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Prospectus
SUN LIFE OF CANADA (U.S.)
Futurity
Survivorship
Variable Universal Life
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[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 is being offered, depending on the circumstances, as either an individual
policy or as a certificate under a group policy. The substantive terms of a
certificate under a group policy will be identical to those of an individual
policy. In this Prospectus, unless stated otherwise, the term "Policy" will
include individual policies, group policies, and certificates issued under group
policies." 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.
April 17, 2000
As Supplemented August 14, 2000
and September 22, 2000
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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
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<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............................................ 25
Transfer Privileges....................................... 26
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
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<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...................................... 46
Voting Rights............................................... 47
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iv FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
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<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...................................... 54
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
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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
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- 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
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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 and current daily
rate is equivalent to an annual rate of 0.50% of the
Variable Account Value.
- 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
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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
greatest surrender charge that might apply to a
combination of Insureds is $45.00 per $1,000 of
Specified Face Amount. 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
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<S> <C> <C>
$ 8.48 $19.19 $27.22
<CAPTION>
ISSUE AGES ISSUE AGES ISSUE AGES
65 & 65 75 & 75 85 & 85
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<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
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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
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(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
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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
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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
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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
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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
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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-SM- 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-SM- 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-SM- 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.
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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
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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
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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
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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
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- 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
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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 greatest
surrender charge that might apply to a combination of
Insureds is $45.00 per $1,000 of Specified Face Amount.
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>
For Policies delivered in Pennsylvania, surrender
charges in the first policy year are lower for certain
issue ages.
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
23 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
change in death benefit option or partial surrender.
These surrender charges will be applied in the following
order:
- first, to the most recent increase;
- second, to the next most recent
increases, in reverse chronological
order; and
- third, to the initial Specified Face
Amount.
On a decrease in the initial Specified Face Amount,
you will pay a proportion of the full surrender charge
based on the ratio of the Face Amount decrease to the
Initial Face Amount. The surrender charge you pay on a
decrease that is less than the full amount of an increase
in Specified Face Amount will be calculated on the same
basis. Future surrender charges will be 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
24 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 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.
25 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 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
0.50% 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 Co.; Senior
Vice President and a Director of Sun Life Assurance
Company of
48 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 Chairman and
a Director of Barrick Gold Corporation; and Trustee of
the
49 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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 this rate is guaranteed.
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 Daily Risk Percentage charge and the
