Variable Universal Life
Prospectus, August 24, 1999
Offered by Columbus Life Insurance Company
Picture of a family at the beach
CL5.764 9908
Columbus Life
Insurance Company Logo
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COLUMBUS LIFE FLEXIBLE PREMIUM
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
COLUMBUS LIFE INSURANCE COMPANY
SEPARATE ACCOUNT 1
PROSPECTUS
AUGUST 24, 1999
This Prospectus describes the Columbus Life Flexible Premium Variable Universal
Life Insurance Policy (Policy) and the investment options available to Policy
owners. It contains information you should know before purchasing a Policy and
selecting your investment options. Please read this Prospectus carefully and
keep it for future reference.
The Policy is issued by Columbus Life Insurance Company (Columbus Life). The
Policy is an investment alternative that offers you:
o Life insurance protection o Tax-deferred earnings
o Flexible premium payments o Access to your funds through
withdrawals and loans
o Flexible benefits
o 19 investment options
o Optional coverages
You tell us how to invest your premium payments among the investment options.
Your investment options include the following Sub-Accounts of Separate Account
1:
o AIM V.I. GROWTH o TOUCHSTONE INTERNATIONAL EQUITY
o AIM V.I. GOVERNMENT SECURITIES o TOUCHSTONE INCOME OPPORTUNITY
o ALGER AMERICAN SMALL CAPITALIZATION o TOUCHSTONE HIGH YIELD
o ALGER AMERICAN GROWTH o TOUCHSTONE VALUE PLUS
o MFS VIT EMERGING GROWTH o TOUCHSTONE GROWTH & INCOME
o MFS VIT GROWTH WITH INCOME o TOUCHSTONE ENHANCED 30
o PIMCO LONG-TERM U.S. GOVERNMENT o TOUCHSTONE BALANCED
o TOUCHSTONE SMALL CAP VALUE o TOUCHSTONE BOND
o TOUCHSTONE EMERGING GROWTH o TOUCHSTONE STANDBY INCOME
The Fixed Account is an additional investment option. It is a fixed-rate option,
backed by the general assets of Columbus Life.
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The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains certain other material that is legally part of the registration
statement for Columbus Life Insurance Company Separate Account 1 (Separate
Account 1) and other information about Separate Account 1. You can view these
documents at the Public Reference Room of the Securities and Exchange Commission
or obtain copies, for a fee, by writing to the Public Reference Room of the
Securities and Exchange Commission, 450 Fifth Street N.W., Washington, D.C.
20549. You can also call the Securities and Exchange Commission at 800.SEC.0330.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Policies or determined if this
Prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
The Policy is not a deposit or obligation of any bank. No bank has guaranteed or
endorsed the Policy. The Policy is not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, the National Credit Union
Share Insurance Fund or any other agency.
Each Sub-Account invests in a corresponding Fund that may have a name and/or
investment objective that is very similar to the name of a publicly available
mutual fund managed by the same advisor and sub-advisor. The Funds in which the
Sub-Accounts invest are not publicly available and will not have the same
performance as those publicly available mutual funds. Different performance will
result from differences in various factors that affect the operation of a Fund,
such as implementation of the Fund's investment policies, Fund expenses and size
of the Fund. In addition, your investment return from your Policy will be less
than the investment return of a shareholder in the publicly available mutual
funds because you will pay additional charges related to your Policy, such as
premium tax charges and mortality and expense risk charges.
Investments in variable life insurance policies involve investment risk,
including possible loss of principal and interest.
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TABLE OF CONTENTS
POLICY AT A GLANCE 4
SUMMARY 7
PURCHASING YOUR POLICY 11
PREMIUM PAYMENTS 13
ALLOCATION OF NET PREMIUMS 16
TRANSFERRING YOUR MONEY 19
BORROWING YOUR MONEY 22
WITHDRAWING YOUR MONEY 24
DEATH BENEFITS 26
PAYMENT OF POLICY PROCEEDS 30
CHARGES 34
CONTINUATION OF YOUR POLICY 40
RIDERS 43
OTHER INFORMATION ABOUT YOUR POLICY 50
INFORMATION ABOUT THE INVESTMENT OPTIONS 56
VALUATION OF YOUR INVESTMENT 65
PERFORMANCE INFORMATION 67
VOTING RIGHTS 68
COLUMBUS LIFE INSURANCE COMPANY AND SEPARATE ACCOUNT 1 69
SERVICE PROVIDERS 74
TAX MATTERS 76
OTHER GENERAL INFORMATION 85
SUPPLEMENT A - POLICY ILLUSTRATION A-1
SUPPLEMENT B - TABLE OF APPLICABLE DEATH BENEFIT FACTORS B-1
SUPPLEMENT C - TABLE OF COST OF INSURANCE CHARGES C-1
SUPPLEMENT D - TABLE OF SURRENDER CHARGES D-1
SUPPLEMENT E - CONTINUATION PROVISIONS E-1
SUPPLEMENT F - VALUATION PROCEDURES F-1
COLUMBUS LIFE INSURANCE COMPANY FINANCIAL STATEMENTS i
GLOSSARY G-1
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POLICY AT A GLANCE
The following is a snapshot of the Policy. Please refer to the Policy and the
remainder of the Prospectus for further details and other information. See
Supplement A for Illustrations of how various aspects of the Policy and
investment performance can affect your Policy.
PREMIUM PAYMENTS AND WITHDRAWALS
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MINIMUM AMOUNTS
PREMIUMS Depends on the Insured's Attained Age, gender and
underwriting class and the Specified Amount of
insurance coverage
WITHDRAWALS $500
INSURANCE BENEFITS
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DEATH BENEFITS
OPTION 1 Greater of Specified Amount or the applicable
multiple of your Account Value
OPTION 2 Greater of Specified Amount plus Account Value or
the applicable multiple of your Account Value
MINIMUM ISSUE LIMIT
PREFERRED $100,000
STANDARD $25,000
MINIMUM INCREASE OR $25,000, subject to Minimum Issue Limit
DECREASE IN COVERAGE restrictions
RIDERS
INCLUDED RIDER* Accelerated Death Benefit
OPTIONAL RIDERS Accidental Death
Insured Insurability
Disability Credit
Children's Term
Other Insured
TRANSFERS
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NUMBER OF FREE TRANSFERS 12 times between Sub-Accounts per Policy Year;
1 time from the Fixed Account per Policy Year
(25% limitation in the first 4 years) or 1 time
to the Fixed Account per Policy Year
(restrictions do not apply to transfers made
under the Dollar Cost Averaging Program)
MINIMUM AMOUNT OF TRANSFER $250 or the total amount in the Sub-Accounts,
whichever is less
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LOANS
LOAN AMOUNT
MINIMUM None
MAXIMUM 90% of the Cash Surrender Value, less any
Indebtedness and less the next 2 Monthly
Deductions and Monthly Expense Charges
INTEREST RATE 6.50% (maximum of 8.00%)
* Where permitted by state law.
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POLICY CHARGES AND DEDUCTIONS
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PERCENT OF PREMIUM CHARGES
PREMIUM EXPENSE CHARGES 4.75% (maximum of 5.50%) of premium payments
TAX CHARGES Varies by state of residence (maximum of
3.50% of premium payments)
MONTHLY DEDUCTIONS FROM ACCOUNT VALUE
COST OF INSURANCE CHARGES Depends on the Insured's Attained Age,
gender and underwriting class, and your
Specified Amount, Account Value and death
benefit option
MONTHLY EXPENSE CHARGES $6.00 (maximum of $7.00)
RIDER CHARGES
Accelerated Death Benefit No charge until advance of funds (and then the
only charge is interest on the advance)
Accidental Death Depends on the Insured's Attained Age and
selected Accidental Death Benefit Amount
Insured Insurability Depends on the Insured's Attained Age and
selected Insured Insurability Option Amount
Disability Credit Depends on the Insured's Attained Age and
selected Credit Amount
Children's Term Depends on selected Children's Term Benefit
Amounts
Other Insured Depends on each Other Insured's Attained Age,
gender and underwriting class and selected Other
Insured Benefit Amounts
SEPARATE ACCOUNT CHARGES
MORTALITY AND EXPENSE 0.90% effective annual rate (maximum of 1.00%)
RISK CHARGE deducted daily from the Accumulation Unit Value
of each Sub-Account
TRANSACTION CHARGES
TRANSFER CHARGES $0 for first 12 transfers among Sub-Accounts each
Policy Year; $10 for each additional transfer in
a Policy Year--deducted from Account Value at
time of transfer
SURRENDER CHARGES
Full Surrender Depends on the decrease in Specified Amount as
shown in your most recent Policy Schedule and in
Supplement D (applies during the first 14 years
since your Policy Date or since the date of any
increase in Specified Amount)--deducted from
Account Value at time of surrender (maximum of
$44.90 Per $1,000 decrease in Specified Amount)
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Partial Surrender or A pro rata portion of the full surrender charge
Withdrawal shown in your most recent Policy Schedule and in
Supplement D (applies during the first 14 years
since your Policy Date or since the date of any
increase in Specified Amount) and a $50
withdrawal fee for your second and each
additional withdrawal in a Policy Year--deducted
from Account Value at time of surrender or
withdrawal (maximum of $44.90 per $1,000
decrease in Specified Amount)
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FUND EXPENSES
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<TABLE>
<CAPTION>
TOTAL EXPENSES TOTAL EXPENSES
OTHER AFTER EXPENSE BEFORE EXPENSE
ADVISOR FEES EXPENSES REIMBURSEMENT REIMBURSEMENT
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
(ADVISOR--AIM ADVISORS, INC.)
AIM V.I. Growth Fund* 0.64% 0.08% 0.72% 0.72%
AIM V.I. Government Securities Fund* 0.50% 0.26% 0.76% 0.76%
THE ALGER AMERICAN FUND
(ADVISOR--FRED ALGER MANAGEMENT, INC.)
Alger American Small
Capitalization Portfolio* 0.85% 0.04% 0.89% 0.89%
Alger American Growth Portfolio* 0.75% 0.04% 0.79% 0.79%
MFS VARIABLE INSURANCE TRUST
(ADVISOR--MASSACHUSETTS FINANCIAL SERVICES COMPANY)
MFS VIT Emerging Growth Series* 0.75% 0.10% 0.85% 0.85%(a)
MFS VIT Growth with Income Series* 0.75% 0.13% 0.88% 0.95%(a)
PIMCO VARIABLE INSURANCE TRUST
(ADVISOR--PACIFIC INVESTMENT MANAGEMENT COMPANY)
PIMCO Long-Term U.S. Government
Portfolio* 0.40% 0.25% 0.65% 0.67%(b)
TOUCHSTONE VARIABLE SERIES TRUST
(ADVISOR--TOUCHSTONE ADVISORS, INC.)
Touchstone Small Cap Value Fund+ 0.80% 0.20% 1.00% 2.70%(c)
Touchstone Emerging Growth Fund* 0.80% 0.35% 1.15% 1.49%(c)
Touchstone International Equity Fund* 0.95% 0.30% 1.25% 1.95%(c)
Touchstone Income Opportunity Fund* 0.65% 0.20% 0.85% 1.25%(c)
Touchstone High Yield Fund+ 0.60% 0.20% 0.80% 2.50%(c)
Touchstone Value Plus Fund+ 0.75% 0.40% 1.15% 7.49%(c)
Touchstone Growth & Income Fund+ 0.80% 0.05% 0.85% 1.37%(c)
Touchstone Enhanced 30 Fund+ 0.65% 0.10% 0.75% 2.45%(c)
Touchstone Balanced Fund* 0.80% 0.10% 0.90% 1.37%(c)
Touchstone Bond Fund+ 0.55% 0.20% 0.75% 1.32%(c)
Touchstone Standby Income Fund* 0.25% 0.25% 0.50% 0.95%(c)
</TABLE>
* The fee and expense figures shown for the Fund are based on amounts
incurred during the fiscal year ended December 31, 1998.
+ Since the Touchstone Value Plus Fund started on May 1, 1998, the Touchstone
Growth & Income Fund and the Touchstone Bond Fund started on January 4,
1999, and the Touchstone Small Cap Value Fund, the Touchstone High Yield
Fund and the Touchstone Enhanced 30 Fund started on May 1, 1999, expenses
for these funds are based on estimates.
(a) The custodian for each of the MFS Funds has agreed to an expense offset
arrangement if expenses reach a certain level. The MFS Funds may also have
other agreements that reduce the expenses actually paid by the MFS Funds.
For example, prior to October 2, 1998, Massachusetts Financial Services
Company had agreed to waive certain fees or reimburse the MFS Growth with
Income Series so that its expenses did not exceed a specified level.
(b) Pacific Investment Management Company has agreed to reduce its
administrative fee, subject to potential future reimbursement, to the
extent that the total expenses of the PIMCO Long-Term U.S. Government
Portfolio would exceed 0.65%.
(c) During 1998, fee waiver and expense reimbursement arrangements had the
effect of reducing expenses actually paid by the Touchstone Emerging Growth
Fund, the Touchstone International Equity Fund, the Touchstone Income
Opportunity Fund, the Touchstone Balanced Fund and the Touchstone Standby
Income Fund. Touchstone Advisors, Inc., has agreed to waive certain fees or
reimburse each Touchstone Fund so that the Fund's total expenses do not
exceed the percentage set forth in the "Total Expenses After Expense
Reimbursement" column for the Fund. These agreements will remain in place
until at least December 31, 1999.
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SUMMARY
This summary answers some basic questions about the Policy. Because this is a
summary, please read the Policy and the remainder of the Prospectus for more
details and other information. If the terms of your Policy differ from the
description of the Policy in this Prospectus, you should rely on the terms of
your Policy.
WHAT KIND OF LIFE INSURANCE IS THE POLICY?
The Policy is a flexible premium, variable universal life insurance policy. The
Policy is called "flexible premium" because you can change the amount and
frequency of your premium payments, within certain limits. The Policy is called
"variable" life insurance because your Cash Surrender Value and your Death
Benefit can vary because your Account Value will vary.
CAN I OBTAIN PERSONALIZED ILLUSTRATIONS DEMONSTRATING HOW THE POLICY MIGHT WORK?
Yes, we will furnish, upon request and free of charge, a personalized
illustration reflecting the proposed Insured's Attained Age, gender and
underwriting class. We may charge a reasonable fee for additional illustrations.
HOW DO I PURCHASE A POLICY?
You can apply for a Policy by contacting your insurance agent. We will not issue
a Policy that insures a person who does not meet our underwriting standards. We
will also not issue a Policy that insures a person who will be over 85 years of
age on the date the Policy is issued. Insurance coverage under your Policy
begins on the effective date of your Policy.
HOW MUCH LIFE INSURANCE CAN I PURCHASE?
The minimum amount of life insurance you must purchase depends on which premium
classification applies to your application. If you qualify for our "preferred"
premium classification, the minimum amount of insurance you must purchase is
$100,000; otherwise it is $25,000. We call this minimum amount of insurance the
"Minimum Issue Limit."
We call the amount of insurance that you request the "Specified Amount."
You can request a change to your Specified Amount at any time after the first
Policy Year. We must approve each request. You cannot decrease your Specified
Amount below your Minimum Issue Limit. Surrender charges may apply to decreases
in your Specified Amount.
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WHAT INSURANCE PROTECTION DOES THE POLICY OFFER?
The Policy provides life insurance on the Insured. We will pay the Beneficiary
the Death Proceeds when the Insured dies. The Death Proceeds include the Death
Benefit under the Policy plus any insurance provided by riders to the Policy.
The Death Benefit will never be lower than your Specified Amount less any
Indebtedness. Depending on the Insured's age and your Account Value, the Death
Benefit could be higher than your Specified Amount. The amount of the Death
Benefit also depends on the death benefit option you selected. We offer two
death benefit options--Option 1 and Option 2.
Option 1 emphasizes the potential growth of your Account Value. If you select
Option 1, any increase in your Account Value will decrease the risk to us
relative to the death benefit we must pay when the Insured dies and will
decrease your cost of insurance.
Option 2 emphasizes the potential growth of your Death Benefit. If you select
Option 2, any increase in your Account Value will increase the amount of your
Death Benefit. Your cost of insurance will be higher under Option 2.
HOW MUCH ARE THE PREMIUM PAYMENTS?
When you purchase your Policy, you tell us how much you plan to pay and how
often you plan to pay. This is called your Planned Premium. The amount and
frequency of your Planned Premium is shown in your Policy Schedule. Generally,
you would continue to make Planned Premium payments until the Insured reaches
100 years of age or dies.
You are not required to make premium payments in set amounts or on a set
schedule. You may skip a Planned Premium payment and you may change the amount
and frequency of your Planned Premium. You must use this flexibility responsibly
to ensure that your insurance coverage continues. You may need to increase your
Planned Premium or make additional premium payments to keep your Policy in
force.
WHAT CHARGES WILL I PAY UNDER THE POLICY?
We assess charges to support the operation of your Policy and Separate Account
1, such as cost of insurance charges, rider charges, Monthly Expense Charges,
premium expense charges, tax charges and mortality and expense risk charges. In
addition, we assess administrative fees for processing withdrawals and certain
transfers among the Sub-Accounts and surrender charges on withdrawals made in
the first 14 years of the Policy or within 14 years following an increase in
your Specified Amount. Some charges are subtracted from your premium payments;
others reduce your Account Value or the Accumulation Unit Value.
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WHAT FACTORS AFFECT MY COST OF INSURANCE CHARGES?
Your cost of insurance charges will depend on the Insured's age, gender and
underwriting class, your Account Value, your Indebtedness and the death benefit
option you select. The underwriting class depends on Insured's health, whether
the Insured uses tobacco and other factors that we use to determine the
insurability of the Insured. The maximum monthly cost of insurance charges will
never exceed the guaranteed monthly cost of insurance rates as shown in your
Policy Schedule.
WHAT ARE MY INVESTMENT OPTIONS?
You have 19 investment options for your Net Premiums. You may allocate your Net
Premiums among the 18 Sub-Accounts of Separate Account 1 and the Fixed Account.
Each Sub-Account invests exclusively in a corresponding Fund of AIM Variable
Insurance Funds, Inc. (AIM), The Alger American Fund (Alger), MFS Variable
Insurance Trust (MFS), PIMCO Variable Insurance Trust (PIMCO) or Touchstone
Variable Series Trust (Touchstone). The Sub-Accounts provide an opportunity for
a higher rate of return than the Fixed Account but also expose you to a higher
risk of losing money. The Fixed Account provides a guaranteed minimum rate of
return.
HOW DO I ALLOCATE MY NET PREMIUMS AMONG INVESTMENT OPTIONS?
You allocate your Net Premiums by specifying on your application the percentage
of your Net Premiums you would like us to allocate to each investment option.
You may change your allocation instructions at any time by notifying us either
by telephone or in writing. When we receive a premium payment from you, we
allocate the Net Premiums based on the most recent allocation instructions we
have received from you.
HOW WILL MY ACCOUNT VALUE VARY?
Your Account Value will vary on a daily basis to reflect the investment
experience of the Sub-Accounts. Your Account Value will also reflect the amount
and frequency of premium payments, any withdrawals, any Indebtedness and charges
and deductions connected with your Policy. There is no guaranteed minimum
Account Value, which means that you bear the entire investment risk that your
Account Value could fall to zero.
CAN I TRANSFER MY ACCOUNT VALUE AMONG INVESTMENT OPTIONS?
Yes, you can transfer your Account Value among the Sub-Accounts up to 12 times
per Policy Year without charge. We will charge you $10 for each additional
transfer you make among the Sub-Accounts in a Policy Year. You are also
permitted to make 1 transfer to the Fixed Account or 1 transfer from the Fixed
Account per Policy Year without charge. In the first 4 Policy Years, you cannot
transfer more than 25% of your money from the Fixed Account in a Policy Year.
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HOW DO I ACCESS MY ACCOUNT VALUE?
Generally, you can withdraw from your Policy part or all of your Account Value,
less any applicable withdrawal fees and surrender charges, and less any
Indebtedness. We generally assess a surrender charge for each partial or full
withdrawal. Partial withdrawals and related withdrawal fees and surrender
charges will reduce your Account Value. Depending upon your Account Value and
death benefit option, partial withdrawals and surrender charges may also reduce
your Specified Amount. A full surrender will terminate your Policy. A partial
withdrawal or surrender may also have tax consequences.
CAN I BORROW AGAINST MY POLICY?
Yes, you can borrow money from us by using your Policy as the sole collateral
for the loan. The most you can borrow against your Policy is 90% of your Cash
Surrender Value, less any Indebtedness and less an amount sufficient to cover
the next 2 Monthly Deductions and Monthly Expense Charges. The maximum interest
rate we charge on loans is 8.00%. A loan, whether repaid or not, will have a
permanent negative effect on the Death Benefit and Account Value of your Policy.
WHAT WILL CAUSE THE POLICY TO LAPSE WITHOUT VALUE?
Your Policy will lapse if your Net Cash Surrender Value is insufficient to pay
the Monthly Expense Charge and Monthly Deduction and none of the continuation
provisions applies and we do not receive sufficient premium payment during the
Grace Period. If your Policy lapses, you will not receive any money from us
because Net Cash Surrender Value will have been reduced to zero.
WILL MY DEATH BENEFIT AND ACCOUNT VALUE BE TAXED?
The Policy is intended to meet the definition of a "life insurance contract"
under federal tax law. Therefore, the Death Proceeds should be fully excludable
from the Beneficiary's gross income. In addition, any earnings on your
investment in the Sub-Accounts should not be taxable to you while the Policy is
in effect unless you withdraw some or all of your Account Value. Under certain
circumstances, a loan may be treated as taxable income. We do not intend this
discussion to be tax advice. You should consult with your own tax advisor before
purchasing a Policy.
DO I HAVE A "FREE LOOK" RIGHT TO EXAMINE THE POLICY?
Yes, you may cancel the Policy within 10 days after receiving it, or such longer
period as state law may require. If you cancel the Policy during the FREE LOOK
period, we generally will refund to you (1) the amount of your Net Premiums
allocated to the Fixed Account, plus (2) the value of your investments in the
Sub-Accounts as calculated on the date your notice of cancellation is received
by us or your insurance agent, plus (3) any charges.
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PURCHASING YOUR POLICY
To obtain an application to purchase a Policy, please contact your insurance
agent.
ELIGIBLE PURCHASERS
You can apply for a Policy if:
o You live in a state where we can issue a Policy.
o You are of legal age.
Your application will be processed through our underwriting process, which may
require the proposed Insured to have a medical exam. Any premium payment
received by us from you before we have completed the underwriting process will
be held by us in escrow. After we complete the underwriting process, we will
notify you of our decision regarding your application. If we approve your
application, the insurance coverage provided by your Policy will begin on the
effective date of your Policy. The effective date of your Policy will be the
later of
o The date we complete the underwriting process and approve your
application; or
o The date we receive the required minimum initial premium
payment.
We will allocate your initial Net Premiums to your selected investment options
on the effective date of your Policy. We will send you a confirmation statement
indicating that your initial Net Premiums have been allocated and your Policy is
effective.
Even if you live in a state where we can issue a Policy, we will not issue a
Policy that insures a person who will be over 85 years of age on the date the
Policy is issued. We will also not issue a Policy that insures a person who does
not meet our underwriting standards. If we do not issue a Policy to you, we will
return any premium payments made by you and received by us.
SPECIFIED AMOUNT AND MINIMUM ISSUE LIMIT
If you meet our underwriting standards, you may purchase a Policy with a
Specified Amount as low as the Minimum Issue Limit. The Minimum Issue Limit
depends on the premium classification used and is shown on your Policy Schedule.
If you purchase a Policy with a Specified Amount equal to or near the Minimum
Issue Limit, you might not be able to
o Make partial withdrawals
o Reduce your Specified Amount
o Change your Death Benefit option
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You should consider these limitations before you purchase a Policy with a
Specified Amount at or near the Minimum Issue Limit. You should discuss the
Specified Amount for your Policy with your insurance agent before purchasing a
Policy.
10-DAY REVIEW PERIOD
You have 10 days to review your Policy after you receive it. This 10-day review
period is called the FREE LOOK period. The state where you live may require us
to give you a longer FREE LOOK period.
If you are not satisfied with the Policy, you can cancel it during the FREE LOOK
period. To cancel your Policy, you must return it either to us at Columbus Life
Variable Service Center, P.O. Box 2850, Cincinnati, Ohio 45201-2850, or to the
insurance agent who sold you the Policy within 10 days after you receive it. If
you cancel the Policy during the FREE LOOK period, we will refund to you:
o The amount of your Net Premiums allocated to the Fixed Account, plus
o The value of your investments in the Sub-Accounts as calculated on the
date your notice of cancellation is received by us or your insurance
agent, plus
o Any charges.
However, some state laws may require us to refund your total premium payments.
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PREMIUM PAYMENTS
Premium payments are payments that you make to purchase and maintain your
Policy. You can vary the amount and frequency of your premium payments. The
amount and frequency of your premium payments will affect your Account Value and
the duration of insurance coverage under your Policy. We reserve the right to
reject any premium payment if, in our opinion, accepting the payment would mean
the Policy would not qualify as life insurance under federal tax laws.
Your initial premium payment must equal at least 1/12th of the applicable
minimum annual premium. Your initial premium payment may be given to your
insurance agent. You should send your subsequent premium payments to the
Columbus Life Variable Service Center, P.O. Box 2850, Cincinnati, Ohio
45201-2850.
Generally each premium payment must be at least $50.
You can make premium payments through automatic or scheduled installment
payments, such as pre-authorized checking account deductions. If you use one of
these methods to make premium payments, we will accept premium payments in
amounts less than $50.
Federal tax law may limit your ability to make certain large premium payments.
We will monitor your premium payments to be sure that you do not exceed the
permitted amounts or inadvertently incur any tax penalties due to excess premium
payments.
PLANNED PREMIUM
When you purchase your Policy, you tell us how much you plan to pay and how
often you plan to pay. This is called your Planned Premium. The amount and
frequency of your Planned Premium is shown in your Policy Schedule. Generally,
you would continue to make Planned Premium payments until the Policy Anniversary
after the Insured reaches 100 years of age or dies. You are not required to make
a Planned Premium payment, but making Planned Premium payments increases the
likelihood that your insurance coverage under the Policy will continue.
You are not required to make premium payments in set amounts or on a set
schedule. You may find this flexibility attractive, but you are responsible for
making sufficient premium payments to ensure that your Policy continues.
Generally, your Policy continues so long as your Net Cash Surrender Value is
equal to or more than the Monthly Deduction plus the Monthly Expense Charge.
Your Net Cash Surrender Value will fluctuate depending on various factors
including the amount of your premium payments. Making Planned Premium payments
increases the likelihood that your Net Cash Surrender Value will be sufficient
to continue your Policy. If you skip a Planned Premium payment or you stop
making Planned Premium payments, it is more likely that your Net Cash Surrender
Value will be insufficient to continue your Policy.
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Making Planned Premium payments does not guarantee that your Policy will
continue. Because your Net Cash Surrender Value is affected by other factors,
such as the investment return of your Policy, the charges related to your
Policy, and the amount of loans and withdrawals you have made, your Planned
Premium payments may not be enough to keep your Policy in force. You may need to
increase your Planned Premium or make additional premium payments to keep your
Policy in force. We will monitor your Policy and notify you if your Net Cash
Surrender Value is no longer sufficient to maintain your Policy. Also, each year
we will send you a report that includes a projection, which is based upon
certain assumptions, that will indicate whether or not your Planned Premium is
likely to be sufficient to keep your Policy in force for the upcoming year.
An illustration is a useful tool for estimating, by assuming one or more
hypothetical investment returns, whether a given Planned Premium is likely to
achieve the goals you have set for your Policy. An illustration is available
upon request and free of charge.
More information about the continuation of your Policy, including certain
provisions of your Policy that guarantee continued coverage for a specific
period of time, is located on page 36 of this Prospectus.
CHANGING YOUR PLANNED PREMIUM
PLANNED PREMIUM CHANGES BY PHONE. You can change the amount or frequency of your
Planned Premium over the phone by following these steps:
STEP 1: Fill out either the telephone authorization part of the application or a
Telephone Access Authorization Form. You can get a copy of this form by
contacting the Columbus Life Variable Service Center, P.O. Box 2850, Cincinnati,
Ohio 45201-2850. You must complete and return one of these telephone
authorizations before you call to change your Planned Premium.
STEP 2: Call the Columbus Life Variable Service Center at 800.677.9595 between
8 a.m. and 4 p.m. Eastern Time.
Give the representative the following information:
o Your Social Security number
o Your Policy number or other precise information that identifies your
Policy
o Your new Planned Premium information
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PLANNED PREMIUM CHANGES IN WRITING. You can also change the amount or frequency
of your Planned Premium by writing to the Columbus Life Variable Service Center,
P.O. Box 2850, Cincinnati, Ohio 45201-2850. Your written instructions must
include the following information:
o Your Policy number or other precise information that identifies your
Policy
o Your new Planned Premium information
o Your signature
SKIPPING PLANNED PREMIUM PAYMENTS
You can skip Planned Premium payments and your Policy will continue to be
effective if the Net Cash Surrender Value of your Policy is sufficient to pay
the Monthly Deduction and the Monthly Expense Charge on the next Monthly
Anniversary Day or one of the continuation provisions described on page 36 is
applicable. If not, your Policy may terminate.
INVESTOR ALERT
o Your Net Cash Surrender Value is affected by various factors, including
the investment performance of the investment options you select.
