Registration No. 333-72233
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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
SEPARATE ACCOUNT VLI
of
THE EQUITABLE OF COLORADO, INC. Joseph G. Williams Jr., Vice President
(Exact Name of Trust) and Associate General Counsel
The Equitable Life Assurance Society
THE EQUITABLE OF COLORADO, INC. of the United States
(Exact Name of Depositor) 1290 Avenue of the Americas, 12th Floor
370 17th Street, Suite 4950 New York, NY 10104
Denver, CO 80202 (Name and Address of Agent for Service)
(Address of Depositor's Principal
Executive Offices)
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Telephone Number, Including Area Code: (303) 892-5700
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Please send copies of all communications to:
BETH N. LOWSON, ESQ. with a copy to:
The Equitable Life Assurance THOMAS C. LAUERMAN, ESQ.
Society of the United States Freedman , Levy, Kroll & Simonds
1290 Avenue of the Americas, 1050 Connecticut Avenue, N.W., Suite 825
12th Floor Washington, D.C. 20036
New York, NY 10104
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Securities Being Registered: Units of Interest in Separate Account VLI
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Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement.
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[Outside Wrapper]
IL PROTECTOR(R)
A flexible premium variable life insurance policy
April __, 1999
Equitable of Colorado Logo
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[FRONT COVER]
IL PROTECTOR(R)
A flexible premium variable life insurance policy
Prospectus dated April __, 1999
Equitable of Colorado Logo
Please read this prospectus and keep it for future reference. It
contains important information that you should know before purchasing, or taking
any other action under a policy. Also, at the end of this prospectus you will
find attached the prospectuses for The Hudson River Trust and EQ Advisors Trust,
which contain important information about their Portfolios.
This prospectus describes many aspects of an IL Protector policy, but
is not itself a policy. The policy is the actual contract that determines your
benefits and obligations under IL Protector. To make this prospectus easier to
read, we sometimes use different words than the policy. Equitable of Colorado or
your Equitable of Colorado associate can provide any further explanation about
your policy.
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WHAT IS IL PROTECTOR? IL Protector is issued by Equitable of Colorado. It
provides life insurance coverage, plus the opportunity for you to earn a return
in our guaranteed interest option and/or one or more of the following variable
investment options:
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FIXED INCOME OPTIONS: EQUITY OPTIONS: ASSET ALLOCATION OPTIONS:
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Domestic Fixed Income Domestic Equity International Equity o Alliance Conservative
- --------------------- --------------- -------------------- Investors
o Alliance Money Market o T. Rowe Price Equity o Alliance Global o EQ/Putnam Balanced
o Alliance Intermediate Income o Alliance International o Alliance Balanced
Government Securities o EQ/Putnam Growth & o T. Rowe Price o Alliance Growth Investors
o Alliance Quality Bond Income Value International Stock o Merrill Lynch World
Aggressive Fixed Income o Alliance Growth & Income o Morgan Stanley Strategy
- ---------------------- o Alliance Equity Index Emerging Markets Equity
o Alliance High Yield o Merrill Lynch Basic
Value Equity Aggressive Equity
o Alliance Common Stock ------------------
o MFS Research o Alliance Aggressive
o MFS Growth with Income* Stock
o EQ/Alliance Premier o Warburg Pincus Small
Growth* Company Value
o Alliance Small Cap
*Available June 4, 1999 Growth
o MFS Emerging Growth
Companies
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Amounts that you allocate under your policy to any of the variable investment
options are invested in a corresponding "Portfolio" that is part of one of the
following two mutual funds: The Hudson River Trust or the EQ Advisors Trust.
Your investment results in a variable investment option will depend on those of
the related Portfolio. Any gains will generally be tax-deferred and the life
insurance benefits we pay if the policy's insured person dies will generally be
income tax-free.
Other choices you have. You have considerable flexibility to tailor the
policy to your needs. For example, subject to our rules, you can (1) choose when
and how much you contribute (as "premiums") to your policy, (2) pay certain
premium amounts to guarantee that your insurance coverage will continue for a
number of years, regardless of investment performance, (3) borrow or withdraw
amounts you have accumulated, (4) change the amount of insurance coverage, (5)
choose between two life insurance benefit options, (6) elect to receive an
insurance benefit if the insured
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person becomes terminally ill, and (7) add or delete certain optional benefits
that we offer by "riders" to your policy.
Your Equitable of Colorado associate can provide you with information about all
forms of life insurance available from us and help you decide which may best
meet your needs. Replacing existing insurance with IL Protector or another
policy may not be to your advantage.
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE POLICIES ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
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COPYRIGHT 1999 THE EQUITABLE OF COLORADO, INC. ALL RIGHTS RESERVED.
IL PROTECTOR IS A REGISTERED SERVICE MARK OF THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES.
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WHO IS EQUITABLE OF COLORADO? We are The Equitable of Colorado, Inc. ("Equitable
of Colorado"), a Colorado stock life insurance company. We have been doing
business since 1984. Equitable of Colorado is a wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States ("Equitable Life"), a New
York stock life insurance company. Equitable Life has been doing business since
1859, and is a wholly-owned subsidiary of The Equitable Companies Incorporated
("Equitable Companies"), whose majority shareholder is AXA, a French holding
company for an international group of insurance and related financial services
companies. As a majority shareholder, and under its other arrangements with
Equitable of Colorado, Equitable Life and Equitable Companies, AXA exercises
significant influence over the operations and capital structure of Equitable
Companies and its subsidiaries. No company other than Equitable of Colorado,
however, has any legal responsibility to pay amounts that Equitable of Colorado
owes under the policies. During 1999, Equitable Companies plans to change its
name to AXA Financial, Inc.
Equitable Companies and its consolidated subsidiaries, including Equitable of
Colorado, managed approximately $347.5 billion in assets as of December 31,
1998. Equitable of Colorado is authorized to sell life insurance in forty-six
states and annuities in twenty-one states. Our home office is located at 370
17th Street, Denver, Colorado 80202.
HOW TO REACH US. To obtain (1) any forms you need for communicating with us, (2)
unit values and other values under your policy, and (3) any other information or
materials that we provide in connection with your policy or the Portfolios, you
can contact us
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BY MAIL: BY EXPRESS DELIVERY: BY TOLL-FREE PHONE: 1-888-855-5100
at the Post Office Box for our At the Street Address for our (automated system available weekdays 7 AM
Administrative Office specified in your Administrative Office specified in to 9 PM, Eastern Time; customer service
policy. your policy. representative available weekdays
8 AM to 9 PM, Eastern Time)
BY FAX: 1-704-540-9714
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We require that the following types of communications be on specific forms we
provide for that purpose:
(1) request for automatic transfer service; and
(2 authorization for telephone transfers by a person who is not also the
insured person.
We also have specific forms that we recommend you use for the following:
(a) policy surrenders;
(b) address changes;
(c) beneficiary changes;
(d) transfers between investment options; and
(e) changes in allocation percentages for premiums and deductions.
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Except for properly authorized telephone transactions, any notice or request
that does not use our standard form must be in writing dated and signed by you
and should also specify your name, the insured person's name (if different),
your policy number, and adequate details about the notice you wish to give or
other action you wish us to take. For information about transaction requests you
can make by phone, see "Telephone Transfers" on page 23 and "Telephone Requests"
on page 41 of this prospectus. We may require you to return your policy to us
before we make certain policy changes that you request.
The proper person to sign forms, notices and requests would normally be the
owner or any other person that our procedures permit to exercise the right or
privilege in question. If there are joint owners both must sign. Any irrevocable
beneficiary or assignee that we have on our records also must sign certain types
of requests.
You should send all requests, and notices to our Administrative Office at the
addresses specified in your policy. We will also accept requests and notices by
fax at the above number, if we believe them to be genuine. We reserve the right,
however, to require an original signature before acting on any faxed item. You
must send premium payments after the first one to our Administrative Office at
the above addresses; except that you should send any premiums for which we have
billed you to the address on the billing notice.
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CONTENTS OF THIS PROSPECTUS
PAGE IN THIS
PROSPECTUS
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WHAT IS IL PROTECTOR? 2
WHO IS EQUITABLE OF COLORADO? 4
HOW TO REACH US 4
CHARGES AND EXPENSES YOU WILL PAY 9
RISKS YOU SHOULD CONSIDER 13
DECIDING TO PURCHASE -- POLICY FEATURES AND BENEFITS 13
How You Can Pay For and Contribute to Your Policy 13
The Minimum Amount of Premiums You Must Pay 14
Investment Options Within Your Policy 16
About Your Life Insurance Benefit 17
You Can Increase or Decrease Your Insurance Coverage 19
Other Benefits You Can Add by Rider 20
Your Options For Receiving Policy Proceeds 20
Your Right to Cancel Within a Certain Number of Days 21
Variations Among IL Protector Policies 21
DETERMINING YOUR POLICY'S VALUE 22
Your Account Value 22
TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS 23
Transfers You Can Make 23
Telephone Transfers 23
Our Dollar Cost Averaging Service 24
ACCESSING YOUR MONEY 24
Borrowing From Your Policy 24
Making Withdrawals From Your Policy 26
Surrendering Your Policy for its Net Cash Surrender Value 27
When the Insured Person Reaches Age 100 ("Maturity") 27
Your Option to Receive a Living Benefit 27
TAX INFORMATION 28
Basic Tax Treatment For You and Your Beneficiary 28
Tax Treatment of Distributions to You 28
Tax Treatment of Living Benefit Proceeds 30
Effect of Policy on Interest Deductions Taken by Business
Entities 31
Requirement That We Diversify Investments 31
Estate, Gift, and Generation-Skipping Taxes 32
Pension and Profit-Sharing Plans 32
Other Employee Benefit Programs 32
ERISA 32
Our Taxes 33
When We Withhold Taxes From Distributions 33
Possibility of Future Tax Changes 33
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MORE INFORMATION ABOUT PROCEDURES THAT APPLY TO YOUR POLICY 34
Ways to Make Premium and Loan Payments 34
Requirements for Surrender Requests 34
Ways We Pay Policy Proceeds 34
Assigning Your Policy 35
Dates and Prices at Which Policy Events Occur 35
Policy Issuance 37
Gender-neutral Policies 38
MORE INFORMATION ABOUT OTHER MATTERS 38
Your Voting Privileges 38
About Our Separate Account VLI 39
About Our General Account 39
You Can Change Your Policy's Insured Person 40
Transfers of Your Account Value 40
Telephone Requests 41
Deducting Policy Charges 41
Suicide and Certain Misstatements 43
When We Pay Policy Proceeds 43
Changes We Can Make 44
Reports We Will Send You 45
Legal Proceedings 45
Illustrations of Policy Benefits 45
SEC Registration Statement 45
How We Market the Policies 45
Insurance Regulation That Applies To Equitable of Colorado 46
Services Provided by Equitable Life 46
Year 2000 Progress 46
Directors and Principal Officers 47
FINANCIAL STATEMENTS OF EQUITABLE OF COLORADO 48
APPENDICES
I -- Investment Performance Record A-1
II--Our Data on Market Performance B-1
III--An Index of Key Words and Phrases C-1
THE HUDSON RIVER TRUST PROSPECTUS (follows after page C-2 of this prospectus,
but is not a part of this prospectus)
EQ ADVISORS TRUST PROSPECTUS (follows after The Hudson River Trust Prospectus,
but is not a part of that prospectus or this prospectus.)
"WE", "OUR" AND "US" REFERS TO EQUITABLE OF COLORADO.
WHEN WE ADDRESS THE READER OF THIS PROSPECTUS WITH WORDS SUCH AS "YOU" AND
"YOUR," WE MEAN THE PERSON OR PERSONS HAVING THE RIGHT OR RESPONSIBILITY THAT
THE PROSPECTUS IS DISCUSSING AT THAT POINT. THIS USUALLY IS THE POLICY'S OWNER.
IF A POLICY HAS MORE THAN ONE OWNER, ALL OWNERS MUST JOIN IN THE EXERCISE OF ANY
RIGHTS AN OWNER HAS UNDER THE POLICY, AND THE WORD "OWNER" THEREFORE REFERS TO
ALL OWNERS.
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WHEN WE USE THE WORD "STATE," WE ALSO MEAN ANY OTHER LOCAL JURISDICTION WHOSE
LAWS OR REGULATIONS AFFECT A POLICY.
EQUITABLE OF COLORADO DOES NOT SELL IL PROTECTOR IN ALL STATES. THIS PROSPECTUS
DOES NOT OFFER IL PROTECTOR ANYWHERE SUCH OFFERS ARE NOT LAWFUL. EQUITABLE OF
COLORADO DOES NOT AUTHORIZE ANY INFORMATION OR REPRESENTATION ABOUT THE OFFERING
OTHER THAN THAT CONTAINED OR INCORPORATED IN THIS PROSPECTUS, IN ANY CURRENT
SUPPLEMENTS THERETO, OR IN ANY RELATED SALES MATERIALS AUTHORIZED BY EQUITABLE
OF COLORADO.
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CHARGES AND EXPENSES YOU WILL PAY
This table shows the charges that we deduct under the terms of your policy. For
more information about some of these charges, see "Deducting Policy Charges"
beginning on page 41 below.
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TABLE OF POLICY CHARGES
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CHARGES WE DEDUCT FROM AMOUNTS YOU CONTRIBUTE TO YOUR POLICY:
<S> <C>
Sales charge........................................ 6% of each premium payment you make
Charge for taxes...................................... Currently ranges from 0.50% to 5% (Virgin Islands)
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CHARGES WE DEDUCT FROM YOUR POLICY'S VALUE EACH MONTH:
Administrative charge............................... $25 in each of your policy's first 12 months
$6 in each subsequent month (which we may increase up
to $10)
Cost of insurance charges and
optional rider charges........................... Amount varies depending on the specifics of
your policy[superscript 1]
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CHARGES WE DEDUCT FROM YOUR POLICY'S INVESTMENT PERFORMANCE EACH DAY:
Mortality and expense risk charge................... .80% (effective annual rate) of the value you have in
our variable investment options[superscript 2]
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1 See "Monthly cost of insurance charge" on page 41 below and "Other Benefits
You Can Add by Rider" on page 20 below. The Illustrations of Policy Benefits
that your Equitable associate will provide will show the impact of the actual
current and guaranteed maximum rates of these and any other charges, based on
various assumptions.
2 This charge does not apply to amounts in our guaranteed interest option.
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CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE TIME OF THE TRANSACTION:
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Surrender (turning in) of your policy
during its first 15 years........................ A surrender charge equal to the smaller of (a) 66% of
one "target premium"[superscript 3] (or less for
surrenders after the ninth year) [superscript 4] or (b)
24% of all premium payments you make in the first year
up to the target premium, plus 3% of all additional
premiums paid in that year or subsequently. (We will
also deduct the amount of surrender charge remaining for
any face amount increases, as discussed immediately below.)
Surrender of your policy during the first 15 years
after you have requested an increase in your
policy's face amount[superscript 5]............... An amount of surrender charge that we will compute on
essentially the same basis as if each such face amount
increase had been a separate, newly-issued IL Protector
policy.[superscript 6]
Requested decrease in your policy's face
amount............................................ A pro-rata portion of the full that would apply to a surrender
at the time of the decrease
Change of your policy's insured person.............. $100
Election to add "living benefit" rider after
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3 The "target premium" is actuarially determined for each policy, based on that
policy's particular characteristics.
4 Beginning in your policy's tenth year, this amount declines at a constant
rate each month until no surrender charge applies to surrenders made after
the policy's 15th year. The maximum amount of surrender charge under clause
(a) will be set forth in your policy. The lowest maximum initial surrender
charge under clause (a) for any policy would be $1.25 for each $1000 of
initial face amount and the highest maximum initial surrender charge under
clause (a) for any policy would be $29.48 per $1000.
5 The "face amount" is the basic amount of insurance coverage under your
policy.
6 This additional surrender charge, however, applies only to the amount (if
any) by which the increase causes the face amount to exceed its highest
previous amount. For these purposes, we disregard any face amount changes
that we make automatically as a result of any change in your death benefit
option.
To calculate the amount of any additional surrender charge, we consider that
a portion of any premiums you pay at or after the time of the increase to have
been paid for the increase. We do this in the manner prescribed by SEC
regulations for such premium allocations.
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policy issue...................................... $100
Exercise of option to receive a "living
benefit".......................................... Up to $250
Transfers among investment options.................. $0 for each of the first 12 transfers per year (which
we may increase up to $25) and $25 for each additional
transfer in the same year[superscript 7]
Partial withdrawal.................................. $25 (or, if less, 2% of the withdrawal)
Increase in your policy's face amount............... $1.50 for each $1000 of the increase (but not more than
$240 in total)
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YOU ALSO BEAR YOUR PROPORTIONATE SHARE OF ALL FEES AND EXPENSES PAID BY A
"PORTFOLIO" THAT CORRESPONDS TO ANY VARIABLE INVESTMENT OPTION YOU ARE USING:
These tables show the fees and expenses paid by each Portfolio for the year
ended December 31, 1998, except as noted below. These fees and expenses are
reflected in the Portfolio's net asset value each day. Therefore, they reduce
the investment return of the Portfolio and of the related variable investment
option. Actual fees and expenses are likely to fluctuate from year to year. All
figures are expressed as an annual percentage of each Portfolio's daily average
net assets.
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1998 FEES AND EXPENSES
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PORTFOLIOS THAT ARE PART OF THE HUDSON RIVER TRUST MANAGEMENT FEE OTHER EXPENSES TOTAL ANNUAL EXPENSES
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<S> <C> <C> <C>
Alliance Money Market 0.35% 0.02% 0.37%
Alliance Intermediate Government Securities 0.50% 0.05% 0.55%
Alliance Quality Bond 0.53% 0.04% 0.57%
Alliance High Yield 0.60% 0.03% 0.63%
Alliance Growth & Income 0.55% 0.03% 0.58%
Alliance Equity Index 0.31% 0.03% 0.34%
Alliance Common Stock 0.36% 0.03% 0.39%
Alliance Global 0.64% 0.07% 0.71%
Alliance International 0.90% 0.16% 1.06%
Alliance Aggressive Stock 0.54% 0.02% 0.56%
Alliance Small Cap Growth 0.90% 0.06% 0.96%
Alliance Conservative Investors 0.48% 0.05% 0.53%
Alliance Balanced 0.41% 0.04% 0.45%
Alliance Growth Investors 0.51% 0.04% 0.55%
</TABLE>
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7 No charge, however, would ever apply apply to a transfer of all of your
variable investment option amounts to our guaranteed interest option.
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1998 FEES AND EXPENSES*
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PORTFOLIOS THAT ARE PART OF THE TOTAL FEE WAIVERS NET TOTAL
EQ ADVISORS TRUST MANAGEMENT OTHER ANNUAL AND/OR EXPENSE ANNUAL
FEE 12B-1 FEE EXPENSES EXPENSES REIMBURSEMENTS EXPENSES
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<S> <C> <C> <C> <C> <C> <C>
T. Rowe Price Equity Income 0.55% 0.25% 0.24% 1.04% 0.19% 0.85%
EQ/Putnam Growth & Income Value 0.55% 0.25% 0.24% 1.04% 0.19% 0.85%
Merrill Lynch Basic Value Equity 0.55% 0.25% 0.26% 1.06% 0.21% 0.85%
MFS Research 0.55% 0.25% 0.25% 1.05% 0.20% 0.85%
T. Rowe Price International Stock 0.75% 0.25% 0.40% 1.40% 0.20% 1.20%
Morgan Stanley Emerging Markets Equity 1.15% 0.25% 1.23% 2.63% 0.88% 1.75%
Warburg Pincus Small Company Value 0.65% 0.25% 0.27% 1.17% 0.17% 1.00%
MFS Emerging Growth Companies 0.55% 0.25% 0.24% 1.04% 0.19% 0.85%
EQ/Putnam Balanced 0.55% 0.25% 0.45% 1.25% 0.35% 0.90%
Merrill Lynch World Strategy 0.70% 0.25% 0.66% 1.61% 0.41% 1.20%
EQ/Alliance Premier Growth 0.90% 0.25% 0.74% 1.89% 0.74% 1.15%
MFS Growth with Income 0.55% 0.25% 0.59% 1.39% 0.54% 0.85%
</TABLE>
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* Other Expenses and Total Annual Expenses are based upon the actual expenses
incurred by each Portfolio for the year ended December 31, 1998, except for MFS
Growth with Income which commenced operations on December 31, 1998 and
EQ/Alliance Premier Growth which will commence operations on May 1, 1999. The
expenses for those Portfolios are based on estimates for 1999. The EQ Advisors
Trust's manager, EQ Financial Consultants, Inc., has entered into an Expense
Limitation Agreement with respect to each Portfolio under which it has agreed to
waive or reduce its fees and to assume other expenses of each of the Portfolios,
if necessary, in an amount that limits each Portfolio's Total Annual Expenses
(exclusive of interest, taxes, brokerage commissions, capitalized expenditures,
extraordinary expenses and 12b-1 fees) to not more than the amounts specified
above as Net Total Annual Expenses. See the EQ Advisors Trust prospectus for
more information.
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HOW WE ALLOCATE CHARGES AMONG YOUR INVESTMENT OPTIONS
In your application for a policy, you tell us from which investment
options you want us to take the policy's monthly deductions as they fall due.
You can change these instructions at any time. If we cannot deduct the charge as
your most current instructions direct, we will allocate the deduction among your
investment options proportionately to your value in each.
CHANGES IN CHARGES
We reserve the right in the future to (1) make a charge for certain
taxes or reserves set aside for taxes (see "Our Taxes" on page 33 below) or (2)
make a charge for any illustration of how your policy's values could change over
time, if you request more than one illustration in the same year.
Any changes that we make in our current charges or charge rates will be
by class of insured person and will be based on changes in future expectations
about such factors as investment earnings, mortality experience, the length of
time policies will remain in effect, premium payments,
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expenses and taxes. Any changes in charges may apply to then outstanding
policies, as well as to new policies, but we will not raise any charges above
any maximums discussed in this prospectus and shown in your policy.
RISKS YOU SHOULD CONSIDER
Some of the principal risks of investing in a policy are as follows:
o If the investment options you choose perform poorly, you could lose some or
all of the premiums you pay.
o If the investment options you choose do not make enough money to pay for the
policy charges, you could have to pay more premiums to keep your policy from
terminating.
o We can increase certain charges without your consent, within limits stated in
your policy.
o You may have to pay a surrender charge if you wish to discontinue some or all
of your insurance coverage under a policy.
Your policy permits other transactions that also have risks. These and other
risks and benefits of investing in a policy are discussed in detail throughout
this prospectus.
DECIDING TO PURCHASE -- POLICY FEATURES AND BENEFITS
HOW YOU CAN PAY FOR AND CONTRIBUTE TO YOUR POLICY
Premium payments. We call the amounts you contribute to your policy
"premiums" or "premium payments." The amount we require as your first premium
varies depending on the specifics of your policy and the insured person. Each
subsequent premium payment must be at least $100, although we can increase this
minimum if we give you advance notice. (Policies issued in some states or
automatic premium payment plans may have different minimums.) Otherwise, with a
few exceptions mentioned below, you can make premium payments at any time and in
any amount.
[Side bar: You can generally pay premiums at such times and in such amounts as
you like, so long as (i) you pay enough to prevent your policy from lapsing and
(ii) you don't exceed certain limits determined by the federal income tax laws
applicable to life insurance.]
Limits on premium payments. The federal tax law definition of "life
insurance" limits your ability to pay certain high levels of premiums (relative
to the amount of your policy's insurance coverage). Also, if your premium
payments exceed certain other amounts specified under the Internal Revenue Code,
your policy will become a "modified endowment contract," which may subject you
to additional taxes and penalties on any distributions from your policy. These
tax law
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premium limits are summarized further under "Tax Information" beginning on page
28 below. We may return to you any premium payments that would exceed those
limits.
You can ask your Equitable of Colorado associate to provide you with an
Illustration of Policy Benefits that shows you the amount of premium you can
pay, based on various assumptions, without exceeding these tax law limits. The
tax law limits can change as a result of certain changes you make to your
policy. For example, a reduction in the face amount of your policy may reduce
the amount of premiums that you can pay.
If at any time your policy's account value is high enough that the
alternative death benefit discussed on page 17 below would apply, we reserve the
right to limit the amount of any premiums that you pay, unless the insured
person provides us with adequate evidence that he/she continues to meet our
requirements for issuing insurance. The requirement for such evidence, however,
would apply only to the amount of premiums you pay in any year of your policy
that exceeds your annual no-lapse guarantee premium or your initial annual
planned periodic premium (whichever is greater). Planned periodic premiums are
discussed immediately below, and no-lapse guarantee premiums are discussed below
on page 15.
Planned periodic premiums. Page 3 of your policy will specify a
"planned periodic premium." This is the amount that you request us to bill you.
However, payment of these or any other specific amounts of premiums is not
mandatory. You need to pay only enough premiums to ensure (i) that your policy
has enough "net cash surrender value" to cover your policy's monthly charges as
they fall due or (ii) that your no-lapse guarantee (discussed below) remains in
effect. ("Net cash surrender value" is explained under "Surrendering Your Policy
For its Net Cash Surrender Value" on page 27 below.)
THE MINIMUM AMOUNT OF PREMIUMS YOU MUST PAY
Policy "lapse" and termination. Your policy will lapse (also referred
to in your policy as "default") if it does not have enough net cash surrender
value to pay the monthly charges when due and the no-lapse guarantee is not then
in effect. We will mail a notice to you at your last known address if your
policy lapses. You will have a 61 day grace period to pay at least an amount
prescribed in your policy, which would be enough to keep your policy in force
for approximately three months (without regard to investment performance). You
may not make any transfers or request any other policy changes during a grace
period. If we do not receive your payment by the end of the grace period, your
policy (and all riders to the policy) will terminate without value and all
coverage under your policy will cease. We will mail an additional notice to you
if your policy terminates.
[Side bar: Your policy will terminate if you don't pay enough premiums either to
pay the charges we deduct or to keep the no-lapse guarantee in effect. However,
we will first send you a notice and give you a chance to cure any shortfall.]
You may owe taxes if your policy terminates while you have a loan
outstanding, even though you receive no additional money from your policy at
that time. See "Tax Information," beginning on page 28 below.
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Restoring a terminated policy. To have your policy "restored" (put back
in force), you must apply within six months after the date of termination. In
some states, you may have a longer period of time. You must also present
evidence of insurability satisfactory to us and pay at least the amount of
premium that we require. Your policy contains additional information about the
minimum amount of this premium and about the values and terms of the policy
after it is restored.
No-lapse guarantee and premiums. Page 3 of your policy will specify a
"no-lapse guarantee premium." Payment of the no-lapse guarantee premiums is not
required. However, we measure the actual premiums you have paid against the
no-lapse guarantee premiums to see if the no-lapse guarantee provision will
prevent a policy from lapsing. For more detail about how we do this, see
"No-lapse guarantee test" below. The no-lapse guarantee provision will not
prevent your policy from lapsing if you have an outstanding policy loan.
[Side bar: In most states, if you pay at least certain prescribed amounts of
premiums, and have no policy loans, your policy will not lapse for a number of
years, even if the value in your policy becomes insufficient to pay the monthly
charges.]
In most states, the no lapse guarantee provision will last for the
first twenty years of your policy if the insured person was age 59 or younger
when the policy was issued, and for the first fifteen years in the case of other
issue ages. In some states, however, the no-lapse guarantee is unavailable or
limited to a much shorter period of time. The no-lapse guarantee period appears
on page 3 of your policy.
If you want to be billed for your no-lapse guarantee premium, you
should select that option in your application for a policy. Your planned
periodic premium will then be your no-lapse guarantee premium.
No-lapse guarantee test. If your policy's net cash surrender value is
not sufficient to pay a monthly deduction that has become due, we check to see
if the cumulative amount of premiums that you have paid to date at least equals
the cumulative no-lapse guarantee premiums due to date. So long as at least this
amount has been paid, your policy will not lapse.
When we calculate the cumulative amount of no-lapse guarantee premiums,
we compound each amount at a 4% annual interest rate from the due date through
the date of the calculation. (This interest rate is purely for purposes of
determining whether you have satisfied the no-lapse guarantee test. It does not
bear any relation to the returns you will actually earn or any loan interest you
will actually pay.) We use the same calculation for determining the cumulative
amount of premiums paid, beginning with the date each premium is received. The
amount of premiums you must pay to maintain the no-lapse guarantee will be
increased by the cumulative amount of any partial withdrawals you have taken
from your policy (calculated by the same method, beginning with the date of
withdrawal).
The amount of the no-lapse guarantee premium set forth in your policy
is actuarially determined at policy issuance and depends on the age and other
insurance risk characteristics of the insured person, as well as the amount of
the coverage and additional features you select. Certain
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additional benefit riders will cause the no-lapse guarantee to increase each
year. The no-lapse guarantee premiums may also change if you make policy changes
that increase or decrease the face amount of the policy or a rider, add or
eliminate a rider, or if there is a change in the insured person's risk
characteristics. We will send you a new policy page showing any change in your
no-lapse guarantee premium. Any change will be prospective only, and no change
will extend the no-lapse period beyond its original number of years.
INVESTMENT OPTIONS WITHIN YOUR POLICY
We will initially put all amounts which you have allocated to variable
investment options into our Alliance Money Market investment option. On the
twenty-first day after your policy's issue date (the "Allocation Date"), we will
re-allocate that investment in accordance with your premium allocation
instructions then in effect. You give such instructions in your application to
purchase a policy. You can change the premium allocation percentages at any
time, but this will not affect any prior allocations. The allocation percentages
that you specify must always be in whole numbers and total exactly 100%.
Variable investment options. The 26 variable investment options
available are listed on the front cover of this prospectus. (Your policy and
other supplemental materials may refer to these as "Investment Funds".) The
investment results you will achieve in any one of these options will depend on
the investment performance of the corresponding Portfolio that shares the same
name as that option. That Portfolio follows investment practices, policies and
objectives that are appropriate to the variable investment option you have
chosen. The advisors who make the investment decisions for each Portfolio are as
follows:
[Side bar: You can choose among 26 variable investment options]
Alliance Capital Management L.P. (for each "Alliance" or "EQ/Alliance"
option)
T. Rowe Price Associates, Inc. and Rowe Price-Fleming International,
Inc. (for both "T. Rowe Price" options)
Putnam Investment Management, Inc. (for both "EQ/Putnam" options)
Merrill Lynch Asset Management L.P. (for both "Merrill Lynch" options)
Massachusetts Financial Services Company (for the "MFS" options)
Morgan Stanley Asset Management Inc. (for the "Morgan Stanley" option)
Warburg Pincus Asset Management, Inc. (for the "Warburg Pincus" option)
The Portfolio that corresponds to each variable investment option that
has "Alliance" in its name is a part of The Hudson River Trust (except for the
"EQ/Alliance" Portfolio). Each other Portfolio is a part of EQ Advisors Trust.
EQ Financial Consultants, Inc., a subsidiary of Equitable Life and an affiliate
of Equitable of Colorado, serves as investment manager of the EQ Advisors Trust.
As such, EQ Financial Consultants oversees the activities of the above-listed
advisors with respect to EQ Advisors Trust and is responsible for retaining or
discontinuing the services of those advisors. You will find other important
information about each Portfolio in the separate prospectuses for The Hudson
River Trust and EQ Advisors Trust attached at the end of this prospectus. We may
add or delete variable investment options or Portfolios at any time.
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Guaranteed interest option. You can also allocate some or all of your
policy's value to our guaranteed interest option. We, in turn, invest such
amounts as part of our general assets. For each year of your policy, we declare
a fixed rate of interest (4% minimum) on amounts you allocate to our guaranteed
interest option. (The guaranteed interest option is part of what your policy and
other supplemental material may refer to this as the "Guaranteed Interest
Account".)
[Side-bar: We will pay at least 4% annual interest on our guaranteed interest
option.]
ABOUT YOUR LIFE INSURANCE BENEFIT
Your policy's face amount. In your application to buy an IL Protector
policy, you tell us how much insurance coverage you want on the life of the
insured person. We call this the "face amount" of the policy. $50,000 is the
smallest amount of coverage you can request.
[Side-bar: If the insured person dies, we pay a life insurance benefit to the
"beneficiary" you have named. The amount we pay depends on whether you have
chosen death benefit Option A or death benefit Option B.]
