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As filed with the Securities and Exchange Commission on July 29, 1999
Registration No.
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
FARMERS VARIABLE LIFE SEPARATE ACCOUNT A
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(Exact Name of Registrant)
FARMERS NEW WORLD LIFE INSURANCE COMPANY
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(Name of Depositor)
3003 77th Avenue, S.E., Mercer Island, Washington 98040
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(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code:
(206) 232-8400
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Name and Address of Agent for Service: Copy to:
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John R. Patton, FLMI, FLHC, CLU, ChFC Stephen E. Roth, Esq.
Assistant Vice President -- Staff Operations Sutherland Asbill & Brennan LLP
Farmers New World Life Insurance Company 1275 Pennsylvania Avenue, N.W.
3003 77th Avenue, S.E. Washington, D.C. 20004-2415
Mercer Island, Washington 98040
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Approximate date of proposed public offering:
As soon as practicable after effectiveness of the Registration Statement.
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Title of securities being registered:
Units of interest in a separate account under flexible premium variable life
insurance policies.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
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PROSPECTUS ____________, 1999
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
FARMERS NEW WORLD LIFE INSURANCE COMPANY
THROUGH
FARMERS VARIABLE LIFE SEPARATE ACCOUNT A
COMPANY ADDRESS: SERVICE CENTER:
3003 - 77TH AVENUE, S.E.
------------------
MERCER ISLAND, WASHINGTON 98040
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(206) 232-8400 1-800-
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This prospectus describes the "______", a flexible premium variable life
insurance policy (the "Policy") issued by Farmers New World Life Insurance
Company. The Policy provides life insurance and accumulates variable Contract
Value. The amount of life insurance may, and the Contract Value will, depend on
the investment experience of the subaccounts of the Farmers Variable Life
Separate Account A ("variable account") in which you invest.
You choose from two death benefit options. The death benefit will be at least
the principal sum shown in the Policy Specifications, adjusted for any increases
or decreases, and reduced by any outstanding indebtedness.
This prospectus provides information that a prospective owner should know before
investing and you should keep this prospectus for future reference. You should
consider whether this Policy is suitable for you in light of your life insurance
needs.
You can allocate Contract Value to:
- the subaccounts of the variable account, which invest in the portfolios of
the mutual funds listed on this page; or
- a fixed account, which credits a specified rate of interest.
AN INVESTMENT IN THIS POLICY IS NOT A BANK DEPOSIT, AND THE POLICY IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
PLEASE READ THE "RISK SUMMARY" SECTION OF THIS PROSPECTUS. IT DESCRIBES CERTAIN
RISKS ASSOCIATED WITH INVESTING IN THE POLICY.
The following portfolios of underlying mutual funds are currently available
under the Policy:
[ ] JANUS ASPEN SERIES
Capital Appreciation Portfolio
[ ] KEMPER VARIABLE SERIES
Kemper High Yield Portfolio
Kemper Government Securities Portfolio
Kemper-Dreman High Return Equity Portfolio
Kemper Small Cap Growth Portfolio
[ ] PIMCO VARIABLE INSURANCE TRUST
PIMCO Low Duration Bond
PIMCO Foreign Bond
[ ] SCUDDER VARIABLE LIFE INVESTMENT FUND
Scudder VLIF International
Scudder VLIF Growth and Income
Scudder VLIF Bond
Scudder VLIF Money Market
[ ] TEMPLETON VARIABLE PRODUCTS SERIES FUND
Templeton Developing Markets Fund
A prospectus for each of the underlying portfolios available through the
variable account must accompany this prospectus. Please read these documents
before investing and save them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THIS
POLICY OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANY ONE WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME.
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TABLE OF CONTENTS
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GLOSSARY.....................................................................1
POLICY SUMMARY...............................................................4
PREMIUMS...................................................................4
INVESTMENT OPTIONS.........................................................4
CONTRACT VALUE.............................................................5
CHARGES AND DEDUCTIONS.....................................................5
SURRENDERS AND WITHDRAWALS.................................................6
DEATH BENEFITS.............................................................6
TRANSFERS..................................................................7
LOANS......................................................................7
RISK SUMMARY.................................................................7
INVESTMENT RISK............................................................7
RISK OF LAPSE..............................................................8
TAX RISKS..................................................................8
WITHDRAWAL LIMITS..........................................................8
LOAN RISKS.................................................................8
EFFECTS OF SURRENDER CHARGES...............................................9
COMPARISON WITH OTHER INSURANCE POLICIES...................................9
ILLUSTRATIONS..............................................................9
PORTFOLIO EXPENSE TABLE.....................................................10
FARMERS NEW WORLD LIFE INSURANCE COMPANY....................................12
FARMERS NEW WORLD LIFE INSURANCE COMPANY..................................12
THE FIXED ACCOUNT.........................................................12
THE VARIABLE ACCOUNT AND THE PORTFOLIOS.....................................13
THE VARIABLE ACCOUNT......................................................13
THE PORTFOLIOS............................................................14
YOUR RIGHT TO VOTE PORTFOLIO SHARES.......................................16
THE POLICY..................................................................17
PURCHASING A POLICY.......................................................17
WHEN INSURANCE COVERAGE TAKES EFFECT......................................18
OWNERSHIP RIGHTS..........................................................18
CHANGING THE OWNER......................................................19
SELECTING AND CHANGING THE BENEFICIARY..................................19
ASSIGNING THE POLICY....................................................19
CANCELING A POLICY........................................................19
PREMIUMS....................................................................20
PREMIUM FLEXIBILITY.......................................................20
MINIMUM PREMIUMS..........................................................20
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PLANNED PREMIUMS..........................................................21
REINSTATEMENT.............................................................21
ALLOCATING PREMIUMS.......................................................21
CONTRACT VALUES.............................................................22
CONTRACT VALUE............................................................22
POLICY VALUE..............................................................22
SURRENDER VALUE...........................................................22
SUBACCOUNT VALUE..........................................................22
UNIT VALUE................................................................23
FIXED ACCOUNT VALUE.......................................................23
CHARGES AND DEDUCTIONS......................................................24
PREMIUM DEDUCTIONS........................................................25
MONTHLY DEDUCTION.........................................................25
COST OF INSURANCE.......................................................25
CHARGES FOR RIDERS......................................................26
MONTHLY ADMINISTRATION CHARGE...........................................26
FLAT EXTRA CHARGE.......................................................26
MORTALITY AND EXPENSE RISK CHARGE.........................................26
SURRENDER CHARGE..........................................................27
TRANSFER CHARGE...........................................................27
PORTFOLIO EXPENSES........................................................28
OTHER CHARGES.............................................................28
DEATH BENEFIT...............................................................29
DEATH BENEFIT PROCEEDS....................................................29
DEATH BENEFIT OPTIONS.....................................................29
CHANGING DEATH BENEFIT OPTIONS............................................31
EFFECTS OF WITHDRAWALS ON THE DEATH BENEFIT...............................32
CHANGING THE PRINCIPAL SUM................................................32
PAYMENT OPTIONS...........................................................33
SURRENDERS AND WITHDRAWALS..................................................33
SURRENDERS................................................................33
PARTIAL WITHDRAWALS.......................................................34
TRANSFERS...................................................................34
TELEPHONE TRANSFERS.......................................................35
LOANS.......................................................................36
LOANS CONDITIONS..........................................................36
EFFECT OF POLICY LOANS....................................................37
POLICY LAPSE................................................................37
LAPSE.....................................................................37
FEDERAL TAX CONSIDERATIONS..................................................38
TAX STATUS OF THE POLICY..................................................38
TAX TREATMENT OF POLICY BENEFITS..........................................38
OTHER POLICY INFORMATION....................................................40
OUR RIGHT TO CONTEST THE POLICY...........................................40
SUICIDE EXCLUSION.........................................................40
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MISSTATEMENT OF AGE OR SEX................................................41
MODIFYING THE POLICY......................................................41
WHEN WE WILL MAKE PAYMENTS................................................41
REPORTS TO OWNERS.........................................................41
POLICY TERMINATION........................................................42
SUPPLEMENTAL BENEFITS (RIDERS)............................................42
PERFORMANCE DATA............................................................43
HYPOTHETICAL ILLUSTRATIONS BASED ON ADJUSTED HISTORIC PORTFOLIO
PERFORMANCE..............................................................43
ADDITIONAL INFORMATION......................................................44
SALE OF THE POLICIES......................................................44
LEGAL MATTERS.............................................................44
LEGAL PROCEEDINGS.........................................................44
YEAR 2000 MATTERS.........................................................44
FINANCIAL STATEMENTS......................................................45
FARMERS' EXECUTIVE OFFICERS AND DIRECTORS.................................46
ILLUSTRATIONS...............................................................48
APPENDIX A - GUARANTEED MAXIMUM COST OF INSURANCE RATES......................1
APPENDIX B - TABLE OF SURRENDER CHARGE FACTORS...............................1
APPENDIX C - FINANCIAL STATEMENTS............................................1
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GLOSSARY
ACCUMULATION UNIT
An accounting unit we use to calculate subaccount values. It measures the net
investment results of each of the variable subaccounts.
ATTAINED AGE
The insured's age when we issued the Policy plus the number of years completed
since we issued the Policy.
BENEFICIARY
The person(s) you select to receive the death benefit from this Policy.
CASH VALUE
The Contract Value minus any applicable surrender charge.
COMPANY (WE, US, OUR, FARMERS)
Farmers New World Life Insurance Company
CONTRACT VALUE
The sum of the values you have in the variable account and the fixed account. If
you have a loan outstanding, the Contract Value includes any amounts we hold in
the loan account to secure the loan.
CUMULATIVE MINIMUM PREMIUMS
The sum of all past monthly-mode minimum premiums due since the issue date. The
initial minimum premium is specified on the Policy specifications page. The
minimum premium will change if you increase or decrease the principal sum or if
certain other changes in the Policy occur.
DEATH BENEFIT PROCEEDS
The amount we will pay to the beneficiary when we receive proof of the insured's
death. We will reduce the proceeds by the amount of any outstanding loans
(including any interest you owe), and any due and unpaid monthly deductions.
FIXED ACCOUNT
An option to which you can direct your Contract Value under the Policy. It
provides a guarantee of principal and interest. The assets supporting the fixed
account are held in our general account and are not part of, or dependent on,
the investment performance of the variable account.
FIXED ACCOUNT VALUE
Your Contract Value in the fixed account.
GENERAL ACCOUNT
The account containing all of Farmers' assets, other than those held in its
separate accounts.
INITIAL PREMIUM
The amount you must pay before insurance coverage begins under this Policy. The
initial premium is shown on your Policy's specification page.
INSURED
The person whose life is insured by this Policy.
ISSUE DATE
The date when life insurance coverage begins. We measure Policy months, Policy
years, and Policy anniversaries from the issue date. On the issue date, we place
your initial premium (reduced by the percent of premium factor) in the fixed
account until the reallocation date. The first monthly deduction occurs on the
issue date.
LAPSE
When life insurance coverage ends because you do not have enough Contract Value
to pay the monthly deduction, the surrender charge and any outstanding loan
amount (including any interest you owe on the loan(s)), and you have not made a
sufficient payment by the end of a 61-day grace period.
LOAN AMOUNT
The total amount of all outstanding Policy loans, including both principal and
interest due. We deduct an amount equal to the loan amount from your Contract
Value and place it in the loan account as collateral for the loans. The loan
account is part of our general account.
MATURITY DATE
The Policy anniversary when the insured reaches age 110 and life insurance
coverage under this
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Policy ends. The maturity date is shown on the Policy specifications page.
MONTHLY DEDUCTION
The amount we deduct from the Contract Value each month to pay for the insurance
coverage. The monthly deduction includes the cost of insurance charge, the
monthly administration charge, the cost of any riders, and any flat extra charge
for a special premium class.
MONTHLY DUE DATE
This is the day of each month when we determine Policy charges and deduct them
from Contract Value. It is the same date each month as the issue date. If there
is no Valuation Day that coincides with the issue date in the calendar month,
the monthly due date is the next Valuation Day.
OWNER (YOU, YOUR)
The person entitled to exercise all rights as owner under the Policy.
PERCENT OF PREMIUM FACTOR
This is the factor (currently .95) by which we multiply each premium payment to
determine the amount of premium credited to the Contract Value. We retain the
balance of each premium to compensate us for certain expenses such as premium
taxes and selling expenses. The percent of premium factor is shown on your
Policy's specifications page.
PREMIUMS
All payments you make under the Policy other than loan repayments.
PRINCIPAL SUM
The amount of the initial death benefit. The initial principal sum is set forth
on the specifications page. You may increase or decrease the principal sum under
certain conditions. Certain actions you take, such as changing the death benefit
option or taking a partial withdrawal, may also affect the amount of the
principal sum. The actual death benefit proceeds we pay under the Policy may be
more or less than the principal sum.
REALLOCATION DATE
The date shown on the Policy specifications page when we reallocate any premium
(plus interest) held in the fixed account to the subaccounts and fixed account
as you directed in your application. The reallocation date is the issue date,
plus the number of days in your state's right to examine period, plus 15 days.
RIGHT TO EXAMINE PERIOD
The period when you may return the Policy and receive a refund. The length of
the right to examine period varies by state. It will be at least 10 days from
the date you receive the Policy. Your Policy's specification page shows the
right to examine period.
SERVICE CENTER
The Service Center is located at _________________, _____________________. The
phone number is 1-800-___-____. The administrator for the Policies is [ ].
SUBACCOUNT
A subdivision of the Farmers Variable Life Separate Account A (variable
account). We invest each subaccount's assets exclusively in shares of one
investment portfolio of a mutual fund.
SURRENDER
To cancel the Policy by signed request from the owner.
SURRENDER VALUE
The amount we will pay you if you surrender the Policy while it is in force. The
Surrender Value on the date you surrender is equal to: the Contract Value, minus
any surrender charge, and minus any outstanding loan amount (including any
interest you owe on the loan(s)).
