FIRST YEAR SURRENDER CHARGES
PER $1,000 OF SPECIFIED FACE AMOUNT
(Male/Female Insured Pair, Non-Tobacco)
<TABLE>
<CAPTION>
ISSUE AGES ISSUE AGES ISSUE AGES
35 & 35 45 & 45 55 & 55
---------- ----------- -----------
<S> <C> <C>
$ 8.48 $19.19 $27.22
<CAPTION>
ISSUE AGES ISSUE AGES ISSUE AGES
65 & 65 75 & 75 85 & 85
---------- ----------- -----------
<S> <C> <C>
$40.02 $45.00 $45.00
</TABLE>
The surrender charge will be calculated based on
surrender charge percentages for the initial Specified
Face Amount and each increase in the Specified Face
Amount. The surrender charge percentages begin at 100% in
the first year and decrease with time. Examples of
surrender charge percentages at representative Issue Ages
are shown below
SURRENDER CHARGE
(As Percentage of First Year Surrender Charge)
<TABLE>
<CAPTION>
ISSUE AGES
YEAR 35 & 35 45 & 45 55 & 55 65 & 65 75 & 75 85 & 85
---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 100.000 100.000 100.000 100.000 100.000 100.000
2 90.000 90.000 90.000 90.000 90.000 90.000
3 80.000 80.000 80.000 80.000 80.000 80.000
4 70.000 70.000 70.000 70.000 70.000 70.000
5 60.000 60.000 60.000 60.000 60.000 60.000
6 50.000 50.000 50.000 50.000 50.000 50.000
7 45.000 45.000 45.000 45.000 40.000 37.500
8 40.000 40.000 40.000 40.000 30.000 25.000
9 35.000 35.000 35.000 35.000 20.000 12.500
10 30.000 30.000 30.000 30.000 10.000 0.000
11 25.000 25.000 25.000 25.000 0.000 0.000
12 20.000 20.000 20.000 20.000 0.000 0.000
13 15.000 15.000 15.000 15.000 0.000 0.000
14 10.000 10.000 10.000 10.000 0.000 0.000
15 5.000 5.000 5.000 5.000 0.000 0.000
16 and thereafter 0.000 0.000 0.000 0.000 0.000 0.000
</TABLE>
A surrender charge will be applied for each decrease
in the Specified Face Amount except for decreases in the
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;
23 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- 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 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. You may make a partial surrender
of your Policy once each Policy Year after the first
Policy Year by written request to us. Each partial
surrender must be for at least $200, and no partial
surrender may be made--
- during the first ten Policy Years for
more than 20 percent of your Cash
Surrender Value at the end of the
first Valuation Date after we receive
your request; or
- thereafter for more than your Cash
Surrender Value.
If the applicable death benefit option is Option A,
the Specified Face Amount will be decreased by the 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
- third, 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.
POLICY LOANS. You may request a policy loan of up to
90% of your Policy's Cash Value, decreased by the amount
of any outstanding Policy Debt on
24 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
the date the policy loan is made. 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.
You may borrow from You may allocate the policy loan among the
us using your Policy Sub-Accounts and the Fixed Account Value. If you do not
as collateral. 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. We will
periodically credit interest at an effective annual rate
of 3% on the loaned values of the Fixed Account Value.
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 death of the last
Insured to die 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.
TRANSFER PRIVILEGES
The Policy is not designed for professional market
timing organizations or other entities using programmed
and frequent transfers. If you wish to employ
25 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
such strategies, you should not purchase a Policy.
Accordingly, such transfers may be subject to special
restrictions. Subject, however, to these special
restrictions and 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.
26 FUTURITY SURVIVORSHIP 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 Face Amount 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 Face Amount 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
which will be the allocated to the Sub- Account, MINUS
later of the Issue - that portion of the Monthly Face Amount Charges
Date, the Policy due on the policy date and subsequent Monthly
Date or the Anniversary Days through the Investment Start Date
Valuation Date we charged to the Sub-Account, MINUS
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.
27 FUTURITY SURVIVORSHIP 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, MINUS
- any amounts transferred by you from
the Sub-Account to another Sub-Account
or to the Fixed Account Value during
the current Valuation Period, MINUS
- that portion of any partial surrenders
deducted from the Sub-Account during
the current Valuation Period, MINUS
- that portion of any policy loan or
capitalized loan interest transferred
from the Sub-Account to the Fixed
Account Value during the current
Valuation Period, MINUS
- 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, MINUS
- if a Monthly Anniversary Day occurs
during the current Valuation Period,
that portion of the Monthly Face
Amount Charge for the Policy Month
just beginning charged to the
Sub-Account, MINUS
- 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
28 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- 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
- 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, MINUS
- that portion of the Monthly Face
Amount 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, MINUS
- 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, MINUS
- any amounts transferred by you from
the Fixed Account Value to the
Variable Account during the current
Valuation Period accrued at interest,
MINUS
29 FUTURITY SURVIVORSHIP 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 or capitalized loan
interest transferred from the Variable
Account to the Fixed Account Value
during the current Valuation Period
accrued at interest, MINUS
- 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, MINUS
- if a Monthly Anniversary Day occurs
during the current Valuation Period,
that portion of the Monthly Face
Amount Charge for the Policy Month
just beginning charged to the Fixed
Account Value accrued at interest,
MINUS
- 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.
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.
30 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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. For the first Policy
Year, the charge is 10% of premiums up to an amount
specified in the policy, which is based on certain
factors, including the Specified Face Amount and the age,
sex and rating class of each insured. The charge on
premiums in excess of that amount is guaranteed not to
exceed 7.25%. The current charge is 5.25%. For Policy
Year 2 and thereafter, the charge on all premiums is
guaranteed not to exceed 7.25%. The current charge is
5.25%.
31 FUTURITY SURVIVORSHIP 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
0.80% annually. Currently, the charge is 0.50% annually.
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 FACE AMOUNT CHARGE. We will deduct a monthly
charge from your Account Value for the first 10 Policy
Years following the issuance of your Policy based on the
initial Specified Face Amount and for the first 10 Policy
Years following the effective date for each increase in
the Specified Face Amount, if any, based on the amount of
increase. The applicable charge is equal to the initial
Specified Face Amount or the amount of increase, as the
case may be, times a rate that varies based on the age,
sex and rating class of each Insured.
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,
MINUS
- your Account Value on the Valuation
Date prior to assessing the Monthly
Face Amount Charge and the cost of
insurance charges.
32 FUTURITY SURVIVORSHIP 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
sex, Issue Age and rating class of each Insured. 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
sex, Issue Age and rating class of each Insured. 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
We may reduce or waive the sales load or surrender
charge 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 in
connection with Policies sold to our or our affiliates'
officers, directors and employees.
MATURITY
Your Policy will terminate when the younger Insured
reaches Attained Age 100. If either Insured is living and
your Policy is in force on the Maturity date, your
Policy's Cash Surrender Value will be payable to you.
33 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 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
Face Amount 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 death of the
last Insured to die.
- 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 as described above
or if the Maturity date is extended under the terms of
the Maturity Extension With Full Death Benefit Rider
described below, 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
You may supplement your Policy with the riders
described below; provided, however, that riders may not
be available in some states. An additional cost of
insurance will be charged for each rider in force as part
of the Monthly Cost of Insurance charge.
ESTATE PRESERVATION RIDER. This rider provides term
insurance coverage which increases the death benefit in
the first four Policy Years by an amount you choose,
subject to a maximum of 122% of the Specified Face Amount
and other limits we may impose.
MATURITY EXTENSION WITH FULL DEATH BENEFIT RIDER.
This rider allows you, upon request, to extend the
Maturity date of your Policy beyond the original Maturity
date. The Specified Face Amount and death benefit option
in effect at the original Maturity date will apply beyond
the original Maturity date.
34 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 last Insured to die, or the Maturity
date.
REINSTATEMENT
We will reinstate your Policy prior to the Maturity
date, provided that the Policy has not been surrendered
and neither of the Insureds died after the date of that
termination and you--
- make a request for reinstatement
within five years from the date of
termination;
- submit satisfactory evidence of
insurability with respect to each
surviving Insured; and
- pay an amount sufficient to put the
Policy in force.
To put your Policy in Force, you must pay an amount
of at least--
- the Unpaid Policy Charges at the date
of termination; PLUS
- any excess of the Policy Debt over the
Cash Value at the date of termination;
PLUS
- three times the Monthly Cost of
Insurance charges applicable at the
date of reinstatement; PLUS
- three times the Monthly Face Amount
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. The 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; MINUS
- the Monthly Face Amount Charge; MINUS
- the Monthly Cost of Insurance charge
applicable on the date of
reinstatement; MINUS
- Any Unpaid Policy Charges at the time
of termination.
35 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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 the
death of the last Insured to die, Due Proof of the death
of each Insured. Payment is subject to our rights under
the Policy's incontestability and suicide provisions.
Payment of any amount payable from the Variable Account
on death of the last Insured to die, 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 either 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 last
Insured to die;
36 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- 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 designation when
you merely transfer ownership, or change or revoke a
contingent owner designation.
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 last Insured to die. 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.
37 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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;
- 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. While either Insured is alive, 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. If the age or sex of
either Insured is stated incorrectly, the amounts payable
by us will be adjusted upon the death of the last Insured
to die 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 of each Insured.
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 of each Insured.
38 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUICIDE. If the last surviving 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 last surviving 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.
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 Insureds 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 Insureds 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 Insureds 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 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.
39 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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;
40 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
- 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
- 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.
41 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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,
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
separate account used to support the policy. In those
circumstances, income and gains from the separate 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
42 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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 death of the last Insured to die.
death of the last DISTRIBUTIONS. If you surrender your Policy,
Insured to die. 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;
- an election to extend the Maturity
Date; 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."
43 FUTURITY SURVIVORSHIP 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, 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 following 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
- is part of a series of substantially
equal periodic payments for the
duration of your life (or life
expectancy)
44 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
or for the duration of the longer of
your or the beneficiary's life (or
life expectancies).
These exceptions may only apply if the policy is
owned by an individual and, generally, do not apply if
the policy is owned by a legal entity, such as a trust,
partnership or corporation.
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 or
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.
45 FUTURITY SURVIVORSHIP 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 100% of the target premium, which will
vary based on each Insured's age, sex and
46 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
rating Class, plus an amount not to exceed 5% of any
excess premium payments. Gross renewal commissions in
Policy Years 2 through 10 will not exceed 5% of actual
premium payments, and will not exceed 2% 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 Investment Company Act of 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.
47 FUTURITY SURVIVORSHIP 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, 53, Chairman and Director (1996*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Chairman and Chief Executive Officer and a
Director of Sun Life Financial Services of Canada Inc.
and 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.
C. JAMES PRIEUR, 48, Vice Chairman and Director (1998*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is President and Chief Operating Officer of Sun
Life Financial Services of Canada Inc. and Sun Life
Assurance Company of Canada; Vice Chairman and a Director
of Sun Life Insurance and Annuity Company of New York;
Chairman and a Director of 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 of Canada
(U.S.) Financial Services Holdings, Inc., and Sun Life
Assurance Company of Canada - U.S. Operations
Holdings, Inc.; and a Director of Sun Life Information
Services Ireland Limited and Massachusetts Financial
Services Company.
JAMES A. MCNULTY, III, 57, President and
Director (1999*)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Executive Vice President, U.S. Operations for
Sun Life Financial Services of Canada Inc. and Sun Life
Assurance Company of Canada; President and Director of
Sun Life Insurance and Annuity Company of New York; and
Chairman and Director of Sun Life of Canada (U.S.)
Distributors, Inc. He is President and a Director of Sun
Life of Canada (U.S.) SPE 97-I, Inc., Sun Benefit
Services Company, Inc., Sun Life of Canada (U.S.)
Holdings General Partner, Inc., Sun Life Financial
Services Limited, and Sun Canada Financial
48 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Co.; Senior Vice President and a Director of Sun Life
Assurance Company of Canada -- U.S. Operations
Holdings, Inc., Sun Life of Canada (U.S.)
Holdings, Inc., and Sun Life of Canada (U.S.) Financial
Services Holdings, Inc.; and a Director of Clarendon
Insurance Agency, Inc., Sunesco Insurance Agency, Inc.,
and the Support Committee for Battered Women.
RICHARD B. BAILEY, 73, Director (1983*)
63 Atlantic Avenue 11D
Boston, Massachusetts 02110
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. He is a Director of
Cambridge Bancorp.
GREGORY W. GEE, 51, Director (1999*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Vice Chairman of Sun Life Financial Services of
Canada Inc. and Sun Life Assurance Company of Canada and
a Director of Sun Life Insurance and Annuity Company of
New York.
DAVID D. HORN, 58, Director (1985*)
Strong Road
P.O. Box 24
New Vineyard, Maine 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, Global Governments Variable Account,
Total Return Variable Account, and Managed Sectors
Variable Account.
ANGUS A. MACNAUGHTON, 68, Director (1985*)
Genstar Investment Corporation
555 California Street
Suite 4850
San Francisco, California 94104
He is President and Director of Genstar Investment
L.L.C. and a Director of Sun Life Financial Services of
Canada Inc., Sun Life Assurance Company of Canada, Sun
Life Insurance and Annuity Company of New York, Canadian
Pacific, Ltd., Varian Semiconductor Equipment Associates,
Genstar Capital Corporation, San Francisco Opera, and
Diversified Collection Services, Inc.; Vice
49 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Chairman and a Director of Barrick Gold Corporation; and
Trustee of the Board of Governors (Lakefield College
School) and World Affairs Council of Northern California.
S. CAESAR RABOY, 63, Director (1997*)
220 Boylston Street
Boston, Massachusetts 02110
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; and a Director
of Fleet International Bank.
WILLIAM W. STINSON, 66, Director (2000*)
Canadian Pacific Limited
1800 Bankers Hall, East Tower
855 - 2nd Street S.W.
Calgary, Alberta T2P 4Z5
He is Lead Director of Sun Life Assurance Company of
Canada, and a Director of Sun Life Financial Services of
Canada Inc. and Sun Life Insurance and Annuity Company of
New York. In addition, he is a Director of Pan Canadian
Petroleum, Massachusetts Financial Services Company,
United Dominion Industries, Western Star Trucks, and
Westshore Terminals Income Fund. In May 1996,
Mr. Stinson retired as Chairman and Chief Executive
Officer of Canadian Pacific Limited after a 45-year
career.
JAMES M.A. ANDERSON, 50, 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 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 Services Holdings, Inc., Sun Life Assurance
Company of Canada - U.S. Operations Holdings, Inc., Sun
Life of Canada (U.S.) Holdings General Partner, Inc., and
Sun Canada Financial Co.; Vice President, Investments and
Director of Sun Life of Canada (U.S.)
Distributors, Inc.; and a Director of Clarendon Insurance
Agency, Inc., Sunesco Insurance Agency, Inc., and Sun
Benefit Services Company, Inc.
50 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
DAVEY SCOON, 53, Vice President, Finance and Treasurer
(1999)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President and Chief Financial Officer of
U.S. Operations for Sun Life Assurance Company of Canada;
Vice President, Finance, Controller, and Treasurer of Sun
Life Insurance and Annuity Company of New York; Vice
President and Treasurer and Director of Sun Benefit
Services Company, Inc., Sun Life of Canada (U.S.)
Distributors, Inc., and Sun Life of Canada (U.S.) SPE
97-I, Inc.; Vice President and Director of Sun Life
Assurance Company of Canada -- U.S. Operations
Holdings, Inc., Sun Life of Canada (U.S.)
Holdings, Inc., Sun Life of Canada (U.S.) Financial
Services Holdings, Inc., Sun Life of Canada (U.S.)
Holdings General Partner, Inc., Sun Life Financial
Services Limited, and Sun Canada Financial Co.; Director
and Treasurer of Clarendon Insurance Agency, Inc. and
Sunesco Insurance Agency, Inc.; Regular Trustee of Sun
Life of Canada (U.S.) Capital Trust I; and Chairman and
Director of Tufts Associated Health Plan, Lead Director
of Tufts Associated Health Maintenance Organization, and
Board Chairman of Managed Comp. Prior to October 1999, he
was Executive Vice President and Chief Operating Officer
of Liberty Funds Group.
ROBERT P. VROLYK, 46, Vice President and Actuary (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
He is Vice President and Chief Actuary of Sun Life
Assurance Company of Canada; Vice President and Actuary
of Sun Life Insurance and Annuity Company of New York;
Vice President and Director of Sun Life of Canada -- U.S.
Operations Holdings, Inc., Sun Life of Canada (U.S.)
Holdings, Inc., Sun Life of Canada (U.S.) Financial
Services Holdings, Inc., Sun Canada Financial Co., and
Sun Life of Canada (U.S.) Holdings General
Partner, Inc.; Vice President and Director of Sun Life of
Canada (U.S.) SPE 97-I, Inc.; a Director of Sun Benefit
Services Company, Inc., and Sun Life Information Services
Ireland Limited; and a Regular Trustee of Sun Life of
Canada (U.S.) Capital Trust I.
PETER F. DEMUTH, 41, Vice President and 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 and Assistant Secretary 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.; Assistant Secretary for Sun
Capital Advisers
51 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
Trust; and a Regular Trustee of Sun Life of Canada (U.S.)
Capital Trust I. Prior to February 1998, he was a partner
at the firm of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C.
ELLEN B. KING, 43, Counsel and Secretary (1998)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
She is Counsel of Sun Life Assurance Company of
Canada; Counsel and Secretary of Sun Life Insurance and
Annuity Company of New York; and Secretary 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
Benefit Services Company, Inc., Sun Life of Canada (U.S.)
SPE 97-I, Inc., Sun Canada Financial Co., and Sun Life of
Canada (U.S.) Holdings General Partner, Inc.
RONALD J. FERNANDES, 42
Vice President, Retirement
Products and Services (1999)
One Copley Place
Boston, Massachusetts 02116
He is Vice President, Retirement Products and
Services of Sun Life Insurance and Annuity Company of New
York. He is also a Director of Clarendon Insurance
Agency, Inc., Sunesco Insurance Agency, Inc., and Sun
Life of Canada (U.S.) Distributors, Inc. Prior to
October 1999, Mr. Fernandes was Senior Vice President and
Director, Retirement Products and Services of Wheat First
Union in Richmond, Virginia.
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.
52 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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, 1999 and 1998, 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, 1999
included in this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year
ended December 31, 1999 filed with the SEC is
incorporated by reference in this Prospectus. Any
statement contained in a document we incorporate by
reference is deemed modified or superceded to the extent
that a later filed document, including this Prospectus,
shall modify or supercede that statement. Any statement
so modified or superceded shall not be deemed, except as
so modified or superceded, to constitute part of this
Prospectus.
The Company will furnish, without charge, to each
person to whom a copy of this Prospectus is delivered,
upon the written or oral request of such person, a copy
of the document referred to above which has been
incorporated by reference in this Prospectus, other than
exhibits to such document (unless such exhibits are
specifically incorporated by reference in this
Prospectus). Requests for such document should be
directed to the Secretary, Sun Life Assurance Company of
Canada (U.S.), One Sun Life Executive Park, Wellesley
Hills, Massachusetts 02481, telephone (800) 225-3950.
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
53 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
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.
54 FUTURITY SURVIVORSHIP 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, 1999 AND 1998 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ADMITTED ASSETS
Bonds................................................... $ 1,221,970 $ 1,763,468
Common stocks........................................... 75,283 128,445
Mortgage loans on real estate........................... 528,911 535,003
Properties acquired in satisfaction of debt............. 15,641 17,207
Investment real estate.................................. 79,182 78,021
Policy loans............................................ 40,095 41,944
Cash and short-term investments......................... 316,971 265,226
Other invested assets................................... 67,938 64,177
Investment income due and accrued....................... 25,303 35,706
Federal income tax recoverable and interest thereon..... -- 1,110
Other assets............................................ 5,807 1,928
----------- -----------
General account assets.................................. 2,377,101 2,932,235
Separate account assets
Unitized.............................................. 15,490,328 11,774,745
Non-unitized.......................................... 2,080,726 2,195,641
----------- -----------
Total admitted assets................................... $19,948,155 $16,902,621
=========== ===========
LIABILITIES
Aggregate reserve for life policies and contracts....... $ 1,153,642 $ 1,216,107
Supplementary contracts................................. 3,182 1,885
Policy and contract claims.............................. 962 369
Liability for premium and other deposit funds........... 564,820 1,000,875
Surrender values on cancelled policies.................. 16 5
Interest maintenance reserve............................ 41,771 40,490
Commissions to agents due or accrued.................... 3,253 2,615
General expenses due or accrued......................... 14,055 5,932
Transfers from Separate Accounts due or accrued......... (467,619) (361,863)
Taxes, licenses and fees due or accrued, excluding
FIT................................................... 379 401
Federal income taxes due or accrued..................... 89,031 25,019
Unearned investment income.............................. 22 23
Amounts withheld or retained by company as agent or
trustee............................................... (442) 529
Remittances and items not allocated..................... 1,078 5,176
Asset valuation reserve................................. 44,071 44,392
Payable to parent, subsidiaries, and affiliates......... 26,284 30,381
Payable for securities.................................. -- 428
Other liabilities....................................... 16,674 9,770
----------- -----------
General account liabilities............................. 1,491,179 2,022,534
Separate account liabilities:
Unitized.............................................. 15,489,908 11,774,522
Non-unitized.......................................... 2,080,726 2,195,641
----------- -----------
Total liabilities....................................... 19,061,813 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........................................ 116,087 139,669
----------- -----------
Surplus................................................. 880,442 904,024
----------- -----------
Total common capital stock and surplus.................. 886,342 909,924
----------- -----------
Total liabilities, capital stock and surplus............ $19,948,155 $16,902,621
=========== ===========
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
55 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
INCOME:
Premiums and annuity
considerations.................... $ 69,492 $ 210,198 $ 254,066
Deposit-type funds.................. 2,598,265 2,140,604 2,155,297
Considerations for supplementary
contracts without life
contingencies and dividend
accumulations..................... 3,461 2,086 1,615
Net investment income............... 167,035 184,532 270,249
Amortization of interest maintenance
reserve........................... 3,702 2,282 1,166
Income from fees associated with
investment management and
administration and contract
guarantees from Separate
Account........................... 173,417 141,211 109,757
Net gain from operations from
Separate Account.................. 61 -- 5
Other income........................ 24,554 87,364 102,889
---------- ---------- ----------
Total Income........................ 3,039,987 2,768,277 2,895,044
---------- ---------- ----------
BENEFITS AND EXPENSES:
Death benefits...................... 4,386 15,335 17,284
Annuity benefits.................... 155,387 153,636 148,135
Disability benefits and benefits
under accident and health
policies.......................... -- 104 132
Surrender benefits and other fund
withdrawals....................... 2,313,179 1,933,833 1,854,004
Interest on policy or contract
funds............................. 237 (140) 699
Payments on supplementary contracts
without life contingencies and
dividend accumulations............ 2,345 2,528 1,687
Increase (decrease) in aggregate
reserves for life and accident and
health policies and contracts..... (62,465) (972,135) 127,278
Decrease in liability for premium
and other deposit funds........... (436,055) (449,831) (447,603)
Increase (decrease) in reserve for
supplementary contracts without
life contingencies and for
dividend and coupon
accumulations..................... 1,296 (362) 42
---------- ---------- ----------
Total Benefits...................... 1,978,310 682,968 1,701,658
---------- ---------- ----------
Commissions on premiums and annuity
considerations (direct business
only)............................. 155,381 137,718 132,700
Commissions and expense allowances
on reinsurance assumed............ -- 13,032 17,951
General insurance expenses.......... 75,046 58,132 46,624
Insurance taxes, licenses and fees,
excluding federal income taxes.... 8,710 7,388 8,267
Increase (decrease) in loading on
and cost of collection in excess
of loading on deferred and
uncollected premiums.............. -- (1,663) 523
Net transfers to Separate
Accounts.......................... 727,811 722,851 844,130
Reserve and fund adjustments on
reinsurance terminated............ -- 1,017,112 --
---------- ---------- ----------
Total Benefits and Expenses......... $2,945,258 $2,637,538 $2,751,853
---------- ---------- ----------
Net gain from operations before
dividends to policyholders and
federal income tax expense........ 94,729 130,739 143,191
Dividends to policyholders.......... -- (5,981) 33,316
---------- ---------- ----------
Net gain from operations after
dividends to policyholders and
before federal income tax
expense........................... 94,729 136,720 109,875
Federal income tax expense,
(excluding tax on capital
gains)............................ 24,479 11,713 7,339
---------- ---------- ----------
Net gain from operations after
dividends to policyholders and
federal income taxes and before
realized capital gains............ 70,250 125,007 102,536
Net realized capital gains less
capital gains tax and transferred
to the Interest Maintenance
Reserve........................... 20,108 394 26,706
---------- ---------- ----------
NET INCOME.............................. $ 90,358 $ 125,401 $ 129,242
========== ========== ==========
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
56 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Capital and surplus, beginning of year... $909,924 $832,695 $ 567,143
-------- -------- ---------
Net income............................. 90,358 125,401 129,242
Change in net unrealized capital gains
(losses)............................. (36,111) (384) 1,152
Change in non-admitted assets and
related items........................ 1,715 (1,086) (463)
Change in reserve due to change in
valuation basis...................... -- 39,016
Change in asset valuation reserve...... 320 3,213 6,307
Surplus (contributed to) withdrawn from
separate accounts during period...... 136 82 --
Other changes in surplus in separate
accounts statements.................. -- 10 --
Change in surplus notes................ -- -- 250,000
Dividends to stockholders.............. (80,000) (50,000) (159,722)
Aggregate write-ins for gains and
(losses) in surplus.................. -- (7) 20
-------- -------- ---------
Net change in capital and surplus for
the year............................. (23,582) 77,229 265,552
-------- -------- ---------
Capital and surplus, end of year......... $886,342 $909,924 $ 832,695
======== ======== =========
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
57 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---------- ----------- -----------
<S> <C> <C> <C>
CASH PROVIDED BY OPERATIONS:
Premiums, annuity considerations and
deposit funds received............... $2,667,756 $ 2,361,669 $ 2,410,919
Considerations for supplementary
contracts and dividend accumulations
received............................. 3,461 2,086 1,615
Net investment income received......... 225,038 236,944 345,279
Fees associated with investment
management, administration, and
contract guarentees from separate
accounts............................. 173,417 141,211 --
Other income received.................. 24,555 111,936 208,223
---------- ----------- -----------
Total receipts........................... 3,094,227 2,853,846 2,966,036
---------- ----------- -----------
Benefits paid (other than dividends)... 2,474,693 2,107,736 2,020,747
Insurance expenses and taxes paid
(other than federal income and
capital gains taxes)................. 230,744 217,023 203,650
Net cash transferred to separate
accounts............................. 833,567 800,636 895,465
Dividends paid to policyholders........ -- 26,519 28,316
Federal income tax payments
(recoveries), (excluding tax on
capital gains)....................... (40,644) 46,965 1,397
Other--net............................. 237 (138) 698
---------- ----------- -----------
Total payments........................... 3,498,597 3,198,741 3,150,273
---------- ----------- -----------
Net cash used in operations.............. (404,370) (344,895) (184,237)
---------- ----------- -----------
Proceeds from long-term investments
sold, matured or repaid (after
deducting taxes on capital gains
(losses) of $(1,768) for 1999, $2,038
for 1998, and $750 for 1997)......... 1,065,307 1,261,396 1,343,803
Issuance of surplus notes.............. -- -- 250,000
Other cash provided (used)............. 13,797 (40,529) 71,095
---------- ----------- -----------
Total cash provided...................... 1,079,104 1,220,867 1,664,898
---------- ----------- -----------
CASH APPLIED:
Cost of long-term investments
acquired............................. (484,417) (967,901) (773,783)
Other cash applied..................... (138,572) (187,263) (310,519)
---------- ----------- -----------
Total cash applied....................... (622,989) (1,155,164) (1,084,302)
Net change in cash and short-term
investments.............................. 51,745 (279,192) 396,359
Cash and short-term investments:
Beginning of year........................ 265,226 544,418 148,059
---------- ----------- -----------
End of year.............................. $ 316,971 $ 265,226 $ 544,418
========== =========== ===========
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
58 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
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 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"), a mutual insurance company.
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 19 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 mortgage backed securities are generally
carried at amortized cost. Changes in prepayment assumptions and resulting cash
flows are confirmed retrospectively. 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 the Interest Maintenance Reserve (IMR). Investments in non-insurance
subsidiaries are carried on the equity basis. 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
59 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED):
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 are computed in accordance with presently accepted actuarial
standards, and are based on actuarial assumptions and methods (including use of
published mortality tables and prescribed interest rates) which produce 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.
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.
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.
Gains (losses) from mortality experience and investment experience of the
separate accounts, not applicable to contract owners, and accrued expense
allowances recognized in reserves are receivable from or payable to the general
account. Accumulated amounts 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 $467,619,000 in 1999 and $361,863,000 in
1998.
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.
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.
60 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED):
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 the following
subsidiaries:
Sun Life Insurance and Annuity Company of New York ("Sun Life (N.Y.)") is
engaged in the sale of individual fixed and variable annuity contracts and group
life and group long term disability insurance contracts in the State of New
York;
Sun Life of Canada (U.S.) Distributors, Inc. (formerly Sun Investment
Services Company) ("Sundisco"), is a registered broker-dealer;
Sun Life Financial Services Limited ("SLFSL"), serves as the marketing
administrator for the distribution of the offshore products of SLOC (Bermuda
branch), an affiliate;
Sun Benefit Services Company, Inc. ("Sunbesco") receives renewal commissions
on a disability product and is currently inactive;
Sun Capital Advisers, Inc. ("Sun Capital") is a registered investment
adviser;
Sun Life Finance Corporation ("Sunfinco") is a finance company and currently
inactive;
Sun Life of Canada (U.S.) SPE 97-1, Inc. ("SPE 97-1") is a special purpose
corporation engaging in activities incidental to securitizing mortgage loans;
Clarendon Insurance Agency, Inc. ("Clarendon") is a registered broker-dealer
that acts as the general distributor of certain annuity and life insurance
contracts issued by the Company and its affiliates;
Sun Life Information Services Ireland Limited ("SLISL") is an offshore
technology services center for affiliates.