Your policy's "death benefit" options. In your policy application, you
also choose whether the basic amount (or "benefit") we will pay if the insured
person dies is
o Option A - THE POLICY'S FACE AMOUNT on the date of the insured
person's death. The amount of this death benefit doesn't change
over time, unless you take any action that changes the policy's
face amount;
- or -
o Option B - THE FACE AMOUNT PLUS THE POLICY'S "ACCOUNT VALUE" on
the date of death. Under this option, the amount of death benefit
generally changes from day to day, because many factors (including
investment performance, charges, premium payments and withdrawals)
affect your policy's account value.
Your policy's "account value" is the total amount that at any time is earning
interest for you or being credited with investment gains and losses under your
policy. (Account value is discussed in more detail under "Determining Your
Policy's Value" beginning on page 22 below.)
Under Option B, your policy's death benefit will tend to be higher than
under Option A. As a result, the monthly insurance charge we deduct will also be
higher, to compensate us for our additional risk.
Alternative higher death benefit in limited cases. Your policy is
designed to always provide a minimum level of insurance protection relative to
your policy's account value, in part to meet the Internal Revenue Code's
definition of "life insurance." Thus, we will automatically pay an alternative
death benefit if it is HIGHER than the basic Option A or Option B death benefit
you have
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selected. This alternative death benefit is computed by multiplying your
policy's account value on the insured person's date of death by a percentage
specified in your policy. The percentage depends on the insured person's age.
Representative percentages are as follows:
[Side bar: If the value in your policy is high enough, relative to the face
amount, the life insurance benefit will automatically be greater than the Option
A or Option B death benefit you have selected.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Age:* 40 or Under 45 50 55 60 65 70 75 to 95 100
%: 250% 215% 185% 150% 130% 120% 115% 105% 100%
</TABLE>
* For the then-current policy year.
This higher alternative death benefit exposes us to greater insurance
risk than the regular Option A and B death benefit. Because the cost of
insurance charges we make under your policy are based in part on the amount of
our risk, you will pay more cost of insurance charges for any periods during
which the higher alternative death benefit is the operative one.
Other adjustments to death benefit. We will increase the death benefit
proceeds by the amount of any other benefits we owe upon the insured person's
death under any optional riders which are in effect.
We will reduce the death benefit proceeds by the amount of any
remaining policy loans and unpaid loan interest, as well as any amount of
monthly charges under the policy that have become due but have not been paid
because of insufficient value in the policy. We also reduce the death benefit if
we have already paid part of it under a living benefit rider. We reduce it by
the amount of the living benefit payment plus accrued interest. See "Your Option
to Receive a Living Benefit" on page 27 below.
[Side-bar: You can request to change your death benefit option any time after
the second year of the policy.]
Change of death benefit option. If you change from Option A to B, we
automatically reduce your policy's face amount by an amount equal to your
policy's account value at the time of the change. We may refuse this change if
the policy's face amount would be reduced below our then current minimum for new
policies. Also, we may require you to provide us with satisfactory evidence that
the insured person remains insurable at the time of this change.
If you change from Option B to A, we automatically increase your
policy's face amount by an amount equal to your policy's account value at the
time of the change.
If the alternative death benefit discussed above is in effect at the
time of a change, we will determine the new face amount somewhat differently
from the general procedures described above.
We will not deduct or establish any amount of surrender charge as a
result of a change in death benefit option. Please refer to "Tax Information"
beginning on page 28 below, to learn about certain possible income tax
consequences that may result from a change in death benefit option.
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YOU CAN INCREASE OR DECREASE YOUR INSURANCE COVERAGE
You may increase the life insurance coverage under your policy by
requesting an increase in your policy's face amount. You can do so any time
after the first year of your policy. You may request a decrease in your policy's
face amount any time after the second year of your policy. The requested
increase or decrease must be at least $10,000. Please refer to "Tax Information"
beginning on page 28 for certain possible tax consequences of changing the face
amount.
We can refuse any requested increase or decrease. We will not approve
any increase or decrease if we are at that time being required to waive charges
under any optional disability waiver rider that is part of the policy. We also
will not approve an increase if the insured person has reached age 81. The
following additional conditions also apply:
Face amount increases. We treat an increase in face amount in many
respects as if it were the issuance of a new policy. For example, you must
submit satisfactory evidence that that the insured person still meets our
requirements for coverage. Also, we establish additional amounts of surrender
charge and no-lapse premium under your policy for the face amount increase;
these amounts are essentially the same as they would be if we were issuing the
same amount of additional coverage as a new policy.
In most states, you can cancel the face amount increase within 10 days
after you receive a new policy page showing the increase. If you cancel, we will
reverse any charges attributable to the increase and recalculate all values
under your policy to what they would have been had the increase not taken place.
The monthly insurance charge we make for the amount of the increase
will be based on the age and other insurance risk characteristics of the insured
person at the time of the increase. If we refuse a requested face amount
increase because the insured person's risk characteristics have become less
favorable, we may issue the additional coverage as a separate IL Protector
policy with a different insurance risk classification. In that case, we would
waive the monthly administrative charge that otherwise would apply to that
separate policy.
Face amount decreases. You may not reduce the face amount below the
minimum we are then requiring for new policies. Nor will we permit a decrease
that would cause your policy to fail the Code's definition of life insurance. No
lapse guarantee premiums, as well as our monthly deductions for the cost of
insurance coverage, will generally decrease (prospectively) after you reduce the
face amount.
If you reduce the face amount during the first 15 years of your policy,
or during the first 15 years after a face amount increase you have requested, we
will deduct all or part of the remaining surrender charge from your policy.
Assuming you have not previously changed the face amount, the amount of
surrender charge we will deduct will be determined by dividing the amount of the
decrease by the initial face amount and multiplying that fraction by the total
amount of surrender charge that still remains applicable to your policy. We
deduct the charge from the same investment options as if it were a part of a
regular monthly deduction under your policy.
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In some cases, we may have to make a distribution to you from your
policy in order to decrease your policy's face amount. This may be necessary in
order to preserve your policy's status as life insurance under the Internal
Revenue Code.
OTHER BENEFITS YOU CAN ADD BY RIDER
You may be eligible for the following other optional benefits we
currently make available by rider:
o disability waiver benefit o term insurance on an additional insured person
o accidental death benefit o option to purchase additional insurance
o children's term insurance o cost-of-living rider
Equitable of Colorado or your Equitable of Colorado associate can provide you
with more information about these riders. The riders provide additional
information, and we will furnish samples of them to you on request. The maximum
amount of any charge we make for a rider will be set forth in the rider or in
the policy itself. We can, however, add, delete, or modify the riders we are
making available, at any time before they become effective as part of your
policy.
The option to purchase additional insurance rider permits you to
purchase additional coverage on the insured person, without evidence of
insurability, if specified events occur.
The cost of living rider provides for scheduled automatic face amount
increases that, within limits, reflect increases in the Consumer Price Index.
These automatic face amount increases will result in a prospective increase in
your no lapse guarantee premiums and an additional surrender charge, in the same
manner as would any other face amount increase you request. However, the
administrative charge applicable to other face amount increases does not apply
to increases made under this rider.
See also "Tax Information" beginning on page 28 below for certain
possible tax consequences of face amount increases or adding or deleting riders.
YOUR OPTIONS FOR RECEIVING POLICY PROCEEDS
Beneficiary of death benefit. You designate your beneficiary in your
policy application. You can change your policy's beneficiary at any other time
during the insured person's life. If no beneficiary is living when the insured
person dies, we will pay the death benefit proceeds in equal shares to the
insured person's surviving children. If there are no surviving children, we will
instead pay the insured person's estate.
Payment options for death benefit. In your policy application, or at
any other time during the insured person's life, you may choose among several
payment options for all or part of any death benefit proceeds that subsequently
become payable. These payment options are described in the policy and may result
in varying tax consequences. The terms and conditions of each option are set out
in a separate contract that we will send the payee when any such option goes
into effect.
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Equitable of Colorado or your Equitable of Colorado associate can provide you
with samples of such contracts on request. [Side-bar: You can choose to have the
proceeds from the policy's life insurance benefit paid under one of our payment
options, rather than as a single sum.]
If you have not elected a payment option, we will pay any death benefit
in a single sum. If the beneficiary is a natural person (i.e., not an entity
such as a corporation or trust) we will pay any such single sum death benefit
through an interest-bearing checking account (the "Access Account") that we will
automatically open for the beneficiary. The beneficiary will have immediate
access to the proceeds by writing a check on the account. We pay interest on the
proceeds from the date of death to the date the beneficiary closes the Access
Account. The annual rate will be at least 3%.
If an Equitable of Colorado associate has assisted the beneficiary in
preparing the documents that are required for payment of the death benefit, we
will send the Access Account checkbook or check to the associate within the
periods specified for death benefit payments under "When We Pay Policy
Proceeds," beginning on page 43 below. Our associates will take reasonable steps
to arrange for prompt delivery to the beneficiary.
Payment options for surrender, withdrawal and maturity proceeds. You
can also choose to receive all or part of any proceeds from a surrender or
withdrawal from your policy, or upon policy maturity, under one of the above
referenced payment options, rather than as a single sum.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your policy, you may
return it to us for a full refund of the premiums paid. In some states, we will
adjust this amount for any investment performance (whether positive or
negative).
To exercise this cancellation right, you must mail the policy directly
to our Administrative Office with a written request to cancel. Your cancellation
request must be postmarked within 10 days after you receive the policy and your
coverage will terminate as of the date of the postmark. In some states, this
"free look" period is longer than 10 days. Your policy will indicate the length
of your "free look" period.
VARIATIONS AMONG IL PROTECTOR POLICIES
Time periods and other terms and conditions described in this
prospectus may vary due to legal requirements in your state. These variations
will be reflected in your policy.
Equitable of Colorado also may vary the charges and other terms of IL
Protector where special circumstances result in sales or administrative expenses
or mortality risks that are different from those normally associated with IL
Protector. We will make such variations only in accordance with uniform rules
that we establish.
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Equitable of Colorado or your Equitable of Colorado associate can
advise you about any variations that may apply to your policy.
DETERMINING YOUR POLICY'S VALUE
YOUR ACCOUNT VALUE
As set forth on page 9 above, we deduct certain charges from each
premium payment you make. We credit the rest of each premium payment to your
policy's "account value." You instruct us to allocate your account value to one
or more of the policy's investment options indicated on the front cover of this
prospectus.
Your account value is the total of (i) your amounts in our variable
investment options, (ii) your amounts in our guaranteed interest option, and
(iii) any amounts that we are holding to secure policy loans that you have
taken. See "Borrowing From Your Policy" beginning on page 24 below. (Your policy
and other supplemental material may refer to (ii) and (iii) above as our
"Guaranteed Interest Account".) These amounts are subject to certain charges
discussed in the table on page 9.
[Side-Bar: Your account value will be credited with the same returns as are
achieved by the Portfolios (or guaranteed interest option) that you select, but
will also be reduced by the amount of charges we deduct under the policy.]
Your policy's value in our variable investment options. We invest the
account value that you have allocated to any variable investment option in
shares of the corresponding Portfolio. Your value in each variable investment
option is measured by "units." The value of your units will increase or decrease
each day, by the same amount as if you had invested in the corresponding
Portfolio's shares directly (and reinvested all dividends and distributions from
the Portfolio in additional Portfolio shares). The units' values will be
reduced, however, by the amount of the mortality and expense risk charge for
that period (the charge is described in the table on page 9 above). On any day,
your value in any variable investment option equals the number of units credited
to your policy under that option, multiplied by that day's value for one such
unit.
The number of your units in any variable investment option does not
change, absent an event or transaction under your policy that involves moving
assets into or out of that option. Whenever any amount is withdrawn or otherwise
deducted from one of your policy's variable investment options, we "redeem"
(cancel) the number of units that has a value equal to that amount. This can
happen, for example, when all or a portion of monthly deductions and
transaction-based charges are allocated to that option, or when loans,
transfers, withdrawals and surrenders are made from that option. Similarly, you
"purchase" additional units having the same value as the amount of any premium,
loan repayment, or transfer that you allocate to that option.
Your policy's value in our guaranteed interest option. Your policy's
value in our guaranteed interest option includes: (i) any amounts you have
specifically requested that we allocate to that option and (ii) any "restricted"
amounts that we hold in that option as a result of your election to receive a
living benefit (these amounts may be referred to in your policy as "liened
policy amounts").
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See "Your Option to Receive a Living Benefit" on page 27 below. We credit all of
such amounts with interest at rates we declare. We guarantee that these rates
will not be less than a 4% effective annual rate. The mortality and expense risk
charge mentioned above does not apply to our guaranteed interest option.
Amounts may be allocated to or removed from your policy's value in our
guaranteed interest option for the same purposes as described above for the
variable investment options. We credit your policy with a number of dollars in
that option that equals any amount that is being allocated to it. Similarly, if
amounts are being removed from your guaranteed interest option for any reason,
we reduce the amount you have credited to that option on a dollar-for-dollar
basis.
TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
TRANSFERS YOU CAN MAKE
[Side-bar: You can transfer freely among our variable investment options and
into our guaranteed interest option.]
After your policy's initial investment Allocation Date, you can
transfer amounts from one investment option to another. The total of all
transfers you make on the same day must be at least $500; except that you may
transfer your entire balance in an investment option, even if it is less than
$500. You may submit a written request for a transfer to our Administrative
Office or you can make a telephone request (see below).
[Side-bar: Transfers out of our guaranteed interest option are more limited.]
Restrictions on transfer out of the guaranteed interest option. We only
permit you to make one transfer out of our guaranteed interest option during
each policy year. (No such limit applies to transfers out of our variable
investment options.) Also, the maximum transfer from our guaranteed interest
option is the greater of (a) 25% of your then current balance in that option,
(b) $500, or (c) the amount (if any) that you transferred out of the guaranteed
interest option during the immediately preceding policy year.
We will not accept a request to transfer out of the guaranteed interest
option unless we receive it within the period beginning 30 days before and
ending 60 days after an anniversary of your policy. If we receive the request
within that period, the transfer will occur as of that anniversary or, if later,
the date we receive it.
TELEPHONE TRANSFERS
You can make telephone transfers by following one of two procedures:
o if you are both the policy's insured person and its owner, by
calling 1-888-855-5100 (toll free) from a touch tone phone; or
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o if you are not both the insured person and owner, by signing a
telephone transfer authorization form and sending it to us. Once
we have the form on file, we will provide you with a toll-free
telephone number to make transfers.
For more information see "Telephone Requests" on page 41 below. We allow only
one request for telephone transfers each day (although each request can cover
multiple transfers), and we will not allow you to revoke a telephone transfer.
If you are unable to reach us by telephone, you should send a written transfer
request to our Administrative Office.
OUR DOLLAR COST AVERAGING SERVICE
We offer you a dollar cost averaging service. This service allows you
to gradually allocate amounts to the variable investment options by periodically
transferring approximately the same dollar amount to the variable investment
options you select. This will cause you to purchase more units if the unit's
value is low, and fewer units if the unit's value is high. Therefore, you may
get a lower average cost per unit over the long term. This plan of investing,
however, does not guarantee that you will earn a profit or be protected against
losses.
Our dollar cost averaging service (also referred to as our "automatic
transfer service") enables you to make automatic monthly transfers from the
Alliance Money Market option to our other variable investment options. You need
a minimum of $5,000 in the Alliance Money Market option to begin using the
dollar cost averaging service. You can choose up to eight other variable options
to receive the automatic transfers but each transfer to each option must be at
least $50. Note: Transfers made using our dollar cost averaging service do not
count toward the twelve free transfers you may otherwise make each year.
You may elect the dollar cost averaging service with your policy
application or at any later time. You can also cancel the dollar cost averaging
service at any time.
ACCESSING YOUR MONEY
BORROWING FROM YOUR POLICY
You may borrow up to 90% of the difference between your policy's
account value and any surrender charges that are in effect under your policy.
(In your policy, this "difference" is referred to as your Cash Surrender Value.)
However, the amount you can borrow will be reduced by any amount that we hold on
a "restricted" basis following your receipt of a living benefit payment, as well
as by any other loans (and accrued loan interest) you have outstanding. See
"Your Option to Receive a Living Benefit" beginning on page 27 below. Each new
loan you request must be at least $500.
[Side-bar: You can use policy loans to obtain funds from your policy without
surrender charges or, in most cases, paying current income tax. However, the
borrowed amount is no longer credited with the investment results of any of our
investment options under the policy.]
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When you take a policy loan, we remove an amount equal to the loan from
one or more of your investment options and hold it as collateral for the loan's
repayment. (Your policy may sometimes refer to the collateral as the "loaned
portion of your policy account.") We hold this loan collateral under the same
terms and conditions as apply to amounts supporting our guaranteed interest
option, with several exceptions:
- you cannot make transfers or withdrawals of the collateral;
- we expect to credit different rates of interest to loan collateral
than we credit under our guaranteed interest option;
- we do not count the collateral when we compute any reduction in
cost of insurance charges (described under "Deducting Policy
Charges - Monthly Cost of Insurance Charge" on page 41 below); and
- the collateral is not available to pay policy charges.
When you request your loan, you should tell us how much of the loan
collateral you wish to have taken from any amounts you have in each of our
investment options. If you do not give us directions (or if we are making the
loan automatically to cover unpaid interest), we will take the loan from your
investment options in the same proportion as we are then taking monthly
deductions for charges. If that is not possible, we will take the loan from your
investment options in proportion to your value in each.
Loan interest we charge. The interest we charge on a policy loan
accrues daily at an adjustable interest rate. We determine the rate at the
beginning of each year of your policy, and that rate applies to all policy loans
that are outstanding at any time during the year. The maximum rate is the
greater of (a) 5% or (b) the "Monthly Average Corporate" yield published in
Moody's Corporate Bond Yield Averages for the month that ends two months before
the interest rate is set. (If that average is no longer published, we will use
another average, as the policy provides.) We will notify you of the current loan
interest rate when you apply for a loan, and will notify you in advance of any
rate increase.
Loan interest payments are due on each policy anniversary. If not paid
when due, we automatically add the interest as a new policy loan.
Interest that we credit on loan collateral. Under our current rules,
the annual interest rate we credit on your loan collateral during any of your
policy's first fifteen years will be 1% less than the rate we are then charging
you for policy loan interest, and, beginning in the policy's 16th year, 1/4%
less than the loan interest rate. The rate differentials are not guaranteed.
Accordingly, we have discretion to increase the rate differential for any
period, including under policies that are already outstanding (and may have
outstanding loans). We do guarantee that the annual rate of interest credited on
your loan collateral will never be less than 4% and that the differential will
not exceed 2% (except if tax law changes increase the taxes we pay on policy
loans or loan interest). Because IL Protector was first offered only in 1999, no
such reduction in the interest rate differential has yet been attained under any
outstanding policy.
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Interest we pay on your loan collateral accrues daily. On each
anniversary of your policy (or when your policy loans are fully discharged) we
contribute that interest to your policy's investment options in the same
proportions as if it were a premium payment.
Effects of policy loans. A loan can reduce the length of time that your
insurance remains in force, because the amount we set aside as loan collateral
cannot be used to pay charges as they become due. A loan will also prevent your
policy's no-lapse guarantee from keeping the policy in force. We will deduct any
outstanding policy loan plus accrued loan interest from your policy's proceeds
if you do not pay it back. See "Tax Information" beginning on page 28 below for
a discussion of the tax consequences of policy loans.
Paying off your loan. You can repay all or part of your loan at any
time. We normally assume that payments you send us are premium payments.
Therefore, you must submit instructions with your payment indicating that it is
a loan repayment. If you send us more than all of the loan principal and
interest you owe, we will treat the excess as a premium payment.
When you send us a loan repayment, we will transfer an amount equal to
such repayment from your loan collateral back to the investment options under
your policy. First we will restore any amounts that, before being designated as
loan collateral, had been in the guaranteed interest option under your policy.
We will allocate any additional repayments among investment options as you
instruct; or, if you don't instruct us, in the same proportion as if they were
premium payments.
MAKING WITHDRAWALS FROM YOUR POLICY
You may make a partial withdrawal of your net cash surrender value at
any time after the first year of your policy. The request must be for at least
$500, however, and we have discretion to decline any request. If you do not tell
us from which investment options you wish us to take the withdrawal, we will use
the same allocation that then applies for the monthly deductions we make for
charges; and, if that is not possible, we will take the withdrawal from all of
your investment options in proportion to your value in each.
[Side-bar: You can withdraw all or part of your policy's net cash surrender
value, although you may incur charges and tax consequences by doing so.]
Effect of partial withdrawals on insurance coverage. If the Option A
death benefit is in effect, a partial withdrawal results in a dollar-for-dollar
automatic reduction in the policy's face amount (and, hence, an equal reduction
in the Option A death benefit). We will not permit a partial withdrawal that
would reduce the face amount below our minimum for new policy issuances at the
time, or that would cause the policy to no longer be treated as life insurance
for federal income tax purposes. If death benefit Option B is in effect, a
partial withdrawal also reduces the death benefit on a dollar for dollar basis,
but does not affect the face amount.
The result is different, however, during any time when the alternative
death benefit (discussed on page 17 above) would be higher than the Option A or
B death benefit you have selected. In that case, a partial withdrawal will cause
the death benefit to decrease by more than the amount of the withdrawal. Please
also remember that a partial withdrawal reduces the amount of
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your premium payments that count toward maintaining the policy's no-lapse
guarantee.
You should refer to "Tax Information" beginning on page 28 below, for
information about possible tax consequences of partial withdrawals and any
associated reduction in policy benefits.
SURRENDERING YOUR POLICY FOR ITS NET CASH SURRENDER VALUE
You can surrender (give us back) your policy for its "net cash
surrender value" at any time. The net cash surrender value equals your account
value, minus any outstanding loans and unpaid loan interest, minus any amount of
your account value that is "restricted" as a result of previously distributed
"living benefits," and minus any surrender charge that then remains applicable.
The surrender charge is described on page 10 above.
Please refer to "Tax Information" beginning on page 28 below for the
possible tax consequences of surrendering your policy.
WHEN THE INSURED PERSON REACHES AGE 100 ("MATURITY")
If the insured person is still living on the policy anniversary closest
to his or her 100th birthday, we will pay you the policy's account value on that
date, reduced by any outstanding loans, by unpaid loan interest, and by any
amounts of the account value that are "restricted" as a result of previously
distributed "living benefits." The policy will then terminate. See "Tax
Information" beginning on page 28 below for the tax consequences of maturity.
YOUR OPTION TO RECEIVE A LIVING BENEFIT
Subject to our insurance underwriting guidelines and availability in
your state, your policy will automatically include our living benefit rider.
This feature enables you to receive a portion (generally 75%) of the policy's
death benefit (excluding death benefits payable under certain other policy
riders), if the insured person has a terminal illness (as defined in the rider).
We make no additional charge for the rider, but we will deduct a one-time
administrative charge of up to $250 from any living benefit we pay.
If you tell us that you do not wish to have the living benefit rider
added at issue, but you later ask to add it, there will be a $100 administrative
charge. Also, we will need to evaluate the insurance risk at that time, and we
may decline to issue the rider.
If you receive a living benefit, the remaining benefits under your
policy will be affected. We will deduct the amount of any living benefit we have
paid, plus interest (as specified in the rider), from the death benefit proceeds
that become payable under the policy when the insured person dies.
When we pay a living benefit we automatically transfer a pro-rata
portion of your policy's net cash surrender value to the policy's guaranteed
interest option. This amount, together with the interest you earn thereon, will
be "restricted" - that is, it will not be available for any loans, transfers or
partial withdrawals that you may wish to make. We will deduct these restricted
amounts from any
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subsequent surrender or maturity proceeds that we pay. (In your policy, we refer
to this as a "lien" we establish against your policy.)
The receipt of a living benefit payment may qualify for exclusion from
income tax. See "Tax Information" below. Receipt of a living benefit payment may
affect your eligibility for certain government benefits or entitlements.
[Side-bar: You can arrange to receive a "living benefit" if the insured person
becomes terminally ill.]
TAX INFORMATION
This discussion is based on current federal income tax law and
interpretations. It assumes that the policyowner is a natural person who is a
U.S. citizen and resident. The tax effects on corporate taxpayers, non-U.S.
residents or non-U.S. citizens may be different. This discussion is general in
nature, and should not be considered tax advice, for which you should consult a
qualified tax advisor.
BASIC TAX TREATMENT FOR YOU AND YOUR BENEFICIARY
An IL Protector 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 (the "Code") and (b) as long as the
investments made by the underlying Portfolios satisfy certain investment
diversification requirements under Section 817(h) of the Code. We believe that
the policies will meet these requirements and, therefore, that
o the death benefit received by the beneficiary under your policy will
not be subject to federal income tax; and
o increases in your policy's account value as a result of interest or
investment experience will not be subject to federal income tax,
unless and until there is a distribution from your policy, such as
a surrender, a partial withdrawal, loan or a payment to you that we
believe is required to maintain your policy's status as life
insurance under the Code.
There may be different tax consequences if you assign your policy or
designate a new owner. See "Assigning Your Policy" at page 35 below.
TAX TREATMENT OF DISTRIBUTIONS TO YOU
The federal income tax consequences of a distribution from your policy
depend on whether your policy is a "modified endowment contract" (sometimes also
referred to as a "MEC"). In all cases, however, the character of any income
described below as being taxable to the recipient will be ordinary income (as
opposed to capital gain).
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Testing for modified endowment contract status. Your policy will be a
"modified endowment contract" if, at any time during the first seven years of
your policy, you have paid a cumulative amount of premiums that exceeds the
cumulative seven-pay limit. The cumulative seven-pay limit is the amount of
premiums that you would have paid by that time under a similar fixed-benefit
insurance policy that was designed (based on certain assumptions mandated under
the Code) to provide for paid up future benefits after the payment of seven
equal annual premiums. ("Paid up" means that no future premiums would be
required.) This is called the "seven-pay" test.
Whenever there is a "material change" under a policy, the policy will
generally be (a) treated as a new contract for purposes of determining whether
the policy is a modified endowment contract and (b) subjected to a new seven-pay
period and a new seven-pay limit. The new seven-pay limit would be determined
taking into account, under a prescribed formula, the account value of the policy
at the time of such change. A materially changed policy would be considered a
modified endowment contract if it failed to satisfy the new seven-pay limit at
any time during the new seven-pay period. A "material change" for these purposes
could occur as a result of a change in death benefit option, the selection of
additional rider benefits, an increase in your policy's face amount (including
pursuant to our cost-of-living rider), or certain other changes.
If your policy's benefits are reduced during its first seven years (or
within seven years after a material change), the seven-pay limit will be
redetermined based on the reduced level of benefits and applied retroactively
for purposes of the seven-pay test. (Such a reduction in benefits could include,
for example, a requested decrease in face amount, the termination of additional
benefits under a rider or, in some cases, a partial withdrawal.) If the premiums
previously paid are greater than the recalculated (lower) seven-pay limit, the
policy will become a modified endowment contract.
A life insurance policy that you receive in exchange for a modified
endowment contract will also be considered a modified endowment contract.
Taxation of pre-death distributions if your policy is not a modified
endowment contract. As long as your policy remains in force as a non-modified
endowment contract, policy loans will be treated as indebtedness, and no part of
the loan proceeds will be subject to current federal income tax. Interest on the
loan will generally not be tax deductible, although interest credited on loan
collateral may become taxable under the rules below if distributed.
If you make a partial withdrawal after the first 15 years of your
policy, the proceeds will not be subject to federal income tax except to the
extent such proceeds exceed your "basis" in your policy. (Your basis generally
will equal the premiums you have paid, less the amount of any previous
distributions from your policy that were not taxable.) During the first 15
years, however, the proceeds from a partial withdrawal could be subject to
federal income tax, under a complex formula, to the extent that your account
value exceeds your basis.
On the maturity date or upon full surrender, any amount by which the
proceeds we pay (including amounts we use to discharge any policy loan and
unpaid loan interest) exceed your basis in the policy will be subject to federal
income tax. IN ADDITION, IF A POLICY TERMINATES AFTER A GRACE PERIOD, THE
EXTINGUISHMENT OF ANY THEN-OUTSTANDING POLICY LOAN AND UNPAID LOAN INTEREST WILL
BE
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TREATED AS A DISTRIBUTION AND COULD BE SUBJECT TO TAX UNDER THE FOREGOING RULES.
Finally, if you make an assignment of rights or benefits under your policy, you
may be deemed to have received a distribution from your policy, all or part of
which may be taxable.
Taxation of pre-death distributions if your policy is a modified
endowment contract. Any distribution from your policy will be taxed on an
"income-first" basis if your policy is a modified endowment contract.
Distributions for this purpose include a loan (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 withdrawal. Any such distributions will be considered taxable
income to you to the extent your account value exceeds your basis in the policy.
(For modified endowment contracts, your basis is similar to the basis described
above for other policies, except that it also would be increased by the amount
of any prior loan under your policy that was considered taxable income to you.)
For purposes of determining the taxable portion of any distribution,
all modified endowment contracts issued by Equitable of Colorado (or its
affiliate) to the same owner (excluding certain qualified plans) during any
calendar year are treated as if they were a single contract.
A 10% penalty tax also will apply to the taxable portion of most
distributions from a policy that is a modified endowment contract. The penalty
tax will not, however, apply to (i) taxpayers whose actual age is at least 59
1/2, (ii) distributions in the case of a disability (as defined in the Code) or
(iii) distributions received as part of a series of substantially equal periodic
annuity payments for the life (or life expectancy) of the taxpayer or the joint
lives (or joint life expectancies) of the taxpayer and his or her beneficiary.
IF YOUR POLICY TERMINATES AFTER A GRACE PERIOD, THE EXTINGUISHMENT OF
ANY THEN OUTSTANDING POLICY LOAN AND UNPAID LOAN INTEREST WILL BE TREATED AS A
DISTRIBUTION (to the extent the loan was not previously treated as such) and
could be subject to tax, including the 10% penalty tax, as described above. In
addition, on the maturity date and upon a full surrender, 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.
Distributions that occur during a year of your policy in which it
becomes a modified endowment contract, and during any subsequent years, will be
taxed as described in the four preceding paragraphs. In addition, distributions
from a policy within two years before it becomes a modified endowment contract
also will be subject to tax in this manner. This means that a distribution made
from a policy that is not a modified endowment contract could later become
taxable as a distribution from a modified endowment contract.
Restoration of a terminated policy. For tax purposes, some restorations
of a policy that terminated after a grace period may be treated as the purchase
of a new policy.
TAX TREATMENT OF LIVING BENEFIT PROCEEDS
Amounts received under an insurance policy on the life of an individual
who is terminally ill, as defined by the tax law, are generally excludable from
the payee's gross income. We believe that
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the benefits provided under our living benefit rider meet the tax law's
definition of terminally ill and can qualify for this income tax exclusion. This
exclusion does not apply to amounts paid to someone other than the insured
person, however, if the payee has an insurable interest in the insured person's
life only because the insured person is a director, officer or employee of the
payee or by reason of the insured person being financially interested in any
trade or business carried on by the payee.
EFFECT OF POLICY ON INTEREST DEDUCTIONS TAKEN BY BUSINESS ENTITIES
Ownership of a policy by a trade or business entity can limit the
amount of any interest on business borrowings that entity otherwise could deduct
for federal income tax purposes, even though such business borrowings may be
unrelated to the policy. To avoid the limit, the insured person must be an
officer, director, employee or 20% owner of the trade or business entity when
coverage on that person commences.
The limit does not generally apply for policies owned by natural
persons (even if those persons are conducting a trade or business as sole
proprietorships), unless a trade or business entity that is not a sole
proprietorship is a direct or indirect beneficiary under the policy. Entities
commonly have such a beneficial interest, for example, in so-called "split
dollar" arrangements. If the trade or business entity has such an interest in a
policy, it will be treated the same as if it owned the policy for purposes of
the limit on deducting interest on unrelated business income.
The limit generally applies only to policies issued after June 8, 1997
in taxable years ending after such date. However, for this purpose, any material
increase in face amount that you request, or other material change in a policy,
will be treated as the issuance of a new policy.
In cases where the above-discussed limit on deductibility applies, the
non-deductible portion of unrelated interest on business loans is determined by
multiplying the total amount of such interest by a fraction. The numerator of
the fraction is the policy's average account value (excluding amounts we are
holding to secure any policy loans) for the year in question, and the
denominator is the average for the year of the aggregate tax bases of all the
entity's other assets.