VALUATION DAY
Each day that the New York Stock Exchange ("NYSE") is open for trading, except
when a subaccount's corresponding portfolio does not value its shares. Farmers
New World Life Insurance Company is open to administer the Policy on each day
the NYSE is open.
VALUATION PERIOD
The period of time over which we determine the change in the value of the
subaccounts in order to price accumulation units. Each valuation period begins
at the close of normal trading on the NYSE (currently 4:00 p.m. Eastern time on
each Valuation Day) and ends at the close of normal trading on the NYSE on the
next Valuation Day.
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VARIABLE ACCOUNT
Farmers Variable Life Separate Account A. It is a separate investment account
that is divided into subaccounts, each of which invests in a corresponding
portfolio of a designated mutual fund.
VARIABLE ACCOUNT VALUE
The total value of your Policy allocated to the subaccounts of the variable
account.
WRITTEN NOTICE
The written notice you must sign and send us to request or exercise your rights
as owner under the Policy. To be complete, it must: (1) be in a form we accept,
(2) contain the information and documentation that we determine is necessary,
and (3) be received at our Service Center.
YOU (YOUR, OWNER)
The person entitled to exercise all rights as owner under the Policy.
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POLICY SUMMARY
This summary describes important features of the Policy and corresponds to
sections in this prospectus which discuss the topics in more detail. Please
refer to the Glossary for definitions of certain terms.
PREMIUMS
- - You can select a premium payment plan. Within certain limits specified in
your Policy, you can vary the frequency and amount of premiums. You may be
able to skip premium payments under certain circumstances. However, you
greatly increase your risk of lapse if you do not regularly pay premiums at
least as large as the current minimum premium.
- - We will not accept any premiums after the insured reaches attained age
100.
- - After you make an initial premium payment, you can pay subsequent premiums
(minimum $25) at any time.
- - We multiply each premium by the percent of premium factor (currently 0.95)
and credit the resulting amount to the Contract Value.
- - The initial minimum premium and payment mode are shown on your Policy
specification page. The minimum premium will change if you increase or
decrease the principal sum, if you change or add a rider, if you take a
partial withdrawal and you have chosen level death benefit (Option B), or if
the insured's premium class changes.
- - PAYING THE CURRENT MINIMUM PREMIUM EACH MONTH WILL NOT NECESSARILY KEEP
YOUR POLICY IN FORCE. Even if you pay the current minimum premium according
to your payment plan, your Policy will lapse if the Contract Value, less
loans and interest owed, the "net Contract Value" is not enough to cover a
monthly deduction.
- - There will be a 61-day grace period before your Policy lapses. The grace
period begins when you are sent notice that the Surrender Value (or net
Contract Value) is insufficient to cover a monthly deduction. If you fail to
make a sufficient payment during the 61-day grace period, your Policy will
lapse and terminate without value. See Risk of Lapse; and Policy Lapse.
- - Once you receive your Policy, the RIGHT TO EXAMINE PERIOD begins. You may
return the Policy during this period and receive a refund. See Canceling a
Policy.
- - New net premium(s) will be allocated to the subaccounts and the fixed
account in accordance with your instructions in the application, unless you
provide different instructions with your premium payments. Any future net
premiums will be allocated in accordance with the new instructions, unless
we receive contrary instructions.
INVESTMENT OPTIONS
VARIABLE ACCOUNT:
- - You may direct the money in your Policy to any of the 12 subaccounts of the
variable account. WE DO NOT GUARANTEE ANY MONEY YOU PLACE IN THE
SUBACCOUNTS. THE VALUE OF EACH SUBACCOUNT WILL INCREASE OR DECREASE,
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE CORRESPONDING PORTFOLIO. YOU
COULD LOSE SOME OR ALL OF YOUR MONEY.
- - Each subaccount invests exclusively in one investment portfolio of a mutual
fund. The following mutual funds and portfolios are currently available:
[ ] Janus Aspen Series
Capital Appreciation Portfolio
[ ] Kemper Variable Fund Series
Kemper High Yield Portfolio
Kemper Government Securities Portfolio
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Kemper-Dreman High Return Equity Portfolio
Kemper Small Cap Growth Portfolio
[ ] PIMCO Variable Insurance Trust
PIMCO Low Duration Bond
PIMCO Foreign Bond
[ ] Scudder Variable Life Investment Fund
Scudder VLIF International (A-Shares)
Scudder VLIF Growth and Income (A-Shares)
Scudder VLIF Bond (A-Shares)
Scudder VLIF Money Market
[ ] Templeton Variable Products Series Fund
Templeton Developing Markets Fund (Class 2 Shares)
FIXED ACCOUNT:
- You may place money in the fixed account where it earns interest at an
annual rate of at least 4%. We may declare higher rates of interest, but
are not obligated to do so.
CONTRACT VALUE
- - Contract Value is the sum of your amounts in the subaccounts and the fixed
account. Contract Value also includes amounts we hold in the loan account to
secure any outstanding loans.
- - Contract Value varies from day to day, depending on the investment
experience of the subaccounts you choose, the interest we credit to the
fixed account, the charges we deduct, and any other transactions (such as
transfers, withdrawals, and loans.)
- - Contract Value is the starting point for calculating important values under
the Policy, such as the Surrender Value and the death benefit.
- - We do not guarantee a minimum Contract Value. Your Policy may lapse if you
do not have sufficient Contract Value (minus any loan and interest you owe)
to pay the monthly deduction due. If you have not paid sufficient premiums,
we will look to the Surrender Value to determine whether the Policy will
lapse.
- - From the issue date until the reallocation date (the issue date, plus the
number of days in your state's right to examine period, plus 15 days), we
hold your premium(s) in the fixed account. On the reallocation date, we
transfer the Contract Value in the fixed account to other subaccounts and
the fixed account in accordance with the allocation percentages you provided
in the application.
CHARGES AND DEDUCTIONS
$ Premium charge: We currently deduct 5% from each premium payment and credit
the remaining 95% to your Contract Value. This occurs when we apply the
percent of premium factor to each premium received. We may change the charge
for new owners in the future.
$ Monthly Deduction. Each month we deduct:
- a cost of insurance charge for the Policy (varies by age);
- charges for any riders;
- a flat extra charge, if any, for a special premium class, which can range
from ____ to ____;
- a special premium class rate, applied to both current and guaranteed cost
of insurance charges, for insured in a special premium class; and
- a monthly administration charge:
- first year = $26;
- after first year = $5 (ages 21 - 50); $7 (ages 51 - 80).
$ Surrender and withdrawal charges:
- surrender: We deduct a surrender charge when a full surrender occurs
during the first 15 Policy years. It is calculated by multiplying the
number of thousands of principal sum on the issue date (minus any
reductions in principal sum for which a surrender charge has already been
paid) by a factor that varies by insured's age and number of years you
held the Policy. THIS CHARGE MAY BE SIGNIFICANT. YOU MAY HAVE NO SURRENDER
VALUE IF YOU SURRENDER YOUR
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POLICY DURING THE PERIOD WHEN SURRENDER CHARGES APPLY.
- withdrawal (partial surrender): We deduct a processing fee equal to the
lesser of $25 or 2% of the amount withdrawn, PLUS, if you elect a level
death benefit (Option B), a surrender charge.
- Decrease in principal sum: If you decrease the principal sum, we deduct
surrender charges.
$ Mortality and Expense Risk Charge: Deducted daily at an annual rate to
0.90% of your average daily net assets in the variable subaccounts.
$ Transfer charge: $25 fee for the 7th and each additional transfer in a
Policy year.
$ Portfolio Expenses: You indirectly bear the annual operating expenses of
the portfolios in which the subaccounts invest. These may include
investment advisory fees, 12b-1 fees, and other expenses. These charges
vary by portfolio and range from .44% to 1.91% per year.
$ Other charges:
- A $5 fee for each additional annual report you request.
- A charge of $1.50 per $1,000 for each increase in principal sum (maximum
charge is $300).
- [FEES FOR RIDERS].
SURRENDERS AND WITHDRAWALS
- - FULL SURRENDER: At any time while the Policy is in force, you may make a
written request to surrender your Policy and receive the Surrender Value
(that is, the Contract Value minus any surrender charge, and minus any
outstanding loan amount including any accrued interest). A surrender may
have tax consequences. See "Federal Tax Considerations."
- - PARTIAL WITHDRAWALS: After the 2nd Policy year, you may make a written
request to withdraw part of the Surrender Value, subject to the following
rules. Withdrawals may have tax consequences. See "Federal Tax
Considerations."
- You may make only 1 withdrawal each calendar quarter;
- You must request at least $500;
- You may not request more than 75% of the Surrender Value;
- Surrender charges apply to the withdrawal;
- For each withdrawal, we deduct a processing fee equal to the lesser of $25
or 2% of the withdrawal.
- If you select a level death benefit (Option B), the principal sum will be
reduced by the amount of the partial withdrawal, plus the surrender
charge.
DEATH BENEFITS
- - As long as it remains in force, the Policy provides for a death benefit
payment upon the death of the insured.
- - You must choose between two death benefit options under the Policy. You may
change options after the first Policy year:
[ ] OPTION A is a variable death benefit that is the greater of :
- the principal sum plus the Contract Value on the date of death; or
- the Contract Value multiplied by the applicable death benefit
percentage.
[ ] OPTION B is a level death benefit through attained age 99 that is the
greater of:
- the principal sum on the date of death; or
- the Contract Value multiplied by the applicable death benefit
percentage.
Any death benefit paid will be reduced by the amount of any outstanding loans
and interest due.
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TRANSFERS
- - Each year, you may make:
- an unlimited number of transfers from the subaccounts; and
- one transfer from the fixed account.
- - Transfers from subaccounts must be the lesser of $250, or the total value in
the subaccount.
- - Transfers from the fixed account may not be for more than 25% of the
unloaned value in the fixed account, unless the balance after the transfer
is less than $250, in which case the entire amount will be transferred.
- - We charge $25 for the 7th and each additional transfer during a year.
LOANS
- - You may take a loan against the Policy for amounts up to the Surrender Value
minus loan interest to the next Policy anniversary date. Loans may have tax
consequences.
- - To secure the loan, we transfer an amount equal to the loan from the
variable subaccounts and fixed account to the loan account (part of our
general account). Unless you specify otherwise, the amount is withdrawn from
the subaccounts and the fixed account on a pro-rata basis.
- - Amounts in the loan account earn interest at the guaranteed minimum rate of
4% per year.
- - We charge you a maximum interest rate of 8% per year on your loan. Interest
is due and payable at the end of each Policy year. Unpaid interest becomes
part of the outstanding loan.
- - You may repay all or part of your outstanding loans at any time. Loan
repayments must be at least $25, and must be clearly marked as "loan
repayments" or they will be credited as premiums.
- - We deduct any unpaid loans from the proceeds payable on the insured's death.
- - A loan may have tax consequences. See "Federal Tax Consequences."
RISK SUMMARY
INVESTMENT RISK
If you instruct us to invest your Contract Value in one or more subaccounts,
you will be subject to the risk that investment performance will be unfavorable
and that the Contract Value will decrease. If you select the fixed account, we
credit your Contract Value with a declared rate of interest, but you assume the
risk that the rate may decrease, although it will never be lower than a
guaranteed minimum annual effective rate of 4.0%.
Because we continue to deduct charges from Contract Value, if loans,
withdrawals, and monthly deductions reduce your Surrender Value to too low an
amount, and/or if investment results are not sufficiently favorable, and/or if
interest rates are too low, and/or if you do not pay sufficient premiums, then
your Policy's Surrender Value (or Contract Value, if you have paid sufficient
premiums) may fall to zero. In that case, the Policy will lapse without value
and insurance coverage will no longer be in effect, unless you make an
additional payment sufficient to prevent a lapse during a 61-day grace period.
However, if investment experience is sufficiently favorable and you have kept
the Policy in force for a substantial time, you may be able to draw upon
Contract Value, through withdrawals and loans.
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RISK OF LAPSE
Certain circumstances will cause your Policy to enter a grace period during
which you must make a sufficient payment to keep your Policy in force:
- If your Policy's Surrender Value becomes zero, and cumulative premiums
less withdrawals are less than cumulative minimum premiums, then the
Policy will enter a 61-day grace period.
- If cumulative premiums minus withdrawals exceed cumulative minimum
premiums, then the Policy will enter a 61-day grace period whenever the
Contract Value (minus outstanding loans and interest you owe on the loans)
is too low to pay the entire monthly deduction due.
Whenever your Policy enters the grace period, if you do not make a
sufficient payment before the grace period ends, your Policy will terminate
without value, insurance coverage will no longer be in effect, and you will
receive no benefits. The payment must be sufficient enough to cause either one
of the following conditions:
1. the Surrender Value exceeds zero, after deducting all due and unpaid
monthly deductions; OR
2. cumulative premiums minus withdrawals exceed cumulative minimum
premiums; AND Contract Value minus any outstanding loan and interest
you owe exceeds zero, after deducting all due and unpaid monthly
deductions.
A Policy lapse will have adverse tax consequences.
TAX RISKS
Although there is limited guidance and some uncertainty, we believe that the
Policy should be deemed a life insurance contract under Federal tax law, so that
the death benefit paid to the beneficiary will not be subject to Federal income
tax. However, depending on the total amount of premiums you pay, the Policy may
be treated as a modified endowment contract ("MEC") under Federal tax laws. If a
Policy is treated as a MEC, then withdrawals, surrenders and loans under a
Policy will be taxable as ordinary income to the extent there are earnings in
the Policy. In addition, a 10% penalty tax may be imposed on withdrawals,
surrenders and loans taken before you reach age 59 1/2. You should consult a
qualified tax advisor for assistance in all tax matters involving your Policy.
WITHDRAWAL LIMITS
The Policy permits you to take only one partial withdrawal in any calendar
quarter, after the 2nd Policy year has been completed. The amount you may
withdraw is limited to 75% of the Surrender Value.
A withdrawal reduces the Surrender Value and Contract Value, so it will
increase the risk that the Policy will lapse. A withdrawal also may have tax
consequences.