On October 29, 1999, the Company sold New London Trust F.S.B. ("NLT") to an
unaffiliated party for $30,254,000. The Company realized a post tax gain of
$13,170,000.
61 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
2. INVESTMENTS IN SUBSIDIARIES (CONTINUED):
On February 5, 1999, the Company sold Massachusetts Casualty Insurance
Company ("MCIC"), a disability insurance company, to an unaffiliated party. The
net proceeds of this sale were $33,965,000. The Company realized a post tax gain
of $4,900,000.
The impact of the sales of NLT and MCIC on continuing operations of the
Company is not expected to be material.
Prior to December 24, 1997, the Company owned 93.6% of the outstanding
shares of Massachusetts Financial Services Company ("MFS"), a registered
investment adviser. On December 24, 1997, the Company transferred all of its
shares of MFS to Life Holdco in the form of a dividend valued at $159,722,000.
As a result of this transaction, the Company realized a gain of $21,195,000 of
undistributed earnings.
During 1999, 1998, and 1997, the Company contributed capital in the
following amounts to its subsidiaries:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
MCIC........................................................ $ -- $ -- $ 2,000
SLFSL....................................................... 1,000 750 1,000
SPE 97-1.................................................... -- -- 20,377
Sundisco.................................................... 19,000 10,000 --
Sun Capital................................................. -- 500 --
Clarendon................................................... -- 10 --
SLISL....................................................... -- 502 --
</TABLE>
During 1999, 1998, and 1997, the Company received dividends from the
following subsidiaries:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
SUN Life (N.Y.)............................................. $ 6,500 $ 3,000 $ --
NLT......................................................... 19,319 -- 7,500
MFS......................................................... -- -- 33,110
SPE 97-1.................................................... -- 675 --
SUNDISCO.................................................... -- -- 571
</TABLE>
62 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
2. INVESTMENTS IN SUBSIDIARIES (CONTINUED):
Summarized combined financial information of the Company's subsidiaries as
of December 31, 1999, 1998 and 1997 and for the years then ended, follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1999 1998 1997
--------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Assets................................................... $ 877,939 $ 1,315,317 $ 1,190,951
Liabilities.............................................. (802,656) (1,186,872) (1,073,966)
--------- ----------- -----------
Total net assets......................................... $ 75,283 $ 128,445 $ 116,985
========= =========== ===========
Total revenues........................................... $ 82,443 $ 222,853 $ 750,364
Operating expenses....................................... (90,318) (221,933) (646,896)
Income tax expense....................................... 3,249 (1,222) (43,987)
--------- ----------- -----------
Net income (loss)........................................ $ (4,626) $ (302) $ 59,481
========= =========== ===========
</TABLE>
3. BONDS
Investments in debt securities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------------------------------
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................... $ 78,161 $ 2,091 $ (2,454) $ 77,798
States, provinces and political
subdivisions............................... 20,428 69 (57) 20,440
Public utilities............................. 181,466 6,854 (5,907) 182,413
Transportation............................... 188,285 7,689 (2,709) 193,265
Finance...................................... 88,517 4,631 (518) 92,630
All other corporate bonds.................... 665,113 18,353 (17,152) 666,314
---------- ------- -------- ----------
Total long-term bonds.................... 1,221,970 39,687 (28,797) 1,232,860
---------- ------- -------- ----------
Short-term bonds:
U.S. Treasury Bills, bankers acceptances and
commercial paper........................... 312,585 -- -- 312,585
---------- ------- -------- ----------
Total short-term bonds................... 312,585 -- -- 312,585
---------- ------- -------- ----------
Total bonds...................................... $1,534,555 $39,687 $(28,797) $1,545,445
========== ======= ======== ==========
</TABLE>
63 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
3. BONDS (CONTINUED):
<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>
The amortized cost and estimated fair value of bonds at December 31, 1999
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, 1999
-----------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Maturities:
Due in one year or less................................. $ 376,761 $ 376,823
Due after one year through five years................... 184,077 182,788
Due after five years through ten years.................. 259,042 263,321
Due after ten years..................................... 542,678 543,301
---------- ----------
1,362,558 1,366,233
Mortgage-backed securities.............................. 171,997 179,212
---------- ----------
Total bonds................................................. $1,534,555 $1,545,445
========== ==========
</TABLE>
64 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
3. BONDS (CONTINUED):
Proceeds from sales and maturities of investments in debt securities during
1999, 1998, and 1997 were $740,081,000, $1,016,811,000 and $980,264,000, gross
gains were $7,688,000, $17,025,000, and $10,732,000 and gross losses were
$4,477,000, $866,000, and $2,446,000, respectively.
Bonds included above with an amortized cost of approximately $2,604,000,
$2,572,000, and $2,578,000 at December 31, 1999, 1998 and 1997, 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 concentrations 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 on loan as of December 31, 1999, 1998 or 1997. Income resulting from
this program was $20,000, $94,000, and $200,000 for the years ended
December 31, 1999, 1998 and 1997, 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,
-------------------
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
California.................................................. $ 72,693 $ 82,397
Massachusetts............................................... 38,083 53,528
Michigan.................................................... 32,941 34,357
New York.................................................... 22,912 21,190
Ohio........................................................ 31,914 36,171
Pennsylvania................................................ 92,825 93,587
Washington.................................................. 30,265 36,548
All other................................................... 207,278 177,225
-------- --------
$528,911 $535,003
======== ========
</TABLE>
65 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
5. MORTGAGE LOANS (CONTINUED):
The Company has restructured mortgage loans totaling $15,644,000 and
$30,743,000 and corresponding allowances for losses of $1,043,000 and $2,120,000
at December 31, 1999 and 1998, respectively.
On December 22, 1999, the Company acquired 28 mortgages from SLOC at a cost
of $118,091,637. The Company in turn sold a 90% participation in these 28 plus
an additional 11 existing mortgage loans to a third party as part of two
mortgage participation agreements, for which the Company received proceeds of
$146,974,851.
The Company has outstanding mortgage loan commitments on real estate
totaling $2,384,000 and $18,005,000 at December 31, 1999 and 1998, respectively.
6. INVESTMENT GAINS AND LOSSES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net realized gains (losses):
Bonds....................................................... $ 70 $ 5,659 $ 2,882
Common stock of affiliates.................................. 15,290 -- 21,195
Common stocks............................................... -- 48 --
Mortgage loans.............................................. 787 2,374 3,837
Real estate................................................. (481) 955 2,912
Other invested assets....................................... -- (3,827) (717)
-------- ------- -------
Subtotal.................................................... 15,666 5,209 30,109
Capital gains tax expense (benefit)......................... (4,442) 4,815 3,403
-------- ------- -------
Total....................................................... $ 20,108 $ 394 $26,706
======== ======= =======
Changes in unrealized gains (losses):
Bonds....................................................... $ (6,689) $ -- $ --
Common stock of affiliates.................................. (30,966) (302) (2,894)
Mortgage loans.............................................. 83 (1,312) 1,524
Real estate................................................. 1,461 403 3,377
Other invested assets....................................... -- 827 (855)
-------- ------- -------
Total....................................................... $(36,111) $ (384) $ 1,152
======== ======= =======
</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 $4,965,000 in
1999, $8,943,000 in 1998, and $6,321,000 in 1997. All gains and losses are
transferred net of applicable income taxes.
66 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
7. NET INVESTMENT INCOME
Net investment income consisted of:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income from bonds.................................. $128,992 $167,436 $188,924
Income from investment in common stock of affiliates........ 25,819 3,675 41,181
Interest income from mortgage loans......................... 50,327 53,269 76,073
Real estate investment income............................... 15,696 15,932 17,161
Interest income from policy loans........................... 3,118 2,881 3,582
Other investment income (loss).............................. (1,700) (641) (193)
-------- -------- --------
Gross investment income..................................... 222,252 242,552 326,728
-------- -------- --------
Interest on surplus notes and notes payable................. (43,266) (44,903) (42,481)
Investment expenses......................................... (11,951) (13,117) (13,998)
-------- -------- --------
Net investment income....................................... $167,035 $184,532 $270,249
======== ======== ========
</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 and foreign currency
exchange rates. The Company's use of derivatives has included U.S. Treasury
futures, conventional interest rate swaps, and currency and interest rate swap
agreements structured as 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, 1999 and 1998,
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 IMR and amortized over the shorter of the remaining life
of the hedged asset 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.
67 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
8. DERIVATIVES (CONTINUED):
The Company's open positions are as follows:
<TABLE>
<CAPTION>
SWAPS OUTSTANDING
AT DECEMBER 31, 1999
--------------------------------
NOTIONAL MARKET VALUE
PRINCIPAL AMOUNTS OF POSITIONS
----------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Conventional interest rate swaps............................ $20,000 $249
Foreign currency swap....................................... 648 113
</TABLE>
<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>
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 creditworthiness 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.
68 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
9. LEVERAGED LEASES (CONTINUED):
The Company's net investment in leveraged leases is composed of the
following elements:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Lease contracts receivable.................................. $ 69,766 $ 78,937
Less non-recourse debt...................................... (69,749) (78,920)
-------- --------
Net receivable.............................................. 17 17
Estimated residual value of leased assets................... 41,150 41,150
Less unearned and deferred income........................... (7,808) (8,932)
-------- --------
Investment in leveraged leases.............................. 33,359 32,235
Less fees................................................... (113) (138)
-------- --------
Net investment in leveraged leases.......................... $ 33,246 $ 32,097
======== ========
</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 $1,527,000, $2,128,000 and
$1,381,000 for the years ended December 31, 1999, 1998 and 1997, 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, and $37,050,000 for the years ended December 31, 1998 and 1997,
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.
69 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
10. REINSURANCE (CONTINUED):
The following are summarized pro-forma results of operations of the Company
for the years ended December 31, 1999, 1998 and 1997 before the effect of
reinsurance transactions with SLOC:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Income:
Premiums, annuity deposits and other revenues........ $2,874,513 $2,377,364 $2,340,733
Net investment income and realized gains............. 190,845 187,208 298,120
---------- ---------- ----------
Subtotal............................................. 3,065,358 2,564,572 2,638,853
---------- ---------- ----------
Benefits and Expenses:
Policyholder benefits................................ 2,709,712 2,312,247 2,350,354
Other expenses....................................... 239,282 203,238 187,591
---------- ---------- ----------
Subtotal............................................. 2,948,994 2,515,485 2,537,945
---------- ---------- ----------
Income from operations................................... $ 116,364 $ 49,087 $ 100,908
========== ========== ==========
</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 $193,000 in 1999, $3,008,000 in
1998, and decreasing income from operations by $2,658,000 in 1997.
During 1999 the Company entered into an agreement with an unrelated company
which provides reinsurance on certain fixed group annuity contracts. The net
effect of this agreement was to increase income from operations by approximately
$3,400,000. Also during 1999, the Company entered into three agreements with two
unrelated companies for the purpose of obtaining stop-loss coverage of
guaranteed minimum death benefit exposure with respect to the Company's variable
annuity business. The net effect of these agreements was to increase income from
operations by approximately $157,000.
The Company is contingently liable for the portion of the policies reinsured
under each of its existing reinsurance agreements in the event the reinsurance
companies are unable to pay their portion of any reinsured claim. Management
believes that any liability from this contingency is unlikely. However, to limit
the possibility of such losses, the Company evaluates the financial condition of
its reinsurers and monitors concentration of credit risk.
70 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
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, 1999
------------------------
AMOUNT % OF TOTAL
----------- ----------
(IN THOUSANDS)
<S> <C> <C>
Subject to discretionary withdrawal--with adjustment:
With market value adjustment............................ $ 2,346,853 13
At market value......................................... 15,010,696 81
At book value less surrender charges (surrender charge
>5%).................................................. 45,722 --
At book value (minimal or no charge or adjustment)...... 104,539 1
Not subject to discretionary withdrawal provision........... 1,015,108 5
----------- ---
Total annuity actuarial reserves and deposit liabilities.... $18,522,918 100
=========== ===
</TABLE>
<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 market value......................................... 11,368,059 73
At book value less surrender charges (surrender charge
>5%).................................................. 62,404 --
At book value (minimal or no charge or adjustment)...... 111,757 1
Not subject to discretionary withdrawal provision........... 1,055,642 7
----------- ---
Total annuity actuarial reserves and deposit liabilities.... $15,494,391 100
=========== ===
</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 Protection 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
Wealth Management 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.
71 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
12. SEGMENT INFORMATION (CONTINUED):
The following amounts pertain to the various business segments:
<TABLE>
<CAPTION>
TOTAL TOTAL PRETAX FEDERAL TOTAL
REVENUES EXPENDITURES* INCOME INCOME TAX ASSETS
---------- ------------- -------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1999
Protection................................ $ 33,236 $ 41,030 $ (7,794) $ (2,661) $ 136,127
Wealth Management......................... 2,979,450 2,898,158 81,292 18,593 19,015,394
Corporate................................. 27,301 6,070 21,231 8,547 796,634
---------- ---------- -------- -------- -----------
Total................................. $3,039,987 $2,945,258 $ 94,729 $ 24,479 $19,948,155
---------- ---------- -------- -------- -----------
1998
Protection................................ $ 229,710 $ 144,800 $ 84,910 $ (4,148) $ 199,683
Wealth Management......................... 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
Protection................................ $ 304,141 $ 272,333 $ 31,808 $ 13,825 $ 1,143,697
Wealth Management......................... 2,533,006 2,507,592 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
---------- ---------- -------- -------- -----------
</TABLE>
- ------------------------
* Total expenditures includes dividends to policyholders of $0 for 1999,
$(5,981) for 1998, and $33,316 for 1997.
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 obligation was
$1,914,000, and $1,178,000 at December 31, 1999 and 1998, respectively. The
Company's share of net periodic pension cost was $736,000, $586,000, and
$146,000 for 1999, 1998 and 1997, respectively.
72 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
13. RETIREMENT PLANS (CONTINUED):
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 $284,000, $231,000, and $259,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.
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.
The Company records an accrual of the estimated cost of retiree benefit
payments during the years the employee provides services, and amortizes an
obligation of approximately $400,000 over a period of ten years. The Company's
cash flows are not affected by this method, however the net effect decreased
income by $185,000, $95,000, and $117,000, for the years ended December 31,
1999, 1998, and 1997, respectively. The Company's post-retirement health, dental
and life insurance benefits currently are not funded.
73 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
13. RETIREMENT PLANS (CONTINUED):
The following table sets forth the change in the pension and other
post-retirement 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
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year......... $110,792 $ 79,684 $ 10,419 $ 9,845
Service cost.................................... 5,632 4,506 413 240
Interest cost................................... 6,952 6,452 845 673
Actuarial loss (gain)........................... (21,480) 21,975 1,048 308
Benefits paid................................... (2,376) (1,825) (508) (647)
-------- -------- -------- --------
Benefit obligation at end of year................... $ 99,520 $110,792 $ 12,217 $ 10,419
======== ======== ======== ========
The Company's share:
Benefit obligation at beginning of year......... $ 9,125 $ 5,094 $ 416 $ 385
Benefit obligation at end of year............... $ 8,816 $ 9,125 $ 743 $ 416
Change in plan assets:
Fair value of plan assets at beginning of
year.......................................... $151,575 $136,610 $ -- $ --
Actual return on plan assets.................... 9,072 16,790 -- --
Employer contribution........................... -- -- 508 647
Benefits paid................................... (2,376) (1,825) (508) (647)
-------- -------- -------- --------
Fair value of plan assets at end of year............ $158,271 $151,575 $ -- $ --
======== ======== ======== ========
Funded status....................................... $ 58,752 $ 40,783 $(12,217) $(10,419)
Unrecognized net actuarial gain (loss).............. (20,071) (2,113) 1,469 586
Unrecognized transition obligation (asset).......... (22,617) (24,674) 140 185
Unrecognized prior service cost..................... 7,081 7,661 -- --
-------- -------- -------- --------
Prepaid (accrued) benefit cost...................... $ 23,145 $ 21,657 $(10,608) $ (9,648)
======== ======== ======== ========
The Company's share of accrued benefit cost......... $ (1,914) $ (1,178) $ (381) $ (195)
Weighted-average assumptions as of December 31:
Discount rate................................... 7.50% 6.75% 7.50% 6.75%
Expected return on plan assets.................. 8.75% 8.00% N/A N/A
Rate of compensation increase................... 4.50% 4.50% N/A N/A
</TABLE>
74 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
13. RETIREMENT PLANS (CONTINUED):
For measurement purposes, a 10.9% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1999 (5.6% 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
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Components of net periodic benefit cost:
Service cost.......................................... $ 5,632 $ 4,506 $ 413 $240
Interest cost......................................... 6,952 6,452 845 673
Expected return on plan assets........................ (12,041) (10,172) -- --
Amortization of transition obligation (asset)......... (2,056) (2,056) 45 45
Amortization of prior service cost.................... 580 580 -- --
Recognized net actuarial (gain) loss.................. (554) (677) 164 (20)
-------- -------- ------ ----
Net periodic benefit cost................................. $ (1,487) $ (1,367) $1,467 $938
======== ======== ====== ====
The Company's share of net periodic benefit cost...... $ 736 $ 586 $ 185 $ 95
======== ======== ====== ====
</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..... $ 288 $ (518)
Effect on postretirement benefit obligation................. 2,754 (2,279)
</TABLE>
75 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
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:
<TABLE>
<CAPTION>
1999
-------------------------------------
CARRYING AMOUNT ESTIMATED FAIR VALUE
--------------- --------------------
(IN THOUSANDS)
<S> <C> <C>
Assets:
Bonds (including short-term).............. $ 1,534,555 $1,545,445
Mortgages................................. 528,911 526,608
Derivatives............................... -- 362
Other Invested Assets..................... 67,938 67,938
Policy loans.............................. 40,095 40,095
Liabilities:
Insurance reserves........................ $ 120,536 $ 120,536
Individual annuities...................... 247,619 238,229
Pension products.......................... 661,806 665,830
<CAPTION>
1998
-------------------------------------
CARRYING AMOUNT ESTIMATED FAIR VALUE
--------------- --------------------
(IN THOUSANDS)
Assets:
<S> <C> <C>
Bonds (including short-term).............. $ 2,026,868 $2,153,953
Mortgages................................. 535,003 556,143
Derivatives............................... -- 771
Policy loans.............................. 41,944 41,944
Liabilities:
Insurance reserves........................ $ 121,100 $ 121,100
Individual annuities...................... 274,448 271,849
Pension products.......................... 1,104,489 1,145,351
</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 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 policy loans approximate carrying amounts.
76 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
14. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED):
The fair values of derivative financial instruments are estimated using the
process described in Note 8.
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 fair value.
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 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,
-----------------------------------------
1999 1998
------------------- -------------------
AVR IMR AVR IMR
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance, beginning of year.............................. $44,392 $40,490 $47,605 $33,830
Net realized investment gains, net of tax............... 9,950 4,983 256 8,942
Amortization of net investment gains.................... -- (3,702) -- (2,282)
Unrealized investment losses............................ (9,705) -- (6,550) --
Required by formula..................................... (566) -- 3,081 --
------- ------- ------- -------
Balance, end of year.................................... $44,071 $41,771 $44,392 $40,490
======= ======= ======= =======
</TABLE>
16. FEDERAL INCOME TAXES
The Company, its subsidiaries and certain other affiliates 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 $3,000,000,
$48,144,000, and $31,000,000 for the years ended December 31, 1999, 1998 and
1997, 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.
77 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
17. RELATED PARTY TRANSACTIONS
A. 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.
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 $4,259,000 for interest on surplus notes
for the years ended December 31, 1999 and 1998, respectively.
The Company expensed $43,266,000, $44,903,000, and $42,481,000 for interest
on surplus notes and notes payable for the years ended December 31, 1999, 1998
and 1997, respectively.
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 on December 22, 1998 at an interest rate of 5.55% due
February 11, 1999. These two notes and an additional $10,000,000 were combined
into a new note of $230,000,000 with a floating interest rate based on the six
month LIBOR rate plus 25 basis points. The $230,000,000 note was repaid to the
Company on December 21, 1999.
On January 14, 2000, the Company purchased $200,000,000 of notes from MFS.
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.
78 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
17. RELATED PARTY TRANSACTIONS (CONTINUED):
On December 31, 1998, the Company had an additional $20,000,000 in notes
issued by MFS, scheduled to mature in 2000. These notes were repaid to the
Company on December 21, 1999.
B. STOCKHOLDER DIVIDENDS
The maximum amount of dividends which can be paid by the Company without
prior approval of the Insurance Commissioner of the State of Delaware is subject
to restrictions relating to statutory surplus. In 1999, a dividend in the amount
of $80,000,000 was declared and paid by the Company to its parent, Life Holdco.
This dividend was approved by the Board of Directors, but did not require
approval of the Insurance Commissioner. In 1998, a dividend in the amount of
$50,000,000 was declared and paid by the Company to its parent, Life Holdco.
This dividend was approved by the Insurance Commissioner and the Board of
Directors. On December 24, 1997 the Company transferred all of its shares of MFS
to Life Holdco in the form of a dividend valued at $159,722,000. This dividend
was approved by the Insurance Commissioner and the Board of Directors.
C. SERVICE AGREEMENTS
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 $28,700,000 in 1999, $16,344,000 in 1998, and $15,997,000 in 1997.
The Company leases office space to SLOC under lease agreements with terms
expiring in December, 2004 and options to extend the terms for each of twelve
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 1999 amounted to approximately $6,943,000.
18. 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, 1999, 1998 and 1997.
19. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for monetary and punitive damages have
been asserted. Although there can be no assurances, at the present time the
Company does not anticipate that the ultimate liability arising from such
pending or
79 FUTURITY SURVIVORSHIP 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, 1999, 1998 AND 1997
19. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED):
threatened litigation, after consideration of provisions made for potential
losses and costs of defense, will have a material adverse effect on the
financial condition or operating results of the Company.
Under insurance guaranty fund laws in each state, the District of Columbia
and Puerto Rico, insurers licensed to do business can be assessed by state
insurance guaranty associations for certain obligations of insolvent insurance
companies to policyholders and claimants. Recent regulatory actions against
certain large life insurers encountering financial difficulty have prompted
various state insurance guaranty associations to begin assessing life insurance
companies for the deemed losses. Most of these laws do provide, however, that an
assessment may be excused or deferred it it would threaten an insurer's solvency
and further provide annual limits on such assessments. Part of the assessments
paid by the Company and its subsidiaries pursuant to these laws may be used as
credits for a portion of the associated premium taxes. The Company incurred
guaranty fund assessments of approximately $3,500,000, $3,500,000, and
$3,083,000 in 1999, 1998 and 1997, respectively.
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.
Other differences between statutory accounting practices and GAAP include
the following items. 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.
Investments in fixed maturity securities classified as available-for-sale are
carried at aggregate fair value with changes in unrealized gains and losses
reported net of taxes in a separate component of stockholder's equity for GAAP
and generally at amortized cost under statutory accounting practices.
* * * * * *
80 FUTURITY SURVIVORSHIP 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, 1999 and 1998, 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, 1999.
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, 1999 and 1998, and the results of its operations and its cash flow
for each of the three years in the period ended December 31, 1999 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, 1999 and 1998 or the
results of its operations or its cash flow for each of the three years in the
period ended December 31, 1999.
February 10, 2000
81 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF CONDITION -- DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES COST VALUE
ASSETS: ------ ------- -------
<S> <C> <C> <C>
Investments in mutual funds:
AIM Variable Insurance Funds, Inc.
V.I. Capital Appreciation Fund ("AIM1")... 37 $ 1,028 $ 1,330
V.I. Growth Fund ("AIM2")................. 49 1,417 1,585
V.I. Growth and Income Fund ("AIM3")...... 37 1,010 1,182
V.I. International Equity Fund ("AIM4")... 76 1,797 2,235
The Alger American Fund
Growth Portfolio ("AL1").................. 18 1,000 1,179
Income and Growth Portfolio ("AL2")....... 76 1,000 1,340
Small Capitalization Portfolio ("AL3").... 24 1,000 1,340
Goldman Sachs Variable Insurance Trust
CORE Large Cap Growth Fund ("GS1")........ 75 1,001 1,191
CORE Small Cap Equity Fund ("GS2")........ 108 1,003 1,144
CORE US Equity Fund ("GS3")............... 119 1,577 1,665
Growth and Income Fund ("GS4")............ 92 1,011 999
International Equity Fund ("GS5")......... 85 1,091 1,226
MFS/Sun Life Series Trust
Capital Appreciation Series ("CAS")....... 23 1,000 1,266
Massachusetts Investors Trust
Series ("CGS").......................... 27 1,000 1,033
Emerging Growth Series ("EGS")............ 290 9,765 11,676
Government Securities Series ("GGS")...... 125 1,561 1,561
High Yield Series ("HYS")................. 134 1,187 1,210
Massachusetts Investors Growth Stock
Series ("MIS").......................... 652 9,743 10,516
New Discovery Series ("NWD").............. 91 1,000 1,533
Total Return Series ("TRS")............... 259 4,876 4,867
Utilities Series ("UTS").................. 62 1,000 1,220
OCC Accumulation Trust
Equity Portfolio ("OP1").................. 26 1,000 972
Mid Cap Portfolio ("OP2")................. 104 1,028 1,206
Small Cap Portfolio ("OP3")............... 43 1,000 966
Managed Portfolio ("OP4")................. 23 1,000 1,005
Sun Capital Advisers Trust
Sun Capital Money Market Fund ("SCA1").... 1,017 1,017 1,017
Sun Capital Investment Grade Bond Fund
("SCA2")................................ 187 1,771 1,747
Sun Capital Real Estate Fund ("SCA3")..... 109 1,051 972
Sun Capital Select Equity Fund ("SCA
4")..................................... 100 1,000 1,264
Sun Capital Blue Chip Mid-Cap Fund ("SCA
5")..................................... 151 1,600 1,857
Sun Capital Investors Foundation Fund
("SCA 6")............................... 100 1,002 1,122
------- -------
Net Assets:................................... $56,536 $63,426
======= =======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
82 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF CONDITION -- CONTINUED
<TABLE>
<CAPTION>
NET ASSETS APPLICABLE TO OWNERS OF UNITS UNIT VALUE VALUE
DEFERRED VARIABLE ANNUITY CONTRACTS: ----- ---------- -------
<S> <C> <C> <C>
AIM Variable Insurance Funds, Inc.