Any corporate, trade, or business use of a policy should be carefully
reviewed by your tax advisor with attention to these rules, as well as the other
rules and possible tax law changes that could occur with respect to such
coverage.
REQUIREMENT THAT WE DIVERSIFY INVESTMENTS
Under Section 817(h) of the Code, the Treasury Department has issued
regulations that implement investment diversification requirements. Failure to
comply with these regulations would disqualify your policy as a life insurance
policy under Section 7702 of the Code. If this were to occur, you would be
subject to federal income tax on any income and gains under the policy and the
death benefit proceeds would lose their income tax-free status. These
consequences would continue for the period of the disqualification and for
subsequent periods. Through the Portfolios, we intend to comply with the
applicable diversification requirements.
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ESTATE, GIFT, AND GENERATION-SKIPPING TAXES
If the policy's owner is the insured person, the death benefit will
generally be includable in the owner's estate for purposes of federal estate
tax. If the owner is not the insured person, and the owner dies before the
insured person, the value of the policy would be includable in the owner's
estate. If the owner is neither the insured person nor the beneficiary, the
owner will be considered to have made a gift to the beneficiary of the death
benefit proceeds when they become payable.
In general, a person will not owe estate or gift taxes until gifts made
by such person, plus that person's taxable estate, total at least $650,000 (a
figure that is scheduled to rise at periodic intervals to $1 million by the year
2006). For this purpose, however, certain amounts may be deductible or
excludable, such as gifts and bequests to the person's spouse or charitable
institutions and certain gifts of $10,000 or less per year for each recipient.
As a general rule, if you make a "transfer" to a person two or more
generations younger than you, a generation skipping tax may be payable.
Generation skipping transactions would include, for example, a case where a
grandparent "skips" his or her children and names grandchildren as a policy's
beneficiaries. In that case, the generation-skipping "transfer" would be deemed
to occur when the insurance proceeds are paid. The generation-skipping tax rates
are similar to the maximum estate tax rate in effect at the time. Individuals,
however, are generally allowed an aggregate generation skipping tax exemption of
$1 million.
The particular situation of each policyowner, insured person or
beneficiary will determine how ownership or receipt of policy proceeds will be
treated for purposes of federal estate, gift and generation skipping taxes, as
well as state and local estate, inheritance and other taxes. Because these rules
are complex, you should consult with a qualified tax advisor for specific
information, especially where benefits are passing to younger generations.
PENSION AND PROFIT-SHARING PLANS
There are special limits on the amount of insurance that may be
purchased by a trust or other entity that forms part of a pension or
profit-sharing plan qualified under Section 401(a) or 403 of the Code. In
addition, the federal income tax consequences will be different from those
described in this prospectus. These rules are complex, and you should consult a
qualified tax advisor.
OTHER EMPLOYEE BENEFIT PROGRAMS
Complex rules may also apply when a policy is held by an employer or a
trust, or acquired by an employee, in connection with the provision of other
employee benefits. These policyowners 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 beneficiary to receive a death benefit.
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ERISA
Employers and employer-created trusts may be subject to reporting,
disclosure and fiduciary obligations under the Employee Retirement Income
Security Act of 1974. You should consult a qualified legal advisor.
OUR TAXES
The operations of our Separate Account VLI are reported in our federal
income tax return. The separate account's investment income and capital gains,
however, are, for tax purposes, reflected in our variable life insurance policy
reserves. Therefore, we currently pay no taxes on such income and gains and
impose no charge for such taxes. We reserve the right to impose a charge in the
future for taxes incurred; for example, a charge to the separate account for
income taxes incurred by us that are allocable to the policies.
We may have to pay state, local or other taxes (in addition to
applicable taxes based on premiums). At present, these taxes are not
substantial. If they increase, charges may be made for such taxes when they are
attributable to our separate account or allocable to the policies.
WHEN WE WITHHOLD TAXES FROM DISTRIBUTIONS
Generally, unless you provide us with an election to the contrary prior
to the distribution, we are required to withhold income tax from any proceeds we
distribute as part of a taxable transaction under your policy. If you do not
wish us to withhold tax from the payment, or if we do not withhold enough, you
may have to pay later. In some cases, where generation skipping taxes may apply,
we may also be required to withhold for such taxes unless we are provided
satisfactory notification that no such taxes are due. States may also require us
to withhold tax on distributions to you. Special withholding rules apply if you
are not a U.S. resident or not a U.S. citizen.
POSSIBILITY OF FUTURE TAX CHANGES
The U.S. Congress frequently considers legislation that, if enacted,
could change the tax treatment of life insurance policies or increase the taxes
we pay in connection with such policies. In addition, the Treasury Department
may amend existing regulations, issue regulations on the qualification of life
insurance and modified endowment contracts, or adopt new interpretations of
existing law. State and local tax law or, if you are not a U.S. citizen and
resident, foreign tax law, may also affect the tax consequences to you, the
insured person or your beneficiary, and are subject to change. Any changes in
federal, state, local or foreign tax law or interpretations could have a
retroactive effect.
The Treasury Department has stated that it anticipates the issuance of
guidelines prescribing the circumstances in which your ability to direct your
investment to particular Portfolios within a separate account may cause you,
rather than the insurance company, to be treated as the owner of the Portfolio
shares attributable to your policy. In that case, income and gains attributable
to such Portfolio shares would be included in your gross income for federal
income tax purposes. Under current law, however, we believe that Equitable of
Colorado, and not the owner of a policy, would be considered the owner of the
Portfolio shares.
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MORE INFORMATION ABOUT PROCEDURES THAT APPLY TO YOUR POLICY
This section provides further detail about certain subjects that are
addressed in pages 2-33 above. The following discussion generally does not
repeat the information already contained in those pages.
WAYS TO MAKE PREMIUM AND LOAN PAYMENTS
Checks and money orders. Premiums or loan payments generally must be
paid by check or money order drawn on a U.S. bank in U.S. dollars and made
payable to "Equitable Life."
We prefer that you make each payment to us with a single check drawn on
your business or personal bank account. We also will accept a single money
order, bank draft or cashier's check payable directly to Equitable of Colorado,
although we must report such "cash equivalent" payments to the Internal Revenue
Service under certain circumstances. Cash and travelers' checks, or any payments
in foreign currency, are not acceptable. We will accept third party checks
payable to someone other than Equitable of Colorado and endorsed over to
Equitable of Colorado only (1) as a direct payment from a qualified retirement
plan or (2) if it is made out to a trustee who owns the policy and endorses the
entire check (without any refund) as a payment to the policy.
REQUIREMENTS FOR SURRENDER REQUESTS
Your surrender request must include the policy number, your name, your
tax identification number, the name of the insured person, and the address where
proceeds should be mailed. The request must be signed by you, as the owner, and
by any joint owner, collateral assignee or irrevocable beneficiary. We may also
require you to complete specific tax forms.
Finally, in order for your surrender request to be complete, you must
return your policy to us.
WAYS WE PAY POLICY PROCEEDS
The payee for death benefit or other policy proceeds (e.g. upon
surrenders) may name a successor to receive any amounts that we still owe
following the payee's death. Otherwise, we will pay any such amounts to the
payee's estate.
We must approve any payment arrangements that involve more than one
payment option, or a payee who is not a natural person (for example, a
corporation), or a payee who is a fiduciary. Also, the details of all payment
arrangements will be subject to our rules at the time the arrangements are
selected and take effect. This includes rules on the minimum amount we will pay
under an option, minimum amounts for installment payments, withdrawal or
commutation rights (your rights to receive payments over time, for which we may
offer a lump sum payment), the naming of payees, and the methods for proving the
payee's age and continued survival.
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ASSIGNING YOUR POLICY
You may assign (transfer) your rights in a policy to someone else as
collateral for a loan, to effect a change of ownership or for some other reason,
if we agree. A copy of the assignment must be forwarded to our Administrative
Office. We are not responsible for any payment we make or any action we take
before we receive notice of the assignment or for the validity of the
assignment. An absolute assignment is a change of ownership.
Certain transfers for value may subject you to income tax and penalties
and cause the death benefit to lose its income-tax free treatment. Further, a
gift of a policy that has a loan outstanding may be treated as part gift and
part transfer for value, which could result in both gift tax and income tax
consequences. You should consult your tax advisor prior to making a transfer or
other assignment.
DATES AND PRICES AT WHICH POLICY EVENTS OCCUR
We describe below the general rules for when, and at what prices,
events under your policy will occur. Other portions of this prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
Date of receipt. Where this prospectus refers to the day when we
receive a payment, request, election, or notice from you, we usually mean the
day on which that item (or the last thing necessary for us to process that item)
arrives in complete and proper form at our Administrative Office or via the
appropriate telephone or fax number if the item is a type we accept by those
means. There are two main exceptions: if the item arrives (1) on a day that is
not a business day or (2) after the close of a business day, then, in each case,
we are deemed to have received that item on the next business day.
Business days. Every day that the New York Stock Exchange is open for
regular trading is a business day for us. Each business day ends at the time
regular trading on the exchange closes (or is suspended) for the day. We compute
unit values for our variable investment options as of the end of each business
day. This usually is 4:00 p.m., Eastern Time.
Payments you make. The following are reflected in your policy as of the
date we receive them:
o premium payments received after the policy's investment start date
(discussed below)
o loan repayments and interest payments
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Requests you make. The following transactions occur as of the date we
receive your request:
o withdrawals o tax withholding elections
o face amount decreases that o changes of allocation percentages
result from a withdrawal for premium payments or monthly
o surrenders deductions
o transfers from a variable o changes of beneficiary
investment option to the o changes in form of death benefit payment
guaranteed interest option o loans
o transfers among variable o assignments
investment options
The following transactions occur on your policy's next monthly
anniversary that coincides with or follows the date we approve your request:
o changes in face amount o changes of insured person
o changes in death benefit o restoration of lapsed policies
option
Dollar cost averaging service. Transfers pursuant to our dollar cost
averaging service occur as of the first day of each month of your policy. We
make the first such transfer, as of your policy's first monthly anniversary that
coincides with or follows the date we receive your request. If you request the
dollar cost averaging service in your original policy application, however, the
first transfer will occur as of the first day of the second month of your policy
that begins after your policy's initial Allocation date.
Delay in certain cases. We may delay allocating any payment you make to
our variable investment options, or any transfer, for the same reasons stated in
"Delay of variable investment option proceeds" on page 43 below. We may also
delay such transactions for any other legally permitted purpose.
Prices applicable to policy transactions. If a transaction will
increase or decrease the amount you have in a variable investment option as of a
certain date, we process the transaction using the unit values for that option
computed as of that day's close of business, unless that day is not a business
day. In that case, we use unit values computed as of the next business day's
close.
Effect of death or surrender. You may not make any surrender or partial
withdrawal request after the insured person has died. Also, all insurance
coverage ends on the date as of which we process any request for a surrender.
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POLICY ISSUANCE
Register date. When we issue a policy, we assign it a "register date,"
which will be shown in the policy. We measure the months, years, and
anniversaries of your policy from your policy's register date.
o If you submit the full minimum initial premium to your Equitable of
Colorado associate at the time you sign the application, and we
issue the policy as it was applied for, then the register date will
be the later of (a) the date you signed part I of the policy
application or (b) the date a medical professional signed part II
of the policy application.
o If we do not receive your full minimum initial premium at our
Administrative Office before the issue date or, if we issue the
policy on a different basis than you applied for, the register date
will be the same as the date we actually issue the policy (the
"issue date").
Policies that would otherwise receive a register date of the 29th, 30th or 31st
of any month will receive a register date of the 28th of that month.
We may also permit an earlier than customary register date (a) for
employer-sponsored cases, to accommodate a common register date for all
employees or (b) to provide a younger age at issue. (A younger age at issue
reduces the monthly charges that we deduct under a policy.) The charges and
deductions commence as of the register date, even when we have permitted an
early register date. We may also permit policyowners to delay a register date
(up to three months) in employer-sponsored cases.
Investment start date. This is the date your investment first begins to
earn a return for you in our Alliance Money Market option (prior to the
Allocation Date). Generally, this is the register date, or, if later, the date
we receive your full minimum initial premium at our Administrative Office.
Commencement of insurance coverage. You must give the full minimum
initial premium to your Equitable of Colorado associate on or before the day the
policy is delivered to you. No insurance under your policy will take effect
unless (1) the insured person is still living at the time such payment and
delivery are completed and (2) unless the information in the application
continues to be true and complete, without material change, as of the time of
such payment. If you submit the full minimum initial premium with your
application, we may, subject to certain conditions, provide a limited amount of
temporary insurance on the proposed insured person. You may review a copy of our
temporary insurance agreement, on request, for more information about the terms
and conditions of that coverage.
Non-issuance. If, after considering your application, we decide not to
issue a policy, we will refund any premium you have paid, without interest.
Age; age at issue. Unless the context in this prospectus requires
otherwise, we consider the insured person's "age" during any policy year to be
his or her age on his or her birthday nearest to
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the beginning of that policy year. For example, the insured person's age for the
first policy year ("age at issue") is that person's age on whichever birthday is
closer to (i.e., before or after) the policy's register date.
GENDER-NEUTRAL POLICIES
Congress and various states have from time to time considered
legislation that would require insurance rates to be the same for males and
females. In addition, employers and employee organizations should consider, in
consultation with counsel, the impact of Title VII of the Civil Rights Act of
1964 on the purchase of IL Protector in connection with an employment-related
insurance or benefit plan. In a 1983 decision, the United States Supreme Court
held that, under Title VII, optional annuity benefits under a deferred
compensation plan could not vary on the basis of sex.
There will be no distinctions based on sex in the cost of insurance
rates for IL Protector policies sold in Montana. We will also make such
gender-neutral policies available on request in connection with certain employee
benefit plans. Cost of insurance rates applicable to a gender-neutral policy
will not be greater than the comparable male rates under a gender specific IL
Protector policy.
MORE INFORMATION ABOUT OTHER MATTERS
YOUR VOTING PRIVILEGES
Voting of Portfolio shares. As the legal owner of any Portfolio shares
that support a variable investment option, we will attend (and have the right to
vote at) any meeting of shareholders of the Portfolio (or the Trust of which
that Portfolio is a part). To satisfy currently-applicable legal requirements,
however, we will give you the opportunity to tell us how to vote the number of
each Portfolio's shares that are attributable to your policy. We will vote
shares attributable to policies for which we receive no instructions in the same
proportion as the instructions we do receive from all policies that participate
in our Separate Account VLI (discussed below). With respect to any Portfolio
shares that we are entitled to vote directly (because we do not hold them in a
separate account or because they are not attributable to policies), we will vote
in proportion to the instructions we have received from all holders of variable
annuity and variable life insurance policies who are using that Portfolio.
Under current legal requirements, we may disregard the voting
instructions we receive from policyowners only in certain narrow circumstances
prescribed by SEC regulations. If we do, we will advise you of the reasons in
the next annual or semi-annual report we send to you.
Voting as policyowner. In addition to being able to instruct voting of
Portfolio shares as discussed above, policyowners that use our variable
investment options may in a few instances be called upon to vote on matters that
are not the subject of a shareholder vote being taken by any Portfolio. If so,
you will have one vote for each $100 of account value in any such option; and we
will vote our interest in Separate Account VLI in the same proportion as the
instructions we receive from holders of IL Protector and other policies that
Separate Account VLI supports.
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<PAGE>
ABOUT OUR SEPARATE ACCOUNT VLI
Each variable investment option is a part (or "subaccount") of our
Separate Account VLI. We established Separate Account VLI under provisions of
the Colorado Insurance Law. These provisions prevent creditors from any other
business we conduct from reaching the assets we hold in our variable investment
options for owners of our variable life insurance policies. We are the legal
owner of all of the assets in Separate Account VLI and may withdraw any amounts
that exceed our reserves and other liabilities with respect to variable
investment options under our policies. The results of Separate Account VLI's
operations are accounted for without regard to Equitable of Colorado's other
operations.
We established our Separate Account VLI under Colorado Law in June
1996.
Separate Account VLI is registered with the SEC under the Investment
Company Act of 1940 and is classified by that act as a "unit investment trust."
The SEC, however, does not manage or supervise Equitable of Colorado or Separate
Account VLI.
Each subaccount (variable investment option) of Separate Account VLI
available under IL Protector invests solely in one class of shares issued by the
corresponding Portfolio. For Portfolios that are part of The Hudson River Trust,
these are class IA shares; and for Portfolios that are part of EQ Advisors
Trust, these are class IB shares. Separate Account VLI immediately reinvests all
dividends and other distributions it receives from a Portfolio in additional
shares of that Portfolio.
The EQ Advisors Trust and The Hudson River Trust sell their shares to
Equitable of Colorado's separate accounts in connection with Equitable of
Colorado's variable life insurance and annuity products, as well as to separate
accounts of Equitable Life. The EQ Advisors Trust also sells its shares to the
trustee of a qualified plan for Equitable Life. The Hudson River Trust also
sells its shares to separate accounts of insurance companies unaffiliated with
Equitable of Colorado. We currently do not foresee any disadvantages to our
policyowners arising out of this. However, the Board of Trustees of The Hudson
River Trust intends to monitor events to identify any material irreconcilable
conflicts that may arise and to determine what action, if any, should be taken
in response. If we believe that the Board's response insufficiently protects our
policyowners, we will see to it that appropriate action is taken to do so. Also,
if we ever believe that any of the Trusts' Portfolios is so large as to
materially impair the investment performance of the Portfolio the Trust
involved, we will examine other investment alternatives.
ABOUT OUR GENERAL ACCOUNT
Our general account assets support all of our obligations, (including
those under the IL Protector policies and, more specifically, the guaranteed
interest option). Our general assets consist of all of our assets as to which no
class or classes of our annuity or life insurance policies have any preferential
claim. You will not share in the investment experience of our general account
assets, however; and we have full discretion about how we invest those assets
(subject only to any requirements of law).
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Because of applicable exemptions and exclusions, we have not registered
interests in the general account under the Securities Act of 1933 or registered
the general account as an investment company with the SEC. Accordingly, neither
the general account, the guaranteed interest option, nor any interests therein,
are subject to regulation under those acts. The staff of the SEC has not
reviewed the portions of this prospectus that relate to the general account and
the guaranteed interest option. The disclosure, however, may be subject to
certain provisions of the federal securities law relating to the accuracy and
completeness of statements made in prospectuses.
We declare the rate of interest for each year of your policy at the
beginning of that year, but it will not be less than 4%. We credit and compound
the interest daily at an effective annual rate that equals the declared rate for
the year. The rates we are at any time declaring on outstanding policies may
differ from the rates we are then declaring for newly issued policies.
YOU CAN CHANGE YOUR POLICY'S INSURED PERSON
After the policy's second year, we will permit you to request that a
new insured person replace the existing one. This requires that you provide us
with adequate evidence that the proposed new insured person meets our
requirements for insurance. Other requirements are outlined in your policy.
Upon making this change, the monthly insurance charges we deduct and
prospective no-lapse guarantee premiums will be based on the new insured
person's insurance risk characteristics. The change of insured person will not,
however, affect the surrender charge computation for the amount of coverage that
is then in force.
Substituting the insured person is a taxable event and may, depending
upon individual circumstances, have other tax consequences as well. For example,
the change could cause the policy to be a "modified endowment contract" or to
fail the Internal Revenue Code's definition of "life insurance," unless we also
distribute certain amounts to you from the policy. See "Tax Information"
beginning on page 28 above. You should consult your tax advisor prior to
substituting the insured person. As a condition to substituting the insured
person we may require you to sign a form acknowledging the potential tax
consequences. In no event, however, will we permit a change that causes your
policy to fail the definition of life insurance.
TRANSFERS OF YOUR ACCOUNT VALUE
Transfers not implemented. When we cannot process part of a transfer
request, we will not process any other part of the request. This could occur,
for example, where the request does not comply with our transfer limitations, or
where you request transfer of an amount greater than that currently allocated to
an investment option.
Similarly, the dollar cost averaging service will terminate immediately
if: (1) your amount in the Alliance Money Market option is insufficient to cover
the automatic transfer amount; (2) your policy is in a grace period; or (3) we
receive notice of the insured person's death.
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TELEPHONE REQUESTS
If you are a properly authorized person, you may make telephone
transfers as described above on page 23.
Also, if you are both the owner and the insured person under your
policy, you may call 1-888-855-5100 (toll free) from a touch tone phone to make
the following additional types of requests:
o policy loans o changes of premium allocation
o changes of address percentages
All telephone requests are automatically tape-recorded and are invalid
if the information given is incomplete or any portion of the request is
inaudible. We have established procedures reasonably designed to confirm that
telephone instructions are genuine. These include requiring personal
identification information from the caller and providing subsequent written
confirmation of the instructions. If we do not employ reasonable procedures to
confirm the genuineness of telephone instructions, we may be liable for any
losses arising out of any act or omission that constitutes negligence, lack of
good faith, or willful misconduct. In light of our procedures, we will not be
liable for following telephone instructions that we reasonably believe to be
genuine.
Any telephone transaction request that you make after the close of a
business day (which is usually 4:00 p.m. Eastern Time) will be processed as of
the next business day. During times of extreme market activity, or for other
reasons, you may be unable to contact us to make a telephone request. If this
occurs, you should submit a written transactions request to our Administrative
Office. We reserve the right to discontinue telephone transactions, or modify
the procedures and conditions for such transactions, at any time.
DEDUCTING POLICY CHARGES
Charge for taxes. This charge is designed to approximate certain taxes
and additional charges imposed upon us by states and other jurisdictions. This
charge may be increased or decreased to reflect any changes in our taxes. In
addition, if an insured person changes his or her residence, you should notify
us to change our records so that the charge will reflect the new jurisdiction.
Any change will take effect on the next policy anniversary, if received at least
60 days prior to the policy anniversary. You cannot deduct our charge to you as
state or local taxes on your federal income tax return.
Monthly cost of insurance charge. The monthly cost of insurance charge
is determined by multiplying the cost of insurance rate that is then applicable
to your policy by the amount we have at risk under your policy. Our amount at
risk (also described in your policy as "net amount at risk") on any date is the
difference between (a) the death benefit that would be payable if the insured
person died on that date and (b) the then total account value under the policy.
A greater amount at risk, or a higher cost of insurance rate, will result in a
higher monthly charge.
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As a general rule, the cost of insurance rate increases each year that
you own your policy. This happens automatically because of the insured person's
increasing age. However, for policies that have been outstanding for more than
nine years, we reduce the current monthly insurance charge. The dollar amount by
which we reduce each month's charge is a percentage of the total amount you then
have in our investment options (not including any value we are holding as
collateral for any policy loans). The percentage reduction begins at an annual
rate of .05% for the policy's tenth year and increases by .05% in each
subsequent year, until it is .65% in the 25th and all subsequent years. These
charge reductions are not guaranteed, however. Because IL Protector was first
offered only in 1999, no such reduction has yet been attained under any
outstanding policy.
Our cost of insurance rates are guaranteed not to exceed those that
will be specified in your policy. For most insured persons at most ages, our
current rates are lower than those maximums. Therefore, we have the ability to
raise these rates (including by reducing or eliminating the current monthly
charge reduction that otherwise would begin in the tenth year) up to the
guaranteed maximum at any time. The guaranteed maximum cost of insurance rates
for gender neutral IL Protector policies are based on the 1980 Commissioner's
Standard Ordinary SB Smoker and NB Non-Smoker Mortality Table. For all other
policies, the guaranteed maximum cost of insurance rates are based on the 1980
Commissioner's Standard Ordinary Male and Female Smoker and Non-Smoker Mortality
Tables.
Our cost of insurance rates will generally be lower (except in Montana
and in connection with certain employee benefit plans) if the insured person is
a female than if a male. They also will generally be lower for non-tobacco users
than tobacco users and lower for persons that have other highly favorable health
characteristics, as compared to those that do not. On the other hand, insured
persons who present particular health, occupational or avocational risks may be
charged higher cost of insurance rates and other additional charges as specified
in their policies.
In addition, the current rates also vary depending on the duration of
the policy (i.e., the length of time since the policy was issued).
We offer lower rates for non-tobacco users only if they are at least
age 20. You may ask us to review a younger insured person's tobacco habits
following the policy anniversary on which such person is age 20.
Date of monthly deductions. We make the regular monthly deductions as
of the first day of each month of the policy.
Purposes of policy charges. The charges under the policies are designed
to cover, in the aggregate, our direct and indirect costs of selling,
administering and providing benefits under the policies. They are also designed,
in the aggregate, to compensate us for the risks of loss we assume pursuant to
the policies. If, as we expect, the charges that we collect from the policies
exceed our total costs in connection with the policies, we will earn a profit.
Otherwise, we will incur a loss.
The current and maximum rates of certain of our charges have been set
with reference to estimates of the amount of specific types of expenses or risks
that we will incur. In most cases, this
42
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prospectus identifies such expenses or
risks in the name of the charge: e.g., the administrative charge, cost of
insurance charge, and mortality and expense risk charge. However, the fact that
any charge bears the name of, or is designed primarily to defray, a particular
expense or risk does not mean that the amount we collect from that charge will
never be more than the amount of such expense or risk. Nor does it mean that we
may not also be compensated for such expense or risk out of any other charges we
are permitted to deduct by the terms of the policies. The surrender charge, for
example, is designed primarily to defray sales expenses, but may also be used to
defray other expenses associated with your policy that we have not recovered by
the time of any surrender. Similarly, the sales charge is designed primarily to
defray sales expenses we incur that are based on premium payments.
SUICIDE AND CERTAIN MISSTATEMENTS
If an insured person commits suicide within certain time periods, the
amount of death benefit we pay will be limited as described in the policy. Also,
if an application misstated the age or gender of an insured person, we will
adjust the amount of any death benefit (and certain rider benefits), as
described in the policy (or rider).
WHEN WE PAY POLICY PROCEEDS
General. We will generally pay any death benefit, surrender,
withdrawal, or loan within seven days after we receive the request and any other
required items. In the case of a death benefit, if we do not have information
about the desired manner of payment within 60 days after the date we receive
notification of the insured person's death (and other required items), we will
pay the proceeds as a single sum, normally within seven days thereafter. We pay
maturity proceeds within seven days after the maturity date.
Clearance of checks. We reserve the right to defer payment of that
portion of your account value that is attributable to a premium payment made by
check for a reasonable period of time (not to exceed 15 days) to allow the check
to clear the banking system.
Delay of guaranteed interest option proceeds. We also have the right to
defer payment or transfers of amounts out of our guaranteed interest option for
up to six months. If we delay more than 30 days in paying you such amounts, we
will pay interest of at least 3% per year from the date we receive your request.
Delay of variable investment option proceeds. We reserve the right to
defer payment of any death benefit, transfer, loan or other distribution that is
derived from a variable investment option if (a) the New York Stock Exchange is
closed (other than customary weekend and holiday closings) or trading on that
exchange is restricted; (b) the SEC has declared that an emergency exists, as a
result of which disposal of securities is not reasonably practicable or it is
not reasonably practicable to fairly determine the account value; or (c) the law
permits the delay for the protection of owners. If we need to defer calculation
of values for any of the foregoing reasons, all delayed transactions will be
processed at the next available unit values.
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Delay to challenge coverage. We may challenge the validity of your
insurance policy or any rider based on any material misstatements in an
application you have made to us. We cannot make such challenges, however, beyond
certain time limits set forth in the policy or rider. If the insured person dies
within one of these limits, we may delay payment of any proceeds until we decide
whether to challenge the policy.
CHANGES WE CAN MAKE
In addition to any of the other changes described in this prospectus,
we have the right to modify how we or Separate Account VLI operate. We intend to
comply with applicable law in making any changes and, if necessary, we will seek
policyowner approval. We have the right to:
o combine two or more variable investment options or withdraw assets
relating to IL Protector from one investment option and put them
into another;
o end the registration of, or re-register, Separate Account VLI under
the Investment Company Act of 1940;
o operate Separate Account VLI under the direction of a "committee"
or discharge such a committee at any time;
o restrict or eliminate any voting rights or privileges of
policyowners (or other persons) that affect Separate Account VLI;
o operate Separate Account VLI, or one or more of the variable
investment options, in any other form the law allows. This includes
any form that allows us to make direct investments, in which case
we may charge Separate Account VLI an advisory fee. We may make any
legal investments we wish for Separate Account VLI. In addition, we
may disapprove any change in investment advisors or in investment
policy unless a law or regulation provides differently.
If we take any action that results in a material change in the
underlying investments of a variable investment option, we will notify you as
required by law. We may, for example, cause the variable investment option to
invest in a mutual fund other than, or in addition to, The Hudson River Trust or
EQ Advisors Trust. If you then wish to transfer the amount you have in that
option to another investment option, you may do so.
We may make any changes in the policy or its riders, require additional
premium payments, or make distributions from the policy to the extent we deem
necessary to ensure that your policy qualifies or continues to qualify as life
insurance for tax purposes. Any such change will apply uniformly to all policies
that are affected. We will give you written notice of such changes. We also may
make other changes in the policies that do not reduce any net cash surrender
value, death benefit, account value, or other accrued rights or benefits.
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REPORTS WE WILL SEND YOU
Shortly after the end of each year of your policy, we will send you a
report that includes information about your policy's current death benefit,
account value, cash surrender value (i.e., account value minus any current
surrender charge), policy loans, policy transactions and amounts of charges
deducted. We will send you individual notices to confirm premium payments,
transfers and certain other policy transactions.
LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal
proceedings. In our view, none of these proceedings would be considered material
with respect to a policyowner's interest in the Separate Account, nor would any
of these proceedings be likely to have a material adverse effect upon the
Separate Account, our ability to meet our obligations under the policies, or the
distribution of the policies.
ILLUSTRATIONS OF POLICY BENEFITS
In order to help you understand how your policy values would vary over
time under different sets of assumptions, we will provide you with certain
illustrations upon request. These will be based on the age and insurance risk
characteristics of the insured person under your policy and such factors as the
face amount, death benefit option, premium payment amounts, and rates of return
(within limits) that you request. You can request such illustrations at any
time. We have filed an example of such an illustration as an exhibit to the
registration statement referred to below.
SEC REGISTRATION STATEMENT
We have on file with the SEC a registration statement under the
Securities Act of 1933 that relates to the IL Protector policies. The
registration statement contains additional information that is not required to
be included in this prospectus. You may obtain this information, for a fee, from
the SEC's Public Reference Section at 450 5th Street, N.W., Washington, D.C.
20549 or, without charge, from the SEC's web-site (www.sec.gov).
HOW WE MARKET THE POLICIES
We offer variable life insurance policies (including IL Protector) and
variable annuity contracts through EQ Financial Consultants, Inc. ("EQF"). The
Investment Company Act of 1940, therefore, classifies EQF as the "principal
underwriter" of those policies and contracts. EQF also serves as manager and a
principal underwriter of EQ Advisors Trust and as the principal underwriter of
The Hudson River Trust. EQF is a wholly-owned subsidiary of Equitable Life and
an affiliate of Equitable of Colorado, with its address at 1290 Avenue of the
Americas, New York, NY 10104. EQF is registered with the SEC as a broker-dealer
and is a member of the National Association of Securities Dealers, Inc. During
1999, EQF plans to change its name to AXA Advisors, Inc. Equitable of Colorado
will pay EQF a fee for its services as principal underwriter of our policies.
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We sell IL Protector through licensed insurance agents who are also
registered representatives of EQF. The agent who sells you this policy receives
sales commissions from Equitable Life. The commissions don't cost you anything
above the charges and expenses already discussed elsewhere in this prospectus.
Generally, the agents will receive maximum commissions of 50% of the amount of
the target premium you pay in your policy's first year, plus 6% of the amount of
the target premium you pay in the second through the tenth years, plus 3% of all
other premiums you pay in any year. We pay comparable commissions on the amount
of premiums you pay that we deem attributable to any face amount increase that
you request. The agent may be required to return to us any commissions on
premiums that we have refunded to a policyowner.
We also sell the policies through licensed independent insurance
brokers. They will also be registered representatives either of EQF or of
another SEC registered broker-dealer. The commissions for independent brokers
will be no more than those for agents. The commissions will be paid through the
registered broker-dealer and may be subject to our above-noted return policy if
premiums are refunded.
SERVICES PROVIDED BY EQUITABLE LIFE
In carrying out certain of our operations, we use Equitable Life's
personnel, property, and facilities. We reimburse Equitable Life for these
intercompany services on the basis of the cost of the services provided.