A withdrawal will reduce the death benefit. If you select a level death
benefit (Option B), a partial withdrawal will permanently reduce the principal
sum by the amount of the withdrawal and the applicable surrender charge. If a
variable death benefit (Option A) is in effect when you make a withdrawal, the
death benefit also will be reduced because the Contract Value is reduced.
LOAN RISKS
A Policy loan, whether or not repaid, will affect Contract Value over time
because we subtract the amount of the loan from the subaccounts and fixed
account as collateral. We then credit a fixed interest rate of 4.0% to the loan
collateral. As a result, the loan collateral does not participate in the
investment
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<PAGE> 15
results of the subaccounts nor does it receive any higher current interest rate
credited to the fixed account. The longer the loan is outstanding, the greater
the effect is likely to be. Depending on the investment results of the
subaccounts and the interest rate credited to the fixed account, the effect
could be favorable or unfavorable.
A Policy loan affects the death benefit because a loan reduces the death
benefit proceeds by the amount of the outstanding loan, plus any interest you
owe on Policy loans.
A Policy loan could make it more likely that a Policy would terminate. There
is a risk if the loan reduces your Surrender Value (or Contract Value, if
applicable) to an amount that is insufficient to pay the monthly deduction and
investment results are unfavorable, that the Policy will lapse, resulting in
adverse tax consequences.
EFFECTS OF SURRENDER CHARGES
The surrender charges under this Policy are significant, especially in the
early Policy years. It is likely that you will receive no Surrender Value if you
surrender your Policy in the first few Policy years. You should purchase this
Policy only if you have the financial ability to keep it in force at the initial
principal sum for a substantial period of time.
Even if you do not ask to surrender your Policy, surrender charges may play
a role in determining whether your Policy will lapse. If you have not paid
sufficient premiums, the Surrender Value is the measure we use to determine
whether your Policy will enter a grace period, and possibly lapse.
COMPARISON WITH OTHER INSURANCE POLICIES
Like fixed benefit life insurance, the Policy offers a minimum death benefit
and provides a Contract Value, loan privileges and a value on surrender.
However, the Policy differs from a fixed benefit policy because it allows you to
place your premiums in investment subaccounts. The amount and duration of life
insurance protection and of the Contract Value will vary with the investment
performance of the amounts you place in the subaccounts. In addition, the
Surrender Value will always vary with the investment results of your selected
subaccounts.
As you consider purchasing this Policy, keep in mind that it may not be to
your advantage to replace existing insurance with the Policy.
ILLUSTRATIONS
The Illustrations provided at the end of this prospectus illustrate
Contract Values, Surrender Values and Death Benefits. These illustrations are
based on hypothetical rates of return that are not guaranteed. The illustrations
also assume costs of insurance for a hypothetical person. Your rates of return
and insurance charges may be higher or lower than those illustrations.
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<PAGE> 16
PORTFOLIO EXPENSE TABLE
The following table shows the fees and expenses charged by the portfolios.
The purpose of the table is to assist you in understanding the various costs and
expenses that you will bear directly and indirectly. The table reflects charges
and expenses of the portfolios for the fiscal year ended December 31, 1998.
Expenses of the portfolios may be higher or lower in the future. For more
information on the fees and expenses described in this table, see the
prospectuses for the portfolios which accompany this prospectus.
ANNUAL PORTFOLIO OPERATING EXPENSES (as a percentage of average portfolio assets
before fee waivers and expense reimbursements)
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT EXPENSES (AFTER
FEES OTHER EXPENSES WAIVERS
(AFTER 12B-1 (AFTER AND
NAME OF PORTFOLIO WAIVERS) FEES REIMBURSEMENT) REIMBURSEMENT)
<S> <C> <C> <C> <C>
Janus Aspen Series
- ------------------
Capital Appreciation Portfolio(1) 70% --- .22% .92%
Kemper Variable Series
- ----------------------
Kemper Government Securities Portfolio .55% --- .11% .66%
Kemper High Yield Portfolio .60% --- .05% .65%
Kemper Small Cap Growth Portfolio .65% --- .05% .70%
Kemper-Dreman High Return Equity
Portfolio(2)(3) 42% --- .45% .87%
PIMCO Variable Insurance Trust
- ------------------------------
Low Duration Bond Portfolio(4) .63% --- .02% .65%
Foreign Bond Portfolio(4) .88% --- .02% .90%
Scudder VLIF
- ------------
Money Market Portfolio 37% --- .07% .44%
Growth and Income Portfolio
(Class A Shares) .47% --- .09% .56%
International Portfolio (Class A
Shares) .87% --- .18% 1.05%
Bond Portfolio (Class A Shares) .47% --- .09% .56%
Templeton Variable Products Series Fund
- ---------------------------------------
Developing Markets Fund (Class 2
Shares)(5) 1.25% .25% .41% 1.91%
</TABLE>
1/ The expense figures shown for the Janus Aspen Capital Appreciation Portfolio
are net of certain fee waivers or reductions from Janus Capital Corporation.
Without such waivers, the Management Fees, Other Expenses and Total Annual
Expenses for the Janus Aspen Capital Appreciation Portfolio for the fiscal year
ended December 31, 1998 would have been: .75%, .22% and .97%, respectively. See
the prospectus and Statement of Additional Information of Janus Aspen Series for
a description of these waivers.
2/ The Kemper-Dreman High Return Equity Portfolio commenced operations on or
after 5/1/98. As a result, "Other Expenses" for fiscal year 1998 have been
annualized.
3/ Pursuant to their respective agreements with Kemper Variable Series, the
investment manager and the accounting agent have agreed, for the period
commencing on the date of this prospectus until May 1, 2000, to limit their
respective fees and to reimburse other operating expenses, in a manner
communicated to the Board of the Fund, to the extent necessary to limit total
operating expenses of the Kemper-Dreman High Return Equity Portfolio to the
levels set forth in the table above. Without
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<PAGE> 17
taking into effect these expense caps, for the High Return Equity Portfolio, the
Management Fees are estimated to be .75%; Other Expenses are estimated to be
.45%; and Total Annual Expenses are estimated to be 1.20%.
4/ For the PIMCO Variable Insurance Trust portfolios, management fees include
fixed advisory and administrative fees. The administrative fee covers most of
the expenses of these portfolios. However, the portfolios are responsible for
bearing certain expenses associated with their operations that are not covered
by the administrative fee. While it is expected that these expenses generally
will not have a material effect on the portfolio expense ratios, they may have a
material effect in certain circumstances, such as when the average net assets of
a portfolio are lower than anticipated. Pacific Investment Management Company
has agreed to reduce its administrative fee, subject to potential future
reimbursement, to the extent that Total Annual Expenses would exceed, due to
organizational expenses and the payment by the portfolio of its pro rata portion
of the Trust's Trustees' fees, 0.65% of average daily net assets of the PIMCO
Low Duration Bond portfolio and 0.90% of average daily net assets of the PIMCO
Foreign Bond portfolio. "Other Expenses" are based on estimates for the current
fiscal year. Without such reductions, Management Fees, Other Expenses and Total
Annual Expenses for the fiscal year ended December 31, 1998 would have been: for
the PIMCO Low Duration Bond Portfolio, .65%, .02% and .67%, respectively; and
for the PIMCO Foreign Bond Portfolio, .90%, .02% and .92%, respectively.
5/ Class 2 of the Templeton Developing Market Portfolio has a distribution plan
or "Rule 12b-1 Plan" which is described in the portfolio's prospectus.
The purpose of this table is to assist you in understanding the costs and
expenses that you will bear directly or indirectly. The table reflects the
actual charges and expenses for each portfolio for the fiscal year ended
December 31, 1998, unless the charges are annualized. For more information, you
should read the sections relating to expenses in the prospectus for each
portfolio.
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<PAGE> 18
FARMERS NEW WORLD LIFE INSURANCE COMPANY AND THE FIXED ACCOUNT
FARMERS NEW WORLD LIFE INSURANCE COMPANY
Farmers New World Life Insurance Company ("Farmers"), is the insurance
company issuing the Policy. Farmers is located at 3003 77th Avenue, S.E., Mercer
Island, Washington 98040, and was incorporated under Washington law on February
21, 1910. Farmers established the variable account to support the investment
options under this Policy and under other variable life insurance policies
Farmers may issue. Farmers' general account supports the fixed account under the
Policy.
Farmers is a direct subsidiary of Farmers Group, Inc., a Nevada corporation
that is a management holding company. In December 1988, BATUS Inc. ("Batus"), a
subsidiary of B.A.T. Industries p.l.c. ("B.A.T."), acquired 100% ownership of
Farmers Group, Inc. through its wholly owned subsidiary BATUS Financial
Services. Immediately thereafter, BATUS Financial Services was merged into
Farmers Group, Inc. The acquisition was accounted for as a purchase and,
accordingly, the acquired assets and liabilities were recorded in Farmers Group,
Inc.'s consolidated balance sheets based on their estimated values at December
31, 1988. In January 1990, ownership of Farmers Group, Inc. was transferred to
South Western Nominees Limited, a subsidiary of B.A.T.
On December 22, 1997, a definitive agreement was reached to merge B.A.T.'s
Financial Services Businesses, which included Farmers Group, Inc., with Zurich
Insurance Company ("Zurich"). In June 1998, the merger was approved by the
shareholders of B.A.T. and Zurich. In September 1998, this merger was completed
and the businesses of Zurich and B.A.T.'s Financial Services Businesses were
transferred to Zurich Financial Services ("ZFS"), a new Swiss company with
headquarters in Zurich. As a result, each two shares of Farmers Group, Inc.'s
prior outstanding stock were recapitalized into one share of Class A Common
Stock, par value $1.00 per share ("Ordinary Share"), and one share of Class B
Common Stock, par value $1.00 per share ("Income Share"). Under the merger
agreement, all Ordinary Shares became wholly owned by ZFS and all Income Shares
became wholly owned by Allied Zurich Holdings Limited, an affiliated company
created during the restructuring of B.A.T. This merger was accounted for by ZFS
as a pooling of interests and, therefore, no purchase accounting adjustments
were made to Farmer's Group, Inc.'s assets and liabilities.
Farmers currently is licensed to sell insurance in 38 states and the
District of Columbia. The states where Farmers is not licensed are Alaska,
Connecticut, Florida, Hawaii, Louisiana, Maine, Massachusetts, New Hampshire,
New Jersey, New York, North Carolina, and Vermont.
THE FIXED ACCOUNT
The fixed account is part of Farmers' general account. We use our general
assets to support our insurance and annuity obligations other than those funded
by the variable account. Subject to applicable law, Farmers has sole discretion
over investment of the fixed account's assets. Farmers bears the full investment
risk for all amounts contributed to the fixed account. Farmers guarantees that
the amounts allocated to the fixed account will be credited interest daily at a
net effective interest rate of at least 4%. We will determine any interest rate
credited in excess of the guaranteed rate at our sole discretion.
Money you place in the fixed account will earn interest for the length of
the guarantee period that is compounded daily at the current interest rate in
effect at the time of your allocation. We currently offer a
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<PAGE> 19
one year guaranteed period. We may declare more than one excess interest rate
for different money based upon the date of allocation or transfer to the fixed
account. At the end of the guarantee period, we may declare a new current
interest rate on those amounts and any accrued interest thereon. You bear the
risk that interest we credit will not exceed 4.0%.
We allocate amounts from the fixed account for partial withdrawals,
transfers to the subaccounts, or charges for the monthly deduction on a last in,
first out basis ("LIFO") for the purpose of crediting interest.
THE FIXED ACCOUNT IS NOT REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.
THE VARIABLE ACCOUNT AND THE PORTFOLIOS
THE VARIABLE ACCOUNT
Farmers established the variable account as a separate investment account
under Washington law on April 6, 1999. Farmers owns the assets in the variable
account and is obligated to pay all benefits under the Policies. Farmers may use
the variable account to support other variable life insurance policies Farmers
issues. The variable account is registered with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of 1940
and qualifies as a "separate account" within the meaning of the Federal
securities laws.
The variable account is divided into 12 subaccounts, each of which invests
in shares of a specific portfolio of one of the following mutual funds:
[ ] Janus Aspen Series
[ ] Kemper Variable Series
[ ] PIMCO Variable Insurance Trust
[ ] Scudder Variable Life Investment Fund
[ ] Templeton Variable Products Series Fund
The subaccounts buy and sell portfolio shares at net asset value. Any dividends
and distributions from a portfolio are reinvested at net asset value in shares
of that portfolio.
Under Washington law, the assets in the variable account are the property of
Farmers. However, assets in the variable account that are attributable to the
Policy are not chargeable with liabilities arising out of any other business we
may conduct. Income, gains, and losses (realized and unrealized), resulting from
assets in the variable account are credited to or charged against the variable
account without regard to other income, gains or losses of Farmers. Promises we
make in the Policy are general corporate obligations of Farmers and are not
dependent on assets in the variable account.
13
<PAGE> 20
The variable account may include other subaccounts that are not available
under the Policies and are not discussed in this prospectus. Where permitted by
applicable law, Farmers reserves the right to:
1. Create new variable accounts;
2. Combine separate accounts, including the variable account;
3. Remove, combine or add subaccounts and make the new subaccounts available
to you at our discretion;
4. Make new portfolios available under the variable account or remove
existing portfolios;
5. Substitute new portfolios for any existing portfolios if shares of the
portfolio are no longer available for investment or if Farmers determines
that investment in a portfolio is no longer appropriate in light of the
purposes of the variable account;
6. Deregister the variable account under the Investment Company Act of 1940
if such registration is no longer required;
7. Operate the variable account as a management investment company under the
Investment Company Act of 1940 or as any other form permitted by law; and
8. Make any changes required by the Investment Company Act of 1940 or any
other law.
No such changes will be made without any necessary approval of the Securities
and Exchange Commission and applicable state insurance departments. We will
notify you of any changes.
THE PORTFOLIOS
The variable account invests in shares of certain portfolios of the Funds.