Therefore, it is possible that, due to poor investment performance,
your Net Cash Surrender Value will not be sufficient to continue
coverage under your Policy even if you have paid your Planned Premiums.
o Skipped premium payments, withdrawals and loans will reduce your Net
Cash Surrender Value and may prevent you from meeting the conditions
required to continue coverage under your Policy.
o Because of the relative size of the minimum annual premium for the Term
No-Lapse Guarantee and the surrender charge, your Net Cash Surrender
Value will likely be zero for at least 10 years if you pay only that
minimum annual premium.
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<PAGE>
ALLOCATION OF NET PREMIUMS
INVESTMENT OPTIONS
You decide how to allocate your Net Premiums by selecting from the following
investment options:
SUB-ACCOUNTS
o AIM V.I. Growth
o AIM V.I. Government Securities
o Alger American Small Capitalization
o Alger American Growth
o MFS VIT Emerging Growth
o MFS VIT Growth with Income
o PIMCO Long-Term U.S. Government
o Touchstone Small Cap Value
o Touchstone Emerging Growth
o Touchstone International Equity
o Touchstone Income Opportunity
o Touchstone High Yield
o Touchstone Value Plus
o Touchstone Growth & Income
o Touchstone Enhanced 30
o Touchstone Balanced
o Touchstone Bond
o Touchstone Standby Income
FIXED ACCOUNT
You should review your selected investment options and allocations
periodically to determine if they are appropriate considering market
conditions and your financial objectives.
16
<PAGE>
ALLOCATION OF NET PREMIUMS
Your initial allocation instructions are included in your application and are
shown in your Policy Schedule. You can change your allocation instructions by
contacting us either by phone or in writing. After we receive a premium payment
from you, we allocate your Net Premiums based on the most recent allocation
instructions we have received from you.
The following guidelines apply to the allocation of your Net Premiums:
o Allocate at least 1% of your Net Premiums to each investment option you
choose.
o Use whole percentages. For example, you can allocate 33% or 34% to an
investment option, not 33 1/3%.
o Make sure your percentages total 100%.
ALLOCATION CHANGES BY PHONE. You can change the allocation of your future Net
Premiums over the phone by following these steps:
STEP 1: Fill out either the telephone authorization part of the application or a
Telephone Access Authorization Form. You can get a copy of this form by
contacting the Columbus Life Variable Service Center, P.O. Box 2850, Cincinnati,
Ohio 45201-2850. You must complete and return one of these telephone
authorizations before you call to change your allocations over the phone.
STEP 2: Call the Columbus Life Variable Service Center at 800.677.9595 between
8 a.m. and 4 p.m. Eastern Time.
Give the representative the following information:
o Your Social Security number
o Your Policy number or other precise information that identifies your
Policy
o Your allocation instructions
ALLOCATION CHANGES IN WRITING. You can also change the allocation of your future
Net Premiums by writing to the Columbus Life Variable Service Center, P.O. Box
2850, Cincinnati, Ohio 45201-2850. Your written instructions must include the
following information:
o Your Policy number or other precise information that identifies your
Policy
o Your allocation instructions
o Your signature
17
<PAGE>
THIRD PARTY AUTHORIZATION. You can authorize a third party to allocate your Net
Premiums. To do so, you must complete the appropriate authorization forms.
Contact the Columbus Life Variable Service Center, P.O. Box 2850, Cincinnati,
Ohio 45201-2850 at 800.677.9595 for additional information.
INVESTOR ALERT
o There is no guaranteed minimum value for amounts allocated to the
Sub-Accounts. This means that you bear the entire investment risk that
your investment in a Sub-Account could fall to zero.
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<PAGE>
TRANSFERRING YOUR MONEY
After your FREE LOOK period, you can transfer money from one investment option
to another. You can make transfers by phone or in writing.
The following guidelines apply to transfers other than dollar cost averaging
transfers:
o Each transfer must be at least $250 or the total value of the
Sub-Accounts, if less than $250.
o The allocation to each investment option must be at least 1% of the total
transfer amount.
o You can transfer money among the Sub-Accounts up to 12 times in a Policy
Year without a charge. You will be charged $10 per transfer for each
additional transfer in a Policy Year.
o You can transfer FROM the Fixed Account or TO the Fixed Account only once
each Policy Year.
o During the first 4 Policy Years, you can transfer up to 25% of
your money FROM the Fixed Account in a Policy Year. After your 4th
Policy Year, you can transfer all of your money FROM the Fixed
Account at any time.
o You can transfer an unlimited amount TO the Fixed Account.
All transfers requested on the same day will be considered a single transfer for
purposes of these guidelines and charges.
TRANSFERS BY PHONE. You can transfer your money by calling us and following
these steps:
STEP 1: Fill out either the telephone authorization part of the application or a
Telephone Access Authorization Form. You can get a copy of this form by
contacting the Columbus Life Variable Service Center, P.O. Box 2850, Cincinnati,
Ohio 45201-2850. You must complete and return one of these telephone
authorizations before you call to transfer your money.
STEP 2: Call the Columbus Life Variable Service Center at 800.677.9595 between
8 a.m. and 4 p.m. Eastern Time.
Give the representative the following information:
o Your Social Security number
o Your Policy number or other precise information that identifies your
Policy
o Your transfer instructions
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<PAGE>
TRANSFERS IN WRITING. You can also transfer your money by writing to the
Columbus Life Variable Service Center, P.O. Box 2850, Cincinnati, Ohio
45201-2850. Your written instructions must include the following information:
o Your Policy number or other precise information that identifies your
Policy
o Your transfer instructions
o Your signature
THIRD PARTY AUTHORIZATION. You can authorize a third party to transfer your
money for you. To do so, you must complete the appropriate authorization forms.
Contact the Columbus Life Variable Service Center, P.O. Box 2850, Cincinnati,
Ohio 45201-2850 at 800.677.9595 for additional information.
DOLLAR COST AVERAGING PROGRAM
Dollar cost averaging is a method of investing equal amounts of money at regular
intervals. Dollar cost averaging allows you to purchase more when prices are low
and less when prices are high. For dollar cost averaging to be effective, you
should continue to invest during both market ups and downs. You should also
consider your financial ability to maintain a consistent level of investment
over time.
The Dollar Cost Averaging Program allows you to transfer amounts at regular
intervals from the Touchstone Standby Income Sub-Account or the Fixed Account to
the other Sub-Accounts. You can make the following transfers:
o A specific dollar amount
o A specific percentage of your money in the Touchstone Standby Income
Sub-Account or the Fixed Account
o Earnings in the Touchstone Standby Income Sub-Account or the Fixed
Account
You select the number and frequency of your transfers in the Dollar Cost
Averaging Program. We will transfer the money on your Monthly Anniversary Day.
The following guidelines apply to dollar cost averaging transfers:
o Dollar cost averaging transfers must continue for at least 12 months.
o Each transfer must be at least $100.
o The allocation to each Sub-Account must be at least 1% of the transfer
amount.
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<PAGE>
To set up dollar cost averaging transfers, contact the Columbus Life Variable
Service Center, P.O. Box 2850, Cincinnati, Ohio 45201-2850 at 800.677.9595. We
currently do not charge a fee for this service. However, we may charge a fee in
the future for your transfers in the Dollar Cost Averaging Program.
Dollar cost averaging transfers will stop if we complete the number of transfers
you requested, you ask us to stop after using the program for 12 months, you do
not have enough money in your accounts to complete the transfer, or we
discontinue the program. If we discontinue the program, you will be allowed to
complete the number of transfers you previously requested.
21.
<PAGE>
BORROWING YOUR MONEY
Your Policy is designed to provide insurance coverage and to help you achieve
your long-term financial goals. However, there may be times when you need to
borrow money against your Policy.
LOANS
You can borrow money against your Policy. We calculate the maximum loan amount
using the following procedure:
o We determine 90% of your Cash Surrender Value.
o We subtract any outstanding Indebtedness.
o We determine and subtract the next 2 Monthly Deductions and Monthly
Expense Charges.
COLLATERAL FOR LOANS
If you borrow money against your Policy, we will transfer the same amount of
money to your Loan Account. The money in your Loan Account is collateral for
your loan. We transfer money on a pro rata basis from each of your investment
options. For example, if you have 25% of your money in the Touchstone Income
Opportunity Sub-Account and 75% of your money in the Touchstone Balanced
Sub-Account and you borrow $2,000, we will transfer $500 from the Touchstone
Income Opportunity Sub-Account (25% of $2,000) and $1,500 from the Touchstone
Balanced Sub-Account (75% of $2,000) to your Loan Account.
We pay interest on your Loan Account. The minimum interest we currently pay is
3.00% annually. Each month we transfer the interest on your Loan Account back to
your investment options on a pro rata basis according to your current allocation
instructions at that time.
INTEREST ON BORROWED AMOUNTS
We charge interest on the amounts you borrow at the current rate shown in your
Policy Schedule. We may change the interest rate at any time, but the interest
rate will never be greater than the maximum interest rate that is listed in your
Policy Schedule.
Interest is due on each Policy Anniversary and on the date the loan is repaid.
If you do not pay the interest when it is due, we will treat it as an additional
loan and transfer it on a pro rata basis from each of your investment options to
the Loan Account.
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<PAGE>
INVESTOR ALERT
Any loan, even if you repay the loan, will generally have a permanent negative
effect on the Death Benefit and Account Value because:
o Loan amounts will not be available for investment in the Sub-Accounts or
Fixed Account.
o Interest charged on borrowed amounts may be treated as an additional loan.
o Outstanding Indebtedness is subtracted to determine your Death Benefit.
LOAN REPAYMENTS
You can repay all or part of your loan at any time while the Insured is living.
When you make a payment towards the principal amount of your loan, we transfer
the amount of the loan payment from your Loan Account back to your investment
options on a pro rata basis according to your allocation instructions at that
time.
If you do not repay the loan before the Insured dies, we will deduct the
Indebtedness when determining your Death Benefit. If you do not repay the loan
before you surrender your Policy, we will deduct the Indebtedness to determine
the Net Cash Surrender Value proceeds.
CANCELLATION BASED ON INDEBTEDNESS
If the Indebtedness exceeds the Cash Surrender Value less the Monthly Deduction
and Monthly Expense Charge for the current month, we can terminate your Policy.
We will tell you that we intend to terminate your Policy by mailing a notice to
you at least 31 days before we terminate your Policy. This notice will tell you
the minimum amount that you must pay to keep your Policy in effect. We will mail
the notice to your address as shown on our records. If our records indicate that
someone holds your Policy as collateral, we will also mail a copy of the notice
to that person's address as shown on our records.
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<PAGE>
WITHDRAWING YOUR MONEY
There may be times when you need to withdraw money from your Policy. If you
withdraw money from your Policy or cancel your Policy, you may have to pay a
surrender charge. Surrender charges are explained on page 36.
PARTIAL WITHDRAWALS
After you have owned your Policy for one year, you may withdraw a portion of
your money from your Policy by sending written instructions to the Columbus Life
Variable Service Center, P.O. Box 2850, Cincinnati, Ohio 45201-2850. For help
with a partial withdrawal, please call the Columbus Life Variable Service Center
at 800.677.9595.
The following guidelines apply to partial withdrawals:
o You must include your Policy number or other information that identifies
your Policy and the amount to be withdrawn in your instructions.
o Each withdrawal must be at least $500.
o No partial withdrawal may be made that would reduce your Net Cash
Surrender Value below $250.
o You will generally pay a surrender charge for each partial withdrawal
you make.
o You can make one withdrawal in a Policy Year without paying a withdrawal
fee. You will be charged a fee of $50 per withdrawal for each additional
withdrawal in that Policy Year.
o If you have death benefit Option 1, each partial withdrawal will
generally reduce your Specified Amount by the amount withdrawn plus any
withdrawal fees and surrender charges.
o The amount of your partial withdrawal may be limited because your
Specified Amount cannot be reduced to less than the Minimum Issue Limit
by a partial withdrawal. As a result, if your Specified Amount is equal
to the Minimum Issue Limit for your Policy, you will not be able to
make partial withdrawals.
PROCESSING WITHDRAWALS
When we process your partial withdrawal, we will deduct the amount withdrawn
plus any withdrawal fees and surrender charges from your Account Value. We
withdraw money from each of your investment options on a pro-rata basis.
CANCELING YOUR POLICY
You can cancel your Policy at any time. When you cancel your Policy, we pay you
the Net Cash Surrender Value. This payment terminates your Policy and our
obligations under the Policy.
24
<PAGE>
The Net Cash Surrender Value will equal your Account Value, less any
Indebtedness and any applicable surrender charge. Because investment
performance, Monthly Deductions and Monthly Expense Charges affect your Account
Value, loan activity affects your Indebtedness and surrender charges may apply,
the Net Cash Surrender Value may be much less than the total of your premium
payments.
To cancel your Policy, send written instructions to the Columbus Life Variable
Service Center, P.O. Box 2850, Cincinnati, Ohio 45201-2850. Include your Policy
number or other information that identifies your Policy and your signature in
your instructions. For assistance, please call the Columbus Life Variable
Service Center at 800.677.9595.
PAYMENT OF WITHDRAWALS
We will generally send payments to you within 7 days of the date that we process
your request. We may delay calculating the amount of the payment from a
Sub-Account or sending a payment from a Sub-Account for any of the following
reasons:
o You have made a premium payment by a check that has not cleared the
banking system.
o The New York Stock Exchange is closed on a day that it
normally would be open.
o Trading on the New York Stock Exchange is restricted.
o Because of an emergency, it is not reasonably practicable for the
Sub-Accounts to sell securities or to fairly determine the value of
their investments.
o The Securities and Exchange Commission permits us to postpone payments
from the Sub-Accounts for your protection.
As required by most states, we reserve the right to delay payments from the
Fixed Account for up to 6 months. We do not expect to delay payments from the
Fixed Account and we will notify you if there will be a delay.
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<PAGE>
DEATH BENEFITS
DEATH BENEFIT OPTIONS
Your Death Benefit depends on the death benefit option you select. When you
complete your application, you select one of 2 death benefit options (Option 1
or Option 2).
OPTION 1
WHAT YOUR BENEFICIARY RECEIVES
The Death Benefit will equal the greater of the following amounts:
o The Specified Amount, less any Indebtedness
o The Account Value multiplied by the Applicable Death Benefit Factor (see
Supplement B), less any Indebtedness
We calculate these amounts as of the date of the Insured's death.
WHY SELECT THIS OPTION
Option 1 emphasizes the potential growth of your Account Value. Under
Option 1, any increase in your Account Value will decrease the risk to us
relative to the Death Benefit we must pay when the Insured dies. As a
result, all other things being equal, you will pay less in cost of
insurance charges under Option 1 for the same Specified Amount. These lower
charges may allow your Account Value to grow faster.
EXAMPLE
Facts:
o The Insured is less than 40 years old (Applicable Death Benefit
Factor = 2.50).
o Your Policy's Specified Amount is $100,000.
o You have never borrowed money from your Policy.
o Your Account Value is $25,000.
Under Option 1, your Death Benefit would be the greater of $100,000 and $62,500
($25,000 multiplied by 2.50). Therefore, your Death Benefit would be $100,000.
26
<PAGE>
OPTION 2
WHAT YOUR BENEFICIARY RECEIVES
The Death Benefit will equal the greater of the following amounts:
o The Specified Amount plus the Account Value, less any Indebtedness
o The Account Value multiplied by the Applicable Death Benefit Factor (see
Supplement B), less any Indebtedness
We calculate these amounts as of the date of the Insured's death.
WHY SELECT THIS OPTION
Option 2 emphasizes the potential growth of your Death Benefit. Under
Option 2, any increase in your Account Value will increase the amount of
your Death Benefit. As a result, your Death Benefit under Option 2 will
generally be greater than that under Option 1 for the same Specified
Amount. However, you will pay more in cost of insurance charges under
Option 2 for the same Specified Amount than you would under Option 1.
EXAMPLE
Facts:
o The Insured is less than 40 years old (Applicable Death Benefit
Factor = 2.50).
o Your Policy's Specified Amount is $100,000.
o You have never borrowed money from your Policy.
o Your Account Value is $25,000.
Under Option 2, your Death Benefit would be the greater of $125,000 ($100,000
plus $25,000) and $62,500 ($25,000 multiplied by 2.50). Therefore, your Death
Benefit would be $125,000.
CHANGING YOUR DEATH BENEFIT OPTION
After you have owned your Policy for one year, you may change your death benefit
option by sending written notice to the Columbus Life Variable Service Center,
P.O. Box 2850, Cincinnati, Ohio 45201-2850. If you change your death benefit
option, your Specified Amount will also change unless you elect to keep the same
Specified Amount. The change in your Specified Amount insures that your Death
Benefit immediately after you change your death benefit option is the same as
your Death Benefit immediately before you change your death benefit option.
Also, a change in death benefit option will generally affect your cost of
insurance charges. However, you will not pay any surrender charges solely
because of a change in your death benefit option. If you change your death
benefit option, we will automatically make any other changes necessary to
preserve the status of the Policy as life insurance under the federal tax laws.
27
<PAGE>
We must approve any changes in your death benefit option. Changes in your death
benefit option are effective on the first Monthly Anniversary Day after we
approve your request. We will send you an amended Policy Schedule showing both
new minimum annual premiums and schedule of surrender charges applicable to your
Policy.
CHANGING FROM OPTION 1 TO OPTION 2
If you change from Option 1 to Option 2, your previous Specified Amount
will be reduced by your Account Value at the time of the change. We
will not allow this change if it causes the new Specified Amount to
fall below the Minimum Issue Limit shown on your Policy Schedule.
If you elect to keep the same Specified Amount as before, you must provide
us with proof of insurability satisfactory to us.
CHANGING FROM OPTION 2 TO OPTION 1
If you change from Option 2 to Option 1, your previous Specified Amount
will be increased by your Account Value at the time of the change.
CHANGING YOUR SPECIFIED AMOUNT
After you have owned your Policy for one year, you may change your Specified
Amount by sending a written request to the Columbus Life Variable Service
Center, P.O. Box 2850, Cincinnati, Ohio 45201-2850. You may change the Specified
Amount of your Policy without changing your death benefit option. The Specified
Amount must be increased or decreased by at least $25,000.
We must approve any changes in your Specified Amount. Changes in your Specified
Amount are effective on the first Monthly Anniversary Day after we approve your
request. We will send you an amended Policy Schedule showing both new minimum
annual premiums and schedule of surrender charges applicable to your Policy.
INCREASING THE SPECIFIED AMOUNT
If the Insured's Attained Age is 75 or less, you may apply for any
increase in your Specified Amount on a supplemental application. Before
the increase is effective, we will require proof of insurability
satisfactory to us. Any approved increase will be effective as of the
date shown on the amended Policy Schedule.
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<PAGE>
DECREASING THE SPECIFIED AMOUNT
Only your written request is needed to decrease your Specified Amount.
However, you may not decrease your Specified Amount below the Minimum
Issue Limit shown on your Policy Schedule. We may also limit the amount
of the decrease in order to preserve the tax status of your Policy as
life insurance.
A decrease in your Specified Amount will be applied in the following order:
(1) We will reduce the most recent increase in your Specified Amount, if any.
(2) We will then reduce the next most recent increase in your Specified
Amount, if any.
(3) We will continue reducing any increases in your Specified Amount until
it has been reduced to your initial Specified Amount.
(4) Finally, any remaining decreases will reduce your initial Specified
Amount.
CHARGES FOR CHANGING SPECIFIED AMOUNT
You will generally be charged a surrender charge any time you decrease your
Specified Amount. However, even though it may cause a decrease in your Specified
Amount, you will not be charged a surrender charge solely for changing your
death benefit option from Option 1 to Option 2.
The amount of your surrender charge will depend on the amount of the decrease in
Specified Amount, the number of years since the issuance of your Policy, whether
or not your Specified Amount has previously changed and when previous changes in
your Specified Amount occurred. If you are charged a surrender charge, the
applicable surrender charge will be deducted from your Account Value on the
effective date of the decrease.
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<PAGE>
PAYMENT OF POLICY PROCEEDS
POLICY PROCEEDS
We will pay the proceeds of this Policy in a lump sum or under one of
the Income Plans. We will generally pay one of 2 types of proceeds--Death
Proceeds or Net Cash Surrender Value proceeds. Proceeds applied under one of the
Income Plans no longer vary with the investment experience of the Sub-Accounts.
<TABLE>
<CAPTION>
NET CASH
PROCEEDS DEATH PROCEEDS SURRENDER VALUE
----------------- -----------------
<S> <C> <C>
WHEN PAID? o Upon the death of the Insured. o Upon any cancellation of the
policy during the lifetime of
the insured.
WHO RECEIVES o The Beneficiaries receive the o You receive the payments.
PAYMENTS OR payments.
WHO ARE o If the Beneficiaries are dead,
THE PAYEES? the Contingent Beneficiaries
who are still alive receive the
payments.
o If there are no surviving Beneficiaries
or Contingent Beneficiaries, you or
your estate receive the payments.
AMOUNT OF o The proceeds equal your Death o The proceeds equal your
PROCEEDS? Benefit plus any insurance on Account Value less any
the life of the Insured provided applicable Surrender Charges
by riders. and less any Indebtedness on
o We will also pay you interest the date of cancellation.
on the proceeds at not less than o We will also pay you interest
the rate required by law for the on the proceeds at not less
time between the date of the than the rate required by law
Insured's death to the date of for the time between the date
the lump-sum payment or the of the Policy is cancelled to
date on which we apply the the date of the lump-sum
proceeds to the selected payment or the date on which
Income Plan. we apply the proceeds to the
o If the Insured dies during a selected Income Plan.
Grace Period, we will reduce
the proceeds by the amount of
any unpaid charges, but not by
more than 3 times the sum of
the Monthly Deduction and the
Monthly Expense Charge.
30
<PAGE>
<CAPTION>
NET CASH
DEATH PROCEEDS SURRENDER VALUE
----------------- -----------------
<S> <C> <C>
HOW TO CLAIM o The Beneficiary must contact o You must write to us and tell
PROCEEDS? us for instructions and provide us that you want to cancel
proof of the Insured's death. your Policy.
o We may request other o We may request other
information before we pay the information before we pay the
proceeds. proceeds.
</TABLE>
SELECTING AN INCOME PLAN
While the Insured is alive, you may select an Income Plan under which we will
pay the proceeds of your Policy. If the Insured dies and you have not selected
an Income Plan, the Beneficiary may select an Income Plan. If you have selected
an Income Plan before the Insured's death, the Beneficiary may not change the
Income Plan after the Insured's death.
We will send you a separate written agreement putting the selected Income Plan
into effect. One of the following Income Plans may be selected:
INCOME PLAN 1 o Payments for Fixed Period - we make monthly payments for a
fixed number of years.
INCOME PLAN 2 o Payments for Life--Guaranteed Period - we make monthly
payments for a guaranteed period or the life of the Payee,
whichever is longer.
INCOME PLAN 3 o Payments of a Fixed Amount - we make monthly payments of a
fixed amount until an amount equal to the proceeds plus
accrued interest has been paid.
INCOME PLAN 4 o Life Annuity--No Guaranteed Period - we make monthly
payments for the life of the Payee.
INCOME PLAN 5 o Joint and Survivor - we make monthly payments as long as one
of the two designated Payees is alive.
In addition to these Income Plans, other Income Plans may be available in the
future or upon request.
If you or the Beneficiary do not select an Income Plan, we will make a lump-sum
payment of the proceeds. We generally make this lump-sum payment to a special
account retained by us. We will provide the Beneficiary with a checkbook to
access these funds from that special account.
The Income Plan selected and the time when the Income Plan is selected can
affect the tax consequences to you or the Beneficiary. You should consult your
tax advisor before selecting an Income Plan.
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SUMMARY OF INCOME PLANS
In the following summaries of the Income Plans, we use Payee to mean the person
who actually receives the payment of proceeds from us. Depending upon the
circumstances, the Payee might mean you, the Beneficiary, the Contingent
Beneficiary, your estate or another designated person.
The total amount to be applied under an Income Plan includes both the proceeds
and any interest we have paid on the proceeds.
INCOME PLAN 1
(PAYMENTS FOR FIXED PERIOD)
We will pay the proceeds in equal monthly installments for a fixed period of
time, up to a maximum of 30 years. The installment payments will remain the
same throughout the period of years selected.
The amount of the monthly installment payment will depend on the following:
o The total amount to be applied under this Income Plan
o The number of years selected for installment payments
INCOME PLAN 2
(PAYMENTS FOR LIFE--GUARANTEED PERIOD)
You select a guaranteed payment period of 10 or 20 years. We will make
equal monthly payments for the selected guaranteed period or the life
of the Payee, whichever is longer. Before we make a payment, we may
require proof that the Payee is alive at the time a payment is due.
The amount of the monthly installment payment will depend on the following:
o The total amount to be applied under this Income Plan
o The gender of the Payee
o The age of the Payee on the effective date of this Income Plan
o The selected guaranteed period
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<PAGE>
INCOME PLAN 3
(PAYMENTS OF A FIXED AMOUNT)
We will pay the proceeds in equal monthly installment payments. You select
the amount of the monthly installment payment, which must be at least
$5 for every $1,000 of proceeds. For example, if the proceeds are
$60,000, the minimum monthly installment payment is $300 ($5 x 60). The
monthly installment payment will remain the same until the total amount
to be applied under this Income Plan is paid. The last payment will be
for the balance only. All monthly installment payments must be made in
30 years or less.
INCOME PLAN 4
(LIFE ANNUITY--NO GUARANTEED PERIOD)
We will make equal monthly payments as long as the Payee is alive. When
the Payee dies, we will stop making payments, even if we have only made
one payment. Before we make a payment, we may require proof that the
Payee is alive at the time a payment is due.
The amount of the monthly installment payment will depend on the following:
o The total amount to be applied under this Income Plan
o The gender of the Payee
o The age of the Payee on the effective date of this Income Plan
INCOME PLAN 5
(JOINT AND SURVIVOR)
You can select this Income Plan only if 2 persons are named as Payees.
We will make monthly payments to the Payee or Payees as long as at
least one Payee is alive. Before we make a payment, we may require
proof that at least one of the Payees is alive at the time a payment is
due.
The amount of the monthly installment payment will depend on the following:
o The total amount to be applied under this Income Plan
o The gender of each of the Payees
o The age of each of the Payees on the effective date of this Income Plan
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<PAGE>
CHARGES
PREMIUM EXPENSE CHARGES
The premium expense charge covers the cost of distributing the Policies. The
maximum premium expense charge is 5.50% of a premium payment. The current
premium expense charge is 4.75% of a premium payment.
We will deduct the premium expense charge from each premium payment that we
receive from you before we allocate the Net Premiums to your investment options.
TAX CHARGES
The tax charge covers state taxes on insurance premiums and certain federal
taxes. The maximum tax charge is 3.50% of a premium payment. The tax charge you
pay will reflect certain federal taxes plus the actual state premium tax charged
by the state in which you reside.
We will deduct the tax charge from each premium payment that we receive from you
before we allocate the payment to your investment options.
COST OF INSURANCE CHARGES
You pay us a monthly cost of insurance charge for providing you with life
insurance protection.
The cost of insurance charge that you pay to us depends on the your Specified
Amount and the age, gender and underwriting class of the Insured. Various risk
factors determine the underwriting class of the Insured. The cost of insurance
charge is also affected by your Account Value, Indebtedness and your death
benefit option.
Some examples showing how the cost of insurance charge varies are set forth
below:
o The cost of insurance charge for a policy insuring a particular person
for a Specified Amount of $1,000,000 is generally more than the cost of
insurance charge for a policy insuring the same person for a Specified
Amount of $250,000 because the $1,000,000 policy provides 4 times the
amount of insurance as the $250,000 policy.
o If all other relevant factors are the same, the cost of insurance on a
50-year old male is generally more than the cost of insurance on a
35-year old female. The differences in age and gender between the 2
persons affects the cost of insurance charge. The monthly cost of
insurance charge for the 50-year old man is higher because he will
probably die sooner than the 35-year old woman, which means we will
receive fewer payments for the insurance we provide on the life of the
50-year old man.
34
<PAGE>
o A person who does not smoke is in a different underwriting class than a
person who does smoke because smoking affects life expectancy. If all
other relevant factors are the same, the monthly cost of insurance
charge for the smoker is generally higher.
o If your Account Value grows because of additional premium payments or a
positive return from your selected investment options, and all other
relevant factors are the same, the cost of insurance charge will
decrease. If your Account Value declines because of partial withdrawals
or a negative return from your investment options and all other factors
are the same, the cost of insurance charge will increase. The
fluctuations in cost of insurance charge are related to the risk that
we take in providing a death benefit equal to at least the Specified
Amount. You pay us to assume this insurance risk. The less "at risk" we
are, the lower the cost of insurance charge. Therefore, as your Account
Value increases and our risk decreases, the cost of insurance charge
decreases.
If all other relevant factors are the same, the monthly cost of insurance charge
is the same for all insured persons of the same Attained Age, gender and
underwriting classification whose policies have been in effect for the same
amount of time.
The table in Supplement C shows the maximum monthly cost of insurance charge if
the Insured under your Policy is in either a standard or preferred underwriting
class. Your monthly cost of insurance charge may be higher than that shown in
Supplement C if the Insured under your Policy is in a special or substandard
underwriting class.
The maximum monthly cost of insurance charge under your Policy is shown in your
Policy Schedule. At our option, we may charge less than the maximum shown in
your Policy Schedule.
MONTHLY DEDUCTION AND MONTHLY EXPENSE CHARGE
The Monthly Deduction includes the cost of insurance charge described above plus
the cost of any additional benefits provided under your Policy by rider.
The Monthly Expense Charge covers the cost of record keeping and administering
your Policy. The maximum Monthly Expense Charge is $7.00. The current Monthly
Expense Charge is $6.00.