V.I. Capital Appreciation Fund............ -- $13.2630 $ 1,330
V.I. Growth Fund.......................... 32 12.0173 1,585
V.I. Growth and Income Fund............... -- 11.7887 1,182
V.I. International Equity Fund............ 53 14.5631 2,235
The Alger American Fund
Growth Portfolio.......................... -- 11.7559 1,179
Income and Growth Portfolio............... -- 13.3516 1,340
Small Capitalization Portfolio............ -- 13.3581 1,340
Goldman Sachs Variable Insurance Trust
CORE Large Cap Growth Fund................ -- 11.8769 1,191
CORE Small Cap Equity Fund................ -- 11.4055 1,144
CORE US Equity Fund....................... 52 10.9307 1,665
Growth and Income Fund.................... -- 9.9587 999
International Equity Fund................. -- 12.2243 1,226
MFS/Sun Life Series Trust
Capital Appreciation Series............... -- 12.6212 1,266
Massachusetts Investors Trust Series...... -- 10.3059 1,033
Emerging Growth Series.................... 742 15.7395 11,676
Government Securities Series.............. 56 9.9799 1,561
High Yield Series......................... 18 10.1980 1,210
Massachusetts Investors Growth Stock
Series.................................. 851 12.3539 10,516
New Discovery Series...................... -- 15.2928 1,533
Total Return Series....................... 495 9.8304 4,867
Utilities Series.......................... -- 12.1675 1,220
OCC Accumulation Trust
Equity Portfolio.......................... -- 9.6931 972
Mid Cap Portfolio......................... -- 12.0310 1,206
Small Cap Portfolio....................... -- 9.6339 966
Managed Portfolio......................... -- 10.0177 1,005
Sun Capital Advisers Trust
Sun Capital Money Market Fund............. -- 10.1492 1,017
Sun Capital Investment Grade Bond Fund.... 75 9.9711 1,747
Sun Capital Real Estate Fund.............. -- 9.6829 972
Sun Capital Select Equity Fund............ -- 12.6067 1,264
Sun Capital Blue Chip Mid-Cap Fund........ 46 12.6740 1,857
Sun Capital Investors Foundation Fund..... -- 11.1831 1,122
-------
Net Assets:.............................................. $63,426
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
83 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
AIM1 AIM2 AIM3 AIM4 AL1 AL2
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME:
Dividend income and capital gain
distributions received............... $ 28 $ 42 $ 10 $ 48 $ -- $ --
----- ----- ----- ----- ----- -----
EXPENSES:
Mortality and expense risk charges.... $ -- $ -- $ -- $ -- $ -- $ --
Cost of insurance..................... -- -- -- -- -- --
----- ----- ----- ----- ----- -----
Total expenses........................ $ -- $ -- $ -- $ -- $ -- $ --
----- ----- ----- ----- ----- -----
Net investment income (loss)...... $ 28 $ 42 $ 10 $ 48 $ -- $ --
----- ----- ----- ----- ----- -----
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ -- $ -- $ -- $ -- $ -- $ --
Cost of investments sold............ -- -- -- -- -- --
----- ----- ----- ----- ----- -----
Net realized gains (losses)....... $ -- $ -- $ -- $ -- $ -- $ --
----- ----- ----- ----- ----- -----
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 302 $ 168 $ 172 $ 438 $ 179 $ 340
Beginning of year................... -- -- -- -- -- --
----- ----- ----- ----- ----- -----
Change in unrealized appreciation
(depreciation).................. $ 302 $ 168 $ 172 $ 438 $ 179 $ 340
----- ----- ----- ----- ----- -----
Realized and unrealized gains
(losses).......................... $ 302 $ 168 $ 172 $ 438 $ 179 $ 340
----- ----- ----- ----- ----- -----
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS.......................... $ 330 $ 210 $ 182 $ 486 $ 179 $ 340
===== ===== ===== ===== ===== =====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
84 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS -- continued
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
AL3 GS1 GS2 GS3 GS4
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME:
Dividend income and capital gain
distributions received............... $ -- $ 1 $ 3 $ 16 $ 11
----- ----- ----- ----- ----
EXPENSES:
Mortality and expense risk charges.... $ -- $ -- $ -- $ -- $ --
Cost of insurance..................... -- -- -- -- --
----- ----- ----- ----- ----
Total expenses........................ $ -- $ -- $ -- $ -- $ --
----- ----- ----- ----- ----
Net investment income (loss)...... $ -- $ 1 $ 3 $ 16 $ 11
----- ----- ----- ----- ----
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ -- $ -- $ -- $ -- $ --
Cost of investments sold............ -- -- -- -- --
----- ----- ----- ----- ----
Net realized gains (losses)....... $ -- $ -- $ -- $ -- $ --
----- ----- ----- ----- ----
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 340 $ 190 $ 141 $ 88 $(12)
Beginning of year................... -- -- -- -- --
----- ----- ----- ----- ----
Change in unrealized appreciation
(depreciation).................. $ 340 $ 190 $ 141 $ 88 $(12)
----- ----- ----- ----- ----
Realized and unrealized gains
(losses).......................... $ 340 $ 190 $ 141 $ 88 $(12)
----- ----- ----- ----- ----
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS.......................... $ 340 $ 191 $ 144 $ 104 $ (1)
===== ===== ===== ===== ====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
85 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS -- CONTINUED
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
GS5 CAS CGS EGS GGS HYS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME:
Dividend income and capital gain
distributions received............... $ 91 $ -- $ -- $ -- $ -- $ --
---- ---- ---- ------- ---- ----
EXPENSES:
Mortality and expense risk charges.... $ -- $ -- $ -- $ (6) $ -- $ --
Cost of insurance..................... -- -- -- (181) -- --
---- ---- ---- ------- ---- ----
Total expenses........................ $ -- $ -- $ -- $ (187) $ -- $ --
---- ---- ---- ------- ---- ----
Net investment income (loss)...... $ 91 $ -- $ -- $ (187) $ -- $ --
---- ---- ---- ------- ---- ----
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ -- $ -- $ -- $ 1,365 $ -- $ --
Cost of investments sold............ -- -- -- (1,000) -- --
---- ---- ---- ------- ---- ----
Net realized gains (losses)....... $ -- $ -- $ -- $ 365 $ -- $ --
---- ---- ---- ------- ---- ----
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $135 $266 $ 33 $ 1,911 $ -- $ 23
Beginning of year................... -- -- -- -- -- --
---- ---- ---- ------- ---- ----
Change in unrealized appreciation
(depreciation).................. $135 $266 $ 33 $ 1,911 $ -- $ 23
---- ---- ---- ------- ---- ----
Realized and unrealized gains
(losses).......................... $135 $266 $ 33 $ 2,276 $ -- $ 23
---- ---- ---- ------- ---- ----
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS.......................... $226 $266 $ 33 $ 2,089 $ -- $ 23
==== ==== ==== ======= ==== ====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
86 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS -- CONTINUED
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
MIS NWD TRS UTS OP1
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME:
Dividend income and capital gain
distributions received............... $ -- $ -- $ -- $ -- $ --
------- ---- ------- ---- ----
EXPENSES:
Mortality and expense risk charges.... $ (6) $ -- $ (2) $ -- $ --
Cost of insurance..................... (178) -- (85) -- --
------- ---- ------- ---- ----
Total expenses........................ $ (184) $ -- $ (87) $ -- $ --
------- ---- ------- ---- ----
Net investment income (loss)...... $ (184) $ -- $ (87) $ -- $ --
------- ---- ------- ---- ----
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 1,171 $ -- $ 997 $ -- $ --
Cost of investments sold............ (1,000) -- (1,000) -- --
------- ---- ------- ---- ----
Net realized gains (losses)....... $ 171 $ -- $ (3) $ -- $ --
------- ---- ------- ---- ----
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 773 $533 $ (9) $220 $(28)
Beginning of year................... -- -- -- -- --
------- ---- ------- ---- ----
Change in unrealized appreciation
(depreciation).................. $ 773 $533 $ (9) $220 $(28)
------- ---- ------- ---- ----
Realized and unrealized gains
(losses).......................... $ 944 $533 $ (12) $220 $(28)
------- ---- ------- ---- ----
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS.......................... $ 760 $533 $ (99) $220 $(28)
======= ==== ======= ==== ====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
87 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS -- CONTINUED
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
OP2 OP3 OP4 SCA1 SCA2
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME:
Dividend income and capital gain
distributions received............... $ 28 $ -- $ -- $ 17 $ 22
---- ---- ---- ---- ----
EXPENSES:
Mortality and expense risk charges.... $ -- $ -- $ -- $ -- $ --
Cost of insurance..................... -- -- -- -- --
---- ---- ---- ---- ----
Total expenses........................ $ -- $ -- $ -- $ -- $ --
---- ---- ---- ---- ----
Net investment income (loss)...... $ 28 $ -- $ -- $ 17 $ 22
---- ---- ---- ---- ----
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ -- $ -- $ -- $ -- $ --
Cost of investments sold............ -- -- -- -- --
---- ---- ---- ---- ----
Net realized gains (losses)....... $ -- $ -- $ -- $ -- $ --
---- ---- ---- ---- ----
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $178 $(34) $ 5 $ -- $(24)
Beginning of year................... -- -- -- -- --
---- ---- ---- ---- ----
Change in unrealized appreciation
(depreciation).................. $178 $(34) $ 5 $ -- $(24)
---- ---- ---- ---- ----
Realized and unrealized gains
(losses).......................... $178 $(34) $ 5 $ -- $(24)
---- ---- ---- ---- ----
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS.......................... $206 $(34) $ 5 $ 17 $ (2)
==== ==== ==== ==== ====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
88 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS -- CONTINUED
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
SCA3 SCA4 SCA5 SCA6
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME:
Dividend income and capital gain
distributions received............... $ 51 $ -- $ 38 $ 2
---- ---- ---- ----
EXPENSES:
Mortality and expense risk charges.... $ -- $ -- $ -- $ --
Cost of insurance..................... -- -- -- --
---- ---- ---- ----
Total expenses........................ $ -- $ -- $ -- $ --
---- ---- ---- ----
Net investment income (loss)...... $ 51 $ -- $ 38 $ 2
---- ---- ---- ----
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ -- $ -- $ -- $ --
Cost of investments sold............ -- -- -- --
---- ---- ---- ----
Net realized gains (losses)....... $ -- $ -- $ -- $ --
---- ---- ---- ----
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $(79) $264 $257 $120
Beginning of year................... -- -- -- --
---- ---- ---- ----
Change in unrealized appreciation
(depreciation).................. $(79) $264 $257 $120
---- ---- ---- ----
Realized and unrealized gains
(losses).......................... $(79) $264 $257 $120
---- ---- ---- ----
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS.......................... $(28) $264 $295 $122
==== ==== ==== ====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
89 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF CHANGES IN NET ASSETS
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
AIM1 AIM2 AIM3 AIM4 AL1 AL2
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 28 $ 42 $ 10 $ 48 $ -- $ --
Net realized gains (losses)........... -- -- -- -- -- --
Net unrealized gains (losses)......... 302 168 172 438 179 340
------ ------ ------ ------ ------ ------
Increase (Decrease) in net assets
from operations:................ $ 330 $ 210 $ 182 $ 486 $ 179 $ 340
------ ------ ------ ------ ------ ------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Net transfers between sub-accounts
and fixed accounts................. -- 375 -- 749 -- --
Withdrawals, surrenders and account
fees............................... -- -- -- -- -- --
------ ------ ------ ------ ------ ------
Net contract owner activity....... $1,000 $1,375 $1,000 $1,749 $1,000 $1,000
------ ------ ------ ------ ------ ------
Increase (Decrease) in net assets... $1,330 $1,585 $1,182 $2,235 $1,179 $1,340
NET ASSETS:
Beginning of period................... -- -- -- -- -- --
------ ------ ------ ------ ------ ------
End of period......................... $1,330 $1,585 $1,182 $2,235 $1,179 $1,340
====== ====== ====== ====== ====== ======
<CAPTION>
AL3 GS1 GS2 GS3 GS4
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss).......... $ -- $ 1 $ 3 $ 16 $ 11
Net realized gains (losses)........... -- -- -- -- --
Net unrealized gains (losses)......... 340 190 141 88 (12)
------ ------ ------ ------ ------
Increase (Decrease) in net assets
from operations:................ $ 340 $ 191 $ 144 $ 104 $ (1)
------ ------ ------ ------ ------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $1,000 $1,000 $1,000 $1,000 $1,000
Net transfers between sub-accounts
and fixed accounts................. -- -- -- 561 --
Withdrawals, surrenders and account
fees............................... -- -- -- -- --
------ ------ ------ ------ ------
Net contract owner activity....... $1,000 $1,000 $1,000 $1,561 $1,000
------ ------ ------ ------ ------
Increase (Decrease) in net assets... $1,340 $1,191 $1,144 $1,665 $ 999
NET ASSETS:
Beginning of period................... -- -- -- -- --
------ ------ ------ ------ ------
End of period......................... $1,340 $1,191 $1,144 $1,665 $ 999
====== ====== ====== ====== ======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
90 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF CHANGES IN NET ASSETS -- CONTINUED
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
GS5 CAS CGS EGS GGS HYS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 91 $ -- $ -- $ (187) $ -- $ --
Net realized gains (losses)........... -- -- -- 365 -- --
Net unrealized gains (losses)......... 135 266 33 1,911 -- 23
------- ------ ------ ------- ------ ------
Increase (Decrease) in net assets
from operations:................ $ 226 $ 266 $ 33 $ 2,089 $ -- $ 23
------- ------ ------ ------- ------ ------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 1,000 $1,000 $1,000 $ 1,000 $1,000 $1,000
Net transfers between sub-accounts
and fixed accounts................. -- -- -- 9,901 561 187
Withdrawals, surrenders and account
fees............................... -- -- -- (1,314) -- --
------- ------ ------ ------- ------ ------
Net contract owner activity....... $ 1,000 $1,000 $1,000 $ 9,587 $1,561 $1,187
------- ------ ------ ------- ------ ------
Increase (Decrease) in net assets... $ 1,226 $1,266 $1,033 $11,676 $1,561 $1,210
NET ASSETS:
Beginning of period................... -- -- -- -- -- --
------- ------ ------ ------- ------ ------
End of period......................... $ 1,226 $1,266 $1,033 $11,676 $1,561 $1,210
======= ====== ====== ======= ====== ======
<CAPTION>
MIS NWD TRS UTS OP1
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss).......... $ (184) $ -- $ (87) $ -- $ --
Net realized gains (losses)........... 171 -- (3) -- --
Net unrealized gains (losses)......... 773 533 (9) 220 (28)
------- ------ ------ ------- ------
Increase (Decrease) in net assets
from operations:................ $ 760 $ 533 $ (99) $ 220 $ (28)
------- ------ ------ ------- ------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 1,000 $1,000 $1,000 $ 1,000 $1,000
Net transfers between sub-accounts
and fixed accounts................. 9,901 -- 4,951 -- --
Withdrawals, surrenders and account
fees............................... (1,145) -- (985) -- --
------- ------ ------ ------- ------
Net contract owner activity....... $ 9,756 $1,000 $4,966 $ 1,000 $1,000
------- ------ ------ ------- ------
Increase (Decrease) in net assets... $10,516 $1,533 $4,867 $ 1,220 $ 972
NET ASSETS:
Beginning of period................... -- -- -- -- --
------- ------ ------ ------- ------
End of period......................... $10,516 $1,533 $4,867 $1,220 $ 972
======= ====== ====== ======= ======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
91 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
STATEMENT OF CHANGES IN NET ASSETS -- CONTINUED
For the Period from August 25, 1999 (commencement of operations) through
December 31, 1999
<TABLE>
<CAPTION>
OP2 OP3 OP4 SCA1 SCA2
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 28 $ -- $ -- $ 17 $ 22
Net realized gains (losses)........... -- -- -- -- --
Net unrealized gains (losses)......... 178 (34) 5 -- (24)
------ ------ ------ ------ ------
Increase (Decrease) in net assets
from operations:................ $ 206 $ (34) $ 5 $ 17 $ (2)
------ ------ ------ ------ ------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $1,000 $1,000 $1,000 $1,000 $1,000
Net transfers between sub-accounts
and fixed accounts................. -- -- -- -- 749
Withdrawals, surrenders and account
fees............................... -- -- -- -- --
------ ------ ------ ------ ------
Net contract owner activity....... $1,000 $1,000 $1,000 $1,000 $1,749
------ ------ ------ ------ ------
Increase (Decrease) in net assets... $1,206 $ 966 $1,005 $1,017 $1,747
NET ASSETS:
Beginning of period................... -- -- -- -- --
------ ------ ------ ------ ------
End of period......................... $1,206 $ 966 $1,005 $1,017 $1,747
====== ====== ====== ====== ======
<CAPTION>
SCA3 SCA4 SCA5 SCA6
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -----------
OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net investment income (loss).......... $ 51 $ -- $ 38 $ 2
Net realized gains (losses)........... -- -- -- --
Net unrealized gains (losses)......... (79) 264 257 120
------ ------ ------ ------
Increase (Decrease) in net assets
from operations:................ $ (28) $ 264 $ 295 $ 122
------ ------ ------ ------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $1,000 $1,000 $1,000 $1,000
Net transfers between sub-accounts
and fixed accounts................. -- -- 562 --
Withdrawals, surrenders and account
fees............................... -- -- -- --
------ ------ ------ ------
Net contract owner activity....... $1,000 $1,000 $1,562 $1,000
------ ------ ------ ------
Increase (Decrease) in net assets... $ 972 $1,264 $1,857 $1,122
NET ASSETS:
Beginning of period................... -- -- -- --
------ ------ ------ ------
End of period......................... $ 972 $1,264 $1,857 $1,122
====== ====== ====== ======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
92 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life (U.S.) Variable Account I (the "Variable Account"), a separate
account of Sun Life Assurance Company of Canada (U.S.) (the "Sponsor") was
established on August 25, 1999 as a funding vehicle for the variable portion of
certain individual variable universal life insurance contracts. The Variable
Account is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 as a unit investment trust.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account is invested in shares of a specific mutual fund or series thereof
selected by contract owners. The funds currently offered are as follows: AIM
Variable Insurance Funds, Inc., the Alger American Fund, Goldman Sachs Variable
Insurance Trust, MFS/Sun Life Series Trust, OCC Accumulated Trust, and Sun
Capital Advisers Trust (collectively the "Funds"). The MFS/Sun Life Series Trust
and Sun Capital Advisers Trust are advised by affiliates of the Sponsor.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVESTMENT VALUATIONS Investments in the Funds are recorded at their net asset
value. Realized gains and losses on sales of shares of the Funds are determined
on the identified cost basis. Dividend income and capital gain distributions
received by the Sub-Accounts are reinvested in additional Fund shares and are
recognized on the ex-dividend date.
Exchanges between Sub-Accounts requested by contract owners are recorded in
the new Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS The operations of the Variable Account are part of
the operations of the Sponsor and are not taxed separately. The Variable Account
is not taxed as a regulated investment company. The Sponsor qualifies for the
federal income tax treatment granted to life insurance companies under
Subchapter L of the Internal Revenue Code. Under existing federal income tax
law, investment income and capital gains earned by the Variable Account on
contract owner reserves are not subject to tax.
(3) CONTRACT CHARGES
The Sponsor deducts a sales charge from purchase payments. The current
charge is 5.25% of the amount of purchase payments. The maximum charge is
guaranteed not to exceed 7.25% of purchase payments.
A mortality and expense risk charge based on the value of the Variable
Account is deducted from the Variable Account at the end of each valuation
period for the mortality and expense risks assumed by the Sponsor. The maximum
deduction is at an effective annual rate of 0.90%. The current effective annual
rate in effect at December 31, 1999 is equivalent to 0.80% for Policy Years 1
through 10 and 0.50% thereafter.
Each month, a monthly administration charge ("Account Fee") of $8 is
deducted from each contract's account value to cover administrative expenses
relating to the contract.
93 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(3) CONTRACT CHARGES (CONTINUED):
Within the first 10 Policy Years or the 10 Policy Years following an
increase in the specified face amount of the policy, a surrender charge may be
deducted to cover certain expenses relating to the sale of the contract. The
base surrender charge will be an amount based on certain factors, including the
specified face amount of the policy, the insured's age, sex and rating class.
The charge will be 100% of the base surrender charge in the first 5 Policy
Years, or the first 5 Policy Years after an increase in the specified face
amount, scaling down to zero after 10 Policy Years.
The Sponsor deducts a monthly cost of insurance from the account value to
cover anticipated costs of providing insurance coverage. The charge will be
based on the Sponsor's expectation of future mortality, 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.
94 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(4) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS
During the year, the Sponsor deposited $1,000 of initial "seed" money into
each of the Sub-Accounts. Unlike normal participant transactions, the initial
"seed" money deposited is not issued with corresponding units.
Transactions in participant units during the period from August 25, 1999
(commencement of operations) through December 31, 1999 were as follows:
<TABLE>
<CAPTION>
UNITS TRANSFERRED
UNITS OUTSTANDING UNITS BETWEEN SUB-ACCOUNTS UNITS WITHDRAWN UNITS OUTSTANDING
BEGINNING OF PERIOD PURCHASED AND FIXED ACCOUNT AND SURRENDERED END OF PERIOD
------------------- --------- ------------------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
AIM1................ -- -- -- -- --
AIM2................ -- -- 32 -- 32
AIM3................ -- -- -- -- --
AIM4................ -- -- 53 -- 53
AL1................. -- -- -- -- --
AL2................. -- -- -- -- --
AL3................. -- -- -- -- --
GS1................. -- -- -- -- --
GS2................. -- -- -- -- --
GS3................. -- -- 52 -- 52
GS4................. -- -- -- -- --
GS5................. -- -- -- -- --
CAS................. -- -- -- -- --
CGS................. -- -- -- -- --
EGS................. -- -- 742 -- 742
GGS................. -- -- 56 -- 56
HYS................. -- -- 18 -- 18
MIS................. -- -- 851 -- 851
NWD................. -- -- -- -- --
TRS................. -- -- 495 -- 495
UTS................. -- -- -- -- --
OP1................. -- -- -- -- --
OP2................. -- -- -- -- --
OP3................. -- -- -- -- --
OP4................. -- -- -- -- --
SCA1................ -- -- -- -- --
SCA2................ -- -- 75 -- 75
SCA3................ -- -- -- -- --
SCA4................ -- -- -- -- --
SCA5................ -- -- 46 -- 46
SCA6................ -- -- -- -- --
</TABLE>
95 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE CONTRACT OWNERS PARTICIPATING IN SUN LIFE (U.S.) VARIABLE ACCOUNT I
AND THE BOARD OF DIRECTORS OF SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.):
We have audited the accompanying statement of condition of V.I. Capital
Appreciation Sub-Account, V.I. Growth Sub-Account, V.I. Growth and Income
Sub-Account, V.I. International Equity Sub-Account, Growth Sub-Account, Income
and Growth Sub-Account, Small Capitalization Sub-Account, CORE Large Cap Growth
Sub-Account, CORE Small Cap Equity Sub-Account, CORE US Equity Sub-Account,
Growth and Income Sub-Account, International Equity Sub-Account, Capital
Appreciation Sub-Account, Massachusetts Investors Trust Sub-Account, Emerging
Growth Sub-Account, Government Securities Sub-Account, High Yield Sub-Account,
Massachusetts Investors Growth Stock Sub-Account, New Discovery Sub-Account,
Total Return Sub-Account, Utilities Sub-Account, Equity Sub-Account, Mid Cap
Sub-Account, Small Cap Sub-Account, Managed Sub-Account, Sun Capital Money
Market Sub-Account, Sun Capital Investment Grade Bond Sub-Account, Sun Capital
Real Estate Sub-Account, Sun Capital Select Equity Sub-Account, Sun Capital Blue
Chip Mid-Cap Sub-Account, and Sun Capital Investors Foundation Sub-Account of
Sun Life (U.S.) Variable Account I (the "Sub-Accounts") as of December 31, 1999,
and the related statements of operations and changes in net assets for the
period from August 25, 1999 (the commencement of operations) through December
31, 1999. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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. Our procedures included
confirmation of securities held as of December 31, 1999 by correspondence with
the custodian. 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 audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Sub-Accounts as of December 31, 1999,
the results of their operations and the changes in their net assets for the
period from August 25, 1999 (the commencement of operations) through December
31, 1999 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, MA
February 10, 2000
96 FUTURITY SURVIVORSHIP 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--With respect to an Insured, 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 an 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 your Policy.
INSURED--A 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--With respect to an Insured, the 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 younger 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.
A-1 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
MONTHLY FACE AMOUNT CHARGE--A deduction made on a monthly basis for
administration and other expenses.
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 last Insured to die 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 Face Amount 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 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
APPENDIX B
TABLE OF DEATH BENEFIT PERCENTAGES
(Based on the Age of the Younger Insured)
<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>
B-1 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<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 Face Amount Charge and the
Monthly Cost of Insurance. The Expense Charges Applied to Premium are deducted
as a sales load and for our federal, state and local tax obligations. In the
first Policy Year the Expense Charges Applied to Premium are 10% of premiums up
to an amount specified in the policy. The charge on premiums in excess of the
amount specified is currently 5.25% and is guaranteed not to exceed 7.25%. The
charge we will deduct from premiums in Policy Years 2 and after is 5.25% and is
guaranteed not to exceed 7.25%. The Daily Risk Percentage charge is an annual
effective rate of 0.50% and is guaranteed not to exceed an annual effective rate
of 0.80%.
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 -1.36%, 4.64% and 10.64%,
respectively, taking into account the current Daily Risk Percentage charge and
the assumed 0.86% charge for the Funds' advisory fees and operating expenses;
and -1.66%, 4.34% and 10.34%, 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
C-1 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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.
C-2 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
TABLE 1
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
MALE, PREFERRED, AGE 55, NON TOBACCO; AND FEMALE, STANDARD, AGE 55, NON TOBACCO
$1,000,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM $10,000.00
DEATH BENEFIT OPTION A
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.36% NET 4.64%
PREMIUMS ------------------------------------ -------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------ -------------- --------- ---------- ----------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 7,934.12 1,000,000 0 8,444 1,000,000
2 21,525 0 16,177.27 1,000,000 0 17,723 1,000,000
3 33,101 2,474 24,250.40 1,000,000 5,597 27,373 1,000,000
4 45,256 13,069 32,122.64 1,000,000 18,323 37,377 1,000,000
5 58,019 23,422 39,753.74 1,000,000 31,376 47,708 1,000,000
6 71,420 33,611 47,221.43 1,000,000 44,849 58,459 1,000,000
7 85,491 42,213 54,461.76 1,000,000 57,333 69,582 1,000,000
8 100,266 50,580 61,467.53 1,000,000 70,198 81,086 1,000,000
9 115,779 58,728 68,254.93 1,000,000 83,476 93,003 1,000,000
10 132,068 66,658 74,824.01 1,000,000 97,186 105,352 1,000,000
11 149,171 75,256 82,060.79 1,000,000 112,263 119,068 1,000,000
12 167,130 83,545 88,989.03 1,000,000 127,779 133,223 1,000,000
13 185,986 91,495 95,577.61 1,000,000 143,724 147,807 1,000,000
14 205,786 99,029 101,750.54 1,000,000 160,045 162,767 1,000,000
15 226,575 106,157 107,518.23 1,000,000 176,774 178,135 1,000,000
16 248,404 112,827 112,826.72 1,000,000 193,882 193,882 1,000,000
17 271,324 117,603 117,603.11 1,000,000 209,967 209,967 1,000,000
18 295,390 121,776 121,776.02 1,000,000 226,348 226,348 1,000,000
19 320,660 125,258 125,257.47 1,000,000 242,972 242,972 1,000,000
20 347,193 127,940 127,939.87 1,000,000 259,773 259,773 1,000,000
21 375,052 129,692 129,692.17 1,000,000 276,668 276,668 1,000,000
22 404,305 130,361 130,360.78 1,000,000 293,558 293,558 1,000,000
23 435,020 129,761 129,760.76 1,000,000 310,329 310,329 1,000,000
24 467,271 127,677 127,677.09 1,000,000 326,848 326,848 1,000,000
25 501,135 123,868 123,867.51 1,000,000 342,971 342,971 1,000,000
26 536,691 118,061 118,060.61 1,000,000 358,546 358,546 1,000,000
27 574,026 109,954 109,953.14 1,000,000 373,410 373,410 1,000,000
28 613,227 99,213 99,212.58 1,000,000 387,398 387,398 1,000,000
29 654,388 85,463 85,462.19 1,000,000 400,331 400,331 1,000,000
30 697,608 68,242 68,240.98 1,000,000 411,996 411,996 1,000,000
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.64%
---------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
------ --------- --------- ---------
<S> <C> <C> <C>
1 0 8,954 1,000,000
2 0 19,331 1,000,000
3 8,974 30,750 1,000,000
4 24,235 43,289 1,000,000
5 40,690 57,022 1,000,000
6 58,547 72,157 1,000,000
7 76,528 88,777 1,000,000
8 96,144 107,032 1,000,000
9 117,587 127,114 1,000,000
10 141,056 149,222 1,000,000
11 167,720 174,525 1,000,000
12 196,903 202,347 1,000,000
13 228,857 232,940 1,000,000
14 263,825 266,547 1,000,000
15 302,164 303,525 1,000,000
16 344,219 344,219 1,000,000
17 389,013 389,013 1,000,000
18 438,353 438,353 1,000,000
19 492,745 492,745 1,000,000
20 552,771 552,771 1,000,000
21 619,109 619,109 1,000,000
22 692,558 692,558 1,000,000
23 774,068 774,068 1,000,000
24 864,788 864,788 1,000,000
25 966,117 966,117 1,014,423
26 1,078,598 1,078,598 1,132,528
27 1,202,806 1,202,806 1,262,947
28 1,339,927 1,339,927 1,406,923
29 1,491,255 1,491,255 1,565,817
30 1,658,206 1,658,206 1,741,116
</TABLE>
(1) Assumes a $10,000.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequently 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 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
TABLE 2
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
MALE, PREFERRED, AGE 55, NON TOBACCO; AND FEMALE, STANDARD, AGE 55, NON TOBACCO
$1,000,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM $10,000.00
DEATH BENEFIT OPTION A
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6% HYPOTHETICAL 12%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.66% NET 4.34% NET 10.34%
PREMIUMS ----------------------------------- ------------------------------- ---------------------------------
PAID PLUS CASH CASH CASH
POLICY INTEREST 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 10,500 0 7,863.14 1,000,000 0 8,371 1,000,000 0 8,880 1,000,000
2 21,525 0 15,746.91 1,000,000 0 17,269 1,000,000 0 18,854 1,000,000
3 33,101 1,592 23,368.28 1,000,000 4,642 26,418 1,000,000 7,944 29,720 1,000,000
4 45,256 11,653 30,706.96 1,000,000 16,750 35,804 1,000,000 22,493 41,547 1,000,000
5 58,019 21,406 37,737.55 1,000,000 29,076 45,408 1,000,000 38,071 54,403 1,000,000
6 71,420 30,818 44,427.90 1,000,000 41,591 55,201 1,000,000 54,751 68,361 1,000,000
7 85,491 38,489 50,737.64 1,000,000 52,899 65,148 1,000,000 71,241 83,490 1,000,000
8 100,266 45,722 56,610.17 1,000,000 64,306 75,194 1,000,000 88,969 99,857 1,000,000
9 115,779 52,443 61,970.03 1,000,000 75,738 85,265 1,000,000 107,989 117,516 1,000,000
10 132,068 58,560 66,725.58 1,000,000 87,099 95,265 1,000,000 128,352 136,518 1,000,000
11 149,171 64,926 71,731.39 1,000,000 99,271 106,076 1,000,000 151,128 157,933 1,000,000
12 167,130 70,470 75,914.32 1,000,000 111,201 116,645 1,000,000 175,474 180,918 1,000,000
13 185,986 75,081 79,163.60 1,000,000 122,768 126,851 1,000,000 201,480 205,563 1,000,000
14 205,786 78,640 81,362.35 1,000,000 133,845 136,567 1,000,000 229,257 231,979 1,000,000
15 226,575 81,001 82,362.37 1,000,000 144,272 145,633 1,000,000 258,919 260,280 1,000,000
16 248,404 81,955 81,954.37 1,000,000 153,825 153,825 1,000,000 290,566 290,566 1,000,000
17 271,324 79,781 79,780.66 1,000,000 160,776 160,776 1,000,000 322,866 322,866 1,000,000
18 295,390 75,615 75,614.75 1,000,000 166,232 166,232 1,000,000 357,374 357,374 1,000,000
19 320,660 68,891 68,891.03 1,000,000 169,619 169,619 1,000,000 394,112 394,112 1,000,000
20 347,193 59,031 59,030.51 1,000,000 170,335 170,335 1,000,000 433,208 433,208 1,000,000
21 375,052 45,403 45,402.05 1,000,000 167,710 167,710 1,000,000 474,897 474,897 1,000,000
22 404,305 27,294 27,293.33 1,000,000 160,979 160,979 1,000,000 519,547 519,547 1,000,000
23 435,020 3,908 3,907.07 1,000,000 149,265 149,265 1,000,000 567,708 567,708 1,000,000
24 467,271 (*) (*) (*) 131,533 131,533 1,000,000 620,155 620,155 1,000,000
25 501,135 (*) (*) (*) 106,435 106,435 1,000,000 677,912 677,912 1,000,000
26 536,691 (*) (*) (*) 72,121 72,121 1,000,000 742,326 742,326 1,000,000
27 574,026 (*) (*) (*) 26,076 26,076 1,000,000 815,248 815,248 1,000,000
28 613,227 (*) (*) (*) (*) (*) (*) 899,281 899,281 1,000,000
29 654,388 (*) (*) (*) (*) (*) (*) 997,373 997,373 1,047,241
30 697,608 (*) (*) (*) (*) (*) (*) 1,105,763 1,105,763 1,161,051
</TABLE>
(1) Assumes a $10,000.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequently 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.