Each of the Funds is a mutual fund that is registered with the Securities and
Exchange Commission as an open-end management investment company. Such
registration does not involve supervision of the management or investment
practices or policies of the Funds by the Securities and Exchange Commission.
Each portfolio's assets are held separate from the assets of the other
portfolios, and each portfolio has investment objectives and policies that are
different from those of the other portfolios. Thus, each portfolio operates as a
separate investment fund, and the income or losses of one portfolio generally
have no effect on the investment performance of any other portfolio. Pending any
prior approval by a state insurance regulatory authority, certain subaccounts
and corresponding portfolios may not be available to residents of some states.
The investment objectives and policies of certain portfolios are similar to
the investment objectives and policies of other portfolios that may be managed
by the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of other such
portfolios. We make no assurance, and no representation, that the investment
results of any of the portfolios will be comparable to the investment results of
any other portfolio, even if the other portfolio has the same investment adviser
or manager.
The following table summarizes each portfolio's investment objective(s) and
policies. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS
STATED OBJECTIVE(S). You can find more detailed information about the
portfolios, including a description of risks, in the prospectuses for the Funds.
You should read the Funds' prospectuses carefully.
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT OBJECTIVE AND INVESTMENT ADVISER
<S> <C>
JANUS ASPEN SERIES - Seeks long-term growth of capital. Investment
CAPITAL APPRECIATION adviser is Janus Capital Corporation.
PORTFOLIO
KEMPER GOVERNMENT Seeks high current return consistent with
SECURITIES PORTFOLIO preservation of capital. Investment adviser is
Scudder Kemper Investments, Inc.
</TABLE>
14
<PAGE> 21
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT OBJECTIVE AND INVESTMENT ADVISER
<S> <C>
KEMPER-DREMAN HIGH Seeks to achieve a high rate of total return.
RETURN EQUITY PORTFOLIO Investment adviser is Scudder Kemper Investments,
Inc.; investment sub-adviser is Dreman Value
Management L.L.C.
KEMPER SMALL CAP GROWTH Seeks maximum appreciation of investors' capital.
PORTFOLIO Investment adviser is Scudder Kemper Investments,
Inc.
PIMCO LOW DURATION BOND Seeks to maximize total return, consistent with
PORTFOLIO preservation of capital and prudent investment
management. Investment adviser is Pacific
Investment Management Company.
PIMCO FOREIGN BOND Seeks to maximize total return, consistent with
PORTFOLIO preservation of capital and prudent investment
management. Investment adviser is Pacific
Investment Management Company.
SCUDDER VLIF Seeks long-term growth of capital principally from a
INTERNATIONAL (A-SHARES) diversified portfolio of foreign equity securities.
Investment adviser is Scudder Kemper Investments,
Inc.
SCUDDER VLIF GROWTH AND Seeks long-term growth of capital, current income and
INCOME (A-SHARES) growth of income from a portfolio consisting primarily
of common stocks and securities convertible into common
stocks. Investment adviser is Scudder Kemper
Investments, Inc.
SCUDDER VLIF BOND Seeks high income from a high quality portfolio of
(A-SHARES) bonds. Investment adviser is Scudder Kemper
Investments, Inc.
SCUDDER VLIF MONEY Seeks stability and current income from a portfolio
MARKET (A-SHARES) of money market instruments. Investment adviser is
Scudder Kemper Investments, Inc.
TEMPLETON DEVELOPING Seeks long-term capital appreciation. Investment
MARKETS FUND (CLASS 2 adviser is Templeton Asset Management Ltd.
SHARES)
</TABLE>
15
<PAGE> 22
In addition to the variable account, the mutual funds may sell shares to
other separate investment accounts established by other insurance companies to
support variable annuity contracts and variable life insurance policies. It is
possible that, in the future, it may become disadvantageous for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the mutual funds simultaneously. Although neither Farmers nor the mutual funds
currently foresee any such disadvantages, either to variable life insurance
policy owners or to variable annuity contract owners, each fund's Board of
Directors (Trustees) will monitor events in order to identify any material
conflicts between the interests of such variable life insurance policy owners
and variable annuity contract owners, and will determine what action, if any, it
should take. Such action could include the sale of fund shares by one or more of
the separate accounts, which could have adverse consequences. Material conflicts
could result from, for example, (1) changes in state insurance laws, (2) changes
in Federal income tax laws, or (3) differences in voting instructions between
those given by variable life insurance policy owners and those given by variable
annuity contract owners.
If a fund's Board of Directors (Trustees) were to conclude that separate
funds should be established for variable life insurance and variable annuity
separate accounts, Farmers will bear the attendant expenses, but variable life
insurance policy owners and variable annuity contract owners would no longer
have the economies of scale resulting from a larger combined fund.
PLEASE READ THE ATTACHED MUTUAL FUND PROSPECTUSES TO OBTAIN MORE COMPLETE
INFORMATION REGARDING THE PORTFOLIOS.
YOUR RIGHT TO VOTE PORTFOLIO SHARES
Even though we are the legal owner of the portfolio shares held in the
subaccounts, and have the right to vote on all matters submitted to shareholders
of the portfolios, we will vote our shares only as Policy owners instruct, so
long as such action is required by law.
Before a vote of a portfolio's shareholders occurs, you will receive voting
materials from us. We will ask you to instruct us on how to vote and to return
your proxy to us in a timely manner. You will have the right to instruct us on
the number of portfolio shares that corresponds to the amount of Contract Value
you have in that portfolio (as of a date set by the portfolio).
If we do not receive voting instructions on time from some owners, we will
vote those shares in the same proportion as the timely voting instructions we
receive. Should Federal securities laws, regulations and interpretations change,
we may elect to vote portfolio shares in our own right. If required by state
insurance officials, or if permitted under Federal regulation, we may disregard
certain owner voting instructions. If we ever disregard voting instructions, we
will send you a summary in the next annual report to Policy owners advising you
of the action and the reasons we took such action.
16
<PAGE> 23
THE POLICY
PURCHASING A POLICY
To purchase a Policy, you must submit a completed application and an initial
premium to us at the Service Center. You may also send the application and
initial premium to us through any licensed life insurance agent who is also a
registered representative of a broker-dealer having a selling agreement with the
principal underwriter for the Policy, ___________________________________.
Acceptance of an application is subject to our insurance underwriting, and we
reserve the right to decline an application for any reasons subject to the
requirements imposed by law in the jurisdiction where the requested insurance
Policy was to be issued and delivered.
We determine the minimum principal sum (death benefit) for a Policy based on
the attained age of the insured when we issue the Policy. The minimum principal
sum at attained ages 21 to 50 is $75,000. The minimum principal sum at attained
ages above 50 is $50,000. We base the minimum initial premium for your Policy on
a number of factors including the age, sex and risk class of the insured and the
amount of the principal sum. We currently require a minimum initial premium as
shown on the Policy's specifications page.
17
<PAGE> 24
We use different underwriting standards in relation to the Policy. We can
provide you with details as to these underwriting standards when you apply for a
Policy. We must receive evidence of insurability that satisfies our underwriting
standards before we will issue a Policy. We reserve the right to reject an
application for any reason permitted by law.
WHEN INSURANCE COVERAGE TAKES EFFECT
Full insurance coverage under the Policy will take effect after underwriting
is completed only if the proposed insured is alive and in the same condition of
health as described in the application when we deliver the Policy to you, and if
the initial premium is paid.
CONDITIONAL INSURANCE COVERAGE. Temporary coverage for the principal sum
applied for, or $50,000 if less, will begin when the proposed insured completes,
signs and delivers an application with at least 1/12th of the minimum first
year's premium to an agent.
Conditional life insurance coverage is void if the application contains any
material misrepresentation or if the premium check submitted is not honored by
the bank on first presentations. Benefits will also be denied if any proposed
insured commits suicide, whether sane or insane. In addition, the proposed
insured must be more than 15 days and less than 70 years of age on the date of
the application.
Conditional life insurance coverage terminates automatically, and without
notice, on the earliest of:
- the date we determine the insured has satisfied our underwriting
requirements, that is, on the issue date; or
- the proposed insured receives notice that their application has been
declined, and in no event later than 12:01 a.m. Pacific Standard Time of
the fifth day after Farmers has mailed a letter giving such notice; or
- We received the proposed insured's or the owner's signed request to
cancel the application.
If the application is declined or canceled, the full amount paid with the
application will be refunded.
FULL INSURANCE COVERAGE. Once we determine that the insured meets our
underwriting requirements, full insurance coverage begins, we issue the Policy,
and we begin to deduct monthly charges from your premium. This date is the issue
date. On the issue date, we will allocate your premium (less the monthly
deduction) to the fixed account. On the reallocation date (the issue date, plus
the number of days in your state's right to examine period, plus 15 days), we
will transfer your Contract Value from the fixed account to the subaccounts and
fixed account as you directed on your application.
OWNERSHIP RIGHTS
The Policy belongs to the owner named in the application. The owner may
exercise all of the rights and options described in the Policy. The owner is the
insured unless the application specifies a different person as the insured. If
the owner dies before the insured and no contingent owner is named, then
ownership of the Policy will pass to the owner's estate. The owner may exercise
certain rights described below.
18
<PAGE> 25
CHANGING THE - You may change the owner by providing a written request
OWNER to us at any time while the insured is alive.
- The change takes effect on the date that the written
request is signed.
- We are not liable for any actions we made before we
received the written request.
- Changing the owner does not automatically change the
beneficiary.
- Changing the owner may have tax consequences. You should
consult a tax adviser before changing the owner.
SELECTING AND - You designate the beneficiary (the person to receive the
CHANGING THE death benefit when the insured dies) in the application.
BENEFICIARY - If you designate more than one beneficiary, then each
beneficiary shares equally in any death benefit proceeds
unless the beneficiary designation states otherwise.
- If the beneficiary dies before the insured, then any
contingent beneficiary becomes the beneficiary.
- If both the beneficiary and contingent beneficiary die
before the insured, then we will pay the death benefit to
the owner or the owner's estate once the insured dies.
- You can request a delay clause which provides that if the
beneficiary dies within a specified number of days (maximum
180 days) following the insured's death, then the death
benefit proceeds will be paid as if the beneficiary had died
first.
- You can change the beneficiary by providing us with a
written request while the insured is living.
- The change in beneficiary is effective as of the date you
sign the written request.
- We are not liable for any actions we made before we
received the written request.
ASSIGNING THE - You may assign Policy rights while the insured is alive.
POLICY - The owner retains any ownership rights that are not
assigned.
- Assignee may not change the owner or the beneficiary, and
may not elect or change an optional method of payment.
We will pay any amount payable to the assignee in a lump
sum.
- Claims under any assignment are subject to proof of
interest and the extent of the assignment.
- We are not:
- bound by any assignment unless we receive a written
notice of the assignment
- responsible for the validity of any assignment
- liable for any payment we made before we received
written notice of the assignment
- Assigning the Policy may have tax consequences. See
"Federal Tax Considerations."
CANCELING A POLICY
You may cancel a Policy during the "right-to-examine period" by returning it
to the agent who sold it, to one of our branch offices, or to us. In most
states, the right-to-examine period expires 10 days after you receive the
Policy. This period will be longer if required by state law. If you decide to
cancel the Policy
19
<PAGE> 26
during the right-to-examine period, we will treat the Policy as if we never
issued it. Within seven calendar days after we receive the returned Policy, we
will refund an amount equal to the greater of Contract Value at the end of the
Valuation Date on which we receive the returned Policy at our Service Center or
the sum of all premiums paid for the Policy.
PREMIUMS
PREMIUM FLEXIBILITY
You have flexibility to determine the frequency and the amount of the
premiums you pay. You do not have to pay premiums according to any schedule.
However, you greatly increase your risk of lapse if you do not regularly pay
premiums at least as large as the current minimum premium.
Before we issue a Policy, we will require you to pay the premium indicated
on your Policy's specification page. Thereafter, you may pay premiums ($25
minimum) at any time. You must make all premium payments to our Service Center
or to one of our authorized agents. We reserve the right to limit the number and
amount of any unscheduled premium payments. You may not pay any premiums after
the insured reaches attained age 100.
We multiple each premium by the percent of premium factor (currently 0.95)
and credit the resulting value to the Contract Value. We retain the balance of
each premium to compensate us for certain expenses such as premium taxes and
selling expenses.
WE WILL TREAT ANY PAYMENT YOU MAKE AS A PREMIUM PAYMENT UNLESS YOU CLEARLY
MARK IT AS A LOAN REPAYMENT. We have the right to limit or refund any premium,
if the premium would disqualify the Policy as a life insurance contract under
the Internal Revenue Code, or if the payment would increase the death benefit by
more than the amount of the premium. Your Policy's specifications page will show
the maximum premium amount. If we return a portion of your premium based on the
maximum premium amount, we will not allow you to make additional premium
payments until they are allowed by the maximum premium limitations.
You can stop paying premiums at any time and your Policy will continue in
force until the earlier of the maturity date (when the insured reaches attained
age 110), or the date when either (1) the insured dies, or (2) the grace period
ends after the Surrender Value has been exhausted, or (3) we receive your signed
request to surrender the Policy.
MINIMUM PREMIUMS
The full initial premium is the only premium required to be paid under the
Policy. However, you greatly increase your risk of lapse if you do not regularly
pay premiums at least as large as the current minimum premium. PAYING THE
CURRENT MINIMUM PREMIUM EACH MONTH WILL NOT NECESSARILY KEEP YOUR POLICY IN
FORCE. Additional premiums may be necessary to keep the Policy in force.
The initial minimum premium and payment mode (annual and monthly) are shown
on your Policy's specifications page, and depends on a number of factors
including the age, sex, and risk class of the proposed insured, and the
principal sum requested.
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The minimum premium will change if :
- you increase or decrease the principal sum;
- you change or add a rider;
- you take a partial withdrawal when you have elected the level death
benefit option (Option B); or
- the insured's class changes (for example, from smoker to non-smoker,
or from standard to substandard).