assumed 0.86% charge for the Funds' advisory fees and operating expenses.
The hypothetical returns shown in the tables do not reflect any charges for
income taxes against the Variable Account since no charges are currently made.
If, in the future, such charges are made, in order to produce the illustrated
death benefits and Cash Values, the gross annual investment rate of return would
have to exceed 0%, 6% or 12% by a sufficient amount to cover the tax charges.
C-1 FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
<PAGE>
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
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 -1.36% NET 4.64% NET 10.64%
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 7,889 1,000,000 0 8,397 1,000,000 0 8,905 1,000,000
2 21,525 0 15,822 1,000,000 0 17,347 1,000,000 0 18,935 1,000,000
3 33,101 1,739 23,515 1,000,000 4,801 26,577 1,000,000 8,116 29,892 1,000,000
4 45,256 11,893 30,947 1,000,000 17,022 36,076 1,000,000 22,798 41,852 1,000,000
5 58,019 21,760 38,092 1,000,000 29,492 45,824 1,000,000 38,559 54,891 1,000,000
6 71,420 31,306 44,916 1,000,000 42,189 55,799 1,000,000 55,479 69,089 1,000,000
7 85,491 39,129 51,378 1,000,000 53,716 65,965 1,000,000 72,278 84,527 1,000,000
8 100,026 46,531 57,419 1,000,000 65,382 76,270 1,000,000 90,392 101,280 1,000,000
9 115,779 53,435 62,962 1,000,000 77,114 86,641 1,000,000 109,891 119,418 1,000,000
10 132,068 59,749 67,915 1,000,000 88,822 96,988 1,000,000 130,837 139,003 1,000,000
11 149,171 66,327 73,132 1,000,000 101,389 108,194 1,000,000 154,320 161,125 1,000,000
12 167,130 72,095 77,539 1,000,000 113,767 119,211 1,000,000 179,517 184,961 1,000,000
13 185,986 76,940 81,023 1,000,000 125,839 129,922 1,000,000 206,542 210,625 1,000,000
14 205,786 80,743 83,465 1,000,000 137,479 140,201 1,000,000 235,532 238,254 1,000,000
15 226,575 83,353 84,714 1,000,000 148,532 149,893 1,000,000 266,631 267,992 1,000,000
16 248,404 84,557 84,557 1,000,000 158,777 158,777 1,000,000 299,977 299,977 1,000,000
17 271,324 82,635 82,635 1,000,000 166,493 166,493 1,000,000 334,286 334,286 1,000,000
18 295,390 78,717 78,717 1,000,000 172,789 172,789 1,000,000 371,165 371,165 1,000,000
19 320,660 72,233 72,233 1,000,000 177,100 177,100 1,000,000 410,709 410,709 1,000,000
20 347,193 62,599 62,599 1,000,000 178,832 178,832 1,000,000 453,133 453,133 1,000,000
21 375,052 49,176 49,176 1,000,000 177,325 177,325 1,000,000 498,785 498,785 1,000,000
22 404,305 31,244 31,244 1,000,000 171,826 171,826 1,000,000 548,174 548,174 1,000,000
23 435,020 7,994 7,994 1,000,000 161,471 161,471 1,000,000 602,033 602,033 1,000,000
24 467,271 (*) (*) (*) 145,242 145,242 1,000,000 661,374 661,374 1,000,000
25 501,135 (*) (*) (*) 121,812 121,812 1,000,000 727,531 727,531 1,000,000
26 536,691 (*) (*) (*) 89,359 89,359 1,000,000 802,276 802,276 1,000,000
27 574,026 (*) (*) (*) 45,406 45,406 1,000,000 888,044 888,044 1,000,000
28 613,227 (*) (*) (*) (*) (*) (*) 987,862 987,862 1,037,256
29 654,388 (*) (*) (*) (*) (*) (*) 1,098,948 1,098,948 1,153,895
30 697,608 (*) (*) (*) (*) (*) (*) 1,220,649 1,220,649 1,281,681
</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 -1.36% 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 9,718 1,009,718 0 10,337 1,010,337
2 25,830 0 19,453 1,019,453 0 21,316 1,021,316
3 39,722 7,144 28,920 1,028,920 10,887 32,663 1,032,663
4 54,308 19,040 38,094 1,038,094 25,314 44,368 1,044,368
5 69,623 30,613 46,945 1,046,945 40,080 56,412 1,056,412
6 85,704 41,827 55,437 1,055,437 55,157 68,767 1,068,767
7 102,589 51,274 63,523 1,063,523 69,147 81,396 1,081,396
8 120,319 60,249 71,137 1,071,137 83,349 94,237 1,094,237
9 138,935 68,667 78,194 1,078,194 97,679 107,206 1,107,206
10 158,481 76,423 84,589 1,084,589 112,026 120,192 1,120,192
11 179,006 84,359 91,164 1,091,164 127,252 134,057 1,134,057
12 200,556 91,385 96,829 1,096,829 142,273 147,717 1,147,717
13 223,184 97,374 101,457 1,101,457 156,938 161,021 1,161,021
14 246,943 102,194 104,916 1,104,916 171,077 173,799 1,173,799
15 271,890 105,681 107,042 1,107,042 184,482 185,843 1,185,843
16 298,084 107,609 107,609 1,107,609 196,867 196,867 1,196,867
17 325,589 106,238 106,238 1,106,238 206,410 206,410 1,206,410
18 354,468 102,707 102,707 1,102,707 214,148 214,148 1,214,148
19 384,791 96,448 96,448 1,096,448 219,378 219,378 1,219,378
20 416,631 86,917 86,917 1,086,917 221,387 221,387 1,221,387
21 450,063 73,572 73,572 1,073,572 219,418 219,418 1,219,418
22 485,166 55,867 55,867 1,055,867 212,671 212,671 1,212,671
23 522,024 33,272 33,272 1,033,272 200,316 200,316 1,200,316
24 560,725 5,276 5,276 1,005,276 181,496 181,496 1,181,496
25 601,361 (*) (*) 971,266 155,205 155,205 1,155,205
26 644,030 (*) (*) 930,446 120,188 120,188 1,120,188
27 688,831 (*) (*) 881,832 74,930 74,930 1,074,930
28 735,873 (*) (*) 824,232 17,614 17,614 1,017,614
29 785,266 (*) (*) 756,297 (*) (*) 946,165
30 837,129 (*) (*) 676,850 (*) (*) 858,565
<CAPTION>
HYPOTHETICAL 12%
GROSS INVESTMENT RETURN
NET 10.64%
---------------------------------
CASH
POLICY SURRENDER ACCOUNT DEATH
YEAR VALUE VALUE BENEFIT
------ --------- --------- ---------
<S> <C> <C> <C>
1 0 10,957 1,010,957
2 0 23,254 1,023,254
3 14,939 36,715 1,036,715
4 32,379 51,433 1,051,433
5 51,175 67,507 1,067,507
6 71,426 85,036 1,085,036
7 91,872 104,121 1,104,121
8 113,964 124,852 1,124,852
9 137,778 147,305 1,147,305
10 163,380 171,546 1,171,546
11 191,845 198,650 1,198,650
12 222,321 227,765 1,227,765
13 254,874 258,957 1,258,957
14 289,568 292,290 1,292,290
15 326,441 327,802 1,327,802
16 365,465 365,465 1,365,465
17 405,084 405,084 1,405,084
18 446,602 446,602 1,446,602
19 489,585 489,585 1,489,585
20 533,574 533,574 1,533,574
21 578,053 578,053 1,578,053
22 622,439 622,439 1,622,439
23 666,099 666,099 1,666,099
24 708,342 708,342 1,708,342
25 748,293 748,293 1,748,293
26 784,776 784,776 1,784,776
27 816,283 816,283 1,816,283
28 840,908 840,908 1,840,908
29 856,365 856,365 1,856,365
30 860,281 860,281 1,860,281
</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
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
Sun Life
of Canada (U.S.)