(*) Policy terminates unless additional premiums are paid.
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 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
TABLE 3
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
MALE, PREFERRED, AGE 55, NON TOBACCO; AND FEMALE, STANDARD, AGE 55, NON TOBACCO
$1,000,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM $12,000.00
DEATH BENEFIT OPTION B
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.36% NET 4.64%
PREMIUMS ------------------------------------ -------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------ -------------- --------- ---------- ----------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 0 9,803.27 1,009,803 0 10,427 1,010,427
2 25,830 0 19,889.51 1,019,890 0 21,780 1,021,780
3 39,722 8,003 29,778.81 1,029,779 11,822 33,598 1,033,598
4 54,308 20,385 39,438.58 1,039,439 26,812 45,866 1,045,866
5 69,623 32,494 48,825.59 1,048,826 42,226 58,558 1,058,558
6 85,704 44,410 58,019.61 1,058,020 58,161 71,771 1,071,771
7 102,589 54,703 66,952.22 1,066,952 73,208 85,457 1,085,457
8 120,319 64,726 75,614.02 1,075,614 88,735 99,623 1,099,623
9 138,935 74,494 84,020.59 1,084,021 104,778 114,305 1,114,305
10 158,481 84,004 92,170.42 1,092,170 121,355 129,521 1,129,521
11 179,006 94,136 100,941.39 1,100,941 139,393 146,198 1,146,198
12 200,556 103,909 109,352.79 1,109,353 157,958 163,402 1,163,402
13 223,184 113,284 117,367.23 1,117,367 177,029 181,112 1,181,112
14 246,943 122,175 124,896.76 1,124,897 196,534 199,256 1,199,256
15 271,890 130,588 131,949.04 1,131,949 215,494 217,855 1,217,855
16 298,084 138,460 138,459.68 1,138,460 236,856 236,856 1,236,856
17 325,589 144,342 144,342.33 1,144,342 256,183 256,183 1,256,183
18 354,468 149,512 149,512.06 1,149,512 275,753 275,753 1,275,753
19 384,791 153,865 153,865.15 1,153,865 295,461 295,461 1,295,461
20 416,631 157,276 157,276.13 1,157,276 315,172 315,172 1,315,172
21 450,063 159,594 159,594.12 1,159,594 334,718 334,718 1,334,718
22 485,166 160,646 160,645.39 1,160,646 353,896 353,896 1,353,896
23 522,024 160,225 160,225.13 1,160,225 372,461 372,461 1,372,461
24 560,725 158,102 158,102.17 1,158,102 390,124 390,124 1,390,124
25 601,361 154,027 154,026.25 1,154,027 406,562 406,562 1,406,562
26 644,030 147,732 147,731.53 1,147,732 421,417 421,417 1,421,417
27 688,831 138,941 138,940.27 1,138,941 434,297 434,297 1,434,297
28 735,873 127,375 127,374.16 1,127,375 444,790 444,790 1,444,790
29 785,266 112,748 112,747.31 1,112,748 452,451 452,451 1,452,451
30 837,129 94,736 94,735.15 1,094,736 456,770 456,770 1,456,770
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.64%
---------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
------ --------- --------- ---------
<S> <C> <C> <C>
1 0 11,051 1,011,051
2 0 23,746 1,023,746
3 15,953 37,729 1,037,729
4 34,044 53,098 1,053,098
5 53,620 69,952 1,069,952
6 74,920 88,530 1,088,530
7 96,690 108,939 1,108,939
8 120,473 131,361 1,131,361
9 146,495 156,022 1,156,022
10 174,989 183,155 1,183,155
11 207,150 213,955 1,213,955
12 242,333 247,777 1,247,777
13 280,813 284,896 1,284,896
14 322,844 325,566 1,325,566
15 368,802 370,163 1,370,163
16 419,032 419,032 1,419,032
17 472,527 472,527 1,472,527
18 531,041 531,041 1,531,041
19 594,988 1,594,988 1,594,988
20 664,801 664,801 1,664,801
21 740,930 740,930 1,740,930
22 823,848 823,848 1,823,848
23 914,041 914,041 1,914,041
24 1,012,018 1,012,018 2,012,018
25 1,118,318 1,118,318 2,118,318
26 1,233,517 1,233,517 2,233,517
27 1,358,237 1,358,237 2,358,237
28 1,493,162 1,493,162 2,493,162
29 1,639,038 1,639,038 2,639,038
30 1,796,646 1,796,646 2,796,646
</TABLE>
(1) Assumes a $12,000.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequently 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 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
TABLE 4
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
MALE, PREFERRED, AGE 55, NON TOBACCO; AND FEMALE, STANDARD, AGE 55, NON TOBACCO
$1,000,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM $12,000.00
DEATH BENEFIT OPTION B
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 0% HYPOTHETICAL 6%
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
NET -1.66% NET 4.34%
PREMIUMS ------------------------------------ -------------------------------
PAID PLUS CASH CASH
POLICY INTEREST AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------ -------------- --------- ---------- ----------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 0 9,686.95 1,009,687 0 10,306 1,010,306
2 25,830 0 19,362.04 1,019,362 0 21,221 1,021,221
3 39,722 6,964 28,740.47 1,028,740 10,693 32,469 1,032,469
4 54,308 18,746 37,799.66 1,037,800 24,982 44,036 1,044,036
5 69,623 30,179 46,511.23 1,046,511 39,570 55,902 1,055,902
6 85,704 41,229 54,839.20 1,054,839 54,426 68,036 1,068,036
7 102,589 50,489 62,738.36 1,062,738 68,147 80,396 1,080,396
8 120,319 59,258 70,145.62 1,070,146 82,032 92,920 1,092,920
9 138,935 67,450 76,977.00 1,076,977 95,993 105,520 1,105,520
10 158,481 74,965 83,130.48 1,083,131 109,918 118,084 1,118,084
11 179,006 82,643 89,447.81 1,089,448 124,664 131,469 1,131,469
12 200,556 89,397 94,841.05 1,094,841 139,144 144,588 1,144,588
13 223,184 95,103 99,186.32 1,099,186 153,204 157,287 1,157,287
14 246,943 99,633 102,354.92 1,102,355 166,675 169,397 1,169,397
15 271,890 102,826 104,187.19 1,104,187 179,346 180,707 1,180,707
16 298,084 104,462 104,461.93 1,104,462 190,931 190,931 1,190,931
17 325,589 102,805 102,804.95 1,102,805 199,610 199,610 1,199,610
18 354,468 99,001 99,000.62 1,099,001 206,421 206,421 1,206,421
19 384,791 92,488 92,487.34 1,092,488 210,665 210,665 1,210,665
20 416,631 82,731 82,730.52 1,082,731 211,635 211,635 1,211,635
21 450,063 69,199 69,198.86 1,069,199 208,582 208,582 1,208,582
22 485,166 51,357 51,356.86 1,051,357 200,717 200,717 1,200,717
23 522,024 28,690 28,689.79 1,028,690 187,224 187,224 1,187,224
24 560,725 700 698.72 1,000,700 167,262 167,262 1,167,262
25 601,361 (*) (*) 0 139,847 139,847 1,139,847
26 644,030 (*) (*) 0 103,745 103,745 1,103,745
27 688,831 (*) (*) 0 57,475 57,475 1,057,475
28 735,873 (*) (*) 0 (*) 0 0
29 785,266 (*) (*) 0 (*) 0 0
30 837,129 (*) (*) 0 (*) 0 0
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.34%
---------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
------ --------- --------- ---------
<S> <C> <C> <C>
1 0 10,926 1,010,926
2 0 23,156 1,023,156
3 14,729 36,505 1,036,505
4 32,006 51,060 1,051,060
5 50,578 66,910 1,066,910
6 70,535 84,145 1,084,145
7 90,603 102,852 1,102,852
8 112,222 123,110 1,123,110
9 135,453 144,980 1,144,980
10 160,345 168,511 1,168,511
11 187,954 194,759 1,194,759
12 217,404 222,848 1,222,848
13 248,739 252,822 1,252,822
14 281,998 284,720 1,284,720
15 317,190 318,551 1,318,551
16 354,256 354,256 1,354,256
17 391,602 391,602 1,391,602
18 430,498 430,498 1,430,498
19 470,467 470,467 1,470,467
20 511,007 511,007 1,511,007
21 551,553 551,553 1,551,553
22 591,473 591,473 1,591,473
23 630,080 630,080 1,630,080
24 666,624 666,624 1,666,624
25 700,169 700,169 1,700,169
26 729,473 729,473 1,729,473
27 752,961 752,961 1,752,961
28 768,655 768,655 1,768,655
29 774,197 774,197 1,774,197
30 767,142 767,142 1,767,142
</TABLE>
(1) Assumes a $12,000.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequently 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.
(*) Policy terminates unless additional premiums are paid.
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-6 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<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 Securities and Exchange Commission 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
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
kp_pontkp_0<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
The depositer 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 it.
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.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectuses consisting of 110 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.
Georges C. Rouhart, FSA, MAAA
Accountants
<PAGE>
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 Last Survivor Flexible Premium Combination Fixed and
Variable Universal Life Insurance Policy
(5)(b) Form of Estate Preservation Rider*.
(5)(c) Form of Maturity Extension With Full Death Benefit 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***
II-2
<PAGE>
(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 Last Survivor Flexible Premium
Combination Fixed and Variable Universal 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 Accountants, 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. 333-94359,
filed with the Securities and Exchange Commission on January 10, 2000.
** 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 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 30th day of
March, 2000.
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT I
(Registrant)
By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
(Depositer)
By: /s/ James A. McNulty, III
---------------------------------
James A. McNulty, III, 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.
<TABLE>
<S> <C> <C>
/s/ James A. McNulty, III President and Director
- --------------------------- (Principal Executive Officer) March 30, 2000
James A. McNulty, III
/s/ Davey Scoon Vice President, Finance and Treasurer
- -------------------------- (Principal Financial and Accounting Officer) March 30, 2000
Davey Scoon
*/s/ Donald A. Stewart Chairman and Director
- -------------------------
Donald A. Stewart
*/s/ C. James Prieur Vice Chairman and Director
- -------------------------
C. James Prieur
*/s/ Richard B. Bailey Director
- -------------------------
Richard B. Bailey
*/s/ Gregory W. Gee Director
- -------------------------
Gregory W. Gee
*/s/ David D. Horn Director
- -------------------------
David D. Horn
*/s/ Angus A. MacNaughton Director
- -------------------------
Angus A. MacNaughton
*/s/ S. Caesar Raboy Director
- -------------------------
S. Caesar Raboy
Director
- -------------------------
William W. Stinson
</TABLE>
By: /s/ Ellen B. King March 30, 2000
- -------------------------------------
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. 333-94359, filed with the Securities and Exchange Commission on
January 10, 2000.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<S> <C>
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 Last Survivor Flexible Premium Combination Fixed and
Variable Universal Life Insurance Policy
1.A(5)(b) Form of Estate Preservation Rider*
1.A(5)(c) Form of Maturity Extension With Full Death Benefit 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.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
1.A(10) Form of Application for Last Survivor Flexible Premium
Combination Fixed and Variable Universal 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 Accountants, Independent Public Accountants
8. Powers of Attorney*
</TABLE>
- --------------------
* Incorporated herein by reference.
<PAGE>
MARKETING COORDINATION AGREEMENT
THIS MARKETING COORDINATION AGREEMENT is entered into as of the 1st day of
January 1998 by and among Sun Life Assurance Company of Canada (U.S.) ("Sun Life
(U.S.)"), a Delaware corporation; Clarendon Insurance Agency Inc. ("Clarendon"),
a Massachusetts corporation; and Sun Life of Canada (U.S.) Distributors, Inc.
("SDC"), a Delaware corporation.
WITNESSETH
WHEREAS, Sun Life (U.S.) proposes to issue and offer for sale certain
Insurance and Annuity Contracts (the "Plans"), some of which are and others of
which are not deemed to be securities under the Securities Act of 1933, as
amended; and
WHEREAS, Clarendon is registered as a broker-dealer with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, Clarendon agrees to serve as general distributor with respect to
the Plans in accordance with the terms and conditions of this Agreement; and
WHEREAS, SDC is registered as a broker-dealer with the SEC under the 1934
Act and is a member of the NASD; and
WHEREAS, SDC proposes to assist Clarendon by coordinating the marketing of
the Plans.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged by all parties, the parties hereto
agree as follows:
I. THE PLANS
A. TYPE OF PLANS
The Plans issued by Sun Life (U.S.) to which this Agreement applies are
listed in Exhibit A. Exhibit A may be amended from time to time as may be agreed
upon by Sun Life (U.S.), Clarendon and SDC. All such amendments shall be
reflected in a revised Exhibit A and, to the extent relevant, a revised Exhibit
F (as relates to the applicable Distribution Allowance).
B. SUSPENSION/RESTRICTION
Sun Life (U.S.) may, at its sole discretion, suspend or restrict in any
manner the sale or method of distribution of all or any of the Plans, including
sales by all or any individuals licensed to sell Sun Life (U.S.)'s products. If
any suspension or restriction is required by any regulatory
<PAGE>
authority having appropriate jurisdiction, written notice shall be given to
Clarendon and SDC immediately upon receipt by Sun Life (U.S.) of notice of such
required suspension or restriction. In all other cases, Sun Life (U.S.) will
provide at least thirty (30) days' prior written notice to Clarendon and SDC of
any such suspension or restriction, except in the case of any breach of this
agreement by a party, which is addressed by Article VI, Para H (Termination).
C. PLAN CHANGES
Sun life (U.S.) may, at its sole discretion, amend, add or delete features
of any or all of the Plans. In the event of any such amendment, addition or
deletion, Sun Life (U.S.) will provide written notice of such change to
Clarendon and SDC. If the change is required by any regulatory authority having
appropriate jurisdiction, written notice shall be given to Clarendon. In any
other cases, written notice shall be given to Clarendon and SDC at least thirty
(30) days prior to the effective date of such change.
II. MARKETING COORDINATION AND SALES ADMINISTRATION
A. DISTRIBUTION AGREEMENTS
Clarendon will distribute the Plans pursuant to one of four different
standard types of agreements with financial intermediaries (collectively
referred to as "Distribution Agreements"). Copies of the Distribution Agreements
are attached as Exhibits B, C, D and E, respectively. Clarendon, or SDC on its
behalf, shall negotiate all Distribution Agreements, subject to approval by Sun
Life (U.S.); provided that all such Distribution Agreements shall be
substantially in the form of the Distribution Agreements attached as Exhibits B,
C, D and E, respectively unless otherwise agreed by Sun Life (U.S.). No
Commission Schedule attached to any Distribution Agreement may provide for
commission payments in excess of specified maximums established from time to
time by Sun Life (U.S.). Clarendon shall retain copies of all executed
Distribution Agreements and all correspondence, memoranda and other documents
relating to the Distribution Agreements.
B. REPRESENTATIVES
2. APPOINTMENT AND TERMINATION OF REPRESENTATIVES
(a) The Distribution Agreements shall provide for the appointment, as
insurance agent, by Sun Life (U.S.) of the financial intermediaries and
their individual representatives. Sun Life (U.S.) reserves the right to
terminate any and all such designations by and will provide written notice
of any such termination to Clarendon and SDC concurrently with notice to
the particular regulatory authority.
(b) Appointments and/or dismissals of individuals as representatives of Sun
Life (U.S.) shall be made on forms supplied by regulatory authorities
having jurisdiction or otherwise as supplied by Sun Life (U.S.), as the
case may be. All such appointments and dismissals shall be subject to all
applicable laws, rules and regulations and to such written
<PAGE>
instructions and rules as Sun Life (U.S.) may establish from time to time
and provide to Clarendon. If requested by Sun Life (U.S.), Clarendon shall
retain copies of all completed forms appointing and/or dismissing agents
and all related correspondence, memoranda and other documents.
(c) Sun Life (U.S.) shall document its licensing and appointment
procedures, which will set forth the then current requirements for
licensing and appointment of representatives in those jurisdictions where
Sun Life (U.S.) transacts an insurance business. Sun Life (U.S.) shall and
also prepare periodic updates of these procedures, which shall be available
to Clarendon at its request.
(d) Clarendon shall have current lists of representatives appointed by Sun
Life (U.S.).
(e) Sun Life (U.S.) shall pay all necessary licensing and appointment fees
(initial and renewal) and other expenses of any type incurred by Clarendon
with respect to Clarendon's licensing and appointment of individuals as
representatives of Sun Life (U.S.), including persons appointed as General
Agents pursuant to the Distribution Agreements.
(f) Clarendon shall be responsible for determining that any individual
soliciting applications for any of Plans is: (i) properly licensed with
state insurance regulatory authorities; (ii) appointed as a representative
of Sun Life (U.S.); (iii) properly licensed, to the extent necessary, under
all applicable securities laws; (iv) associated as a registered
representative with a broker-dealer registered under the 1934 Act who is
also an NASD member and which has executed a Distribution Agreement (in the
case of Plans which are deemed to be securities under the 1934 Act); and
(v) covered by a satisfactory fidelity bond.
2. TRAINING OF REPRESENTATIVES
SDC shall assist Clarendon in training representatives of Sun Life (U.S.)
which have been appointed to solicit applications for the Plans.
3. SUPERVISION OF REPRESENTATIVES
Clarendon shall coordinate the supervision of representatives appointed on
behalf of Sun Life (U.S.) who are associated with broker-dealers in
connection with the offering and sale of the Plans. Clarendon will
establish such rules and procedures as may be necessary to insure proper
supervision of the agents/registered representatives.
4. SALES ASSISTANCE TO REPRESENTATIVES
SDC shall provide sales assistance to representatives appointed on behalf
of Sun Life (U.S.) appointed pursuant to this agreement. This sales
assistance shall include, without limitation, assistance from SDC's field
representatives as well as from SDC's home office
<PAGE>
personnel. SDC shall also prepare sales promotional programs for the Plans
and assist the agents in utilizing such programs. In addition, SDC shall
provide such representatives with sufficient quantities of sales
promotional materials, sample Plans, applications and any necessary service
forms.
5. PAYMENT OF COMMISSIONS TO AGENTS/REGISTERED REPRESENTATIVES
Unless otherwise agreed, all commission payments required to be made
pursuant to the Distribution Agreements shall be made by Sun Life (U.S.)
directly to the parties entitled thereto. In the case of Plans which are
securities, such payments shall be made to Clarendon (or as directed by
it), which, in turn, shall pay the entitled party. Sun Life (U.S.) will
fund a commission account which Clarendon may draw upon to make these
payments.
C. SALES MATERIAL AND OTHER DOCUMENTS
1. SDC'S RESPONSIBILITIES
SDC shall be responsible for the design, preparation, printing and use of
all promotional material to be used in the distribution of the Plans; and
for filing all promotional material with the NASD, when applicable. SDC
shall furnish copies of NASD review letters, when requested.
2. SUN LIFE (U.S.)'S RESPONSIBILITIES
(a) Sun Life (U.S.) shall provide Clarendon and SDC with applications and
sample Plans for sales training purposes, all in sufficient quantities for
use by representatives.
(b) Sun Life (U.S.) shall be responsible for the approval of promotional
material if required by state and other local insurance regulatory
authorities.
3. SUN LIFE (U.S.)'S RIGHT TO APPROVE
Sun Life (U.S.) shall have the right to review and approve or disapprove
sales promotional material proposed for use by SDC and reserves the right
to require modification of any such material or forms to comply with
applicable laws, rules and regulations.
D. ADVERTISING
Neither Clarendon nor SDC shall print, publish or distribute any
advertisements, circulars or other documents relating to the Plans or to Sun
Life (U.S.) unless such advertisement, circular or document shall have been
approved in writing by Sun Life (U.S.). Neither Sun Life (U.S.) nor any of its
agents or affiliates shall print, publish or distribute any advertisement,
circular or other document relating to the Plans unless a copy of such
advertisement, circular or document has
<PAGE>
been provided to SDC. However, nothing herein shall prohibit any person from
advertising annuities in general or on a generic basis.
E. SALES RECORDS; PRODUCTION REPORTS
Clarendon, or Sun Life (U.S.) on behalf of Clarendon, shall prepare and
maintain sales records, production data and production reports and such other
reports and materials relative to the marketing and distribution of Plans as may
be necessary or appropriate in the furtherance of Sun Life (U.S.)'s insurance
business.
III. ADMINISTRATION OF THE PLANS
A. APPOINTMENT AND DUTIES OF MARKETING ADMINISTRATOR
Clarendon is hereby appointed by Sun Life (U.S.) as Marketing Administrator
with respect to the sale and post-issue servicing of Plans. Clarendon shall be
responsible as Marketing Administrator for the timely and proper performance of
such administrative functions as may be delegated to it from time to time by Sun
Life (U.S.). Clarendon shall perform all such functions in accordance with such
administrative standards, practices and procedures as may be established from
time to time by Sun Life (U.S.). At its sole discretion, Clarendon may delegate
some or all of its Marketing Administration duties to Sun Life (U.S.) or to SDC.
B. PLAN FORMS AND APPLICATIONS
Sun Life (U.S.) shall be responsible for the design, preparation and
printing of the policy forms and related documents which are used with the Plans
in sufficient quantities for issuance to Plan owners.
C. SERVICE FORMS
Sun Life (U.S.) shall be responsible for the design, printing and approval
of service forms not included under Para. B above, which the parties jointly
determine to be necessary in conjunction with the sale or servicing of the
Plans. Sun Life (U.S.) agrees to provide Clarendon with copies of all service
forms prior to their initial use, and to amend or chance any such form if
requested by Clarendon.
IV. COMPENSATION
A. AMOUNT AND TIME OF PAYMENT
For performing the marketing coordination services set forth in this
Agreement, Sun Life (U.S.) will pay the compensation as set forth in the
attached Exhibit F - Schedule of Fees to the parties entitled thereto. Sun Life
(U.S.) will pay all compensation due hereunder on a weekly basis, in accordance
with such Schedule of Fees.
<PAGE>
B. CHANGES IN COMPENSATION
Compensation payable under this Agreement may be increased or decreased to
reflect any changes in the marketing coordination responsibilities of Clarendon
or SDC. The Schedule of Fees may be amended or changed only upon mutual
agreement of the parties as to amount and effective date.
C. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving Clarendon or SDC the
right to incur any indebtedness on behalf of Sun Life (U.S.). However, Sun Life
(U.S.) may offset amounts owed it by SDC or Clarendon under this Agreement
against amounts payable to SDC or Clarendon as applicable, for any reason.
V. OTHER PROVISIONS
A. PRODUCT DEVELOPMENT
SDC and Clarendon shall Assist Sun Life (U.S.) in the design and
development of life insurance and annuity products for distribution pursuant to
the Distribution Agreements. This assistance shall include: market research
studies and such other related activity as may be reasonably requested by Sun
Life (U.S.); consulting services with respect to product design; assisting in
the development of sales training, sales promotional and advertising material
relating to new insurance and annuity products. SDC and Clarendon acknowledge
that they have no proprietary rights in such studies and materials and, as among
the parties, all such studies and materials are the exclusive property of Sun
Life (U.S.) and shall constitute proprietary and confidential matter, whether or
not identified as such.
B. OWNERSHIP OF BUSINESS RECORDS
Sun Life (U.S.) shall own all Plan records, tax records, payments records,
Plan descriptions, appointment records, representative's lists and other similar
Plan records maintained by Clarendon or SDC, either on paper or in
machine-readable form, pertaining to the duties and responsibilities of
Clarendon and SDC under or otherwise created in connection with this Agreement.
Such records shall be delivered to Sun Life (U.S.) promptly after its reasonable
request therefor. Clarendon and SDC will maintain all records and accounts in
accordance with Sun Life (U.S.)'s standards or requirements, as communicated
from time to time by Sun Life (U.S.), or otherwise in accordance with generally
accepted industry procedures. At Sun Life (U.S.)'s reasonable request, Clarendon
and SDC will make any such records available to Sun Life (U.S.)'s auditors or to
any governmental authority having jurisdiction over Sun Life (U.S.); but all
such records shall, otherwise, be the sole and exclusive property of Sun Life
(U.S.) and shall constitute proprietary and confidential matter, whether or not
identified as such.
Notwithstanding the foregoing, Sun Life (U.S.), as agent for Clarendon,
shall confirm to each applicant for, and purchaser of, an SEC-registered Plan,
in accordance with Rule 10b-10
<PAGE>
under the 1934 Act acceptance of premiums and such other transactions as are
required by Rule 10b-10 administrative interpretations thereunder. Sun Life
(U.S.) shall maintain and preserve books and records with respect to such
confirmations in conformity with the requirements of Rules 17a-3 and 17a-4 under
the 1934 Act to the extent such requirements apply. The books, accounts and
records of Sun Life (U.S.), Clarendon, SDC, the SEC-registered Plans and as to
all transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. Sun Life (U.S.) shall
maintain, as agent for Clarandon and SDC, such books and records of Clarendon
SDC pertaining to the distribution and servicing of the Plans and required by
the 1934 Act as may be mutually agreed upon by them, including but not limited
to maintaining a record of selling firms and of the payment of commissions and
other payments or service fees to selling firms. In addition, Sun Life (U.S.),
as agent for Clarendon and SDC, shall maintain and preserve such additional
accounts, books and other record as are required of Clarendon and SDC by the
1934 Act. Sun Life (U.S.) shall maintain all such books and records and hold
such books and records on behalf of and as agent for Clarendon and SDC whose
property they are and shall remain, and acknowledges that such books and records
are at all times subject to inspection by the SEC in accordance with Section
17(a) of the 1934 Act, NASD, and all other regulatory bodies having
jurisdiction.
C. APPROVAL OF PRACTICES AND PROCEDURES
Sun Life (U.S.) shall have the right to review and suggest revisions to the
standards, practices and procedures utilized by Clarendon and SDC in fulfilling
their respective obligations under this Agreement. Sun Life (U.S.) reserves the
right, from time to time, to prescribe reasonable rules and regulations
respecting the conduct of the business covered hereby, as relates to the Plans.
D. COMPLAINTS
1. After recording a customer complaint received by either Clarendon or SDC
in the appropriate customer complaint file, Clarendon and SDC shall immediately
forward to Sun Life (U.S.) any complaints received by them relating to the
Plans, including any notice or complaint which alleges activity or omission by a
representative, broker-dealer, or other person appointed on behalf of Sun Life
(U.S.) under this Agreement. All such complaints shall be reflected, as
appropriate in records and reports filed with the NASD by Clarendon and SDC.
2. In the case of complaints or inquiries relating to the Plans distributed
pursuant to the distribution Agreements, Sun Life (U.S.) shall consult with
Clarendon and DSC, as applicable, before responding and thereafter may respond
directly or request Clarendon or SDC to investigate and/or respond to such
complaints or inquiries. In such instances, Clarendon or SDC, as appropriate,
shall promptly forward to Sun Life (U.S.) copies of all documents and other
material relating to such investigations and/or responses. Whichever party to
this Agreement responds, it is expressly acknowledged and agreed that the
complaint resolution process shall confirm to the "fair dealing" standards
established by the NASD.
<PAGE>
E. LIMITATIONS AND AUTHORITY
SDC and Clarendon shall have authority only as expressly granted in this
Agreement. No party to this Agreement shall enter into any proceeding in a court
of law or before a regulatory agency in the name of any other party, without the
express written consent of that party. If any legal or administrative
proceedings are commenced against any party arising out of the obligations,
duties or services performed under this Agreement by any third party or any
federal, state or other governmental or regulatory authority, that party, as the
case may be, shall immediately notify the other parties of this fact.
VI. GENERAL PROVISIONS
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions or provisions of this Agreement shall not be construed as a waiver of
any of such conditions or provision; and this Agreement shall remain in full
force and effect. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provisions, whether or not
similar, nor shall any waiver constitute a continuing waiver.
B. FIDELITY BOND
Clarendon and SDC will maintain whatever fidelity bond as may be required
by Sun Life (U.S.), and such bond shall be of a type and amount and issued by a
reputable company, satisfactory to Sun Life (U.S.).
C. BINDING EFFECT; ENTIRE AGREEMENT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns; but no party may
assign its interest herein, directly or indirectly, without the prior written
consent of the other parties hereto, failing which this Agreement shall be
deemed to terminate automatically as to such party. This Agreement, including
all Exhibits and Schedules hereto, constitutes the sole and entire understanding
of the parties with respect to the marketing coordination services to be
provided with respect to the Plans and supersedes all prior oral or written
agreements between or among the parties with respect to the services
contemplated by this Agreement.