We deduct the Monthly Deduction and the Monthly Expense Charge on each Monthly
Anniversary Day. We normally deduct the these charges from each of your
investment options on a pro-rata basis. You may elect to have these charges
deducted entirely from the Fixed Account or from a single Sub-Account that you
select. Please contact the Columbus Life Variable Service Center for assistance
in making this election.
MORTALITY AND EXPENSE RISK CHARGE
In addition to our insurance risk, we assume 2 other risks: a mortality risk and
an expense risk. We take a mortality risk that the Insureds will not live as
long as we expect and therefore the amount of the death benefits we pay under
the Policies will be greater than we expect. We take an expense risk that the
costs of issuing and administering the Policies will be greater than we expect.
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<PAGE>
You pay us to assume these risks by paying the mortality and expense risk
charge. The maximum mortality and expense risk charge is 1.00% annually. The
current effective annual rate of these charges is 0.90%. We can use any profit
we derive from the mortality and expense risk charge to pay for general
corporate expenses, including distribution and sales expenses.
On each Valuation Date, we deduct the mortality and expense risk charge from the
Accumulation Unit Value of each Sub-Account. We do not impose this charge on
your money in the Fixed Account.
Surrender Charges
A surrender charge will generally apply if:
o Your Policy is cancelled for any reason.
o The Specified Amount of your Policy decreases because
o You reduce the Specified Amount of your Policy.
o You withdraw money from your Policy and you have selected death
benefit Option 1.
o During the first 14 years after the issuance of your Policy.
o During the first 14 years after an increase in the Specified Amount.
The maximum surrender charge under your Policy depends upon the Insured's age,
gender and underwriting class. The maximum surrender charge for each month in
the 14-year period is shown in your Policy Schedule and in Supplement D. The
surrender charge will be deducted from your Account Value. For example, if you
are a 35-year old male tobacco abstainer, you purchase a Policy with a Specified
Amount of $100,000 with you as the Insured and you cancel your Policy 3 years
after we issue it, we would deduct a surrender charge of $2,400 from your
Account Value.
A separate 14-year period applies to the initial Specified Amount and each
increase in the Specified Amount. In this discussion, we will refer to the
initial Specified Amount and each increase as a layer of insurance. If your
Policy has more than one layer of insurance and you decrease the Specified
Amount, we will cancel layers of insurance (or a part of a layer) in order,
starting with the last layer of insurance that you purchased, until the amount
cancelled equals the amount of the decrease. We will apply the appropriate
surrender charge to each cancelled layer.
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<PAGE>
The following example should help you understand the surrender charges.
o You purchase a Policy with an initial Specified Amount of $200,000 on October
1, 2000. This is the first layer of insurance.
o You have selected death benefit Option 1.
o You increase the Specified Amount by $100,000 on October 1, 2012. This is the
second layer of insurance.
o Your total Specified Amount would then be $300,000.
o You withdraw $150,000 from your Policy on October 15, 2015. Since the
withdrawal amount is more than the amount of the second layer of
insurance, we would cancel that layer. In addition, we would cancel a
portion of the first layer of insurance.
o We would deduct the maximum applicable surrender charge on the second
layer from your Account Value. We would not apply a surrender charge to
the cancelled portion of the first layer because the applicable 14-year
period would have expired.
o If the maximum surrender charge were $2,400, your Account Value would be
reduced by $152,400.
TRANSFER CHARGES
We do not charge you for the first 12 transfers among Sub-Accounts in a Policy
Year. If you make more than 12 transfers among Sub-Accounts in a Policy Year, we
will charge you $10 per transfer for each additional transfer. We do not charge
you for transfers made in connection with the Dollar Cost Averaging Program and
we do not count these transfers when we determine the number of transfers you
have made in a Policy Year. We deduct the $10 transfer charge from your Account
Value.
All transfers requested on the same day will be considered a single transfer for
purposes of determining transfer charges.
WITHDRAWAL FEES
We do not charge you for the first withdrawal in a Policy Year. If you make more
than one withdrawal in a Policy Year, we will charge you $50 per withdrawal for
each withdrawal. We deduct the $50 transfer charge from your Account Value.
37
<PAGE>
SUMMARY OF CHARGES
<TABLE>
<CAPTION>
PREMIUM MONTHLY MONTHLY
EXPENSE CHARGE TAX CHARGE DEDUCTION EXPENSE CHARGE
<S> <C> <C> <C> <C>
When Charged? When you make a When you make a On each Monthly On each Monthly
premium payment. premium payment. Anniversary Day. Anniversary Day
How Much Charged? The maximum The maximum tax This charge is The maximum
premium expense charge is 3.50% of generally based on monthly expense
charge is 5.50% of each premium the cost of insurance charge is $7.00
each premium payment. The tax and cost of benefits each month. The
payment. The current charge you pay provided by riders. current monthly
premium expense will reflect certain See your Policy expense charge
charge is 4.75% of federal taxes plus Schedule for the is $6.00 per
each premium the actual state maximum cost of month.
payment. premium tax charged insurance charge
by the state in which applicable to your
you reside. Policy and the
maximum cost of
benefits to be
provided by rider.
- -----------------------------------------------------------------------------------------------------------------
How Charged? We deduct this charge We deduct this charge We reduce your We reduce your
from each premium from each premium Account Value. Account Value.
payment before we payment before we
allocate the Net allocate the Net
Premiums to your Premiums to your
investment options. investment options.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
MORTALITY
AND EXPENSE
RISK CHARGE SURRENDER CHARGES TRANSFER CHARGES WITHDRAWAL FEES
When Charged? On each day the New When the Specified On transfers among On withdrawals
York Stock Exchange Amount decreases Sub-Accounts after after the first
is open. for any reason. the first 12 transfers withdrawal in a
in a Policy Year. Policy Year.
- -----------------------------------------------------------------------------------------------------------------
How Much Charged? The maximum charge This charge is based $10 per transfer. $50 per withdrawal.
is 1.00% annually. on a specific dollar
The current effective amount, which is
annual rate of the applied to each
charge is 0.90%. $1,000 decrease in the
portion of the Specified
Amount subject to the
charge. The charge
decreases on a monthly
basis after the first 10
years in the applicable
14-year period. See
your Policy Schedule
for the maximum
surrender charges
applicable to your
Policy.
- -----------------------------------------------------------------------------------------------------------------
How Charged? We deduct this We reduce your We reduce your We reduce your
charge from the Account Value. Account Value. Account Value.
Accumulation
Unit Value of each
Sub-Account. We
do not impose this
charge on your
money in the
Fixed Account.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
CONTINUATION OF YOUR POLICY
CONTINUATION OF INSURANCE COVERAGE
On each Monthly Anniversary Day, we determine whether your insurance coverage
will continue. If your Net Cash Surrender Value is equal to or more than the
MONTHLY CHARGES to be charged on that Monthly Anniversary Day, your Policy will
continue.
If your Net Cash Surrender Value is less than the MONTHLY CHARGES, then a Grace
Period related to the continuation of your Policy will start unless one of the
no-lapse guarantees described below applies. If neither of the no-lapse
guarantees applies, and you do not make the required additional premium payment
during the Grace Period, your Policy will lapse without value.
o MONTHLY CHARGES include the Monthly Deduction and the Monthly Expense
Charge. The Monthly Deduction includes the amount deducted for the cost
of insurance plus the cost of any additional benefits provided under
your Policy by rider.
o Grace Periods, which are designed to give you time to make an additional
premium payment, are explained below.
CONTINUATION UNDER THE TERM NO-LAPSE GUARANTEE PROVISION
Even if your Net Cash Surrender Value on a Monthly Anniversary Day is not
sufficient to continue your Policy, your Policy may continue under the Term
No-Lapse Guarantee.
If the Term No-Lapse Guarantee applies, we guarantee that, for a specific period
of time, we will not terminate your Policy or start a Grace Period related to
continuation of your Policy. In this discussion, we call this specific period of
time the guaranteed minimum continuation period. The guaranteed minimum
continuation period applicable to your Policy is shown in your Policy Schedule.
On each Monthly Anniversary Day, we determine if your Policy meets the
conditions for the Term No-Lapse Guarantee as described in Supplement E. If your
Policy does not meet these conditions, then a Grace Period related to the Term
No-Lapse Guarantee will start. If you do not make the required additional
premium payment during this Grace Period, you will lose the Term No-Lapse
Guarantee. It cannot be reinstated. In addition, you will no longer be eligible
for the Lifetime No-Lapse Guarantee described below.
CONTINUATION UNDER THE LIFETIME NO-LAPSE GUARANTEE PROVISION
Even if your Net Cash Surrender Value on a Monthly Anniversary Day is not
sufficient to continue your Policy and the guaranteed minimum continuation
period has expired, your Policy may continue under the Lifetime No-Lapse
Guarantee.
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<PAGE>
As long as the Lifetime No-Lapse Guarantee applies, we guarantee that we will
never terminate your Policy or start a Grace Period related to continuation of
your Policy.
The Lifetime No-Lapse Guarantee will apply only if:
o You met the conditions for maintaining the Term No-Lapse Guarantee
throughout the guaranteed minimum continuation period.
o The guaranteed minimum continuation period has expired.
On each Monthly Anniversary Day after the expiration of the guaranteed minimum
continuation period, we determine if your Policy meets the conditions for
Lifetime No-Lapse Guarantee as described in Supplement E. If your Policy does
not meet these conditions, then a Grace Period related to the Lifetime No-Lapse
Guarantee will start. If you do not make the required additional premium payment
during this Grace Period, you will lose the Lifetime No-Lapse Guarantee. It
cannot be reinstated.
ADDITIONAL INFORMATION ABOUT NO-LAPSE GUARANTEES
o Supplement E to this Prospectus contains a description of the procedures
we use to determine if your Policy meets the conditions for the Term
No-Lapse Guarantee or the Lifetime No-Lapse Guarantee.
o Grace Periods, which are designed to give you time to make an additional
premium payment, are explained below.
MINIMUM ANNUAL PREMIUMS
Your minimum annual premiums for the Term No-Lapse Guarantee and the Lifetime
No-Lapse Guarantee are shown in your Policy Schedule. We use the minimum annual
premiums to determine if you have met the conditions for continuing your
insurance coverage under these provisions.
If you make any changes in your Policy that result in a change in the Monthly
Deduction, we will determine new minimum annual premiums. We will send you a new
Policy Schedule showing the new minimum annual premiums.
GRACE PERIODS
A Grace Period is a 61-day period that starts on the day after we mail you the
applicable notice. Under certain circumstances, the Grace Periods related to the
continuation of your Policy and the continuation of the no-lapse guarantees may
overlap or start at the same time. The chart below shows how Grace Periods work.
41
<PAGE>
<TABLE>
<CAPTION>
MAINTENANCE OF TERM MAINTENANCE OF LIFETIME
CONTINUATION OF YOUR POLICY NO-LAPSE GUARANTEE NO-LAPSE GUARANTEE
<S> <C> <C>
o A Grace Period related to the o A Grace Period related to o A Grace Period related to
continuation of your Policy will the Term No-Lapse Guarantee the Lifetime No-Lapse
start if: will start if your Policy does Guarantee will start if:
not meet the conditions for
o Your Net Cash Surrender Value this guarantee. o You maintained your Term
is not sufficient on a Monthly No-Lapse Guarantee
Anniversary Day. throughout the guaranteed
o Neither No-Lapse Guarantee minimum continuation
applies. period.
o The guaranteed minimum
continuation period has
expired.
o Your Policy does not meet
the conditions for this
guarantee.
- ------------------------------------------------------------------------------------------------------------------
o The notice will tell you the o The notice will tell you o The notice will tell you
amount of the minimum additional the amount of the minimum the amount of the minimum
premium you must pay to keep your additional premium you must additional premium you must
Policy in effect. pay to maintain the Term pay to maintain the Lifetime
No-Lapse Guarantee. No-Lapse Guarantee.
- ------------------------------------------------------------------------------------------------------------------
o If you make the required o If you make the required o If you make the required
additional premium payment during additional premium payment additional premium payment
the Grace Period, your Policy will during the Grace Period, the during the Grace Period, the
continue to be effective. Term No-Lapse Guarantee will Lifetime No-Lapse Guarantee
continue to be effective. will continue to be effective.
- ------------------------------------------------------------------------------------------------------------------
o If you do not make the o If you do not make the o If you do not make the
required additional premium required additional premium required additional premium
payment during the Grace Period, payment during the Grace payment during the Grace
your Policy will terminate at the Period, you will lose the Term Period, you will lose the
end of the Grace Period without No-Lapse Guarantee. Lifetime No-Lapse Guarantee.
value.
- ------------------------------------------------------------------------------------------------------------------
o If the Insured dies during the o In addition, if you do not o The no-lapse guarantee
Grace Period, we will reduce the make the required additional cannot be reinstated.
death proceeds by the amount of premium payment during the
any unpaid charges up to 3 times Grace Period, you will lose the
the sum of the Monthly Deduction Lifetime No-Lapse Guarantee.
and the Monthly Expense Charge.
- ------------------------------------------------------------------------------------------------------------------
o These no-lapse guarantees
cannot be reinstated.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
We will mail Grace Period notices to you at your address as shown on our
records. We will also mail these notices to anyone holding your Policy as
collateral as shown on our records at the collateral holder's address as shown
on our records.
42
<PAGE>
POLICY LAPSE
If a Grace Period related to the continuation of your Policy ends, you have not
paid the minimum additional premium needed to continue your Policy and neither
no-lapse guarantee applies, your Policy will lapse and you will not receive any
money from us because Net Cash Surrender Value of your Policy will have been
reduced to zero.
REINSTATEMENT
If your Policy was terminated but the Insured is still living, you can ask us to
reinstate your Policy at any time during the 5-year period after the Grace
Period ended. We will reinstate your Policy if:
o We receive satisfactory evidence of insurability.
o You pay a premium that increases your Net Cash Surrender Value to
an amount equal to or greater than:
o All costs and charges that we would have deducted from your
Account Value on each Monthly Anniversary Day from the date of
termination to the date of reinstatement and
o The Monthly Deductions and Monthly Expense Charges for the
next 3 months
o You repay or reinstate any Indebtedness that was outstanding on
the date of termination.
If you do not maintain the Term No-Lapse Guarantee, we will not reinstate this
guarantee and you will not be eligible for the Lifetime No-Lapse Guarantee. If
you do not maintain the Lifetime No-Lapse Guarantee, we will not reinstate this
guarantee.
RIDERS
Each rider's description in this Prospectus is subject to the specific terms of
the rider as each contains definitions, contractual limitations and conditions.
You should review any rider before purchasing it.
INCLUDED RIDER
The insurance benefit (or rider) summarized below is automatically included with
every Policy issued in a state where such an insurance benefit is permitted. You
should ask your insurance agent if this insurance benefit is available in your
state.
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<PAGE>
ACCELERATED DEATH BENEFIT RIDER
Benefit Summary: Enables you to obtain an advance against the Death
Benefit upon diagnosis of fatal illness
Benefit Description: When the Insured is diagnosed with a fatal illness, we
will make you special loans secured by your Death
Benefits payable under the Policy. The maximum amount
of these special loans is the lesser of
o $250,000
o 60% of the difference between your Death Benefit
and the maximum amount you are able to borrow from
your Policy Multiple special loan advances are
permitted during the 12- month period from the date
of the first advance until you reach the maximum
amount. The minimum special loan is $5,000. We
charge you interest at an annual rate of 8% on all
special loans we make to you.
Some or all of the special loan advances may be
considered taxable by the Internal Revenue Service. You
should consult your tax adviser before requesting an
advance under this rider. The Death Proceeds will be
reduced by the amount of all special loan advances,
including interest, upon the death of the Insured.
Excluded Coverage: This advance must be voluntarily elected. It is not
available if:
o You are required to elect this benefit by law to
meet the claims of creditors
o You are required to elect this benefit by a
government agency in order to apply, keep or
maintain a government benefit
Cost of Benefits: No charge until elected (and then the only charge is
interest on the advance)
Termination of Benefits: The benefits terminate on the earliest of
o When your Policy ends
o When the cumulative maximum amount has been advanced
44
<PAGE>
OPTIONAL RIDERS
Subject to certain underwriting and other requirements, you may add one or more
of the following optional insurance benefits to your Policy by rider. We will
deduct the cost of any rider as part of the Monthly Deduction. Each available
optional insurance benefit (or rider) is summarized below.
ACCIDENTAL DEATH RIDER
Benefit Summary: Pays an additional death benefit if the Insured's death
is caused by accidental bodily injury
Benefit Description: You select the Accidental Death Benefit Amount. The
Accidental Death Benefit Amount will be added to the
Death Proceeds and paid under the same Income Plan.
Under certain circumstances, we will pay 2
times your Accidental Death Benefit Amount.
Excluded Coverage: We will not pay an Accidental Death Benefit if the
Insured's injury or death resulted from certain risks,
such as suicide, certain travel in aircraft, certain
use of drugs and participation in an activity while
intoxicated.
Cost of Benefits: Depends on the Insured's Attained Age and selected
Accidental Death Benefit Amount
Termination of The benefits terminate at the earliest of Benefits:
Benefits: o When your Policy ends
o Upon cancellation of the rider
o The day before the Policy Anniversary on which the
Insured is 70 years old
45
<PAGE>
INSURED INSURABILITY RIDER
Benefit Summary: Provides an option to purchase additional insurance on
the life of the Insured without evidence of
insurability
Benefit Description: We provide you an option to purchase additional
insurance on the life of the Insured without evidence
of insurability. The Insured Insurability Option Amount
you select is the amount of additional insurance you
have the option to purchase.
Under most circumstances, the options may be exercised
on each regular option date. The regular option dates
are the Policy Anniversaries that occur after the
Insured is ages 25, 28, 31, 34, 37 and 40.
The options may also be exercised on alternate option
dates. An alternate option date occurs on the 90th day
following each of the following:
o Insured's marriage
o Birth of a living child of Insured
o Adoption of a child by Insured
The exercise of an option on an alternate option date
cancels the next regular option date still available.
Excluded Coverage: N/A
Cost of Benefits: Depends on the Insured's Attained Age and selected
Insured Insurability Option Amount
Termination of The benefits terminate on the earliest of
Benefits: o When your Policy ends
o Upon cancellation of the rider
o The Policy Anniversary on which the Insured is
40 years old
46
<PAGE>
DISABILITY CREDIT RIDER
Benefit Summary: Makes premium payments equal to the "Credit Amount"
while you are disabled
Benefit Description: You select the Credit Amount. The Credit Amount is the
annual amount of premium payments we will pay under
this optional policy benefit. The Credit Amount must
always be
o Greater than or equal to your minimum annual premium
for the Term No-Lapse Guarantee
o Less than or equal to your minimum annual premium for
the Lifetime No-Lapse Guarantee
Your Credit Amount may be adjusted if either minimum
annual premium changes.
We make a premium payment of 1/12 of the Credit Amount
for each month you are disabled. This amount may or may
not be sufficient to keep your Policy in effect.
Excluded Coverage: Disabilities that result from the following are not
covered:
o Self-inflicted injuries
o A declared or undeclared war
o Injuries or diseases that first manifest while this
optional insurance benefit is not in force
Cost of Benefits: Depends on the Insured's Attained Age and selected
Credit Amount
Termination of The benefits terminate on the earliest of
Benefits: o When your Policy ends
o Upon cancellation of the rider
o The day before the Policy Anniversary on which the
Insured is 60 years old, unless such benefits are
being paid at that time
47
<PAGE>
CHILDREN'S TERM RIDER
Benefit Summary: Pays a death benefit if an Insured Child dies
Benefit Description: For each Insured Child that you name in
your application, you select the Children's Term
Benefit Amount that will be applicable to each Insured
Child. The Children's Term Benefit Amount will be paid
upon the death of an Insured Child and can be paid
under an Income Plan.
Under most circumstances, if the Insured dies, the
insurance on each Insured Child provided by this rider
will become fully paid-up nonparticipating term
insurance and will continue until each Insured Child's
23rd birthday. After an Insured Child is age 18, that
Insured Child may convert the term insurance policy to
a whole life plan.
Excluded Coverage: This rider provides coverage only for Insured
Children of the Insured. An Insured Child includes any
child of the Insured who was at least 15 days old and
less than 18 years old when named in the application.
An Insured Child also includes any child at least 15
days old, who after the date of application for this
rider, was born of any marriage of the Insured or was
adopted by the Insured when less than 18 years of age.
Cost of Benefits: Depends only on selected Children's Term Benefit
Amounts
Termination of The benefits terminate on the earliest of
Benefits: o When your Policy ends
o When you cancel the rider
o The day before the Policy Anniversary on which the
Insured is 65 years old
o On an Insured Child's 23rd birthday, for that Insured
Child
o The day an Insured Child exercises the conversion
option, for that Insured Child
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<PAGE>
OTHER INSURED RIDER
Benefit Summary: Pays a death benefit if an Other Insured dies
Benefit Description: For each Other Insured that you name in your
application, you select an Other Insured Benefit
Amount. The Other Insured Benefit Amount will be paid
to the designated beneficiary upon the death of an
Other Insured and can be paid under an Income Plan.
Under most circumstances, if the Insured dies, each
Other Insured has the right to convert the coverage to
a new life insurance policy. Until the Policy
Anniversary on which an Other Insured is age 85, that
Other Insured may convert the coverage to any life
insurance policy (other than term insurance) that we
regularly issue.
Excluded Coverage: N/A
Cost of Benefits: Depends on each Other Insured's Attained Age, gender
and underwriting class and selected Other Insured
Benefit Amounts
Termination of The benefits terminate on the earliest of
Benefits: o When your Policy ends
o When you cancel the rider
o The day before the Policy Anniversary on which the
Insured is 100 years old
o The day before the Policy Anniversary on
which the Other Insured is 95 years old,
for that Other Insured
o The day an Other Insured exercises the conversion
options, for that Other Insured
49
<PAGE>
OTHER INFORMATION ABOUT YOUR POLICY
POLICY IS A CONTRACT
The Policy is a legal contract between you and us to insure the life of the
person named in the application as the Insured. We provide the insurance
coverage and other benefits described in the Policy in exchange for your
completed application and your premium payments.
When we refer to the Policy, we mean the entire contract, which consists of:
o The basic policy
o The application
o Any supplemental applications
o Any optional policy benefits, riders or endorsements that add
provisions or change the terms of the basic policy
The description of the Policy in this Prospectus is subject to the specific
terms of your Policy as it contains specific contractual provisions and
conditions. If the terms of your Policy differ from the description of the
Policy in the Prospectus, you should rely on the terms in your Policy.
The Policy is subject to the laws in the state in which it is issued. To the
extent that the Policy may not comply with the applicable state law, we will
interpret it so that it complies.
MODIFICATION OF POLICY
Upon notice to you, we may modify your Policy:
o If such modification is necessary to make the Policy comply with any law
or regulation issued by a governmental agency applicable to the Policy
o If such modification 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
o If such modification is necessary to reflect a change in the operation of
the Company, Separate Account 1 or the Sub-Accounts
o If such modification 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 a modification, we may make appropriate
endorsement to the Policy to reflect the modification.
Your insurance agent cannot change any of the terms of your Policy, extend the
time for making premium payments or make any other agreement that would be
binding on us.
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<PAGE>
EXTENDED MATURITY BENEFIT
On the Policy Anniversary after the Insured turns age 100, the total of the then
current value of your Sub-Accounts and the then current value of your Loan
Account, plus interest due and unpaid, will be automatically transferred to the
Fixed Account. Your total value in the Fixed Account will then be reduced by the
amount of any outstanding Indebtedness. After that time, we will not accept any
further premium payments, we will not deduct further charges, we will not permit
you to transfer your money from the Fixed Account, we will not permit any
additional loans and your death benefit option will be changed to Option 2.
Unless you were older than age 75 on the Policy Date, we will not decrease your
Specified Amount by your Account Value when we change your death benefit option
to Option 2. Your Policy will continue in effect until the Insured's death or
until the Policy is surrendered for its Net Cash Surrender Value.
CONVERSION TO A FIXED POLICY
You may elect to convert your Policy to a fixed policy at any time:
o Within 24 months of your Policy Date or
o Within 60 days of the later of
o notification of a change in the investment policy of Separate Account
1, or
o the effective date of the change
If you elect to convert your Policy, we will transfer the entire value of your
investment in the Sub-Accounts to the Fixed Account. We will not charge you for
this transfer. After the date of your election to convert your Policy, Net
Premiums may not be allocated and transfers may not be made to any of the
Sub-Accounts. All other terms and charges of your Policy will continue to apply.
CONFIRMATIONS AND STATEMENTS
We will send you a confirmation of each premium payment and other financial
transactions, such as transfers and partial withdrawals. We will also send you a
statement each year showing the value of your investment in the Sub-Accounts and
the Fixed Account.
If you have invested money in a Sub-Account, you will also receive semi-annual
reports for the Fund in which the Sub-Account invests. These semi-annual reports
will include a list of portfolio securities held by the underlying Fund.
PROCESSING GUIDELINES
We use certain guidelines to determine when we will process your Policy
application and other instructions. These processing guidelines determine your
Policy Date and the effective date of instructions that you send to us. The
effective date depends upon:
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o Whether we receive your application or instructions before or after the
close of regular trading on the New York Stock Exchange (typically 4:00 p.m.
Eastern Time),
o Whether the New York Stock Exchange is open at that time, and
o Whether your application and instructions are in good order
Also, we cannot determine the effective date of your Policy until we have
received the initial minimum premium required to issue your Policy.
If you are the sole owner of the Policy, you must sign the Policy application
and other instructions. If you and another person are joint owners of your
Policy, you and your joint owner must both sign your Policy application and
instructions.
REQUIRED NOTE ON COMPUTATIONS
Calculations are based on the mortality table shown in your Policy Schedule.
We have filed a detailed statement of our computations with the applicable state
insurance departments. The values under this Policy are not less than those
required by the law of your state. Any benefit provided by an attached rider
will not increase these values unless stated in the rider.
The method used in calculating Policy values will be based on the actuarial
procedures that recognize the variable nature of this Policy.
PROJECTION OF BENEFITS AND VALUES
In addition to any examples and illustrations provided to you by your insurance
agent, you may request that we send you a hypothetical illustration of Policy
benefits and values. We may charge a reasonable fee to provide this information
to you.
INCONTESTABILITY
We issue the Policy in reliance on the answers you provided in the application
and any supplemental applications. These answers are considered representatives,
and not warranties. We have assumed that all these answers are true and
complete. If they are not, we may have the right to contest and void the Policy
as if it had not been issued. Except for cases involving termination of the
Policy or fraud, we will not contest:
o The Policy after the Policy has been in effect for 2 years during the
Insured's lifetime
o Any increase in Specified Amount after the increase has been in effect for
2 years during the Insured's lifetime
o Any rider attached to the Policy after the rider has been in effect for
2 years
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During these 2-year periods, we may contest the validity of your Policy, any
increase in Specified Amount or the validity of any riders based on material
misstatements made in the application or any supplemental application. No
statement will be used in contesting a claim unless it is in an application or
supplemental application and a copy of the application is attached to the
Policy.
If your Policy is reinstated after termination, the 2-year period of
contestability begins on the reinstatement date. If the Policy has been in
effect for 2 years during the lifetime of the Insured, it will be contestable
only as to statements made in the reinstatement application. If the Policy has
been in force for less than 2 years, it will be contestable as to statements
made in the reinstatement application as well as the initial application and
supplemental applications.
DEFENDING AGAINST CLAIMS
We will not use any statement you made to defend against a claim under your
Policy unless it is in an application or supplemental application and a copy of
the application is attached to the Policy.
SUICIDE EXCLUSION
Your Policy does not cover suicide by the Insured, whether sane or insane,
during the 2-year period beginning with the Policy Date. If the Policy is in
effect and the Insured commits suicide during this 2-year period, we will pay
you the greater of the following amounts:
o Your premium payments, less any Indebtedness, less any previous
withdrawals, and less all monthly costs of insurance on all persons
other than the Insured ever covered by rider
o The Net Cash Surrender Value
We will not pay any Death Benefit in these circumstances.
With respect to any increase in Specified Amount, we will not pay death benefits
if the Insured, whether sane or insane, commits suicide within 2 years from the
effective date of the increase. If the Policy has been in effect for more than 2
years after the Policy Date but less than 2 years from an increase in Specified
Amount, we will return the monthly costs of insurance charged for the increase
and pay death benefits based on the previous Specified Amount (on which the
2-year suicide exclusion has expired).
This provision also applies to any rider attached to the Policy. The 2-year
period begins on the rider's date of issue.
If your Policy terminates and is later reinstated, we will measure the 2-year
time period from the effective date of reinstatement. Any premium payment refund
will be limited to premiums paid on or after the effective date of
reinstatement.
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TERMINATION OF YOUR POLICY
Your Policy will terminate and all insurance coverage under the Policy will stop
in the following instances:
o As of the date on which we receive notice from you requesting that the
Policy options, be cancelled
o As of the date the Insured dies (although some riders may provide
benefits for other covered persons beyond the Insured's death)
o As of the date a Grace Period related to the continuation of your Policy
expires
o As of 31 days after we mail you a notice that your Indebtedness exceeds your
Cash Surrender Value less the Monthly Deduction and the Monthly Expense
Charge for the current month unless you make the necessary premium payment
to continue the Policy
NO DIVIDENDS
The Policies are "non-participating," which means that they do not pay
dividends.
MISSTATEMENT OF AGE OR GENDER
If the age or gender of the Insured is misstated in information sent to us, we
will change any benefits under the Policy to those benefits that your cost of
insurance charge for the month of death would provide if the correct age and
gender had been stated. If we do not discover the misstatement until after the
payment of the Policy proceeds under one of the Income Plans has started, we
will deduct any overpayments, plus compound interest, from subsequent payments
and we will pay any underpayments, plus compound interest, in a lump sum.