If your Surrender Value (Contract Value, minus any surrender charge, and
minus any outstanding loan amount and interest owed) becomes zero or less, so
that you cannot pay the monthly deduction, and if the cumulative premiums you
have paid, less withdrawals, are less than the cumulative minimum premiums
required under your Policy (that is, the sum of all past monthly-mode minimum
premiums due since the Policy has been in effect), then your Policy will enter a
61 day grace period during which you must make a sufficient payment to keep the
Policy in force. But if the cumulative premiums you have paid, less withdrawals,
are greater than the cumulative minimum premiums required under your Policy,
then your Policy will enter a grace period only if your Contract Value, minus
any outstanding loans and interest owed, is insufficient to pay the entire
monthly deduction.
PLANNED PREMIUMS
We will determine a planned premium payment schedule which allows you to pay
level premiums at fixed intervals over a specified period of time. You are not
required to pay premiums according to this schedule. You may change the amount,
frequency, and the time period over which you make your planned premium payments
by sending us a written request. We have the right to limit the amount of any
increase in planned premium payments. Even if you make your planned premium
payments on schedule, your Policy may still lapse if investment experience is
poor, or if your Surrender Value (or Contract Value, if applicable) is
insufficient to pay the monthly deduction. See Policy Lapse.
REINSTATEMENT
If you do not pay premiums for three years, you can reinstate the Policy
to a premium-paying basis by paying 2 monthly minimum premiums.
ALLOCATING PREMIUMS
When you apply for a Policy, you must instruct us to allocate your premium
to one or more subaccounts of the variable account and to the fixed account
according to the following rules:
- you must put at least 1% of each premium in any subaccount or the fixed
account you select;
- allocation percentages must be in whole numbers and the sum of the
percentages must equal 100.
You can change the allocation instructions for additional premiums without
charge at any time by providing us with written notification (or any other
notification we deem satisfactory). Any allocation change will be effective on
the date we record the change. Any future net premiums will be allocated in
accordance with the new allocation, unless we receive contrary written
instructions. We reserve the right to limit the number of premium allocation
changes. We also reserve the right to limit the number of subaccount allocations
in effect at any one time.
Investment returns from amounts allocated to the subaccounts will vary with
the investment experience of these subaccounts and will be reduced by Policy
charges. YOU BEAR THE ENTIRE INVESTMENT RISK FOR AMOUNTS YOU ALLOCATE TO THE
SUBACCOUNTS.
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On the issue date, we will allocate your Contract Value to the fixed
account. We also allocate any premiums we receive from the issue date to the
reallocation date (the issue date, plus the number of days in your state's right
to examine period, plus 15 days) to the fixed account. On the reallocation date,
we will reallocate the Contract Value in the fixed account to the other
subaccounts (at the unit value next determined) and the fixed account in
accordance with the allocation percentages provided in the application. We
invest all premiums paid after the reallocation date on the Valuation Day they
are received in our Service Center. We credit these premiums to the subaccounts
at the unit value next determined after we receive your payment.
CONTRACT VALUES
CONTRACT VALUE
CONTRACT VALUE - serves as the starting point for calculating values under
a Policy
- equals the sum of all values in each subaccount and the
fixed account
- is determined on the issue date and on each Valuation Day
- has no guaranteed minimum amount and may be more or less
than premiums paid
SURRENDER VALUE
The Surrender Value is the amount we pay when you surrender your Policy. We
determine the Surrender Value at the end of the Valuation Period when we receive
your written surrender request.
SURRENDER VALUE - the Contract Value as of such date; MINUS
ON ANY - any surrender charge as of such date; MINUS
VALUATION DAY - any outstanding Policy loans; MINUS
EQUALS: - any interest you owe on the Policy loans.
SUBACCOUNT VALUE
Each subaccount's value is the Contract Value in that subaccount. At the end
of any Valuation Period, the subaccount's value is equal to the number of units
that the Policy has in the subaccount, multiplied by the unit value of that
subaccount.
THE NUMBER OF - the initial units purchased at the unit value on the
UNITS IN ANY issue date; PLUS
SUBACCOUNT ON - units purchased with additional premiums; PLUS
ANY VALUATION - units purchased via transfers from another subaccount
DAY EQUALS: or the fixed account; MINUS
- units redeemed to pay for monthly deductions; MINUS
- units redeemed to pay for withdrawals; MINUS
- units redeemed as part of a transfer to another
subaccount or the fixed account.
Every time you allocate or transfer money to or from a subaccount, we
convert that dollar amount into units. We determine the number of units we
credit to, or subtract from, your Policy by dividing
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<PAGE> 29
the dollar amount of the allocation, transfer, or withdrawal, by the unit value
for that subaccount at the end of the Valuation Period.
SUBACCOUNT UNIT VALUE
The value (or price) of each subaccount will reflect the investment
performance of the portfolio in which the subaccount invests. Unit values will
vary among subaccounts. The unit value of each subaccount was originally
established at $10 per unit. The unit value may increase or decrease from one
Valuation Period to the next.
The unit value of any subaccount at the end of a Valuation Period is
calculated as:
A x B, where:
"A" is the subaccount's unit value for the end of the immediately
preceding Valuation Day; and
"B" is the net investment factor for the most current Valuation Day.
The net investment factor is an index we use to measure the investment
performance of a subaccount from one Valuation Period to the next. Each
subaccount has a net investment factor for each Valuation Period that may be
greater or less than one. Therefore, the value of a unit (and the value of a
subaccount) may increase or decrease. We determine the net investment factor for
any subaccount for any Valuation Period by the following formula:
X Z
--- -
Y
"X" equals:
1. the net asset value per unit held in the subaccount at the end of the
current Valuation Day; PLUS
2. the per unit amount of any dividend or capital gain distribution on
shares held in the subaccount during the current Valuation Day; LESS
3. the per unit amount of any capital loss distribution on shares held in
the subaccount during the current Valuation Day; LESS
4. the per unit amount of any taxes or any amount set aside during the
Valuation Day as a reserve for taxes.
"Y" equals the net asset value per unit held in the subaccount as of the end of
the immediately preceding Valuation Day.
"Z" equals the mortality and expense risk charge.
FIXED ACCOUNT VALUE
On the issue date, the fixed account value is equal to the premiums
allocated to the fixed account, less the portion of the first monthly deduction
taken from the fixed account.
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<PAGE> 30
THE FIXED ACCOUNT - "A" is the fixed account value on the preceding
VALUE AT THE END Valuation Day plus interest from the preceding
OF ANY VALUATION Valuation Day to the date of calculation; PLUS
PERIOD IS EQUAL TO
A+B+C-D-E-F: - "B" is the portion of the premium(s), multiplied by the
percent of premium factor, allocated to the
fixed account since the preceding Valuation Day plus
interest from the date such premiums were received to
the date of calculation; PLUS
- "C" any amounts transferred to the fixed account since
the preceding Valuation Day plus interest from the
effective date of such transfers to the date of
calculation; MINUS
- "D" is the amount of any transfer from the fixed
account to the subaccounts since the preceding
Valuation Day plus interest from the effective date of
such transfers to the date of calculation; MINUS
- "E" is the amount of any withdrawals (partial
surrenders) and any applicable surrender
charges deducted from the fixed account since the
preceding valuation day, plus interest on those
surrendered amounts from the effective date of each
withdrawal to the date of calculation; MINUS
- "F" is zero, except on the monthly due date, when it
is a pro-rata share of the monthly deduction for the
month beginning on that monthly due date.
Your Policy's guaranteed minimum fixed account value will not be not less
than the minimum values required by the state where we deliver your Policy.
CHARGES AND DEDUCTIONS
This section describes the charges and deductions that we make under the
Policy to compensate for: (1) the services and benefits we provide; (2) the
costs and expenses we incur; and (3) the risks we assume.
SERVICES AND - the death benefit (principal sum), surrender and loan
BENEFITS WE benefits under the Policy
PROVIDE: - investment options, including premium allocations
- administration of elective options
- the distribution of reports to owners
COSTS AND - costs associated with processing and underwriting
EXPENSES WE applications, issuing and administering the Policy
INCUR: (including any riders)
- overhead and other expenses for providing services and
benefits
- sales and marketing expenses
- other costs of doing business, such as collecting
premiums, maintaining records, processing claims,
effecting transactions, and paying Federal, state and
local premium and other taxes and fees
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<PAGE> 31
RISKS WE ASSUME: - that the cost of insurance charges we may deduct
are insufficient to meet our actual claims because
insureds die sooner than we estimate
- that the costs of providing the services and
benefits under the Policies exceed the charges we
deduct
PREMIUM DEDUCTIONS
When you make a premium payment, we apply a percent of premium factor
currently equal to 0.95 (95%) to the premium to determine the amount that we
will allocate to the subaccounts and the fixed account according to your
instructions. The 5% of each premium we retain compensates us for distribution
expenses and state premium taxes. We may change the percent of premium factor
for new Policies in the future.
MONTHLY DEDUCTION
We take a monthly deduction from the Contract Value on the issue date and on
each monthly due date (the same day of each succeeding month as the issue date,
or, if there is no comparable Valuation Day, the next Valuation Day). We will
make deductions from each subaccount and the fixed account in accordance with
the current premium allocation instructions. If the value of any subaccount or
the fixed account is insufficient to pay that subaccount or fixed account's
portion of the monthly deduction, we will take the monthly deduction on a
pro-rata basis from all accounts (i.e., in the same proportion that the value in
each subaccount and the fixed account bears to the total Contract Value on the
monthly due date). Because portions of the monthly deduction can vary from
month-to-month, the monthly deduction will also vary.
The monthly deduction is equal to:
- The cost of insurance charge for the Policy; PLUS
- The charges for any riders; PLUS
- The monthly administration charge; PLUS
- The special premium factor applied to the cost of insurance for a
special premium class, if any; PLUS
- The flat extra charge for a special premium class, if any.
COST OF INSURANCE. We assess a monthly cost of insurance charge to
compensate us for underwriting the death benefit (i.e., the anticipated cost of
paying a death benefit that exceeds your Contract Value). The charge depends
on a number of variables (Contract Value and age, sex, and risk class of the
insured) that would cause it to vary from Policy to Policy and from monthly due
date to monthly due date.
The cost of insurance charge is equal to the cost of insurance rate at the
insured's attained age, times the number of thousands of Risk Insurance Amount.
The Risk Insurance Amount is:
1. The current death benefit; MINUS
2. The Contract Value at the end of the Valuation Day preceding the monthly
due date; PLUS
3. The monthly administrative charge for the month that begins on the
monthly due date; PLUS
4. Any charges for riders for the month that begins on the monthly due date.
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The Risk Insurance Amount may increase, or decrease, depending on investment
experience, the payment of additional premiums, Policy riders, and the
application of the death benefit percentage formula. Therefore, the cost of
insurance charges can increase or decrease over time.
Cost of insurance rates are based on the sex, attained age, and risk class
of the insured. The cost of insurance rates are generally higher for male
insureds than for female insureds of the same age and risk class, and ordinarily
increase with age. Cost of insurance rates may never exceed the guaranteed
maximum cost of insurance rates shown in Appendix A.
The risk class of the insured will affect the cost of insurance rates. We
currently place insureds into standard rate classes and premium classes
involving higher mortality risks. The cost of insurance rates for classes
involving higher mortality risks are multiples of the standard rates. If the
insured is in a special premium class, the guaranteed maximum monthly cost of
insurance rate will be the rate shown in the table in Appendix A times the
special premium class rating factor shown on your Policy's specification page.
The charge for any attached rider is a separate calculation.
We calculate the cost of insurance separately for the initial principal sum
and for any increase in principal sum. If you request and we approve an increase
in your Policy's principal sum, then a different risk class (and a different
cost of insurance) may apply to the increase, based on the insured's
circumstances at the time of the increase.
The Policies are based on mortality tables that distinguish between men and
women. As a result, the Policy may pay different benefits to men and women of
the same age and risk class. We also offer Policies based on unisex mortality
tables if required by state law.
CHARGES FOR RIDERS. The monthly deduction includes charges for any optional
insurance benefits you add to your Policy by rider.
MONTHLY ADMINISTRATION CHARGE. We deduct this charge to compensate us for
administrative expenses such as recordkeeping, processing death benefit claims
and Policy changes, and overhead costs. The monthly administration charge
equals:
- During first Policy Year = $26;
- After first Policy Year = $5 (ages 21 - 50), or $7 (ages 51 - 80)
SPECIAL PREMIUM CLASS CHARGE. If the insured is in a special premium class,
the guaranteed maximum monthly cost of insurance rate will be the rate shown in
the Policy times the special premium rate factor shown on the Policy's
specifications page. This factor is applied to both current and guaranteed cost
of insurance rate. This charge compensates us for additional costs associated
with claims from the insureds in the special premium class. If applicable to
you, your Policy's specifications page will show the amount of this charge.
FLAT EXTRA CHARGE. We deduct a flat extra charge if the insured is in a
special premium class. This compensates us for the additional costs associated
with the special premium class. The charge, if any, will be shown on your
Policy's specifications page.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a daily charge from your Contract Value in each subaccount to
compensate us for certain mortality and expense risks we assume. The mortality
risk is that an insured will live for a shorter time than we project. The
expense risk is that the expenses that we incur will exceed the administrative
charge limits we set in the Policy. This charge is equal to:
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<PAGE> 33
- your Contract Value in each subaccount MULTIPLIED BY
- the daily pro rata portion of the annual mortality and expense risk
charge rate of 0.90%.
If this charge does not cover our actual costs, we absorb the loss.
Conversely, if the charge more than covers actual costs, the excess is added to
our surplus. We expect to profit from this charge. We may use any profits for
any lawful purpose including covering distribution costs.
SURRENDER CHARGE
We deduct a surrender charge if, during the first 15 Policy years, you:
- fully surrender the Policy, or
- take a partial withdrawal from your Policy, if you have elected a
level death benefit (Option B).
In the case of a full surrender, we pay the remaining Contract Value (less
any outstanding loan amount) to you. The payment you receive is called the
Surrender Value. We reduce the surrender charge at older ages in compliance with
state laws.