<PAGE>
D. NOTICES
All notices, requests, demands and other communication under this Agreement
shall be in writing, and shall be deemed to have been given on the date of
service if served personally on the party to whom notice is to be given, or as
of the date of mailing, if sent by First Class Mail, Registered or Certified,
postage prepaid and promptly addressed follows:
AMENDMENT #1
MARKETING COORDINATION AGREEMENT
By agreement, the undersigned hereby amend the Marketing Coordination
Agreement ("Agreement") entered into as of the 1st day of January, 1998 as
follows:
1) EXHIBIT F: The applicable Distribution Allowance for the Plans is
amended, as of April 3, 2000, as per the attached Exhibit F.
2) NOTICES: Unless subsequently changed by the parties, in writing, all
notices shall be addressed as follows:
TO SUN LIFE (U.S.):
Sun Life Assurance Company of Canada (U.S.)
One Copley Place
Boston, Massachusetts 02116
Attention: Robert Leach
TO SDC:
Sun Life of Canada (U.S.) Distributors, Inc.
Retirement Products & Services
One Copley Place
Boston, Massachusetts 02116
Attention: Secretary
TO CLARENDON:
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
Attention: Secretary
In witness whereof, each of the undersigned parties has executed this
Amendment #1 by its duly authorized officers, to be effective as of April 3,
2000. Except as expressly amended herein, all other provisions of the
Agreement continue as set forth therein.
Sun Life Assurance Company of Canada (U.S.)
by:________________________________________
by:________________________________________
Sun Life of Canada (U.S.) Distributors, Inc.
by:________________________________________
by:________________________________________
Clarendon Insurance Agency, Inc.
by:________________________________________
by:________________________________________
<PAGE>
EXHIBIT A
LIST OF PLANS ISSUED BY SUN LIFE (U.S.)
Futurity Flexible Payment Deferred Annuity
(variable and fixed)
Futurity Variable Universal Life
As of March 31, 2000
<PAGE>
EXHIBIT B
DISTRIBUTION AGREEMENT
<PAGE>
EXHIBIT C
DISTRIBUTION AGREEMENT
<PAGE>
EXHIBIT D
DISTRIBUTION AGREEMENT
<PAGE>
EXHIBIT E
DISTRIBUTION AGREEMENT
<PAGE>
EXHIBIT F
FUTURITY FLEXIBLE PREMIUM VARIABLE
UNIVERSAL LIFE INSURANCE
For performing the marketing coordination services set forth in this agreement,
Sun Life (U.S.) will pay compensation to Sun Life of Canada (U.S.)
Distributors, Inc. in an amount not to exceed 105% of first year premium paid.
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 "ten day free look" provision of the contract, the following
percentage of commissions will be due to Sun Life of Canada (U.S.)
Chargeback Schedule
-------------------
<TABLE>
<CAPTION>
Month Percentage
<S> <C>
1-6 100
7-12 50
</TABLE>
FUTURITY SURVIVORSHIP VARIABLE
UNIVERSAL LIFE INSURANCE
For performing the marketing coordination services set forth in this
agreement, Sun Life (U.S.) will pay compensation to Sun Life of Canada (U.S.)
Distributors, Inc. in an amount not to exceed 110% of first year premium paid.
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 "ten day free look" provision of the contract, the following
percentage of commissions will be due to Sun Life of Canada (U.S.)
Chargeback Schedule
-------------------
<TABLE>
<CAPTION>
Month Percentage
<S> <C>
1-6 100
7-12 50
</TABLE>
<PAGE>
TYPE 1
------------------------------------------------------------------
ONE SIGNED AND AUTHORIZED COPY OF THIS AGREEMENT SHOULD BE
RETURNED TO THE ANNUITY SERVICE MAILING ADDRESS SHOWN BELOW.
------------------------------------------------------------------
[LOGO] SUN LIFE ASSURANCE
COMPANY OF CANADA (U.S.)
<TABLE>
<S> <C>
EXECUTIVE OFFICE: HOME OFFICE: ANNUITY SERVICE MAILING ADDRESS:
One Sun Life Executive Park Wilmington, Delaware Sun Life of Canada (U.S.)
Wellesley Hills, Massachusetts 02481 Retirement Products and Services
P.O. Box 1024
Boston, Massachusetts 02103
</TABLE>
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SALES OPERATIONS AND GENERAL AGENT AGREEMENT
- -------------------------------------------------------------------------------
AGREEMENT by and between Sun Life Assurance Company of Canada (U.S.)
(hereinafter referred to as Sun Life of Canada (U.S.), a Delaware
Corporation; Clarendon Insurance Agency, Inc. (hereinafter referred to as
Clarendon), a registered broker-dealer with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers Inc.; and ____________________
(hereinafter referred to as Broker-dealer), also a registered broker-dealer
with the Securities and Exchange Commission under the Securities Act of 1934
and a member of the National Association of Securities Dealers Inc.; and
_______________________ (hereinafter referred to as the General Agent), as
follows:
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I WITNESSETH
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WHEREAS, Sun Life of Canada (U.S.) has agreed with General Agent to have
General Agent's insurance agents (herein-after referred to as sub-agents)
solicit and sell those certain Insurance and Annuity Plans, more particularly
described in this Agreement; and, because certain of said Plans may be deemed
to be securities under the Securities Act of 1933 and applicable state laws,
Sun Life of Canada (U.S.) desires that the sub-agents be associated with
Broker-dealer and Broker-dealer hereby covenants that each such sub-agent is
registered as its registered representative with the National Association of
Securities Dealers Inc. (hereinafter referred to as NASD) and may engage in
the offer or sale of such of the Plans which constitute a security under
federal or state law; and
WHEREAS, Sun Life of Canada (U.S.) has agreed with Clarendon that
Clarendon shall be responsible for the training and supervision of such
sub-agents, with respect to the solicitation and offer or sale of any of said
Plans which constitute a security under federal and state law, and also for
the training and supervision of any other "persons associated" with
Broker-dealer who are engaged directly or indirectly therewith; and Clarendon
wishes to, and hereby does, delegate, to the extent legally permitted, said
supervisory duties to Broker-dealer, who hereby agrees to accept such
delegation; and
WHEREAS, Sun Life of Canada (U.S.) has agreed with General Agent that
General Agent will limit solicitations to those jurisdictions where it has
been duly licensed to solicit sales of life insurance policies, fixed
annuity, and variable annuity contracts and General Agent agrees to provide
Sun Life of Canada (U.S.) with a list of such jurisdictions and agrees
further to notify Sun Life of Canada (U.S.) of any change to such list; and
General Agent hereby agrees that General Agent shall be responsible for the
training and supervision of such sub-agents with respect to the solicitation
and sale of any of said Plans which are regulated by the jurisdiction's
insurance department or similar regulatory agency; and
WHEREAS, Sun Life of Canada (U.S.) has established life insurance and
annuity plans for use with groups and for individuals and Sun Life of Canada
(U.S.) agrees to furnish to General Agent and to keep current a list of the
types of plans, (hereinafter referred to as the "Plans") which Sun Life of
Canada (U.S.) has available for offering by the General Agent.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
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II APPOINTMENT OF GENERAL AGENT FOR INSURANCE AND ANNUITY PLANS
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A. APPOINTMENT
Sun Life of Canada (U.S.) hereby appoints General Agent as a general
agent of Sun Life of Canada (U.S.) for the solicitation of sales of the
Plans.
<PAGE>
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III AUTHORITY OF GENERAL AGENT
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A. DISTRIBUTION AUTHORITY
General Agent is authorized to procure, through the sub-agents appointed
by it, applications for the Plans. Sun Life of Canada (U.S.), in its sole
discretion and without notice to General Agent, may suspend sales of any
Plans hereunder or may amend any policies or contracts evidencing such plans.
B. APPOINTMENT OF SUB-AGENTS
General Agent is authorized to appoint sub-agents to solicit sales of the
Plans hereunder. All sub-agents appointed by General Agent pursuant to this
Agreement shall be duly licensed under the applicable insurance laws to sell
the said Plans by the proper authorities within the applicable jurisdictions
where General Agent proposes to offer the Plans and where Sun Life of Canada
(U.S.) is duly authorized to conduct business. Sun Life of Canada (U.S.) will
provide General Agent with a list which shows: (1) the jurisdictions where
Sun Life of Canada (U.S.) is authorized to do business; and (2) any
limitations on the availability of the Plans in any of such jurisdictions.
General Agent agrees to fulfill all requirements set forth in the General
Letter of Recommendation attached as Exhibit A in conjunction with the
submission of licensing/appointment papers for all applicants as sub-agents
submitted by General Agent.
C. SECURING APPLICATIONS
All applications for the Plans covered hereby shall be made on
application forms supplied by Sun Life of Canada (U.S.), and all payments
collected by General Agent or any sub-agent of General Agent shall be
remitted promptly in full, together with such application forms and any other
required documentation, directly to Sun Life of Canada (U.S.) at the address
indicated on such application or to such other address as Sun Life of Canada
(U.S.) may, from time to time designate in writing. Checks or money orders in
payment on any such Plan shall be drawn to the order of "Sun Life Assurance
Company of Canada (U.S.)". All applications are subject to acceptance or
rejection by Sun Life of Canada (U.S.) at its sole discretion.
D. SUPERVISION OF SUB-AGENTS
1. General Agent shall supervise any sub-agents appointed by it to
solicit sales of the Plans hereunder and General Agent shall be responsible,
without regard to any technical distinction between this relationship and
that which exists in law between principal and agent, for all acts and
omissions of each sub-agent within the scope of his agency appointment at all
times. General Agent shall exercise all responsibilities required by the
applicable federal and state law and regulations other than those
responsibilities which under applicable securities laws are the
responsibilities of Broker-dealer; provided however, Broker-dealer shall
continue to have full responsibility under applicable securities laws for
such sub-agents in their capacity as registered representatives including by
example, but without limitation, training and supervisory duties over such
sub-agents. Nothing contained in this Agreement or otherwise shall be deemed
to make any sub-agents appointed by General Agent an employee or agent of Sun
Life of Canada (U.S.). Sun Life of Canada (U.S.) shall not have any
responsibility for the supervision of any sub-agents of General Agent and if
the act or omission of a sub-agent or any other employee of General Agent is
the proximate cause of any claim, damage or liability to Sun Life of Canada
(U.S.) (including reasonable attorneys' fees), General Agent shall be
responsible and liable therefore.
2. Sun Life of Canada (U.S.) may, by written notice to General Agent,
refuse to permit any sub-agent to solicit applications for the sale of any of
the Plans hereunder and may, by such notice, require General Agent to cause
any such sub-agent to cease any such solicitation or sales, and, Sun Life of
Canada (U.S.) may require General Agent to cancel the appointment of any
sub-agent.
3. General Agent is responsible for the selection or appointment of
sub-agents for the sales of the Plans hereunder. General Agent is responsible
for preparation and transmission of the proper appointment and licensing
forms and to insure that all sales personnel are appropriately licensed.
4. General Agent will pay all fees to state insurance regulatory
authorities in connection with obtaining necessary licenses and appointments
for sub-agents appointed hereunder. All fees payable to such regulatory
authorities in connection with the initial appointment of sub-agents who
already possess necessary licenses will be paid by Sun Life of Canada (U.S.).
Any renewal license fees due after the initial appointment of a sub-agent
hereunder will be paid by General Agent.
5. Before a sub-agent is permitted to sell the Plans, General Agent,
Broker-dealer and the sub-agent shall have entered into an agreement pursuant
to which the sub-agent will be appointed a sub-agent of General Agent and a
registered representative of Broker-dealer and in which the sub-agent will
agree that his selling activities relating to the securities-regulated Plans
will be under the supervision and control of Broker-dealer and his selling
activities relating to the insurance-regulated Plans will be under the
supervision and control of General Agent; and that the sub-agent's right to
continue to sell such Plans is subject to his continued compliance with such
agreement.
E. MONEY RECEIVED BY GENERAL AGENT
All money payable in connection with any of the Plans, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any
policyholder, contract
<PAGE>
owner or certificateholder or anyone else having an interest in the Plans is
the property of Sun Life of Canada (U.S.), and shall be transmitted
immediately in accordance with the administrative procedures of Sun Life of
Canada (U.S.) without any deduction or offset for any reason, including by
example but not limitation, any deduction or offset for compensation claimed
by General Agent.
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IV COMPENSATION
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A. COMMISSIONS
Commissions payable to General Agent or any sub-agent in connection with
the Plans shall be paid by Sun Life of Canada (U.S.) to the person(s)
entitled thereto through General Agent or as otherwise required by law. Sun
Life of Canada (U.S.) will provide General Agent with a copy of its current
Commission Schedule. Commissions will be paid as a percentage of premiums or
purchase payments (Premiums and Purchase Payments are hereinafter referred to
collectively as "Payments") received in cash or other legal tender and
accepted by Sun Life of Canada (U.S.) on applications obtained by the various
sub-agents appointed by General Agent hereunder. Upon termination of this
Agreement, all compensation to the General Agent hereunder shall cease,
however, General Agent shall continue to be liable for any chargebacks
pursuant to the provisions of said Commission Schedule or for any other
amounts advanced by or otherwise due SUN LIFE OF CANADA (U.S.) hereunder.
B. TIME OF PAYMENT
Sun Life of Canada (U.S.) will pay any compensation due General Agent
hereunder within fifteen (15) days after the end of the calendar month in
which Payments upon which such compensation is based are accepted by Sun Life
of Canada (U.S.).
C. AMENDMENT OF SCHEDULES
Sun Life of Canada (U.S.) may, upon at least ten (10) days prior written
notice to General Agent change the commission schedule. Any such change shall
be by written amendment of the commission schedule and shall apply to
compensation due on applications received by Sun Life of Canada (U.S.) after
the effective date of such notice.
D. PROHIBITION AGAINST REBATES
If General Agent or any sub-agent of General Agent shall rebate or offer
to rebate all or any part of a Payment on a policy or contract or certificate
issued hereunder, or if General Agent or any sub-agent of General Agent shall
withhold any Payment on any policy or contract or certificate issued
hereunder, the same may be grounds for termination of this Agreement by Sun
Life of Canada (U.S.). If General Agent or any sub-agent of General Agent
shall at any time induce or endeavor to induce any owner of any policy or
contract issued hereunder or any certificate holder to discontinue Payments
or to relinquish any such policy or contract or certificate except under
circumstances where there is reasonable grounds for believing the policy,
contract or certificate is not suitable for such person, any and all
compensation due General Agent hereunder shall cease and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving General Agent the
right to incur any indebtedness on behalf of Sun Life of Canada (U.S.).
General Agent hereby authorizes Sun Life of Canada (U.S.) to set off
liabilities of General Agent to Sun Life of Canada (U.S.) against any and all
amounts otherwise payable to General Agent by Sun Life of Canada (U.S.).
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V. DUTIES OF BROKER DEALER
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A. SUPERVISION OF REGISTERED REPRESENTATIVES
Broker-dealer agrees that it has full responsibility for the training and
supervision of all persons, including sub-agents of General Agent, associated
with Broker-dealer who are engaged directly or indirectly in the offer or
sale of such of the Plans as are subject to the federal securities laws and
that all such persons shall be subject to the control of Broker-dealer with
respect to such persons' securities-regulated activities in connection with
such Plans. Broker-dealer will cause the sub-agents, in their capacity as
registered representatives to be trained in the sale of such of the Plans as
are subject to the federal securities laws; will use its best efforts to
cause such sub-agents to qualify under applicable federal and state laws to
engage in the sale of such policies and/or contracts; and will cause such
sub-agents to be registered representatives of Broker-dealer before such
sub-agents engage in the solicitation of any of such policies and/or
contracts. Broker-dealer shall cause such sub-agent's qualifications to be
certified to the satisfaction of Clarendon; and shall notify Clarendon if any
of said sub-agents cease to be a registered representative of Broker-dealer.
B. REGISTERED REPRESENTATIVES AGREEMENT
Broker-dealer agrees that it shall train and supervise the General
Agent's sub-agents in connection with such of the Plans as are subject to the
federal securities law and agrees that, before a sub-agent shall be permitted
to sell such Plans, such sub-agent will be appointed a registered
representative of Broker-dealer and, along with Broker-dealer and General
Agent, such sub-agent will have entered into the agreement more particularly
described in Section III, Paragraph D5.
<PAGE>
C. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS
Broker-dealer will fully comply with the requirements of the National
Association of Securities Dealers, Inc. and of the Securities Exchange Act of
1934 and all other applicable federal or state laws and will establish such
rules and procedures as may be necessary to cause diligent supervision of the
securities activities of the sub-agents. Upon request by Clarendon,
Broker-dealer shall furnish such appropriate records as may be necessary to
establish such diligent supervision.
D. NOTICE OF SUB-AGENT NONCOMPLIANCE
In the event a sub-agent fails or refuses to submit to supervision of
Broker-dealer in accordance with this Agreement, or otherwise fails to meet
the rules and standards imposed by Broker-dealer on its registered
representatives, Broker-dealer shall certify such fact to Sun Life of Canada
(U.S.) and General Agent and shall immediately notify such sub-agent that he
is no longer authorized to sell the Plans, and Broker-dealer and General
Agent shall take whatever additional action may be necessary to terminate the
sales activities of such sub-agent relating to the Plans.
E. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Broker-dealer shall be provided, without any expense to Broker-dealer,
with prospectuses relating to those of the Plans which are subject to federal
securities laws and such other material as Clarendon determines to be
necessary or desirable for use in connection with sales of those Plans. No
sales promotion materials or any advertising relating to any of the
securities-regulated Plans shall be used by Broker-dealer unless the specific
item has been approved in writing by Clarendon.
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VI GENERAL PROVISIONS
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A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed, or shall constitute
a waiver of any other provisions, whether or not similar, nor shall any
waiver constitute a continuing waiver.
B. INDEPENDENT CONTRACTORS
Both Sun Life of Canada (U.S.) and Clarendon are independent contractors
with respect both to Broker-dealer and to General Agent.
C. LIMITATIONS
No party other than Sun Life of Canada (U.S.) shall have the authority on
behalf of Sun Life of Canada (U.S.) to make, alter, or discharge any policy
or contract or certificate issued by Sun Life of Canada (U.S.), to waive any
forfeiture or to grant, permit, nor to extend the time of making any
Payments, nor to guarantee dividends, nor to alter the forms which Sun Life
of Canada (U.S.) may prescribe or substitute other forms in place of those
prescribed by Sun Life of Canada (U.S.); nor to enter into any proceeding in
a court of law or before a regulatory agency in the name of or on behalf of
Sun Life of Canada (U.S).
D. FIDELITY BOND
General Agent represents that all directors, officers, employees and sub-
agents of General Agent who are licensed pursuant to this agreement as Sun
Life of Canada (U.S.) agents for state insurance law purposes or who have
access to funds of Sun Life of Canada (U.S.), including but not limited to
funds submitted with applications for the Plans or funds being returned to
owners or certificate holders, are and shall be covered by a blanket fidelity
bond, including coverage for larceny and embezzlement, issued by a reputable
bonding company. This bond shall be maintained by General Agent at General
Agent's expense. Such bond shall be, at least, of the form, type, and amount
required under the NASD Rules of Fair Practice, endorsed to extend coverage
to General Agent's life insurance and fixed annuity transactions. Sun Life of
Canada (U.S.) may require evidence, satisfactory to it, that such coverage is
in force and General Agent shall give prompt written notice to Sun Life of
Canada (U.S.) of any notice of cancellation or change of coverage.
General Agent assigns any proceeds received from the fidelity bonding
company to Sun Life of Canada (U.S.) to the extent of Sun Life of Canada
(U.S.)'s loss due to activities covered by the bond. If there is any
deficiency amount, whether due to a deductible or otherwise, General Agent
shall promptly pay Sun Life of Canada (U.S.) such amount on demand and
General Agent hereby indemnifies and holds harm-less Sun Life of Canada
(U.S.) from any such deficiency and from the costs of collection thereof
(including reasonable attorneys' fees).
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns provided that
neither Broker-dealer nor General Agent may assign this Agreement or any
rights or obligations hereunder without the prior written consent of Sun Life
of Canada (U.S.).
<PAGE>
F. REGULATIONS AND SUITABILITY
All parties agree to observe and comply with the existing laws and rules
or regulations of applicable local, state, or federal regulatory authorities
and with those which may be enacted or adopted during the term of this
Agreement regulating the business contemplated hereby in any jurisdiction in
which the business described herein is to be transacted. The parties hereby
expressly confirm that "suitability" requirements, whether arising from
federal securities law (including NASD) or state insurance law, shall be,
respectively, the compliance responsibility of Broker-dealer and General
Agent within their respective supervisory responsibilities as more
particularly in this Agreement; and, in connection therewith, Broker-dealer
and General Agent hereby represent to Sun Life of Canada (U.S.) and Clarendon
that no recommendation shall be made by them (or any sub-agent under their
supervision) to any applicant to purchase a Plan unless they have reasonable
grounds to believe that the purchase of such Plan is suitable for that
applicant, after reasonable inquiry of the applicant concerning such relevant
matters as the applicant's insurance and investment objectives, financial
situation and needs, together with such other relevant information as may be
required under applicable law or by Sun Life of Canada (U.S.) from time to
time.
G. NOTICES
All notices or communications shall be sent to the address shown in sub
paragraph VI M of this Agreement or to such other address as the party may
request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
I. AMENDMENT OF AGREEMENT
Sun Life of Canada (U.S.) reserves the right to amend this Agreement at
any time and the General Agent's submission of an application after notice of
any such amendment has been sent to the other parties shall constitute the
other parties' agreement to any such amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Neither Broker-dealer, General Agent nor any of its sub-agents shall
print, publish or distribute any advertisement, circular or any document
relating to the Plans distributed pursuant to this Agreement or relating to
Sun Life of Canada (U.S.) unless such advertisement, circular or document
shall have been approved in writing by Sun Life of Canada (U.S.) or by
Clarendon, and in the case of items within the scope of Section V, Paragraph
E approved in writing by Clarendon. Provided, however, that nothing herein
shall prohibit Broker-dealer, General Agent or any sub-agent from advertising
life insurance and annuities in general or on a generic basis.
K. GENERAL AGENT AS BROKER DEALER
If Broker-dealer and General Agent are the same person or legal entity,
such person or legal entity shall have the rights and obligations hereunder
of both Broker-dealer and General Agent and this Agreement shall be binding
and enforceable by and against such person or legal entity in both capacities.
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty
(30) days prior written notice; and may be terminated, for cause, by any
party immediately; and shall be terminated if Clarendon or Broker-dealer
shall cease to be a registered Broker-dealer under the Securities Exchange
Act of 1934 and a member of the NASD.
<PAGE>
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M. ADDRESS FOR NOTICES
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<TABLE>
<CAPTION>
<S> <C>
GENERAL AGENT
____________________________________________________ Clarendon Insurance Agency, Inc.
Licensed General Agent of Agency Name: Attn: Roy P. Creedon
One Sun Life Executive Park
Address: ___________________________________________ Wellesley Hills, MA 02481
____________________________________________________ CLARENDON INSURANCE AGENCY, INC.
Tax ID No.:_________________________________________ By /s/ Roy P. Creedon
-----------------------------
____________________________________________________ Roy P. Creedon, Secretary
Print Name and Title of Authorized Officer
By /s/ Anne M. Georges
By__________________________________________________ --------------------------------
Signature and Title of Authorized Officer Date Anne M. Georges, President
Sun Life Assurance Company of Canada (U.S.)
Attn: Ellen B. King
____________________________________________________ One Sun Life Executive Park
NASD BROKER/DEALER Wellesley Hills, MA 02181
SUN LIFE ASSURANCE COMPANY OF
Registered Name: ___________________________________ CANADA (U.S.)
Home/Office Address:________________________________ By /s/ Ellen B. King
---------------------------------
____________________________________________________ Ellen B. King, Secretary
Tax ID No.: ________________________________________
By /s/ C. James Prieur
____________________________________________________ ---------------------------------
Print Name and Title of Authorized Officer C. James Prieur, President
By__________________________________________________
Signature and Title of Authorized Officer Date
</TABLE>
<PAGE>
EXHIBIT A
GENERAL LETTER OF RECOMMENDATION
GENERAL AGENT hereby certifies to Sun Life of Canada (U.S.) that all the
following requirements will be fulfilled in conjunction with the submission
of licensing/appointment papers for all applicants as agents of Sun Life of
Canada (U.S.) submitted by GENERAL AGENT. GENERAL AGENT will, upon request,
forward proof of compliance with same to Sun Life of Canada (U.S.) in a
timely manner.
1. We have made a thorough and diligent inquiry and investigation relative
to each applicant's identity, residence and business reputation and declare
that each applicant is personally known to us, has been examined by us, is
known to be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of a license. Each
individual is trustworthy, competent and qualified to act as an agent for
Sun Life of Canada (U.S.) to hold himself out in good faith to the general
public. We vouch for each applicant.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements
for the registration of each applicant as a registered representative
through our NASD member firm, and each applicant is presently registered as
an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license and all the
findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the
specific state each applicant is requesting a license in, and that, all
such persons have fulfilled the appropriate examination, education and
training requirements.
4. If the applicant is required to submit his picture, his signature,
and securities registration in the state in which he is applying for a
license, we certify that those items forwarded to Sun Life of Canada
(U.S.) are those of the applicant and the securities registration is a
true copy of the original.
5. We hereby warrant that the applicant is not applying for a license
with Sun Life of Canada (U.S.) in order to place insurance chiefly and
solely on his life or property, lives or property of his relatives,
or property or liability of his associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all
risks written by these applicants, to the end that the insurance
interest of the public will be properly protected.
7. We will not permit any applicant to transact insurance as an agent
until duly licensed therefore. No applicants have been given a contract
or furnished supplies, nor have any applicants been permitted to write,
solicit business, or act as an agent in any capacity, and they will not
be so permitted until the certificate of authority or license applied
for is received.
<PAGE>
[LOGO] SUN LIFE ASSURANCE SLPC 5329
COMPANY OF CANADA (U.S.) (8/99)
<PAGE>
One Sun Life Executive Park
Wellesley Hills, MA 02481
[LOGO] SUN LIFE
OF CANADA (U.S.) Tel: (781) 237-6030
Variable Life Insurance Supplement And
Commission Schedule
This Variable Life Insurance Supplement ("Supplement") and the attached
Commission Schedule, form a part of that certain Sales Operation and General
Agent Agreement ("Distribution Agreement") entered into by and between the
parties listed herein. All capitalized terms used in this Supplement shall
carry the meaning assigned in the Distribution Agreement. The specific
purpose of this Supplement is to add the variable life insurance product(s)
offered by Sun Life of Canada(U.S.), as listed on the attached Commission
Schedule (which may be amended, from time to time, by Sun Life of
Canada(U.S), as set forth in the Distribution Agreement). In conjunction
with the availability of such products, the parties hereby confirm that
"suitability" requirements. whether arising from federal securities
law(including NASD) or state insurance law, shall be, respectively, the
compliance responsibility of Broker-dealer and General Agent within their
respective supervisory responsibilities as more particularly set forth in the
Distribution Agreement; and, in connection therewith, Broker-dealer and
General Agent hereby represent to Sun Life of Canada(U.S.) and Clarendon that
no recommendation shall be made by them(or any sub-agent under their
supervision) to any applicant to purchase a variable life insurance policy
unless they have reasonable grounds to believe that the purchase of such
policy is suitable for that applicant, after reasonable inquiry of the
applicant concerning such relevant matters as the applicant's insurance and
investment objectives, financial situation and needs, together with such
other relevant information as may be required under applicable law or by Sun
Life of Canada(U.S.) from time to time.
This Supplement shall be effective when signed by all the following parties
to be effective as of _________________________.
<TABLE>
<S> <C>
GENERAL AGENT
____________________________________________________ Clarendon Insurance Agency, Inc.
Licensed General Agent or Agency Name: Attn: Roy P. Creedon
One Sun Life Executive Park
Address: ___________________________________________ Wellesley Hills, MA 02481
____________________________________________________ CLARENDON INSURANCE AGENCY, INC.
Tax ID No.:_________________________________________
____________________________________________________
____________________________________________________
Print Name and Title of Authorized Officer By /s/ Roy P. Creedon
-----------------------------
By__________________________________________________ Roy P. Creedon, Secretary
Signature and Title of Authorized Officer Date
____________________________________________________
NASD BROKER/DEALER
Registered Name: ___________________________________ Sun Life Assurance Company of Canada (U.S.)
Attn: Ellen B. King
Home/Office Address:________________________________ One Sun Life Executive Park
Wellesley Hills, MA 02481
____________________________________________________
Tax ID. No.:________________________________________ SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
____________________________________________________ By /s/ Ellen B. King
Print Name and Title of Authorized Officer ---------------------------------
Ellen B. King, Secretary
By__________________________________________________
Signature and Title of Authorized Officer Date
</TABLE>
6/99 SLPC5085
<PAGE>
SALES OPERATIONS AND GENERAL AGENT AGREEMENT
COMMISSION SCHEDULE A - SVUL
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 by 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 and
Broker-Dealer in writing that a new Commission Schedule shall take effect
with respect to the Plan(s) listed below.
Commissions will be paid to the Broker-Dealer(or General Agent, if required
by law) in the percentages shown in the following commission schedule:
FIRST YEAR PREMIUM RENEWAL PREMIUM
------------------ ---------------
PLAN UP TO TARGET IN EXCESS OF TARGET YRS. 2-10
- ---- ------------ ------------------- ---------
FUTURITY FLEXIBLE PREMIUM
VARIABLE UNIVERSAL LIFE 90 2 2
INSURANCE
FUTURITY SURVIVORSHIP
VARIABLE UNIVERSAL LIFE 90 2.5 2.5
INSURANCE*
*COMMISSIONS REDUCED BY 10% ON POLICIES WHERE INSURED REACHES AGE 75 WITHIN
THE FIRST 12 MONTHS OF THE POLICY.
Trail Commission: Trail Commissions will be computed at an annual rate of
0.10% 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 Sales Operations and General Agent
Agreement is in force on the date the commission is payable.