INSURANCE REGULATION THAT APPLIES TO EQUITABLE OF COLORADO
We are regulated and supervised by the Division of Insurance of the
State of Colorado. In addition, we are subject to the insurance laws and
regulations in every state where we sell policies. We submit annual reports on
our operations and finances to insurance officials in all of these states. The
officials are responsible for reviewing our reports to see that we are
financially sound. Such regulation, however, does not guarantee or provide
absolute assurance of our soundness.
YEAR 2000 PROGRESS
Equitable of Colorado relies upon various Equitable Life computer
systems in order to administer your policy and operate the investment options.
Equitable of Colorado also relies upon systems of service providers who are not
affiliated with Equitable Life. These systems are the same systems that
Equitable Life relies upon in order to administer its policies.
In 1995, Equitable Life began addressing the question of whether its
computer systems would recognize the Year 2000 before, on or after January 1,
2000, and Equitable Life has identified those of its systems critical to
business operations that were not Year 2000 compliant. By year end 1998, the
work of modifying or replacing non-compliant systems was substantially
completed. Equitable Life has begun comprehensive testing of its Year 2000
compliance and expects that the testing will be substantially completed by June
30, 1999. Equitable Life has contacted third-party services providers to seek
assurances that they are acting to address the Year 2000 issue with the goal of
avoiding any material adverse effect on services provided to policyowners and on
operations
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of the investment options. Most third-party service providers have provided
Equitable Life assurances of their Year 2000 compliance. Equitable Life believes
it is on schedule for substantially all such systems and services, including
those considered to be mission-critical, to be confirmed as Year 2000 compliant,
renovated, replaced or the subject of contingency plans, by June 30, 1999,
except for one investment accounting system which is scheduled to be replaced by
August 31, 1999 and confirmed as Year 2000 compliant by September 30, 1999.
Additionally, Equitable Life will be supplementing its existing business
continuity and disaster recovery plans to cover certain categories of
contingencies that could arise as a result of Year 2000 related failures. Year
2000 specific contingency plans are anticipated to be in place by June 30, 1999.
There are many risks associated with Year 2000 issues, including the
risk that Equitable Life's computer systems will not operate as intended.
Additionally, there can be no assurance that the systems of third parties will
be Year 2000 compliant. Any significant unresolved difficulty related to the
Year 2000 compliance initiatives could result in an interruption in, or a
failure of, normal business operations and, accordingly, could have a material
adverse effect on our ability to administer your policy and operate the
investment options.
To the fullest extent permitted by law, the foregoing Year 2000
discussion is a "Year 2000 Readiness Disclosure" within the meaning of The Year
2000 Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
DIRECTORS AND PRINCIPAL OFFICERS
Set forth below is information about our directors and our principal
officers. Unless otherwise noted, their address is 1290 Avenue of the Americas,
New York, New York 10104.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Michel Beaulieu Director, Equitable of Colorado. Senior Vice President, Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------
Harvey E. Blitz Director, Equitable of Colorado. Senior Vice President, Equitable Life; prior
thereto, Senior Vice President and Deputy Chief Financial Officer, Equitable
Life. Senior Vice President, Equitable Companies. Vice President and Chief
Financial Officer since March 1997, EQ ADVISORS TRUST. Chairman, Frontier
Trust Company ("Frontier"). Executive Vice President since November 1996 and
Director, EQ Financial Consultants, Inc. ("EQF"). Director until May 1997,
Equitable Distributors, Inc. ("EDI") and Director and Officer of various
Equitable of Colorado affiliates. Previously held other officerships with
Equitable Life and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------
OFFICER-DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
Michael S. Martin Director and Executive Vice President, Equitable of Colorado. Executive Vice
President and Chief Marketing Officer, Equitable Life. Prior thereto, Senior
Vice President, Equitable Life. Chairman and Chief Executive Officer, EQF.
Vice President, EQ ADVISORS TRUST (since March 1997) and THE HUDSON RIVER
TRUST (until March 1998). Director, Equitable Underwriting and Sales Agency
(Bahamas), Ltd. (since May 1996) and EquiSource. Previously held other
officerships with Equitable Life and its affiliates.
</TABLE>
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<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------
Samuel B. Shlesinger Chairman of the Board, President and Chief Executive Officer, Equitable of
Colorado. Senior Vice President, Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
OTHER PRINCIPAL OFFICERS
- ------------------------------------------------------------------------------------------------------------------------
Kevin R. Byrne Senior Vice President and Treasurer, Equitable of Colorado, Equitable Life
and Equitable Companies. Treasurer, EquiSource, Frontier Trust Company and
Equitable Investment Corporation. President and Chief Executive Officer,
Equitable Casualty Insurance Company ("Casualty"). Vice President and
Treasurer, EQ ADVISORS TRUST (since March 1997). Holds various other
officerships and directorships with other Equitable of Colorado affiliates.
- ------------------------------------------------------------------------------------------------------------------------
Alvin H. Fenichel Senior Vice President and Chief Financial Officer, Equitable of Colorado.
Senior Vice President and Controller, Equitable Life and Equitable Companies.
Previously held other officerships with Equitable Life and its affiliates.
- ------------------------------------------------------------------------------------------------------------------------
Linda J. Galasso Vice President and Secretary, Equitable of Colorado. Vice President and
Secretary, Equitable Life. Assistant Secretary, Equitable Companies, EQF and
other Equitable of Colorado affiliates.
- ------------------------------------------------------------------------------------------------------------------------
Mark A. Hug Senior Vice President, Equitable of Colorado. Senior Vice President since
April 1997, Equitable Life. Prior thereto, Vice President, Aetna.
- ------------------------------------------------------------------------------------------------------------------------
Charles Marino Vice President and Actuary, Equitable of Colorado. Vice President and Senior
Actuary (since Sept. 1998), and Vice President and Actuary (Feb. 1996 to
Sept. 1998), Equitable Life. Prior thereto, Assistant Vice President and
Actuary, Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------
John P. Natoli Vice President and Chief Underwriting Officer, Equitable of Colorado. Vice
President and Chief Underwriter, Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------
Mildred M. Oliver Vice President, Equitable of Colorado. Vice President, Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------
Michael J. Remus Vice President and Chief Administrative Officer, Equitable of Colorado. Vice
3001 Westown Parkway President and Chief Administrative Officer, Equitable Life.
West Des Moines, IA 50266
- ------------------------------------------------------------------------------------------------------------------------
Allen Zabusky Vice President and Controller, Equitable of Colorado. Vice President and
135 West 50th Street Deputy Controller, Equitable Life. Vice President and Controller, EQ
New York, New York 10020 ADVISORS TRUST.
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL STATEMENTS OF EQUITABLE OF COLORADO
The financial statements of Equitable of Colorado as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998 included in this prospectus have been so included in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of such firm as experts in accounting and auditing. The financial
statements of Equitable of Colorado have relevance for the policies only to the
extent that they bear upon the ability of Equitable of Colorado to meet its
obligations under the policies. There are no financial
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statements for Separate Account VLI as the policies are being offered for the
first time in 1999, and Separate Account VLI had not commenced operations at the
date of this prospectus.
49
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THE EQUITABLE OF COLORADO, INC.
1998 FINANCIAL STATEMENTS
AND
REPORT OF INDEPENDENT ACCOUNTANTS
F-1
<PAGE>
February 8, 1999
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
The Equitable of Colorado, Inc.
In our opinion, the accompanying balance sheets and the related statements of
earnings, of shareholder's equity and comprehensive income and of cash flows
present fairly, in all material respects, the financial position of The
Equitable of Colorado, Inc. ("EOC") at December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of EOC's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
F-2
<PAGE>
THE EQUITABLE OF COLORADO, INC.
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investments:
Policy loans......................................................... $ 701,986.1 $ 1,158,866.7
Fixed maturities available for sale, at estimated fair value......... 232,819.8 226,077.5
------------------- -------------------
Total investments................................................ 934,805.9 1,384,944.2
Cash and cash equivalents.............................................. 7,034.4 421.4
Deferred policy acquisition costs...................................... 51,613.6 59,000.0
Amounts due from reinsurers............................................ 621,627.6 589,021.8
Accrued investment income.............................................. 14,624.5 58,990.2
Other assets........................................................... 7,168.4 7,299.7
------------------- -------------------
TOTAL ASSETS........................................................... $ 1,636,874.4 $ 2,099,677.3
=================== ===================
LIABILITIES
Policyholders' account balances........................................ $ 972,029.9 $ 1,457,678.0
Amounts due to reinsurers.............................................. 522,072.9 488,149.4
Future policy benefits and other policyholder's liabilities............ 27,803.7 23,724.9
Amounts due to Equitable Life.......................................... 6,249.1 15,465.6
Other liabilities...................................................... 18,357.4 21,361.5
------------------- -------------------
Total liabilities................................................ 1,546,513.0 2,006,379.4
------------------- -------------------
Commitments and contingencies (Notes 7, 8 and 9)
SHAREHOLDER'S EQUITY
Common stock, $2.00 par value 1.0 million shares authorized, issued
and outstanding...................................................... 2,000.0 2,000.0
Capital in excess of par value......................................... 37,000.0 37,000.0
Retained earnings...................................................... 48,793.3 52,308.1
Accumulated other comprehensive income................................. 2,568.1 1,989.8
------------------- -------------------
Total shareholder's equity....................................... 90,361.4 93,297.9
------------------- -------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY............................. $ 1,636,874.4 $ 2,099,677.3
=================== ===================
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
THE EQUITABLE OF COLORADO, INC.
STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------------ ------------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Universal life policy fee income..................... $ 6,876.3 $ 14,358.6 $ 13,891.7
Premiums............................................. 11,045.9 8,211.6 7,316.6
Net investment income................................ 39,113.6 79,205.2 70,132.8
Investment gains, net................................ 1,066.5 428.9 909.3
Other income......................................... 6,321.5 5,098.1 5,201.5
------------------ ------------------- -------------------
Total revenues................................. 64,423.8 107,302.4 97,451.9
------------------ ------------------- -------------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders'
account balances................................... 30,361.2 70,251.4 63,592.4
Policyholders' benefits.............................. 10,313.5 13,317.0 10,325.5
Other operating costs and expenses................... 29,155.9 18,787.4 16,694.8
------------------ ------------------- -------------------
Total benefits and other deductions............ 69,830.6 102,355.8 90,612.7
------------------ ------------------- -------------------
(Loss) earnings before Federal income taxes.......... (5,406.8) 4,946.6 6,839.2
Federal income benefit (tax)......................... 1,892.0 (1,731.3) (2,393.7)
------------------ ------------------- -------------------
Net (Loss) Earnings.................................. $ (3,514.8) $ 3,215.3 $ 4,445.5
================== =================== ===================
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
THE EQUITABLE OF COLORADO, INC.
STATEMENTS OF SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------------ ------------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Common stock, at par value, beginning and
end of year........................................ $ 2,000.0 $ 2,000.0 $ 2,000.0
------------------ ------------------- -------------------
Capital in excess of par value, beginning
of year............................................ 37,000.0 37,000.0 22,000.0
Capital contribution from Equitable Life............. - - 15,000.0
------------------ ------------------- -------------------
Capital in excess of par value, end of year.......... 37,000.0 37,000.0 37,000.0
------------------ ------------------- -------------------
Retained earnings, beginning of year................. 52,308.1 49,092.8 44,647.3
Net (loss) earnings.................................. (3,514.8) 3,215.3 4,445.5
------------------ ------------------- -------------------
Retained earnings, end of year....................... 48,793.3 52,308.1 49,092.8
------------------ ------------------- -------------------
Accumulated other comprehensive income,
beginning of year.................................. 1,989.8 467.8 1,802.4
Other comprehensive income........................... 578.3 1,522.0 (1,334.6)
------------------ ------------------- -------------------
Accumulated other comprehensive income............... 2,568.1 1,989.8 467.8
------------------ ------------------- -------------------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR.............. $ 90,361.4 $ 93,297.9 $ 88,560.6
================== =================== ===================
COMPREHENSIVE INCOME
Net (loss) earnings.................................. $ (3,514.8) $ 3,215.3 $ 4,445.5
------------------ ------------------- -------------------
Change in unrealized gains (losses), net of
reclassification adjustment........................ 732.0 1,577.4 (1,659.5)
Minimum pension liability adjustment................. (153.7) (55.4) 324.9
------------------ ------------------- -------------------
Other comprehensive income........................... 578.3 1,522.0 (1,334.6)
------------------ ------------------- -------------------
COMPREHENSIVE INCOME................................. $ (2,936.5) $ 4,737.3 $ 3,110.9
================== =================== ===================
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
THE EQUITABLE OF COLORADO, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------------ ------------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Net (loss) earnings.................................. $ (3,514.8) $ 3,215.3 $ 4,445.5
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Interest credited to policyholders'
account balances................................. 30,361.2 70,251.4 63,592.4
Universal life policy fee income................... (6,876.3) (14,358.6) (13,891.7)
Investment gains................................... (1,066.5) (428.9) (909.3)
Change in amounts due to (from) reinsurers, net.... 1,317.7 (8,160.4) 23,717.1
Change in accrued investment income................ 44,365.7 (7,494.7) (6,271.4)
Other, net......................................... 13,137.8 8,586.2 5,592.7
------------------ ------------------- -------------------
Net cash provided by operating activities............ 77,724.8 51,610.3 76,275.3
------------------ ------------------- -------------------
Cash flows from investing activities:
Maturities and repayments.......................... 24,602.3 19,380.4 34,164.7
Sales.............................................. 109,882.4 16,820.3 27,813.2
Purchases.......................................... (139,177.6) (62,699.2) (95,629.5)
Increase in policy loans........................... (104,873.7) (123,720.3) (152,900.2)
Other, net......................................... (1.6) 4.6 15.8
------------------ ------------------- -------------------
Net cash used by investing activities................ (109,568.2) (150,214.2) (186,536.0)
------------------ ------------------- -------------------
Cash flows from financing activities:
Policyholders' account balances:
Deposits......................................... 54,456.9 88,806.6 93,253.2
Withdrawals...................................... (3,453.7) (6,732.9) -
(Decrease) increase in loan due to Equitable Life.. (12,546.8) 12,546.8 -
Capital contribution from Equitable Life........... - - 15,000.0
------------------ ------------------- -------------------
Net cash provided by financing activities............ 38,456.4 94,620.5 108,253.2
------------------ ------------------- -------------------
Change in cash and cash equivalents.................. 6,613.0 (3,983.4) (2,007.5)
Cash and cash equivalents, beginning of year......... 421.4 4,404.8 6,412.3
------------------ ------------------- -------------------
Cash and Cash Equivalents, End of Year............... $ 7,034.4 $ 421.4 $ 4,404.8
================== =================== ===================
Supplemental cash flow information
Income Taxes Refunded (Paid)....................... $ 1,241.2 $ (4,349.4) $ (874.9)
================== =================== ===================
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE>
THE EQUITABLE OF COLORADO, INC.
NOTES TO FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable of Colorado, Inc. ("EOC") was incorporated on January 18,
1984, as a wholly owned subsidiary of The Equitable Life Assurance Society
of the United States ("Equitable Life") which is a wholly owned subsidiary
of The Equitable Companies Incorporated (the "Holding Company"). EOC's
operations consist principally of the sale of whole life fixed premium,
interest-sensitive policies and ten year term life insurance policies.
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
-----------------------------------------------------
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles ("GAAP") which require 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.
The years "1998," "1997" and "1996" refer to the years ended December 31,
1998, 1997 and 1996, respectively.
Certain reclassifications have been made in the amounts presented for prior
periods to conform these periods with the 1998 presentation.
New Accounting Pronouncements
-----------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments, including
certain derivatives embedded in other contracts, and for hedging
activities. It requires all derivatives to be recognized on the balance
sheet at fair value. The accounting for changes in the fair value of a
derivative depends on its intended use. Derivatives not used in hedging
activities must be adjusted to fair value through earnings. Changes in the
fair value of derivatives used in hedging activities will, depending on the
nature of the hedge, either be offset in earnings against the change in
fair value of the hedged item attributable to the risk being hedged or
recognized in other comprehensive income until the hedged item affects
earnings. For all hedging activities, the ineffective portion of a
derivative's change in fair value will be immediately recognized in
earnings.
SFAS No. 133 requires adoption in fiscal years beginning after June 15,
1999 and permits early adoption as of the beginning of any fiscal quarter
following issuance of the statement. Retroactive application to financial
statements of prior periods is prohibited. EOC expects to adopt SFAS No.
133 effective January 1, 2000. Adjustments resulting from initial adoption
of the new requirements will be reported in a manner similar to the
cumulative effect of a change in accounting principle and will be reflected
in net income or accumulated other comprehensive income based upon existing
hedging relationships, if any. SFAS No. 133 is not expected to have a
material impact on EOC's financial statements.
F-7
<PAGE>
In late 1998, the Americal Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-7, "Deposit Accounting:
Accounting for Insurance and Reinsurance Contracts that Do Not Transfer
Insurance Risk". This SOP, effective for fiscal years beginning after June
15, 1999, provides guidance to both the insured and insurer on how to apply
the deposit method of accounting when it is required for insurance and
reinsurance contracts that do not transfer insurance risk. The SOP does not
address or change the requirements as to when deposit accounting should be
applied. SOP 98-7 applies to all entities and all insurance and reinsurance
contracts that do not transfer insurance risk except for long-duration life
and health insurance contracts. This SOP is not expected to have a material
impact on EOC's financial statements.
In December 1997, the AICPA issued SOP 97-3, "Accounting by Insurance and
Other Enterprises for Insurance-Related Assessments". SOP 97-3 provides
guidance for assessments related to insurance activities and requirements
for disclosure of certain information and is effective for financial
statements issued for periods beginning after December 31, 1998.
Restatement of previously issued financial statements is not required. SOP
97-3 is not expected to have a material impact on EOC's financial
statements.
Valuation of Investments
------------------------
Fixed maturities identified as available for sale are reported at estimated
fair value. The amortized cost of fixed maturities is adjusted for
impairments in value deemed to be other than temporary.
Policy loans are stated at unpaid principal balances.
Cash and cash equivalents includes cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.
All securities are recorded in the financial statements on a trade date
basis.
Investment Gains, Net and Unrealized Investment Gains (Losses)
--------------------------------------------------------------
Realized investment gains (losses) are determined by specific
identification and are presented as a component of revenue.
Unrealized investment gains and losses on fixed maturities available for
sale are accounted for as a separate component of accumulated comprehensive
income, net of related deferred Federal income taxes and deferred policy
acquisition costs ("DAC") related to universal life and investment-type
products.
Recognition of Insurance Income and Related Expenses
----------------------------------------------------
Premiums from universal life contracts are reported as deposits to
policyholders' account balances. Revenues from these contracts consist of
amounts assessed during the period against policyholders' account balances
for mortality charges, policy administration charges and surrender charges.
Policy benefits and claims that are charged to expense include benefit
claims incurred in the period in excess of related policyholders' account
balances.
Premiums from non-participating traditional life policies with life
contingencies generally are recognized as income when due. Benefits and
expenses are matched with such income so as to result in the recognition of
profits over the life of the contracts. This match is accomplished by means
of the provision for liabilities for future policy benefits and the
deferral and subsequent amortization of policy acquisition costs.
F-8
<PAGE>
Deferred Policy Acquisition Costs
---------------------------------
The costs of acquiring new business, principally commissions, underwriting,
agency and policy issue expenses, all of which vary with and are primarily
related to the production of new business, are deferred. DAC is subject to
recoverability testing at the time of policy issue and loss recognition
testing at the end of each accounting period.
For universal life products, DAC is amortized over the expected total life
of the contract group (periods ranging from 25 to 35 years) as a constant
percentage of estimated gross profits arising principally from investment
results, mortality and expense margins and surrender charges based on
historical and anticipated future experience, updated at the end of each
accounting period. The effect on the amortization of DAC of revisions to
estimated gross profits is reflected in earnings in the period such
estimated gross profits are revised. The effect on the DAC asset that would
result from realization of unrealized gains (losses) is recognized with an
offset to accumulated comprehensive income in shareholders' equity as of
the balance sheet date.
For non-participating traditional life policies with life contingencies,
DAC is amortized in proportion to anticipated premiums. Assumptions as to
anticipated premiums are estimated at the date of policy issue and are
consistently applied during the life of the contracts. Deviations from
estimated experience are reflected in earnings in the period such
deviations occur. For these contracts, the amortization periods generally
are for the total life of the policy.
DAC totaling $12,300.0 thousand ($8,000.0 thousand net of Federal income
taxes), related to a single large company-owned life insurance ("COLI")
policy surrendered in the first quarter of 1998, was written off and
included in other operating costs and expense. Concurrently, an initial fee
liability of $1,400.0 thousand ($900.0 thousand, net of Federal income
taxes) was amortized and included in universal life and investment-type
product fee income.
Policyholders' Account Balances and Future Policy Benefits
----------------------------------------------------------
Policyholders' account balances for universal life contracts are equal to
the policy account values. The policy account values represents an
accumulation of gross premium payments plus credited interest less expense
and mortality charges and withdrawals.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on the
basis of actuarial assumptions as to mortality, persistency and interest
established at policy issue. Assumptions established at policy issue as to
mortality and persistency are based on EOC's experience which, together
with interest and expense assumptions, include a margin for adverse
deviation. When the liabilities for future policy benefits plus the present
value of expected future gross premiums for a product are insufficient to
provide for expected future policy benefits and expenses for that product,
DAC is written off and thereafter, if required, a premium deficiency
reserve is established by a charge to earnings. Interest rates used in
establishing such liabilities range from 4.00% to 8.25% for life insurance
liabilities.
Federal Income Taxes
--------------------
EOC is included in a consolidated Federal income tax return filed by the
Holding Company with Equitable Life and its other eligible subsidiaries. In
accordance with tax sharing arrangements between EOC and Equitable Life,
the amount of current income taxes as determined on a separate return basis
will be paid to or received from Equitable Life. Benefits for losses, which
are paid to EOC to the extent they are utilized by Equitable Life, may not
have been received in the absence of such an arrangement. Current Federal
income taxes are charged or credited to operations based upon amounts
estimated to be payable or recoverable as a result of taxable operations
for the current year. Deferred income tax assets and liabilities are
recognized based on the difference between financial statement carrying
amounts and income tax bases of assets and liabilities using enacted income
tax rates and laws.
F-9
<PAGE>
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------------- ----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 200,395.2 $ 6,231.9 $ 365.5 $ 206,261.6
Mortgage-backed.................... 6,862.6 119.7 - 6,982.3
U.S. Treasury securities and
U.S. government and
agency securities................ 13,629.4 164.4 18.1 13,775.7
States and political subdivisions.. 3,203.8 - 13.9 3,189.9
Foreign governments................ 1,987.5 37.1 - 2,024.6
Redeemable preferred stock......... 592.6 - 6.9 585.7
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 226,671.1 $ 6,553.1 $ 404.4 $ 232,819.8
================= ================= ================ =================
December 31, 1997
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 197,388.2 $ 4,821.3 $ 568.8 $ 201,640.7
Mortgage-backed.................... 9,410.0 95.8 - 9,505.8
U.S. Treasury securities and
U.S. government and
agency securities................ 14,778.3 152.7 - 14,931.0
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 221,576.5 $ 5,069.8 $ 568.8 $ 226,077.5
================= ================= ================ =================
</TABLE>
For publicly traded fixed maturities, estimated fair value is determined
using quoted market prices. For fixed maturities without a readily
ascertainable market value, EOC has determined an estimated fair value
using a discounted cash flow approach, including provisions for credit
risk, generally based on the assumption such securities will be held to
maturity. Such estimated fair values do not necessarily represent the
values for which these securities could have been sold at the dates of the
consolidated balance sheets. At December 31, 1998 and 1997, securities
without a readily ascertainable market value having an amortized cost of
$97,253.5 thousand and $111,147.1 thousand, respectively, had estimated
fair values of $101,073.7 thousand and $114,176.4 thousand, respectively.
The contractual maturity of bonds at December 31, 1998 is shown below:
AVAILABLE FOR SALE
------------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
---------------- -----------------
(IN THOUSANDS)
Due in one year or less............. $ 19,088.7 $ 19,221.6
Due in years two through five....... 87,625.6 89,141.6
Due in years six through ten........ 94,565.9 98,594.6
Due after ten years................. 17,935.7 18,294.0
Mortgage-backed securities.......... 6,862.6 6,982.3
---------------- -----------------
Total............................... $ 226,078.5 $ 232,234.1
================ =================
F-10
<PAGE>
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
EOC's fixed maturity investment portfolio includes corporate high yield
securities consisting of public high yield bonds and directly negotiated
debt in leveraged buyout transactions. EOC seeks to minimize the higher
than normal credit risks associated with such securities by monitoring the
total investments in any single issuer or total investment in a particular
industry group. Certain of these corporate high yield securities are
classified as other than investment grade by the various rating agencies,
i.e., a rating below Baa or National Association of Insurance Commissioners
("NAIC") designation of 3 (medium grade), 4 or 5 (below investment grade)
or 6 (in or near default). At December 31, 1998, approximately 1.8% of the
$226,078.5 thousand aggregate amortized cost of bonds held by EOC were
considered to be other than investment grade.
4) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturities................................... $ 16,178.2 $ 14,877.4 $ 13,164.5
Policy loans....................................... 23,624.9 64,707.6 57,398.9
Other investment income............................ 53.2 131.4 450.0
----------------- ---------------- -----------------
Gross investment income.......................... 39,856.3 79,716.4 71,013.4
Investment expenses.............................. (742.7) (511.2) (880.6)
----------------- ---------------- -----------------
Net Investment Income.............................. $ 39,113.6 $ 79,205.2 $ 70,132.8
================= ================ =================
</TABLE>
For 1998, 1997 and 1996, respectively, proceeds received on sales of fixed
maturities classified as available for sale amounted to $109,882.4
thousand, $16,820.3 thousand and $27,813.2 thousand. Gross gains of
$1,200.3 thousand, $608.3 thousand and $1,316.0 thousand and gross losses
of $120.1 thousand, $180.3 thousand and $1,050.8 thousand, respectively,
were realized on these sales.
F-11
<PAGE>
Net unrealized investment gains (losses), included in the balance sheets as
a component of accumulated comprehensive income, and the changes for the
corresponding years are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 2,135.5 $ 558.1 $ 2,217.6
Changes in gross unrealized investment
gains (losses)................................... 1,647.7 3,237.9 (4,068.0)
Changes in unrealized investment losses
(gains) attributable to:
DAC............................................ (521.6) (811.1) 1,515.0
Deferred Federal income taxes.................. (394.1) (849.4) 893.5
----------------- ---------------- -----------------
Balance, End of Year............................... $ 2,867.5 $ 2,135.5 $ 558.1
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains on:
Fixed maturities............................... $ 6,148.7 $ 4,501.0 $ 1,263.1
Amounts of unrealized investment gains
attributable to:
DAC.......................................... (1,736.9) (1,215.3) (404.2)
Deferred Federal income taxes................ (1,544.3) (1,150.2) (300.8)
----------------- ---------------- -----------------
Total.............................................. $ 2,867.5 $ 2,135.5 $ 558.1
================= ================ =================
</TABLE>
5) ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents cumulative gains and
losses on items that are not reflected in the statements of earnings. The
balances for the years 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Unrealized gains on investments.................... $ 2,867.5 $ 2,135.5 $ 558.1
Minimum pension liability.......................... (299.4) (145.7) (90.3)
----------------- ---------------- -----------------
Total Accumulated Other
Comprehensive Income............................. $ 2,568.1 $ 1,989.8 $ 467.8
================= ================ =================
</TABLE>
F-12
<PAGE>
The components of other comprehensive income for the years 1998, 1997 and
1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Net unrealized gains (losses) on investment
securities:
Net unrealized gains (losses) arising during
the period..................................... $ 2,260.3 $ 3,840.1 $ (4,085.3)
Reclassification adjustment for (gains) losses
included in net earnings....................... (612.6) (602.2) 17.3
----------------- ---------------- -----------------
Net unrealized gains (losses) on investment
securities....................................... 1,647.7 3,237.9 (4,068.0)
Adjustments for:
DAC and deferred Federal income taxes.............. (915.7) (1,660.5) 2,408.5
----------------- ---------------- -----------------
Change in unrealized gains (losses), net of
reclassification of adjustment................... 732.0 1,577.4 (1,659.5)
Change in minimum pension liability................ (153.7) (55.4) 324.9
----------------- ---------------- -----------------
Total Other Comprehensive Income................... $ 578.3 $ 1,522.0 $ (1,334.6)
================= ================ =================
</TABLE>
6) FEDERAL INCOME TAXES
A summary of the Federal income taxes in the statements of earnings is
shown below:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal income tax (benefit) expense:
Current.......................................... $ (507.9) $ 2,676.7 $ 2,633.6
Deferred......................................... (1,384.1) (945.4) (239.9)
----------------- ---------------- -----------------
Total.............................................. $ (1,892.0) $ 1,731.3 $ 2,393.7
================= ================ =================
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 December 31, 1997
--------------------------------- ---------------------------------
ASSETS LIABILITIES Assets Liabilities
--------------- ---------------- --------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ - $ 330.8 $ - $ 13.5
Other.................................. 1,076.1 - 1,432.0
DAC, reserves and reinsurance.......... - 4,937.0 - 7,115.4
Investments............................ - 1,092.9 - 660.4
--------------- ---------------- --------------- ---------------
Total.................................. $ 1,076.1 $ 6,360.7 $ 1,432.0 $ 7,789.3
=============== ================ =============== ===============
</TABLE>
F-13
<PAGE>
The deferred Federal income taxes impacting operations reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for
income tax purposes. The sources of these temporary differences and the tax
effects of each are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ (2,140.0) $ (1,185.0) $ (510.0)
Investments........................................ - - 300.0
Compensation and related benefits.................. 400.0 200.0 400.0
Other.............................................. 355.9 39.6 (429.9)
----------------- ---------------- -----------------
Deferred Federal Income Tax
Benefit.......................................... $ (1,384.1) $ (945.4) $ (239.9)
================= ================ =================
</TABLE>
7) REINSURANCE AGREEMENTS
EOC cedes reinsurance to Equitable Life and unaffiliated insurance
companies. EOC evaluates the financial condition of its reinsurers to
minimize its exposure to significant losses from reinsurer insolvencies.
Ceded reinsurance does not relieve the originating insurer of liability.
The effect of reinsurance is summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Direct premiums.................................... $ 53,896.3 $ 50,014.0 $ 49,459.8
Reinsurance ceded.................................. (42,850.4) (41,802.4) (42,143.2)
----------------- ---------------- -----------------
Premiums........................................... $ 11,045.9 $ 8,211.6 $ 7,316.6
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 31,862.9 $ 25,216.1 $ 17,152.4
================= ================ =================
Policyholders' Benefits Ceded...................... $ 72,624.0 $ 70,187.7 $ 61,931.5
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 39,521.6 $ 36,371.0 $ 32,267.4
================= ================ =================
</TABLE>
To limit its exposure to losses, effective February 1998, EOC reinsured 90%
of the mortality risk on new term policies. EOC also reinsures mortality
risks in excess of $150.0 thousand on any single life. EOC also reinsures
the entire risk on certain substandard underwriting risks as well as in
certain other cases.
8) FAIR VALUE OF FINANCIAL INSTRUMENTS
EOC defines fair value as the quoted market prices for those instruments
that are actively traded in financial markets. In cases where quoted market
prices are not available, fair values are estimated using present value or
other valuation techniques. The fair value estimates are made at a specific
point in time, based on available market information and judgments about
the financial instrument, including estimates of the timing and amount of
expected future cash flows and the credit standing of counterparties. Such
estimates do not reflect any premium or discount that could result from
offering for sale at one time EOC's entire holdings of a particular
financial instrument, nor do they consider the tax impact of the
realization of unrealized gains or losses. In many cases, the fair value
estimates cannot be substantiated by comparison to independent markets, nor
can the disclosed value be realized in immediate settlement of the
instrument. Certain financial instruments are excluded, particularly
insurance liabilities other than financial guarantees and investment
contracts.
F-14
<PAGE>
Fair values of policy loans are estimated by discounting the face value of
the loans from the time of the next interest rate review to the present, at
a rate equal to the excess of the current estimated market rates over the
current interest rate charged on the loan. The carrying value and estimated
fair value for policy loans were both $701,986.1 thousand at December 31,
1998 as compared with $1,158,866.7 thousand at December 31, 1997.