TELEPHONE SECURITY PROCEDURES
We have established security procedures for telephone transactions, such as
recording telephone calls. We may also require a personal identification number
(PIN) or other identifying information. We will not be liable for losses due to
unauthorized or fraudulent telephone instructions if we follow reasonable
security procedures and reasonably believe the instructions are genuine.
YEAR 2000 INFORMATION
Columbus Life began its effort to address the Year 2000 compliance issue prior
to 1990. As of January 1, 1999, the internal effort was completed. All computer
equipment and software systems, communications equipment and software, and any
building equipment and facilities are expected to properly calculate, process
and use dates before, during and after January 1, 2000, without error or
interruption. In addition to its internal efforts, Columbus Life has a Year 2000
Task Force in place to monitor the Year 2000 efforts of its critical business
partners and suppliers. Should this Task Force determine that the Year 2000
efforts of any of these partners or suppliers will not be adequate, Columbus
Life will develop contingency plans to address any issues that may arise.
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ASSIGNMENT
Generally, you may assign your Policy. We will not be bound by an assignment
until we receive and record written notice of the assignment at Columbus Life
Variable Service Center, P.O. Box 2850, Cincinnati, Ohio 45201-2850. Your rights
and the rights of your Beneficiary will be affected by an assignment. We are not
responsible for the validity or tax consequences of any assignment.
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INFORMATION ABOUT THE INVESTMENT OPTIONS
THE SUB-ACCOUNTS AND THE FUNDS
You can allocate your Net Premiums to one or more Sub-Accounts. You may also
transfer amounts among the Fixed Account and the Sub-Accounts. Each Sub-Account
invests in a corresponding Fund of the AIM Variable Insurance Funds, Inc. (AIM),
The Alger American Fund (Alger), MFS Variable Insurance Trust (MFS), PIMCO
Variable Insurance Trust (PIMCO) or Touchstone Variable Series Trust
(Touchstone).
Each Sub-Account buys shares of the corresponding Fund at net asset value
without a sales charge. Dividends and capital gains distributions from a Fund
are reinvested at net asset value without a sales charge and held by the
Sub-Account as an asset. Each Sub-Account redeems Fund shares at net asset value
to the extent necessary to make payment of Death Proceeds or other payments
under the Policy.
The following table contains general information about the investment advisor,
investment objective and principal investment strategies of each Fund in which a
corresponding Sub-Account invests. The fund advisors and sub-advisors cannot
guarantee that the Funds will meet their investment objectives nor is there any
guarantee that your Account Value will equal or exceed the total of your Net
Premiums. More complete information about each Fund, including information about
its risks, performance and other investment strategies, is included in the
prospectus of each Fund. Please read each prospectus carefully before you
purchase a Policy or make other decisions about your investment options.
A Fund may have a name and/or investment objective that is very similar the name
of a publicly available mutual fund managed by the same advisor or sub-advisor.
The Funds in which the Sub-Accounts invest are not publicly available and will
not have the same performance as those publicly available mutual funds.
Different performance will result from differences in various factors that
affect the operation of a Fund, such as implementation of investment policies,
Fund expenses and size of the Fund. In addition, your investment return from
your Policy will be less than the investment return of a shareholder in the
publicly available funds because you will pay additional charges related to your
Policy, such as the mortality and expense risk charge.
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AIM V.I. GROWTH FUND
(AIM V.I. GROWTH SUB-ACCOUNT)
Fund Family: AIM Variable Insurance Funds, Inc.
Fund Advisor: AIM Advisors, Inc.
Investment Objective: The Fund seeks to achieve growth of capital
principally through investment in common stocks of
seasoned and better capitalized companies considered
to have strong earnings momentum.
Principal Investment The Fund invests primarily in the common stocks of
Strategies: 2 types of companies:
o "Core" companies that the portfolio
manager believes have experienced
above-average consistent, long-term
growth in earnings and have a good chance
to continue such growth in the future
o "Earnings Acceleration" companies that
the portfolio manager believes are
currently enjoying a dramatic increase in
profits.
AIM V.I. GOVERNMENT SECURITIES FUND
(AIM V.I. GOVERNMENT SECURITIES SUB-ACCOUNT)
Fund Family: AIM Variable Insurance Funds, Inc.
Fund Advisor: AIM Advisors, Inc.
Investment Objective: The Fund seeks to achieve a high level of current
income consistent with reasonable concern for safety
of principal by investing in debt securities issued,
guaranteed or otherwise backed by the U.S.
Government. The Fund intends to maintain a dollar-
weighted average portfolio maturity between 3 and
10 years.
Principal Investment The Fund invests primarily in U.S. Treasury
Strategies: obligations and obligations issued or guaranteed by
U.S. Government agencies and instrumentalities.
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ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
(ALGER AMERICAN SMALL CAPITALIZATION SUB-ACCOUNT)
Fund Family: The Alger American Fund
Fund Advisor: Fred Alger Management, Inc.
Investment Objective: The Fund seeks long-term capital appreciation.
Principal Investment The Fund invests primarily (up to 65% of total
Strategies: securities of companies that have a market
assets) in equity capitalization within the range of
companies included in the Russell 2000 Growth Index
or the S&P SmallCap 600 Index. The combined
range of the market capitalization of
companies included in these indices is
approximately $20 million to $4.25 billion.
The Fund may invest up to 35% of total
assets in companies with a market
capitalization outside the range provided by
the indices.
ALGER AMERICAN GROWTH PORTFOLIO
(ALGER AMERICAN GROWTH SUB-ACCOUNT)
Fund Family: The Alger American Fund
Fund Advisor: Fred Alger Management, Inc.
Investment Objective: The Fund seeks long-term capital appreciation.
Principal Investment The Fund invests primarily (up to 65% of total
Strategies: assets) in equity securities of companies that have
a market capitalization of $1 billion or greater.
The Fund may invest up to 35% of total assets in
companies with a market capitalization of less than
$1 billion.
MFS VIT EMERGING GROWTH SERIES
(MFS VIT EMERGING GROWTH SUB-ACCOUNT)
Fund Family: MFS Variable Insurance Trust
Fund Advisor: Massachusetts Financial Services Company
Investment Objective: The Fund seeks to provide long-term growth of
capital. Dividend and interest income from portfolio
securities, if any, is incidental to the Fund's
objective of long-term growth of capital.
Principal Investment The Fund invests primarily (at least 65% of total
Strategies: assets) in the common stocks of companies believed
to be early in their life cycle but have the
potential to become major enterprises
(emerging growth companies) or major
enterprises whose rates of earnings growth
are expected to accelerate. In selecting its
investments, the portfolio manager focuses
on those companies it believes will grow
faster than the overall U.S.
economy and the rate of inflation.
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MFS VIT GROWTH WITH INCOME SERIES
(MFS VIT GROWTH WITH INCOME SUB-ACCOUNT)
Fund Family: MFS Variable Insurance Trust
Fund Advisor: Massachusetts Financial Services Company
Investment Objective: The Fund seeks to provide reasonable current income
and long-term growth of capital and income.
Principal Investment The Fund invests primarily (at least 65% of total
Strategies: assets) in equity securities of companies that are
believed to have long-term prospects for growth and
income.
PIMCO LONG-TERM U.S. GOVERNMENT PORTFOLIO
(PIMCO LONG-TERM U.S. GOVERNMENT SUB-ACCOUNT)
Fund Family: PIMCO Variable Insurance Trust
Fund Advisor: Pacific Investment Management Company
Investment Objective: The Fund seeks to maximize total return, consistent
with the preservation of capital and prudent
investment management.
Principal Investment The Fund invests primarily (up to 65% of net assets)
Strategies: in U.S. Government securities. The U.S. Government
securities may be represented by options and futures
contracts.
TOUCHSTONE SMALL CAP VALUE FUND
(TOUCHSTONE SMALL CAP VALUE SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Todd Investment Advisors, Inc.
Investment Objective: The Fund seeks long-term growth of capital.
Principal Investment The Fund invests primarily (at least 75% of total
Strategies: assets) in the common stocks of small to medium
capitalization companies that the portfolio
manager believes are undervalued. The
portfolio manager looks for stocks that are
priced lower than they should be, and also
contain a catalyst for growth. The Fund may
also invest up to 5% of its assets (at the
time of purchase) in any one company. The
Fund will limit its investments so that the
percentage of the Fund's assets invested in
a particular industry will not be more than
double the percentage of the industry in the
Russell 2000 Index.
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TOUCHSTONE EMERGING GROWTH FUND
(TOUCHSTONE EMERGING GROWTH SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisors: David L. Babson & Company, Inc.
Westfield Capital Management Company, Inc.
Investment Objective: The Fund seeks to increase the value of its shares
as a primary goal and to earn income as a secondary
goal.
Principal Investment The Fund invests primarily (at least 65% of total
Strategies: assets) in the common stocks of smaller, rapidly
growing (emerging growth) companies. In selecting
its investments, the portfolio managers focus on
those companies they believe will grow faster than
the U.S. economy in general. They also choose
companies they believe are priced lower in
the market than their true value.
TOUCHSTONE INTERNATIONAL EQUITY FUND
(TOUCHSTONE INTERNATIONAL EQUITY SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Credit Suisse Asset Management
Investment Objective: The Fund seeks to increase the value of its shares
over the long-term.
Principal Investment The Fund invests primarily (at least 80% of total
Strategies: assets) in equity securities of foreign companies
and will invest in at least 3 countries outside the
United States. A large portion of those non-U.S.
equity securities may be issued by companies active
in emerging market countries (up to 40% of total
assets).
TOUCHSTONE INCOME OPPORTUNITY FUND
(TOUCHSTONE INCOME OPPORTUNITY SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Alliance Capital Management L.P.
Investment Objective: The Fund seeks to achieve a high level of current
income as its main goal. The Fund may also seek to
increase the value of its shares, if consistent with
its main goal.
Principal Investment The Fund invests primarily in debt securities. These
Strategies: debt securities will generally be more risky
non-investment grade corporate and government
securities (up to 100% of total assets).
Non-investment grade debt securities are often
referred to as "junk bonds" and are considered
speculative.
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TOUCHSTONE HIGH YIELD FUND
(TOUCHSTONE HIGH YIELD SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Fort Washington Investment Advisors, Inc.
Investment Objective: The Fund seeks to achieve a high level of current
income as its main goal. Capital appreciation is a
secondary consideration in achieving its goal.
Principal Investment The Fund invests primarily in debt securities. These
Strategies: debt securities will generally be more risky
non-investment grade corporate and government
securities (up to 100% of total assets) issued
primarily by U.S. issuers. Non-investment grade debt
securities are often referred to as "junk bonds" and
are considered speculative.
TOUCHSTONE VALUE PLUS FUND
(TOUCHSTONE VALUE PLUS SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Fort Washington Investment Advisors, Inc.
Investment Objective: The Fund seeks to increase the value of its shares
over the long-term.
Principal Investment The Fund invests primarily (at least 65% of total
Strategies: assets) in common stock of larger companies that the
portfolio manager believes are undervalued.
In choosing undervalued stocks, the
portfolio manager looks for companies that
have proven management and unique features
or advantages and are believed to be priced
lower than their true value. These companies
may not pay dividends. The Fund may also
invest in common stocks of rapidly growing
companies to enhance the Fund's return and
vary its investments to avoid having too
much of the Fund's assets subject to risks
specific to undervalued stocks. Also, up to
70% of total assets may be invested in large
cap companies and up to 30% may be invested
in mid cap companies.
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TOUCHSTONE GROWTH & INCOME FUND
(TOUCHSTONE GROWTH & INCOME SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Scudder Kemper Investments, Inc.
Investment Objective: The Fund seeks to increase the value of its shares
over the long-term, while receiving dividend income.
Principal Investment The Fund invests primarily (at least 65% of total
Strategies: assets) in dividend-paying common stocks, preferred
stocks and convertible securities in a
variety of industries. The portfolio manager
may choose to purchase securities that do
not pay dividends (up to 35%) but which are
expected to increase in value or produce
high income payments in the future. In
choosing securities for the Fund, the
portfolio manager will follow a value
oriented style, generally buying securities
with yields that are at least 20% higher
than the average yield of companies in the
S&P 500. The portfolio manager focuses on
investing in companies that have a market
capitalization of at least $1 billion, but
may invest in companies of any size.
TOUCHSTONE ENHANCED 30 FUND
(TOUCHSTONE ENHANCED 30 SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Todd Investment Advisors, Inc.
Investment Objective: The Fund seeks to achieve a total return which is
higher than the total return of the Dow Jones
Industrial Average (DJIA).
Principal Investment The Fund's portfolio is based on the 30 stocks which
Strategies: comprise the DJIA. The portfolio manager seeks to
enhance the total return of the Fund by substituting
some rapidly growing companies for those companies
in the DJIA that appear to have slower growth. The
portfolio manager uses a database of 4,000
stocks from which to choose the companies
that will be substituted in the enhanced
portion of the portfolio.
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TOUCHSTONE BALANCED FUND
(TOUCHSTONE BALANCED SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: OpCap Advisors, Inc.
Investment Objective: The Fund seeks to achieve an increase in value and
current income.
Principal Investment The Fund invests in both equity securities
Strategies: (generally about 60% of total assets) and debt
securities (generally about 40%, but at least 25%).
The debt securities will be rated investment grade
or at the highest levels of non-investment grade.
TOUCHSTONE BOND FUND
(TOUCHSTONE BOND SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Fort Washington Investment Advisors, Inc.
Investment Objective: The Fund seeks to provide a high level of
dividends and distributions.
Principal Investment The Fund invests primarily in higher quality
Strategies: investment grade debt securities (at least
65% of total assets). The Fund's investment
in debt securities may be determined by the
direction in which interest rates are
expected to move because the value of these
securities generally moves in the opposite
direction from interest rates. The Fund
expects to have an average maturity between
5 and 15 years.
TOUCHSTONE STANDBY INCOME FUND
(TOUCHSTONE STANDBY INCOME SUB-ACCOUNT)
Fund Family: Touchstone Variable Series Trust
Fund Advisor: Touchstone Advisors, Inc.
Fund Sub-Advisor: Fort Washington Investment Advisors, Inc.
Investment Objective: The Fund seeks to provide a higher level of current
income than a money market fund, while also seeking
to prevent large fluctuations in the value of the
Sub-Account's initial investment. The Fund does not
try to keep a constant $1.00 per share net
asset value.
Principal Investment The Fund invests mostly in various types of
Strategies: money market instruments. All investments will be
rated at least investment grade. On average, the
securities held by the Fund will mature in less than
one year.
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Neither AIM Advisors, Inc., Fred Alger Management, Inc., Massachusetts Financial
Services Company nor Pacific Investment Management Company is an affiliate of
Columbus Life.
SPECIAL CONSIDERATIONS
AIM, Alger, MFS and PIMCO offer shares to Separate Account 1 and other separate
accounts of unaffiliated life insurance companies to fund benefits under
variable annuity contracts and variable life insurance policies. Touchstone
offers its shares to the separate accounts of Columbus Life and Western-Southern
Life Assurance Company to fund benefits under the Policies, other variable life
insurance policies and variable annuity contracts. We do not foresee any
disadvantage to you arising out of these arrangements. Nevertheless, differences
in treatment under tax and other laws, as well as other considerations, could
cause the interests of various purchasers of contracts and policies to conflict.
For example, violation of the federal tax laws by one separate account investing
in a Fund could cause the contracts or policies funded through another separate
account to lose their tax-deferred status, unless remedial action were taken.
If a material irreconcilable conflict arises between separate accounts, a
separate account may be required to withdraw its investment in a Fund. If it
becomes necessary for a separate account to replace its shares of a Fund with
another investment, the Fund may have to liquidate portfolio securities on a
disadvantageous basis. At the same time, AIM, Alger, MFS, PIMCO and Columbus
Life are subject to conditions imposed by the SEC that are designed to prevent
or remedy any conflict of interest. Touchstone, which is not subject to such
conditions, has adopted certain procedures that substantially reflect and
implement the substance of these conditions. These conditions and procedures
require the Board of Trustees of each Fund has the obligation to monitor events
in order to identify any material irreconcilable conflict that may possibly
arise and to determine what action, if any, should be taken to remedy or
eliminate the conflict.
CHANGES IN THE SUB-ACCOUNTS AND THE FUNDS
We may add, delete or combine Sub-Accounts. New Sub-Accounts will invest in
Funds we consider suitable. We may also substitute a new Fund or similar
investment option for the Fund in which a Sub-Account invests. We would make a
substitution to ensure the underlying Fund continues to be a suitable
investment. A substitution may be triggered by unsatisfactory investment
performance, a change in laws or regulations, a change in the Fund's investment
objectives or restrictions, a change in the availability of the Fund for
investment, or any other reason. Before any substitution, we will obtain any
required approvals, including approval from the SEC or from Policy holders.
FIXED ACCOUNT
The Net Premiums that you allocate to the Fixed Account will earn interest. We
guarantee that this interest rate will never be less than an effective annual
rate of at least 3%. We may, but are not required to, credit interest in excess
of this rate. Different interest rates may apply to Net Premiums allocated, or
amounts transferred, to the Fixed Account on different dates. The current
interest rate of the Fixed Account at the time we issue your Policy is shown in
your Policy Schedule.
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VALUATION OF YOUR INVESTMENT
SUB-ACCOUNTS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT A unit of measure used to calculate a Policy owner's
share of a Sub-Account. Although it is not the same as
a mutual fund share, it is similar.
- --------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE The dollar value of an Accumulation Unit in a
Sub-Account.
- --------------------------------------------------------------------------------
The value of your interest in a Sub-Account is measured in Accumulation Units.
An Accumulation Unit is an accounting unit of measure. It is similar to a share
of a mutual fund. The value of an Accumulation Unit varies from day to day
depending on the investment performance of the Fund in which the Sub-Account is
invested and the expenses of the Sub-Account.
The Accumulation Unit Value of each Sub-Account is calculated on each day that
the New York Stock Exchange is open for business (Valuation Date). The
Accumulation Unit Value of a Sub-Account on any Valuation Date is calculated by
dividing the value of the Sub-Account's net assets by the number of Accumulation
Units credited to the Sub-Account on the Valuation Date.
When you allocate Net Premiums or transfer amounts to a Sub-Account, your
Account Value is credited with Accumulation Units. Other transactions, such as
withdrawals and payments of the Monthly Deduction and Monthly Expense Charge,
will decrease the number of Accumulation Units.
The number of Accumulation Units added to or subtracted from your Account Value
is calculated by dividing the dollar amount of the transaction by the
Accumulation Unit Value for the Sub-Account at the close of trading on the
Valuation Date when we process the transaction. We use the following guidelines
to determine the Valuation Date when we process the transaction:
o If we receive your premium payment or transfer instructions in good
order on a Valuation Date before the close of regular trading on the
New York Stock Exchange (typically 4:00 p.m. Eastern Time), we will
process the transaction on that Valuation Date.
o If not, we will process the transaction on the next Valuation Date.
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To calculate the Accumulation Unit Value of a Sub-Account on any Valuation Date,
we start with the Accumulation Unit Value from the preceding Valuation Date and
adjust it to reflect the following items:
o The investment performance of the Sub-Account, which is based on the
investment performance of the corresponding Fund
o Any dividend or distributions paid by the corresponding Fund
o Any charges or credits for taxes that we determined were the result of the
investment operations of the Sub-Account
o The mortality and expense risk charge
Supplement F to this Prospectus contains a description of the procedures we use
to calculate the Accumulation Unit Value of a Sub-Account.
FIXED ACCOUNT
The value of the Fixed Account is calculated daily and reflects the following
transactions:
o Net Premiums allocated to the Fixed Account
o Withdrawals from the Fixed Account
o Transfers to and from the Fixed Account
o Interest credited to the Fixed Account
o Charges assessed against the Fixed Account, such as the Monthly Deduction
and Monthly Expense Charges and any surrender charges
Supplement F to this Prospectus contains a description of the procedures we use
to calculate the value in the Fixed Account.
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PERFORMANCE INFORMATION
We may include performance information in advertisements, sales literature and
reports to Policy owners or prospective investors.
We may report performance information in any manner permitted under applicable
law. For example, we may report total returns and average annual total returns
for the Funds and the Sub-Accounts or present performance information as a
change in a hypothetical Policy owner's Account Value or Death Benefit. The
performance information may cover various periods of time, including periods
beginning with the start of operations of a Sub-Account or the Fund in which it
invests. Performance information may not reflect the deduction of all charges
applicable to a particular Policy. For example, performance information may not
reflect the deduction of the cost of insurance charge because of the individual
nature of this charge. If all charges applicable to a particular Policy were
included, performance would be reduced.
You can request a personalized illustration that shows the performance of a
hypothetical Policy. The illustration will be based either on actual historical
Fund performance or on the hypothetical investment return that you request. The
Net Cash Surrender Value provided in the illustration will assume all Fund
charges and expenses, all Separate Account 1 charges and all Policy charges are
deducted. The Account Value provided in the illustration will assume all charges
except the surrender charge are deducted. Your Policy's actual investment
performance may not be the same as the performance of the hypothetical Policy
shown in the illustration. You should not consider any performance information
to be an estimate or guarantee of future performance.
We may also compare the performance of a Sub-Account to the performance of other
separate accounts or investments as listed in rankings prepared by independent
organizations that monitor the performance of separate accounts and other
investments. We may also include evaluations of the Sub-Account published by
nationally recognized ranking services or nationally recognized financial
publications.
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VOTING RIGHTS
Because each Sub-Account invests in a corresponding Fund, Columbus Life is
entitled to vote at any meeting of the Fund's shareholders. Columbus Life, on
behalf of Separate Account 1, votes the shares of a Fund that are held by a
Sub-Account according to the instructions of the holders of the Policies who
have invested in that Sub-Account.
If you have money in a Sub-Account on the record date for a meeting of the
shareholders of the corresponding Fund, we will ask you for voting instructions.
Your voting instructions will apply to a specific number of Fund shares. We will
calculate this number by determining the percentage of the Sub-Account that you
own and applying this percentage to the total number of Fund shares that the
Sub-Account owns.
We will mail materials to you at least 14 days before the shareholder meeting so
you can provide your voting instructions to us. If we do not receive voting
instructions from you, we will still vote the shares for which you are entitled
to provide instructions. We will vote these shares in the same proportion as the
voting instructions received by Policy holders who provide instructions. If
Columbus Life itself is entitled to vote at the shareholders meeting, it will
vote its shares in the same manner.
We may not ask the Policy holders for voting instructions if the applicable
rules and regulations change and permit us to vote the shares of the Fund. We
may also change the manner in which we calculate the number of shares for which
you can provide voting instructions if the applicable rules and regulations
change.
We may disregard the voting instructions of Policy holders under certain
circumstances and state insurance regulators may require us to disregard these
instructions under certain circumstances. If we disregard the voting
instructions we receive, we will include a summary of our actions in our next
report to you.
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COLUMBUS LIFE INSURANCE COMPANY AND SEPARATE ACCOUNT 1
COLUMBUS LIFE INSURANCE COMPANY
Columbus Life Insurance Company (Columbus Life) is a stock life insurance
company organized under the laws of the State of Ohio on September 8, 1986. It
is a wholly-owned subsidiary of The Western and Southern Life Insurance Company
(WSLIC), a mutual life insurance company organized under the laws of the State
of Ohio on February 23, 1888. Columbus Life issues insurance and annuity
contracts and is located at 400 East Fourth Street, Cincinnati, Ohio 45202.
Columbus Life is subject to supervision by the department of insurance of the
various states in which it is licensed to transact business.
Investments allocated to the Fixed Account are held in Columbus Life's general
account along with Columbus Life's other assets. The interests of the Fixed
Account have not been registered under the Securities Act of 1933 and Columbus
Life's general account has not been registered as an investment company under
the Investment Company Act of 1940. As a result, the staff of the SEC has not
reviewed the information in this Prospectus about the Fixed Account. Disclosures
regarding the Fixed Account may, however, be subject to certain general
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in a prospectus.
Because of state insurance law requirements, Columbus Life maintains reserves to
cover its obligations under the Policies. The assets in Separate Account 1
attributable to the Policies make up a part of these reserves. Although these
reserves support the Policies, Policy owners have no ownership interest in these
reserves and any excess reserves will be for the benefit of Columbus Life and
not the Policy owners. The general account of Columbus Life is available to
satisfy Columbus Life's obligations under the Policies.
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DIRECTORS OF COLUMBUS LIFE. Columbus Life is managed by its Board of Directors,
4 of whom are also officers of Columbus Life or WSLIC. Each Director's principal
business address is 400 East Fourth Street, Cincinnati, Ohio 45202, unless
otherwise noted. The following persons serve as Directors of Columbus Life:
NAME PRINCIPAL OCCUPATION (PAST 5 YEARS)
William J. Williams Chairman of the Board of Columbus Life since 1989;
Chairman of the Board of WSLIC and Western-Southern Life
Assurance Company (WSLAC) since 1989; Chief Executive
Officer of WSLIC and WSLAC 1989-1994.
John F. Barrett Vice-Chairman of the Board of Columbus Life since 1987;
Chief Executive Officer of WSLIC and WSLAC since 1994;
President of WSLIC and WSLAC since 1989; Chief
Operating Officer of WSLIC and WSLAC 1989-1994.
Lawrence L. Grypp President and Chief Executive Officer of Columbus Life
since 1999; President and Chief Executive Officer of
Summit Financial Resources, Inc. 1998-1999; Executive
Vice President of Massachusetts Mutual Life Insurance
Company 1976-1996.
James N. Clark Executive Vice President and Secretary of WSLIC and
WSLAC since 1997; Executive Vice President, Secretary
and Treasurer of WSLIC and WSLAC 1996-1997;
Executive Vice President and Treasurer of
WSLIC and WSLAC 1994-1996.
Robert C. Savage General Agent, Savage and Associates, 4427 Talmadge
Road, Building 2, Toledo, Ohio 43623.
Ralph E. Waldo Retired President and Chief Executive Officer of
Columbus Life. 3974 Patricia Drive, Columbus, Ohio 43220.
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OFFICERS OF COLUMBUS LIFE (OTHER THAN DIRECTORS). The senior officers of
Columbus Life, other than the Directors named above, and the officers
responsible for the variable life operations are described below. Each officer's
principal business address is 400 East Fourth Street, Cincinnati, Ohio 45202,
unless otherwise noted.
NAME PRINCIPAL OCCUPATION (PAST 5 YEARS)
Dale P. Hennie Senior Vice President and Chief Information Officer of
Columbus Life, WSLIC and WSLAC since 1999; Senior Vice
President of Insurance Operations of Columbus Life,
WSLIC and WSLAC 1997-1999; Vice President of
WSLIC and WSLAC 1990-1997.
Nora E. Moushey Senior Vice President and Chief Actuary of Columbus Life,
WSLIC and WSLAC since 1998; Senior Vice President of
Products and Financial Management of Columbus Life from
1993-1998.
James M. Teeters Senior Vice President of Insurance Operations of Columbus
Life, WSLIC and WSLAC since 1999; Senior Vice President
of Administration of Columbus Life 1991-1999; Senior Vice
President of Administration of WSLIC and WSLAC 1998-1999.
Robert L. Walker Senior Vice President and Chief Financial Officer of
Columbus Life, WSLIC and WSLAC since 1998; Chief
Financial Officer of National Data Corporation 1997-1998;
Senior Vice President and Chief Financial Officer of
Providian Corporation 1993-1997.
Mark A. Wilkerson Senior Vice President and Chief Marketing Officer of
Columbus Life since 1990.
William F. Ledwin Vice President and Chief Investment Officer of Columbus
Life since 1987; Senior Vice President and Chief
Investment Officer of WSLIC and WSLAC since 1989;
President of Fort Washington Investment Advisors, Inc.,
since 1990.
Thomas D. Holdridge Vice President of Underwriting of Columbus Life since
1980.
Donald J. Wuebbling Vice President and Secretary of Columbus Life since 1987;
Senior Vice President and General Counsel of WSLIC and
WSLAC since 1999; Vice President and General Counsel of
WSLIC and WSLAC 1988-1999.
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NAME PRINCIPAL OCCUPATION (PAST 5 YEARS)
Edward S. Heenan Vice President and Comptroller of Columbus Life, WSLIC
and WSLAC since 1987.
James J. Vance Vice President and Treasurer of Columbus Life, WSLIC and
WSLAC since 1999; Treasurer of Columbus Life, WSLIC and
WSLAC 1997-1999; Assistant Treasurer of WSLIC and WSLAC
1995-1997; Director of Financial Research of WSLIC and
WSLAC 1994-1995.
Charles W. Wood, Jr. Vice President of Sales and Marketing of Columbus Life
since 1999; Vice President of Marketing Support of
Columbus Life 1998-1999; Regional Vice President of
Sales of Ameritas Life Insurance Company 1996-1998;
Senior Vice President and Chief Marketing Officer of
Covenant Life Insurance Company 1988-1995.
Donald W. Kaplan Vice President of Financial Projections of Columbus Life
since 1998; Vice President of Financial Projections of
WSLIC and WSLAC since 1988.
Mario J. San Marco Vice President of Columbus Life since 1992; Vice
President of WSLIC and WSLAC since 1988.
The directors, officers and employees of Columbus Life and Touchstone Securities
are bonded in the amount of $10,000,000 by a Financial Institutions Blanket
Bond, for dishonest, fraudulent, or criminal acts, wherever committed, and
whether committed alone or in collusion with others.
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SEPARATE ACCOUNT 1
Columbus Life established Columbus Life Separate Account 1 (Separate Account 1)
under Ohio law on September 10, 1998. Separate Account 1 is registered with the
SEC as a unit investment trust. We may operate Separate Account 1 as a
management investment company or any other form permitted by law. We may also
deregister Separate Account 1 if registration with the SEC is no longer
required.