If you take a partial withdrawal, we will reduce the Contract Value on a
pro-rata basis from the subaccounts and the fixed account (unless you instruct
us otherwise) by the amount of the partial withdrawal, the processing fee, and
any surrender charge.
THE SURRENDER CHARGE MAY BE SIGNIFICANT. YOU SHOULD CAREFULLY CALCULATE THIS
CHARGE BEFORE YOU REQUEST A SURRENDER. Under some circumstances the level of
surrender charges might result in no Surrender Value available if you surrender
your Policy during the period when surrender charges apply. This will depend on
a number of factors, but is more likely if:
1. you pay premiums equal to or not much higher than the minimum premium
shown in your Policy, or
2. investment performance is too low.
The surrender charge is equal to:
- the appropriate surrender charge factor from the table in Appendix B
for the insured's age on the issue date and the number of full Policy
years since the issue date, MULTIPLIED BY
- the number of thousands of principal sum on the issue date, MINUS
- any reductions in principal sum for which a surrender charge has
already been imposed.
DECREASE IN PRINCIPAL SUM. To determine the surrender charge for a decrease
in principal sum: multiply the appropriate surrender charge factor from the
table in Appendix B by the number of thousands of principal sum at the time of
issue that are now being decreased.
An example of calculating the surrender charge follows: [an example will be
provided by subsequent amendment]
PARTIAL WITHDRAWAL PROCESSING FEE. We deduct a processing fee equal to the
lesser of $25 or 2% of the amount withdrawn.
TRANSFER CHARGE
- We currently allow you to make 6 transfers each year free from charge.
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- We charge $25 for each additional transfer. We will not increase this
charge.
- For purposes of assessing the transfer charge, each written or telephone
request is considered to be one transfer, regardless of the number of
subaccounts (or fixed account) affected by the transfer.
- We deduct the transfer charge from the amount being transferred.
- Transfers we effect on the reallocation date, and transfers due to loans,
do NOT count as transfers for the purpose of assessing this charge.
PORTFOLIO EXPENSES
The value of the net assets of each subaccount reflects the investment
advisory fees, 12b-1 fees in some cases, and other expenses incurred by the
corresponding portfolio in which the subaccount invests. See the portfolio
Annual Expenses Table in this prospectus, and the mutual funds' prospectuses for
further information on these fees and expenses.
We may receive compensation from the investment advisers, administrators,
distributors (and/or an affiliate thereof) of the portfolios in connection with
administrative, distribution, or other services and cost savings experienced by
the investment advisers, administrators or distributors. It is anticipated that
such compensation will be based on assets of the particular portfolios
attributable to the Policy. Some advisers, administrators or distributors may
pay us more than others.
OTHER CHARGES
- We charge $5 for each additional annual report you request.
- We charge $1.50 per $1,000 for each increase in principal sum (this charge
cannot exceed $300).
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DEATH BENEFIT
DEATH BENEFIT PROCEEDS
As long as the Policy is in force, we will pay the death benefit proceeds
once we receive satisfactory proof of the insured's death. We may require return
of the Policy. We will pay the death benefit proceeds to the primary beneficiary
or a contingent beneficiary. If the beneficiary dies before the Insured and
there is no contingent beneficiary, we will pay the death benefit proceeds to
the Owner or the Owner's estate. We will pay the death benefit proceeds in a
lump sum or under a payment option. See Payment Options.
- the death benefit (described below); MINUS
- any past due monthly deductions; MINUS
- any outstanding Policy loan on the date of death; MINUS
DEATH BENEFIT - any interest you owe on the Policy loan(s); PLUS
PROCEEDS EQUAL: - any additional insurance provided by rider.
If all or part of the death benefit proceeds are paid in one sum, we will
pay interest on this sum as required by applicable state law from the date we
receive due proof of the insured's death to the date we make payment.
We may further adjust the amount of the death benefit proceeds under certain
circumstances. See Our Right to Contest the Policy; and Misstatement of Age or
Sex.
DEATH BENEFIT OPTIONS
In your application, you tell us how much life insurance coverage you want
on the life of the insured. We call this the "principal sum" of insurance. You
also chose whether the death benefit we will pay is Option A (variable death
benefit), or Option B (level death benefit through attained age 99). You may
change the death benefit option after the first Policy year.
THE VARIABLE - the principal sum PLUS the Contract Value (determined
DEATH BENEFIT as of the end of the Valuation Period during which the
UNDER OPTION A IS insured dies); OR
THE GREATER OF: - the death benefit required by the Tax Code (Contract
Value on the date of death multiplied by the
applicable death benefit percentage).
Under Option A, the death benefit varies with the Contract Value.
THE LEVEL DEATH - the principal sum on the date of death; OR
BENEFIT UNDER - the death benefit required by the Tax Code (Contract
Value on the date of death multiplied by the
applicable death benefit percentage).
GREATER OF:
Under Option B, your death benefit generally equals the principal amount and
will remain level, unless the death benefit is determined as required by the
Tax Code (Contract Value times the applicable death benefit percentage).
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<PAGE> 36
Under Option A, your death benefit will tend to be higher than under Option
B. However, the monthly insurance chages we deduct will also be higher to
compensate us for our additional risk. Because of this, your Contract Value will
tend to be higher under Option B than under Option A.
In order for the Policy to qualify as life insurance, Federal tax law
requires that your death benefit be at least as much as your Contract Value
multiplied by the applicable death benefit percentage. The death benefit
percentage is based on the insured person's attained age. For example, the
death benefit percentage is 250% for an insured at age 40 or under, and it
declines for older insureds. The following table indicates the applicable death
benefit percentages for different attained ages:
<TABLE>
<CAPTION>
ATTAINED AGE DEATH BENEFIT PERCENTAGE
<S> <C>
40 and under 250%
41 to 45 250% minus 7% for each age over age 40
46 to 50 209% minus 6% for each age over age 45
51 to 55 178% minus 7% for each age over age 50
56 to 60 146% minus 4% for each age over age 55
61 to 65 128% minus 2% for each age over age 60
66 to 70 119% minus 1% for each age over age 65
71 to 74 113% minus 2% for each age over age 70
75 to 90 105%
91 to 94 104% minus 1% for each age over age 90
95 and above 100%
</TABLE>
If the Federal tax code requires us to increase the death benefit by
reference to the death benefit percentages, that increase in the death benefit
will increase our risk, and will result in a higher monthly cost of insurance.
OPTION A EXAMPLE. Assume that the insured's attained age is under 40, that
there have been no decreases in the principal sum, and that there are no
outstanding loans. Under Option A, a Policy with a principal sum of $100,000
will pay a death benefit equal to the greater of $100,000 plus Contract Value or
250% of the Contract Value. Thus, a Policy with a Contract Value of $10,000
will have a death benefit of $60,000 (that is, the greater of $60,000 ($50,000 +
$10,000) or $25,000 (250% of $10,000)).
However, once the Contract Value exceeds $66,666, the death benefit
determined by reference to the death benefit percentage ($66,666 X 250% =
$166,666.50) will be greater than the principal sum plus Contract Value
($100,000 + $66,666 =$166,666). Each additional dollar of Contract Value above
$66,666 will increase the death benefit by $2.50.
Similarly, under this scenario, any time Contract Value exceeds $66,666,
each dollar taken out of Contract Value will reduce the death benefit by $2.50.
OPTION B EXAMPLE. Assume that the insured's attained age is under 40, there
have been no withdrawals or decreases in principal sum, and that there are no
outstanding loans. Under Option B, a Policy with a $100,000 principal sum will
generally pay $100,000 in death benefits. However, because the death benefit
must be equal to or be greater than 250% of Contract Value, any time the
Contract Value exceeds $40,000, the death benefit will be determined as
required by the Tax Code (Contract Value X 250%) and will exceed the principal
sum of $100,000. Each additional dollar added to the Contract Value above
$40,000 will increase the death benefit by $2.50.
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Similarly, so long as the Contract Value exceeds $40,000, each dollar taken
out of the Contract Value will reduce the death benefit by $2.50.
CHANGING DEATH BENEFIT OPTIONS
- You may change death benefit options after the first Policy year.
- You must make your request in writing.
- We may require evidence of insurability.
- You may not make more than one death benefit option change each Policy
year.
- The effective date of the change will be the monthly due date on or
following the date when we approve your request for a change.
- We will send you a Policy endorsement with the change to attach to your
Policy.
- Changing the death benefit option may have tax consequences. You should
consult a tax adviser before changing the death benefit option.
FROM OPTION A (VARIABLE DEATH BENEFIT) TO OPTION B (LEVEL DEATH BENEFIT)
- We do not require evidence of insurability.
- The principal sum will change. The new Option B principal sum will
equal the Option A principal sum plus the Contract Value on the
effective date of the change.
- The minimum premium will increase.
- The change in option affects the determination of the death
benefit since Contract Value is no longer added to the principal
sum. The death benefit will equal the new principal sum (or, if
higher, the Contract Value times the applicable death benefit
percentage).
FROM OPTION B (LEVEL DEATH BENEFIT) TO OPTION A (VARIABLE DEATH BENEFIT)
- You must provide satisfactory evidence of insurability.
- The principal sum will change. The new Option A principal sum will
equal the Option B principal sum less the Contract Value immediately
before the change, but the new principal sum will not be less than
the minimum principal sum shown on your Policy's specifications
page. WE WILL NOT IMPOSE ANY SURRENDER CHARGE SOLELY AS A RESULT OF
THIS CHANGE IN PRINCIPAL SUM.
- The minimum premium will decrease.
- The change in death benefit option affects the determination of
the death benefit since Contract Value will be added to the new
principal sum, and the death benefit will then vary with the
Contract Value.
A change in death benefit option may affect the future monthly cost of
insurance charge, which varies with the Risk Insurance Amount. Generally, the
Risk Insurance Amount is the amount by which
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the death benefit exceeds the Contract Value. (See "Charges and Deductions --
Monthly Deduction -- Cost of Insurance.") If the death benefit does not equal
Contract Value times the death benefit percentage under either Options A or B,
changing from Option A (variable death benefit) to Option B (level death
benefit) will generally decrease the future Risk Insurance Amount. This would
decrease the future cost of insurance charges. Changing from Option B (level
death benefit) to Option A (variable death benefit) generally results in a Risk
Insurance Amount that remains level. Such a change, however, results in an
increase in cost of insurance charges over time, since the cost of insurance
rates increase with the insured's age.
EFFECTS OF WITHDRAWALS ON THE DEATH BENEFIT
If you have selected the variable death benefit (Option A), a withdrawal
will not affect the principal sum. But if you have selected the level death
benefit (Option B), a withdrawal (partial surrender) will reduce the principal
sum by the amount of the withdrawal (not including surrender charges or the
processing fee). The reduction in principal sum will be subject to the terms of
the Changing the Principal Sum section below.
CHANGING THE PRINCIPAL SUM
When you apply for the Policy, you tell us how much life insurance coverage
you want on the life of the insured. We call this the principal sum. After the
first Policy year, you may change the principal sum subject to the conditions
described below. You may make no more than one change per Policy year. We will
send you a Policy endorsement with the change to attach to your Policy.
Increasing the principal sum could increase the death benefit. Decreasing
the principal sum could decrease the death benefit. The amount of change in the
death benefit will depend, among other things, upon the selected death benefit
option and the degree to which the death benefit exceeds the principal sum prior
to the change. Changing the principal sum could affect the subsequent level of
death benefit and Policy values. An increase in the principal sum may increase
the Risk Insurance Amount, thereby increasing your cost of insurance charge.
Conversely, a decrease in the principal sum may decrease the Risk Insurance
Amount, thereby decreasing your cost of insurance charge.
We will not permit any change that would result in your Policy being
disqualified as a life insurance contract under Section 7702 of the Internal
Revenue Code. However, changing the principal sum may have other tax
consequences. You should consult a tax adviser before changing the principal
sum.
INCREASES
- You may increase the principal sum by submitting a written request and
providing evidence of insurability satisfactory to us. The increase
will be effective on the monthly due date following our approval of
your request.
- The minimum increase is $10,000.
- We deduct a processing fee from the Contract Value equal to $1.50 per
$1,000 of increase. The fee cannot exceed $300. The processing fee will
be deducted from the subaccounts and the fixed account on a pro-rata
basis, unless you give us different instructions.
- If the amount of the Contract Value is insufficient to cover the
processing fee, you must add sufficient additional premiums before the
increase in principal sum will become effective.
- Increasing the principal sum will increase your Policy's minimum
premium.
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DECREASES
- You may decrease the principal sum, but not below the minimum principal
sum amount shown on your Policy specifications page.
- You must submit a written request to decrease the principal sum.
Evidence of insurability is not required.
- Any decrease must be at least $______, and will be effective on the
monthly due date following our approval of your request.
- Any decrease will first be used to reduce the most recent increase,
then the next most recent increases in succession, and then the initial
principal sum (subject to a surrender charge).
- We will assess surrender charges. To determine the surrender charge
for a decrease in principal sum, multiply the appropriate surrender
charge factor (see Appendix B) by the number of thousands of principal
sum at the time of issue that are now being decreased. Surrender
charges will be deducted from the subaccounts and the fixed account on
a pro-rata basis, unless you give us different instructions.
- A decrease in principal sum may require that a portion of a Policy's
Surrender Value be distributed as a partial surrender in order to
maintain federal tax compliance.
- Decreasing the principal sum will reduce your Policy's minimum premium.
PAYMENT OPTIONS
There are several ways of receiving proceeds under the death benefit and
surrender provisions of the Policy, other than in a lump sum. Information
concerning these settlement options is available on request. None of these
options vary with the investment performance of a variable account.
SURRENDERS AND WITHDRAWALS
SURRENDERS
- You may make a written request to surrender your Policy for its Surrender
Value as calculated at the end of the Valuation Day when we receive your
request. A surrender may have tax consequences.
- The insured must be alive and the Policy must be in force when you make
your written request. A surrender is effective as of the date when we
receive your written request.