9) LITIGATION
An action was instituted on April 6, 1995 against EOC and Equitable Life in
New York state court, entitled Sidney C. Cole, et al. v. The Equitable Life
Assurance Society of the United States and The Equitable of Colorado, Inc.
The action is brought by the holders of a joint survivorship whole life
policy issued by EOC. The action purports to be on behalf of a class
consisting of all persons who from January 1, 1984 purchased life insurance
policies sold by Equitable Life and EOC based upon allegedly uniform sales
presentations and policy illustrations. The complaint puts in issue various
alleged sales practices that plaintiffs assert, among other things,
misrepresented the stated number of years that the annual premium would
need to be paid. Plaintiffs seek damages in an unspecified amount,
imposition of a constructive trust, and seek to enjoin Equitable Life and
EOC from engaging in the challenged sales practices. In June 1996, the
court issued a decision and order dismissing with prejudice plaintiffs'
causes of action for fraud, constructive fraud, breach of fiduciary duty,
negligence, and unjust enrichment, and dismissing without prejudice
plaintiffs' cause of action under the New York State consumer protection
statute. The only remaining causes of action are for breach of contract and
negligent misrepresentation. In 1997, plaintiffs noticed an appeal from the
court's June 1996 order and filed their memorandum of law and affidavits in
support of their motion for class certification. In August 1997, Equitable
Life and EOC moved for summary judgment dismissing plaintiffs' remaining
claims of breach of contract and negligent misrepresentation and in
February 1998, the court granted Equitable Life and EOC's motion for
summary judgment. The court therefore denied plaintiffs' motion to certify
the class. In April 1998, plaintiffs noticed their appeal from that
decision and from the June 1996 decision, the appeal from which had been
dismissed. Plaintiffs perfected their appeal in January 1999. Oral argument
is scheduled for September 1999.
Although the outcome of litigation cannot be predicted with certainty,
EOC's management believes that the ultimate resolution of this case should
not have a material adverse effect on the financial position of EOC. EOC's
management cannot make an estimate of loss, if any, or predict whether or
not any such litigation will have a material adverse effect on EOC's
results of operations in any particular period.
In addition, EOC is involved in various legal actions and proceedings in
connection with its business. Some of the actions and proceedings have been
brought on behalf of various alleged classes of claimants and certain of
these claimants seek damages of unspecified amounts. While the ultimate
outcome of such matters cannot be predicted with certainty, in the opinion
of management no such matter is likely to have a material adverse effect on
EOC's financial position or results of operations.
10) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
EOC is restricted as to the amounts of dividends it may pay to Equitable
Life. Under Colorado Insurance Law, the Division of Insurance of the State
of Colorado has broad discretion to determine whether the financial
condition of a stock life insurance company would support the payment of
dividends to its shareholders. Statutory surplus, capital stock and Asset
Valuation Reserve ("AVR") totaled $51,662.9 thousand and $47,907.1 thousand
at December 31, 1998 and 1997, respectively. For 1998, 1997 and 1996,
statutory net income totaled $3,401.3 thousand, $615.6 thousand and $784.0
thousand, respectively.
At December 31, 1998, EOC, in accordance with various government and state
regulations, had $3,770.4 thousand of securities deposited with such
government or state agencies.
F-15
<PAGE>
The differences between statutory surplus and capital stock determined in
accordance with Statutory Accounting Principles ("SAP") and total
shareholder's equity on a GAAP basis are primarily attributable to: (a)
inclusion in SAP of an AVR intended to stabilize surplus from fluctuations
in the value of the investment portfolio; (b) future policy benefits and
policyholders' account balances under SAP differ from GAAP due to
differences between actuarial assumptions and reserving methodologies; (c)
certain policy acquisition costs are expensed under SAP but deferred under
GAAP and amortized over future periods to achieve a matching revenues and
expenses; (d) Federal income taxes are generally accrued under SAP based
upon revenues and expensed in the Federal income tax return while under
GAAP deferred taxes are provided for timing differences between recognition
of revenues and expenses for financial reporting and income tax purposes;
(e) valuation of assets under SAP and GAAP differ due to different
investment valuation and depreciation methodologies, as well as the
deferral of interest-related realized capital gains and losses on fixed
income investments; and (f) differences in the accrual methodologies for
post-employment and retirement benefit plans.
11) RELATED PARTY TRANSACTIONS
EOC reimburses Equitable Life for its use of Equitable Life's personnel,
property and facilities in carrying out certain of its operations.
Reimbursements for intercompany services is made on the basis of the cost
of services provided. The amounts of these intercompany transactions are as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Personnel and facilities........................... $ 6,897.9 $ 9,835.4 $ 5,523.1
Agent commissions and fees......................... $ 5,784.8 $ 4,835.1 $ 4,679.0
</TABLE>
Equitable Life sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified part-time
employees), managers and agents. The pension plans are non-contributory and
benefits are based on a cash balance formula or years of service and final
average earnings, if greater, under certain grandfathering rules in the
plans. Under its cost sharing agreement, Equitable Life allocated a portion
of the costs of these benefit plans to EOC; these costs were included in
personnel and facilities above.
EOC incurred investment advisory and asset management fees of $375.8
thousand, $362.7 thousand and $315.6 thousand for services provided by
affiliates during 1998, 1997 and 1996, respectively.
F-16
<PAGE>
APPENDIX I: INVESTMENT PERFORMANCE RECORD
The tables below show performance information for the variable
investment options. The performance shown for each option equals the performance
of the Portfolio corresponding to that option, reduced by the rate of the
policies' mortality and expense risk charge (.80% annual rate). You can find
more information about the performance of the Portfolios in The Hudson River
Trust and EQ Advisors Trust prospectuses attached at the end of this prospectus.
The performance figures on which the tables are based are after deduction of all
fees and expenses paid by the Trusts or any of the Portfolios.
The tables below, however, do not take into account the following
additional charges that we will deduct under your policy: (1) the 6% sales
charge and the tax charge that we deduct from each premium payment you make; (2)
the monthly cost of insurance charge; (3) the policies' monthly administrative
charge (currently $25 for your policy's first 12 months and $6 per month
thereafter); (4) the surrender charge; or (5) any charge for optional rider
benefits you may select. For more information about these charges, see "Charges
and Expenses You Will Pay" beginning on page 9 of this prospectus. If we
reflected these charges, the performance shown below would be reduced. We have
not done so, however, because the actual impact of these charges on a particular
policy varies considerably based on such factors as the insurance risk
characteristics of the insured person; the face amount and other options you
select for your policy; the state of policy issuance; the amount and timing of
your premium payments; and whether you make transfers or withdrawals, take
policy loans, or surrender your policy. In order to better understand how the
charges we have omitted from the below tables will affect your policy's value,
you should refer to your Illustrations of Policy Benefits that your Equitable of
Colorado associate will provide. You can request Equitable of Colorado or your
Equitable of Colorado associate to provide you with such illustrations at any
time, whether before or after you purchase a policy.
The returns below represent periods of time prior to when Separate
Account VLI offered any corresponding investment options. As of the date of this
prospectus, no variable investment option of Separate Account VLI had invested
in any of the corresponding Portfolios.
<TABLE>
<CAPTION>
AVERAGE ANNUAL RATE OF RETURN FOR PERIODS ENDING
DECEMBER 31, 1998*
------------------
SINCE PORTFOLIO
VARIABLE INVESTMENT OPTION 1 YR. 3 YRS. 5 YRS. 10 YRS. 20 YRS. INCEPTION (DATE**)
FIXED INCOME OPTIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Money Market 4.50% 4.52% 4.33% 4.74% -- 6.25% (7/13/81)
Alliance Intermediate Gov't
Securities 6.88% 5.40% 4.55% -- -- 6.25% (4/1/91)
Alliance Quality Bond 7.82% 6.86% 5.92% -- -- 5.49% (10/1/93)
Alliance High Yield (5.91%) 10.46% 9.11% 10.27% -- 9.71% (1/2/87)
EQUITY OPTIONS
T. Rowe Price Equity Income 8.20% -- -- -- -- 17.80% (5/1/97)
EQ/Putnam Growth & Income
</TABLE>
A-1
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value 11.92% -- -- -- -- 16.69% (5/1/97)
Alliance Growth & Income 19.90% 21.55% 16.87% -- -- 15.90% (10/1/93)
Alliance Equity Index 27.05% 26.58% -- -- -- 23.32% (3/1/94)
Merrill Lynch Basic Value
Equity 10.69% -- -- -- -- 16.40% (5/1/97)
Alliance Common Stock 28.35% 26.58% 20.94% 17.68% 17.63% 15.43% (1/13/76)
MFS Research 23.11% -- -- -- -- 23.45% (5/1/97)
Alliance Global 20.83% 14.97% 13.34% 13.90% -- 11.66% (8/27/87)
Alliance International 9.68% 4.74% -- -- -- 6.61% (4/3/95)
T. Rowe Price International
Stock 12.79% -- -- -- -- 6.16% (5/1/97)
Morgan Stanley Emerging
Markets Equity (27.60%) -- -- -- -- (33.25%) (8/20/97)
Alliance Aggressive Stock (0.52%) 9.85% 10.56% 17.93% -- 16.81% (1/27/86)
Warburg Pincus Small
Company Value (10.73%) -- -- -- -- 3.43% (5/1/97)
Alliance Small Cap Growth (5.04%) -- -- -- -- 11.35% (5/1/97)
MFS Emerging Growth
Companies 33.44% -- -- -- -- 33.78% (5/1/97)
ASSET ALLOCATION OPTIONS
Alliance Conservative
Investors 12.97% 9.81% 8.52% -- -- 9.10% (10/2/89)
EQ/Putnam Balanced 10.92% -- -- -- -- 15.02% (5/1/97)
Alliance Balanced 17.17% 13.98% 9.92% 11.60% -- 11.81% (1/27/86)
Alliance Growth Investors 18.18% 15.21% 12.99% -- -- 15.13% (10/2/89)
Merrill Lynch World Strategy 5.97% -- -- -- -- 6.09% (5/1/97)
</TABLE>
* No performance information is shown for MFS Growth with Income or
EQ/Alliance Premier Growth, as neither had commenced operations prior to
December 31, 1998.
** The inception date shown is the date that the relevant Portfolio (or its
predecessor) received its initial funding.
Unlike the rate of return tables above, the following yield information
does not include capital gains and losses that the Portfolios corresponding to
the indicated variable investment options may have experienced.
<TABLE>
<CAPTION>
ANNUALIZED YIELD FOR PERIODS
VARIABLE INVESTMENT OPTION ENDING DECEMBER 31, 1998
-------------------------- ------------------------
7 DAYS 30 DAYS
------ -------
<S> <C> <C>
Alliance Money Market 4.69% --
Alliance Intermediate Government Securities -- 4.72%
Alliance Quality Bond -- 5.16%
Alliance High Yield -- 14.50%
</TABLE>
A-2
<PAGE>
The information in the tables above is not a guarantee, a prediction,
or necessarily an indication of future performance.
A-3
<PAGE>
APPENDIX II: OUR DATA ON MARKET PERFORMANCE
In reports or other communications to policyowners or in advertising
material, we may describe general economic and market conditions affecting our
variable investment options, and the Portfolios and may compare the performance
or ranking of those options and the Portfolios with:
o those of other insurance company separate accounts or mutual funds
included in the rankings prepared by Lipper Analytical Services,
Inc., Morningstar, Inc. or similar investment services that monitor
the performance of insurance company separate accounts or mutual
funds;
o other appropriate indices of investment securities and averages for
peer universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective policyowners
advertisements or other communications that include evaluations of a variable
investment option or Portfolio by nationally recognized financial publications.
Examples of such publications are:
Barron's Money Management Letter
Morningstar's Variable Annuities/Life Investment Dealers Digest
Business Week National Underwriter
Forbes Pension & Investments
Fortune USA Today
Institutional Investor Investor's Daily
Money The New York Times
Kiplinger's Personal Finance The Wall Street Journal
Financial Planning The Los Angeles Times
Investment Advisor The Chicago Tribune
Investment Management Weekly
Lipper Analytical Services, Inc. (Lipper) compiles performance data for
peer universes of Portfolios with similar investment objectives in its Lipper
Variable Insurance Products Performance Analysis Service (Lipper Survey).
Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life
Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over
800 mutual funds underlying variable annuity and life insurance products. It
divides these actively managed portfolios into 25 categories by portfolio
objectives. The Lipper Survey contains two different universes, which reflect
different types of fees in performance data:
B-1
<PAGE>
o The "Separate Account" universe reports performance data net of
investment management fees, direct operating expenses and
asset-based charges applicable under variable insurance and annuity
contracts; and
o The "Mutual Fund" universe reports performance net only of
investment management fees and direct operating expenses, and
therefore reflects only charges that relate to the underlying
mutual fund.
The Morningstar Report consists of nearly 700 variable life and annuity
portfolios, all of which report their data net of investment management fees,
direct operating expenses and separate account level charges.
LONG-TERM MARKET TRENDS
The following chart presents historical return trends for various types
of securities. The information presented does not directly relate to the
performance of our variable investment options or the Trusts. Nevertheless, it
may help you gain a perspective on the potential returns of different asset
classes over different periods of time. By combining this information with your
knowledge of your own financial needs, you may be able to better determine how
you wish to allocate your IL Protector premiums.
Historically, the investment performance of common stocks over the long
term has generally been superior to that of long- or short-term debt securities.
However, common stocks have also experienced dramatic changes in value over
short periods of time. One of our variable investment options that invests
primarily in common stocks may, therefore, be a desirable selection for owners
who are willing to accept such risks. If, on the other hand, you wish to limit
your short-term risk, you may find it preferable to allocate a smaller
percentage of net premiums to those options that invest primarily in common
stock. All investments in securities, whether equity or debt, involve varying
degrees of risk. They also offer varying degrees of potential reward.
The chart on page B-3 illustrates the average annual compound rates of
return over selected time periods between December 31, 1926 and December 31,
1998 for the types of securities indicated in the chart. These rates of return
assume the reinvestment of dividends, capital gains and interest. The Consumer
Price Index is also shown as a measure of inflation for comparison purposes. The
investment return information presented is an historical record of unmanaged
categories of securities. In addition, the rates of return shown do not reflect
either (1) investment management fees and expenses, or (2) costs and charges
associated with ownership of a variable life insurance policy.
The rates of return illustrated do not represent returns of our
variable investment options or the Portfolios and do not constitute a
representation that the performance of those options or the Portfolios will
correspond to rates of return such as those illustrated in the chart.
B-2
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Average Annual Rates of Return
Long-Term Long-Term Intermediate U.S. Consumer
For the following periods ending Common Government Corporate -Term Gov't Treasury Price
December 31, 1998 Stocks Bonds Bonds Bonds Bills Index
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Year 28.58% 13.06% 10.76% 10.21% 4.86% 1.80%
3 Years 28.27 9.07 8.25 6.84 5.11 2.27
5 years 24.06 9.52 8.74 6.20 4.96 2.41
10 years 19.19 11.66 10.85 8.74 5.29 3.14
20 years 17.75 11.14 10.86 9.85 7.17 4.53
30 years 12.67 9.09 9.14 8.71 6.76 5.24
40 years 12.00 7.20 7.43 7.39 5.94 4.44
50 years 13.56 5.89 6.20 6.21 5.07 3.92
60 years 12.49 5.43 5.62 5.50 4.26 4.19
Since 1926 11.21 5.29 5.78 5.32 3.78 3.15
Inflation Adjusted 7.82 2.08 2.55 2.11 0.62 0.00
Since 1926
</TABLE>
- -----------------------
Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 1999
YEARBOOK, (TM) Ibbotson Associates, Inc., Chicago. All rights reserved.
Common Stocks (S&P 500) - Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
Long-Term Government Bonds - Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty-year maturity and a
reasonably current coupon.
Long-Term Corporate Bonds - For the period 1969-1998, represented by the Salomon
Brothers Long-Term, High-Grade Corporate Bond Index; for the period 1946-1968,
the Salomon Brothers' Index was backdated using Salomon Brothers' monthly yield
data and a methodology similar to that used by Salomon for 1969-1998; for the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a twenty-year maturity.
B-3
<PAGE>
Intermediate-Term Government Bonds - Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five-year maturity.
U.S. Treasury Bills - Measured by rolling over each month a one-bill portfolio
containing, at the beginning of each month, the bill having the shortest
maturity not less than one month.
Consumer Price Index - Measured by the Consumer Price Index for all Urban
Consumers (CPI-U), not seasonally adjusted.
B-4
<PAGE>
APPENDIX III: AN INDEX OF KEY WORDS AND PHRASES
This index should help you locate more information on the terms used in this
prospectus.
<TABLE>
<CAPTION>
PAGE IN PAGE IN
THIS PROSPECTUS THIS PROSPECTUS
--------------- ---------------
<S> <C> <C> <C>
Access Account 21 month, year 42, 45
account value 22 monthly deduction 12, 42
Administrative Office 4 monthly insurance charge 17, 19, 42
age 37 net cash surrender value 27
Allocation Date 16 no-lapse guarantee 15
alternative death benefit 17 no-lapse guarantee premium 15
amount at risk 41 option A, B 17
anniversary 23, 27, 36 our 7
assign; assignment 35 owner 7
automatic transfer service 24 partial withdrawal 26
basis 29 payment option 20
beneficiary 20 planned periodic premium 14
business day 35 policy 2
Cash Surrender Value 24 Portfolio 2
Code 28 premium payments 13
collateral 25 prospectus 2
cost of insurance charge 9, 41 receive 35
cost of insurance rates 42 restore, restoration 15
day 35 rider 20
default 14 SEC 3
dollar cost averaging service 24 Separate Account VLI 39
EQ Advisors Trust 16 state 8
EQ Financial Consultants 45 subaccount 39
Equitable of Colorado 4 surrender 27
face amount 17 surrender charge 10
grace period 14 target premium 10
guaranteed interest option 17 telephone transfers 23
Guaranteed Interest Account 17 transfers 23
Hudson River Trust 16 Trust(s) 16
IL Protector 2 units 22
insured person 2, 17 unit values 22
Investment Funds 16 us 7
investment option 16 variable investment option 2
issue date 37 we 7
lapse 14 withdrawal 26
loan, loan interest 24, 25 you, your 7
matures, maturity, maturity date 27
modified endowment contract 13
</TABLE>
C-1
<PAGE>
110404
C-2
<PAGE>
Part II
REPRESENTATION REGARDING REASONABLENESS OF
AGGREGATE POLICY FEES AND CHARGES
The Equitable of Colorado, Inc. ("EOC") represents that the fees and
charges deducted under the Policies described in this Registration Statement, in
the aggregate, are reasonable in relation to the services rendered, the expenses
to be incurred, and the risks assumed by EOC under the Policies. EOC bases its
representation on its assessment of all of the facts and circumstances,
including such relevant factors as: the nature and extent of such services,
expenses and risks, the need for EOC to earn a profit, the degree to which the
Policies include innovative features, and regulatory standards for the grant of
exemptive relief under the Investment Company Act of 1940 used prior to October
1996, including the range of industry practice. This representation applies to
all policies sold pursuant to this Registration Statement, including those sold
on the terms specifically described in the prospectus contained herein, or any
variations therein, based on supplements, data pages or riders to any policies
or prospectus, or otherwise.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKING PURSUANT TO RULE 484(b)(1) UNDER
THE SECURITIES ACT OF 1933
EOC's By-Laws provide, in Article VII, as follows:
7.1 Indemnification of Directors, Officers, Employees and Incorporators. To
the extent permitted by the law of the State of Colorado, and subject to all
applicable requirements thereof:
(a) any person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that he, his
testator or intestate, is or was a director, officer, employee or incorporator
of the Company shall be indemnified by the Company;
(b) any person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that he, his
testator or intestate serves or served any other organization in any capacity at
the request of the Company may be indemnified by the Company; and
(c) the related expenses of any such person in any of said categories may
be advanced by the Company.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
Part II
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Reconciliation and Tie, previously filed with this Registration Statement, File
No. 333-72233, on February 12, 1999.
The Prospectus dated April 1, 1999 consisting of 48 pages.
Representation regarding reasonableness of aggregate policy fees and charges.
Undertaking to file reports.
Undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933
The signatures.
Written Consents of the following persons:
Edwards & Angell, LLP. (see exhibit 2(a))
Barbara Fraser, F.S.A., M.A.A.A., Vice President of The
Equitable of Colorado, Inc. (see exhibit 2(b))
Independent Public Accountants (see exhibit 6)
The following exhibits: Exhibits required by Article IX, paragraph A of Form
N-8B-2:
<TABLE>
<S> <C> <C>
1-A(1)(a)(i) Certified Resolutions re Authority to Market
Variable Life Insurance and Establish
Separate Accounts, dated December 16, 1996,
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
1-A(2) Inapplicable.
1-A(3)(a) See Exhibit 1-A(8).
1-A(3)(b) See Exhibit 1-A(8)(i).
1-A(4) Inapplicable.
1-A(5)(a) Flexible Premium Variable Life Insurance
Policy (C099-500) (IL Protector).
+ 1-A(5)(b) Option to Purchase Additional Insurance
Rider (R94-204), previously filed with this
Registration Statement, File No. 333-72233,
on February 12, 1999.
+ 1-A(5)(c) Disability Rider - Waiver of Monthly
Deductions (R94-216, previously filed with
this Registration Statement, File No.
333-72233, on February 12, 1999.
+ 1-A(5)(d) Term Insurance Rider on Additional Insured
(R90-217), previously filed with this
Registration Statement, File No. 333-72233,
on February 12, 1999.
+ 1-A(5)(e) Children's Term Insurance Rider (R94-218),
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
+ 1-A(5)(f) Accidental Death Benefit Rider (R94-219),
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
1-A(5)(g) Accelerated Death Benefit Rider (R94-102),
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
+ 1-A(5)(h) Cost of Living Rider (R96-101), previously
filed with this Registration Statement, File
No. 333-72233, on February 12, 1999.
+ 1-A(5)(i) Substitution of Insured Rider (R94-212),
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
1-A(6)(a) Declaration and Charter of The Equitable of
Colorado, Inc. ("EOC"), as amended,
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
1-A(6)(b) By-Laws of EOC, as amended, previously
filed with this Registration Statement,
File No. 333-72233, on February 12, 1999.
1-A(7) Inapplicable.
- - -------------------------------
+ State variations not included
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
1-A(8) Form of Distribution and Servicing Agreement
among EOC and EQ Financial Consultants, Inc.
("EQFC") authorizing EQFC to distribute all
EOC products in the agency channel,
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
1-A(8)(i) Schedule of Commissions, previously filed
with this Registration Statement, File No.
333-72233, on February 12, 1999.
1-A(8)(ii) Form of Distribution Agreement between EOC
and Equitable Distributors, Inc. ("EDI"),
authorizing EDI to distribute all EOC
products in the retail channel, previously
filed with this Registration Statement,
File No. 333-72233, on February 12, 1999.
1-A(8)(iii) Form of Sales Agreement between EQFC and
EOC committing EQFC to provide shares of The
Hudson River Trust ("HRT") for all EOC
separate account products sold in the agency
channel, previously filed with this
Registration Statement, File No.
333-72233, on February 12, 1999.
1-A(8)(iv) Form of Sales Agreement between EOC and EDI
committing EDI to provide HRT shares for all
EOC separate account products sold in the
retail channel, previously filed with this
Registration Statement, File No. 333-72233,
on February 12, 1999.
1-A(8)(v) Participation Agreement by and among EQ
Advisors Trust ("EQAT"), EDI, EOC and EQFC,
committing EQAT and its distributors, EQFC
and EDI, to provide EQAT and EQFC shares for
all EOC separate account products sold in
the agency channel and the retail channel,
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
1-A(9) Agreement for Cooperative and Joint Use of
Personnel, Property and Services between
Equitable Life Assurance Society of the
United States and EOC, dated April 16, 1984,
previously filed with this Registration
Statement, File No. 333-72233, on
February 12, 1999.
1-A(10) Form of Application, previously filed with
this Registration Statement, File
No. 333-72233, on February 12, 1999.
2(a) Opinion and Consent of Edwards & Angell, LLP.
2(b) Opinion and Consent of Barbara Fraser,
F.S.A., M.A.A.A., Vice President of The
Equitable of Colorado, Inc.
3 Inapplicable.
4 Inapplicable.
6 Consent of Independent Public Accountant.
7(a) Powers-of-Attorney, previously filed with
this Registration Statement, File No.
333-72233, on February 12, 1999.
8 Description of EOC's Issuance, Transfer and
Redemption Procedures for Flexible Premium
Policies pursuant to Rule 6e-3(T)(b)(12)
(iii) under the Investment Company Act of
1940, previously filed with this
Registration Statement, File No. 333-72233,
on February 12, 1999.
9 Form of Illustration of Policy Benefits
</TABLE>
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City and State of New York on the
9th day of April, 1999.
[SEAL] SEPARATE ACCOUNT VLI OF THE EQUITABLE OF
COLORADO, INC.
(Registrant)
By: THE EQUITABLE OF COLORADO, INC.,
(Depositor)
By: /s/ Mildred M. Oliver
----------------------
(Mildred M. Oliver)
Vice President
Attest: /s/ Linda Galasso
-----------------
(Linda Galasso)
Secretary
April 9, 1999
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Depositor has
duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City and State of
New York on the 9th day of April, 1999.
THE EQUITABLE OF COLORADO, INC.
(Depositor)
By: /s/Mildred M. Oliver
---------------------
(Mildred M. Oliver)
Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed by the following persons in the
capacities and on the date indicated:
PRINCIPAL EXECUTIVE OFFICER:
<TABLE>
<S> <C>
* Samuel B. Shlesinger Chairman of the Board, President and Chief
Executive Officer.
PRINCIPAL FINANCIAL OFFICER:
/s/Alvin H. Fenichel
- --------------------
* Alvin H. Fenichel Senior Vice President and Chief Financial
April 9, 1999 Officer
PRINCIPAL ACCOUNTING OFFICER:
* Allen Zabusky Vice President and Controller
*DIRECTORS:
Michel Beaulieu Michael S. Martin
Harvey E. Blitz Samuel B. Shlesinger
</TABLE>
*By: /s/ Mildred M. Oliver
-----------------------
(Mildred M. Oliver)
Attorney-in-Fact
April 9, 1999
II-5
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NO. TAG VALUE
- ---------- ---------
<S> <C> <C>
1-A(5)(a) Flexible Premium Variable Life Policy EX-99.1A5a
2(a) Opinion and Consent of Edwards & Angell, LLP. EX-99.2a
2(b) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A. EX-99.2b
6 Consent of Independent Public Accountants. EX-99.6
9. Form of Illustration of Policy Benefits. EX-99.9
</TABLE>
II-6
INSURED PERSON RICHARD ROE
POLICY OWNER RICHARD ROE
THE EQUITABLE
OF COLORADO, INC.
FACE AMOUNT
OF INSURANCE $50,000 VARIABLE LIFE
INSURANCE
DEATH BENEFIT OPTION A (SEE PAGE 6) POLICY
POLICY NUMBER XX XXX XXX
WE AGREE to pay the Insurance Benefit of this policy and to provide its other
benefits and rights in accordance with its provisions.
FLEXIBLE PREMIUM VARIABLE LIFE POLICY
This is a flexible premium variable life insurance policy. You can, within
limits:
o increase or decrease the Face Amount of Insurance;
o make premium payments at any time and in any amount;
o change the death benefit option;
o change the allocation of net premiums and deductions among your
investment options; and
o transfer amounts among your investment options.
THIS POLICY IS GUARANTEED NOT TO LAPSE DURING THE POLICY YEARS SHOWN ON PAGE 3,
SUBJECT TO PREMIUMS HAVING BEEN PAID IN ACCORDANCE WITH THE NO LAPSE GUARANTEE
PROVISION AS DESCRIBED IN THIS POLICY.
All of these rights and benefits are subject to the terms and conditions of this
policy. All requests for policy changes are subject to our approval and may
require evidence of insurability.
We will put your net premiums into your Policy Account. You may then allocate
them to one or more investment funds of our Separate Account(s) (SA) and to our
Guaranteed Interest Account (GIA).
THE PORTION OF YOUR POLICY ACCOUNT THAT IS IN AN INVESTMENT FUND OF OUR SA WILL
VARY UP OR DOWN DEPENDING ON THE UNIT VALUE OF SUCH INVESTMENT FUND, WHICH IN
TURN DEPENDS ON THE INVESTMENT PERFORMANCE OF THE SECURITIES HELD BY THAT SA
FUND. THERE ARE NO MINIMUM GUARANTEES AS TO SUCH PORTION OF YOUR POLICY ACCOUNT.
The portion of your Policy Account that is in our GIA will accumulate, after
deductions, at rates of interest we determine. Such rates will not be less than
4% a year.
THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY BE VARIABLE OR FIXED AS
DESCRIBED IN THIS POLICY.
This is a non-participating policy.
RIGHT TO EXAMINE POLICY. You may examine this policy and if for any reason you
are not satisfied with it, you may cancel it by returning this policy with a
written request for cancellation to our Administrative Office by the 10th day
after you receive it. If you do this, we will refund the premiums that were paid
on this policy.
/s/ Linda J. Glasso /s/ Samuel B. Shlesinger
- ------------------------------- ---------------------------------------
Linda J. Galasso, Samuel B. Shlesinger, Chairman,
Secretary President & Chief Executive Officer
<PAGE>
No. CO99-500
CONTENTS
Policy Information 3
Table of Maximum Monthly Charges
for Benefits 4
Those Who Benefit from this Policy 5
The Insurance Benefit We Pay 5
Changing the Face Amount of Insur-
ance or the Death Benefit Option 7
<TABLE>
<CAPTION>
The Premiums You Pay 7 In this Policy Administrative Office
-------------- ---------------------
<S> <C> <C>
Your Policy Account and How it "We, "our," and "us mean the The address of our administra-
Works 9 Equitable Of Colorado, Inc. tive Office is shown on Page 3.
You should send premiums and
Your Investment Options 10 "You" and "your" mean the correspondence to that address
owner of the policy at the time unless instructed otherwise.
The Value of Your Policy Account 11 an owners right is exercised.
The Cash Surrender Value of this Unless otherwise stated all
Policy 12 references to interest in this
Policy are effective annual rates
How a Loan Can Be Made 13 of interest.
Our Separate Account(s) (SA) 14
Our Annual Report to You 15 Attained age means the age on the
Birthday nearest to the beginning Copies of the application for this
How Benefits are Paid 15 of the current policy year. policy and any additional benefit
riders are attached to the policy.
Other Important Information 16
In this policy:
</TABLE>
INTRODUCTION
The premiums you pay, after deductions are made in accordance with the Table of
Expense Charges in the Policy Information section, are put into your Policy
Account. Amounts in your Policy Account are allocated at your direction to one
or more investment funds of our SA and to our GIA.
The investment funds of our SA invest in securities and other investments whose
value is subject to market fluctuations and investment risk. There is no
guarantee of principal or investment experience.
Our GIA earns interest at rates we declare in advance of each policy year. The
rates are guaranteed for each policy year. The principal, after deductions, is
also guaranteed.
If death benefit Option A is in effect, the death benefit is the Face Amount of
Insurance, and the amount of the death benefit is fixed except when it is a
percentage of your Policy Account. If death benefit Option B is in effect, the
death benefit is the Face Amount of Insurance plus the amount in your Policy
Account. The amount of the death benefit is variable. Under either option, the
death benefit will never be less than a percentage of your Policy Account as
stated on Page 6.
This policy is guaranteed not to lapse during the policy years shown on Page 3,
subject to premiums having been paid in accordance with the No Lapse Guarantee
provision as described in this policy.
We make monthly deductions from your Policy Account to cover the cost of the
benefits provided by this policy and the cost of any benefits provided by riders
to this policy. If you give up this policy for its Net Cash Surrender Value,
reduce the Face Amount of Insurance, or if this policy ends without value at the
end of the grace period, we may deduct a surrender charge from your Policy
Account.
This is only a summary of what this policy provides. You should read all of it
carefully. Its terms govern your rights and our obligations.