Separate Account 1 is currently divided into 18 Sub-Accounts. Separate Account 1
holds the investments allocated to the Sub-Accounts by the owners of the
Policies. It may also hold assets for the benefit of owners of certain other
variable universal life insurance policies that it issues. Separate Account 1
invests the assets of each Sub-Account in an underlying Fund. The investment
objective of a Sub-Account and the underlying Fund in which it invests are
identical.
We own Separate Account 1's assets but we segregate Separate Account 1's assets
from our general account assets and the assets of our other separate accounts.
Liabilities from other businesses we conduct will not be charged to Separate
Account 1's assets. We hold Separate Account 1's assets exclusively for the
benefit of owners and beneficiaries of the Policies and any other variable
universal life policies supported by Separate Account 1. We are obligated to pay
all benefits provided under the Policies.
The income, capital gains and capital losses of each Sub-Account are credited to
or charged against the assets of that Sub-Account without regard to the income,
capital gains or capital losses of any other Sub-Account or Columbus Life.
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SERVICE PROVIDERS
DISTRIBUTION OF THE POLICIES
Touchstone Securities, Inc. is the sole underwriter of the Policy. Touchstone
Securities is a wholly-owned subsidiary of IFS Financial Services, a
wholly-owned subsidiary of WSLAC, a wholly-owned subsidiary of WSLIC. Touchstone
Securities is a broker-dealer registered under the Securities Exchange Act of
1934 and is a member of the National Association of Securities Dealers, Inc.
(NASD) and Securities Investor Protection Corporation (SIPC). The Policy will be
sold by agents who have entered into distribution agreements with Touchstone
Securities. The agents will be licensed insurance agents in those states where
the Policy may be lawfully sold. The agents will also be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of NASD.
Columbus Life pays Touchstone Securities, or agents of Touchstone Securities, a
commission of up to 105% of the target annual premium (annualized) in the first
year when the Policy is sold, plus up to 3% of all premiums in excess of the
target annual premium. Each year thereafter, Columbus Life pays a commission of
3% or less on all premiums paid on a Policy. Each year Columbus Life also pays a
service fee of 0.25% or less of the Account Value, less any Indebtedness.
Touchstone Securities is generally responsible for paying its agents and
representatives for distribution of the Policies.
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SERVICE PROVIDERS TO THE FUNDS
The key service providers for each family of Funds in which the Sub-Accounts
invest are indicated below:
<TABLE>
<CAPTION>
AIM VARIABLE INSURANCE FUNDS, INC. (AIM)
ADVISOR CUSTODIAN UNDERWRITER/DISTRIBUTOR
------- --------- -----------------------
<S> <C> <C>
AIM Advisors, Inc. State Street Bank AIM Distributors, Inc.
11 Greenway Plaza, Suite 100 and Trust Company 11 Greenway Plaza, Suite 100
Houston, Texas 77046 225 Franklin Street Houston, Texas 77046
Boston, Massachusetts 02110
- ------------------------------------------------------------------------------------------------------------
THE ALGER AMERICAN FUND (ALGER)
ADVISOR CUSTODIAN UNDERWRITER/DISTRIBUTOR
------- --------- -----------------------
Fred Alger Management, Inc. Custodial Trust Company Alger Inc.
75 Maiden Lane 101 Carnegie Center 30 Montgomery Street
New York, New York 10038 Princeton, New Jersey 08540 Jersey City, New Jersey 07302
- ------------------------------------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST (MFS)
ADVISOR CUSTODIAN UNDERWRITER/DISTRIBUTOR
-------- --------- -----------------------
Massachusetts Financial Services State Street Bank MFS Fund Distributors, Inc.
Company and Trust Company 500 Boylston Street
500 Boylston Street 225 Franklin Street Boston, Massachusetts 02116
Boston, Massachusetts 02116 Boston, Massachusetts 02110
- ------------------------------------------------------------------------------------------------------------
PIMCO VARIABLE INSURANCE TRUST (PIMCO)
ADVISOR CUSTODIAN UNDERWRITER/DISTRIBUTOR
-------- --------- ---------------------
Pacific Investment Investors Fiduciary PIMCO Funds Distributors, Inc.
Management Company Trust Company 2187 Atlantic Street
840 Newport Center Drive 801 Pennsylvania Stamford, Connecticut 06902
Newport Beach, California 92660 Kansas City, Missouri 64105
- ------------------------------------------------------------------------------------------------------------
TOUCHSTONE VARIABLE SERIES TRUST (TOUCHSTONE)
ADVISOR CUSTODIAN UNDERWRITER/DISTRIBUTOR
-------- --------- ---------------------
Touchstone Advisors, Inc. Investors Bank & Trust Company Touchstone Securities, Inc.
311 Pike Street 200 Clarendon Street 311 Pike Street
Cincinnati, Ohio 45202 Boston, Massachusetts 02116 Cincinnati, Ohio 45202
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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TAX MATTERS
The following is a summary discussion of certain federal income tax matters that
apply to your Policy. The following discussion does not purport to be complete
or to cover all situations. The discussion is general in nature, and it should
not be considered tax advice. You should consult your own tax advisor for more
complete information.
The individual situation of each Policy owner or beneficiary will determine how
ownership or receipt of the Policy's proceeds will be treated for purposes of
federal estate tax, state inheritance tax and other taxes. Other than the very
general overview of the effect of federal estate taxes on the Policy that is
contained in the following discussion, the effect of federal estate tax, state
inheritance tax and other taxes is generally not discussed herein.
The following discussion is also based on federal income tax law and
interpretations in effect as of the date of this Prospectus and is subject to
later changes in such tax law or interpretations.
Except as is otherwise expressly noted below, this discussion assumes that you
are the Policy owner and that you are a natural person who is a U.S. citizen and
resident. The tax effects on an owner who is not a natural person, U.S. citizen
or U.S. resident may be different than the effects discussed herein.
GENERAL
Your Policy will be treated as "life insurance" for federal income tax purposes
(a) if it meets the definition of life insurance under Section 7702 of the
Internal Revenue Code of 1986, as amended (the "Code"), and (b) for as long as
the investments made by the mutual funds available for investment under the
Policy satisfy certain investment diversification requirements under Section
817(h) of the Code. We believe that the Policy will meet these requirements.
Accordingly, provided that your Policy meets such requirements, the following
federal income tax consequences should apply:
o The death benefit received by the beneficiary under the Policy will not be
subject to federal income tax; and
o Increases in the Policy's cash value as a result of investment experience
will not be subject to federal income tax unless and until there is a
distribution from the Policy, such as a surrender or a partial withdrawal.
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<PAGE>
PAYMENT OF DEATH BENEFIT
In general, as long as your Policy is considered "life insurance," the death
benefit payable under the Policy will not be included in the income of the
beneficiary receiving such benefit for federal income tax purposes.
However, if such death benefit is paid in the form of an Income Plan (over a
period of years) and not in a lump sum, then, in general, a portion of each
payment will be tax-free but the remaining portion of each payment will be
treated as interest on the death benefit and will be included in the
beneficiary's income for federal income tax purposes. The portion of each such
payment that will be treated as tax-free and the portion that will be treated as
interest are determined under the provisions of Section 101 of the Code and U.S.
Treasury Department regulations issued thereunder. The tax-free portion
generally will be determined by spreading on a pro rata basis the single sum
death benefit under the Policy over the anticipated number of payments under the
applicable Income Plan.
PRE-DEATH DISTRIBUTIONS - TESTING FOR MODIFIED ENDOWMENT CONTRACT STATUS
The federal income tax consequences of a distribution from your Policy that does
not reflect the payment of a death benefit under the Policy can be affected by
whether the Policy is determined to be a "modified endowment contract." In all
cases, however, the character of the income that is described in this and the
following parts of this tax discussion as taxable to the recipient will be
ordinary income (as opposed to capital gain).
Your Policy will generally be considered under the Code to be a "modified
endowment contract" if, at any time during the first 7 Policy Years of the
Policy, you have paid a cumulative amount of premiums that exceeds the premiums
that would have been paid by that time under a fixed-benefit insurance policy
that provided a death benefit equal to the Policy's first-year death benefit and
that was designed (based on certain assumptions mandated under the Code) to
provide for paid-up future benefits after the payment of 7 level annual
premiums. This determination is called the "7-pay test."
Further, whenever there is a "material change" in your Policy, it will generally
be (a) treated as a new contract for purposes of determining whether the Policy
is a modified endowment contract and (b) thereby subjected to a new 7-pay test
over a new 7-year period. The new 7-pay test will be adjusted to take into
account, under a prescribed formula, the accumulated cash value of the Policy at
the time of the material change. Thus, a materially changed Policy will be
considered a modified endowment contract if it fails to satisfy the new 7-pay
test.
A material change in your Policy for these purposes could occur as a result of a
change in the Policy's death benefit option, the selection of additional rider
benefits under the Policy, an increase in the Policy's Specified Amount of
coverage, or certain other changes.
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<PAGE>
If your Policy's benefits are reduced during the first 7 Policy Years of the
Policy (or within 7 years after a material change in the Policy), the initial
7-pay test that applied to the Policy at the time of its issue (or, if
applicable, at the time of the material change in the Policy) will be
recalculated based on the reduced level of benefits and applied retroactively
for purposes of such 7-pay test. (Such a reduction in benefits could include,
for example, a decrease in the Policy's Specified Amount that you request or, in
some cases, a partial surrender or termination of additional benefits under a
rider to the Policy.) If the premiums previously paid are greater than the
recalculated 7-pay test limit, the Policy will become a modified endowment
contract.
If your Policy is received in exchange for a modified endowment contract, it
will also be considered a modified endowment contract.
Changes made in your Policy (for example, a decrease in the Policy's benefits or
a lapse or reinstatement of the Policy) may also impact the maximum amount of
premiums that can be paid under the Policy as well as the maximum amount of cash
value that may be maintained under the Policy.
TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT
CONTRACT
This part of the tax discussion summarizes the federal income tax purposes of a
distribution to you from your Policy (that does not reflect the payment of a
death benefit under the Policy) when the Policy is not considered a modified
endowment contract.
LOANS. As long as your Policy remains in force during the Insured's lifetime
(and is not a modified endowment contract), no part of the proceeds of a loan
from the Policy will be subject to current federal income tax. Interest on the
loan generally will not be tax deductible.
If a loan is still outstanding when the Policy is surrendered or lapses,
however, the then outstanding loan amount will be included in your income for
federal income tax purposes at that time to the extent the cash value of the
Policy exceeds your "basis" in the Policy. Generally your "basis" in the Policy
will equal the premiums you have paid on the Policy less the amount of any
previous distributions from the Policy that were taxable.
PARTIAL WITHDRAWALS. AFTER the first 15 Policy Years of your Policy, the
proceeds from a partial withdrawal will be subject to federal income tax to the
extent such PROCEEDS exceed your "basis" in the Policy. Your "basis" in the
Policy generally will equal the premiums you have paid on the Policy, less the
amount of any previous distributions from the Policy that were not taxable.
During the first 15 Policy Years of your Policy, the proceeds from a partial
withdrawal or a reduction in insurance coverage generally will be subject to
federal income tax to the extent that THE THEN CASH SURRENDER VALUE under the
Policy exceeds your "basis" in the Policy, up to certain limits that are set
forth in Section 7702 of the Code.
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<PAGE>
These limits generally are based on the amount by which your premiums on the
Policy or the Policy's cash surrender value immediately before the withdrawal or
reduction in coverage exceeds the amount of premiums or cash surrender value
that was needed for the Policy to be considered a life insurance policy under
the Code immediately before the withdrawal or reduction in coverage. These
limits also depend in part on whether the withdrawal or reduction in coverage
occurs in the first 5 Policy Years of the Policy.
SURRENDER OR TERMINATION. Upon full surrender of your Policy, any excess in the
amount of the proceeds we pay (including for this purpose amounts we use to
discharge any Policy loan) over your "basis" in the Policy will be subject to
federal income tax. You will generally not be taxed on the portion of the
proceeds that does not exceed your "basis" in the Policy. Your "basis" in the
Policy generally will equal the premiums you have paid on the Policy less the
amount of any previous distributions from the Policy that were taxable.
In addition, if your Policy terminates while there is a Policy loan outstanding,
the cancellation of the loan and accrued loan interest will be treated as a
distribution and could be subject to tax under the above rules.
ASSIGNMENT. Finally, if you make an assignment of rights or benefits under your
Policy, you may be deemed to have received a distribution from the Policy, all
or part of which may be taxable.
TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS A MODIFIED ENDOWMENT
CONTRACT
This part of the tax discussion summarizes the federal income tax purposes of a
distribution to you from your Policy (that does not reflect the payment of a
death benefit under the Policy) when the Policy is considered a modified
endowment contract.
If your Policy is considered a modified endowment contract, any distribution
from the Policy during the Insured's lifetime will generally be taxed on an
"income-first" basis and hence will be included in your income for federal
income tax purposes to the extent the then cash surrender value of the Policy
exceeds your then "basis" in the Policy. For modified endowment contracts, your
"basis" in the Policy is similar to the basis described above that would apply
if the Policy were not a modified endowment contract, except that your "basis"
would be increased by the amount of any prior loan under the Policy that was
considered taxable income to you.
Distributions for this purpose generally include a loan received under the
Policy (including any increase in the loan amount to pay interest on an existing
loan or an assignment or a pledge to secure a loan) or a partial withdrawal from
the Policy. Thus, any such distributions will be considered taxable income to
you to the extent the cash surrender value exceeds your "basis" in the Policy.
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For purposes of determining the taxable portion of any distribution, all
modified endowment contracts issued by the same insurer (or its affiliate) to
the same owner (excluding certain tax-qualified plans) during any calendar year
are aggregated and treated as if they were a single modified endowment contract.
Thus, if your Policy is considered a modified endowment contract and other
modified endowment contracts issued by us (or an affiliate of ours) were issued
to you in addition to the Policy during any calendar year, the Policy and such
other contracts are considered one contract in determining the tax on any
distribution under the Policy or one of such other contracts.
The U.S. Treasury Department has authority to prescribe additional rules to
prevent avoidance of "income-first" taxation on distributions from modified
endowment contracts.
Further, a 10% penalty tax will also generally apply under the federal income
tax provisions of the Code to the taxable portion of a distribution to you from
your Policy if it is a modified endowment contract. The penalty tax will not,
however, apply to a distribution that is made:
o To you after you have attained age 59 1/2
o In the case of your disability (as defined in the Code and generally
limited to a disability that is expected to result in your death or be
of indefinite duration and that prevents you from working in any job)
or
o Received as part of a series of substantially equal periodic payments
for your life (or life expectancy) or the joint lives (or joint life
expectances) of you and a beneficiary under the Policy.
SURRENDER OR TERMINATION. In addition, upon a full surrender of the Policy, any
excess of the proceeds we pay (including any amounts we use to discharge any
loan) over your "basis" in the Policy will be subject to federal income tax and,
unless an exception applies, the 10% penalty tax.
If your Policy terminates after a Grace Period while there is a Policy loan
outstanding, the cancellation of the loan will be treated as a distribution (to
the extent not previously treated as a distribution) and could be subject to
federal income tax, including the 10% penalty tax, as described above.
APPLICABLE TIME PERIODS. Distributions that occur during a Policy Year in which
your Policy becomes a modified endowment contract, and during any subsequent
Policy Years, will be taxed as described in this part of the discussion as
distributions from a modified endowment contract. In addition, distributions
from your Policy within two years before it becomes a modified endowment
contract also will be subject to federal income tax in this manner. This means
that a distribution made from the Policy when it was not a modified endowment
contract could later become taxable as a distribution from a modified endowment
contract if the Policy, subsequently, becomes a modified endowment contract (by
reason of later failing the 7-pay test).
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<PAGE>
The U.S. Treasury Department has been authorized to prescribe rules that would
treat other distributions from the Policy made in anticipation of the Policy
becoming a modified endowment contract in a similar fashion.
POLICY LAPSES AND REINSTATEMENTS
The lapse of your Policy may have the tax consequences described above for
surrenders and terminations, even if you may be able to reinstate the Policy.
For federal income tax purposes, some reinstatements may be treated as the
purchase of a new insurance contract.
DIVERSIFICATION
As has been noted before, your Policy will be treated as "life insurance" for
federal income tax purposes only if, among other things, the investments made by
the mutual funds available for investment under the Policy satisfy certain
investment diversification requirements under Section 817(h) of the Code.
The U.S. Treasury Department has issued regulations that implement the
investment diversification requirements of Code Section 817(h). If we fail to
comply with these regulations, your Policy will be disqualified as a life
insurance policy under Section 7702 of the Code and you will be subject to
federal income tax on the income under the Policy for the period of the
disqualification and for subsequent periods. Separate Account 1, through the
Funds, therefore intends to comply with these requirements.
In connection with the issuance of then temporary diversification regulations,
the U.S. Treasury Department stated that it anticipated the issuance of
guidelines that could describe certain circumstances in which your ability as
the owner of your Policy to direct your investments under the Policy to
particular sub-accounts within Separate Account 1 would cause you, rather than
Columbus Life, to be treated as the owner of the assets of Separate Account 1.
If you were considered the owner of the assets of Separate Account 1, income and
gains from Separate Account 1 would be included in your income for federal
income tax purposes. Columbus Life thus reserves the right to amend the Policy
in any way necessary to avoid any such result.
As of the date of this Prospectus, however, no such guidelines have been issued,
although the U.S. Treasury Department has informally indicated that any such
guidelines could limit the number of investment funds or the frequency of
transfers among such funds. If issued, these guidelines may be applied by us
retroactively.
ESTATE AND GENERATION SKIPPING TAXES
As noted before, this tax discussion generally addresses only federal income tax
matters. We do, however, want to note as a general matter that, if you are the
Insured under your Policy, the death benefit under the Policy will generally be
includable in your estate for purposes of federal estate tax. If you are not the
Insured, then, under certain conditions, only the replacement value, an amount
approximately equal to the cash surrender value of the Policy, will be
includable in your estate for purposes of federal estate tax.
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Federal estate tax is integrated with federal gift tax under a unified rate
schedule. In general, under the law in effect as of the date of this Prospectus,
estates of less than $650,000 (with such amount increasing incrementally to $1
million by 2006) will not incur a federal estate tax liability. In addition, an
unlimited marital deduction may be available for federal estate tax purposes to
the extent your estate is to be distributed to your surviving spouse.
If you are not the Insured under the Policy, and you die before the Insured, the
value of your Policy, as determined under U.S. Treasury Department regulations,
is includable in your estate for federal estate tax purposes. Whether a federal
estate tax is payable depends on a variety of factors, including those listed in
the preceding paragraph.
As a general rule, if a "transfer" under the Policy is made to a person who is
two or more generations younger than you, a generation skipping transfer tax may
be payable at rates similar to the maximum estate tax rate in effect at the
time. The generation skipping transfer tax provisions generally apply to
"transfers" that would be subject to the gift and estate tax rules. Individuals
are generally allowed an aggregate generation skipping transfer tax exemption of
$1 million.
Because these rules are complex, you should consult with a qualified tax advisor
for specific information, especially when benefits under the Policy are passing
to younger generations.
The particular situation of the Policy's owner, Insured and/or beneficiary will
determine how ownership or receipt of the Policy's proceeds will be treated for
purposes of federal estate and generation skipping taxes, as well as state and
local estate, inheritance and other taxes.
PENSION AND PROFIT SHARING PLANS
If the Policy is purchased by a trust or other entity that forms part of a
pension or profit-sharing plan that is qualified as a tax-favored plan under
Section 401(a) of the Code for the benefit of a participant covered under the
plan, the federal income tax treatment of the Policy will be somewhat different
from that described in the foregoing parts of this tax discussion.
If the Policy is purchased as part of a pension or profit sharing plan for the
benefit of a plan participant, the reasonable net premium cost for the amount of
insurance under the Policy is generally required to be included annually in the
applicable plan participant's income for federal income tax purposes. This cost
is generally determined by tables issued by the Internal Revenue Service or, if
less, the insurance company's rates as to the cost of individual one-year term
insurance for standard risks. This cost (generally referred to as the "P.S.-58"
cost) is reported to the participant annually.
82
<PAGE>
If the plan participant dies while covered by the plan and the Policy proceeds
are paid to the participant's beneficiary, then the excess of the Policy's death
benefit over the Policy's cash surrender value generally will not be subject to
federal income tax. However, the Policy's cash surrender value will generally
still be taxable in this situation to the extent it exceeds the participant's
cost basis in the Policy. The participant's cost basis will generally include
the costs of insurance previously reported as income to the participant.
Special rules may apply if the participant borrowed from the Policy or was
considered an owner-employee under the plan (such as the sole proprietor, a 10%
partner, or 5% Subchapter S corporation owner of the employer of the plan).
There are limits on the amounts of life insurance that may be purchased on
behalf of a participant in a pension or profit-sharing plan. Complex rules, in
addition to those discussed above, apply whenever life insurance is purchased by
a tax-qualified plan. You should consult with the plan administrator and a
qualified tax advisor in such situation.
OTHER EMPLOYEE BENEFIT PROGRAMS
Complex rules may also apply when the Policy is held by an employee or a trust,
or acquired by an employee, in connection with the provision of other employee
benefits. In particular, such a Policy owner must consider whether the Policy
was applied for by (or issued to) a person having an insurable interest under
applicable state law and with the insured person's consent. The lack of an
insurable interest or consent may, among other things, affect the qualification
of the Policy as life insurance for federal income tax purposes and the right of
the named beneficiary under the Policy to receive a death benefit.
ERISA
Employers and employer-created trusts may be subject to reporting, disclosure
and fiduciary obligations under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). An employer or trust should consult a qualified
legal advisor as to the effect of ERISA in any case when the Policy is purchased
in connection with an employee benefit plan.
WITHHOLDING
Payments received by you from your Policy (other than the payment of a tax-free
death benefit under the Policy) are generally subject to federal income tax
withholding to the extent it is reasonable to believe that they will be
includable in income for federal income tax purposes, except that you generally
are permitted to elect not to have federal income taxes withheld from such
payments if you notify us on a timely basis that you are making this election
(and meet certain reporting requirements as to such election).
If federal income tax withholding applies to the payment, the withholding is
generally taken at the same rate as is taken on wages; except that, if the
payments are not payable over a period of more than a year, the withholding is
generally taken at a 10% rate. In some cases, when generation skipping taxes may
apply, we may also be required to withhold for such taxes unless we receive
satisfactory written notification that no such taxes are due.
83
<PAGE>
CHANGES IN TAX LAWS
Your Policy may be affected by changes that occur in the federal income tax laws
and by other tax laws, such as state or local income tax laws, federal estate
and gift tax laws and local estate and other similar laws (which other laws are
generally not discussed in this Prospectus). We have also not discussed the
effect of possible tax law changes on the Policy in this tax discussion. We
suggest that you consult a tax advisor if you have questions about the effects
of such other tax laws or of possible changes in the tax laws.
TAXATION OF COLUMBUS LIFE
Columbus Life is taxed as a life insurance company under federal income tax
laws. Columbus Life does not initially expect to incur any income tax on the
earnings or the realized capital gains attributable to Separate Account 1. If,
in the future, Columbus Life determines that Separate Account 1 may incur
federal income taxes, then it may assess a charge against the Sub-Accounts for
those taxes. Any charge will reduce your Policy's Account Value.
We may have to pay state, local or other taxes in addition to premium taxes. At
present, these taxes are not substantial. If they increase, charges may be made
for such taxes when they are attributable to Separate Account 1 or allocable to
your Policy.
Finally, certain Funds in which the Sub-Accounts are invested may elect to pass
through to Columbus Life taxes withheld by foreign taxing jurisdictions of
foreign source income. Such an election may result in additional taxable income
and income tax to Columbus Life, which could result in charges being made for
such taxes. The amount of the additional income tax, however, may be more than
offset by credits for the foreign taxes withheld that are also passed through.
These credits may provide a benefit to Columbus Life.
84
<PAGE>
OTHER GENERAL INFORMATION
LEGAL MATTERS
Frost & Jacobs LLP has advised Columbus Life on certain federal securities law
matters. All matters of Ohio law pertaining to the Policy, including the
validity of the Policy and Columbus Life's right to issue the Policy under Ohio
insurance law, have been passed upon by Donald J. Wuebbling, Esq., Senior Vice
President and General Counsel of WSLIC.
EXPERTS
The financial statements as of December 31, 1998 and 1997 and for each of the
three years in the period ended December 31, 1998 in this Registration Statement
have been so included in reliance upon the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
Actuarial matters in the Prospectus have been examined by David M. Burridge,
FSA, MAAA, as stated in his opinion filed as an exhibit to the registration
statement.
FINANCIAL STATEMENTS
The consolidated financial statements of Columbus Life included in this
Prospectus are relevant only for the purpose of showing the ability of Columbus
Life to meet its contractual obligations under the Policies. They do not show or
contain any information about the investment performance of Separate Account 1.
This Prospectus contains no financial statements for Separate Account 1, which
commenced operations as of the date of this Prospectus.
85
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
86
<PAGE>
SUPPLEMENT A - POLICY ILLUSTRATION
The following tables illustrate how the Death Benefits, Account Values and Net
Cash Surrender Values of a Policy may vary over an extended period of time at
certain ages, assuming hypothetical gross rates of investment return for the
investment options equivalent to constant gross annual rates of 0%, 5% and 10%.
The hypothetical rates of investment return are for purposes of illustration
only and should not be deemed a representation of past or future rates of
investment return. Actual rates of return for a particular Policy may be more or
less than the hypothetical investment rates of return and will depend on a
number of factors including the investment allocations made by a Policy owner.
Also, values would be different from those shown if the gross annual investment
returns averaged 0%, 5% and 10% over a period of years but fluctuated above and
below those averages for individual Policy Years.
The tables assume that the Sub-Accounts are subject to a daily charge for Fund
advisory fees and operating expenses equivalent to an annual rate of 0.86% of
the average daily net assets. This annual expense ratio is based on the average
of the expense ratios of each available Fund underlying the Sub-Accounts for the
last fiscal year (estimated for Funds beginning operations in 1999) and takes
into account current expense caps or expense reimbursement arrangements. The
fees and expenses of each underlying Fund vary, and the total fees and expenses
used in the above calculation ranged from an annual rate of 0.50% to an annual
rate of 1.25% of average daily net assets. For more information on the
investment option expenses, see the "Policy at a Glance" at the beginning of the
Prospectus.
The tables also assume that the Sub-Accounts are subject to a daily charge for
the Company's mortality and expense risks on a current basis at an annual rate
of 0.90% for the first 20 Policy Years and 0.35% thereafter. On a guaranteed
basis, the annual rate is 1.00% for all Policy Years.
The hypothetical gross annual rates of investment return of 0%, 5% and 10%,
when adjusted for the above daily charges, result in the following net
effective annual rates of return:
o -1.74%, 3.17% and 8.09%, respectively, during the first 20 Policy Years
and -1.20%, 3.74% and 8.68%, respectively, thereafter, with the
mortality and expense risk charge on a current basis.
o -1.84%, 3.07% and 7.98%, respectively, for all Policy Years with the
mortality and expense risk charge on a guaranteed basis.
The tables reflect deduction of all applicable charges described in the
Prospectus for the hypothetical Insured. The Net Cash Surrender Values
illustrated in the tables also reflect deduction of applicable surrender
charges. The current charges and the higher guaranteed maximum charges Columbus
Life may charge are reflected in separate tables on each of the following pages.
The amounts shown are as of the end of each Policy Year.
A-1
<PAGE>
The hypothetical values shown in the tables do not reflect any charges for
federal income taxes against Separate Account 1 since Columbus Life is not
currently making such charges. However, such charges may be made in the future
and, in that event, the gross annual investment rate of return would have to
exceed 0%, 5% or 10% by an amount sufficient to cover tax charges in order to
produce the Death Benefits, Account Values and Net Cash Surrender Values
illustrated.
The tables illustrate the Policy values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated, if
all Net Premiums are allocated to the Sub-Accounts, if no Policy Loans have been
made and if death benefit Option 1 has been selected. The tables are also based
on the assumptions that the Policy owner has not requested an increase or
decrease in Specified Amount, and that no partial withdrawals or transfers have
been made.
For comparative purposes, the second column of each table on the Summary Pages
of the illustrations shows the amount to which the premiums would accumulate if
an amount equal to those premiums were invested to earn interest at 5%
compounded annually.
Upon request, Columbus Life will provide you with a comparable illustration
based upon the proposed Insured's age, sex and premium class, the Specified
Amount or premium requested, and the proposed frequency of premium payments.
A-2
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
Designed for John Doe $100,000.00 Specified Amount
Male Issue Age 35 Death Benefit Option: 1
- --------------------------------------------------------------------------------
Preferred-TNU $900.00 Annual Premium
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
The Policy is a flexible premium, variable universal life policy. The Policy is
called "flexible premium" because you can change the amount and frequency of
your premium payments, within certain limits. The Policy is called "variable"
life insurance because your Cash Surrender Value and your Death Benefit may vary
with the performance of the Sub-Accounts.
UNDERWRITING CLASS: MALE PREFERRED-TNU
The cost of insurance for this illustration is based on the assumption the
policy is issued with the underwriting class listed at the left. Actual cost of
insurance will depend on the outcome of the underwriting process, and may vary
from what is shown on the illustration.
DEATH BENEFIT OPTION
You may select from two options. Option 1 provides an initial Death Benefit
equal to the Specified Amount. Option 2 provides an initial Death Benefit equal
to the Specified Amount plus the Account Value.