Commission Chargeback: In the event that a policy for which a commission has
been paid is surrendered by the policy owner, or is lapsed or returned
pursuant to the so-called "right of return" provision of the policy, the
following percentage of commission will be due and Sun Life of Canada(U.S.)
shall be entitled to collect such amount from all entities which received
commissions, including by set off of future commissions
CHARGEBACK SCHEDULE
-------------------
MONTH PERCENTAGE
----- ----------
1-6 100
7-12 50
A production bonus will be paid by Sun Life of Canada(U.S.) at the end of each
calendar year based on the aggregate amount paid to Broker-Dealer(or General
Agent, if required by law) during the calendar year. A bonus will be earned
that calendar year in accordance with the following schedule:
TARGETED FIRST YEAR PREMIUM ON BONUS
------------------------------ -----
WHICH BONUS IS BASED PERCENTAGE
-------------------- ----------
$5,000,000 and greater 2.5
Any production bonus due to the Broker-Dealer(or General Agent) will be paid
by Sun Life of Canada(U.S.) prior to January 15th of the following year.
V01A 3/24/00
Merrill Lynch
<PAGE>
One Sun Life Executive Park
Wellesley Hills, MA 02481
[LOGO] SUN LIFE
OF CANADA (U.S.) Tel: (781) 237-6030
Variable Life Insurance Supplement And
Commission Schedule
This Variable Life Insurance Supplement and Commission Schedule
("Supplement")is entered into by and among:
Sun Life Assurance Company of Canada (U.S.)(Sun Life of Canada (U.S.), a
Delaware corporation; Clarendon Insurance Agency, Inc. ("Clarendon"), a
registered broker-dealer with the Securities and Exchange Commission under
the Securities Act of 1934 and a member of the National Association of
Securities Dealers, Inc. ("NASD"); ____________________ ("Broker-dealer"),
also a registered broker-dealer with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc.; and ___________________ ("General
Agent").
This Variable Life Insurance Supplement ("Supplement") and the attached
Commission Schedule, amend and form a part of that certain Broker-dealer
Supervisory and Service Agreement ("Distribution Agreement"), dated
__________________ (and incorporated herein). All capitalized terms used in
this Supplement shall carry the meaning assigned in the Distribution
Agreement and the parties to this Supplement hereby adopt and agree to all
provisions of said Distribution Agreement, as amended by this Supplement. This
Supplement adds the variable life insurance product(s) offered by Sun Life of
Canada (U.S.), as listed on the attached Commission Schedule (which may be
amended, from time to time, by Sun Life of Canada (U.S.) as set forth in the
Distribution Agreement). In conjunction with the availability of such
products, the parties hereby confirm that "suitability" requirements, whether
arising from federal securities law (including NASD) or state insurance law,
shall be, respectively, the compliance responsibility of Broker-dealer and
General Agent within their respective supervisory responsibilities as more
particularly set forth in the Distribution Agreement; and, in connection
therewith, Broker-dealer and General Agent hereby represent to Sun Life of
Canada (U.S.) and Clarendon that no recommendation shall be made by them (or
any sub-agent under their supervision) to any applicant to purchase a
variable life insurance policy unless they have reasonable grounds to believe
that the purchase of such policy is suitable for that applicant, after
reasonable inquiry of the applicant concerning such relevant matters as the
applicant's insurance and investment objectives, financial situation and
needs, together with such other relevant information as may be required under
applicable law or by Sun Life of Canada (U.S.) from time to time.
General Agent, as a general agent of Sun Life of Canada (U.S.), is authorized
to solicit sales of the Insurance and Annuity Plans (the "Plans") described
in said Distribution Agreement, including the variable life insurance
product(s) referenced in this supplement, through the sub-agents appointed by
it. General Agent is responsible for the selection and appointment of
sub-agents and General Agent agrees to fulfill all requirements set forth in
the General Letter of Recommendation attached as Exhibit A to the
Distribution Agreement. General Agent and all such sub-agents shall be duly
licensed under the applicable insurance laws to sell the Plans by the proper
authorities within the applicable jurisdictions where Sun Life of Canada
(U.S.) is duly authorized to conduct business. General Agent shall supervise
all sub-agents appointed by it hereunder and General Agent shall be
responsible, without regard to any technical distinction between this
relationship and that which exists in law between principal and agent, for
all acts and omissions of each sub-agent within the scope of the sub-agent's
appointment at all times. General Agent shall exercise all responsibilities
required by applicable state and federal law and regulation (including
published rules and guidelines of the Office of the Controller of the
Currency or state banking regulators, if applicable), other than those
responsibilities which under applicable securities laws are the
responsibility of Broker-dealer; provided however that Broker-dealer shall
continue to have full responsibility under applicable securities laws for
such sub-agents in their capacity as registered representatives, including by
example, but without limitation, training and supervisory duties over such
sub-agents. Broker-dealer hereby represents that all such sub-agents shall,
at all times, be registered representatives associated with and supervised by
Broker-dealer; and that all activities including maintenance of books and
records shall be in compliance with the applicable terms and conditions of
the No-action letter issued by the Securities and Exchange Commission staff
to First of America Brokerage Services, Inc. (dated September 28, 1995).
All compensation payable in connection with the Plans shall
<PAGE>
be paid by Sun Life of Canada (U.S.) to the person entitled thereto, through
Broker-dealer or as otherwise required by law; provided that, upon
termination of the Distribution Agreement all compensation shall cease, but
General Agent shall continue to be liable for any chargebacks and any other
amounts advanced by or otherwise due Sun Life of Canada (U.S.).
This Supplement shall be effective when signed by all the following parties
to be effective as of ________________________________.
<TABLE>
<S> <C>
GENERAL AGENT
____________________________________________________ Clarendon Insurance Agency, Inc.
Licensed General Agent or Agency Name: Attn: Roy P. Creedon
One Sun Life Executive Park
Address: ___________________________________________ Wellesley Hills, MA 02481
____________________________________________________ CLARENDON INSURANCE AGENCY, INC.
Tax ID No.:_________________________________________ By /s/ Roy P. Creedon
-----------------------------
____________________________________________________ Roy P. Creedon, Secretary
Print Name and Title of Authorized Officer
By__________________________________________________
Signature and Title of Authorized Officer Date
Sun Life Assurance Company of Canada (U.S.)
Attn: Ellen B. King
____________________________________________________ One Sun Life Executive Park
NASD BROKER/DEALER Wellesley Hills, MA 02481
SUN LIFE ASSURANCE COMPANY OF
Registered Name: ___________________________________ CANADA (U.S.)
Home/Office Address:________________________________ By /s/ Ellen B. King
---------------------------------
____________________________________________________ Ellen B. King, Secretary
Tax ID. No.:________________________________________
____________________________________________________
Print Name and Title of Authorized Officer
By__________________________________________________
Signature and Title of Authorized Officer Date
</TABLE>
Type 4
6/99 SLPC5232
<PAGE>
EXECUTIVE OFFICE:
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
800-700-6554
[LOGO] SUN LIFE ASSURANCE
COMPANY OF CANADA (U.S.) HOME OFFICE:
Wilmington, Delaware
- --------------------------------------------------------------------------------
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
INSUREDS -
--------------------------------
-
--------------------------------
POLICY NUMBER -
-------------------
- --------------------------------------------------------------------------------
This Policy is a legal contract in which We, Sun Life Assurance Company of
Canada (U.S.), promise to provide the kind of insurance described below. Upon
death of the last Insured to die prior to Maturity, We agree to pay the
Beneficiary such amounts as then become due and payable. Until that time, We
agree to provide You, as Owner, the other rights and benefits of the Policy.
These rights and benefits are subject to the provisions on the pages which
follow.
Signed at Wellesley Hills, Massachusetts, on the Issue Date.
---------------------
---------------------
---------------------
---------------------
---------------------
/s/ Ellen B. King
C. James Prieur, President Ellen B. King, Secretary
- --------------------------------------------------------------------------------
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.
UPON RECEIPT OF DUE PROOF THE POLICY PROCEEDS ARE PAYABLE AT THE DEATH OF THE
LAST INSURED TO DIE PRIOR TO MATURITY AND WHILE THE POLICY IS IN FORCE. THE
CASH SURRENDER VALUE, IF ANY, IS PAYABLE ON MATURITY.
THE POLICY DOES NOT PARTICIPATE IN DIVIDENDS.
FLEXIBLE PREMIUMS ARE PAYABLE WHILE EITHER INSURED IS ALIVE 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
"RIGHT TO RETURN POLICY 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.
SVUL-2000 Page 1-AV10
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
1. POLICY SPECIFICATIONS Page 3
2. TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE
RATES PER $1,000 OF NET AMOUNT AT RISK Page 4
3. DEFINITIONS Page 5
4. GENERAL PROVISIONS Page 8
5. RIGHTS OF OWNERS AND BENEFICIARIES Page 10
6. THE VARIABLE ACCOUNT Page 11
7. PREMIUMS Page 13
8. DEATH BENEFIT Page 14
9. ACCOUNT VALUE Page 15
10. POLICY BENEFITS Page 20
RIDERS AND ENDORSEMENTS
APPLICATION
SVUL-2000 Page 2
<PAGE>
<TABLE>
<CAPTION>
<S><C>
-----------------------------------------------------------------------------------------------------
1. POLICY SPECIFICATIONS
Insureds John Doe
Jane Doe
Policy Number VL0000001
Office ABC Insurance Agency
Issue Age, Sex, Class John Doe
35, Male, Non Tobacco Preferred
Jane Doe
35, Female, Non Tobacco Preferred
Underwriting classification for
additional charges John Doe
Jane Doe
None
Specified Face Amount $250,000
Minimum Specified Face Amount $250,000
Initial Premium (minimum amount required to $ xxx
begin coverage)
Minimum Monthly Premium $ xxx
Planned Periodic Premium $ xxx
Billing Period Annual
Issue Date January 1, 2000
Policy Date January 1, 2000
Maturity January 1, 2065
Protected Period 60 months
Currency United States Dollars
Owner Jean D'Eau
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 Right to Return Period Fixed Account Value
</TABLE>
NOTE: 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.
SVUL-2000 Page 3
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------------
1. POLICY SPECIFICATIONS
Expense Charge Applied to Premium
In Policy Year 1
- percentage applied to the first $xx.xx of Premium 10.00%
- percentage applied to the amount of each Premium in
excess of $xx.xx 7.25%
After Policy Year 1, percentage applied to Premium 7.25%
Monthly Face Amount Charge
Policy Years 1-10 $xxx
Mortality and Expense Risk Percentage .80% (annual)
Daily Risk Charge .0021831% (daily)
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
- -----------------------------------------------------------------------------------------------------
</TABLE>
SVUL-2000 Page 3a
<PAGE>
---------------------------------------------------------------------------
1. POLICY SPECIFICATIONS
Insureds John Doe, Jane Doe
SURRENDER CHARGE ON THE SPECIFIED FACE AMOUNT ON THE POLICY DATE
<TABLE>
<CAPTION>
----------------------------------------------------------
POLICY YEAR SURRENDER CHARGE
----------------------------------------------------------
<S> <C>
1 xxxx
2 Xxxx
3 Xxxx
4 Xxxx
5 Xxxx
6 Xxxx
7 Xxxx
8 Xxxx
9 Xxxx
10 Xxxx
11 Xxxx
12 Xxxx
13 Xxxx
14 Xxxx
15 Xxxx
16 and after 0
----------------------------------------------------------
</TABLE>
Surrender Charges apply upon the surrender of the Policy for its Cash Surrender
Value. Partial Surrender Charges are deducted from the Account Value upon
requested decreases in the Specified Face Amount. See Section 10.
SVUL-2000 Page 3b
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ----------------------------------------------------------------------------------------------------------------
1. POLICY SPECIFICATIONS
NET PREMIUM ALLOCATION PERCENTAGES
AIM VARIABLE INSURANCE FUNDS, INC. MFS/SUN LIFE SERIES TRUST
___% AIM V.I. Capital Appreciation Fund ___% MFS/Sun Life Capital Appreciation Series
___% AIM V.I. Growth Fund ___% MFS/Sun Life Emerging Growth Series
___% AIM V.I. Growth and Income Fund ___% MFS/Sun Life Government Securities Series
___% AIM V.I. International Equity Fund ___% MFS/Sun Life High Yield Series
___% MFS/Sun Life Massachusetts Investors
THE ALGER AMERICAN FUND Growth Series Stocks
___% Alger American Growth Portfolio ___% MFS/Sun Life Massachusetts Investors
___% Alger American Income and Growth Portfolio Trust Series
___% Alger American Small Capitalization Portfolio ___% MFS/Sun Life New Discovery Series
___% MFS/Sun Life Total Return Series
GOLDMAN SACHS VARIABLE INSURANCE TRUST ___% MFS/Sun Life Utilities Series
___% Goldman Sachs V.I.T. CORE-SM- Large Cap
Growth Fund OCC ACCUMULATION TRUST
___% Goldman Sachs V.I.T. CORE-SM- Small Cap ___% OCC Accumulation Trust Equity Portfolio
Equity Fund ___% OCC Accumulation Trust Managed Portfolio
___% Goldman Sachs V.I.T. CORE-SM- U.S. Equity ___% OCC Accumulation Trust Mid Cap Portfolio
Fund ___% OCC Accumulation Trust Small Cap
___% Goldman Sachs V.I.T. Growth and Income Portfolio
Fund
___% Goldman Sachs International Equity Fund SUN CAPITAL ADVISERS, INC (WELLINGTON
MANAGEMENT SUBADVISED FUNDS)
SUN CAPITAL ADVISERS, INC. ___% Sun Capital Blue Chip Mid Cap Fund
___% Sun Capital Money Market Fund ___% Sun Capital Investors Foundation Fund
___% SunCapital Investment Grade Bond Fund ___% Sun Capital Select Equity Fund
___% Sun Capital Real Estate Fund
SUN LIFE OF CANADA (U.S.) FIXED ACCOUNT
GUARANTEE OPTION
___% Fixed Account
</TABLE>
SVUL-2000 Page 3c
<PAGE>
- --------------------------------------------------------------------------------
1. POLICY SPECIFICATIONS
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>
--------------------------------------------------------------------------
DEATH BENEFIT PERCENTAGES ARE BASED ON THE AGE OF THE YOUNGER INSURED.
SVUL-2000 Page 3d
<PAGE>
- --------------------------------------------------------------------------------
2. TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE
RATES PER $1,000 OF NET AMOUNT AT RISK
<TABLE>
<CAPTION>
Policy Monthly Policy Monthly
Year Rate Year Rate
<S> <C> <C> <C>
1 $ 0.000000 34 $ 0.000000
2 35
3 36
4 37
5 38
6 39
7 40
8 41
9 42
10 43
11 44
12 45
13 46
14 47
15 48
16 49
17 50
18 51
19 52
20 53
21 54
22 55
23 56
24 57
25 58
26 59
27 60
28 61
29 62
30 63
31 64
32 65
33
</TABLE>
This Table of Guaranteed Maximum Monthly Cost of Insurance Rates reflects
additional charges due to any underwriting classification shown in Section 1 of
the Policy.
SVUL-2000 Page 4
<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: An 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 an Insured, as specified in
Section 1.
COMPANY: Sun Life Assurance Company of Canada (U.S.).
DAILY RISK CHARGE: 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. Due Proof is required
of the death of each Insured.
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.
INSUREDS: The persons whose lives are insured under this Policy.
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: For each Insured, the age as of the Insured's birthday nearest the
Policy Date shown in Section 1.
ISSUE DATE: The date We produce the Policy from Our systems and specified as
such in Section 1.
SVUL-2000 Page 5
<PAGE>
- --------------------------------------------------------------------------------
MATURITY: The Anniversary on which the younger Insured's Attained Age is 100. If
either Insured is living and the Policy is in force on this date, the Cash
Surrender Value is payable to You. This date may be extended at Your request and
in accordance with the Maturity Date Extension provision in Section 4. 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 FACE AMOUNT CHARGE: An amount deducted from the Account Value on a
monthly basis for administrative and other expenses shown 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
Charge, and deducted from the the Unit Values of the Sub-Acounts 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 either 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 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 last Insured to die 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.
SVUL-2000 Page 6
<PAGE>
- --------------------------------------------------------------------------------
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 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 Face Amount Charges plus
the Monthly Costs of Insurance plus the Policy Debt exceed the Account Value
during the Grace Period.
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: You, Your and Yourself refer to the Owner of the Policy.
SVUL-2000 Page 7
<PAGE>
- --------------------------------------------------------------------------------
4. GENERAL PROVISIONS
ENTIRE CONTRACT
Your entire contract with Us consists of the Policy, including the attached copy
of the Application and any copies of supplemental applications for increases in
the Specified Face Amount.
ALTERATION
Sales representatives do not have the authority either to alter or to 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
At any time before Maturity of the Policy and while either Insured is alive, 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
If the age or sex of either Insured is stated
incorrectly, the amounts payable by Us will be adjusted as follows:
- - Misstatement discovered at death: Upon the death of the last Insured to
die, 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 of each Insured.
- - Misstatement discovered prior to death: Upon the death of the last
Insured to die, the Account Value will be recalculated from the
Policy Date using the Monthly Cost of Insurance Rates based on the
correct age or sex of each Insured.
SUICIDE
If the last surviving
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 last surviving 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.
SVUL-2000 Page 8
<PAGE>
- --------------------------------------------------------------------------------
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 Specified 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
Insureds 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 Specified 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 Insureds 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 Insureds 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
At your request, after the first Policy Year, we will provide You with
illustrations of future Account Values and death benefits. The first
illustration in a Policy Year will be provided free of charge. For each
additional illustration provided in a Policy Year, we may charge a fee not to
exceed $25 per 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 in writing prior
thereto 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 any applicable Monthly Face Amount Charges 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 of the
last Insured.
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.
SVUL-2000 Page 9
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5. RIGHTS OF OWNERS AND BENEFICIARIES
RIGHTS OF OWNER
While either 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 last Insured to die;
- - 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 Changes in the Death
Benefit Option provision 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 designation 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 last Insured
to die. If a Beneficiary is alive at that time, the Beneficiary will be entitled
to payment of the Policy Proceeds as they become due.
SSVUL-1999 Page 10
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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 invests exclusively in a different investment portfolio. Income,
gains and losses, whether or not realized, from the assets of each Sub-Account
are credited to 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 SUB-ACCOUNTS
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 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 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. 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.
SVUL-2000 Page 11
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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 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.
SVUL-2000 Page 12
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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 for each Insured 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 the
guaranteed maximum shown for this Charge 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 Policy Period. Your initial allocation percentages will take effect at
the end of the Right to Return Policy Period.
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 a timely
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.
SVUL-2000 Page 13
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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 of the last Insured to die. The actual Policy Proceeds payable on the date
of the death of the last Insured to die. The Policy Proceeds payable on the
death of the last Insured to die 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. Both Insureds must be living when You
request the increase. You may be required to submit evidence of an Insured's
insurability satisfactory to Us. We will not accept a request for an increase if
the age of either 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.
Both Insureds must be living when You request a change to option B.
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. This increase
in the Specified Face Amount is not subject to evidence of the Insureds'
insurability. 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.
SVUL-2000 Page 14
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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 Charge deductions, Monthly Face
Amount 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 Face
Amount 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 Face Amount 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.
SVUL-2000 Page 15
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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 Face Amount 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 of
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 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.
SVUL-2000 Page 16
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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 the guaranteed maximum shown for this Charge in Section 1.
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 Face Amount 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 Face Amount 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 FACE AMOUNT CHARGE
The Monthly Face Amount Charge is shown in Section 1. The Monthly Face Amount
Charge deduction will be charged proportionately to the amounts in the
Sub-Accounts and the amount of the Fixed Account Value in excess of the Policy
Debt.
SVUL-2000 Page 17
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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) and (2) 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; and
(2) is the monthly rider cost (as described in the riders) for any riders which
are a part of the Policy.
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 Face
Amount 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 each Insured's sex, Issue Age, Class and any
additional charges for underwriting classification.
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
each Insured's sex, Issue Age, Class and any additional charges for underwriting
classification. 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. The
guaranteed maximum Monthly Cost of Insurance rates reflect any additional
charges for underwriting classification 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 to 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.
SVUL-2000 Page 18
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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:
- - an increase in the Specified Face Amount;
- - an increase in supplemental benefits;
- - 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. Unpaid Policy Charges are any overdue Monthly Cost of
Insurance amounts and Mortality and Expense Risk Charges. If the Policy Proceeds
become payable during the grace period, then Unpaid Policy Charges will be
deducted from the amount payable by Us. Net Premium paid will first reduce any
Unpaid Policy Charges and the remainder will be allocated to the Account Value.
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.
SVUL-2000 Page 19
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10. POLICY BENEFITS
BENEFITS AT DEATH
The Policy Proceeds will be paid as they become due upon the death of the last
Insured to die prior to Maturity, in accordance with Section 8. We will make
payment when We receive Due Proof of the death of each Insured.
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.
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.
SVUL-2000 Page 20
<PAGE>
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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;
3. and 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.
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. If on a Valuation
Date the Policy Debt exceeds the Cash Value, the Policy will terminated for no
value, subject to the Grace Period provision as described in the Insufficient
Value provision in Section 9.
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.
SVUL-2000 Page 21
<PAGE>
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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 last Insured to die. Due Proof
of the death of each Insured. 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 ("NYSE") 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 Policy Owners, 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.
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.
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 last Insured to die,
or the date of Maturity.
REINSTATEMENT
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:
- - You make Your reinstatement request within five years from the Policy
termination date;
- - If both Insureds are living at the time We receive Your request for
reinstatement, You will be required to provide evidence of insurability,
satisfactory to Us, with respect to each Insured;
- - If an Insured died before this Policy terminated, You will be required to
provide evidence of insurability, satisfactory to Us, for the surviving
Insured; and
- - You pay an amount sufficient to put the Policy in force.
If an Insured dies after the Policy terminates for insufficient value, You will
not be able to reinstate it.
An amount sufficient to put the Policy in force is not less than:
- - the Unpaid Policy Charges on the Policy Termination Date; plus
- - any excess of the Policy Debt over the Cash Value on the Policy Termination
Date; plus
- - three times the Monthly Cost of Insurance charges applicable at the date of
reinstatement; plus
- - three times the Monthly Face Amount 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.
SVUL-2000 Page 22
<PAGE>
- --------------------------------------------------------------------------------
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 Premium attributable to the amount paid to reinstate the Policy; less
3. the Monthly Face Amount Charge; less the Monthly Cost of Insurance charge
applicable on the date of reinstatement; less
4. any Unpaid Policy Charges at the time of termination.
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.
SVUL-2000 Page 23
<PAGE>
EXECUTIVE OFFICE:
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
800-700-6554
[LOGO] SUN LIFE ASSURANCE
COMPANY OF CANADA (U.S.) HOME OFFICE:
Wilmington, Delaware
- --------------------------------------------------------------------------------
LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE 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.
UPON RECEIPT OF DUE PROOF, THE POLICY PROCEEDS ARE PAYABLE AT THE DEATH OF THE
LAST INSURED TO DIE PRIOR TO MATURITY AND WHILE THE POLICY IS IN FORCE. THE CASH
SURRENDER VALUE, IF ANY, IS PAYABLE ON MATURITY.
THE POLICY DOES NOT PARTICIPATE IN DIVIDENDS.
FLEXIBLE PREMIUMS ARE PAYABLE WHILE EITHER INSURED IS ALIVE PRIOR TO MATURITY.
- --------------------------------------------------------------------------------
SLPC XXXX
SVUL-2000
<PAGE>
PARTICIPATION AGREEMENT
Among
SUN CAPITAL ADVISERS TRUST,
SUN CAPITAL ADVISERS, INC.
and
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
THIS AMENDED AND RESTATED AGREEMENT, made and entered into this 18th
day of August, 1999 by and among SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(hereinafter the "Company"), on its own behalf and on behalf of each segregated
asset account of the Company set forth on Schedule A hereto as may be amended
from time to time (each such account hereinafter referred to as the "Account"),
SUN CAPITAL ADVISERS TRUST, a Delaware business trust (hereinafter the "Fund"),
and SUN CAPITAL ADVISERS, INC. (hereinafter the "Adviser"), a Delaware
corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as (i) the investment vehicle for
certain qualified pension or retirement plans ("Qualified Plans") and (ii) the
investment vehicle for separate accounts established for variable life insurance
policies and variable annuity contracts (collectively, the "Variable Insurance
Products") to be offered by insurance companies which have entered into
participation agreements with the Fund and the Adviser (hereinafter
"Participating Insurance Companies"); and
WHEREAS, the beneficial interests in the Fund are divided into several
series of shares (each designated a "Portfolio"), each representing the interest
in a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has received an order from the Securities and
Exchange Commission, dated April 20, 1999 (File No. 812-23793) that grants
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from
<PAGE>
the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies and to Qualified Plans (hereinafter the "Mixed and Shared Funding
Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an Investment Adviser under
the Investment Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts ("Contracts") under the 1933 Act;
and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life insurance or
variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the Contracts,
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Adviser agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those shares of the Fund
which each Account orders, executing such orders on a daily basis at the net
asset value next computed
2
<PAGE>
after receipt by the Fund or its designee of the order for the shares of the
Fund. For purposes of this Section 1.1, the Company shall be the designee of the
Fund for receipt of such orders from each Account and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund receives notice of
such order by 9:00 a.m. Eastern time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission (the "Commission").
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Commission, and the Fund shall use reasonable efforts to
calculate such net asset value on each day which the New York Stock Exchange is
open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interest of the shareholders of such Portfolio.
1.3. The Fund and the Adviser agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts and
certain Qualified Plans, in accordance with the terms of the Mixed and Shared
Funding Exemptive Order. No shares of any Portfolio will be sold to the general
public.
1.4. The Fund will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Articles I, III, V, and VII of this Agreement is in effect to govern
such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for
3
<PAGE>
redemption. For purposes of this Section 1.5, the Company shall be the designee
of the Fund for receipt of requests for redemption from each Account and receipt
by such designee shall constitute receipt by the Fund; provided that the Fund
receives notice of such request for redemption by 9:00 a.m. Eastern time on the
next following Business Day.
1.6. The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus.
1.7. The Company shall pay for Fund shares by 11:00 a.m. Eastern
time on the next Business Day after an order to purchase Fund shares is made
in accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated (normally 6:30
p.m. Eastern time) and shall use its best efforts to make such net asset value
per share available by 7:00 p.m. Eastern time.
4
<PAGE>
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 2932 of the Delaware Insurance Code and has registered or, prior
to any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Delaware and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states if and to the extent deemed advisable by the Fund or the
Adviser.
2.3. The Fund represents that it intends to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that each Account is properly treated as a
"segregated asset account" for purposes of Treasury Regulation Section
1.817-5(f), that the Contracts are
5
<PAGE>
currently treated as endowment, annuity or life insurance contacts under
applicable provisions of the Code and that it will maintain such treatment and
that it will notify the Fund and the Adviser immediately upon having a
reasonable basis for believing that any Account or Contract has ceased to be so
treated or might not be so treated in the future.
2.5. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund and the Adviser represent that their respective operations
are and shall at all times remain in material compliance with applicable laws of
the State of Delaware to the extent required to perform this Agreement.
2.6. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and that it does and will
comply in all material respects with the 1940 Act.
2.7. The Adviser represents and warrants that the Adviser is and shall
remain duly registered as an investment adviser in all material respects under
all applicable federal and state securities laws and that the Adviser shall
perform its obligations for the Fund in compliance in all material respects with
applicable state and federal securities laws.
2.8. The Fund and Adviser represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.9. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity
6
<PAGE>
bond or similar coverage for the benefit of the Fund, in an amount not less than
the minimal coverage as required currently by entities subject to the
requirements of Rule 17g-1 of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid Bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Fund or the Adviser shall provide the Company, at the
Company's expense, with as many copies of the Fund's current prospectus as the
Company may reasonably request for distribution, at the Company's expense, to
prospective Contract owners and applicants. The Fund or the Adviser shall
provide the Company, at the Fund's or the Adviser's expense, with as many copies
of the Fund's prospectus as necessary for distribution, at the Company's
expense, to existing Contract owners. If requested by the Company in lieu
thereof, the Fund shall provide such documentation (including a final "camera
ready" or diskette copy of the new prospectus as set in type at the Fund's
expense) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for the Fund is
amended) to have the prospectus for the Contracts and the Fund's prospectus
printed together in one document, in which case the Fund will bear its
reasonable share of expenses, as described above, allocated based on the
proportionate number of pages of the Fund's portion of the document.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Adviser (or in the Fund's
discretion, the Prospectus shall state that such Statement is available from the
Fund), and the Adviser (or the Fund), at its expense, shall provide a copy of
such Statement free of charge to the Company and to any owner of a Contract or
prospective owner who requests such Statement.
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to shareholders, and other communications to
shareholders in such quantity
7
<PAGE>
as the Company shall reasonably require for distributing to Contract owners. The
Company will distribute this proxy material and tabulate the votes at the Fund's
or the Adviser's expense.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of
such Portfolio for which instructions have been
received:
so long as and to the extent that the Commission continues to interpret the 1940
Act to require pass-through voting privileges for owners of Variable Insurance
Products. The Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that each of
their separate accounts participating in the Fund calculates voting privileges
in a manner consistent with this Section and with each other.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund, the Adviser or one of their respective affiliates is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee objects to such use within fifteen Business
Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be
8
<PAGE>
amended or supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales literature or other promotional material approved by the
Fund or its designee or by the Adviser, except with the permission of the Fund
or the Adviser or the designee of either.
4.3. The Fund and the Adviser, or its designee, shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee object to such use
within fifteen Business Days after receipt of such material.