No. CO99-500-2 Page 2
<PAGE>
POLICY INFORMATION
INSURED PERSON RICHARD ROE
POLICY OWNER RICHARD ROE
FACE AMOUNT
OF INSURANCE $50,000
DEATH BENEFIT OPTION A (SEE PAGE 6)
POLICY NUMBER XX XXX XXX SEPARATE ACCOUNT [VLI]
BENEFICIARY MARGARET H. ROE
REGISTER DATE JANUARY 11, 1999 ISSUE AGE 35
DATE OF ISSUE JANUARY 11, 1999 SEX MALE
INSURED PERSON'S PREFERRED
STATE OF RESIDENCE SPECIMEN NON-TOBACCO USER
A MINIMUM INITIAL PREMIUM PAYMENT OF $96.42 IS DUE ON OR BEFORE DELIVERY OF THE
POLICY.
THE PLANNED PERIODIC PREMIUM OF [$150.00] IS PAYABLE [QUARTERLY.]
NO LAPSE GUARANTEE PERIOD - 20 YEARS - SEE NO LAPSE GUARANTEE PROVISION
SEE PAGE 3 -- CONTINUED FOR TABLE OF NO LAPSE GUARANTEE PREMIUMS
PREMIUM PAYMENTS ARE FOR THE INSURANCE BENEFIT AND ANY ADDITIONAL BENEFIT RIDERS
LISTED BELOW.
THE PLANNED PERIODIC PREMIUMS SHOWN ABOVE MAY NOT BE SUFFICIENT TO CONTINUE THE
POLICY AND LIFE INSURANCE COVERAGE IN FORCE TO THE FINAL POLICY DATE, WHICH IS
THE POLICY ANNIVERSARY NEAREST THE INSURED PERSON'S 100TH BIRTHDAY. THE PERIOD
FOR WHICH THE POLICY AND COVERAGE WILL CONTINUE IN FORCE WILL DEPEND ON: (1) THE
AMOUNT, TIMING AND FREQUENCY OF PREMIUM PAYMENTS; (2) CHANGES IN THE FACE AMOUNT
OF INSURANCE AND THE DEATH BENEFIT OPTIONS; (3) CHANGES IN THE INTEREST RATES
CREDITED TO OUR GIA AND IN THE INVESTMENT PERFORMANCE OF THE INVESTMENT FUNDS OF
OUR SA; (4) CHANGES IN THE MONTHLY DEDUCTIONS FROM THE POLICY ACCOUNT FOR THIS
POLICY AND ANY BENEFITS PROVIDED BY RIDERS TO THIS POLICY; AND (5) LOAN AND
PARTIAL NET CASH SURRENDER VALUE WITHDRAWAL ACTIVITY.
PAGE 3
CO99-500-3 (CONTINUED ON NEXT PAGE) Page 3
<PAGE>
POLICY INFORMATION CONTINUED - POLICY NUMBER XX XXX XXX
-----------------TABLE OF NO LAPSE GUARANTEE PREMIUMS---------------
BENEFITS MONTHLY PREMIUM PREMIUM PERIOD
- -------- --------------- --------------
BASIC LIFE INSURANCE 31.42 20 YEARS
CO99-500-4 PAGE 3 -- CONTINUED Page 4
<PAGE>
POLICY INFORMATION CONTINUED--POLICY NUMBER XX XXX XXX
-----------TABLE OF AUTOMATIC EXPENSE CHARGES----------
DEDUCTIONS FROM PREMIUM PAYMENTS:
CHARGE FOR APPLICABLE TAXES (OTHER THAN TAXES DISCUSSED ON PAGE 12):
[2.000%] OF EACH PREMIUM PAYMENT. THIS AMOUNT IS SUBTRACTED FROM EACH
PREMIUM PAYMENT. WE RESERVE THE RIGHT TO CHANGE THIS PERCENTAGE TO
CONFORM TO CHANGES IN THE LAW OR IF THE INSURED PERSON CHANGES
RESIDENCE.
PREMIUM CHARGE:
6% OF EACH PREMIUM PAYMENT.
DEDUCTIONS FROM YOUR POLICY ACCOUNT:
INITIAL ADMINISTRATIVE CHARGE:
$25.00 IS DEDUCTED AT THE BEGINNING OF EACH POLICY MONTH DURING THE
FIRST POLICY YEAR.
SUBSEQUENT YEARS ADMINISTRATIVE CHARGE:
[$6.00] IS DEDUCTED AT THE BEGINNING OF EACH POLICY MONTH DURING EACH
POLICY YEAR AFTER THE FIRST POLICY YEAR. WE RESERVE THE RIGHT TO
CHANGE THIS CHARGE BUT IT WILL NEVER BE MORE THAN $10.00 A MONTH.
CHANGES WILL BE AS DESCRIBED IN "CHANGES IN POLICY COST FACTORS" ON
PAGE 16.
CO99-500-5 PAGE 3 -CONTINUED Page 5
<PAGE>
POLICY INFORMATION CONTINUED-POLICY NUMBER XX XXX XXX
--------TABLE OF MAXIMUM SURRENDER CHARGES--------
FOR THE INITIAL FACE AMOUNT
BEGINNING OF BEGINNING OF
POLICY POLICY
YEAR CHARGE YEAR CHARGE
---- ------ ---- ------
1 $300.30 9 $300.30
2 300.30 10 296.13
3 300.30 11 246.08
4 300.30 12 196.03
5 300.30 13 145.98
6 300.30 14 95.93
7 300.30 15 45.88
8 300.30 16 AND LATER 0.00
A SURRENDER CHARGE WILL BE SUBTRACTED FROM YOUR POLICY ACCOUNT IF THIS POLICY IS
GIVEN UP FOR ITS NET CASH SURRENDER VALUE OR IF THIS POLICY TERMINATES WITHIN
THE FIRST FIFTEEN POLICY YEARS. THE MAXIMUM CHARGE IN THE FIRST POLICY MONTH OF
EACH POLICY YEAR IS SHOWN IN THE TABLE ABOVE (SUBJECT TO ANY APPLICABLE
LIMITATIONS IMPOSED BY THE INVESTMENT COMPANY ACT OF 1940). AFTER THE NINTH
POLICY YEAR, THE MAXIMUM CHARGE IN ANY OTHER POLICY MONTH WILL BE BASED ON THE
NUMBER OF POLICY MONTHS SINCE THE BEGINNING OF THE POLICY YEAR.
THIS TABLE ASSUMES NO FACE AMOUNT INCREASES. SEE PAGE 12 FOR A DESCRIPTION OF
CHANGES TO MAXIMUM SURRENDER CHARGES FOR FACE AMOUNT INCREASES.
IF THE FACE AMOUNT OF INSURANCE IS REDUCED WITHIN THE FIRST FIFTEEN POLICY
YEARS, A PRO RATA SHARE OF THE APPLICABLE SURRENDER CHARGE AT THAT TIME WILL BE
DEDUCTED FROM YOUR POLICY ACCOUNT. SEE PAGE 12 FOR A DESCRIPTION OF THE PRO RATA
SURRENDER CHARGE.
****ADMINISTRATIVE OFFICE: THE EQUITABLE OF COLORADO, INC. ****
SPECIMEN SERVICE CENTER
100 SPECIMEN STREET
CITY, STATE 10001-6018
CO99-500-6 PAGE 3 -CONTINUED Page 6
<PAGE>
POLICY INFORMATION CONTINUED - POLICY NUMBER XX XXX XXX
-----------TABLE OF MAXIMUM MONTHLY CHARGES FOR BENEFITS----------
MONTHLY DEDUCTION
BENEFITS FROM POLICY ACCOUNT PERIOD
- -------- ------------------- ------
BASIC COST OF INSURANCE MAXIMUM MONTHLY COST OF
INSURANCE RATE (SEE PAGE
4--CONTINUED) TIMES
THOUSANDS OF NET AMOUNT
AT RISK (SEE PAGE 9) 65 YEARS
CO99-500-7 PAGE 4 Page 7
(CONTINUED ON NEXT PAGE)
<PAGE>
POLICY INFORMATION CONTINUED - POLICY NUMBER XX XXX XXX.
-------TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES------
PER $1,000 OF NET AMOUNT AT RISK (SEE PAGE 9) FOR BASIC LIFE INSURANCE
INSURED INSURED INSURED
PERSON'S PERSON'S PERSON'S
ATTAINED ATTAINED ATTAINED
AGE RATE AGE RATE AGE RATE
35 0.14083 55 0.65333 75 5.03667
36 0.14750 56 0.72167 76 5.59000
37 0.15667 57 0.79417 77 6.17500
38 0.16667 58 0.87250 78 6.78667
39 0.17833 59 0.96083 79 7.44000
40 0.19083 60 1.05917 80 8.16167
41 0.20583 61 1.16833 81 8.97250
42 0.22083 62 1.29417 82 9.89750
43 0.23833 63 1.43667 83 10.95167
44 0.25583 64 1.59833 84 12.11833
45 0.27667 65 1.77750 85 13.37417
46 0.29917 66 1.97083 86 14.69833
47 0.32333 67 2.18083 87 16.08083
48 0.34917 68 2.40583 88 17.49667
49 0.37833 69 2.65333 89 18.96583
50 0.41000 70 2.93250 90 20.51167
51 0.44667 71 3.30167 91 22.16500
52 0.48917 72 3.61750 92 23.98667
53 0.53667 73 4.04167 93 26.06583
54 0.59250 74 4.52000 94 28.78417
95 32.81750
96 39.64250
97 53.06583
98 83.33250
99 83.33250
CO99-500-8 PAGE 4 -- CONTINUED Page 8
<PAGE>
- ------------------------------------------------------------------------
THOSE WHO BENEFIT FROM THIS POLICY
OWNER. The owner of this policy is the insured person unless otherwise stated in
the application, or later changed.
As the owner, you are entitled to exercise all the rights of this policy while
the insured person is living. To exercise a right, you do not need the consent
of anyone who has only a conditional or future ownership interest in this
policy.
BENEFICIARY. The beneficiary is as stated in the application, unless later
changed. The beneficiary is entitled to the Insurance Benefit of this policy.
One or more beneficiaries for the Insurance Benefit can be named in the
application. If more than one beneficiary is named, they can be classed as
primary or contingent. If two or more persons are named in a class, their shares
in the benefit can be stated. The stated shares in the Insurance Benefit will be
paid to any primary beneficiaries who survive the insured person. If no primary
beneficiaries survive, payment will be made to any surviving contingent
beneficiaries. Beneficiaries who survive in the same class will share the
Insurance Benefit equally, unless you have made another arrangement with us.
If there is no designated beneficiary living at the death of the insured person,
we will pay the Insurance Benefit to the insured person's surviving children in
equal shares. If none survive, we will pay the insured person's estate.
CHANGING THE OWNER OR BENEFICIARY. While the insured person is living, you may
change the owner or beneficiary by written notice in a form satisfactory to us.
You can get such a form from our agent or by writing to us at our Administrative
Office. The change will take effect on the date you sign the notice. But, it
will not apply to any payment we make or other action we take before we receive
the notice. If you change the beneficiary, any previous arrangement you made as
to a payment option for benefits is cancelled. You may choose a payment option
for the new beneficiary in accordance with "How Benefits Are Paid" on Page 15.
ASSIGNMENT. You may assign this policy, if we agree. In any event, we will not
be bound by an assignment unless we have received it in writing at our
Administrative Office. Your rights and those of any other person referred to in
this policy will be subject to the assignment. We assume no responsibility for
the validity of an assignment. An absolute assignment will be considered as a
change of ownership to the assignee.
- --------------------------------------------------------------------------------
THE INSURANCE BENEFIT WE PAY
We will pay the Insurance Benefit of this policy to the beneficiary when we
receive at our Administrative Office (1) proof satisfactory to us that the
insured person died before the Final Policy Date; and (2) all other requirements
we deem necessary before such payment may be made. The Insurance Benefit
includes the following amounts, which we will determine as of the date of the
insured person's death:
o the death benefit described on Page 6;
o plus any other benefits then due from riders to this policy;
o minus any policy loan and accrued interest;
o minus any overdue deductions from your Policy Account if the insured person
dies during a grace period.
We will add interest to the resulting amount in accordance with applicable law.
We will compute the interest at a rate we determine, but not less than the
greater of (a) the rate we are paying on the date of payment under the Deposit
Option on Page 15, or (b) the rate required by any applicable law. Payment of
the Insurance Benefit may also be affected by other provisions of this policy.
See Pages 16 and 17, where we specify our right to contest the policy, the
suicide exclusion, and what happens if age or sex has been misstated. Special
exclusions or limitations (if any) are listed in the Policy Information section.
CO99-500-9 Page 9
<PAGE>
DEATH BENEFIT. The death benefit at any time will be determined under either
Option A or Option B below, whichever you have chosen and is in effect at such
time.
Under Option A, the death benefit is the greater of (a) the Face Amount of
Insurance; or (b) a percentage (see Table below) of the amount in your Policy
Account. Under this option, the amount of the death benefit is fixed, except
when it is determined by such percentage.
Under Option B, the death benefit is the greater of (a) the Face Amount of
Insurance plus the amount in your Policy Account; or (b) a percentage (see Table
below) of the amount in your Policy Account. Under this option the amount of the
death benefit is variable.
The percentages referred to above are the percentages from the following table
for the insured person's age (nearest birthday) at the beginning of the policy
year of determination.
TABLE OF PERCENTAGES
For ages not shown, the percentages shall
decrease by a ratable portion for each full year
INSURED INSURED
PERSON'S AGE PERCENTAGE PERSON'S AGE PERCENTAGE
- ------------ ---------- ------------ ----------
40 and under 250% 65 120%
45 215 70 115
50 185 75 thru 95 105
55 150 100 100
60 130
Section 7702 of the Internal Revenue Code of 1986, as amended (i.e., the
"Code"), gives a definition of life insurance which limits the amounts that may
be paid into a life insurance policy relative to the benefits it provides. Even
if this policy states otherwise, at no time will the "future benefits" under
this policy be less than an amount such that the "premiums paid" do not exceed
the Code's "guideline premium limitations". We may adjust the amount of premium
paid to meet these limitations. Also, at no time will the "death benefit" under
the policy be less than the "applicable percentage" of the "cash surrender
value" of the policy. The above terms are as defined in the Code. In addition,
we may take certain actions, described here and elsewhere in the policy, to meet
the definitions and limitations in the Code, based on our interpretation of the
Code. Please see "Policy Changes ^A Applicable Tax Law" for more information.
MATURITY BENEFIT. If the Insured person is living on the Final Policy Date
defined in the Policy Information section, we will pay you the amount in your
Policy Account on that date minus any policy loan and accrued interest. This
policy will then end.
CO99-500-10 Page 10
<PAGE>
- --------------------------------------------------------------------------------
CHANGING THE FACE AMOUNT OF INSURANCE OR THE DEATH BENEFIT OPTION
You may change the death benefit option or the Face Amount of Insurance by
written request to us at our Administrative Office, subject to our approval and
the following:
1. At any time after the first policy year while this policy is in force, you
may ask us to increase the Face Amount of Insurance if you provide evidence
satisfactory to us of the insurability of the insured person. If you
request an increase and the rating class of the insured person on the date
of the increase is higher, a separate policy will be issued for the amount
of the increase. Any increase you ask for must be at least $10,000. There
is a charge for such increase of $1.50 for each $1,000 of insurance, but
not more than $240.00 per increase. We will deduct the charge from your
Policy Account as of the date the increase takes effect. Such deduction
will be made in accordance with the "Allocations" provision on Page 10. If
you increase the face amount, an additional fifteen year surrender charge
may apply to that increase if any or all of that increase is surrendered
before the end of the fifteenth year from the effective date of increase.
2. At any time after the second policy year while this policy is in force, you
may ask us to reduce the Face Amount of Insurance but not to less than the
minimum amount for which we would then issue this policy under our rules.
Any such reduction in the Face Amount of Insurance may not be less than
$10,000. If you do this before the end of the fifteenth policy year or
before the end of the fifteenth year following an increase in the face
amount, we will deduct from your Policy Account a pro rata share of the
applicable surrender charge (see Page 12). Reductions will first be applied
against the most recent increase in the Face Amount of Insurance. They will
then be applied to prior increases in the Face Amount of Insurance in the
reverse order in which such increases took place, and then to the original
Face Amount of Insurance.
3. At any time after the second policy year while this policy is in force, you
can change your death benefit option. If you ask us to change from Option A
to Option B, we will decrease the Face Amount of Insurance by the amount in
your Policy Account on the date the change takes effect. However, we
reserve the right to decline to make such change if it would reduce the
Face Amount of Insurance below the minimum amount for which we would then
issue this policy under our rules. We also reserve the right to request
evidence of insurability for a change to Option B. If you ask us to change
from Option B to Option A, we will increase the Face Amount of Insurance by
the amount in your Policy Account on the date the change takes effect. Such
decreases and increases in the Face Amount of Insurance are made so that
the death benefit remains the same immediately before and after the change.
4. The change will take effect at the beginning of the policy month that
coincides with or next follows the date we approve your request.
5. We reserve the right to decline to make any change that we determine would
cause this policy to fail to qualify as life insurance under applicable tax
law as interpreted by us (see Page 16).
6. You may ask for a change by completing an application for change, which you
can get from our agent or by writing to us at our Administrative Office. A
copy of your application for change will be attached to the new Policy
Information section that we will issue when the change is made. The new
section and the application for change will become a part of this policy.
We may require you to return this policy to our Administrative Office to
make a policy change.
- --------------------------------------------------------------------------------
THE PREMIUMS YOU PAY
The minimum initial premium payment shown in the Policy Information section is
due on or before delivery of this policy. No insurance will take effect before a
premium at least equal to the minimum initial premium payment is paid. Other
premiums may be paid at any time while this policy is in force and before the
Final Policy Date at our Administrative Office.
We will send premium notices to you for the planned periodic premium shown in
the Policy Information section. You may skip planned periodic premium payments.
However, this may adversely affect the duration of the death benefit and your
policy's values. We will assume that any payment you make to us is a premium
payment, unless you tell us in writing that it is a loan repayment.
CO99-500-11 Page 11
<PAGE>
LIMITS. Each premium payment after the initial one must be at least $100. We may
increase this minimum limit 90 days after we send you written notice of such
increase. We reserve the right to limit the amount of any premium payments you
may make which are in excess of the greater of the Planned Periodic Premium or
the No Lapse Guarantee Premium shown on Page 3-Continued.
We also reserve the right not to accept premium payments or to return excess
amounts (in a policy year) that we determine would cause this policy to fail to
qualify as life insurance under applicable tax law as interpreted by us (see
Page 16).
NO LAPSE GUARANTEE.
This policy is guaranteed not to lapse during the policy years shown on Page 3
if the sum of premium payments accumulated at 4%, less any partial withdrawals
accumulated at 4%, is at least equal to the No Lapse Guarantee Premium(s) (shown
on Page 3-Continued for base policy and additional benefit riders, if any)
accumulated at 4%, and any outstanding loan and accrued loan interest does not
exceed the cash surrender value. Certain policy changes after issue will change
the No Lapse Guarantee Premium(s). This no lapse guarantee terminates at the end
of the policy year shown on Page 3.
GRACE PERIOD. At the beginning of each policy month, the Net Cash Surrender
Value will be compared to the total monthly deductions described on Page 9. If
the Net Cash Surrender Value is sufficient to cover the total monthly
deductions, the policy is not in default.
If the Net Cash Surrender Value at the beginning of any policy month during the
no lapse guarantee period is less than such deductions for that month we will
perform the following calculations to determine whether the policy is in
default:
1. Determine the No Lapse Guarantee Premium fund. The No Lapse Guarantee
Premium fund for any policy month is the accumulation of all the No Lapse
Guarantee premiums shown on Page 3-Continued up to that month at 4%
interest.
2. Determine the actual premium fund. The actual premium fund for any policy
month is the accumulation of all the premiums received at 4% interest minus
all withdrawals accumulated at 4% interest.
3. If the result in Step 2 is greater than or equal to the result in Step 1,
and any loan and accrued loan interest does not exceed the Cash Surrender
Value, the policy is not in default. The no lapse guarantee will be in
effect and monthly deductions in excess of the Policy Account will be
waived.
4. If the result of Step 2 is less than the result in Step 1, or if the result
of Step 2 is greater than or equal to the result in Step 1 and any loan and
accrued loan interest exceeds the Cash Surrender Value, the policy is in
default as of the first day of this policy month. This is the date of
default.
If the no lapse guarantee has terminated (see No Lapse Guarantee provision) the
calculations in Steps 1. - 4. above will not be performed. In that case, if the
Net Cash Surrender Value at the beginning of any policy month is less than the
monthly deductions for that month, the policy is in default as of the first day
of such policy month.
If the policy is in default, we will send you and any assignee on our records at
last known addresses written notice stating that a grace period of 61 days has
begun as of the date of default. The notice will also state the amount of
payment that is due.
The payment required will not be more than an amount sufficient to increase the
Net Cash Surrender Value to cover all monthly deductions for 3 months calculated
assuming no interest or investment performance were credited to or charged
against the Policy Account and no policy changes were made.
If we do not receive such amount at our Administrative Office before the end of
the grace period, your policy will lapse as of the date of default and we will
then (1) withdraw and retain the entire amount in your Policy Account; and (2)
send a written notice to you and any assignee on our records at last known
addresses stating that this policy has ended without value.
If we receive the requested amount before the end of the grace period, but the
Net Cash Surrender Value is still insufficient to cover total monthly
deductions, we will send a written notice that a new 61-day grace period has
begun and request an additional payment.
If the insured person dies during a grace period, we will pay the Insurance
Benefit as described on Page 5.
CO99-500-12 Page 12
<PAGE>
RESTORING YOUR POLICY BENEFITS. If this policy has ended without value, you may
restore policy benefits while the insured person is alive if you: Ask for
restoration of policy benefits within 6 months from the end of the grace period;
and
1. Provide evidence of insurability satisfactory to us; and
2. Make a required payment. The required payment will not be more than an
amount sufficient to cover (i) the monthly administrative charges from the
date of default to the effective date of restoration; (ii) total monthly
deductions for 3 months, calculated from the effective date of restoration;
(iii) any excess of the applicable surrender charge on the date of
restoration over the surrender charge that was deducted on the date of
default; and (iv) the charge for applicable taxes, the premium charge, and
any increase in surrender charges associated with this payment. We will
determine the amount of this required payment as if no interest or
investment performance were credited to or charged against your Policy
Account.
From the required payment we will deduct the charge for applicable taxes and the
premium charge. The policy account on the date of restoration will be equal to
the balance of the required payment plus a surrender charge credit. The
surrender charge credit will be the surrender charge that was deducted on the
date of default, but not greater than the applicable surrender charge as of the
effective date of restoration.
The effective date of the restoration of policy benefits will be the beginning
of the policy month which coincides with or next follows the date we approve
your request.
We will start to make monthly charges again as of the effective date of
restoration. The monthly administrative charges from the date of default to the
effective date of restoration will be deducted from the Policy Account as of the
effective date of restoration.
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YOUR POLICY ACCOUNT AND HOW IT WORKS
PREMIUM PAYMENTS. When we receive your premium payments, we subtract the expense
charges shown in the table in the Policy Information section and any overdue
monthly deductions (unless waived under the No Lapse Guarantee provision.) We
put the balance (the net premium) into your Policy Account as of the date we
receive the premium payment at our Administrative Office, and before any
deductions from your Policy Account due on that date are made. However, we will
put the initial net premium payment into your Policy Account as of the Register
Date if it is later than the date of receipt. No premiums will be applied to
your Policy Account until the minimum initial premium payment, as shown in the
Policy Information Section, is received at our Administrative Office.
MONTHLY DEDUCTIONS. At the beginning of each policy month we make a deduction
from your Policy Account to cover monthly administrative charges and to provide
insurance coverage. Such deduction for any policy month is the sum of the
following amounts determined as of the beginning of that month:
o the monthly administrative charges;
o the monthly cost of insurance for the insured person; and
o the monthly cost of any benefits provided by riders to this policy.
The monthly cost of insurance is the sum of a) our current monthly cost of
insurance rate times the net amount at risk at the beginning of the policy month
divided by $1,000; plus b) any flat extra charge shown in the Policy Information
section. The net amount at risk at any time is the death benefit minus the
amount in your Policy Account at that time.
We will determine cost of insurance rates from time to time. Any change in the
cost of insurance rates we use will be as described in "Changes in Policy Cost
Factors" on Page 16. They will never be more than those shown in the Table of
Guaranteed Maximum Cost of Insurance Rates on Page 4-Continued.
CO99-500-13 Page 13
<PAGE>
OTHER DEDUCTIONS. We also make the following other deductions from your Policy
Account as they occur:
o We deduct a withdrawal charge if you make a partial withdrawal of the Net
Cash Surrender Value (see Page 13).
o We deduct a surrender charge if, before the end of the fifteenth policy
year, you give up this policy for its Net Cash Surrender Value, you reduce
the Face Amount of Insurance, or if this policy terminates without value at
the end of a grace period (see Page 12). A surrender charge will also apply
to such transactions for up to fifteen years following a face amount
increase.
o We deduct a charge if you increase the Face Amount of Insurance (see Page
7).
o We deduct a charge for certain transfers (see below).
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YOUR INVESTMENT OPTIONS
ALLOCATIONS. This policy provides investment options for the amount in your
Policy Account. Amounts put into your Policy Account and deductions from it are
allocated to the investment funds of our SA and to the unloaned portion of our
GIA at your direction. You specified your initial premium allocation and
deduction allocation percentages in your application for this policy, a copy of
which is attached to this policy. Unless you change them, such percentages shall
also apply to subsequent premium and deduction allocations. However, any amounts
which are put into your Policy Account prior to the Allocation Date and which
are to be allocated to the investment funds of our SA will initially be
allocated to (and monthly deductions taken from) the Money Market Fund of our SA
except for any amount allocated to the GIA. The Allocation Date is the first
business day (see Page 12) twenty calendar days after the date of issue of this
policy. On the Allocation Date, any such amounts then in the Money Market Fund
will be allocated in accordance with the directions contained in your policy
application.
Allocation percentages must be zero or a whole number not greater than 100. The
sum of the premium allocation percentages and of the deduction allocation
percentages must each equal 100.
You may change such allocation percentages by written notice to our
Administrative Office. A change will take effect on the date we receive it at
our Administrative Office except for changes received on or prior to the
Allocation Date which will take effect on the first business day following the
Allocation Date.
If we cannot make a monthly deduction on the basis of the deduction allocation
percentages then in effect, we will make that deduction based on the proportion
that your unloaned value in our GIA and your values in the investment funds of
our SA bear to the total unloaned value in your Policy Account.
TRANSFERS. At your written request to our Administrative Office, we will
transfer amounts from your value in any investment fund of our SA to one or more
other funds of our SA or to our GIA. Any such transfer will take effect on the
date we receive your written request at our Administrative Office. However, no
transfers will be made prior to the Allocation Date.
Once during each policy year you may ask us by written request to our
Administrative Office to transfer an amount you specify from your unloaned value
in our GIA to one or more investment funds of our SA. However, we will make such
a transfer only if (1) we receive your written request at our Administrative
Office within 30 days before or after a policy anniversary; and (2) the amount
you specify is not more than the greater of 25% of your unloaned value in our
GIA as of the date the transfer takes effect or $500.00. In no event will we
transfer more than your unloaned value in our GIA. The transfer will take effect
on the date we receive your written request for it at our Administrative Office
but not before the policy anniversary.
The minimum amount that we will transfer from your value in an investment fund
of our SA on any date is the lesser of $500.00 or your value in that investment
fund on that date, except as stated in the next paragraph. The minimum amount
that we will transfer from your value in our GIA is the lesser of $500.00 or
your unloaned value in our GIA as of the date the transfer takes effect, except
as stated in the next paragraph.
We will waive the minimum amount limitations set forth in the immediately
preceding paragraph if the total amount being transferred on that date is at
least $500.00.
CO99-500-14 Page 14
<PAGE>
We reserve the right to make a transfer charge up to $25.00 for each transfer of
amounts among your investment options. The transfer charge, if any, is deducted
from the amounts transferred from the investment funds of our SA and the GIA
based on the proportion that the amount transferred from each investment fund
and the GIA bears to the total amount being transferred. A transfer from the
Money Market Fund on the Allocation Date (if applicable) will not incur a
transfer charge. If you ask us to transfer the entire amount of your value in
the investment funds of our SA to our GIA, we will not make a charge for that
transfer.
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THE VALUE OF YOUR POLICY ACCOUNT
The amount in your Policy Account at any time is equal to the sum of the amounts
you then have in our GIA and the investment funds of our SA under this policy.
YOUR VALUE IN OUR GIA. The amount you have in our GIA at any time is equal to
the amounts allocated and transferred to it, plus the interest credited to it,
minus amounts deducted, transferred and withdrawn from it.
We will credit the amount in our GIA with interest rates we determine. We will
determine such interest rates annually in advance for unloaned and loaned
amounts in our GIA. The rates may be different for unloaned and loaned amounts.
The interest rates we determine each year will apply to the policy year that
follows the date of determination. Any change in the interest rates we determine
will be as described in "Changes in Policy Cost Factors" on Page 16. Such
interest rates will not be less than 4%. Interest accrues and is credited on
unloaned amounts in the GIA daily. However, we will credit interest on the
initial net premium from the Register Date if it is later than the date of
receipt provided the initial premium is at least equal to the minimum initial
premium shown on Page 3 of the policy.
We credit interest on the loaned portion of our GIA daily. The interest rate we
credit to the loaned portion of our GIA will be at an annual rate up to 2% less
than the loan interest rate we charge. However, we reserve the right to credit a
lower rate than this if in the future tax laws change such that our taxes on
policy loans or policy loan interest is increased. In no event will we credit
less than 4% a year. On each policy anniversary and at any time you repay all of
a policy loan, we allocate the interest that has been credited to the loaned
portion of our GIA to the investment funds of our SA and the unloaned portion of
our GIA in accordance with your premium allocation percentages.
YOUR VALUE IN THE INVESTMENT FUNDS OF OUR SA. The amount you have in an
investment fund of our SA under this policy at any time is equal to the number
of units this policy then has in that fund multiplied by the fund's unit value
at that time.
Amounts allocated, transferred or added to an investment fund of our SA are used
to purchase units of that fund; units are redeemed when amounts are deducted,
loaned, transferred or withdrawn. These transactions are called policy
transactions.
The number of units a policy has in an investment fund at any time is equal to
the number of units purchased minus the number of units redeemed in that fund to
that time. The number of units purchased or redeemed in a policy transaction is
equal to the dollar amount of the policy transaction divided by the fund's unit
value on the date of the policy transaction. Policy transactions may be made on
any day. The unit value that applies to a transaction made on a business day
will be the unit value for that day. The unit value that applies to a
transaction made on a non-business day will be the unit value for the next
business day.
We determine unit values for the investment funds of our SA at the end of each
business day. Generally, a business day is any day we are open and the New York
Stock Exchange is open for trading. A business day immediately preceded by one
or more non-business days will include those non-business days as part of that
business day. For example, a business day which falls on a Monday will consist
of that Monday and the immediately preceding Saturday and Sunday.
CO99-500-15 Page 15
<PAGE>
The unit value of an investment fund of our SA on any business day is equal to
the unit value for that fund on the immediately preceding business day
multiplied by the net investment factor for that fund on that business day.
The net investment factor for an investment fund of our SA on any business day
is (a) divided by (b), minus (c), where:
(a) is the net asset value of the shares in designated investment companies that
belong to the investment fund at the close of business on such business day
before any policy transactions are made on that day, plus the amount of any
dividend or capital gain distribution paid by the investment companies on that
day;
(b) is the value of the assets in that investment fund at the close of business
on the immediately preceding business day after all policy transactions were
made for that day; and
(c) is a charge for each calendar day in that business day, as defined above,
corresponding to a charge not exceeding .80% yearly for mortality and expense
risks, plus any charge for that day for taxes or amounts set aside as a reserve
for taxes.
The net asset value of an investment company's shares held in each investment
fund shall be the value reported to us by that investment company.
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THE CASH SURRENDER VALUE OF THIS POLICY
CASH SURRENDER VALUE. The Cash Surrender Value on any date is equal to the
amount in your Policy Account on that date minus any surrender charge.