INITIAL SPECIFIED AMOUNT $100,000
The Specified Amount assumed at issue is shown on the left. The actual amount
payable at death will depend on the Death Benefit Option and may be decreased by
loans or withdrawals, or increased by additional insurance benefits. The
insurance contract will specify how to determine the benefit. The Death Benefits
are illustrated as of the end of each policy year.
INITIAL PLANNED PREMIUM OUTLAY $900.00 ANNUAL
The planned premiums, including lump-sum premiums are shown in the yearly detail
of this illustration (Mode A). Values would be different if premiums are paid
with a different frequency or in different amounts. This illustration assumes
that 100% of the premiums are allocated to the Variable Account.
MINIMUM ANNUAL PREMIUM FOR LIFETIME GUARANTEE $1,254.30
By paying the Lifetime No-Lapse Guarantee premium, you are receiving a Benefit
that will keep the policy in force for the lifetime of the insured even if your
policy Net Cash Surrender Value is less than the next Monthly Deduction and
Monthly Expense Charge, and regardless of investment performance.
A-3
<PAGE>
MINIMUM ANNUAL PREMIUM FOR TERM GUARANTEE $324.96
By paying the Term No-Lapse Guarantee premium, you are receiving a Benefit that
will keep the policy in force for ten years even if your policy Net Cash
Surrender Value is less than the next Monthly Deduction and Monthly Expense
Charge, and regardless of investment performance. At least 1/12 of this minimum
premium must be paid in order for the policy to take effect.
NON-GUARANTEED ELEMENTS OF THE POLICY
The cost of Insurance and the policy charges are guaranteed to be no higher than
the maximums stated in the policy and prospectus. The current cost of insurance
and current policy charges are not guaranteed. The Account Value will depend on
the allocation to and the performance of the various Sub-Accounts as well as the
non-guaranteed elements of the policy. No minimum Account Value is guaranteed
for amounts allocated to the Sub-Accounts.
A-4
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
<TABLE>
<CAPTION>
Designed for: Summary Page
John Doe Current Charges
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SUMMARY PAGE
ASSUMING CURRENT CHARGES
ASSUMING HYPOTHETICAL GROSS INVESTMENT RETURN OF:
0.00% 5.00% 10.00%
----------------- ----------------- -----------------
Net Cash Net Cash Net Cash
Premium Premiums Account Surrender Account Surrender Account Surrender
Year Outlay at 5% Value Value Value Value Value Value
------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 900 945 617 0 653 0 688 0
2 900 1,937 1,225 0 1,327 0 1,433 0
3 900 2,979 1,822 0 2,024 0 2,240 0
4 900 4,073 2,410 10 2,743 343 3,113 713
5 900 5,222 2,977 577 3,475 1,075 4,045 1,645
6 900 6,428 3,535 1,135 4,231 1,831 5,055 2,655
7 900 7,694 4,072 1,672 5,000 2,600 6,136 3,736
8 900 9,024 4,601 2,201 5,796 3,396 7,306 4,906
9 900 10,420 5,111 2,711 6,606 4,206 8,562 6,162
10 900 11,886 5,601 3,201 7,432 5,032 9,910 7,510
15 900 20,392 7,724 7,724 11,769 11,769 18,287 18,287
20 900 31,247 9,250 9,250 16,433 16,433 30,327 30,327
25 900 45,102 10,217 10,217 21,849 21,849 49,130 49,130
30 900 62,785 9,463 9,463 26,944 26,944 77,510 77,510
35 900 85,353 5,640 5,640 30,692 30,692 120,865 120,865
40 900 114,156 0## 0## 31,402 31,402 185,762 185,762
45 900 150,917 0## 0## 25,206 25,206 283,733 283,733
AGE 70 900 85,353 5,640 5,640 30,692 30,692 120,865 120,865
</TABLE>
## Additional premium is required to keep the policy in force.
The current cost of insurance rates and charges are subject to change. Account
Values will vary from those illustrated if actual rates and charges differ from
those assumed.
The hypothetical gross rates of return are illustrative only and do not
represent past or future investment results. Actual investment results may be
more or less than those shown and will depend on investment allocations and the
investment experience of the sub-accounts. No representation is being made that
these hypothetical returns can be achieved over any time period. No minimum
account value is guaranteed for amounts allocated to the Sub-Accounts.
A-5
<PAGE>
If actual variable account earnings over an extended period average out to one
of the hypothetical gross investment returns shown here, and if all other
assumptions continue unchanged, it does not mean the policy will perform exactly
as in these illustrations. This is because actual earnings will likely be
sometimes higher and sometimes lower than the average, which will not give the
same accumulated result as a constant rate every year.
This illustration is not valid unless preceded or accompanied by the current
prospectus for Columbus Life's Variable Universal Life product.
A-6
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
<TABLE>
<CAPTION>
Designed for: Summary Page
John Doe Maximum Charges
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SUMMARY PAGE
ASSUMING MAXIMUM CHARGES
ASSUMING HYPOTHETICAL GROSS INVESTMENT RETURN OF:
0.00% 5.00% 10.00%
----------------- ----------------- -----------------
Net Cash Net Cash Net Cash
Premium Premiums Account Surrender Account Surrender Account Surrender
Year Outlay at 5% Value Value Value Value Value Value
------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 900 945 556 0 590 0 623 0
2 900 1,937 1,091 0 1,186 0 1,285 0
3 900 2,979 1,605 0 1,790 0 1,989 0
4 900 4,073 2,100 0 2,403 3 2,738 338
5 900 5,222 2,574 174 3,023 623 3,537 1,137
6 900 6,428 3,018 618 3,640 1,240 4,377 1,977
7 900 7,694 3,444 1,044 4,266 1,866 5,274 2,874
8 900 9,024 3,840 1,440 4,890 2,490 6,223 3,823
9 900 10,420 4,207 1,807 5,512 3,112 7,226 4,826
10 900 11,886 4,546 2,146 6,132 3,732 8,290 5,890
15 900 20,392 5,791 5,791 9,167 9,167 14,683 14,683
20 900 31,247 5,963 5,963 11,721 11,721 23,195 23,195
25 900 45,102 4,358 4,358 12,954 12,954 34,411 34,411
30 900 62,785 0## 0## 11,343 11,343 49,405 49,405
35 900 85,353 0## 0## 3,585 3,585 70,485 70,485
40 900 114,156 0## 0## 0## 0## 103,899 103,899
45 900 150,917 0## 0## 0## 0## 154,317 154,317
Age 70 900 85,353 0## 0## 3,585 3,585 70,485 70,485
</TABLE>
## Additional premium is required to keep the policy in force.
Maximum cost of insurance rates and charges have been used to calculate the
above values. These maximums are shown in the policy and prospectus.
The hypothetical gross rates of return are illustrative only and do not
represent past or future investment results. Actual investment results may be
more or less than those shown and will depend on investment allocations and the
investment experience of the Sub-Accounts. No representation is being made that
these hypothetical returns can be achieved over any time period. No minimum
account value is guaranteed for amounts allocated to the Sub-Accounts.
A-7
<PAGE>
If actual variable account earnings over an extended period average out to one
of the hypothetical gross investment returns shown here, and if all other
assumptions continue unchanged, it does not mean the policy will perform exactly
as in these illustrations. This is because actual earnings will likely be
sometimes higher and sometimes lower than the average, which will not give the
same accumulated result as a constant rate every year.
This illustration is not valid unless preceded or accompanied by the current
prospectus for Columbus Life's Variable Universal Life product.
A-8
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
<TABLE>
<CAPTION>
Designed for: Policy Illustration
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 10%
---------------------------------------------------------------
8.09% Net 7.98% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36 1 900 A 688 0 100,000 623 0 100,000
37 2 900 A 1,433 0 100,000 1,285 0 100,000
38 3 900 A 2,240 0 100,000 1,989 0 100,000
39 4 900 A 3,113 713 100,000 2,738 338 100,000
40 5 900 A 4,045 1,645 100,000 3,537 1,137 100,000
41 6 900 A 5,055 2,655 100,000 4,377 1,977 100,000
42 7 900 A 6,136 3,736 100,000 5,274 2,874 100,000
43 8 900 A 7,306 4,906 100,000 6,223 3,823 100,000
44 9 900 A 8,562 6,162 100,000 7,226 4,826 100,000
45 10 900 A 9,910 7,510 100,000 8,290 5,890 100,000
------
9,000
46 11 900 A 11,359 9,559 100,000 9,420 7,620 100,000
47 12 900 A 12,906 11,706 100,000 10,622 9,422 100,000
48 13 900 A 14,571 13,971 100,000 11,892 11,292 100,000
49 14 900 A 16,364 16,364 100,000 13,246 13,246 100,000
50 15 900 A 18,287 18,287 100,000 14,683 14,683 100,000
51 16 900 A 20,360 20,360 100,000 16,200 16,200 100,000
52 17 900 A 22,588 22,588 100,000 17,805 17,805 100,000
53 18 900 A 24,985 24,985 100,000 19,507 19,507 100,000
54 19 900 A 27,556 27,556 100,000 21,297 21,297 100,000
55 20 900 A 30,327 30,327 100,000 23,195 23,195 100,000
------
18,000
56 21 900 A 33,512 33,512 100,000 25,193 25,193 100,000
57 22 900 A 36,963 36,963 100,000 27,305 27,305 100,000
58 23 900 A 40,701 40,701 100,000 29,543 29,543 100,000
59 24 900 A 44,747 44,747 100,000 31,906 31,906 100,000
60 25 900 A 49,130 49,130 100,000 34,411 34,411 100,000
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-9
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Designed for: Policy Illustration
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 10%
---------------------------------------------------------------
8.09% Net 7.98% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
61 26 900 A 53,888 53,888 100,000 37,061 37,061 100,000
62 27 900 A 59,057 59,057 100,000 39,877 39,877 100,000
63 28 900 A 64,682 64,682 100,000 42,860 42,860 100,000
64 29 900 A 70,813 70,813 100,000 46,030 46,030 100,000
65 30 900 A 77,510 77,510 100,000 49,405 49,405 100,000
------
27,000
66 31 900 A 84,844 84,844 101,813 53,008 53,008 100,000
67 32 900 A 92,813 92,813 110,447 56,874 56,874 100,000
68 33 900 A 101,437 101,437 119,696 61,042 61,042 100,000
69 34 900 A 110,769 110,769 129,599 65,562 65,562 100,000
70 35 900 A 120,865 120,865 140,203 70,485 70,485 100,000
71 36 900 A 131,787 131,787 151,555 75,881 75,881 100,000
72 37 900 A 143,638 143,638 162,311 81,838 81,838 100,000
73 38 900 A 156,513 156,513 173,729 88,467 88,467 100,000
74 39 900 A 170,514 170,514 185,860 95,856 95,856 104,483
75 40 900 A 185,762 185,762 198,766 103,899 103,899 111,172
------
36,000
76 41 900 A 202,397 202,397 212,516 112,644 112,644 118,276
77 42 900 A 220,403 220,403 231,423 122,019 122,019 128,120
78 43 900 A 239,887 239,887 251,881 132,062 132,062 138,665
79 44 900 A 260,958 260,958 274,005 142,815 142,815 149,956
80 45 900 A 283,733 283,733 297,920 154,317 154,317 162,033
81 46 900 A 308,339 308,339 323,756 166,609 166,609 174,940
82 47 900 A 334,906 334,906 351,651 179,727 179,727 188,713
83 48 900 A 363,573 363,573 381,751 193,705 193,705 203,390
84 49 900 A 394,482 394,482 414,206 208,573 208,573 219,002
85 50 900 A 427,781 427,781 449,170 224,366 224,366 235,584
------
45,000
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-10
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Designed for: Policy Illustration
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 10%
---------------------------------------------------------------
8.09% Net 7.98% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
86 51 900 A 463,619 463,619 486,800 241,113 241,113 253,168
87 52 900 A 502,152 502,152 527,259 258,846 258,846 271,788
88 53 900 A 543,535 543,535 570,712 277,599 277,599 291,479
89 54 900 A 587,927 587,927 617,324 297,401 297,401 312,271
90 55 900 A 635,493 635,493 667,268 318,278 318,278 334,192
91 56 900 A 686,397 686,397 720,717 340,245 340,245 357,257
92 57 900 A 742,068 742,068 771,751 364,326 364,326 378,899
93 58 900 A 803,214 803,214 827,310 390,895 390,895 402,622
94 59 900 A 870,695 870,695 888,109 420,410 420,410 428,818
95 60 900 A 945,557 945,557 955,012 453,470 453,470 458,005
------
54,000
96 61 900 A 1,028,480 1,028,480 1,028,480 490,454 490,454 490,454
97 62 900 A 1,118,602 1,118,602 1,118,602 530,389 530,389 530,389
98 63 900 A 1,216,546 1,216,546 1,216,546 573,511 573,511 573,511
99 64 900 A 1,322,991 1,322,991 1,322,991 620,074 620,074 620,074
100 65 900 A 1,438,676 1,438,676 1,438,676 670,353 670,353 670,353
------
58,500
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-11
<PAGE>
<TABLE>
<CAPTION>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
- ----------------------------------------------------------------------------------------------------------------
Designed for: Policy Illustration
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 5%
---------------------------------------------------------------
3.17% Net 3.07% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36 1 900 A 653 0 100,000 590 0 100,000
37 2 900 A 1,327 0 100,000 1,186 0 100,000
38 3 900 A 2,024 0 100,000 1,790 0 100,000
39 4 900 A 2,743 343 100,000 2,403 3 100,000
40 5 900 A 3,475 1,075 100,000 3,023 623 100,000
41 6 900 A 4,231 1,831 100,000 3,640 1,240 100,000
42 7 900 A 5,000 2,600 100,000 4,266 1,866 100,000
43 8 900 A 5,796 3,396 100,000 4,890 2,490 100,000
44 9 900 A 6,606 4,206 100,000 5,512 3,112 100,000
45 10 900 A 7,432 5,032 100,000 6,132 3,732 100,000
------
9,000
46 11 900 A 8,274 6,474 100,000 6,750 4,950 100,000
47 12 900 A 9,123 7,923 100,000 7,367 6,167 100,000
48 13 900 A 9,990 9,390 100,000 7,972 7,372 100,000
49 14 900 A 10,875 10,875 100,000 8,576 8,576 100,000
50 15 900 A 11,769 11,769 100,000 9,167 9,167 100,000
51 16 900 A 12,683 12,683 100,000 9,736 9,736 100,000
52 17 900 A 13,608 13,608 100,000 10,281 10,281 100,000
53 18 900 A 14,544 14,544 100,000 10,803 10,803 100,000
54 19 900 A 15,482 15,482 100,000 11,280 11,280 100,000
55 20 900 A 16,433 16,433 100,000 11,721 11,721 100,000
------
18,000
56 21 900 A 17,503 17,503 100,000 12,103 12,103 100,000
57 22 900 A 18,588 18,588 100,000 12,426 12,426 100,000
58 23 900 A 19,680 19,680 100,000 12,688 12,688 100,000
59 24 900 A 20,770 20,770 100,000 12,865 12,865 100,000
60 25 900 A 21,849 21,849 100,000 12,954 12,954 100,000
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-12
<PAGE>
<TABLE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Designed for: Policy Illustration
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 5%
---------------------------------------------------------------
3.17% Net 3.07% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
61 26 900 A 22,919 22,919 100,000 12,931 12,931 100,000
62 27 900 A 23,972 23,972 100,000 12,789 12,789 100,000
63 28 900 A 24,999 24,999 100,000 12,493 12,493 100,000
64 29 900 A 25,993 25,993 100,000 12,021 12,021 100,000
65 30 900 A 26,944 26,944 100,000 11,343 11,343 100,000
------
27,000
66 31 900 A 27,845 27,845 100,000 10,423 10,423 100,000
67 32 900 A 28,677 28,677 100,000 9,233 9,233 100,000
68 33 900 A 29,440 29,440 100,000 7,729 7,729 100,000
69 34 900 A 30,116 30,116 100,000 5,872 5,872 100,000
70 35 900 A 30,692 30,692 100,000 3,585 3,585 100,000
71 36 900 A 31,151 31,151 100,000 786 786 100,000
72 37 900 A 31,468 31,468 100,000 0 0 100,000
73 38 900 A 31,637 31,637 100,000
74 39 900 A 31,625 31,625 100,000
75 40 900 A 31,402 31,402 100,000
------
36,000
76 41 900 A 30,934 30,934 100,000
77 42 900 A 30,149 30,149 100,000
78 43 900 A 28,990 28,990 100,000
79 44 900 A 27,371 27,371 100,000
80 45 900 A 25,206 25,206 100,000
81 46 900 A 22,382 22,382 100,000
82 47 900 A 18,760 18,760 100,000
83 48 900 A 14,165 14,165 100,000
84 49 900 A 8,352 8,352 100,000
85 50 900 A 1,009 1,009 100,000
------
45,000
86 51 900 A 0 0 0
------
45,900
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-13
<PAGE>
<TABLE>
<CAPTION>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
- ---------------------------------------------------------------------------------------------------------------
Designed for: Policy Illustration
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 0%
---------------------------------------------------------------
-1.74% Net -1.84% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36 1 900 A 617 0 100,000 556 0 100,000
37 2 900 A 1,225 0 100,000 1,091 0 100,000
38 3 900 A 1,822 0 100,000 1,605 0 100,000
39 4 900 A 2,410 10 100,000 2,100 0 100,000
40 5 900 A 2,977 577 100,000 2,574 174 100,000
41 6 900 A 3,535 1,135 100,000 3,018 618 100,000
42 7 900 A 4,072 1,672 100,000 3,444 1,044 100,000
43 8 900 A 4,601 2,201 100,000 3,840 1,440 100,000
44 9 900 A 5,111 2,711 100,000 4,207 1,807 100,000
45 10 900 A 5,601 3,201 100,000 4,546 2,146 100,000
------
9,000
46 11 900 A 6,072 4,272 100,000 4,857 3,057 100,000
47 12 900 A 6,514 5,314 100,000 5,141 3,941 100,000
48 13 900 A 6,938 6,338 100,000 5,387 4,787 100,000
49 14 900 A 7,345 7,345 100,000 5,607 5,607 100,000
50 15 900 A 7,724 7,724 100,000 5,791 5,791 100,000
51 16 900 A 8,086 8,086 100,000 5,928 5,928 100,000
52 17 900 A 8,422 8,422 100,000 6,018 6,018 100,000
53 18 900 A 8,731 8,731 100,000 6,063 6,063 100,000
54 19 900 A 9,003 9,003 100,000 6,041 6,041 100,000
55 20 900 A 9,250 9,250 100,000 5,963 5,963 100,000
------
18,000
56 21 900 A 9,533 9,533 100,000 5,808 5,808 100,000
57 22 900 A 9,781 9,781 100,000 5,577 5,577 100,000
58 23 900 A 9,984 9,984 100,000 5,269 5,269 100,000
59 24 900 A 10,133 10,133 100,000 4,863 4,863 100,000
60 25 900 A 10,217 10,217 100,000 4,358 4,358 100,000
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-14
<PAGE>
<TABLE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
Designed for: Policy Illustration
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- ----------------------------------------------------------------------------------------------------------------
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Values Projected at 0%
---------------------------------------------------------------
-1.74% Net -1.84% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
61 26 900 A 10,237 10,237 100,000 3,732 3,732 100,000
62 27 900 A 10,182 10,182 100,000 2,982 2,982 100,000
63 28 900 A 10,042 10,042 100,000 2,073 2,073 100,000
64 29 900 A 9,806 9,806 100,000 991 991 100,000
65 30 900 A 9,463 9,463 100,000 0 0 100,000
------
27,000
66 31 900 A 9,001 9,001 100,000
67 32 900 A 8,399 8,399 100,000
68 33 900 A 7,653 7,653 100,000
69 34 900 A 6,738 6,738 100,000
70 35 900 A 5,640 5,640 100,000
71 36 900 A 4,329 4,329 100,000
72 37 900 A 2,776 2,776 100,000
73 38 900 A 970 970 100,000
74 39 900 A 0 0 100,000
------
35,100
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-15
<PAGE>
<TABLE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Designed for: Premium Information
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ---------------------------------------------------------------------------------------------------------------
PREMIUM INFORMATION
Term No-Lapse $324.96 Guideline $1,393.67
Guarantee Level
Premium Premium
Lifetime No-Lapse $1,254.30 Guideline $15,735.04
Guarantee Single
Premium Premium
Seven Pay Premium $3,813.35
</TABLE>
If the policy is in force on the policy anniversary when the insured is age 100,
the Death Benefit will continue and the Death Benefit Option will be Option 2.
If the Death Benefit Option was previously Option 1, the Specified Amount will
not be automatically decreased by the Account Value unless the Insured's issue
age was greater than 75. Any riders will terminate. The variable Account Value
and any Loan Account Value will be transferred to the fixed account, which will
thereafter earn the then-current interest rate. The fixed account will be
reduced by the amount of any indebtedness and no further loans will be
permitted. No further premiums may be paid and no costs or charges will be
deducted. The policy will continue beyond the Insured's age 100 in this manner
until the Insured's death. However, the owner may discontinue this Extended
Maturity Benefit at any time by surrendering the policy.
A-16
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #1
<TABLE>
<CAPTION>
Designed for: Important Notes
John Doe
Male Age: 35 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $900.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
IMPORTANT NOTES
Current and maximum values assume that premiums are paid as indicated, that the
first payment is received by the policy issue date, and that each subsequent
periodic payment is received by the planned date.
The current per policy expense charge is $6.00 per month. The maximum per policy
expense charge is $7.00 per month. The current premium expense charge is 4.75%
for policy years 1-20 and 2.75% thereafter. The maximum premium expense charge
is 5.50%. The premium tax charge will vary by state. On a current basis it will
be equal to the state premium tax rate plus .55% for the federal DAC (Deferred
Acquisition Cost) tax. The maximum tax charge is guaranteed to be no greater
than 3.50%. The Account Values, Net Cash Surrender Values and Death Benefits
shown in this illustration reflect the deduction of these charges. The Net Cash
Surrender Values also reflect the deductions of applicable surrender charges.
Current interest credited on the Fixed Account is 5%.
Guaranteed interest credited on the Fixed Account is 3%.
This illustration does include the Term No-Lapse Guarantee. The Term No-Lapse
Guarantee is available only if the required premium is paid. If the required
premium is not paid the benefit is terminated.
This illustration does not include the Lifetime No-Lapse Guarantee. The
Lifetime-No Lapse Guarantee is available only if the required premium is paid.
If the required premium is not paid the benefit is terminated.
If premiums are paid as illustrated this policy is not a modified endowment
contract.
This is an illustration and not a contract or offer of insurance. Although the
information in this illustration is based on certain tax and legal assumptions,
it is not intended to be tax or legal advice. Such advice should be obtained
from a professional tax or legal adviser.
A-17
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
- --------------------------------------------------------------------------------
Designed for John Doe Policy Illustration
Male Issue Age: 55 Death Benefit Option: 1
Preferred-TNU $2,280.00 Annual Premium:
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
The Policy is a flexible premium, variable universal life policy. The Policy is
called "flexible premium" because you can change the amount and frequency of
your premium payments, within certain limits. The Policy is called "variable"
life insurance because your Cash Surrender Value and your Death Benefit may vary
with the performance of the Sub-Accounts.
UNDERWRITING CLASS: MALE PREFERRED-TNU
The cost of insurance for this illustration is based on the assumption the
policy is issued with the underwriting class listed at the left. Actual cost of
insurance will depend on the outcome of the underwriting process, and may vary
from what is shown on the illustration.
DEATH BENEFIT OPTION
You may select from two options. Option 1 provides an initial Death Benefit
equal to the Specified Amount. Option 2 provides an initial Death Benefit equal
to the Specified Amount plus the Account Value.
INITIAL SPECIFIED AMOUNT $100,000
The Specified Amount assumed at issue is shown on the left. The actual amount
payable at death will depend on the Death Benefit Option and may be decreased by
loans or withdrawals, or increased by additional insurance benefits. The
insurance contract will specify how to determine the benefit. The Death Benefits
are illustrated as of the end of each policy year.
INITIAL PLANNED PREMIUM OUTLAY $2,280.00 ANNUAL
The planned premiums, including lump-sum premiums are shown in the yearly detail
of this illustration (Mode A). Values would be different if premiums are paid
with a different frequency or in different amounts. This illustration assumes
that 100% of the premiums are allocated to the Variable Account.
A-18
<PAGE>
MINIMUM ANNUAL PREMIUM FOR LIFETIME GUARANTEE $3,168.07
By paying the Lifetime No-Lapse Guarantee premium, you are receiving a Benefit
that will keep the policy in force for the lifetime of the insured even if your
policy Net Cash Surrender Value is less than the next Monthly Deduction and
Monthly Expense Charge, and regardless of investment performance.
MINIMUM ANNUAL PREMIUM FOR TERM GUARANTEE $1,414.44
By paying the Term No-Lapse Guarantee premium, you are receiving a Benefit that
will keep the policy in force for ten years even if your policy Net Cash
Surrender Value is less than the next Monthly Deduction and Monthly Expense
Charge, and regardless of investment performance. At least 1/12 of this minimum
premium must be paid in order for the policy to take effect.
NON-GUARANTEED ELEMENTS OF THE POLICY
The cost of Insurance and the policy charges are guaranteed to be no higher than
the maximums stated in the policy and prospectus. The current cost of insurance
and current policy charges are not guaranteed. The Account Value will depend on
the allocation to and the performance of the various Sub-Accounts as well as the
non-guaranteed elements of the policy. No minimum Account Value is guaranteed
for amounts allocated to the Sub-Accounts.
A-19
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
Designed for: Summary Page
John Doe Current Charges
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SUMMARY PAGE
ASSUMING CURRENT CHARGES
ASSUMING HYPOTHETICAL GROSS INVESTMENT RETURN OF:
0.00% 5.00% 10.00%
----------------- ----------------- -----------------
Net Cash Net Cash Net Cash
Premium Premiums Account Surrender Account Surrender Account Surrender
Year Outlay at 5% Value Value Value Value Value Value
------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,280 2,394 1,594 0 1,685 0 1,776 0
2 2,280 4,908 3,132 0 3,395 0 3,668 0
3 2,280 7,547 4,605 695 5,121 1,211 5,674 1,764
4 2,280 10,318 6,004 2,094 6,854 2,944 7,797 3,887
5 2,280 13,228 7,321 3,411 8,586 4,676 10,036 6,126
6 2,280 16,284 8,558 4,648 10,318 6,408 12,406 8,496
7 2,280 19,492 9,708 5,798 12,043 8,133 14,911 11,001
8 2,280 22,861 10,762 6,852 13,752 9,842 17,558 13,648
9 2,280 26,398 11,714 7,804 15,439 11,529 20,354 16,444
10 2,280 30,111 12,554 8,644 17,095 13,185 23,309 19,399
15 2,280 51,659 14,759 14,759 24,610 24,610 40,993 40,993
20 2,280 79,160 12,392 12,392 29,812 29,812 66,081 66,081
25 2,280 114,259 2,285 2,285 31,260 31,260 109,631 109,631
30 2,280 159,055 0## 0## 20,776 20,776 176,682 176,682
35 2,280 216,227 0## 0## 0## 0## 273,649 273,649
40 2,280 289,195 0## 0## 0## 0## 273,649 273,649
45 2,280 382,322 0## 0## 0## 0## 647,732 647,732
Age 70 2,280 51,659 14,759 14,759 24,610 24,610 40,993 40,993
</TABLE>
## Additional premium is required to keep the policy in force.
The current cost of insurance rates and charges are subject to change. Account
Values will vary from those illustrated if actual rates and charges differ from
those assumed.
The hypothetical gross rates of return are illustrative only and do not
represent past or future investment results. Actual investment results may be
more or less than those shown and will depend on investment allocations and the
investment experience of the Sub-Accounts. No representation is being made that
these hypothetical returns can be achieved over any time period. No minimum
account value is guaranteed for amounts allocated to the Sub-Accounts.
A-20
<PAGE>
If actual variable account earnings over an extended period average out to one
of the hypothetical gross investment returns shown here, and if all other
assumptions continue unchanged, it does not mean the policy will perform exactly
as in these illustrations. This is because actual earnings will likely be
sometimes higher and sometimes lower than the average, which will not give the
same accumulated result as a constant rate every year.
This illustration is not valid unless preceded or accompanied by the current
prospectus for Columbus Life's Variable Universal Life product.
A-21
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Designed for: Summary Page
John Doe Maximum Charges
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SUMMARY PAGE
ASSUMING MAXIMUM CHARGES
ASSUMING HYPOTHETICAL GROSS INVESTMENT RETURN OF:
0.00% 5.00% 10.00%
----------------- ----------------- -----------------
Net Cash Net Cash Net Cash
Premium Premiums Account Surrender Account Surrender Account Surrender
Year Outlay at 5% Value Value Value Value Value Value
------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,280 2,394 1,149 0 1,228 0 1,306 0
2 2,280 4,908 2,206 0 2,420 0 2,644 0
3 2,280 7,547 3,172 0 3,579 0 4,017 107
4 2,280 10,318 4,028 118 4,681 771 5,409 1,499
5 2,280 13,228 4,776 866 5,726 1,816 6,823 2,913
6 2,280 16,284 5,397 1,487 6,692 2,782 8,243 4,333
7 2,280 19,492 5,892 1,982 7,577 3,667 9,673 5,763
8 2,280 22,861 6,230 2,320 8,347 4,437 11,084 7,174
9 2,280 26,398 6,401 2,491 8,988 5,078 12,468 8,558
10 2,280 30,111 6,385 2,475 9,473 5,563 13,807 9,897
15 2,280 51,659 2,755 2,755 8,624 8,624 19,172 19,172
20 2,280 79,160 0## 0## 0## 0## 18,613 18,613
25 2,280 114,259 0## 0## 0## 0## 0## 0##
30 2,280 159,055 0## 0## 0## 0## 0## 0##
35 2,280 216,227 0## 0## 0## 0## 0## 0##
40 2,280 289,195 0## 0## 0## 0## 0## 0##
45 2,280 382,322 0## 0## 0## 0## 0## 0##
Age 70 2,280 51,659 2,755 2,755 8,624 8,624 19,172 19,172
</TABLE>
## Additional premium is required to keep the policy in force.
Maximum cost of insurance rates and charges have been used to calculate the
above values. These maximums are shown in the policy and prospectus.