4.4. The Fund and the Adviser shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Commission or other regulatory
authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the
9
<PAGE>
above, that relate to the Contracts or each Account, contemporaneously with the
filing of such document with the Commission or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as materials published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Adviser shall pay no fee or other compensation to the
Company under this Agreement, except that: (a) if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Adviser may make payments to the Company for the Contracts if
and in amounts agreed to by the Adviser in writing; and (b) the Adviser may make
payments out of existing fees otherwise payable to the Adviser, past profits of
the Adviser or other resources available to the Adviser, to the extent permitted
by law.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares; preparation
10
<PAGE>
and filing of the Fund's prospectus and registration statement, proxy materials
and reports; setting the prospectus in type; setting in type and printing the
proxy materials and reports to shareholders (including, if so elected, the costs
of printing a prospectus that constitutes an annual report); the preparation of
all statements and notices required by any federal or state law; and all other
expenses set forth in Article III of this Agreement.
ARTICLE VI. DIVERSIFICATION
6.1. Each Portfolio of the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation Section 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts, to the extent such requirements apply to the Portfolio's investments
pursuant to Treasury Regulation Section 1.817-5(f), and any amendments or other
modifications to such Section or Regulations.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict among the interests of the contract owners of all
separate accounts investing in the Fund and determine what action is to be
taken. An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretive letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity contract owners,
11
<PAGE>
variable life insurance contract owners and Plan trustees; (f) a decision by an
insurer to disregard the voting instructions of contract owners; or (g) if
applicable, a decision by a Qualified Plan to disregard the voting instructions
of Plan participants. The Board shall promptly inform the Company if it
determines that an irreconcilable material conflict exists and the implications
thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company and the Adviser will assist the
Board in carrying out its responsibilities under the Mixed and Shared Funding
Exemptive Order by providing the Board with all information reasonably necessary
for the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (I.E., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or series thereof or managed separate
account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position
12
<PAGE>
or would preclude a majority vote, the Company may be required, at the Fund's
election, to withdraw the affected Account's investment in the Fund and
terminate this Agreement with respect to such Account; provided, however that
such withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. No charge or penalty will be imposed as a
result of the withdrawal. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision is
being implemented, and until the end of that six (6) month period the Adviser
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six (6) months after the Board informs the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six (6) month period, the Adviser
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the contracts if an offer to do so has been (a) declined by
vote of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict or (b) pursuant to governing Qualified Plan
documents and applicable law, the Qualified Plan makes the decision without a
vote of its participants. In the
13
<PAGE>
event that the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each of its directors and officers and each person, if any, who controls the
Fund or the Adviser within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contract or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of
the
14
<PAGE>
Fund for use in the Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by or on behalf
of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement or to the Fund, whichever is applicable.
15
<PAGE>
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operations of
the Fund.
8.2. INDEMNIFICATION BY THE ADVISER
8.2(a). The Adviser agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Adviser) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or
16
<PAGE>
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the Fund
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Adviser or Fund by or on behalf of the Company specifically for use
in the Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise specifically
for use in connection with the sale of the Contracts or Fund shares: or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Adviser or persons under its control) or
wrongful conduct of the Fund or Adviser or persons under their control,
with respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus or sales literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not misleading,
if such statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of
the Fund specifically for inclusion therein; or
17
<PAGE>
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including a failure of any Portfolio, whether unintentional
or in good faith or otherwise, to invest in a manner that complies with
the diversification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Adviser; as limited by and in accordance with the provisions of
Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or Account, whichever, is applicable.
8.2(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof,
18
<PAGE>
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Adviser will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.2(d). The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Commission may grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof shall be interpreted and construed
in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon one-year advance written
notice to the other parties unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company if shares of the Portfolios
delineated in Schedule B are not reasonably available to meet the requirements
of the Contracts as determined by the Company within ten (10) days of notice by
Company to Fund of such fact; or
(c) at the option of the Fund upon institution of formal
proceedings against the Company by the NASD, the Commission, the insurance or
securities commission or division of any state or any other regulatory body
regarding the Company's duties under this
19
<PAGE>
Agreement or related to the sale of the Contracts, the administration of the
Contracts, the operation of the Account, or the purchase of the Fund shares; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund by the NASD, the Commission, or any state
securities or insurance department or any other regulatory body; or
(e) at the option of the Company or the Fund upon receipt of
any necessary regulatory approvals and/or the vote of the contract owners having
an interest in the Account (or any subaccount) to substitute the shares of
another investment company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those Portfolio shares had
been selected to serve as the underlying investment media. The Company will give
30 days' prior written notice to the Fund of the date of any proposed vote or
other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable material conflict
exists from the Company's continued investment in the Fund; or
(g) at the option of the Company if any Portfolio of the Fund
ceases to qualify as a Regulated Investment Company under Subchapter M of the
Internal Revenue Code, or under any successor or similar provision, or if the
Company reasonably believes that the Portfolio may fail to so qualify; or
(h) at the option of the Company if any Portfolio of the Fund
fails to meet the diversification requirements specified in Article VI hereof;
or
(i) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines in
its sole judgment exercised in good faith, that either the Fund or the Adviser
has suffered a material adverse change in its business, operations or financial
condition since the date of this
20
<PAGE>
Agreement or is the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of the Company;
or
(k) at the option of the Fund or Adviser, if the Fund or
Adviser respectively, shall determine in its sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Fund or Adviser; or
(l) at the option of the Fund or Adviser in the event any of
the Contracts are not issued or sold in accordance with applicable federal
and/or state law or if any Account or Contract ceased to qualify as annuity
contracts or life insurance contracts, as applicable, under the Code or if the
Fund or Adviser reasonably believes the Account or Contract may fail to so
qualify.
10.2. NOTICE REQUIREMENT
(a) In the event that any termination of this Agreement is
based upon the provisions of Article VII such prior written notice shall be
given in advance of the effective date of termination as required by such
provisions.
(b) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), prompt
written notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the non-terminating parties,
with said termination to be effective: (x) upon receipt of such notice by the
non-terminating parties in the case of terminations based on Sections 10.1(b) -
(d); or (y) in the event of terminations based on Sections 10.1(g) - (i) if the
breaching party has not cured such breach.
(c) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(j) or 10.1(k), prior written notice
of the election to terminate this Agreement for cause shall be furnished by the
party terminating this Agreement to the non-terminating parties. Such prior
written notice shall be given by the party terminating this
21
<PAGE>
Agreement to the non-terminating parties at least 30 days before the effective
date of termination.
(d) In the event that any termination of this Agreement is
based upon the provisions of Section 10.1(l), termination shall be effective
immediately upon such occurrence without notice.
10.3. It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.4. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement pursuant
to Section 10.1 of this Agreement, the Fund may, at its option, or in the event
of termination of this Agreement by the Fund or the Adviser pursuant to Section
10.1(a) of this Agreement, the Company may require the Fund and the Adviser to
continue to make available additional shares of the Fund for so long after the
termination of this Agreement as the Fund or the Company, if the Company is so
requiring, desires pursuant to the terms and conditions of this Agreement as
provided in paragraph (b) below for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, if the Fund so elects to make
available additional shares of the Fund, pursuant to instructions from the
owners of the Existing Contracts, the Company shall be permitted to reallocate
investments in the Fund, redeem investments in the Fund and/or invest in the
Fund upon the making by such owners of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.4 shall not apply to
any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
(b) In the event of a termination of this agreement pursuant
to Section 10.1 of this Agreement, the Fund shall promptly notify the Company
whether the Fund will continue to make available shares of the Fund after such
termination, except that, with respect to a termination by the Fund or the
Adviser pursuant to Section 10.1(a) of this Agreement, the
22
<PAGE>
Company shall promptly notify the Fund whether it wishes the Fund to continue to
make available additional shares of the Fund. If shares of the Fund continue to
be made available after such termination, the provisions of this Agreement shall
remain in effect except for Section 10.1(a) and thereafter the Fund or the
Company may terminate the Agreement, as so continued pursuant to this Section
10.4 upon written notice to the other party, such notice to be for a period that
is reasonable under the circumstances.
10.5. Except as necessary to implement contract owner initiated or
approved transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets), and the Company
shall not prevent contract owners from allocating payments to a Portfolio that
was otherwise available under the Contracts, until 90 days after the Company
shall have notified the Fund or Adviser of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
23
<PAGE>
If to the Fund:
Sun Capital Advisers Trust
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
Attn: Maura A. Murphy, Esq.
If to the Company:
Sun Life Assurance Company of Canada (U.S.)
One Copley Place
Boston, Massachusetts 02116
Attn: Edward M. Shea, Esq.
If to the Adviser:
Sun Capital Advisers, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
Attn: Maura A. Murphy, Esq.
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Fund must look solely to the
property of the Fund, or in the case of a claim relating to a Portfolio, the
assets of that Portfolio for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund. No Portfolio shall
be subject to liability for the obligations of any other Portfolio. 12.2. Except
as otherwise required by law, legal process and regulatory authority, each party
hereto shall treat as confidential the names and addresses of the owners of the
Contracts and all information reasonably identified as confidential in writing
by any other party hereto and, except as permitted by this Agreement shall not
disclose, disseminate or utilize such names and addresses and other confidential
information until such time as it may come into the public domain without the
express written consent of the affected party.
24
<PAGE>
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provision hereof or
otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
Sun Life Assurance Company of Canada (U.S.)
By: _________________________
Robert P. Vrolyk
Title: Vice President and Actuary
By: ________________________
Edward M. Shea
Title: Assistant Vice President
25
<PAGE>
SUN CAPITAL ADVISERS TRUST
By: _________________________
James M.A. Anderson
Title: President
SUN CAPITAL ADVISERS, INC.
By: ________________________
James M.A. Anderson
Title: President
By: ________________________
Maura A. Murphy
Title: Secretary
26
<PAGE>
SCHEDULE A
Sun Life Assurance Company of Canada (U.S.)
on behalf of its segregated accounts
<TABLE>
<CAPTION>
ACCOUNT DATE OF ORGANIZATION
------- --------------------
<S> <C>
Separate Account F July 13, 1989
Separate Account G July 25, 1996
Separate Account I December 1, 1998
</TABLE>
1
<PAGE>
SCHEDULE B
SUN CAPITAL ADVISERS TRUST
Sun Capital Money Market Fund
Sun Capital Investment Grade Bond Fund
Sun Capital Investors Foundation Fund
Sun Capital Select Equity Fund
Sun Capital Blue Chip Mid Cap Fund
Sun Capital Real Estate Fund
<PAGE>
[GRAPHIC] FUTURITY VARIABLE UNIVERSAL LIFE
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
P.O. BOX 81312
1 SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MA 02481 1-800-700-6554
FUTURITY VARIABLE UNIVERSAL LIFE
INSURANCE APPLICATION
INSTRUCTIONS TO AGENT
- Use black ink, it copies better.
- Print legibly.
- Record all answers as given by the Proposed Insured(s).
- Complete the Pre-Authorized Check Plan, if applicable.
- Complete the Temporary Life Insurance Agreement, if applicable.
- Make sure all checks are made payable to Sun Life Assurance Company of
Canada (U.S.).
- Obtain all necessary signatures.
INSTRUCTIONS FOR TEMPORARY LIFE INSURANCE AGREEMENT
- Temporary Life Insurance Agreement is valid for 90 days.
- All questions on the Temporary Life Insurance Agreement must be
answered, and the Insured(s) and owner(s) signatures obtained on the
appropriate lines.
- The Application must be bound with an amount equal to the initial
premium specified in the illustration.
- The date on the check, Temporary Life Insurance Agreement, and initial
Application must all be the same. Otherwise, the money will be refunded.
- The initial Application must have a designated owner and beneficiary.
- Do not take money if the face amount exceeds $2,000,000 on a single life
application, $4,000,000 on a joint and last survivor application, or if
any of the questions on the Temporary Life Insurance Agreement are
answered "Yes."
- If money is taken on Applications exceeding $2,000,000 on a single life
application, $4,000,000 on a joint and last survivor application, or any
"Yes" answer(s) are given on the Temporary Life Insurance Agreement, all
monies paid will be refunded immediately to the contract owner.
INSTRUCTIONS FOR PRE-AUTHORIZED CHECKING
Complete Pre-Authorized Checking form.
- Obtain necessary signature(s).
- Elect a draft day of the 1st, 10th, or 20th day of the month.
- Collect initial premium, shown on page two of the illustration, along
with void check from account to be drafted.
- If backdating, collect premium for each backdated month.
<PAGE>
PRIVACY INFORMATION NOTIFICATION
Sun Life Assurance Company of Canada (U.S.) ["Sun Life (U.S.)"] provides
insurance, annuities and other financial services to our customers, and as part
of these services, we are entrusted with confidential information. Sun Life
(U.S.) takes this responsibility seriously and all of our employees and our
authorized representatives recognize the importance of maintaining
confidentiality. Sun Life (U.S.) gathers information about you to determine fair
and reasonable charges for your insurance. Once you are a policyholder, we will
need information about you to provide a variety of services, to reinstate a
policy or to evaluate requests for changes in coverage.
CONFIDENTIALITY
Life insurance companies are among the largest gatherers of information about
individuals. Sun Life (U.S.) has long been aware of the importance of guarding
the confidentiality of such information and we have internal standards and
controls governing its use. All employees must follow the procedures outlined in
our Code of Business Conduct and Business Conduct Guide. Other than as required
or permitted by law, the information gathered will not be released to anyone
without your authorization or consent.
AUTHORIZATION FOR INFORMATION
Your signed authorization will allow Sun Life (U.S.), or authorized
representatives of Sun Life (U.S.) to gather information from physicians, health
care providers, hospitals, medically related facilities, specialized clinics
dealing in substance abuse and treatment, mental health facilities, the Medical
Information Bureau, other insurance companies to which you have applied,
consumer reporting agencies, or public records such as a motor vehicle record.
Your signed authorization also allows Sun Life (U.S.) to share this information
with the Medical Information Bureau, reinsurers used by Sun Life (U.S.) and
other insurance companies to which you have applied for coverage.
THE UNDERWRITING PROCESS
Underwriting is a process by which an insurance company determines fair and
reasonable charges for the risk we are asked to consider. Underwriting may start
with the submission of a formal or informal Application which contains medical
information needed to evaluate the risks. The information obtained as part of
this process may consist of a medical examination, blood and urine tests,
special tests, medical records from health care providers or hospitals, motor
vehicle reports or investigative consumer reports. Using this information the
underwriters will further evaluate the risk based on other factors, such as
tobacco use, driving record or hazardous activities.
After the evaluation process is completed, charges and the terms of the contract
may be altered or the underwriter may find the risk to be unacceptable
altogether. The majority of contracts are issued as applied for. If we increase
your charges or do not accept the risk, you will be notified. You have the right
to request in writing the reason for this action within 30 days of our decision.
Due to the confidential nature of the decision, a written authorization and
request to our medical director will be required. We will promptly forward the
requested information. Our policy is to respond through your attending
physician, as they are familiar with your medical history and would be better
equipped to answer any questions you may have concerning the medical findings
leading to our decision. In those states that require the release of information
directly to you we will do so upon receipt of your written request. In those
states that prohibit the release of sensitive information directly to the
prospective Insured we will do so through a named physician or health
department.
PLEASE DIRECT THIS TYPE OF REQUEST TO: SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.)
ATTN. MEDICAL DIRECTOR, SUN CODE 1294
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MA 02481
TO BE LEFT WITH PROSPECTIVE INSURED(S)
<PAGE>
LABORATORY TESTING
To assist in determining your eligibility for insurance, Sun Life (U.S.) will
request some lab testing to be completed. This could include an analysis of
blood, urine and/or saliva obtained as part of your insurance exam. The testing
is done by a licensed laboratory and the results will be sent directly to Sun
Life (U.S.)
The blood testing may include tests for HIV antibody, diabetes, kidney and liver
functions, hepatitis, and cholesterol, as well as other tests. Urine testing
will include tests for diabetes, kidney function, prescription medications,
drugs of abuse and nicotine/cotinine tests. As with the rest of your medical
information all test results are treated confidentially and shared only with
your authorization and consent, except as required by law. Some states require
the reporting of positive test for HIV and for hepatitis to the state department
of health.
INFORMATION EXCHANGE
With your signed authorization Sun Life (U.S.) and its reinsurers may make a
brief report on the information received in some Applications to the Medical
Information Bureau ("MIB, Inc.") The MIB, Inc. is a non-profit membership
organization of life insurance companies which operates an information exchange
on behalf of its members. Upon request by another insurance member company to
which you have applied for life or health insurance coverage, or to which a
claim has been submitted, and to whom you have given a signed authorization, The
MIB, Inc. will supply such a 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 Fair Credit Reporting Act. The
address of the MIB, Inc. information office is:
MEDICAL INFORMATION BUREAU, INC.
P.O. BOX 105
ESSEX STATION, BOSTON, MA 02112
TEL # (617) 426-3660
FEDERAL FAIR CREDIT REPORTING ACT
As part of our underwriting , an investigative consumer report may be requested.
This report obtained through an independent reporting service may include
information concerning your character, general reputation, personal
characteristics and mode of living. This information is obtained through
personal interviews with you, your friends, neighbors and associates. If a
report is requested in connection with your Application, you have the right to
make a written request as to the nature and scope of the report under the Fair
Credit Reporting Act. If information from a consumer report is used in our
underwriting decision, you will be notified of the source of this information.
If you choose to obtain the information, you have 60 days from notification to
request the information. Your written request should be directed to:
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ATTN: UNDERWRITING DEPT. SUN CODE 1215
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MA 02481
MISREPRESENTATION OF FACTS
Any person who knowingly and with intent to defraud any insurance company, files
an Application for insurance or submits a change to a current policy or files a
claim, containing any materially false information or conceals any material
information may be guilty of a fraudulent act, which is a crime, and subject to
criminal and civil penalties.
TO BE LEFT WITH PROSPECTIVE INSURED(S)
<PAGE>
[GRAPHIC] FUTURITY VARIABLE UNIVERSAL LIFE
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
P.O. BOX 81312
1 SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MA 02481 1-800-700-6554
<TABLE>
<CAPTION>
<S><C>
PART ONE OF APPLICATION FOR VARIABLE UNIVERSAL LIFE INSURANCE
- -----------------------------------------------------------------------------------------------------------------
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
----------- ----------- ----------- --------------------------------------------
TELEPHONE # SEX / / Male / / Female
-------------------------------------
PERMANENT U.S. RESIDENT? / / Yes / / No
U.S. CITIZEN? / / Yes / / No
OCCUPATION EMPLOYER
-------------------------------------- --------------------------------------------------
EMPLOYER'S ADDRESS
-----------------------------------------------------------
CITY STATE ZIP
-------------------------------------------- --------------------------- -----------------
- -----------------------------------------------------------------------------------------------------------------
A. SECOND PROPOSED INSURED
(COMPLETE ONLY FOR FUTURITY LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE)
- -----------------------------------------------------------------------------------------------------------------
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 / /
----------- ----------- ----------- ---------- ---------- -----------
TELEPHONE # SEX / / Male / / Female
-------------------------------------
PERMANENT U.S. RESIDENT? / / Yes / / No
U.S. CITIZEN? / / Yes / / No
OCCUPATION EMPLOYER
------------------------------------------- -------------------------------------------
EMPLOYER'S ADDRESS
------------------------------------------------------------------------------------------
CITY STATE ZIP
------------------------------------------------- ------------------------------ -----------
<PAGE>
<CAPTION>
<S><C>
- ------------------------------------------------------ ----------------------------------------------------
B. OWNER INFORMATION C. CONTINGENT OWNER INFORMATION
- ------------------------------------------------------ ----------------------------------------------------
NAME NAME
----------------------------------------------- -----------------------------------------------
ADDRESS ADDRESS
-------------------------------------------- --------------------------------------------
CITY CITY
----------------------------------------------- -----------------------------------------------
STATE ZIP STATE ZIP
------------------- --------------------- ------------------- ---------------------
SOCIAL SECURITY RELATIONSHIP TO INSURED(S)
------------------------------------ -------------------------
DATE OF BIRTH / / SOCIAL SECURITY OR TAX IDENTIFICATION NO.
------------ ------------ ------------ ----------
PERMANENT U.S. RESIDENT? / / YES / / NO DATE OF BIRTH / /
------------ ------------ ------------
U.S. CITIZEN? / / YES / / NO PERMANENT U.S. RESIDENT? / / YES / / NO
RELATIONSHIP TO INSURED(S) U.S. CITIZEN? / / YES / / NO
-------------------------
TRUST DATE / /
------------ ------------- --------------
STATE TRUST ESTABLISHED IN
-------------------------
TAX IDENTIFICATION NO.
-----------------------------
- -------------------------------------------------------------------------------------------------------------
D. BENEFICIARY INFORMATION
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
<S><C>
NAME RELATIONSHIP TO INSURED(S) SOCIAL SECURITY NUMBER
/ / PRIMARY / /
---------------------- -------------------------- ----------------------------
/ / PRIMARY / / CONTINGENT / /
---------------------- -------------------------- ----------------------------
/ / PRIMARY / / CONTINGENT / /
---------------------- -------------------------- ----------------------------
Unless otherwise specified, the proceeds will be divided equally among all primary Beneficiaries who survive
the Insured(s). If no primary Beneficiary survives the Insured(s), then the proceeds will be divided equally
among all contingent Beneficiaries. If no Beneficiary (primary or contingent) is living, then the proceeds
for a single life policy will be paid to the Insured's estate, or in the case of a joint life policy, the
estate of the last Insured to die.
- -------------------------------------------------------------------------------------------------------------
E. PLAN, AMOUNT, DEATH BENEFIT OPTION
- -------------------------------------------------------------------------------------------------------------
Indicate plan:
<CAPTION>
<S><C>
/ / FUTURITY FLEXIBLE PREMIUM / / FUTURITY LAST SURVIVOR / / OTHER
VARIABLE UNIVERSAL LIFE FLEXIBLE PREMIUM VARIABLE -----------------------
INSURANCE (SINGLE LIFE) UNIVERSAL LIFE INSURANCE -----------------------------
-----------------------------
SPECIFIED FACE AMOUNT (EXCLUDING SUPPLEMENTAL BENEFITS) $
----------------------------
/ / DEATH BENEFIT OPTION A (specified face amount) / / DEATH BENEFIT OPTION B (specified face
amount plus account value)
<PAGE>
<CAPTION>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
F. SUPPLEMENTAL BENEFITS
- ---------------------------------------------------------------------------------------------------------------------------------
/ / FUTURITY FLEXIBLE PREMIUM VARIABLE / / FUTURITY SURVIVORSHIP / / OTHER
UNIVERSAL LIFE INSURANCE (SINGLE LIFE) VARIABLE UNIVERSAL LIFE -------------------------
/ / Payment of Stipulated Amount INSURANCE (JOINT AND LAST SURVIVOR) -------------------------
Rider $_______________ / / Estate Preservation Rider -------------------------
/ / to age 65 / / to age 70 / / Maturity Extension Rider -------------------------
/ / Other -------------------------
/ / Accidental Death Benefit Rider -------------------------
Face Amount $ _____________
/ / Waiver of Monthly Deductions Rider
/ / Other _________________________
- ---------------------------------------------------------------------------------------------------------------------------------
G. PREMIUM PAYMENT PLAN
- ---------------------------------------------------------------------------------------------------------------------------------
PLANNED PERIODIC PREMIUM AMOUNT $____________________________________(SUBJECT TO SUN LIFE (U.S.) LIMITATIONS)
FREQUENCY: / / Monthly * / / Quarterly / / Semi-Annually / / Annually
* / / Pre-Authorized Checking Plan Form must be completed.
- ---------------------------------------------------------------------------------------------------------------------------------
H. ADVANCED PAYMENT
- ---------------------------------------------------------------------------------------------------------------------------------
/ / Amount paid with Application $_________________________(REFER TO TEMPORARY LIFE INSURANCE AGREEMENT)
- ---------------------------------------------------------------------------------------------------------------------------------
I. CORRECTIONS OR AMENDMENTS (for Sun Life (U.S.) use only)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
J. OTHER INSURANCE
- ---------------------------------------------------------------------------------------------------------------------------------
Is there insurance in force and/or pending on the Proposed Insured(s) with any company including Sun Life (U.S.) and its
affiliates?
/ / Yes / / No
IF YES, COMPLETE THE FOLLOWING INFORMATION:
COMPANY BUSINESS OR PERSONAL ISSUE YEAR OR PENDING TOTAL AMOUNT
PROPOSED INSURED:
/ / /
- ---------------------------- ------------------------------- ---------------------------------- ------------------------------
/ / /
- ---------------------------- ------------------------------- ---------------------------------- ------------------------------
2ND PROPOSED INSURED:
/ / /
- ---------------------------- ------------------------------- ---------------------------------- ------------------------------
/ / /
- ---------------------------- ------------------------------- ---------------------------------- ------------------------------
Has an Application for insurance on the Proposed Insured(s) life(lives) been
declined or offered on a basis other than applied for?
/ / Yes / / No IF YES, PROVIDE DETAILS:
---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
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. / / Yes / / No
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
If a replacement is involved, is it intended as an IRC Section 1035 exchange? / / Yes / / No
- ---------------------------------------------------------------------------------------------------------------------------------
L. LIFESTYLE INFORMATION ON PROPOSED INSURED(S)
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PROPOSED INSURED 2ND PROPOSED INSURED
<S> <C> <C>
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?
IF YES, PROVIDE DETAILS:___________________________________ / / Yes / / No / / Yes / / No
2. Have you, the Proposed Insured, previously used tobacco or nicotine
products but have since stopped?
IF YES, DATE STOPPED:______________________________________ / / Yes / / No / / Yes / / No
3. Do you, the Proposed Insured, plan to travel or reside outside of the
U.S. in the next two years?
IF YES, PROVIDE DETAILS:___________________________________ / / Yes / / No / / Yes / / No
4. Have you, the Proposed Insured, within the past two years flown as a pilot
or co-pilot in any type of aircraft?
IF YES, AN AVIATION QUESTIONNAIRE IS REQUIRED ON THE PROPOSED INSURED. / / Yes / / No / / Yes / / No
5. Have you, the Proposed Insured, within the past two years participated
in scuba diving, parachuting, hang gliding, motorized racing or any other
hazardous sport?
IF YES, ADDITIONAL INFORMATION MAY BE REQUIRED. / / Yes / / No / / Yes / / No
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? / / Yes / / No / / Yes / / No
b. had an operator's license restricted, suspended or revoked? / / Yes / / No / / Yes / / No
c. been charged with operating under the influence of alcohol and/or
drugs? / / Yes / / No / / Yes / / No
IF YES, PROVIDE DETAILS:___________________________________
- ---------------------------------------------------------------------------------------------------------------------------------
M. FAMILY HISTORY OF PROPOSED INSURED(S)
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1. Family History of the Proposed Insured(s)
AGE IF LIVING AGE OF DEATH STATE OF HEALTH OR CAUSE OF DEATH
PROPOSED 2ND PROPOSED PROPOSED 2ND PROPOSED PROPOSED 2ND PROPOSED
INSURED INSURED INSURED INSURED INSURED INSURED
<S> <C> <C> <C> <C> <C> <C>
FATHER
-------------- -------------- -------------- -------------- -------------- --------------
MOTHER
-------------- -------------- -------------- -------------- -------------- --------------
BROTHER(S)
-------------- -------------- -------------- -------------- -------------- --------------
SISTER(S)
-------------- -------------- -------------- -------------- -------------- --------------
2. Has any parent, brother or sister of the Proposed Insured(s) had diabetes, heart disease or high
blood pressure? / / Yes / / No
IF YES, PROVIDE DETAILS:_______________________________________________________
<PAGE>
<CAPTION>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
N. HEALTH INFORMATION - Complete for non-medical application of Proposed Insured(s)
- ---------------------------------------------------------------------------------------------------------------------------------
1. Proposed Insured's height: Proposed Insured's weight:
--------------------- -------------------
2nd Proposed Insured's height: 2nd Proposed Insured's weight:
-------------------- --------------------
2. Name and address of primary physician or health care provider of the Proposed Insured(s):
PROPOSED INSURED 2ND PROPOSED INSURED
Primary Health Care Provider Medical Specialist seen Primary Health Care Provider Medical Specialist seen
---------------------------- ---------------------------- ---------------------------- ----------------------------
---------------------------- ---------------------------- ---------------------------- ----------------------------
---------------------------- ---------------------------- ---------------------------- ----------------------------
Date last seen: Date last seen:
------------------------------------------- --------------------------------------------
Reason for visit: Reason for visit:
----------------------------------------- -------------------------------------
For all yes responses to questions 3-8c give diagnosis, dates, duration, names and addresses of attending physicians and
medical facilities in the space provided at the end of this section.