- You will incur a surrender charge if you surrender the Policy during the
first 15 Policy years. See Charges and Deductions.
- Once you surrender your Policy, all coverage and other benefits under it
cease and cannot be reinstated.
- We will pay you the Surrender Value in a lump sum within seven days unless
you request other arrangements.
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- Surrendering the Policy may have tax consequences. See "Federal Tax
Consequences."
PARTIAL WITHDRAWALS
After the second Policy Year, you may request a withdrawal of a portion of
your Contract Value subject to certain conditions. Partial withdrawals may have
tax consequences. See "Federal Tax Consequences."
WITHDRAWAL - You must make your partial withdrawal request to us in
CONDITIONS: writing.
- You may make only one partial withdrawal each calendar
quarter.
- You must request at least $500.
- You cannot withdraw more than 75% of the Surrender Value
without surrendering the Policy.
- You can specify the subaccount(s) and fixed account from which
to make the withdrawal, otherwise we will deduct the amount
from the subaccounts and the fixed account on a pro-rata basis
(that is, according to the percentage of Contract Value
contained in each subaccount and the fixed account).
- We will process the withdrawal at the unit values next
determined after we receive your request.
- We generally will pay a withdrawal request within seven
days after the Valuation Day when we receive the request.
We deduct a $25 processing fee from the Contract Value for each withdrawal,
but in no event will we deduct more than 2% of the amount withdrawn.
In addition, if you make a partial withdrawal during the first 15 years from
the issue date and you have elected the level death benefit (Option B), we will
deduct a surrender charge from your Contract Value. The surrender charge on a
withdrawal is equal to the appropriate surrender charge factor from the table in
Appendix B, multiplied by the number of thousands in principal sum on the issue
date, minus any reductions in principal sum for which we have already imposed a
surrender charge. We will cancel units equal to the amount of the withdrawal,
processing fee, and any surrender charge from the subaccounts and the fixed
account according to your instructions, or on a pro-rata basis if you provide no
instructions.
If the level death benefit (Option B) is in effect at the time of a
withdrawal, we will reduce the principal sum by the amount of the withdrawal
(but not by any surrender charges or the processing fee). See Changing the
Principal Sum -- Decreases. We will not allow any withdrawal to reduce the
principal sum below the minimum principal sum set forth in the Policy.
TRANSFERS
You may make transfers from the subaccounts or from the fixed account. We
determine the amount you have available for transfers at the end of the
Valuation Period when we receive your transfer request. WE MAY MODIFY OR REVOKE
THE TRANSFER PRIVILEGE AT ANY TIME. The following features apply to transfers
under the Policy:
- - You may make an unlimited number of transfers in a Policy Year.
- - You may request transfers in writing (in a form we accept), or by telephone.
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- - For SUBACCOUNT TRANSFERS, you must transfer the lesser of $250, or the total
value in the subaccount.
- - For FIXED ACCOUNT TRANSFERS, you may not transfer more than 25% of the
unloaned value in the fixed account, unless the balance after the transfer
is less than $250, in which case the entire amount will be transferred.
- - We deduct a $25 charge from the amount transferred or from the remaining
Contract Value (your choice) for the 7th and each additional transfer in a
Policy Year. Transfers we effect on the reallocation date and transfers
resulting from loans are NOT treated as transfers for the purpose of the
transfer charge.
- - We consider each written or telephone request to be a single transfer,
regardless of the number of subaccounts (or fixed account) involved.
- - We process transfers based on unit values determined at the end of the
Valuation Day when we receive your transfer request.
TELEPHONE TRANSFERS
Your Policy, as applied for and issued, will automatically receive telephone
transfer privileges unless you provide other instructions. The telephone
transfer privileges allow you to give authority to the registered representative
or agent of record for your Policy to make telephone transfers and to change the
allocation of future payments among the subaccounts and the fixed account on
your behalf according to your instructions. To make a telephone transfer, you
may call __________________ .
Please note the following regarding telephone transfers:
- We are not liable for any loss, damage, cost or expense from complying
with telephone instructions we reasonably believe to be authentic. You
bear the risk of any such loss.
- We will employ reasonable procedures to confirm that telephone
instructions are genuine.
- Such procedures may include requiring forms of personal identification
prior to acting upon telephone instructions, providing written
confirmation of transactions to you, and/or tape recording telephone
instructions received from you.
- If we do not employ reasonable confirmation procedures, we may be
liable for losses due to unauthorized or fraudulent instructions.
The corresponding portfolio of any subaccount determines its net asset value
per each share once daily, as of the close of the regular business session of
the New York Stock Exchange ("NYSE") (usually 4:00 p.m. Eastern time), which
coincides with the end of each Valuation Period. Therefore, we will process any
transfer request we receive after the close of the regular business session of
the NYSE, on any day the NYSE is open, using the net asset value for each share
of the applicable portfolio determined as of the close of the next regular
business session of the NYSE.
If a Policy owner authorizes a third party to transact transfers on the
Policy owner's behalf, we will reallocation the Contract Value, pursuant to the
authorized asset allocation program. We do not offer or participate in any asset
allocation program and we take no responsibility for any third party asset
allocation program. We may suspend or cancel acceptance of a third party's
instructions at any time and may restrict the investment options available for
transfer under third party authorizations.
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LOANS
While the Policy is in force, you may borrow money from us using the Policy
as the only security for the loan. A loan that is taken from, or secured by, a
Policy may have tax consequences. See "Federal Tax Consequences."
LOANS CONDITIONS: - You may take a loan against the Policy for amounts up to
the Surrender Value minus loan interest you would have to
pay to the next Policy anniversary date.
- To secure the loan, we transfer an amount equal to the
loan from the variable account and fixed account to the
loan account, which is a part of the fixed account. If
your loan application does not specify any allocation
instructions, we will transfer the loan from the
subaccounts and the fixed account on a pro-rata basis
(that is, according to the percentage of Contract Value
contained in each subaccount and the fixed account).
- Amounts in the loan account earn interest at the
guaranteed minimum rate of 4% per year, compounded
annually. We may credit the loan account with an interest
rate different than the fixed account.
- We normally pay the amount of the loan within seven days
after we receive a proper loan request. We may postpone
payment of loans under certain conditions. See Payments
We Make.
- We charge you a maximum interest rate of 8% per year on
your loan. Interest is due and payable at the end of each
Policy year, or, if earlier, on the date of any loan
increase or repayment. Unpaid interest becomes part of
the outstanding loan and accrues interest accordingly.
- You may repay all or part of your outstanding loans at
any time. LOAN REPAYMENTS MUST BE AT LEAST $25, AND MUST
BE CLEARLY MARKED AS "LOAN REPAYMENTS" OR THEY WILL BE
CREDITED AS PREMIUMS.
- Upon each loan repayment, we will transfer an amount
equal to the loan repayment from the loan account to the
fixed and/or variable account according to your current
premium allocation schedule.
- We deduct any unpaid loans from the Surrender Value and
death benefit proceeds payable on the insured's death.
- If any unpaid loan, including interest you owe, equals or
exceeds the Contract Value, causing the Surrender Value
to become zero, then your Policy will enter a
61-day grace period. See Policy Lapse.
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EFFECTS OF POLICY LOANS
A Policy loan affects the Policy, because we reduce the death benefit
proceeds and Surrender Value under the Policy by the amount of any outstanding
loan plus interest you owe on the loans. Repaying the loan causes the death
benefit proceeds and Surrender Value to increase by the amount of the repayment.
As long as a loan is outstanding, we hold an amount equal to the loan in the
loan account. This amount is not affected by the variable account's investment
performance and may not be credited with the interest rates accruing on the
fixed account. Amounts transferred from the variable account to the loan account
will affect the value in the variable account because we credit such amounts
with an interest rate we declare rather than a rate of return reflecting the
investment results of the variable account.
There are risks involved in taking a Policy loan, a few of which include the
potential for a Policy to lapse if projected earnings, taking into account
outstanding loans, are not achieved. A Policy loan may also have possible
adverse tax consequences that could occur if a Policy lapses with loans
outstanding. See "Federal Income Tax Considerations." You should consult a tax
adviser before taking out a Policy loan.
We will notify you (and any assignee of record) if the sum of your loans
plus any interest you owe on the loans is more than the Surrender Value. If you
do not submit a sufficient payment within 61 days from the date of the notice,
your Policy may lapse.
POLICY LAPSE
LAPSE
Certain circumstances will cause your Policy to enter a grace period during
which you must make a sufficient payment to keep your Policy in force:
- If your Policy's Surrender Value becomes zero, and cumulative premiums you
have paid, less withdrawals, are less than the cumulative minimum premiums
required under the Policy, then the Policy will enter a 61-day grace
period.
- If cumulative premiums you paid, less withdrawals, are greater than the
cumulative minimum premiums, then the Policy will enter a 61-day grace
period only if the Contract Value (minus outstanding loans and interest
you owe) is too low to pay the entire monthly deduction due.
Whenever your Policy enters the grace period, if you do not make a
sufficient payment before the grace period ends, your Policy will terminate
without value, insurance coverage will no longer be in effect, and you will
receive no benefits. The payment must be sufficient enough to cause either one
of the following conditions:
1. the Surrender Value exceeds zero, after deducting all due and unpaid
monthly deductions; OR
2. cumulative premiums less withdrawals exceed cumulative minimum
premiums; AND Contract Value minus any outstanding loan and interest
you owe exceeds zero, after deducting all due and unpaid monthly
deductions.
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If your Policy meets the circumstances where it would enter into a grace
period, we will mail a notice to your last known address and any assignee of
record. The 61-day grace period begins on the date of the notice. The notice
will specify the minimum payment required and the final date by which we must
receive the payment to keep the Policy from lapsing. If we do not receive the
specified minimum payment by the end of the grace period, all coverage under the
Policy will terminate.
FEDERAL TAX CONSIDERATIONS
The following summary provides a general description of the Federal income
tax considerations associated with a Policy and does not purport to be complete
or to cover all situations. THIS DISCUSSION IS NOT INTENDED AS TAX ADVICE.
Please consult counsel or other qualified tax advisors for more complete
information. We base this discussion on our understanding of the present Federal
income tax laws as they are currently interpreted by the Internal Revenue
Service (the "IRS"). Federal income tax laws and the current interpretations by
the IRS may change.
TAX STATUS OF THE POLICY
A Policy must satisfy certain requirements set forth in the Internal Revenue
Code (Code) in order to qualify as a life insurance contract for Federal income
tax purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law. There is limited guidance as to how these
requirements are to be applied. Nevertheless, we believe that a Policy should
satisfy the applicable Code requirements. Because of the absence of pertinent
interpretations of the Code requirements, there is, however, some uncertainty
about the application of such requirements to the Policy, particularly if the
Policy is issued on a special premium class basis. If it is subsequently
determined that a Policy does not satisfy the applicable requirements, we may
take appropriate steps to bring the Policy into compliance with such
requirements and we reserve the right to restrict Policy transactions in order
to do so.
In certain circumstances, owners of variable life insurance contracts have
been considered for Federal income tax purposes to be the owners of the assets
of the variable account supporting their contracts due to their ability to
exercise investment control over those assets. Where this is the case, the
contract owners have been currently taxed on income and gains attributable to
the separate account assets. There is little guidance in this area, and some
features of the Policies, such as the your flexibility to allocate premiums and
Contract Values, have not been explicitly addressed in published rulings. While
we believe that the Policy does not give you investment control over variable
account assets, we reserve the right to modify the Policy as necessary to
prevent you from being treated as the owner of the variable account assets
supporting the Policy.
In addition, the Code requires that the investments of the variable account
be "adequately diversified" in order to treat the Policy as a life insurance
contract for Federal income tax purposes. We intend that the variable account,
through the portfolios, will satisfy these diversification requirements.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
IN GENERAL. We believe that the death benefit under a Policy should be
excludible from the beneficiary's gross income. Federal, state and local
transfer, and other tax consequences of ownership or
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receipt of Policy proceeds depend on your circumstances and the beneficiary's
circumstances. You should consult a tax advisor on these consequences.
Generally, you will not be deemed to be in constructive receipt of the
Contract Value until there is a distribution. When distributions from a Policy
occur, or when loans are taken out from or secured by (e.g., by assignment), a
Policy, the tax consequences depend on whether the Policy is classified as a
"Modified Endowment Contract."
MODIFIED ENDOWMENT CONTRACTS. Under the Code, certain life insurance
policies are classified as "Modified Endowment Contracts" ("MECs") and receive
less favorable tax treatment than other life insurance contracts. Due to the
Policy's flexibility, each Policy's circumstances will determine whether the
Policy is classified as a MEC. The rules are too complex to be summarized here,
but generally depend on the amount of premiums paid during the first seven
Policy years. Certain changes in a Policy after it is issued (including a
reduction in benefits at any time after issuance) could also cause it to be
classified as a MEC. If you do not want your Policy to be classified as a MEC,
you should consult a tax advisor to determine the circumstances, if any, under
which your Policy would not be classified as a MEC.
DISTRIBUTIONS FROM MODIFIED ENDOWMENT CONTRACTS. Policies classified as
MECs are subject to the following tax rules:
- All distributions other than death benefits from a MEC, including
distributions upon surrender and withdrawals, will be treated first as
distributions of gain taxable as ordinary income and as tax-free recovery
of the Policy owner's investment in the Policy only after all gain has
been distributed.
- Loans taken from or secured by (e.g., by assignment) such a Policy are
treated as distributions and taxed accordingly.
- A 10% additional income tax is imposed on the amount included in income
except where the distribution or loan is made when you have attained age
59 1/2 or are disabled, or where the distribution is part of a series of
substantially equal periodic payments for your life (or life expectancy)
or the joint lives (or joint life expectancies) of you, the beneficiary.
- If a Policy becomes a MEC, distributions that occur during the Policy
year will be taxed as distributions from a MEC. In addition, distributions
from a Policy within two years before it becomes a MEC will be taxed in
this manner. This means that a distribution from a Policy that is not a
MEC at the time when the distribution is made could later become taxable
as a distribution from a MEC.