The hypothetical gross rates of return are illustrative only and do not
represent past or future investment results. Actual investment results may be
more or less than those shown and will depend on investment allocations and the
investment experience of the Sub-Accounts. No representation is being made that
these hypothetical returns can be achieved over any time period. No minimum
account value is guaranteed for amounts allocated to the Sub-Accounts.
A-22
<PAGE>
If actual variable account earnings over an extended period average out to one
of the hypothetical gross investment returns shown here, and if all other
assumptions continue unchanged, it does not mean the policy will perform exactly
as in these illustrations. This is because actual earnings will likely be
sometimes higher and sometimes lower than the average, which will not give the
same accumulated result as a constant rate every year.
This illustration is not valid unless preceded or accompanied by the current
prospectus for Columbus Life's Variable Universal Life product.
A-23
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
Designed for: Policy Illustration
John Doe
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 10%
---------------------------------------------------------------
8.09% Net 7.98% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
56 1 2,280 A 1,776 0 100,000 1,306 0 100,000
57 2 2,280 A 3,668 0 100,000 2,644 0 100,000
58 3 2,280 A 5,674 1,764 100,000 4,017 107 100,000
59 4 2,280 A 7,797 3,887 100,000 5,409 1,499 100,000
60 5 2,280 A 10,036 6,126 100,000 6,823 2,913 100,000
61 6 2,280 A 12,406 8,496 100,000 8,243 4,333 100,000
62 7 2,280 A 14,911 11,001 100,000 9,673 5,763 100,000
63 8 2,280 A 17,558 13,648 100,000 11,084 7,174 100,000
64 9 2,280 A 20,354 16,444 100,000 12,468 8,558 100,000
65 10 2,280 A 23,309 19,399 100,000 13,807 9,897 100,000
------
22,800
66 11 2,280 A 26,437 23,505 100,000 15,080 12,147 100,000
67 12 2,280 A 29,745 27,790 100,000 16,276 14,321 100,000
68 13 2,280 A 33,261 32,284 100,000 17,372 16,394 100,000
69 14 2,280 A 37,001 37,001 100,000 18,353 18,353 100,000
70 15 2,280 A 40,993 40,993 100,000 19,172 19,172 100,000
71 16 2,280 A 45,266 45,266 100,000 19,784 19,784 100,000
72 17 2,280 A 49,855 49,855 100,000 20,129 20,129 100,000
73 18 2,280 A 54,817 54,817 100,000 20,117 20,117 100,000
74 19 2,280 A 60,202 60,202 100,000 19,651 19,651 100,000
75 20 2,280 A 66,081 66,081 100,000 18,613 18,613 100,000
------
45,600
76 21 2,280 A 72,997 72,997 100,000 16,865 16,865 100,000
77 22 2,280 A 80,689 80,689 100,000 14,234 14,234 100,000
78 23 2,280 A 89,318 89,318 100,000 10,518 10,518 100,000
79 24 2,280 A 99,047 99,047 104,000 5,431 5,431 100,000
80 25 2,280 A 109,631 109,631 115,112 0 0 0
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-24
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Designed for: Policy Illustration
John Doe
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 10%
---------------------------------------------------------------
8.09% Net 7.98% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
81 26 2,280 A 121,071 121,071 127,124
82 27 2,280 A 133,429 133,429 140,101
83 28 2,280 A 146,772 146,772 154,110
84 29 2,280 A 161,166 161,166 169,224
85 30 2,280 A 176,682 176,682 185,516
------
68,400
86 31 2,280 A 193,390 193,390 203,060
87 32 2,280 A 211,366 211,366 221,934
88 33 2,280 A 230,683 230,683 242,217
89 34 2,280 A 251,418 251,418 263,989
90 35 2,280 A 273,649 273,649 287,331
91 36 2,280 A 297,455 297,455 312,328
92 37 2,280 A 323,466 323,466 336,405
93 38 2,280 A 352,006 352,006 362,566
94 39 2,280 A 383,467 383,467 391,136
95 40 2,280 A 418,327 418,327 422,510
------
91,200
96 41 2,280 A 456,904 456,904 456,904
97 42 2,280 A 498,829 498,829 498,829
98 43 2,280 A 544,394 544,394 544,394
99 44 2,280 A 593,914 593,914 593,914
100 45 2,280 A 647,732 647,732 647,732
------
102,600
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-25
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Designed for: Policy Illustration
John Doe
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 5%
---------------------------------------------------------------
3.17% Net 3.07% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
56 1 2,280 A 1,685 0 100,000 1,228 0 100,000
57 2 2,280 A 3,395 0 100,000 2,420 0 100,000
58 3 2,280 A 5,121 1,211 100,000 3,579 0 100,000
59 4 2,280 A 6,854 2,944 100,000 4,681 771 100,000
60 5 2,280 A 8,586 4,676 100,000 5,726 1,816 100,000
61 6 2,280 A 10,318 6,408 100,000 6,692 2,782 100,000
62 7 2,280 A 12,043 8,133 100,000 7,577 3,667 100,000
63 8 2,280 A 13,752 9,842 100,000 8,347 4,437 100,000
64 9 2,280 A 15,439 11,529 100,000 8,988 5,078 100,000
65 10 2,280 A 17,095 13,185 100,000 9,473 5,563 100,000
------
22,800
66 11 2,280 A 18,715 15,782 100,000 9,776 6,844 100,000
67 12 2,280 A 20,280 18,325 100,000 9,876 7,921 100,000
68 13 2,280 A 21,793 20,816 100,000 9,741 8,763 100,000
69 14 2,280 A 23,239 23,239 100,000 9,344 9,344 100,000
70 15 2,280 A 24,610 24,610 100,000 8,624 8,624 100,000
71 16 2,280 A 25,888 25,888 100,000 7,520 7,520 100,000
72 17 2,280 A 27,058 27,058 100,000 5,951 5,951 100,000
73 18 2,280 A 28,119 28,119 100,000 3,801 3,801 100,000
74 19 2,280 A 29,044 29,044 100,000 941 941 100,000
75 20 2,280 A 29,812 29,812 100,000 0 0 0
------
45,600
76 21 2,280 A 30,627 30,627 100,000
77 22 2,280 A 31,225 31,225 100,000
78 23 2,280 A 31,568 31,568 100,000
79 24 2,280 A 31,598 31,598 100,000
80 25 2,280 A 31,260 31,260 100,000
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-26
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Designed for: Policy Illustration
John Doe
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 5%
---------------------------------------------------------------
3.17% Net 3.07% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
81 26 2,280 A 30,483 30,483 100,000
82 27 2,280 A 29,178 29,178 100,000
83 28 2,280 A 27,236 27,236 100,000
84 29 2,280 A 24,502 24,502 100,000
85 30 2,280 A 20,776 20,776 100,000
------
68,400
86 31 2,280 A 15,782 15,782 100,000
87 32 2,280 A 9,163 9,163 100,000
88 33 2,280 A 434 434 100,000
89 34 2,280 A 0 0 0
------
77,520
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-27
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Designed for: Policy Illustration
John Doe
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Values Projected at 0%
---------------------------------------------------------------
-1.74% Net -1.84% Net
---------------------------------------------------------------
Current Charges Maximum Charges
---------------------------------------------------------------
End Net Cash Net Cash
of Premium Account Surrender Death Account Surrender Death
Age Year Outlay Mode Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
56 1 2,280 A 1,594 0 100,000 1,149 0 100,000
57 2 2,280 A 3,132 0 100,000 2,206 0 100,000
58 3 2,280 A 4,605 695 100,000 3,172 0 100,000
59 4 2,280 A 6,004 2,094 100,000 4,028 118 100,000
60 5 2,280 A 7,321 3,411 100,000 4,776 866 100,000
61 6 2,280 A 8,558 4,648 100,000 5,397 1,487 100,000
62 7 2,280 A 9,708 5,798 100,000 5,892 1,982 100,000
63 8 2,280 A 10,762 6,852 100,000 6,230 2,320 100,000
64 9 2,280 A 11,714 7,804 100,000 6,401 2,491 100,000
65 10 2,280 A 12,554 8,644 100,000 6,385 2,475 100,000
------
22,800
66 11 2,280 A 13,277 10,344 100,000 6,158 3,225 100,000
67 12 2,280 A 13,864 11,909 100,000 5,708 3,753 100,000
68 13 2,280 A 14,317 13,340 100,000 5,008 4,031 100,000
69 14 2,280 A 14,618 14,618 100,000 4,042 4,042 100,000
70 15 2,280 A 14,759 14,759 100,000 2,755 2,755 100,000
71 16 2,280 A 14,718 14,718 100,000 1,098 1,098 100,000
72 17 2,280 A 14,476 14,476 100,000 0 0 0
73 18 2,280 A 14,029 14,029 100,000
74 19 2,280 A 13,344 13,344 100,000
75 20 2,280 A 12,392 12,392 100,000
------
45,600
76 21 2,280 A 11,261 11,261 100,000
77 22 2,280 A 9,752 9,752 100,000
78 23 2,280 A 7,809 7,809 100,000
79 24 2,280 A 5,346 5,346 100,000
80 25 2,280 A 2,285 2,285 100,000
81 26 2,280 A 0 0 0
------
59,280
</TABLE>
Net investment return percentages shown at the top of the page are calculated as
the hypothetical gross investment return less all asset-based charges shown in
the Prospectus. The amounts shown in the columns labeled under Account Values,
Net Cash Surrender Values and Death Benefits reflect these net investment
returns as well as other applicable types of insurance costs, deductions and
charges shown in the Prospectus. This illustration does not project performance
of any fund selected.
A-28
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Designed for: Premium Information
John Doe
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ---------------------------------------------------------------------------------------------------------------
PREMIUM INFORMATION
Term No-Lapse $1,414.44 Guideline $3,520.08
Guarantee Level
Premium Premium
Lifetime No-Lapse $3,168.07 Guideline $36,648.25
Guarantee Single
Premium Premium
Seven Pay Premium $7,440.98
</TABLE>
If the policy is in force on the policy anniversary when the insured is age 100,
the Death Benefit will continue and the Death Benefit Option will be Option 2.
If the Death Benefit Option was previously Option 1, the Specified Amount will
not be automatically decreased by the Account Value unless the Insured's issue
age was greater than 75. Any riders will terminate. The variable Account Value
and any Loan Account Value will be transferred to the fixed account, which will
thereafter earn the then-current interest rate. The fixed account will be
reduced by the amount of any indebtedness and no further loans will be
permitted. No further premiums may be paid and no costs or charges will be
deducted. The policy will continue beyond the Insured's age 100 in this manner
until the Insured's death. However, the owner may discontinue this Extended
Maturity Benefit at any time by surrendering the policy.
A-29
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY - ILLUSTRATION #2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Designed for: Important Notes
John Doe
Male Age: 55 Preferred-TNU Flexible Premium Variable Universal Life
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Death Benefit: $100,000.00 Death Benefit Option: 1
Lump Sum: $0 Initial Premium: $2,280.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
IMPORTANT NOTES
Current and maximum values assume that premiums are paid as indicated, that the
first payment is received by the policy issue date, and that each subsequent
periodic payment is received by the planned date.
The current per policy expense charge is $6.00 per month. The maximum per policy
expense charge is $7.00 per month. The current premium expense charge is 4.75%
for policy years 1-20 and 2.75% thereafter. The maximum premium expense charge
is 5.50%. The premium tax charge will vary by state. On a current basis it will
be equal to the state premium tax rate plus .55% for the federal DAC (Deferred
Acquisition Cost) tax. The maximum tax charge is guaranteed to be no greater
than 3.50%. The Account Values, Net Cash Surrender Values and Death Benefits
shown in this illustration reflect the deduction of these charges. The Net Cash
Surrender Values also reflect the deductions of applicable surrender charges.
Current interest credited on the Fixed Account is 5%.
Guaranteed interest credited on the Fixed Account is 3%.
This illustration does include the Term No-Lapse Guarantee. The Term No-Lapse
Guarantee is available only if the required premium is paid. If the required
premium is not paid the benefit is terminated.
This illustration does not include the Lifetime No-Lapse Guarantee. The Lifetime
No-Lapse Guarantee is available only if the required premium is paid. If the
required premium is not paid the benefit is terminated.
If premiums are paid as illustrated this policy is not a modified endowment
contract.
This is an illustration and not a contract or offer of insurance. Although the
information in this illustration is based on certain tax and legal assumptions,
it is not intended to be tax or legal advice. Such advice should be obtained
from a professional tax or legal adviser.
A-30
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENT B -
TABLE OF APPLICABLE DEATH BENEFIT FACTORS
Insured's Age Applicable Insured's Age Applicable Insured's Age Applicable
Last Policy Death Benefit Last Policy Death Benefit Last Policy Death Benefit
Anniversary Factor Anniversary Factor Anniversary Factor
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1 through 40 2.50 54 1.57 68 1.17
41 2.43 55 1.50 69 1.16
42 2.36 56 1.46 70 1.15
43 2.29 57 1.42 71 1.13
44 2.22 58 1.38 72 1.11
45 2.15 59 1.34 73 1.09
46 2.09 60 1.30 74 1.07
47 2.03 61 1.28 75 through 90 1.05
48 1.97 62 1.26 91 1.04
49 1.91 63 1.24 92 1.03
50 1.85 64 1.22 93 1.02
51 1.78 65 1.20 94 1.01
52 1.71 66 1.19 95 or higher 1.00
53 1.64 67 1.18
</TABLE>
B-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
B-2
<PAGE>
SUPPLEMENT C - TABLE OF COST OF INSURANCE CHARGES
The Guaranteed Maximum Monthly Cost of Insurance Charges per $1,000 of Specified
Amount for an Insured in the standard or preferred underwriting class are listed
in the table below (Based on 1980 CSO Mortality Table, Age Last Birthday). For
any insured in a special or substandard rate class, the rate below must be
multiplied by the appropriate rating factor, as shown in an amendment added to
the policy.
<TABLE>
<CAPTION>
-------------------------- -------------------------------------------------------------------
Juvenile Ages Adult Ages
------------------------ -------------------------------------------------------------------
Male Male Female Female
Attained Attained Tobacco Tobacco Tobacco Tobacco
Age Male Female Age Abstainer* User** Abstainer* User**
----- ---- ------ ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.09 0.07 20 0.14 0.19 0.08 0.10
1 0.09 0.07 21 0.14 0.19 0.09 0.10
2 0.08 0.07 22 0.14 0.19 0.09 0.10
3 0.08 0.07 23 0.13 0.19 0.09 0.10
4 0.08 0.06 24 0.13 0.18 0.09 0.11
5 0.07 0.06 25 0.13 0.18 0.09 0.11
6 0.07 0.06 26 0.12 0.17 0.09 0.11
7 0.07 0.06 27 0.12 0.17 0.10 0.12
8 0.06 0.06 28 0.12 0.17 0.10 0.12
9 0.06 0.06 29 0.12 0.17 0.10 0.13
10 0.06 0.06 30 0.12 0.18 0.10 0.13
11 0.07 0.06 31 0.12 0.18 0.11 0.14
12 0.08 0.06 32 0.13 0.19 0.11 0.14
13 0.09 0.06 33 0.13 0.20 0.12 0.15
14 0.10 0.07 34 0.14 0.21 0.12 0.16
15 0.12 0.07 35 0.14 0.23 0.13 0.17
16 0.13 0.08 36 0.15 0.24 0.13 0.18
17 0.14 0.08 37 0.16 0.26 0.14 0.20
18 0.15 0.08 38 0.17 0.29 0.16 0.22
19 0.16 0.09 39 0.18 0.31 0.17 0.24
--------------------------
40 0.20 0.35 0.18 0.26
41 0.21 0.38 0.20 0.29
42 0.23 0.42 0.21 0.32
* Abstainer generally 43 0.25 0.46 0.23 0.34
means the Insured does not 44 0.27 0.50 0.24 0.37
use tobacco products. 45 0.29 0.55 0.26 0.40
46 0.31 0.60 0.28 0.43
47 0.34 0.65 0.29 0.46
** User generally means 48 0.36 0.71 0.31 0.49
the Insured uses tobacco 49 0.39 0.77 0.34 0.53
products. 50 0.43 0.84 0.36 0.57
51 0.47 0.92 0.39 0.61
52 0.51 1.00 0.42 0.65
53 0.57 1.11 0.46 0.71
54 0.62 1.22 0.49 0.76
-------------------------- ----------------------------------------------------------------
C-1
<PAGE>
<CAPTION>
-------------------------------------------------------------------
Adult Ages
-------------------------------------------------------------------
Male Male Female Female
Attained Tobacco Tobacco Tobacco Tobacco
Age Abstainer* User** Abstainer* User**
------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
55 0.69 1.33 0.53 0.81
56 0.76 1.46 0.57 0.87
57 0.83 1.59 0.61 0.92
58 0.92 1.73 0.65 0.97
59 1.01 1.88 0.69 1.02
60 1.12 2.04 0.74 1.09
61 1.23 2.23 0.80 1.16
62 1.37 2.45 0.88 1.27
63 1.52 2.68 0.97 1.39
64 1.69 2.95 1.08 1.53
65 1.88 3.22 1.20 1.68
66 2.08 3.52 1.32 1.83
67 2.30 3.82 1.44 1.97
68 2.53 4.14 1.57 2.12
69 2.80 4.49 1.71 2.28
70 3.10 4.88 1.88 2.47
71 3.44 5.31 2.08 2.71
72 3.84 5.81 2.33 3.01
73 4.29 6.37 2.64 3.36
74 4.79 6.98 2.98 3.77
75 5.33 7.64 3.38 4.21
76 5.91 8.32 3.80 4.69
77 6.51 9.01 4.26 5.19
78 7.15 9.71 4.76 5.73
79 7.85 10.45 5.32 6.31
80 8.62 11.26 5.96 6.97
81 9.50 12.15 6.70 7.73
* Abstainer generally 82 10.50 13.16 7.56 8.60
means the Insured does not 83 11.63 14.26 8.55 9.61
use tobacco products. 84 12.86 15.43 9.65 10.73
85 14.18 16.62 10.86 11.93
86 15.57 17.80 12.17 13.21
** User generally means 87 17.00 19.04 13.59 14.57
the Insured uses tobacco 88 18.49 20.35 15.13 16.01
products. 89 20.04 21.67 16.79 17.53
90 21.69 23.03 18.61 19.26
91 23.49 24.47 20.64 21.16
92 25.50 26.17 22.97 23.32
93 27.96 28.41 25.80 25.94
94 31.38 31.56 29.59 29.59
95 36.80 36.80 35.37 35.37
96 46.59 46.59 45.53 45.53
97 67.04 67.04 66.32 66.32
98 120.67 120.67 120.23 120.23
99 120.67 120.67 120.23 120.23
----------------------------------------------------------------
</TABLE>
C-2
<PAGE>
SUPPLEMENT D - TABLE OF SURRENDER CHARGES
The Maximum Surrender Charges per $1,000 of decrease in Specified Amount (except
for decreases caused by a change of death benefit options) for Policy Years 1-10
are listed in the table below. Surrender charge decreases linearly to zero
between the end of year 10 and the end of year 14.
<TABLE>
<CAPTION>
-------------------------- ------------------------------------------------------------------
Juvenile Ages Adult Ages
-------------------------- ------------------------------------------------------------------
Issue Issue Male Male Female Female
Age Male Female Age Abstainer* User** Abstainer* User**
----- ---- ------ ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
0 15.40 14.60 20 18.80 20.70 17.80 18.70
1 15.50 14.60 21 19.10 21.00 18.00 19.00
2 15.60 14.80 22 19.30 21.30 18.30 19.30
3 15.80 14.90 23 19.60 21.60 18.50 19.60
4 15.90 15.00 24 19.80 22.00 18.80 19.90
5 16.10 15.20 25 20.10 22.30 19.10 20.20
6 16.30 15.30 26 20.40 22.70 19.30 20.50
7 16.40 15.50 27 20.80 23.10 19.60 20.80
8 16.60 15.60 28 21.10 23.50 19.90 21.20
9 16.90 15.80 29 21.50 24.00 20.30 21.60
10 17.10 16.00 30 21.80 24.40 20.60 21.90
11 17.30 16.10 31 22.20 24.90 20.90 22.30
12 17.60 16.30 32 22.60 25.40 21.30 22.80
13 17.80 16.50 33 23.00 26.00 21.70 23.20
14 18.10 16.70 34 23.50 26.60 22.10 23.70
15 18.30 16.90 35 24.00 27.20 22.50 24.20
16 18.50 17.10 36 24.40 27.80 22.90 24.70
17 18.80 17.40 37 24.90 28.50 23.40 25.20
18 19.00 17.60 38 25.50 29.20 23.80 25.70
19 19.30 17.80 39 26.00 29.90 24.30 26.30
------------------------------
40 26.60 30.60 24.80 26.90
41 27.20 31.40 25.30 27.50
42 27.80 32.20 25.80 28.10
43 28.40 33.10 26.40 28.80
44 29.10 34.00 27.00 29.40
45 29.80 34.90 27.60 30.10
* Abstainer generally means 46 30.60 35.90 28.20 30.80
the Insured does not use 47 31.30 36.90 28.80 31.60
tobacco products. 48 32.10 38.00 29.50 32.30
49 33.00 39.10 30.20 33.10
** User generally means the 50 33.90 40.30 30.90 33.90
Insured uses tobacco products. 51 34.80 41.60 31.70 34.80
52 35.80 42.90 32.40 35.70
53 36.80 44.30 33.20 36.50
54 37.90 44.90 34.10 37.50
55 39.10 44.60 34.90 38.40
56 40.30 44.20 35.80 39.40
------------------------------ -----------------------------------------------------------------
D-1
<PAGE>
<CAPTION>
------------------------------------------------------------------
Adult Ages
------------------------------------------------------------------
Issue Male Male Female Female
Age Abstainer* User** Abstainer* User**
------- --------- ------- --------- -------
57 41.60 43.90 36.80 40.50
<S> <C> <C> <C> <C> <C>
58 42.90 43.60 37.80 41.60
59 43.50 43.30 38.90 42.80
60 43.00 42.90 40.00 44.00
61 42.60 42.60 41.20 44.00
62 42.10 42.30 42.50 43.50
* Abstainer generally means 63 41.60 42.00 42.80 42.90
the Insured does not use 64 41.20 41.60 42.20 42.30
tobacco products. 65 40.80 41.30 41.60 41.80
66 40.30 41.10 41.00 41.20
67 40.00 40.90 40.40 40.70
** User generally means the 68 39.60 40.70 39.80 40.20
Insured uses tobacco products. 69 39.30 40.50 39.30 39.70
70 38.90 40.40 38.70 39.20
71 38.60 40.30 38.10 38.70
72 38.30 40.20 37.60 38.30
73 38.00 40.00 37.10 37.80
74 37.70 39.90 36.50 37.40
75 37.40 39.90 36.00 37.00
76 37.10 39.80 35.60 36.60
77 36.90 39.80 35.10 36.20
78 36.80 39.70 34.70 35.90
79 36.60 39.60 34.30 35.60
80 36.50 39.50 34.00 35.20
81 36.30 39.30 33.50 34.80
82 35.90 38.90 33.00 34.30
83 35.30 38.10 32.30 33.50
84 34.40 36.90 31.40 32.50
85 32.90 35.10 30.00 31.00
-----------------------------------------------------------------
</TABLE>
D-2
<PAGE>
SUPPLEMENT E - CONTINUATION PROVISIONS
Continuation Under the Term No-Lapse Guarantee Provision
To determine if your adjusted total premium payments are sufficient to maintain
the Term No-Lapse Guarantee for continuation of your Policy when the Term
No-Lapse Guarantee applies, we use the following procedure:
o We determine your ADJUSTED TOTAL PREMIUM PAYMENTS (the total amount of
your premium payments less the amount of any withdrawals and the amount
of your Loan Account).
o We determine if you have made any changes in your Policy that resulted
in a change in the Monthly Deduction. In this discussion, we call this
type of change a POLICY CHANGE.
o We determine the TOTAL REQUIRED AMOUNT for this guarantee provision.
o If you have not made any POLICY CHANGES, the TOTAL REQUIRED
AMOUNT is 1/12th of the applicable minimum annual premium for
the Term No-Lapse Guarantee multiplied by the number of months
from the Policy Date to the next Monthly Anniversary Day. The
minimum annual premium for the Term No-Lapse Guarantee under
your Policy is shown in your Policy Schedule.
For example, if the minimum annual premium for the Term
No-Lapse Guarantee is $1,200, your Policy Date is June 15,
2000, the next Monthly Anniversary Day is March 15, 2001, and
you have not made any POLICY CHANGE, the REQUIRED AMOUNT is
$900 ($100 ($1,200 divided by 12) x 9 (number of months in the
period)).
o If you have made a POLICY CHANGE, we calculate a REQUIRED
AMOUNT for the period from the Policy Date to the date on
which the POLICY CHANGE was effective and a REQUIRED AMOUNT
for the period from the date on which the POLICY CHANGE was
effective to the next Monthly Anniversary Day. Each
calculation is based on the minimum annual premium for the
Term No-Lapse Guarantee applicable for the period. We then add
the 2 REQUIRED AMOUNTS to determine the TOTAL REQUIRED AMOUNT.
o If you have made more than one POLICY CHANGE, we calculate a
REQUIRED AMOUNT for each period. We then add the required
amounts to determine the TOTAL REQUIRED AMOUNT.
o We then compare your ADJUSTED TOTAL PREMIUM payments to the
TOTAL REQUIRED AMOUNT.
o If your ADJUSTED TOTAL PREMIUM payments are equal to or
greater than the TOTAL REQUIRED AMOUNT, your Policy will
continue to be effective, your Term No-Lapse Guarantee will
remain in effect and your Policy will not lapse.
o If your ADJUSTED TOTAL PREMIUM PAYMENTS are less than the
TOTAL REQUIRED AMOUNT, a Grace Period will start.
E-1
<PAGE>
o We will send you notice if you are in jeopardy of losing your
Term No-Lapse Guarantee. If your Term No-Lapse Guarantee is
lost, it will not be reinstated.
CONTINUATION UNDER THE LIFETIME NO-LAPSE GUARANTEE PROVISION
To determine if your adjusted total premium payments are sufficient for
continuation when the Lifetime No-Lapse Guarantee applies, we use the procedure
described above, but we base our calculation of the total required amount on the
minimum annual premium for the Lifetime No-Lapse Guarantee under your Policy as
shown on your Policy Schedule.
E-2
<PAGE>
SUPPLEMENT F - VALUATION PROCEDURES
SUB-ACCOUNTS ACCUMULATION UNIT VALUE
In this discussion, the term Valuation Period means the period of time
beginning at the close of trading on the NYSE on one Valuation Date, as defined
below, and ending at the close of trading on the NYSE on the next succeeding
Valuation Date. A Valuation Date is each day valuation of the Sub-Accounts is
required by law including every day that the NYSE is open.
The value of an Accumulation Unit at the close of any Valuation Period
is determined for each Sub-Account by multiplying the Accumulation Unit Value of
the Sub-Account at the close of the immediately preceding Valuation Period by
the "Net Investment Factor" (described below). Depending upon investment
performance of the underlying Fund in which the Sub-Account is invested, the
Accumulation Unit Value may increase or decrease.
The Net Investment Factor for each Sub-Account for any Valuation Period
is determined by dividing (a) by (b) and subtracting (c) from the result, where:
(a) equals: (1) the net asset value per share of the
underlying Fund at the end of the current Valuation
Period, plus
(2) the per share amount of any dividend or capital gain
distribution made by the underlying Fund on shares
held in the Sub-Account if the "ex-dividend" date
occurs during the current Valuation Period, plus
or minus
(3) a per share charge or credit for any taxes reserved,
which are determined by Columbus Life to have
resulted from the investment operations of the
Sub-Account during the current Valuation Period;
(b) is the net asset value per share of the corresponding
underlying Fund determined at the end of the
immediately preceding Valuation Period; and
(c) is a factor representing the charges deducted from
the Sub-Account on a daily basis for the daily
portion of the annual mortality and expense risk
charge.
FIXED ACCOUNT VALUE
The value of the Fixed Account is calculated on a daily basis by the following
formula:
NP + XFT + I - XFF - WD = value of the Fixed Account where
NP = the sum of all Net Premiums allocated to the Fixed Account
XFT = any amount transferred to the Fixed Account from a
Sub-Account
I = interest credited by Columbus Life to the Fixed Account
XFF = any amounts transferred from the Fixed Account to a
Sub-Account
WD = any amounts withdrawn for charges or deductions, or in
connection with any surrenders or partial withdrawals
F-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-2
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY FINANCIAL STATEMENTS
COLUMBUS LIFE INSURANCE COMPANY
(A Wholly Owned Subsidiary of The Western and Southern Life Insurance Company)
Report on Audits of Financial Statements - Statutory Basis as of December 31,
1998 and 1997 and for the Three Years Ended December 31, 1998
i
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
TABLE OF CONTENTS
Pages
Report of Independent Accountants 1
Financial Statements:
Balance Sheets - Statutory Basis as of December 31, 1998 and 1997 2
Summaries of Operations - Statutory Basis for the years ended
December 31, 1998, 1997 and 1996 3
Statements of Changes in Shareholder's Equity - Statutory Basis
for the years ended December 31, 1998, 1997 and 1996 4
Statements of Cash Flows - Statutory Basis for the years ended
December 31, 1998, 1997 and 1996 5
Notes to Statutory Basis Financial Statements 6-16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
We have audited the accompanying balance sheets (statutory basis) of Columbus
Life Insurance Company ("the Company") (a wholly owned subsidiary of The Western
and Southern Life Insurance Company) as of December 31, 1998 and 1997, and the
related summaries of operations (statutory basis) and statements of changes in
shareholder's equity (statutory basis) and cash flows (statutory basis) for the
three years ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the Insurance Department of
the State of Ohio. The effects on the financial statements of the variances
between the statutory basis of accounting and generally accepted accounting
principles are determined to be material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Columbus Life Insurance Company as of December 31, 1998 and 1997, or the
results of its operations or its cash flows for the three years ended December
31, 1998.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities, and surplus of Columbus
Life Insurance Company as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the three years ended December 31, 1998, on
the basis of accounting described in Note 1.