NET CASH SURRENDER VALUE. The Net Cash Surrender Value is equal to the Cash
Surrender Value minus any policy loan and accrued loan interest. You may give up
this policy for its Net Cash Surrender Value at any time while the insured
person is living. You may do this by sending us a written request for it and
this policy to our Administrative Office. Your written request for cancellation
or surrender must include the following:
1. An unequivocal request for cancellation or surrender;
2. The policy number of the policy to be canceled or surrendered;
3. The name of the insured and owner (if other than the insured) and address
where proceeds should be mailed;
4. The signature of the owner of the policy and, if required by the policy or
by a legally binding document of which we have an actual notice, the
signature of a collateral assignment, irrevocable beneficiary, or other
person having an interest in the policy through the legally binding
document.
If this policy has a cash surrender value and is being given up for its net cash
surrender value, a completed withholding authorization (I.R.S. Form W-9) must
also be included with your written request. If this form is not provided to us
with your written request for cancellation or surrender, we will withhold income
tax on the taxable portion of your distribution at the mandated federal and
state tax rates. We will compute the Net Cash Surrender Value as of the date we
receive your request for it and this policy at our Administrative Office. If the
policy has been lost, stolen or destroyed, you must include a statement in the
written request that the policy was lost, stolen or destroyed with an
approximate date of when the policy was lost, stolen or destroyed. All insurance
coverage under this policy ends on the date we receive your written request.
SURRENDER CHARGES. If you give up this policy for its Net Cash Surrender Value
or if it ends without value at the end of a grace period before the end of the
fifteenth policy year, we will subtract a surrender charge from your Policy
Account. A table of maximum surrender charges for the initial face amount is in
the Policy Information section.
We will also establish surrender charges for any increase in the Face Amount of
Insurance that represents an increase over the previous highest Face Amount.
These will apply before the end of the fifteenth year from the effective date of
the increase. Changes in Face Amount resulting from a change in death benefit
option will not be considered in computing the previous highest Face Amount.
If the Face Amount of Insurance is reduced before the end of the fifteenth
policy year or within fifteen years following a face amount increase, we will
also deduct a proportionate amount of any applicable surrender charge from your
Policy Account. Such deduction will be made in accordance with the "Allocations"
provision on Page 10. Reductions will first be applied against the most recent
increase in the Face Amount of Insurance. They will then be applied to prior
increases in the Face Amount of Insurance in the reverse order in which such
increases took place, and then to the original Face Amount of Insurance.
We have filed a detailed statement of the method of computing surrender charges
with the insurance supervisory official of the jurisdiction in which this policy
is delivered.
CO99-500-16 Page 16
<PAGE>
PARTIAL NET CASH SURRENDER VALUE WITHDRAWAL. After the first policy year and
while the insured person is living, you may ask for a partial Net Cash Surrender
Value withdrawal by written request to our Administrative Office. Your request
will be subject to our approval based on our rules in effect when we receive
your request, and to the minimum withdrawal amount of $500.00. The amount
withdrawn from the Policy Account is equal to the amount requested plus an
expense charge equal to the lesser of $25.00 and 2% of the amount withdrawn. We
have the right to decline a request for a partial Net Cash Surrender Value
withdrawal. A partial withdrawal will result in a reduction in the Cash
Surrender Value and in your Policy Account equal to the amount withdrawn plus
the expense charge as well as a reduction in your death benefit. If the death
benefit is Option A, the withdrawal may also result in a decrease in the face
amount.
You may tell us how much of each partial withdrawal is to come from your
unloaned value in our GIA and from your values in each of the investment funds
of our SA. If you do not tell us, we will make the withdrawal on the basis of
your monthly deduction allocation percentages then in effect. The expense charge
is deducted from your value remaining in the investment options from which the
withdrawal was made, based on the proportion that the amount withdrawn from each
investment fund and the GIA bears to the total amount being withdrawn. If we
cannot make the withdrawal or deduct the expense charge as indicated above, we
will make the withdrawal and deduction based on the proportion that your
unloaned value in our GIA and your values in the investment funds of our SA bear
to the total unloaned value in your Policy Account.
Such withdrawal and resulting reduction in the death benefit, in the Cash
Surrender Value and in your Policy Account will take effect on the date we
receive your written request at our Administrative Office. We will send you a
new Policy Information section if a withdrawal results in a reduction in the
Face Amount of Insurance. It will become a part of this policy. We may require
you to return this policy to our Administrative Office to make a change.
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HOW A LOAN CAN BE MADE
POLICY LOANS. You can take a loan on this policy while it has a loan value. This
policy will be the only security for the loan. The initial loan and each
additional loan must be for at least $500.00. Any amount on loan is part of your
Policy Account (see Page 11). We refer to this as the loaned portion of your
Policy Account.
LOAN VALUE. The loan value on any date is 90% of the Cash Surrender Value on
that date.
The amount of the loan may not be more than the loan value. If you request an
increase to an existing loan, the additional amount requested will be added to
the amount of the existing loan and accrued loan interest.
Your request for a policy loan must be in writing to our Administrative Office.
You may tell us how much of the requested loan is to be allocated to your
unloaned value in our GIA and your value in each investment fund of our SA. Such
values will be determined as of the date we receive your request. If you do not
tell us, we will allocate the loan on the basis of your monthly deduction
allocation percentages then in effect. If we cannot allocate the loan on the
basis of your direction or those percentages, we will allocate it based on the
proportion that your unloaned value in our GIA and your values in the investment
funds of our SA bear to the total unloaned value in your Policy Account.
The loaned portion of your Policy Account will be maintained as a part of our
GIA. Thus, when a loaned amount is allocated to an investment fund of our SA, we
will redeem units of that investment fund sufficient in value to cover the
amount of the loan so allocated and transfer that amount to our GIA.
LOAN INTEREST. Interest on a loan accrues daily at an adjustable loan interest
rate. We will determine the rate at the beginning of each policy year, subject
to the following paragraphs. It will apply to any new or outstanding loan under
the policy during the policy year next following the date of determination.
The maximum loan interest rate for a policy year shall be the greater of: (1)
the "Published Monthly Average," as defined below, for the calendar month that
ends two months before the date of determination; or (2) 5%. "Published Monthly
Average" means the Monthly Average Corporates yield shown in Moody's Corporate
Bond Yield Averages published by Moody's Investors Service, Inc., or any
successor thereto. If such averages are no longer published, we will use such
other averages as may be established by regulation by the insurance supervisory
official of the jurisdiction in which this policy is delivered. In no event will
the loan interest rate for a policy year
CO99-500-17 Page 17
<PAGE>
be greater than the maximum rate permitted by applicable law. We reserve the
right to establish a rate lower than the maximum.
No change in the rate shall be less than 1/2 of 1% a year. We may increase the
rate whenever the maximum rate as determined by clause (1) of the preceding
paragraph exceeds the rate being charged by 1/2 of 1% or more. We will reduce
the rate to or below the maximum rate as determined by clause (1) of the
preceding paragraph if such maximum is lower than the rate being charged by 1/2
of 1% or more.
We will notify you of the initial loan interest rate when you make a loan. We
will also give you advance written notice of any increase in the interest rate
of any outstanding loan.
Loan interest is due on each policy anniversary. If the interest is not paid
when due, it will be added to your outstanding loan and allocated on the basis
of the deduction allocation percentages then in effect. If we cannot make the
allocation on the basis of these percentages, we will make it based on the
proportion that your unloaned value in our GIA and your values in the investment
funds of our SA bear to the total unloaned value in your Policy Account. The
unpaid interest will then be treated as part of the loaned amount and will bear
interest at the loan rate.
When unpaid loan interest is allocated to an investment fund of our SA, we will
redeem units of that investment fund sufficient in value to cover the amount of
the interest so allocated and transfer that amount to our GIA.
LOAN REPAYMENT. You may repay all or part of a policy loan at any time while the
insured person is alive and this policy is in force.
Repayments will first be allocated to our GIA until you have repaid any loaned
amounts that were allocated to our GIA. You may tell us how to allocate payments
above that amount among our GIA and the investment funds of our SA. If you do
not tell us, we will make the allocation on the basis of the premium allocation
percentages then in effect.
Failure to repay a policy loan or to pay loan interest will not terminate this
policy unless at the beginning of a policy month the Net Cash Surrender Value is
less than the total monthly deduction then due. In that case, the Grace Period
provision will apply (see Page 8).
A policy loan will have a permanent effect on your benefits under this policy
even if it is repaid.
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OUR SEPARATE ACCOUNT(S) (SA)
We established and we maintain our SA under the laws of Colorado State. Realized
and unrealized gains and losses from the assets of our SA are credited or
charged against it without regard to our other income, gains, or losses. Assets
are put in our SA to support this policy and other variable life insurance
policies. Assets may be put in our SA for other purposes, but not to support
contracts or policies other than variable contracts.
The assets of our SA are our property. The portion of its assets equal to the
reserves and other policy liabilities with respect to our SA will not be
chargeable with liabilities arising out of any other business we conduct. We may
transfer assets of an investment fund in excess of the reserves and other
liabilities with respect to that fund to another investment fund or to our
General Account.
INVESTMENT FUNDS. Our SA consists of investment funds. Each fund may invest its
assets in a separate class of shares of a designated investment company or
companies or make direct investments in securities. The investment funds of our
SA that you chose for your initial allocations are shown on the application for
this policy, a copy of which is attached to this policy. We may from time to
time make other investment funds available to you or we may create a new SA. We
will provide you with written notice of all material details including
investment objectives and all charges.
We have the right to change or add designated investment companies. We have the
right to add or remove investment funds. We have the right to withdraw assets of
a class of policies to which this policy belongs from an investment fund and put
them in another investment fund. We also have the right to combine any two or
more investment funds. The term investment fund in this policy shall then refer
to any other investment fund in which the assets of a class of policies to which
this policy belongs were placed.
CO99-500-18 Page 18
<PAGE>
We have the right to:
1. register or deregister any SA available under this policy under the
Investment Company Act of 1940;
2. run any SA available under this policy under the direction of a committee,
and discharge such committee at any time;
3. restrict or eliminate any voting rights of policy owners, or other persons
who have voting rights as to any SA available under this policy; and
4. Operate any SA available under this policy or one or more of its investment
funds by making direct investments or in any other form. If we do so, we
may invest the assets of such SA or one or more of the investment funds in
any legal investments. We will rely upon our own or outside counsel for
advice in this regard. Also, unless otherwise required by law or
regulation, an investment adviser or any investment policy may not be
changed without our consent. If required by law or regulation, the
investment policy of an investment fund of any SA available under this
policy will not be changed by us unless approved by the Superintendent of
Insurance of New York State or deemed approved in accordance with such law
or regulation.
If any of these changes result in a material change in the underlying
investments of an investment fund of our SA, we will notify you of such change,
as required by law. If you have value in that investment fund, if you wish, we
will transfer it at your written direction from that fund (without charge) to
another fund of our SA or to our GIA, and you may then change your premium and
deduction allocation percentages.
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OUR ANNUAL REPORT TO YOU
For each policy year we will send you a report for this policy that shows the
current death benefit, the value you have in our GIA and the value you have in
each investment fund of any SA available under this policy, the Cash Surrender
Value and any policy loan with the current loan interest rate. It will also show
the premiums paid and any other information as may be required by the insurance
supervisory official of the jurisdiction in which this policy is delivered.
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HOW BENEFITS ARE PAID
You can have the Insurance Benefit, your Net Cash Surrender Value withdrawals or
your Policy Account payable on the Final Policy Date paid immediately in one
sum. Or, you can choose another form of payment for all or part of them. If you
do not arrange for a specific choice before the insured person dies, the
beneficiary will have this right when the insured person dies. If you do make an
arrangement, however, the beneficiary cannot change it after the insured person
dies.
Payments under the following options will not be affected by the investment
experience of any investment fund of our SA after proceeds are applied under
such options.
The options are:
1. DEPOSIT: The sum will be left on deposit for a period mutually agreed upon.
We will pay interest at the end of every month, every 3 months, every 6
months or every 12 months, as chosen.
2. INSTALLMENT PAYMENTS: There are two ways that we pay installments:
A. FIXED PERIOD: We will pay the sum in equal installments for a
specified number of years (not more than 30). The installments
will be at least those shown in the Table of Guaranteed Payments
on Page 18.
B. FIXED AMOUNT: We will pay the sum in installments as mutually
agreed upon until the original sum, together with interest on the
unpaid balance, is used up.
1. MONTHLY LIFE INCOME: We will pay the sum as a monthly income for life. The
amount of the monthly payment will be at least that shown in the Table of
Guaranteed Payments on Page 18. You may choose any one of three ways to
receive monthly life income. We will guarantee payments for at least 10
years (called "10 Years Certain"); at least 20 years (called "20 Years
Certain"); or until the payments we make equal the original sum (called
"Refund Certain").
2. OTHER: We will apply the sum under any other option requested that we make
available at the time of payment.
CO99-500-19 Page 19
<PAGE>
The payee may name and change a successor payee for any amount we would
otherwise pay to the payee's estate.
Any arrangements involving more than one of the options, or a payee who is not a
natural person (for example, a corporation) or who is a fiduciary, must have our
approval. Also, details of all arrangements will be subject to our rules at the
time the arrangement takes effect. These include rules on: the minimum amount we
will apply under an option and minimum amounts for installment payments;
withdrawal or commutation rights; naming payees and successor payees; and
proving age and survival.
Payment choices (or any later changes) will be made and will take effect in the
same way as a change of beneficiary. Amounts applied under these options will
not be subject to the claims of creditors or to legal process, to the extent
permitted by law.
- --------------------------------------------------------------------------------
OTHER IMPORTANT INFORMATION
YOUR CONTRACT WITH US. This policy is issued in consideration of payment of the
initial premium payment shown in the Policy Information section.
This policy, and the attached copy of the initial application and all subsequent
applications to change this policy, and all additional Policy Information
sections added to this policy, make up the entire contract. The rights conferred
by this policy are in addition to those provided by applicable Federal and State
laws and regulations.
Only our Chairman of the Board, our President or one of our Vice Presidents can
modify this contract or waive any of our rights or requirements under it. The
person making these changes must put them in writing and sign them.
POLICY CHANGES - APPLICABLE TAX LAW. For you and the beneficiary to receive the
tax treatment accorded to life insurance under Federal law, this policy must
qualify initially and continue to qualify as life insurance under the Code or
successor law. Therefore, we have reserved earlier in this policy the right to
decline to accept premium payments, to decline to change death benefit options,
to decline to change the Face Amount of Insurance, or to decline to make partial
withdrawals that, in our opinion, would cause this policy to fail to qualify as
life insurance under applicable tax law. Further, we reserve the right to make
changes in this policy or its riders (for example, in the percentages on Page 6)
or to require additional premium payments or to make distributions from this
policy or to change the Face Amount of Insurance to the extent we deem it
necessary to continue to qualify this policy as Life insurance. Any such changes
will apply uniformly to all policies that are affected. You will be given
advance written notice of such changes.
CHANGES IN POLICY COST FACTORS. Changes in policy cost factors (interest rates
we credit, cost of insurance deductions and expense charges) will be by class
and based upon changes in future expectations for such elements as: investment
earnings, mortality, persistency, expenses and taxes. Any change in policy cost
factors will be determined in accordance with procedures and standards on file,
if required, with the insurance supervisory official of the jurisdiction in
which this policy is delivered.
WHEN THE POLICY IS INCONTESTABLE. We have the right to contest the validity of
this policy based on material misstatements made in the initial application for
this policy. We also have the right to contest the validity of any policy change
or restoration based on material misstatements made in any application for that
change or restoration. However, we will not contest the validity of this policy
after it has been in effect during the lifetime of the insured person for two
years from the date of issue shown in the Policy Information section. We will
not contest any policy change that requires evidence of insurability, or any
restoration of this policy, after the change or restoration has been in effect
for two years during the insured person's lifetime.
No statement shall be used to contest a claim unless contained in an
application.
All statements made in an application are representations and not warranties.
See any additional benefit riders for modifications of this provision that apply
to them.
WHAT IF AGE OR SEX HAS BEEN MISSTATED? If the insured person's age or sex has
been misstated on any application, the death benefit and any benefits provided
by riders to this policy shall be those which would be purchased by the most
recent deduction for the cost of insurance, and the cost of any benefits
provided by riders, at the correct age and sex.
CO99-500-20 Page 20
<PAGE>
HOW THE SUICIDE EXCLUSION AFFECTS BENEFITS. If the insured person commits
suicide (while sane or insane) within two years after the Date of Issue shown in
the Policy Information section, our liability will be limited to the payment of
a single sum. This sum will be equal to the premiums paid, minus any loan and
accrued loan interest and minus any partial withdrawal of the Net Cash Surrender
Value. If the insured person commits suicide (while sane or insane) within two
years after the effective date of a change that you asked for that increases the
death benefit, then our liability as to the increase in amount will be limited
to the payment of a single sum equal to the monthly cost of insurance deductions
made for such increase plus the expense charge deducted for the increase (see
Page 7).
HOW WE MEASURE POLICY PERIODS AND ANNIVERSARIES. We measure policy years, policy
months, and policy anniversaries from the Register Date shown in the Policy
Information section. Each policy month begins on the same day in each calendar
month as the day of the month in the Register Date.
HOW, WHEN AND WHAT WE MAY DEFER. We may not be able to obtain the value of the
assets of the investment funds of our SA if: (1) the New York Stock Exchange is
closed; or (2) the Securities and Exchange Commission requires trading to be
restricted or declares an emergency. During such times, as to amounts allocated
to the investment funds of our SA, we may defer:
1. Determination and payment of Net Cash Surrender Value withdrawals;
2. Determination and payment of any death benefit in excess of the Face Amount
of Insurance;
3. Payment of loans;
4. Determination of the unit values of the investment funds of our SA; and
5. Any requested transfer or the transfer on the Allocation Date.
As to amounts allocated to our GIA, we may defer payment of any Net Cash
Surrender Value withdrawal or loan amount for up to six months after we receive
a request for it. We will allow interest, at a rate of at least 3% a year, on
any Net Cash Surrender Value payment derived from our GIA that we defer for 30
days or more.
THE BASIS WE USE FOR COMPUTATION. We provide Cash Surrender Values that are at
least equal to those required by law. If required to do so, we have filed with
the insurance supervisory official of the jurisdiction in which this policy is
delivered a detailed statement of our method of computing such values. We
compute reserves under this policy by the Commissioners Reserve Valuation
Method.
We base minimum cash surrender values and reserves on the Commissioners 1980
Standard Ordinary Male and Female Mortality Tables at attained ages 0-19 or the
Commissioners 1980 Standard Ordinary, Male and Female, Smoker and Non-Smoker,
Mortality Tables at attained ages 20 and over. We also use these tables as the
basis for determining maximum insurance costs, taking account of sex, attained
age, class of risk and Tobacco User status of the insured person. We use an
effective annual interest rate of 4%.
POLICY ILLUSTRATIONS. Upon request we will give you an illustration of the
future benefits under this policy based upon both guaranteed and current cost
factor assumptions. However, if you ask us to do this more than once in any
policy year, we reserve the right to charge you a fee for this service.
POLICY CHANGES. You may add additional benefit riders or make other changes,
subject to our rules at the time of change.
CO99-500-21 Page 21
<PAGE>
<TABLE>
<CAPTION>
TABLE OF GUARANTEED PAYMENTS
(MINIMUM AMOUNT FOR EACH $1,000 APPLIED)
OPTION 2A OPTION 3
FIXED PERIOD INSTALLMENTS MONTHLY LIFE INCOME
------------------------- -------------------
Number of Monthly Annual Age (10 Years Certain) (20 Years Certain) (Refund Certain)
years Installment Installment --- Male Female Male Female Male Female
installments ----------- ----------- ---- ------ ---- ------ ---- ------
- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.28 $1000.00 50 $3.48 $3.19 $3.42 $3.17 $3.37 $3.14
2 42.66 506.17 51 3.54 3.23 3.47 3.21 3.42 3.17
3 28.79 341.60 52 3.59 3.28 3.51 3.25 3.46 3.21
4 21.86 259.33 53 3.65 3.32 3.56 3.29 3.51 3.25
5 17.70 210.00 54 3.70 3.37 3.61 3.33 3.56 3.29
55 3.77 3.42 3.66 3.37 3.61 3.34
6 14.93 177.12 56 3.83 3.47 3.72 3.42 3.67 3.38
7 12.95 153.65 57 3.90 3.52 3.77 3.47 3.72 3.43
8 11.47 136.07 58 3.97 3.58 3.83 3.52 3.78 3.48
9 10.32 122.40 59 4.04 3.64 3.88 3.57 3.84 3.53
10 9.39 11.47
60 4.12 3.70 3.94 3.62 3.90 3.58
61 4.20 3.76 4.00 3.68 3.97 3.64
11 8.64 102.54 62 4.29 3.83 4.06 3.74 4.04 3.69
12 8.02 95.11 63 4.38 3.90 4.12 3.79 4.11 3.75
13 7.49 88.83 64 4.48 3.98 4.18 3.85 4.19 3.82
14 7.03 83.45
15 6.64 78.80 65 4.58 4.06 4.25 3.92 4.26 3.88
66 4.68 4.14 4.31 3.98 4.35 3.95
67 4.79 4.23 4.37 4.04 4.43 4.02
16 6.30 74.73 68 4.90 4.32 4.43 4.11 4.52 4.10
17 6.00 71.15 69 5.02 4.42 4.50 4.18 4.62 4.18
18 5.73 67.97
19 5.49 65.13 70 5.14 4.52 4.56 4.25 4.71 4.26
20 5.27 62.58 71 5.26 4.63 4.62 4.31 4.82 4.35
72 5.39 4.75 4.67 4.38 4.92 4.44
73 5.52 4.87 4.73 4.45 5.03 4.53
21 5.08 60.28 74 5.66 4.99 4.78 4.51 5.14 4.63
22 4.90 58.19
23 4.74 56.29 75 5.80 5.12 4.83 4.58 5.27 4.74
24 4.60 54.55 76 5.95 5.26 4.88 4.64 5.39 4.84
25 4.46 52.95 77 6.10 5.40 4.93 4.70 5.53 4.96
78 6.25 5.55 4.97 4.75 5.66 5.08
79 6.40 5.70 5.01 4.80 5.80 5.20
80 6.56 5.85 5.04 4.86 5.96 5.33
26 4.34 51.48 81 6.72 6.01 5.08 4.90 6.11 5.45
27 4.22 50.12 82 6.88 6.18 5.11 4.95 6.27 5.60
28 4.12 48.87 83 7.04 6.34 5.13 4.99 6.43 5.73
29 4.02 47.70 84 7.20 6.51 5.16 5.03 6.62 5.89
30 3.93 46.61 85 & over 7.36 6.67 5.18 5.07 6.81 6.04
</TABLE>
If installments are paid every 3 months, Amounts for Monthly Life Income are
they will be 25.23% of the annual based on age nearest birthday when
installments. If they are paid every 6 income starts. Amounts for ages
months, they will be 50.31% of the annual not shown will be furnished on
installments. request.
CO99-500-22 Page 22
<PAGE>
THE EQUITABLE
OF COLORADO, INC.
Home Office: 370 17th Street, Suite 4750, Denver, CO 80802
Flexible Premium Variable Life Insurance Policy. Insurance payable upon
death before Final Policy Date. Policy Account less outstanding loans
and accrued interest payable on Final Policy Date. Adjustable Death
Benefit. Premiums may be paid while insured person is living and before
the Final Policy Date. Premiums must be sufficient to keep the policy
in force. Values provided by this policy are based on declared interest
rates, and on the investment experience of the investment funds of a
separate account which in turn depends on the investment performance of
the securities held by such investment fund. They are not guaranteed as
to dollar amount. Investment options are described on Page 10. This is
a non-participating policy.
No. CO99-500-23 Page 23
EDWARDS & ANGELL, LLP
- --------------------------------------------------------------------------------
COUNSELLORS AT LAW 90 STATE HOUSE SQUARE
HARTFORD, CT 06103-3702
since 1894 (860) 525-5065
FAX (860) 527-4198
April 8, 1999
The Equitable of Colorado, Inc.
370 17th Street, Suite 4950
Denver, Colorado 80202
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of a Registration
Statement under the Securities Act of 1933 on Form S-6, File No. 333-72233
("Registration Statement") of Separate Account VLI of The Equitable of Colorado,
Inc. ("EOC"). The Registration Statement covers an indefinite number of units of
interest in Separate Account VLI ("Units") under an individual flexible premium
variable life insurance policy issued by EOC ("Policy").
According to the Registration Statement, the Policies are designed to
provide life insurance protection and are to be offered in the manner described
in the Prospectus included in the Registration Statement. The Registration
Statement also provides that the Policies will be sold only in jurisdictions
authorizing such sales.
We have examined all such corporate records of EOC and such other documents
and laws as we consider appropriate as a basis for the opinions hereinafter
expressed including the Colorado Revised Statutes and Colorado Insurance
Regulations, certified copies of the Articles of Incorporation of EOC as
amended, certified copies of resolutions of the Board of Directors of EOC, a
Certificate of Good Standing for EOC from the Secretary of State of the State of
Colorado, a certified copy of EOC's duplicate original Certificate of Authority
from the Commissioner of Insurance of the State of Colorado (the "Colorado
Commissioner"), a copy of Form N-8A as filed by EOC with the U.S. Securities and
Exchange Commission ("SEC") on February 12, 1999 on behalf of Separate Account
VLI File Number 811-09231, a copy of the SEC's Notice of Acceptance of the
Separate Account VLI Form N-8A Submission dated February 12, 1999, a copy of
Form N-8B-2 as filed by EOC with the SEC on March 19, 1999 on behalf of Separate
Account VLI File Number 811-09231, a copy of the SEC's Notice of Acceptance of
the Separate Account VLI Form N-8B-2 Submission dated March 19, 1999, a copy of
the Form S-6 Registration Statement, File No. 333-72233, as filed with the SEC
on February 12, 1999 and the form of individual flexible premium variable life
insurance policy no. CO99-500.
We assume for purposes of this opinion without independent inquiry, the
accuracy of the facts and representations contained in the Registration
Statement, and we assume that the Policies to be issued will correspond to the
form reviewed by us in all material respects. This opinion is based entirely on
our review of the statutes, regulations, certificates and documents listed above
and we have made no other documentary review or investigation of any kind
whatsoever. On the basis of such examination and subject to the limitations of
the penultimate paragraph of this letter, it is our opinion that:
1. EOC is a corporation duly organized under the laws of the State of
Colorado, and is authorized to transact the
- --------------------------------------------------------------------------------
PROVIDENCE RI BOSTON MA NEW YORK NY PALM BEACH FL SHORT HILLS NJ NEWPORT RI
<PAGE>
The Equitable of Colorado, Inc.
April 8, 1999
Page 2
business of life insurance in the State of Colorado, including
variable life and variable annuity lines of business.
2. Separate Account VLI was duly established and is maintained by EOC
pursuant to the laws of the State of Colorado, under which income,
gains and losses, whether or not realized, from assets allocated to
Separate Account VLI are, in accordance with the Policies, credited to
or charged against Separate Account VLI without regard to other
income, gains or losses of EOC.
3. Assets allocated to Separate Account VLI will be owned by EOC; EOC is
not a trustee with respect thereto. The Policies provide that the
portion of the assets of Separate Account VLI equal to the reserves,
and other Policy liabilities with respect to Separate Account VLI,
will not be chargeable with liabilities arising out of any other
business EOC may conduct. Under the terms of the Policies and in
accordance with applicable law including the consent of the Colorado
Commissioner as provided by applicable Colorado law, EOC reserves the
right to transfer assets of Separate Account VLI in excess of such
reserves and other Policy liabilities to the general account of EOC.
4. When issued and sold as described in the Registration Statement, the
Policies (including any Units duly created thereunder) will be duly
authorized and will constitute validly issued and binding obligations
of EOC in accordance with their terms.
The opinions set forth herein are limited to the laws of the State of
Colorado and the federal laws of the United States of America, and no opinion is
expressed as to the laws of any other jurisdiction.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
EDWARDS & ANGELL, LLP
NSH/TPA/BCD/lrs
April 7, 1999
The Equitable of Colorado, Inc.
370 17th Street
Suite 4950
Denver, CO 80202
This opinion is furnished in connection with the Registration Statement on
Form S-6, File No. 333-72233 ("Registration Statement") of Separate Account VLI
("Separate Account VLI") of The Equitable of Colorado, Inc. ("EOC") covering an
indefinite number of units of interest in Separate Account VLI under IL
Protector (policy form no. CO99-500), flexible premium variable life insurance
policies ("Policies"). Net premiums received under the Policies may be allocated
to Separate Account VLI as described in the Prospectus included in the
Registration Statement.
I participated in the preparation of the Policies and I am familiar with
their provisions. I am also familiar with the description contained in the
prospectus. In my opinion:
1. The Illustration of Policy Benefits (Exhibit No. 9 to the Registration
Statement) (the "Illustration") is consistent with the provisions of
the Policies. The assumptions upon which the Illustration is based,
including the current cost of insurance and expense charges, are
stated in the Prospectus and are reasonable. The Policies have not
been designed so as to make the relationship between premiums and
benefits, as shown in the Illustration, appear disproportionately more
favorable to prospective purchasers of Policies for non-tobacco user
preferred risk males age 40 than to prospective purchasers of
Policies for males at other ages or in other underwriting classes or
for females. The particular Illustrations shown were not selected for
the purpose of making the relationship appear more favorable.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Barbara Fraser
------------------------------------
Barbara Fraser,
F.S.A., M.A.A.A.
Vice President
The Equitable of Colorado, Inc.
51503-6
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Pre-Effective Amendment No. 1 to the Registration Statement No. 333-72233 on
Form S-6 of our report dated February 8, 1999 relating to the financial
statments of The Equitable of Colorado Inc., which reports appear in such
Prospectus. We also consent to the reference to us under the heading "Financial
Statements of Equitable of Colorado" in the Prospectus.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
New York, New York
April 8, 1999
[THE EQUITABLE OF COLORADO, INC. - MEMBER OF THE GLOBAL AXA GROUP - LOGO]
IL PROTECTOR(SM)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
THE EQUITABLE OF COLORADO, INC.
370 17th Street, Suite 4950
Denver, CO 80202
Phone: (303) 892-5700
NOTES TO ILLUSTRATIONS
THE FOLLOWING ILLUSTRATIONS OF DEATH BENEFITS, POLICY ACCOUNT VALUES, AND CASH
SURRENDER VALUES ARE DESIGNED TO SHOW YOU HOW THE PERFORMANCE OF THE INVESTMENT
FUNDS AVAILABLE WITH IL PROTECTOR COULD AFFECT THE CASH SURRENDER VALUE AND
DEATH BENEFIT. THE ILLUSTRATION MAY ALSO HELP YOU COMPARE IL PROTECTOR TO OTHER
VARIABLE LIFE INSURANCE ILLUSTRATIONS. THESE ILLUSTRATIONS USE HYPOTHETICAL
INVESTMENT RETURN ASSUMPTIONS, AND ARE NOT INTENDED AS ESTIMATES OF FUTURE
PERFORMANCE OF ANY INVESTMENT FUND. YOU MAY REQUEST AN ILLUSTRATION THAT ASSUMES
A HYPOTHETICAL INVESTMENT RETURN RANGING FROM 6.01% TO 12.00%. EQUITABLE OF
COLORADO IS NOT ABLE TO PREDICT THE FUTURE PERFORMANCE OF THE INVESTMENT FUNDS.
ILLUSTRATIONS BASED ON ASSUMED CONSTANT RATES OF RETURN DO NOT SHOW THE
FLUCTUATIONS IN THE DEATH BENEFIT, POLICY ACCOUNT VALUE, AND CASH SURRENDER
VALUE THAT CAN OCCUR WITH AN ACTUAL POLICY. SINCE THE VALUES OF THE INVESTMENT
FUNDS VARY UP AND DOWN, VARIABLE LIFE INSURANCE BENEFITS WILL ALSO VARY.
ASSUMPTIONS
THE ILLUSTRATION ASSUMES THAT THE AMOUNTS THAT YOU ALLOCATE TO THE INVESTMENT
FUNDS EXPERIENCE HYPOTHETICAL GROSS RATES OF INVESTMENT RETURN EQUIVALENT TO
0.00%, 6.00%, AND A SPECIFIED RATE OF 10.00%.