<CAPTION>
PROPOSED 2ND PROPOSED
INSURED INSURED
<C> <C> <C>
3. Have you, the Proposed Insured, had a change of weight of more than
10 pounds within the past? 12 months? / / Yes / / No / / Yes / / No
4. Are you, the Proposed Insured, being treated by diet, drugs or other means? / / Yes / / No / / Yes / / No
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? / / Yes / / No / / Yes / / No
b. diabetes, sugar in the urine, thyroid, or other glandular (endocrine) disorder? / / Yes / / No / / Yes / / No
c. kidney, bladder, urinary, reproductive organ or prostate disorder? / / Yes / / No / / Yes / / No
d. protein (albumin), blood or pus in the urine, sexually transmitted disease or
venereal disease? / / Yes / / No / / Yes / / No
e. cancer, tumor, polyp, or disorder of the skin or breast? / / Yes / / No / / Yes / / No
f. asthma, pneumonia, emphysema, or any other respiratory or lung disorder? / / Yes / / No / / Yes / / No
g. seizure, convulsion, fainting, loss of consciousness, tremor, paralysis or
other disorder of the nervous system? / / Yes / / No / / Yes / / No
h. anxiety, depression, stress, or any other psychological or emotional
condition or disorder? / / Yes / / No / / Yes / / No
i. colitis, hepatitis, ulcers, or other disorders of the stomach, liver or
digestive system? / / Yes / / No / / Yes / / No
j. arthritis, gout, back or joint pain, bone fracture, or muscle disorder? / / Yes / / No / / Yes / / No
k. anemia, bleeding, or blood disorder? / / Yes / / No / / Yes / / No
l. acquired Immune Deficiency Syndrome (AIDS) or AIDS-related complex? / / Yes / / No / / Yes / / No
m. a positive blood test for antibodies to the AIDS (Human Immunodeficiency
Virus) virus? / / Yes / / No / / Yes / / No
6. Have you, the Proposed Insured:
a. regularly used amphetamines, marijuana, cocaine, hallucinogens, heroin or
other drugs except as prescribed by a physician? / / Yes / / No / / Yes / / No
b. been treated or counseled for alcoholism or drug abuse? / / Yes / / No / / Yes / / No
c. been advised to reduce consumption of alcohol? / / Yes / / No / / Yes / / 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? / / Yes / / No / / Yes / / No
8. Other than previously stated, have you, the Proposed Insured, within the past
five years:
a. had a checkup, consultation, illness, surgery or been hospitalized? / / Yes / / No / / Yes / / No
b. had an electrocardiogram, stress or exercise test, x-ray, blood test or
other diagnostic test? / / Yes / / No / / Yes / / No
c. been advised to have, or scheduled, any diagnostic test, hospitalization
or surgery which was not completed? / / Yes / / No / / Yes / / No
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
PROPOSED INSURED - DETAILS TO AFFIRMATIVE ANSWERS TO QUESTIONS 3-8c
- ------------------------------------------------------------------------------------------------------------------------------------
QUESTION DATE DURATION DIAGNOSIS NAME AND ADDRESSES OF ATTENDING
NUMBER PHYSICIANS AND MEDICAL FACILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2ND PROPOSED INSURED - DETAILS TO AFFIRMATIVE ANSWERS TO QUESTIONS 3-8c
- ------------------------------------------------------------------------------------------------------------------------------------
QUESTION DATE DURATION DIAGNOSIS NAME AND ADDRESSES OF ATTENDING
NUMBER PHYSICIANS AND MEDICAL FACILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
O. PLAN USE/SUITABILITY
- ---------------------------------------------------------------------------------------------------------------------------------
This policy is intended to be used primarily for (check one):
/ / Income Replacement / / Supplemental Retirement Income / / Estate Plan / / Charitable Gift
/ / Split Dollar / / Deferred Compensation Plan / / Key Person / / Bonus Plan
/ / Business Continuity / / Other________________________
1. Total household income $___________________________ Total household net worth $___________________________
2. 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? / / Yes / / No
3. Has it been acknowledged that the policy, as applied for, is in accord with the insurance and financial objectives
which have been expressed? / / Yes / / No
- ---------------------------------------------------------------------------------------------------------------------------------
P. SIGNATURE SECTION
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DECLARATIONS:
I/We understand and agree that:
1. The information provided in this Application (Part I, 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 of the policy at its sole
discretion.
4. Except as provided in a Temporary Life Insurance Agreement having the same
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(s)
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 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 such person to
criminal and civil penalties.
<PAGE>
- --------------------------------------------------------------------------------
P. SIGNATURE SECTION (CONTINUED)
- --------------------------------------------------------------------------------
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 INVESMENT EXPERIENCE OF THESE VARIABLE SUB-ACCOUNTS.
- - WITH RESPECT TO THE VARIABLE SUB-ACCOUNTS, THERE IS NO GURARANTEED 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
the Futurity variable universal life insurance.
AUTHORIZATION
Sun Life (U.S.), its reinsurers, insurance support organizations, and authorized
representatives of these companies may need to collect information on a Proposed
Insured in regards to this proposed life insurance coverage. The purpose of this
authorization is to allow the companies to collect information for the express
purpose of determining eligibility for life insurance.
Often Sun Life (U.S.) is assisted in the retrieval of a prospective client's
confidential medical records. Your medical records may be obtained through a
third party vendor specializing in the retrieval of medical records, by an
independent general agent who has a relationship with Sun Life (U.S.) and who is
working with your sales representative to obtain your life insurance coverage,
and by Sun Life (U.S.) directly from your health care provider. Sun Life (U.S.)
recognizes each of these organizations as professionals who understand and will
maintain the privacy and confidentiality of the material they are handling. Sun
Life (U.S.) considers each of these organizations authorized representatives of
Sun Life (U.S.) for the purposes of obtaining these medical records.
_________ Proposed Insured ________2nd Proposed Insured By initialing here I/We,
the Proposed Insured(s), acknowledge and confirm receipt of the Pre-Notification
Disclosure form detailing the underwriting process, prenotifications relating to
investigative consumer reports, the Medical Information Bureau (MIB, Inc.), and
disclosure of my/our blood and/or bodily fluid testing.
_________Proposed Insured _________2nd Proposed Insured By initialing here I/We,
the Proposed Insured(s), authorize Sun Life (U.S.) to release the entire
underwriting file to a another insurer's underwriting department if coverage is
declined or offered on terms other than as applied for. I/we, the Proposed
Insured(s), authorize my/our broker to name the other insurer(s) and understand
there may be a fee for Sun Life (U.S.) providing this information.
I/We, the Proposed Insured(s), authorize any physician, health care provider,
hospital, or other medically related facility, specialized clinics dealing in
alcohol or substance abuse, treatment of HIV or AIDS, mental illness; insurance
company, the Medical Information Bureau, or other organization or person that
may have any records or knowledge of me/us or my/our health to give such
information to Sun Life Assurance Company of Canada (U.S.), its authorized
representatives, or its reinsurers. The information collected may be disclosed
to other insurance companies to which I/we 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 twenty-six (26) 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 Signature of 2nd Proposed Insured
required if under age 15) (not required if under age 15)
X
------------------------------------- ---------------------------------------
Signature of Owner (if other than Owner's Daytime Telephone Number
Proposed Insured)
X
------------------------------------- ---------------------------------------
Signature of Co-Owner Co-Owner's Daytime Telephone Number
X X
------------------------------------- ---------------------------------------
Signature of witness/Registered Registered Representative State
Representative Insurance License Number
<PAGE>
- --------------------------------------------------------------------------------
Q. REQUEST FOR TAXPAYER IDENTIFICATION AND CERTIFICATION
- --------------------------------------------------------------------------------
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 NUMBER (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 witholding 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
<PAGE>
- --------------------------------------------------------------------------------
R. FOR REGISTERED REPRESENTATIVE USE ONLY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S><C>
PROPOSED 2ND PROPOSED
INSURED INSURED
1. If the Application was taken on a non-medical basis, were answers from the
Proposed Insured(s) obtained personally and in your presence? / / Yes / / No / / Yes / / No
2. Does the Proposed Insured(s) appear to be in good health? / / Yes / / No / / Yes / / 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?
IF YES, PROVIDE DETAILS. / / Yes / / No / / Yes / / No
-----------------------------------------------------------------------------------------------------------------------------
4. Previous address of Insured(s) 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 source of premium payment for the insurance
applied for? IF YES, PROVIDE DETAILS AND NECESSARY FORMS. / / Yes / / 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? / / Yes / / No
7. Proposed Insured's Marital Status / / Single / / Married / / Divorced / / Separated / / Other ______________
8. Proposed Insured's Annual Household Income:
/ / $50,000 or less / / $75,001-$100,000 / / $150,001-$200,000
/ / $50,001-$75,000 / / $100,001-$150,000 / / $200,001 or more
9. 2nd Proposed Insured's Marital Status / / Single / / Married / / Divorced / / Separated / / Other ______________
10. 2nd Proposed Insured's Annual Household Income:
/ / $50,000 or less / / $75,001-$100,000 / / $150,001-$200,000
/ / $50,001-$75,000 / / $100,001-$150,000 / / $200,001 or more
11. Source of prospect:
/ / Existing Client / / Referral / / Cold Call / / Orphan / / Orphan Referral / / Direct Mail / / Client's request
12. Registered Representatives who will share commission:
Registered Representative State Insurance License Number Share % Servicing Rep? (Select One)
/ / Yes / / No
--------------------------------------- ------------------------------------ -------------
/ / Yes / / No
--------------------------------------- ------------------------------------ -------------
13. Registered Representative's Broker-Dealer Name
---------------------------------------------------------------
Address
------------------------------------------------------------------------------------------------------
City State Zip
--------------------------------------------------- ------------------ ------------------------
Phone Fax
--------------------------------------------- -----------------------------------------------------
Broker/Dealer Account
---------------------------
14. General Agent General Agent's Broker Dealer (if different):
----------------------------- ----------------------
</TABLE>
CERTIFICATION:
I, __________________________________________________________________ certify:
Print Registered Representative's Name
1. (a) that the questions contained in this Application were asked of the
Proposed Insured(s) 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(s) 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. (a) that I have reviewed with the Owner all the policy features and have
given a current prospectus for the plan of insurance indicated in section E
of this Application, and (b) that information regarding the policy applied
for and the Owner's financial situation, insurance objectives and needs has
been submitted to my Broker/Dealer for suitability review.
3. that evidence as to the identities of the Proposed Insured(s) 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
<PAGE>
[GRAPHIC] FUTURITY VARIABLE UNIVERSAL LIFE
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
P.O. BOX 81312
1 SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MA 02481 1-800-700-6554
PRE-AUTHORIZED CHECKING PLAN FORM
- --------------------------------------------------------------------------------
ACCOUNT INFORMATION
- --------------------------------------------------------------------------------
Applicant's Name
----------------------------------------------------------------
Name on Bank Account Name of Bank
--------------------------- --------------------
Bank Address
-------------------------------------------------------------------
City State Zip
-------------------------------- ------------- ------------------
Bank Telephone Number
---------------------------------
Select the day of the month the premium should be drafted from your account:
/ / 1st / / 10th / / 20th
Attach a voided check to this form. Please note that this form can only be used
for the Application to which it is attached.
- --------------------------------------------------------------------------------
AUTHORIZATION
- --------------------------------------------------------------------------------
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.
- --------------------------------------- ---------------------------------------
Payor's Signature Date
- --------------------------------------- ---------------------------------------
Joint Payor's Signature Date
- --------------------------------------- ---------------------------------------
FOR SUN LIFE (U.S.) USE ONLY
- --------------------------------------- ---------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
ROUTING/TRANSIT NUMBER
------------------------------------------------------------------------------
------------------------------------------------------------------------------
ACCOUNT NUMBER
<PAGE>
TEMPORARY LIFE INSURANCE APPLICATION
<TABLE>
<CAPTION>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
TEMPORARY LIFE INSURANCE APPLICATION
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED INSURED 2ND PROPOSED INSURED
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? / / Yes / / No / / Yes / / 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? / / Yes / / No / / Yes / / 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.? / / Yes / / No / / Yes / / 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 2nd Proposed Insured Date
- ------------------------------------------------------- -------------------------------------------------------
Signature of Owner Date
</TABLE>
- --------------------------------------------------------------------------------
TEMPORARY LIFE INSURANCE AGREEMENT AND RECEIPT
- --------------------------------------------------------------------------------
Sun Life (U.S) will provide Temporary Life Insurance coverage on the person(s)
proposed for insurance, who have 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 (a) the Proposed Insured, or (b)
the surviving Insured on a plan which insures two lives and provides a benefit
on the death of the surviving 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 questions
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) a 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 any person 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 on a
single life application or $4,000,000 on a joint and last survivor application,
including Accidental Death Benefit, whichever is less. If more than one
Application is pending on any person proposed for insurance herein and the total
amount of insurance applied for exceeds $2,000,000 on a single life application
or $4,000,000 on a joint and last survivor application then the coverage under
this Temporary Life Insurance Agreement will be reduced to that proportion of
$2,000,000 on a single life application or $4,000,000 on a joint and last
survivor application 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.), or (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 Application 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--No benefit will be paid on first death on a plan which
insures two lives while covered by this Temporary Life Insurance Agreement. If
Proposed Insureds' deaths occur simultaneously or within 30 days of each other,
the benefit will be paid to the beneficiary named in the Application associated
with this Temporary Life Insurance Application.
AMOUNT PAID--The amount paid, as listed below, will be held by Sun Life (U.S.)
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 Sun Life (U.S.) receives the balance of any premiums owed. Prior to
such date, Sun Life (U.S.) 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 ________________________
Month/year
- ---------------------------------------- --------------------------------------
Name of Owner Signature of Owner
- ---------------------------------------- --------------------------------------
Name of Registered Representative Signature of Registered Representative
SUN LIFE (U.S.) COPY Premium checks must be made payable to Sun
Life Assurance Company of Canada (U.S.)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
TEMPORARY LIFE INSURANCE APPLICATION
- ---------------------------------------------------------------------------------------------------------------------------------
TEMPORARY LIFE INSURANCE APPLICATION
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED INSURED 2ND PROPOSED INSURED
4. 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? / / Yes / / No / / Yes / / No
5. 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? / / Yes / / No / / Yes / / No
6. 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.? / / Yes / / No / / Yes / / 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 2nd Proposed Insured Date
- ------------------------------------------------------- -------------------------------------------------------
Signature of Owner Date
</TABLE>
- --------------------------------------------------------------------------------
TEMPORARY LIFE INSURANCE AGREEMENT AND RECEIPT
- --------------------------------------------------------------------------------
Sun Life (U.S) will provide Temporary Life Insurance coverage on the person(s)
proposed for insurance, who have 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 (a) the Proposed Insured, or (b)
the surviving Insured on a plan which insures two lives and provides a benefit
on the death of the surviving 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 questions
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) a 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 any person 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 on a
single life application or $4,000,000 on a joint and last survivor application,
including Accidental Death Benefit, whichever is less. If more than one
Application is pending on any person proposed for insurance herein and the total
amount of insurance applied for exceeds $2,000,000 on a single life application
or $4,000,000 on a joint and last survivor application then the coverage under
this Temporary Life Insurance Agreement will be reduced to that proportion of
$2,000,000 on a single life application or $4,000,000 on a joint and last
survivor application 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.), or (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 Application 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--No benefit will be paid on first death on a plan which
insures two lives while covered by this Temporary Life Insurance Agreement. If
Proposed Insureds' deaths occur simultaneously or within 30 days of each other,
the benefit will be paid to the beneficiary named in the Application associated
with this Temporary Life Insurance Application.
AMOUNT PAID--The amount paid, as listed below, will be held by Sun Life (U.S.)
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 Sun Life (U.S.) receives the balance of any premiums owed. Prior to
such date, Sun Life (U.S.) 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 for life insurance on the life of _____________________________
dated this_______________ day of ________________________
Month/year
- ---------------------------------------- --------------------------------------
Name of Owner Signature of Owner
- ---------------------------------------- --------------------------------------
Name of Registered Representative Signature of Registered Representative
CLIENT COPY Premium checks must be made payable to Sun
Life Assurance Company of Canada (U.S.)
<PAGE>
INVESTMENT DESIGNATION AND OPTIONAL PROGRAM SELECTION
INVESTMENT DESIGNATION
This form should be used to establish a model for allocation of future premium
payments and loan repayments. You may elect to design your own allocation model
(Section A.) or you may choose to have your payments allocated using one of the
professionally managed Asset Allocation Programs (Section B.) Your request will
become effective upon expiration of the Right of Return period applicable to
your contract, and the election will remain in effect until we receive
authorized instructions to change this election. Elect your allocation model
(Section A. or Section B.) and sign on the appropriate signature lines.
<TABLE>
<CAPTION>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
A. Premium Payment Allocation Model
Instructions: Complete this section using whole percentages of no less than
5% and check that the percentages add up to 100%.
- ---------------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNTS ___ % MFS/Sun Life High Yield Series
___ % MFS/Sun Life Massachusetts Investors Growth Stock Series
AIM VARIABLE INSURANCE FUNDS, INC. ___ % MFS/Sun Life Massachusetts Investors Trust Series
___ % AIM V.I. Capital Appreciation Fund ___ % MFS/Sun Life New Discovery Series
___ % AIM V.I. Growth Fund ___ % MFS/Sun Life Total Return Series
___ % AIM V.I. Growth and Income Fund ___ % MFS/Sun Life Utilities Series
___ % AIM V.I. International Equity Fund
OCC ACCUMULATION TRUST
THE ALGER AMERICAN FUND ___ % OCC Accumulation Trust Equity Portfolio
___ % Alger American Growth Portfolio ___ % OCC Accumulation Trust Managed Portfolio
___ % Alger American Income and Growth Portfolio ___ % OCC Accumulation Trust Mid Cap Portfolio
___ % Alger American Small Capitalization Portfolio ___ % OCC Accumulation Trust Small Cap Portfolio
GOLDMAN SACHS VARIABLE INSURANCE TRUST SUN CAPITAL ADVISERS, INC.
___ % Goldman Sachs V.I.T. CORE Large Cap Growth Fund ___ % Sun Capital Money Market Fund
___ % Goldman Sachs V.I.T. CORE Small Cap Equity Fund ___ % Sun Capital Investment Grade Bond Fund
___ % Goldman Sachs V.I.T. CORE U.S. Equity Fund ___ % Sun Capital Real Estate Fund
___ % Goldman Sachs V.I.T. Growth and Income Fund
___ % Goldman Sachs V.I.T. International Equity Fund SUN CAPITAL ADVISERS, INC. (WELLINGTON MANAGEMENT SUBADVISED
FUNDS)
MFS/SUN LIFE SERIES TRUST ___ % Sun Capital Blue Chip Mid Cap Fund
___ % MFS/Sun Life Capital Appreciation Series ___ % Sun Capital Investors Foundation Fund
___ % MFS/Sun Life Emerging Growth Series ___ % Sun Capital Select Equity Fund
___ % MFS/Sun Life Government Securities Series
SUN LIFE OF CANADA (U.S.) FIXED ACCOUNT GUARANTEE OPTION
___ % Fixed Account
- ---------------------------------------------------------------------------------------------------------------------------------
Please establish the payment model I have indicated above. I understand that all
payments made to my policy will be applied using this Premium Payment Allocation
Model unless I, or another authorized party, provide clear instruction (as
determined by the Home Office) to apply a payment/all future payments
differently.
Owner/Authorized Signature: Date:
--------------------------------------------------- -----------------------
Owner/Authorized Signature: Date:
--------------------------------------------------- -----------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B. Asset Allocation Program Election
If participating in the Asset Allocation Program, the initial and any
future premium payments will be allocated entirely to the model selected.
1. Select ONLY ONE of the following programs:
/ / Conservative Asset Allocation Model
/ / Moderate Asset Allocation Model
/ / Aggressive Asset Allocation Model
NOTE: DO NOT complete Section A, Premium Payment Allocation Model.
Please make the changes indicated above to my policy. I understand that
participation in this program involves periodic exchanges of my account value to
ensure they reflect the model I have chosen, and that the Asset Allocation
Committee, upon review each quarter, may make changes to the model I have
elected. I further understand that if I make a request either to (1) allocate a
payment using different allocations, or (2) transfer funds among the
sub-accounts in a way that is not consistent with my Asset Allocation Program,
that my participation in this program will be terminated.
Owner Signature: Date:
---------------------------------------- ----------------
Owner Signature: Date:
---------------------------------------- ----------------
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
This document sets forth the administrative procedures that will be followed
by Sun Life Assurance Company of Canada (U.S.), (the "Company" or "we"), in
connection with the issuance of a Futurity Survivorship 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 Insureds. 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. The company may issue a policy where one
of the Insureds would normally be uninsurable, provided the combination of
the Insureds meets certain requirements.
The applicant must specify certain information in the application including
the Specified Face Amount, the death benefit option and supplemental benefits.
The Specified Face Amount must not be below the Minimum Specified Face
Amount, which is $250,000.
The Policy must satisfy the Guideline Premium compliance test in order to
qualify as life insurance under section 7702 of the Internal Revenue Code.
Under the Guideline Premium compliance test the premiums paid may not exceed
the guideline premiums specified 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 specified
by section 7702 of the Internal Revenue Code.
The Policy provides the following two death benefit options:
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.
FSVUL-2000 1 January 2000
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
Prior to the Policy Date, any payments received are not premiums for the
policy and will be held in the Company's General Account. The Company may
offer a Temporary Insurance Agreement to the owner on the lives of the
Insureds (due on the death of the last living Insured) subject to our
conditions and limitations. The Temporary Insurance Agreement provides
coverage 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 and $2,000,000. 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 lives
of the Insureds 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. 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 Free Look period for a Policy, the Company will allocate the net
premiums received to the Sun Capital Money Market Fund or the fixed account
investment option. Upon expiration of this period, the account value, as so
allocated, will be transferred, as applicable to the subaccounts of the
variable account and to the Fixed Account in accordance with the Owner's
allocation instructions.
The Company's customary practice is to mail Policies directly to the sales
office that submitted the case, for delivery by the sales representative to the
Owner. For cases where a payment is submitted at the time of application, the
Company has established an administrative procedure for purposes of calculating
the Free Look ("Right of Return") period for a Policy. That administrative
procedure adds 5 days to the date when the Company mails the Policy to the
sales office. This date is used to mark the start of the Right of Return period
as defined by applicable state insurance law. At the expiration of that period,
the Company will automatically transfer the account value into the sub-accounts
designated by the Owner, without any action being required of the Owner. A
similar procedure is in place for cases where no payment is submitted at the
time of application, but the first premium is paid at the point of policy
delivery. In these cases, the date used to mark the start of the Right of
Return period is the date the premium is received by the Company at its
Principal Office and applied to the Policy.
B. PREMIUM PAYMENTS
The initial premium is an amount specified for each Policy based on the
requested Specified Face Amount, issue age, sex, classes of each of the
Insureds, 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 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 quarterly. 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
FSVUL-2000 2 January 2000
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
premium payment amount and/or the corresponding billing period or make
additional payments in order to prevent the 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 the Insureds' 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 under 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. 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 each policy
month of the Policy. The Account Value, and therefore the Cash Surrender
Value, depends on such factors as the premiums paid, the investment
experience of the sub-accounts, the interest rate credited to the Fixed
Account, the monthly cost of insurance, the monthly face amount charge and
the mortality and expense risk charge. The rate utilized in computing the
cost of insurance will not be the same for each pair of Insureds. The reason
for this is that the principle of pooling and distribution of mortality risks
is based on the assumption that each pair of Insureds incurs an insurance
rate commensurate with the mortality risk which is actuarially determined
based on such factors as issue age, attained age, sex, and risk class.
Accordingly, while not all pairs of Insureds will be subject to the same cost
of insurance rate, there will be a single rate for all pairs of 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.
FSVUL-2000 3 January 2000
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
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.
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.
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 in
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.
The Owner may make a Partial Surrender of the Policy once each policy year
after the first policy year. The maximum Partial Surrender in the first 10
policy years is 20% of the Cash Surrender Value, 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 $250,000.
The Owner may allocate the Partial Surrender amount to the sub-accounts of
the Variable Account and the Fixed Account. If the allocation is not
specified, then the Partial Surrender will be allocated in proportion to the
amounts in the Sub-Account and the Fixed Account in excess of the Policy Debt
bear to the Account Value in excess of the Policy Debt.
Amounts payable from the Variable Account upon a Surrender or Partial
Surrender will ordinarily be paid within seven days of receipt of a written
request in a form satisfactory to us, at our Principal Office, and any
additional requirements deemed necessary by the state and federal governments.
FSVUL-2000 4 January 2000
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
B. CHANGES IN SPECIFIED FACE AMOUNT
After the end of the first policy year, the Owner may change the Specified
Face Amount. The Owner must send a written request in a form satisfactory to
us, for a change 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 follows 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 $250,000 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 Insureds' 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 on the Policy. 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.
FSVUL-2000 5 January 2000
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
D. DEATH CLAIMS
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
assignment, in accordance with the designated death benefit option within
seven days after receipt in its Principal Office of due proof of death of
both Insureds. The policy pays the death benefit upon the death of the last
Insured to die. 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, to resolve unclear beneficiary
arrangements, or to investigate a death occurring during a suicide or
contestability period. 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 Insureds. If no primary Beneficiary
survives the Insureds, 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 estate of the last Insured to
die.
The amount of the death benefit is determined at the end of the valuation
period on the date of death of the last Insured to die. The amount of the
death benefit will never be less than the Specified Face Amount of the Policy
prior to the maturity date of the policy. The Policy Proceeds, paid to the
beneficiary, equal the death benefit decreased by any Policy Debt.
If either or both Insureds is (are) living on the date of maturity and the
maturity date is not extended, the Company will then pay in a lump sum the
cash surrender value of the Policy.
The policy provides for an extension of the maturity date upon request by the
Owner. The death benefit beyond the original maturity date will be the
Account Value.
The Company offers a Maturity Extension Rider which may be elected by the
Owner at the issue of the Policy. The Maturity Extension Rider has monthly
cost of insurance charges. The Maturity Extension Rider extends the maturity
date beyond age 100 of the younger Insured. Under the Maturity Extension
Rider the death benefit beyond age 100 of the younger Insured is the full
death benefit, based on Option A or Option B as applicable.
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 our
Principal Office, although payments may be delayed or postponed under some
circumstances.
FSVUL-2000 6 January 2000
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
The Owner may allocate the Policy loan among the Sub-Accounts and the Fixed
Account Value. If the Owner does not specify the allocation, then the Policy
loan shall 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. 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
4.00% annually in policy years one through ten and 3.00% 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.
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 (or other Owner-authorized party)
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-account at the end of the valuation period
during which the request was made.
FSVUL-2000 7 January 2000
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
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.
IV. REFUNDS
A. FREE LOOK PERIOD
The Policy has a "Right to 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 ("Right of Return Period.") A longer period applies in some
states.
A Policy returned under this provision will be deemed void. The Owner will
receive a refund equal to the sum of all premium payments made, with no
adjustment for investment experience, if required by applicable state law;
otherwise, the refund will equal 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 or its sales
representative from whom the Policy was purchased; less
(3) any fees or charges imposed on amounts allocated to the Variable
Account.
The Company has established a customary practice to calculate the Right of
Return period, as described in Section I.A. "Application, Underwriting and
Initial Premium Processing," above.
B. SUICIDE
In most states, if the last Insured to die, whether sane or insane, commits
suicide within two years after the Issue date, the Company will not pay any
part of the Policy Proceeds. The Company's obligation will be limited to the
refund of the premiums paid, less the amount of any Policy Debt and any
Partial Surrenders.
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, or change in Death Benefit Option of the Policy.
The Company in defense of a claim can use no statement 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
Insureds for a period of two years from its Issue Date, the Company cannot
contest it except for non-payment of Premiums in
FSVUL-2000 8 January 2000
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
Pursuant to Rule *6e-3(T)(b)(iii)
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 Insureds 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 Insureds for
two years from the date of the increase.
D. MISSTATEMENT OF AGE OR SEX
If the age or sex of either 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 of each Insured.
- 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 of each Insured.
FSVUL-2000 9 January 2000
<PAGE>
[LOGO] One Sun Life Executive Park
Wellesley Hills, MA 02481
Tel: (781) 237-6030
March 31, 2000
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
Re: Registration Statement of Sun Life of Canada (U.S.)
Variable Account I on Form S-6, File No. 333-94359
Dear Ladies and Gentlemen:
This opinion is furnished in connection with the filing of the above-
referenced registration statement (the "Registration Statement") of Sun Life
of Canada (U.S.) Variable Account I (the "Variable Account"), a separate
account of Sun Life Assurance Company of Canada (U.S.), a Delaware
corporation (the "Company"), with respect to the proposed sale of an
indefinite amount of flexible premium variable universal life insurance
policies (the "Policies") described in the prospectus (the "Prospectus")
contained in the Registration Statement.
I have examined all such corporate records of the Company and such other
documents and laws as I consider necessary as a basis for this opinion. On
the basis of such examination, it is my opinion that:
1. The Company is a corporation in good standing duly organized and
validly existing under the laws of the state of Delaware.
2. The Variable Account has been duly established by the Company under
the laws of the State of Delaware.
3. Assets allocated to the Variable Account will be owned by the
Company, and the Policies provide that 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.
4. When issued and sold as described in the Prospectus, the Policies
will be duly authorized and will constitute validly issued and binding
obligations of the Company in accordance with their terms.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Roy P. Creedon
Assistant Vice President and Senior Counsel
<PAGE>
[LOGO] One Sun Life Executive Park
Wellesley Hills, MA 02481
Tel: (781) 237-6030
March 31, 2000
Gentlemen:
In my capacity as Product Officer for Sun Life Assurance Company of Canada, I
have provided actuarial advice concerning: (a) the preparation of the
registration statement for Sun Life of Canada (U.S.) Variable Account I filed
on Form S-6, File No. 333-94359, with the Securities and Exchange Commission
under the Securities Act of 1933 (the "Registration Statement") regarding the
offer and sale of a 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 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,
Georges Rouhart, FSA, MAAA
Product Officer
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 1 to the Registration
Statement (Reg. No. 333-94539) on Form S-6 of Sun Life of Canada (U.S.) Variable
Account I of our report dated February 10, 2000 accompanying the financial
statements of Sun Life of Canada (U.S.) Variable Account I appearing in the
Prospectus, which is part of such Registration Statement, of our report dated
February 10, 2000 accompanying the statutory financial statements of Sun Life
Assurance Company of Canada (U.S.), which includes explanatory paragraphs
relating to the use of statutory accounting practices which differ from
generally accepted accounting principles, appearing in the Prospectus, which is
a part of such Registration Statement, and to the incorporation by reference of
our report dated February 10, 2000 appearing in the Annual Report on Form 10-K
of Sun Life Assurance Company of Canada (U.S.) for the year ended December 31,
1999, which includes explanatory paragraphs relating to the use of statutory
accounting practices which differ from generally accepted accounting principles.
We also consent to the reference to us under the heading "Accountants" in such
Prospectus.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 31, 2000