PricewaterhouseCoopers, LLP
March 5, 1999
1
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
BALANCE SHEETS - STATUTORY BASIS AS OF DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- ----------
(IN THOUSANDS)
-------------------------
ASSETS
<S> <C> <C>
Bonds $1,459,357 $ 1,401,436
Preferred and common stocks 240,218 195,723
Mortgage loans 148,623 159,861
Policy loans 77,236 75,268
Real estate: Investment properties -- 171
Properties acquired in satisfaction of debt 1,992 2,397
Cash and temporary investments 42,064 42,534
Other invested assets 11,194 4,380
---------- -----------
Total cash and invested assets 1,980,684 1,881,770
Premiums deferred and uncollected 7,343 7,636
Investment income due and accrued 23,284 23,048
Other assets 5,073 4,649
---------- -----------
Total assets $2,016,384 $ 1,917,103
---------- -----------
LIABILITIES
Policy reserves $1,574,309 $ 1,538,045
Policy claims in process of settlement 4,107 4,164
Dividends payable to policyholders 14,578 15,204
Other liabilities 77,023 62,980
Interest maintenance reserve 21,705 17,769
Asset valuation reserve 61,165 51,992
---------- -----------
TOTAL LIABILITIES 1,752,887 1,690,154
SHAREHOLDER'S EQUITY
Common stock, $1 par value,
authorized 10,000,000 shares, issued
and outstanding 10,000,000 shares 10,000 10,000
Paid-in-capital 41,600 41,600
Retained earnings 211,897 175,349
---------- -----------
Total shareholder's equity 263,497 226,949
---------- -----------
Total liabilities and shareholder's equity $2,016,384 $ 1,917,103
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
SUMMARIES OF OPERATIONS - STATUTORY BASIS FOR THE YEARS ENDED
December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(IN THOUSANDS)
----------------------------------------------------------
Revenue:
<S> <C> <C> <C>
Premiums $ 167,538 $ 159,235 $ 146,725
Net investment income 138,724 143,809 134,651
Considerations for supplementary
contracts and dividend accumulations 6,250 6,425 6,178
Other 5,624 3,821 3,156
---------- ---------- ----------
318,136 313,290 290,710
---------- ---------- ----------
Policy benefits and expenses:
Death benefits 30,314 29,618 28,851
Annuity benefits 8,165 8,352 7,058
Disability and accident and health benefits 2,875 2,501 2,839
Surrender benefits 121,444 107,856 103,848
Other benefits 10,716 11,913 10,022
Increase in policy reserve and other
policyholders' funds 36,588 43,817 37,204
Commissions on premiums 27,800 23,961 23,030
General expenses 36,583 35,167 37,728
========== ========== ==========
274,485 263,185 250,580
---------- ---------- ----------
Gain from operations before dividends
to policyholders, federal
income taxes, and net realized capital gain 43,651 50,105 40,130
Dividends to policyholders 14,610 15,232 14,671
---------- ---------- ----------
Gain from operations before federal
income taxes and net realized capital gain 29,041 34,873 25,459
Federal income taxes 6,238 11,079 5,713
---------- ---------- ----------
Net gain from operations before
net realized capital gain 22,803 23,794 19,746
Net realized capital gain, less federal
income tax of $5,345 in 1998 and $2,467
in 1997 and transfers to the Interest
Maintenance Reserve of $8,237 in 1998 and
$5,938 in 1997 11,114 4,492 15,358
---------- ---------- ----------
Net income $ 33,917 $ 28,286 $ 35,104
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY - STATUTORY BASIS FOR THE YEARS
ENDED
December 31, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(IN THOUSANDS)
----------------------------------------------------------
<S> <C> <C> <C>
Shareholder's equity at beginning of year $ 226,949 $ 185,348 $ 167,130
Net income 33,917 28,286 35,104
Change in net unrealized gains 10,630 14,507 (13,922)
Increase in nonadmitted assets 1,457 372 685
Increase in asset valuation reserve (9,173) (1,312) (3,491)
Other (283) (252) (158)
---------- ---------- ----------
Shareholder's equity at end of year $ 263,497 $ 226,949 $ 185,348
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
STATEMENTS OF CASH FLOWS - STATUTORY BASIS FOR THE YEARS ENDED DECEMBER 31,
1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(IN THOUSANDS)
----------------------------------------------------------
<S> <C> <C> <C>
Net cash from operations:
Premiums and annuity considerations $ 179,372 $ 169,138 $ 156,428
Net investment income received 132,144 141,117 130,474
Other income received -- 263 166
---------- ---------- ----------
311,516 310,518 287,068
Surrender benefits paid (121,444) (107,856) (103,848)
Other benefits paid to policyholders (52,606) (50,456) (48,811)
Commissions, other expenses and taxes paid (59,937) (57,780) (54,117)
Dividends paid to policyholders (15,236) (14,673) (14,150)
Federal income taxes paid (8,020) (18,334) (13,572)
Net (increase) decrease in policy
loans and premium notes (1,968) (2,169) (1,149)
Other operating expenses paid (112) -- (3,549)
---------- ---------- ----------
Net cash from operations 52,193 59,250 47,872
Proceeds from investments sold,
matured or repaid:
Bond 709,881 674,578 709,018
Stocks 119,711 122,354 115,370
Mortgage loans 24,695 29,186 42,811
Real estate and other invested assets 4,684 1,195 22,057
========= ========== ==========
Total investment proceeds 858,971 827,313 889,256
Other sources 4,197 1,145 4,398
---------- ---------- ----------
Total cash provided 863,168 828,458 941,526
---------- ---------- ----------
Cost of investments acquired:
Bonds 754,891 722,159 793,135
Stocks 140,492 132,550 113,514
Mortgage loans 13,127 13,900 13,711
Real estate and other invested assets 6,656 2,086 283
---------- ---------- ----------
Total investments acquired 915,166 870,695 920,643
Other cash applied, net 665 734 7,180
---------- ---------- ----------
Total cash applied 915,831 871,429 927,823
---------- ---------- ----------
Net change in cash and temporary investments (470) 16,279 13,703
Cash and temporary investments:
Beginning of year 42,534 26,255 12,552
---------- ---------- ----------
End of year $ 42,064 $ 42,534 $ 26,255
========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. PRINCIPAL ACCOUNTING POLICIES:
a. NATURE OF OPERATIONS: Columbus Life Insurance Company (the Company), a stock
life insurance company, is a wholly-owned subsidiary of The Western and Southern
Life Insurance Company (Western and Southern), a mutual life insurance company.
The Company offers individual life, universal life and annuity contracts through
general and independent agents and affiliated broker-dealers. The Company is
licensed in 39 states and the District of Columbia. Approximately 61% of the
gross premiums and annuity considerations for the Company were derived from
Ohio, California, Michigan, Florida, Indiana and New Jersey.
b. BASIS OF PRESENTATION: The Company is subject to regulation by the Department
of Insurance of the State of Ohio (the "Department") and other states in which
the Company operates. The Company files financial statements with these
departments using statutory accounting practices (SAP) prescribed or permitted
by the Department and used in the preparation of the accompanying
statutory-basis financial statements. Prescribed statutory accounting practices
include a variety of publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations, and general
administrative rules. Permitted statutory accounting practices encompass all
accounting practices not so prescribed; such practices differ from
state-to-state, may differ from company-to-company within a state and may change
in the future. These practices differ in some respects from generally accepted
accounting principles. The more significant differences are:
o Certain assets are excluded from the statements of admitted assets,
liabilities and shareholder's equity as "nonadmitted assets" (principally
furniture and equipment) for statutory reporting purposes.
o Debt securities classified as available for sale are carried at amortized cost
instead of fair value.
o Deferred federal income taxes are not provided for statutory reporting
purposes.
o The Company's investment in subsidiaries is accounted for on the equity method
for statutory purposes, rather than being consolidated with the Company.
o The costs of acquiring new business, such as commissions, certain costs of
policy underwriting and issuance and certain variable agency expenses, have not
been deferred for statutory reporting purposes.
6
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company received written approval from the Department to record guaranty
fund assessments as billed and defer the amount on the balance sheet to the
extent that they are recoverable through premium tax credits. When the tax
credits are realized, the assessment is removed from the balance sheet as a
credit to premium tax expense. The Company also received approval to record all
taxes, including interest, assessments, settlements and corrections through the
Summary of Operations, rather than as a direct charge to shareholder's equity.
There is no prescribed accounting treatment for these transactions.
In March 1998, the NAIC finalized the Codification of Statutory Accounting
Principles guidance which will replace the current Accounting Practices and
Procedures manual as the NAIC's primary guidance on statutory accounting. The
Codification provides guidance for areas where statutory accounting has been
silent and changes current statutory accounting in some areas. The principal
changes expected to impact the Company is the recording of deferred taxes.
The Ohio Insurance Department has adopted the Codification, effective January 1,
2001. The Company has not estimated the potential effect of the Codification
guidance.
c. REVENUES AND EXPENSES: Annuity and universal life premiums are recognized as
revenue when received. Other life insurance premiums are recognized at the
beginning of each policy year. Accident and health insurance premiums are
recognized as revenue when due. Policy acquisition costs are expensed as
incurred.
d. VALUATION OF INVESTMENTS:
o Debt securities and stock values are as prescribed by the NAIC; debt
securities at amortized cost or NAIC value, preferred stocks in good
standing at cost and all other stocks at market.
o Investments in subsidiaries are recorded under the equity method,
adjusted to use only those assets that would constitute admitted assets
if owned directly by an insurance company. The net income or loss of
such subsidiaries is recorded directly to retained earnings.
o Mortgage loans not in default are carried at outstanding indebtedness
less unamortized discount. Mortgage loans in default and property
acquired in satisfaction of debt are recorded at the lower of the
related indebtedness or fair market value.
7
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
o Real estate is carried at the lower of depreciated cost or fair market
value. Depreciation is computed by the straight-line method over the
estimated useful life of the asset.
o Policy loan values are carried at outstanding indebtedness not in
excess of policy cash surrender value.
o Real estate joint ventures and partnerships are accounted for on the
equity basis, with the equity in earnings recorded through net
investment income and equity for general and limited partnership
interests, respectively.
The asset valuation reserve serves to provide a reserve, recorded through
equity, against fluctuations in the market values of bonds, stocks, mortgage
loans, real estate and other invested assets. The interest maintenance reserve
defers the recognition of realized capital gains and losses resulting from
changes in interest rates on fixed income investments sold, and amortizes the
gains and losses into investment income over the remaining life of the
investments sold. The net gain deferred as a result of recording the interest
maintenance reserve was $8,237,000 and $5,938,000 and net of federal income
taxes of $4,436,000 and $3,197,000 in 1998 and 1997, respectively. Realized
gains and losses from sales of securities are determined on the basis of
specific identification and recognized on the trade date.
Realized gains and losses, adjusted for the interest maintenance reserve are
included in the determination of net income. Adjustments to fair market value
for permanent declines in value of mortgage loans, property acquired in
satisfaction of debt and real estate are treated as realized losses and are
included in net income. Adjustments for declines which are not permanent are
treated as unrealized losses.
8
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
e. POLICY RESERVES: Policy reserves for life insurance, annuity contracts, and
supplemental benefits are developed by using accepted actuarial methods and are
computed principally on the Commissioner's Annuity Reserve Valuation Method. The
following mortality tables and interest rates are used:
<TABLE>
<CAPTION>
PERCENTAGE OF RESERVES
-------------------------
1998 1997
------ ------
<S> <C> <C>
Life insurance:
1941 Commissioners Standard Ordinary, 2-1/2% - 3%3.7% 3.9%
1958 Commissioners Standard Ordinary, 2-1/2% - 4-1/2% 23.6 23.9
1980 Commissioners Standard Ordinary, 4% - 5% 33.7 29.2
Annuities:
Various, 2-1/2% - 7-1/2% 36.9 40.7
Supplemental benefits:
Various, 2-1/2% - 7-1/2% 1.1 1.2
Other, 2% - 5-1/2% 1.0 1.1
------ ------
100.0% 100.0%
------ ------
</TABLE>
f. DIVIDENDS: Dividends to policyholders are determined annually by the Board of
Directors. The dividends to policyholders were determined using factors based on
approved dividend scales. Dividends to policyholders are reserved one year in
advance through charges to operations.
g. CASH AND TEMPORARY INVESTMENTS: The Company considers short-term investments
with an initial maturity of three months or less to be temporary investments.
h. FEDERAL INCOME TAXES: The Company's parent files a consolidated tax return
with its eligible subsidiaries, including the Company. The provision for federal
income taxes is allocated to the Company using a separate return method based
upon a written agreement. Under the agreement, the benefits from losses of
subsidiaries are not retained by the subsidiary companies but are allocated
among those companies in the consolidated group having taxable income.
i. USE OF ESTIMATES: The preparation of financial statements in conformity with
accounting practices prescribed or permitted by insurance regulatory authorities
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.
9
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. DEBT AND EQUITY SECURITIES:
Fair values for debt securities are based on quoted market prices. The amortized
cost and estimated fair values of debt securities at December 31, 1998 and 1997
are as follows:
<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------------
ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------------------------------- ---------------------------------
(IN THOUSANDS)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations
and agencies $ 64,996 $ 1,273 $ 565 $ 65,704
Debt securities issued by states of
the U.S. and political subdivisions
of the states 6,004 1,012 -- 7,016
Corporate securities 1,074,857 59,379 7,816 1,126,420
Mortgage-backed securities 313,250 8,836 260 321,826
Foreign government securities 250 -- 7 243
------------ ------------ ------------ ------------
Total $1,459,357 $70,500 $8,648 $1,521,209
============ ============ ============ ============
1997
---------------------------------------------------------------------------
ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------------------------------- ---------------------------------
(IN THOUSANDS)
---------------------------------------------------------------------------
U.S. TREASURY SECURITIES AND OBLIGATIONS
OF U.S. GOVERNMENT CORPORATIONS
AND AGENCIES $ 10,456 $ 460 $ -- $ 10,916
Debt securities issued by states of
the U.S. and political subdivisions
of the states 30,900 2,786 -- 33,686
Corporate securities 1,107,134 53,161 1,363 1,158,932
Mortgage-backed securities 252,696 7,183 831 259,048
Foreign government securities 250 - 9 241
------------ ------------ ------------ ------------
Total $1,401,436 $63,590 $2,203 $1,462,823
============ ============ ============ ============
</TABLE>
10
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and estimated fair value of bonds at December 31, 1998, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
ESTIMATED
AMORTIZED FAIR
COST VALUE
---------------------------------------
(IN THOUSANDS)
---------------------------------------
Due in one year or less $28,599 $28,916
Due after one year through five years 479,972 498,720
Due after five years through ten years 446,786 470,016
Due after ten years 190,750 201,731
------------ ------------
1,146,107 1,199,383
Mortgage-backed securities 313,250 321,826
Total $1,459,357 $1,521,209
============ ============
Proceeds from sales of investments in bonds during 1998, 1997 and 1996 were
$709,881,000, $674,578,000 and $709,018,000, respectively. Gross gains of
$13,801,000, $10,711,000 and $12,768,000 and gross losses of $2,004,000,
$1,795,000 and $3,449,000 were realized on these sales in 1998, 1997 and 1996,
respectively.
Unrealized gains and losses on investments in common stocks and on investments
in subsidiaries are reported directly in equity and do not affect net income.
The gross unrealized gains and gross unrealized losses on, and the cost and fair
value of those investments and preferred stocks are as follows:
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------------------
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------------------------------- ---------------------------------
(IN THOUSANDS)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred stocks in good standing $ 22,764 $ 929 $ 146 $ 23,547
Other preferred stocks 2,094 -- 844 1,250
------------ ------------ ------------ ------------
Total preferred stocks $ 24,858 $ 929 $ 990 $ 24,797
============ ============ ============ ============
Common stock $138,817 $41,775 $10,629 $169,963
Subsidiaries 37,573 21,240 12,572 46,241
------------ ------------ ------------ ------------
Total common stock $176,390 $63,015 $23,201 $216,204
============ ============ ============ ============
</TABLE>
11
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997
---------------------------------------------------------------------------
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------------------------------- ---------------------------------
(IN THOUSANDS)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred stocks in good standing $ 14,808 $ 873 $ 16 $ 15,665
Other preferred stocks 2,000 -- 690 1,310
------------ ------------ ------------ ------------
Total preferred stocks $ 16,808 $ 873 $ 706 $ 16,975
============ ============ ============ ============
Common stock $114,837 $22,991 $ 5,008 $136,820
Subsidiaries 33,037 21,043 11,295 42,785
------------ ------------ ------------ ------------
Total common stock $147,874 $44,034 $16,303 $179,605
============ ============ ============ ============
</TABLE>
Proceeds from sales of investments in equity securities during 1998, 1997 and
1996 were $119,711,000, $122,354,000 and $115,370,000, respectively. Gross gains
of $22,175,000, $19,599,000 and $22,663,000 and gross losses of $6,390,000,
$13,127,000 and $2,464,000 were realized on these sales in 1998, 1997 and 1996,
respectively.
Net investment income consisted of the following for the years ended December
31,:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Debt securities $111,621 $108,148 $103,347
Equity securities 5,370 13,717 6,164
Mortgage loans 13,814 14,733 17,650
Rental income from real estate 229 500 1,427
Policy loans 4,811 4,647 4,504
Other invested assets 1,242 905 1,874
Short-term investments 2,597 3,225 2,442
---------- ---------- ----------
Gross investment income 139,684 145,875 137,408
Investment expense (960) (2,066) (2,757)
---------- ---------- ----------
Net investment income $138,724 $143,809 $134,651
========== ========== ==========
</TABLE>
12
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following sets forth the fair values of the Company's financial instruments.
<TABLE>
<CAPTION>
1998 1997
---------------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
--------------------------------- ---------------------------------
(IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
DEBT SECURITIES $1,459,357 $1,521,209 $1,401,436 $1,462,823
Preferred and common stock 193,977 194,760 152,938 153,795
Mortgage loans, net 148,623 158,136 159,861 168,818
Cash and temporary investments 42,064 42,064 42,534 42,534
------------ ------------ ------------ ------------
Total assets $1,844,021 $1,916,169 $1,756,769 $1,827,970
============ ============ ============ ============
Liabilities
Investment-type contract reserves 1,172,653 1,111,851 1,151,598 1,071,801
------------ ------------ ------------ ------------
Total liabilities $1,172,653 $1,111,851 $1,151,598 $1,071,801
============ ============ ============ ============
</TABLE>
Fair values for debt, equity and short-term investment securities are based on
quoted market prices.
The fair values of mortgage loans, consisting principally of commercial real
estate loans, are estimated using discounted cash flow analyses, using interest
rates currently being offered for similar loans collateralized by properties
with similar investment risk. The fair values for mortgage loans in default are
established at the lower of the fair market value of the related underlying
collateral or carrying value of the loan.
The Company believes it is not practicable to estimate the fair value of policy
loans. These assets, totaling $77,236,000 at December 31, 1998, are carried at
their aggregate unpaid principal balances. Estimation of the fair value is not
practicable as the loans have no stated maturity and are an integral part of the
related insurance contracts.
Certain reserves for investment-type insurance contracts do not include
mortality or morbidity risk. Fair values for insurance reserves are not required
to be disclosed. However, the estimated fair values of all insurance reserves
and investment contracts are taken into consideration in the Company's overall
management of interest rate risk.
13
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company believes that all individual annuity contracts which are in the cash
value fund accumulation phase prior to annuitization represent investment-type
insurance contracts. The fair values for these contracts have been estimated as
the carrying values in the balance sheet less any applicable surrender charges.
It also believes the single premium immediate annuities without life
contingencies represent investment contracts. The fair value of these annuities
is estimated by recalculating the reserve at a reinvestment interest rate
determined from Asset/Liability matching.
Interest changes may have temporary effects on the sale and profitability of
annuity products offered by the Company. Although the rates offered by the
Company are adjustable in the long-term, in the short-term they may be subject
to contractual and competitive restrictions which may prevent timely adjustment.
The Company's Management constantly monitors interest rates with respect to a
spectrum of durations and sells annuities that permit flexible responses to
interest rate changes as part of the Company's management of interest spreads.
However, adverse changes in investment yields on invested assets will affect the
earnings on those products with a guaranteed return.
4. RELATED PARTY TRANSACTIONS:
The Company is a party to a service agreement with Western and Southern for the
performance of certain legal services, investment advisory and data processing
functions for the Company. The Company paid $8,537,000, $7,175,000 and
$5,760,000 in 1998, 1997 and 1996, respectively, for these services.
The Company has entered into an agreement with Western and Southern where the
Company reinsured the liabilities of, and began servicing and administering the
former business of Columbus Mutual Life Insurance Company (Columbus Mutual), a
former affiliate of Western and Southern which merged with Western and Southern.
The agreement is anticipated to last until all obligations for policies issued
by Columbus Mutual are settled. Reserves reflected on the Company's balance
sheets for policies and contracts included under the Agreement are:
DECEMBER 31,
--------------
1998 1997
-------- --------
(IN THOUSANDS)
------------------------------
Life and annuity reserves $ 903,045 $ 938,017
Accident and health reserves 13,507 --
14
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. FEDERAL INCOME TAXES:
Following is a reconciliation between the amount of tax computed at the federal
statutory rate of 35% and the federal income tax provision (exclusive of taxes
related to capital gains or losses) reflected in the summaries of operations:
<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
(IN THOUSANDS)
-------------------------------------------------------
<S> <C> <C> <C>
Income tax computed at statutory rate $ 10,164 $ 12,206 $ 8,910
Increase (decrease) in taxes resulting from:
Adjustments to statutory reserves
for tax purposes 1,835 1,989 2,306
Deferred acquisition costs recorded
for tax purposes 1,495 1,719 1,727
Amortization of IMR (1,505) (1,284) (1,001)
EDP conversion cost expense -- -- 56
Bond discount accrual (1,011) (726) (760)
Charitable contributioN -- -- (1,733)
----------- ---------- -----------
Dividend received deduction -- (3,500) (1,225)
Changes in prior period estimates (7,815) 729 (3,129)
Other 3,075 (54) 559
----------- ---------- -----------
Federal income taxes $ 6,238 $ 11,079 $ 5,713
=========== ========== ===========
</TABLE>
6. DIVIDEND RESTRICTIONS:
Ohio insurance law limits the amount of dividends that can be paid to a parent
in a holding company structure, without prior approval of the regulators, to the
greater of ten percent of statutory surplus or the prior year statutory net gain
from operations. As of December 31, 1998, the Company has approximately
$33,917,000 available for payment of dividends to Western and Southern without
further approval of the regulators. No dividends were paid to Western and
Southern in 1998, 1997 and 1996.
7. CONTINGENCIES:
The Company is currently a defendant in various lawsuits which allege improper
sales practices by the Company. Recently a nationwide class was certified in one
of these cases. The terms of the class are still uncertain; however, the Company
intends to vigorously appeal the certification.
At this point in time, management is unable to estimate the potential outcome of
the lawsuits.
15
<PAGE>
COLUMBUS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF THE WESTERN AND SOUTHERN LIFE INSURANCE COMPANY)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. REGULATORY RESTRICTIONS:
The Company is required by statutory regulations to meet minimum risked-based
capital standards. Risk-based capital is a method of measuring the minimum
amount of capital appropriate for an insurance company to support its overall
business operations in consideration of its size and risk profile. At December
31, 1998 and 1997, the Company exceeded the minimum risk-based capital standards
required.
State regulatory authorities have powers relating to granting and revoking
licenses to transact business, the licensing of agents, the regulation of
premium rates and trade practices, the form and content of insurance policies,
the content of advertising material, financial statements and the nature of
permitted practices.
16
<PAGE>
GLOSSARY
ACCOUNT VALUE The sum of the value of your investments in
the Sub-Accounts, the value of your
investments in the Fixed Account and the
value of your Loan Account.
ACCUMULATION UNIT A unit of measure used to calculate a
Policyholder's share of a Sub-Account.
ACCUMULATION UNIT VALUE The dollar value of an Accumulation Unit in
a Sub-Account.
ATTAINED AGE We determine the Attained Age of the Insured
at various times for various reasons.
o At the time we issue your Policy, the
Insured's Attained Age is the
Insured's age on the Policy Date.
o After we issue your Policy, the
Insured's Attained Age generally is
the Insured's age on the last
Policy Anniversary on or before the
Monthly Anniversary Date.
o If you increase the Specified Amount
after we issue your Policy, the
Insured's Attained Age, for purposes
of determining cost of insurance
charges applicable to the increase,
is the Insured's age on the last
anniversary of the increase on or
before that Monthly Anniversary Day.
BENEFICIARY The person or persons you have named to
receive the Death Proceeds when the Insured
dies.
CASH SURRENDER VALUE The Account Value minus any surrender
charge.
COLUMBUS LIFE, WE, US Columbus Life Insurance Company.
AND OUR
CONTINGENT BENEFICIARY The person or persons you have named to
receive the Death Proceeds when no
Beneficiaries remain alive and the Insured
dies.
DEATH BENEFIT The amount we pay to the Beneficiary under
the Policy when the Insured dies.
DEATH PROCEEDS Death Benefit plus any insurance on the
Insured's life that was provided by riders
to your Policy.
FIXED ACCOUNT An investment option that provides a fixed
rate of interest.
G-1
<PAGE>
FUND A Fund is a series of a registered
management investment company. Each
Sub-Account invests in a Fund that has the
same investment objective as the
Sub-Account.
INDEBTEDNESS The sum of the value of your Loan Account
plus accrued and unpaid interest on the
loan.
INSURED The person on whose life we provide
insurance coverage under your Policy.
LOAN ACCOUNT The portion of your Account Value that is
collateral for your loans.
MINIMUM ISSUE LIMIT The minimum amount of insurance you must
purchase and maintain. If the Insured is in
a standard premium class, the Minimum Issue
Limit is $25,000. If the Insured is in a
preferred premium class, the Minimum Issue
Limit is $100,000.
MONTHLY ANNIVERSARY DAY The date each month on which
we deduct the Monthly Deduction and Monthly
Expense Charge. This is generally the same
date each month as the Policy Date, so long
as that date is a day on which processing
occurs.
MONTHLY DEDUCTION The Monthly Deduction includes the amount
deducted for the cost of insurance charge
plus the cost of any additional benefits
provided under your Policy by rider.
MONTHLY EXPENSE CHARGE The Monthly Expense Charge covers the cost
of administering your Policy.
NET CASH SURRENDER VALUE Your Account Value minus any surrender
charge and any Indebtedness.
NET PREMIUMS The amount of premium payment you paid less
the premium expense charge and less the tax
charges.
PAYEE The person who actually receives the payment
of proceeds from us under one of the Income
Plans. Depending on the circumstances, the
Payee might mean you, the Beneficiary, the
Contingent Beneficiary, your estate or
another designated person.
G-2
<PAGE>
POLICY The Columbus Life Flexible Premium Variable
Universal Life Policy, including the
application and any amendments, any
supplemental application, riders or
endorsements.
POLICY ANNIVERSARY The same date each year as the Policy Date.
POLICY DATE The date from which Policy months, years and
anniversaries are measured.
POLICY SCHEDULE The schedule that begins on page 3 of your
Policy. It contains specific information
about your Policy such as the Specified
Amount, your planned premium, the death
benefit option you selected, required
payments for guaranteed continuation of your
Policy and the maximum amounts of various
charges.
POLICY YEAR A year that starts on the your Policy Date
or an anniversary of your Policy Date.
SEPARATE ACCOUNT 1 A separate account of Columbus Life
Insurance Company that supports your Policy.
SPECIFIED AMOUNT The amount of insurance coverage provided by
the Policy.
SUB-ACCOUNTS A division of Separate Account 1. Each
Sub-Account invests in a Fund, which has
the same investment objective as the
Sub-Account.
SURRENDER CHARGE If the Specified Amount of your Policy
decreases, you will pay a surrender charge
under certain circumstances.
G-3
<PAGE>
Columbus Life
Insurance Company Logo
400 East Fourth Street (Y) P.O. Box 5737 (Y) Cincinnati, Ohio 45201-5737 (Y)
(800) 677-8383 (Y) www.ColumbusLife.com
This booklet contains the Columbus Life Flexible Premium Variable Universal Life
Insurance Prospectus and the current prospectuses of AIM Variable Insurance
Funds, Inc., The Alger American Fund, MFS Variable Insurance Trust, PIMCO
Variable Insurance Trust and Touchstone Variable Series Trust. You should rely
only on the information contained in the Policy (including any attached riders
or endorsements), these prospectuses or our approved sales literature.
No one is authorized to give any information or make any representation other
than those contained in the Policy (including any attached riders or
endorsements), these prospectuses or our approved sales literature.