PREMIUMS ARE ASSUMED TO BE PAID AT THE BEGINNING OF THE PAYMENT PERIOD. POLICY
VALUES, DEATH BENEFITS, AND AGES SHOWN ARE AS OF THE END OF THE POLICY YEAR AND
REFLECT THE EFFECT OF ALL LOANS AND WITHDRAWALS. THE DEATH BENEIFIT, POLICY
ACCOUNT, AND CASH SURRENDER VALUE WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT
AMOUNTS, FREQUENCIES, OR NOT ON THE DUE DATE. PREMIUMS LESS THE FOLLOWING
DEDUCTIONS ARE ADDED TO THE POLICY ACCOUNT: 1) A CHARGE FOR TAXES BASED ON THE
ILLUSTRATED INSURED'S STATE OF RESIDENCE, AND 2) A PREMIUM SALES CHARGE EQUAL TO
6% OF PREMIUMS PAID. AN ADMINISTRATIVE CHARGE IS DEDUCTED FROM THE POLICY
ACCOUNT DURING THE FIRST POLICY YEAR EQUAL TO $25 PER MONTH. DURING SUBSEQUENT
YEARS, THE MONTHLY ADMINISTRATIVE CHARGE IS EQUAL TO $6, SUBJECT TO $10 PER
MONTH MAXIMUM.
'ASSUMING CURRENT CHARGES': THIS ILLUSTRATION IS BASED UPON THE 'CURRENT
CHARGES' AS DECLARED BY EQUITABLE OF COLORADO'S BOARD OF DIRECTORS, AND APPLY TO
POLICIES ISSUED AS OF THE PREPARATION DATE SHOWN. 'CURRENT CHARGES' ARE NOT
GUARANTEED AND MAY BE CHANGED AT THE DISCRETION OF THE BOARD OF DIRECTORS. THE
CURRENT COST OF INSURANCE CHARGE IN YEAR 10 AND LATER IS REDUCED BY A PERCENTAGE
OF THE UNLOANED POLICY ACCOUNT VALUE.
'BLENDED CHARGES' ARE BASED UPON A BLEND OF THE CURRENT AND THE GUARANTEED
MAXIMUM MORTALITY CHARGES, ALL OTHER CURRENT CHARGES, AND THE ASSUMED
HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN INDICATED.
'ASSUMING GUARANTEED CHARGES': THIS ILLUSTRATION USES THE GUARANTEED MAXIMUM
MORTALITY CHARGES, ADMINISTRATIVE CHARGES, CHARGES FOR MORTALITY AND EXPENSE
RISK, SALES CHARGE, AND THE ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN.
IT DOES NOT INCLUDE CHARGES FOR RIDER BENEFITS UNLESS OTHERWISE INDICATED.
'NET LOANS/REPAYM'TS/WITHDRAWALS' COLUMNS REFLECT ANY LOANS, LOAN REPAYMENTS,
AND/OR PARTIAL WITHDRAWALS THAT HAVE BEEN REQUESTED.
'NET RATES OF RETURN' (SHOWN IN PARENTHESES) TAKE INTO CONSIDERATION AN ASSUMED
DAILY CHARGE TO THE SEPARATE ACCOUNT EQUIVALENT TO AN ANNUAL CHARGE OF .59% FOR
INVESTMENT ADVISIORY SERVICES (MANAGEMENT FEE), .04% FOR OTHER ESTIMATED TRUST
EXPENSES (INCLUDING 12B-1 FEES, WHERE APPLICABLE), PLUS THE DAILY CHARGE FOR
MORTALITY AND EXPENSE RISKS. THE ACTUAL CHARGE FOR ADVISORY SERVICES VARIES WITH
THE INVESMENT FUND SELECTED, AND CURRENTLY RANGES FROM .3282% TO 1.15%. THE
CHARGE FOR MORTALITY AND EXPENSE RISKS IS A GUARANTEED ANNUAL CHARGE OF .80%.
THE ILLUSTRATION ALSO RELECTS THAT NO CHARGE IS CURRENTLY MADE TO SEPARATE
ACCOUNT FP FOR FEDERAL INCOME TAXES.
IMPORTANT TAX INFORMATION
CERTAIN LEVELS OF PREMIUM PAYMENTS INTO ANY LIFE INSURANCE POLICY, AS WELL AS
CERTAIN POLICY CHANGES, MAY CAUSE YOUR POLICY TO BE CLASSIFIED AS A 'MODIFIED
ENDOWMENT CONTRACT' OR MEC. A MEC CLASSIFICATION AFFECTS THE TAX STATUS OF ANY
DISTRIBUTIONS TAKEN FROM THE POLICY. DISTRIBUTIONS TAKEN FROM A MEC POLICY
(LOANS OR PARTIAL WITHDRAWALS) WILL FIRST BE TAXED AS ORDINARY INCOME (ON THE
GAIN PORTION ONLY). IF THE POLICY OWNER IS UNDER AGE 59 1/2, A 10% PENALTY TAX
WILL ALSO BE IMPOSED BY THE IRS ON THE TAXABLE AMOUNT RECEIVED.
BASED ON OUR UNDERSTANDING OF THE TAX LAWS, THE POLICY ILLUSTRATED HERE IS NOT
A MODIFIED ENDOWMENT CONTRACT (MEC).
A POLICY MAY TERMINATE DUE TO INSUFFICIENT PREMIUMS AND/OR POOR INVESTMENT
PERFORMANCE. EXCESSIVE LOANS OR WIHTDRAWALS MAY CAUSE A POLICY TO LAPSE DUE TO
INSUFFICIENT CASH SURRENDER VALUE.
EV-96-36a (8/96) Prepared by: John Q. Agent
Male Non-Tobacco User Preferred Age 40 Initial Face Amount = $150,000
Riders: Initial Death Benefit Option is A (Level)
Prepared on Apr 08 1999 Form # VM-440
GIA: 5.10 5.6-10-26-98
THIS ILLUSTRATION IS NOT COMPLETE WITHOUT ALL PAGES
<PAGE>
[THE EQUITABLE OF COLORADO, INC. - MEMBER OF THE GLOBAL AXA GROUP - LOGO]
IL PROTECTOR(SM)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
THE EQUITABLE OF COLORADO, INC.
370 17th Street, Suite 4950
Denver, CO 80202
Phone: (303) 892-5700
ILLUSTRATION OF DEATH BENEFITS, POLICY ACOCUNT VALUES,
CASH SURRENDER VALUES, AND PREMIUMS
FOR: John Client
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
0.00% (-1.43% NET) 6.00% (4.49% NET)
END NET LOANS/ NET NET NET NET NET NET
OF ANNUALIZED REPAYMTS/ POLICY CASH SURR DEATH POLICY CASH SURR DEATH
YR AGE PREMIUMS WITHDRAWLS ACCOUNT VALUE BENEFIT ACCOUNT VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 41 2,000 0 1,179 770 150,000 1,267 859 150,000
2 42 2,000 0 2,496 2,027 150,000 2,752 2,283 150,000
3 43 2,000 0 3,771 3,243 150,000 4,280 3,752 150,000
4 44 2,000 0 5,001 4,413 150,000 5,850 5,262 150,000
5 45 2,000 0 6,188 5,539 150,000 7,464 6,816 150,000
6 46 2,000 0 7,325 6,617 150,000 9,121 8,412 150,000
7 47 2,000 0 8,413 7,644 150,000 10,818 10,050 150,000
8 48 2,000 0 9,448 8,620 150,000 12,557 11,729 150,000
9 49 2,000 0 10,429 9,541 150,000 14,339 13,450 150,000
10 50 2,000 0 11,353 10,441 150,000 16,160 15,247 150,000
11 51 2,000 0 12,216 11,486 150,000 18,020 17,290 150,000
12 52 2,000 0 13,011 12,463 150,000 19,914 19,367 150,000
13 53 2,000 0 13,729 13,364 150,000 21,837 21,472 150,000
14 54 2,000 0 14,366 14,183 150,000 23,784 23,601 150,000
15 55 2,000 0 14,907 14,907 150,000 25,746 25,746 150,000
16 56 2,000 0 15,348 15,348 150,000 27,719 27,719 150,000
17 57 2,000 0 15,676 15,676 150,000 29,695 29,695 150,000
18 58 2,000 0 15,887 15,887 150,000 31,672 31,672 150,000
19 59 2,000 0 15,973 15,973 150,000 33,645 33,645 150,000
20 60 2,000 0 15,917 15,917 150,000 35,603 35,603 150,000
21 61 2,000 0 15,705 15,705 150,000 37,536 37,536 150,000
22 62 2,000 0 15,319 15,319 150,000 39,432 39,432 150,000
23 63 2,000 0 14,731 14,731 150,000 41,273 41,273 150,000
24 64 2,000 0 13,912 13,912 150,000 43,037 43,037 150,000
25 65 2,000 0 12,827 12,827 150,000 44,702 44,702 150,000
26 66 2,000 0 11,443 11,443 150,000 46,245 46,245 150,000
27 67 2,000 0 9,728 9,728 150,000 47,647 47,647 150,000
28 68 2,000 0 7,642 7,642 150,000 48,884 48,884 150,000
W 29 69 2,000 0 5,145 5,145 150,000 49,932 49,932 150,000
30 70 2,000 0 2,179 2,179 150,000 50,755 50,755 150,000
<CAPTION>
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
10.00% (8.43% NET)
END NET NET NET
OF POLICY CASH SURR DEATH
YR AGE ACCOUNT VALUE BENEFIT
<S> <C> <C> <C> <C>
1 41 1,326 918 150,000
2 42 2,929 2,460 150,000
3 43 4,643 4,115 150,000
4 44 6,475 5,887 150,000
5 45 8,436 7,788 150,000
6 46 10,533 9,825 150,000
7 47 12,775 12,007 150,000
8 48 15,174 14,346 150,000
9 49 17,743 16,854 150,000
10 50 20,491 19,579 150,000
11 51 23,435 22,705 150,000
12 52 26,585 26,038 150,000
13 53 29,955 29,590 150,000
14 54 33,560 33,378 150,000
15 55 37,415 37,415 150,000
16 56 41,540 41,540 150,000
17 57 45,958 45,958 150,000
18 58 50,698 50,698 150,000
19 59 55,792 55,792 150,000
20 60 61,272 61,272 150,000
21 61 67,178 67,178 150,000
22 62 73,555 73,555 150,000
23 63 80,453 80,453 150,000
24 64 87,931 87,931 150,000
25 65 96,064 96,064 150,000
26 66 104,942 104,942 150,000
27 67 114,679 114,679 150,000
28 68 125,410 125,410 150,000
W 29 69 137,176 137,176 160,496
30 70 149,846 149,846 173,822
</TABLE>
BASED ON THE ASSUMPTION OF GUARANTEED CHARGES AND A HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF 0.00%, THE POLICY TERMINATES
WITHOUT VALUE IN YEAR 31.
BASED ON THE ASSUMPTION OF GUARANTEED CHARGES AND A HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF 6.00%, THE POLICY TERMINATES
WITHOUT VALUE IN YEAR 43.
SEE THE SUPPORTING REPORTS "NOTES TO ILLUSTRATIONS" AND THE "APPLICABLE
FOOTNOTES PAGE" FOR AN EXPLANATION OF INTEREST RATES, FIGURES SHOWN, AND OTHER
IMPORTANT POLICY INFORMATION. THIS PRESENTATION MUST BE PRECEDED OR ACCOMPANIED
BY A PROSPECTUS CONTAINING DETAILED INFORMATION ABOUT IL PROTECTOR INCLUDING
CHARGES AND EXPENSES. THIS IS AN ILLUSTRATION ONLY, AND IS NOT INTENDED TO
PREDICT ACTUAL PERFORMANCE. VALUES SET FORTH ARE NOT GUARANTEED UNLESS THEY ARE
CLEARLY IDENTIFIED AS GUARANTEED.
EV-96-36a (8/96) Prepared by: John Q. Agent
Male Non-Tobacco User Preferred Age 40 Initial Face Amount = $150,000
Riders: Initial Death Benefit Option is A (Level)
Prepared on Apr 08, 1999 Form # VM-440
GIA: 5.10 5.6-10-26-98
THIS ILLUSTRATION IS NOT COMPLETE WITHOUT ALL PAGES
<PAGE>
[THE EQUITABLE OF COLORADO, INC. - MEMBER OF THE GLOBAL AXA GROUP - LOGO]
IL PROTECTOR(SM)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
THE EQUITABLE OF COLORADO, INC.
370 17th Street, Suite 4950
Denver, CO 80202
Phone: (303) 892-5700
ILLUSTRATION OF DEATH BENEFITS, POLICY ACOCUNT VALUES, CASH SURRENDER VALUES,
AND PREMIUMS
FOR: John Client
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
0.00% (-1.43% NET) 6.00% (4.49% NET)
END NET LOANS/ NET NET NET NET NET NET
OF ANNUALIZED REPAYMTS/ POLICY CASH SURR DEATH POLICY CASH SURR DEATH
YR AGE PREMIUMS WITHDRAWLS ACCOUNT VALUE BENEFIT ACCOUNT VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C>
T 31 71 2,000 0 51,301 51,301 150,000
32 72 2,000 0 51,442 51,442 150,000
33 73 2,000 0 51,209 51,209 150,000
34 74 2,000 0 50,433 50,433 150,000
35 75 2,000 0 48,986 48,986 150,000
36 76 2,000 0 46,732 46,732 150,000
37 77 2,000 0 43,506 43,506 150,000
38 78 2,000 0 39,105 39,105 150,000
39 79 2,000 0 33,279 33,279 150,000
40 80 2,000 0 25,684 25,684 150,000
41 81 2,000 0 15,831 15,831 150,000
42 82 2,000 0 3,035 3,035 150,000
T 43 83 2,000 0
44 84 2,000 0
45 85 2,000 0
46 86 2,000 0
47 87 2,000 0
48 88 2,000 0
49 89 2,000 0
50 90 2,000 0
51 91 2,000 0
52 92 2,000 0
53 93 2,000 0
54 94 2,000 0
55 95 2,000 0
56 96 2,000 0
57 97 2,000 0
58 98 2,000 0
59 99 2,000 0
60 100 2,000 0
<CAPTION>
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
10.00% (8.43% NET)
END NET NET NET
OF POLICY CASH SURR DEATH
YR AGE ACCOUNT VALUE BENEFIT
<S> <C> <C> <C> <C>
T 31 71 163,486 163,486 188,009
32 72 178,220 178,220 201,389
33 73 194,188 194,188 215,548
34 74 211,506 211,506 230,541
35 75 230,333 230,333 246,457
36 76 250,866 250,866 263,409
37 77 272,971 272,971 286,620
38 78 296,757 296,757 311,594
39 79 322,334 322,334 338,450
40 80 349,817 349,817 367,308
41 81 379,321 379,321 398,287
42 82 410,957 410,957 431,505
T 43 83 444,828 444,828 467,070
44 84 481,034 481,034 505,086
45 85 519,672 519,672 545,655
46 86 560,840 560,840 588,882
47 87 604,642 604,642 634,874
48 88 651,180 651,180 683,739
49 89 700,561 700,561 735,589
50 90 752,882 752,882 790,526
51 91 808,221 808,221 848,632
52 92 866,632 866,632 909,964
53 93 928,114 928,114 974,520
54 94 992,587 992,587 1,042,216
55 95 1,059,679 1,059,679 1,112,663
56 96 1,128,442 1,128,442 1,184,864
57 97 1,202,347 1,202,347 1,250,440
58 98 1,280,874 1,280,874 1,319,300
59 99 1,363,187 1,363,187 1,390,450
60 100 1,465,269 1,465,269 1,479,922
</TABLE>
BASED ON THE ASSUMPTION OF GUARANTEED CHARGES AND A HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF 0.00%, THE POLICY TERMINATES
WITHOUT VALUE IN YEAR 31.
BASED ON THE ASSUMPTION OF GUARANTEED CHARGES AND A HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF 6.00%, THE POLICY TERMINATES
WITHOUT VALUE IN YEAR 43.
SEE THE SUPPORTING REPORTS "NOTES TO ILLUSTRATIONS" AND THE "APPLICABLE
FOOTNOTES PAGE" FOR AN EXPLANATION OF INTEREST RATES, FIGURES SHOWN, AND OTHER
IMPORTANT POLICY INFORMATION. THIS PRESENTATION MUST BE PRECEDED OR ACCOMPANIED
BY A PROSPECTUS CONTAINING DETAILED INFORMATION ABOUT IL PROTECTOR INCLUDING
CHARGES AND EXPENSES. THIS IS AN ILLUSTRATION ONLY, AND IS NOT INTENDED TO
PREDICT ACTUAL PERFORMANCE. VALUES SET FORTH ARE NOT GUARANTEED UNLESS THEY ARE
CLEARLY IDNETIFIED AS GUARANTEED.
EV-96-36a (8/96) Prepared by: John Q. Agent
Male Non-Tobacco User Preferred Age 40 Initial Face Amount = $150,000
Riders: Initial Death Benefit Option is A (Level)
Prepared on Apr 08 1999 Form # VM-440
GIA: 5.10 5.6-10-26-98
THIS ILLUSTRATION IS NOT COMPLETE WITHOUT ALL PAGES
<PAGE>
[THE EQUITABLE OF COLORADO, INC. - MEMBER OF THE GLOBAL AXA GROUP - LOGO]
IL PROTECTOR(SM)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
THE EQUITABLE OF COLORADO, INC.
370 17th Street, Suite 4950
Denver, CO 80202
Phone: (303) 892-5700
ILLUSTRATION OF DEATH BENEFITS, POLICY ACOCUNT VALUES,
CASH SURRENDER VALUES, AND PREMIUMS
FOR: John Client
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
0.00% (-1.43% NET) 6.00% (4.49% NET)
END NET LOANS/ NET NET NET NET NET NET
OF ANNUALIZED REPAYMTS/ POLICY CASH SURR DEATH POLICY CASH SURR DEATH
YR AGE PREMIUMS WITHDRAWLS ACCOUNT VALUE BENEFIT ACCOUNT VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 41 2,000 0 1,185 776 150,000 1,273 865 150,000
2 42 2,000 0 2,559 2,091 150,000 2,818 2,350 150,000
3 43 2,000 0 3,892 3,364 150,000 4,409 3,881 150,000
4 44 2,000 0 5,182 4,593 150,000 6,048 5,459 150,000
5 45 2,000 0 6,425 5,777 150,000 7,733 7,084 150,000
6 46 2,000 0 7,622 6,913 150,000 9,465 8,757 150,000
7 47 2,000 0 8,766 7,998 150,000 11,242 10,473 150,000
8 48 2,000 0 9,857 9,028 150,000 13,062 12,234 150,000
9 49 2,000 0 10,908 10,020 150,000 14,944 14,056 150,000
10 50 2,000 0 11,926 11,013 150,000 16,898 15,985 150,000
11 51 2,000 0 12,904 12,174 150,000 18,920 18,190 150,000
12 52 2,000 0 13,844 13,297 150,000 21,017 20,470 150,000
13 53 2,000 0 14,743 14,378 150,000 23,190 22,825 150,000
14 54 2,000 0 15,601 15,419 150,000 25,443 25,260 150,000
15 55 2,000 0 16,402 16,402 150,000 27,765 27,765 150,000
16 56 2,000 0 17,123 17,123 150,000 30,142 30,142 150,000
17 57 2,000 0 17,758 17,758 150,000 32,572 32,572 150,000
18 58 2,000 0 18,300 18,300 150,000 35,053 35,053 150,000
19 59 2,000 0 18,799 18,799 150,000 37,637 37,637 150,000
20 60 2,000 0 19,260 19,260 150,000 40,337 40,337 150,000
21 61 2,000 0 19,687 19,687 150,000 43,172 43,172 150,000
22 62 2,000 0 20,024 20,024 150,000 46,123 46,123 150,000
23 63 2,000 0 20,265 20,265 150,000 49,203 49,203 150,000
24 64 2,000 0 20,393 20,393 150,000 52,415 52,415 150,000
25 65 2,000 0 20,392 20,392 150,000 55,768 55,768 150,000
26 66 2,000 0 20,227 20,227 150,000 59,217 59,217 150,000
W 27 67 2,000 0 19,866 19,866 150,000 62,758 62,758 150,000
28 68 2,000 0 19,285 19,285 150,000 66,392 66,392 150,000
29 69 2,000 0 18,453 18,453 150,000 70,122 70,122 150,000
30 70 2,000 0 17,333 17,333 150,000 73,949 73,949 150,000
<CAPTION>
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
10.00% (8.43% NET)
END NET NET NET
OF POLICY CASH SURR DEATH
YR AGE ACCOUNT VALUE BENEFIT
<S> <C> <C> <C> <C>
1 41 1,333 924 150,000
2 42 2,996 2,528 150,000
3 43 4,777 4,249 150,000
4 44 6,685 6,097 150,000
5 45 8,727 8,079 150,000
6 46 10,914 10,206 150,000
7 47 13,253 12,485 150,000
8 48 15,756 14,927 150,000
9 49 18,452 17,564 150,000
10 50 21,370 20,457 150,000
11 51 24,521 23,791 150,000
12 52 27,931 27,383 150,000
13 53 31,620 31,255 150,000
14 54 35,617 35,434 150,000
15 55 39,936 39,936 150,000
16 56 44,596 44,596 150,000
17 57 49,625 49,625 150,000
18 58 55,059 55,059 150,000
19 59 60,983 60,983 150,000
20 60 67,457 67,457 150,000
21 61 74,558 74,558 150,000
22 62 82,360 82,360 150,000
23 63 90,967 90,967 150,000
24 64 100,477 100,477 150,000
25 65 111,018 111,018 150,000
26 66 122,622 122,622 150,000
W 27 67 135,362 135,362 161,080
28 68 149,207 149,207 176,064
29 69 164,247 164,247 192,169
30 70 108,581 180,581 209,474
</TABLE>
BASED ON THE ASSUMPTION OF CURRENT CHARGES AND A HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
0.00%, THE POLICY TERMINATES WITHOUT VALUE IN YEAR 37.
THIS IS NOT AN ILLUSTRATION OF ACTUAL PERFORMANCE. VALUES SHOWN ARE NOT
GUARANTEED. THIS PAGE MUST BE ACCOMPANIED BY AN ILLUSTRATION OF POLICY
PERFORMANCE ASSUMING GUARANTEED CHARGES AND A HYPOTHETICAL GROSS ANNUAL
INVESTMENT RETURN OF 0.00%
SEE THE SUPPORTING REPORTS "NOTES TO ILLUSTRATIONS" AND THE "APPLICABLE
FOOTNOTES PAGE" FOR AN EXPLANATION OF INTEREST RATES, FIGURES SHOWN, AND OTHER
IMPORTANT POLICY INFORMATION. THIS PRESENTATION MUST BE PRECEDED OR ACCOMPANIED
BY A PROSPECTUS CONTAINING DETAILED INFORMATION ABOUT IL PROTECTOR INCLUDING
CHARGES AND EXPENSES. THIS IS AN ILLUSTRATION ONLY, AND IS NOT INTENDED TO
PREDICT ACTUAL PERFORMANCE. VALUES SET FORTH ARE NOT GUARANTEED
UNLESS THEY ARE CLEARLY IDNETIFIED AS GUARANTEED.
EV-96-36a (8/96) Prepared by: John Q. Agent
Male Non-Tobacco User Preferred Age 40 Initial Face Amount = $150,000
Riders: Initial Death Benefit Option is A (Level)
Prepared on Apr 08 1999 Form # VM-440
GIA: 5.10 5.6-10-26-98
THIS ILLUSTRATION IS NOT COMPLETE WITHOUT ALL PAGES
<PAGE>
[THE EQUITABLE OF COLORADO, INC. - MEMBER OF THE GLOBAL AXA GROUP - LOGO]
IL PROTECTOR(SM)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
THE EQUITABLE OF COLORADO, INC.
370 17th Street, Suite 4950
Denver, CO 80202
Phone: (303) 892-5700
ILLUSTRATION OF DEATH BENEFITS, POLICY ACOCUNT VALUES,
CASH SURRENDER VALUES, AND PREMIUMS
FOR: John Client
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
0.00% (-1.43% NET) 6.00% (4.49% NET)
END NET LOANS/ NET NET NET NET NET NET
OF ANNUALIZED REPAYMTS/ POLICY CASH SURR DEATH POLICY CASH SURR DEATH
YR AGE PREMIUMS WITHDRAWLS ACCOUNT VALUE BENEFIT ACCOUNT VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31 71 2,000 0 15,914 15,914 150,000 77,896 77,896 150,000
32 72 2,000 0 14,145 14,145 150,000 81,968 81,968 150,000
33 73 2,000 0 11,939 11,939 150,000 86,161 86,161 150,000
34 74 2,000 0 9,264 9,264 150,000 90,504 90,504 150,000
35 75 2,000 0 6,048 6,048 150,000 95,022 95,022 150,000
36 76 2,000 0 2,145 2,145 150,000 99,718 99,718 150,000
T 37 77 2,000 0 104,635 104,635 150,000
38 78 2,000 0 109,818 109,818 150,000
39 79 2,000 0 115,327 115,327 150,000
40 80 2,000 0 121,245 121,245 150,000
41 81 2,000 0 127,678 127,678 150,000
42 82 2,000 0 134,772 134,772 150,000
43 83 2,000 0 142,710 142,710 150,000
W 44 84 2,000 0 151,271 151,271 158,835
45 85 2,000 0 160,164 160,164 168,172
46 86 2,000 0 169,426 169,426 177,897
47 87 2,000 0 179,031 179,031 187,982
48 88 2,000 0 188,979 188,979 198,428
49 89 2,000 0 199,273 199,273 209,237
50 90 2,000 0 209,912 209,912 220,408
51 91 2,000 0 220,897 220,897 231,941
52 92 2,000 0 232,227 232,227 243,838
53 93 2,000 0 243,903 243,903 256,099
54 94 2,000 0 255,925 255,925 268,721
55 95 2,000 0 268,289 268,289 281,704
56 96 2,000 0 280,995 280,995 295,045
57 97 2,000 0 294,704 294,704 306,492
58 98 2,000 0 309,579 309,579 318,866
59 99 2,000 0 325,806 325,806 332,322
60 100 2,000 0 342,443 342,443 345,867
<CAPTION>
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
10.00% (8.43% NET)
END NET NET NET
OF POLICY CASH SURR DEATH
YR AGE ACCOUNT VALUE BENEFIT
<S> <C> <C> <C> <C>
31 71 198,326 198,326 228,075
32 72 217,657 217,657 245,953
33 73 238,728 238,728 264,989
34 74 261,731 261,731 285,286
35 75 286,877 286,877 306,958
36 76 314,408 314,408 330,129
T 37 77 344,321 344,321 361,537
38 78 376,802 376,802 395,643
39 79 412,055 412,055 432,657
40 80 450,290 450,290 472,804
41 81 491,733 491,733 516,320
42 82 536,626 536,626 563,457
43 83 585,220 585,220 614,481
W 44 84 637,778 637,778 669,667
45 85 694,577 694,577 729,305
46 86 756,062 756,062 793,865
47 87 822,425 822,425 863,547
48 88 893,993 893,993 938,693
49 89 971,110 971,110 1,019,665
50 90 1,054,137 1,054,137 1,106,844
51 91 1,143,458 1,143,458 1,200,630
52 92 1,239,749 1,239,749 1,301,453
53 93 1,342,629 1,342,629 1,409,761
54 94 1,453,354 1,453,354 1,526,022
55 95 1,572,126 1,572,126 1,650,733
56 96 1,699,438 1,699,438 1,784,410
57 97 1,839,954 1,839,954 1,913,552
58 98 1,995,712 1,995,712 2,055,583
59 99 2,169,119 2,169,119 2,212,501
60 100 2,355,065 2,355,065 2,378,615
</TABLE>
BASED ON THE ASSUMPTION OF CURRENT CHARGES AND A HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF 0.00%,
THE POLICY TERMINATES WITHOUT VALUE IN YEAR 37.
THIS IS NOT AN ILLUSTRATION OF ACTUAL PERFORMANCE. VALUES SHOWN ARE NOT
GUARANTEED. THIS PAGE MUST BE ACCOMPANIED BY AN ILLUSTRATION OF POLICY
PERFORMANCE ASSUMING GUARANTEED CHARGES AND A HYPOTHETICAL GROSS ANNUAL
INVESTMENT RETURN OF 0.00%
SEE THE SUPPORTING REPORTS "NOTES TO ILLUSTRATIONS" AND THE "APPLICABLE
FOOTNOTES PAGE" FOR AN EXPLANATION OF INTEREST RATES, FIGURES SHOWN, AND OTHER
IMPORTANT POLICY INFORMATION. THIS PRESENTATION MUST BE PRECEDED OR ACCOMPANIED
BY A PROSPECTUS CONTAINING DETAILED INFORMATION ABOUT IL PROTECTOR INCLUDING
CHARGES AND EXPENSES. THIS IS AN ILLUSTRATION ONLY, AND IS NOT INTENDED TO
PREDICT ACTUAL PERFORMANCE. VALUES SET FORTH ARE NOT GUARANTEED UNLESS THEY ARE
CLEARLY IDENTIFIED AS GUARANTEED.
EV-96-36a (8/96) Prepared by: John Q. Agent
Male Non-Tobacco User Preferred Age 40 Initial Face Amount = $150,000
Riders: Initial Death Benefit Option is A (Level)
Prepared on Apr 08 1999 Form # VM-440
GIA: 5.10 5.6-10-26-98
THIS ILLUSTRATION IS NOT COMPLETE WITHOUT ALL PAGES
<PAGE>
[THE EQUITABLE OF COLORADO, INC. - MEMBER OF THE GLOBAL AXA GROUP - LOGO]
IL PROTECTOR(SM)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
THE EQUITABLE OF COLORADO, INC.
370 17th Street, Suite 4950
Denver, CO 80202
Phone: (303) 892-5700
APPLICABLE FOOTNOTES PAGE
PREPARED FOR: JOHN CLIENT
FOOTNOTES ARE ILLUSTRATED IN ORDER
OF OCCURRENCE FOR EACH YEAR THEY ARE APPLICALE:
-------------------------------------------------------------------
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
Year 27 - Footnote(s): W. Year 29 - Footnote(s): W.
Year 37 - Footnote(s): T. Year 31 - Footnote(s): T.
Year 44 - Footnote(s): W. Year 43 - Footnote(s): T.
EXPLANATION OF FOOTNOTES USED IN THIS ILLUSTRATION
- --------------------------------------------------
T BASED ON THE ASSUMPTIONS OF THIS ILLUSTRATION, THE POLICY TERMINATES
WITHOUT VALUE. ADVERSE TAX CONSEQUENCES COULD OCCUR IF A POLICY WITH
LOANS IS SURRENDERED OR PERMITTED TO TERMINATE.
W THE POLICY HAS GONE INTO CORRIDOR. PREMIUMS IN EXCESS OF THE NO LAPSE
GUARANTEE PREMIUM MAY BE RESTRICTED WITHOUT EVIDENCE OF INSURABILITY.
WITHDRAWALS MAY REDUCE THE DEATH BENEFIT BY AN AMOUNT IN EXCESS OF
THE WITHDRAWAL AMOUNT.
IL Protector is a Service Mark of The Equitable Life Assurance Society of
the United States ("Equitable"). IL Protector is distributed by EQ Financial
Consultants, Inc., New York, NY, a wholly-owned subsidiary of Equitable.
Equitable of Colorado is a wholly-owned subsidiary of Equitable, which is a
wholly-owned subsidiary of The Equitable Companies Incorporated (EQ).
AXA, an insurance holding company, is EQ's largest shareholder.
Neither EQ nor AXA has responsibility for the insurance obligations of
Equitable. IL Protector is policy form 96-400 in most jurisdictions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DELIVERY IN PA MINIMUM INITIAL PREMIUM: $247.00 INITIAL GUIDELINE SINGLE: $28,434.60
RESIDENT OF PA PLANNED ANNUAL PREMIUM: $2,000.00 INITIAL GUIDELINE ANNUAL: $2,506.75
TARGET PREMIUM: $1,360.50 INITIAL 7-PAY PREMIUM: $6,667.00
INITIAL NO LAPSE
GUARANTEE PREM: $1,360.50
</TABLE>
EV-96-36a (8/96) Prepared by: John Q. Agent
Male Non-Tobacco User Preferred Age 40 Initial Face Amount - $150,000
Riders: Initial Death Benefit Options is A (Level)
Prepared on Apr 08 1999 Form # VM-440
GIA: 5.10 5.6-10-26-98
THIS ILLUSTRATION IS NOT COMPLETE WITHOUT ALL PAGES