DISTRIBUTIONS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS.
Distributions from a Policy that is not a MEC are generally treated first as a
recovery of your investment in the Policy, and as taxable income after the
recovery of all investment in the Policy. However, certain distributions which
must be made in order to enable the Policy to continue to qualify as a life
insurance contract for Federal income tax purposes if Policy benefits are
reduced during the first 15 Policy Years may be treated in whole or in part as
ordinary income subject to tax.
Loans from or secured by a Policy that is not a MEC are generally not
treated as distributions.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a MEC are subject to the 10% additional tax.
INVESTMENT IN THE POLICY. Your investment in the Policy is generally your
aggregate premiums. When a distribution is taken from the Policy, your
investment in the Policy is reduced by the amount of the distribution that is
tax-free.
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POLICY LOANS. If a loan from a Policy is outstanding when the Policy is
cancelled or lapses, the amount of the outstanding indebtedness will be added to
the amount distributed and will be taxed accordingly. In general, interest you
pay on a loan from a Policy will not be deductible. Before taking out a Policy
loan, you should consult a tax advisor as to the tax consequences.
MULTIPLE POLICIES. All MECs that we issue (or that our affiliates issue) to
the same owner during any calendar year are treated as one MEC for purposes of
determining the amount includible in the owner's income when a taxable
distribution occurs.
BUSINESS USES OF THE POLICY. The Policy may be used in various arrangements,
including nonqualified deferred compensation or salary continuance plans, split
dollar insurance plans, executive bonus plans, retiree medical benefit plans and
others. The tax consequences of such plans and business uses of the Policy may
vary depending on the particular facts and circumstances of each individual
arrangement and business uses of the Policy. Therefore, if you are contemplating
using the Policy in any arrangement the value of which depends in part on its
tax consequences, you should be sure to consult a tax advisor as to tax
attributes of the arrangement.
POSSIBLE TAX LAW CHANGES. While the likelihood of legislative changes is
uncertain, there is always a possibility that the tax treatment of the Policy
could change by legislation or otherwise. It is even possible that any
legislative change could be retroactive (effective prior to the date of the
change). Consult a tax advisor with respect to legislative developments and
their effect on the Policy.
POSSIBLE CHARGES FOR OUR TAXES. At the present time, we make no charge for
any Federal, state or local taxes (other than the charge for state premium
taxes) that may be attributable to the subaccounts or to the Policy. We reserve
the right to impose charges for any future taxes or economic burden we may
incur.
OTHER POLICY INFORMATION
OUR RIGHT TO CONTEST THE POLICY
In issuing this Policy, we rely on all statements made by or for the insured
in the application or in a supplemental application. Therefore, if you make any
material misrepresentation of a fact in the application (or any supplemental
application), then we may contest the Policy's validity or may resist a claim
under the Policy.
In the absence of fraud, we cannot bring any legal action to contest the
validity of the Policy after the Policy has been in force during the insured's
lifetime for two years from the issue date, or if reinstated, for two years from
the date of reinstatement. We will not contest any increase in principal sum
after the increase has been in force for two years during the insured's
lifetime. This provision also applies to any riders.
SUICIDE EXCLUSION
If the insured commits suicide, while sane or insane, within two years of
the issue date, the Policy will terminate and our liability is limited to an
amount equal to the premiums paid, LESS any loans, and LESS any withdrawals
previously paid. A new two-year period will apply to each increase in principal
sum starting on the effective date of each increase. During this two-year
period, the death benefit proceeds paid that are associated with an increase in
principal sum will be limited to the monthly cost of insurance charges for the
increase.
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MISSTATEMENT OF AGE OR SEX
If the insured's age or sex was stated incorrectly in the application or any
supplemental application, we will adjust the death benefit to the amount that
would have been payable at the correct age and sex based on the most recent
deduction for cost of insurance. If the insured's age has been overstated or
understated, we will calculate future monthly deductions using the cost of
insurance based on the insured's correct age and sex.
MODIFYING THE POLICY
Only one of our officers may modify this Policy or waive any of our rights
or requirements under this Policy. Any modification or waiver must be in
writing. No agent may bind us by making any promise not contained in this
Policy.
Upon notice to you, we may modify the Policy to:
- conform the Policy, our operations, or the variable account's
operations to the requirements of any law (or regulation issued by a
government agency) to which the Policy, our company or the variable
account is subject;
- assure continued qualification of the Policy as a life insurance
contract under the Federal tax laws; or
- reflect a change in the variable account's operation.
If we modify the Policy, we will make appropriate endorsements to the
Policy. If any provision of the Policy conflicts with the laws of a jurisdiction
that govern the Policy, we will amend the provision to conform with such laws.
WHEN WE WILL MAKE PAYMENTS
We usually pay the amounts of any surrender, withdrawal, death benefit
proceeds, or settlement options within seven business days after we receive all
applicable written notices and/or due proofs of death. However, we can postpone
such payments if:
- the NYSE is closed, other than customary weekend and holiday closing,
or trading on the NYSE is restricted as determined by the Securities
and Exchange Commission (SEC); OR
- the SEC permits, by an order, the postponement for the protection of
Owners; OR
- the SEC determines that an emergency exists that would make the
disposal of securities held in the variable account or the
determination of their value not reasonably practicable.
If you have submitted a recent check or draft, we have the right to defer
payment of surrenders, withdrawals, death benefit proceeds, or payments under a
payment option until such check or draft has been honored.
REPORTS TO OWNERS
At least once each year, or more often as required by law, we will mail to
Owners at their last known address a report showing the following information as
of the end of the report period:
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- - the current principal sum
- - the current death benefit
- - the Contract Value
- - the fixed account value
- - the number of units, the unit value, and
the total value in each subaccount
- - the Surrender Value
- - any withdrawals since the last report
- - premiums paid since the last report
- - fixed account transactions since the last report
- - all deductions since the last report
- - the amount of any outstanding loans
- - loan repayments since the last report
- - the dollar amount, the number of
units involved, and the unit value
of each subaccount transaction
You may request additional copies of reports for a $5 fee. We will maintain
all records relating to the variable account and the fixed account.
POLICY TERMINATION
Your Policy will terminate on the earliest of:
- the maturity date - the end of the grace
(insured's attained age 110) period without a
sufficient payment
- the date the insured - the date you surrender the
dies Policy
SUPPLEMENTAL BENEFITS (RIDERS)
The following supplemental benefits (riders) are available and may be added
to a Policy. The cost of these benefits is added to the monthly deduction. The
riders available with the Policies provide fixed benefits that do not vary with
the investment experience of the variable account.
- waiver of monthly deductions due to insured's total disability
- term insurance on the insured's dependent children
- payment of an accidental death benefit if the insured's death was
caused by accidental bodily injury
- term insurance on additional insureds
- payment of a monthly disablity benefit to the fixed account if the
insured is totally disabled. This rider is designed to ensure the
Policy remains in force even during periods when the policyowner is
disabled and cannot pay normal premium. Surrender charges would be
assessed and normal withdrawal limits (as explained on page __) would
apply if you withdrew the monthly disability benefit.
The benefits and restrictions are described in each rider. We will provide
samples of these provisions upon request.
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PERFORMANCE DATA
HYPOTHETICAL ILLUSTRATIONS BASED ON ADJUSTED HISTORIC PORTFOLIO PERFORMANCE
In order to demonstrate how the actual investment experience of the
portfolios could have affected the death benefit, Contract Value and Surrender
Value of the Policy, we will provide hypothetical illustrations using the actual
investment experience of each portfolio since its inception. THESE HYPOTHETICAL
ILLUSTRATIONS ARE DESIGNED TO SHOW THE PERFORMANCE THAT COULD HAVE RESULTED IF
THE POLICY HAD BEEN IN EXISTENCE DURING THE PERIOD ILLUSTRATED.
The values we illustrate for death benefit, Contract Value and Surrender
Value take into account all charges and deductions from the Policy, the variable
account and the portfolios. We have not deducted premium taxes or charges for
any riders.
For each portfolio, the illustrations show an initial premium of [____] and
a principal sum of $100,000 for a male age 65, female age 65, non-tobacco use.
[HYPOTHETICAL ILLUSTRATIONS BASED ON ADJUSTED HISTORIC PORTFOLIO PERFORMANCE TO
BE PROVIDED BY SUBSEQUENT AMENDMENT]
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ADDITIONAL INFORMATION
SALE OF THE POLICIES
The Policy will be sold by individuals who are licensed as our life
insurance agents and who are also registered representatives of broker-dealers
having written sales agreements for the Policy with _______________________, the
principal underwriter of the Policy. ________________ is located at
________________________________, is registered with the SEC under the
Securities Exchange Act of 1934 as a broker-dealer, and is a member of the
National Association of Securities Dealers, Inc. The maximum sales commission
payable to Farmers' agents or other registered representatives will be
approximately ___% of the premium. In addition, certain production, persistency
and managerial bonuses may be paid. [DETAILS TO BE PROVIDED BY SUBSEQUENT
AMENDMENT]
LEGAL MATTERS
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to the Policy under the Federal securities laws.
All matters of Washington law pertaining to the Policy have been passed upon by
M. Douglas Close, Vice President and General Counsel, Farmers New World Life
Insurance Company.
LEGAL PROCEEDINGS
Like other life insurance companies, we are involved in lawsuits . These
actions are in various stages of discovery and development, and some seek
punitive as well as compensatory damages. While it is not possible to predict
the outcome of such matters with absolute certainty, we believe that the
ultimate disposition of these proceedings should not have a material adverse
effect on the consolidated results of operations or financial position for
Farmers Insurance Group, Inc. In addition, we are, from time to time, involved
as a party to various governmental and administrative proceedings. There are no
pending or threatened lawsuits that will adversely impact the variable account.
YEAR 2000 MATTERS
In 1995, Farmers Group, Inc., our parent company, initiated the "Year 2000
Project" in order to prepare for the information processing challenges presented
by the approach of the new millennium. This project encompasses all major areas
of our operations, including internal and vendor mainframe applications,
mainframe systems software, third party interfaces, non-mainframe systems
software, forms, facilities, and equipment. As we rely on computer software
logic to maintain accurate records, the impact of the issues relating to the
approach of the new millennium is significant to our ongoing performance. As
such, a phased plan has been developed for completing this project. As of
December 31, 1998, the first two phases of the project (the "Awareness and
Initial Impact Assessment" and the "Year 2000 Workpackage and Development
Blueprint Project" phases) have been successfully completed. The project is
currently in its final phase (the "Year 2000 Conversion and Implementation
Phase"). We have completed converting, implementing and testing 99% of its Year
2000 conversion programs. We are
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currently in the process of testing the remaining 1%. Management expects this
phase to be completed by mid-1999.
As of the date of this prospectus, we have identified and made available
what we believe are the appropriate resources of hardware, people and dollars,
including engaging outside third parties, to ensure that the our Year 2000 plan
will be completed. In addition, we have evaluated our relationships with third
parties with which we have a direct and material relationship to determine
whether they are Year 2000 compliant. We have sent out questionnaires and
warranty requests to all third party vendors and are currently in the process of
performing compliance testing with all vendors to validate the vendors' claims
regarding Year 2000 compliance. However, it is not possible to state with
certainty that the operations of third parties will not be materially impacted
in turn by other parties with whom they have business relationships.
Preliminary drafts of our Year 2000 contingency plans have been completed.
These plans are being reviewed and updated as more information become available.
In the event that our vendors do not expect to be Year 2000 compliant, our
contingency plans may include replacing such vendors.
Resolving the Year 2000 computer problem is complex and multifaceted. We
cannot know conclusively whether a response plan is successful until the Year
2000 arrives (or an earlier date if the systems or equipment address Year 2000
data prior to the Year 2000). Even with the appropriate and diligent pursuit of
a well-conceived response plan, including testing procedures, there is no
certainty that any company will achieve complete success. Also, the actions (or
failure to act) of third parties beyond our knowledge or control may affect our
ability to function unaffected to and through the Year 2000. See the Funds'
prospectuses for information on their preparation for Year 2000.
FINANCIAL STATEMENTS
This prospectus does not include financial statements of the variable
account because, as of the date of this prospectus, the variable account had not
yet commenced operations, had no assets, and had incurred no liabilities.
Farmers' financial statements appear in Appendix C. Our financial statements
should be distinguished from the variable account's financial statements and you
should consider our financial statements only as bearing upon our ability to
meet our obligations under the Policies.
45
<PAGE> 52
FARMERS' EXECUTIVE OFFICERS AND DIRECTORS
Farmers is governed by a board of directors. The following table sets forth
the name, address and principal occupation during the past five years of each of
Farmers' executive officers and directors.
BOARD OF DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS POSITION WITH FARMERS DURING PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
Richard E. Bangert Director Director since 1973
- -------------------------------------------------------------------------------
Donald J. Covey Director Director since 1976
- -------------------------------------------------------------------------------
Martin D. Feinstein Director Chairman of the Board of
Farmers Group, Inc. ("FGI")
since 11/97, Chief
Executive Officer of FGI
since 1/97, President of
FGI since 1/95 and director
of FGI since 2/95; director
of Allied Zurich p.l.c.
since 3/98 and member of
Group Executive Board of
Zurich Financial Services;
director of B.A.T. from
1/97 to 9/98; Senior Vice
President-Property and
Casualty Staff of FIG from
10/93 to 1/95;Chief
Operating Officer of FGI
from 1/95 to 1/97.
- -------------------------------------------------------------------------------
James A. MacKinnon Director Executive Vice President
and Chief Operating Officer
of FGI from 7/98 to 5/99;
director of FGI from 5/97
to 5/99; Senior Vice
President-Field
Operations-Mid-West Zone of
FGI from 1/92 to 1/96,
Senior Vice
President-Property and
Casualty of FGI from 1/96
to 1/97 and Executive Vice
President-Insurance
Operations from 1/97 to
1/98. Mr. MacKinnon retired
effective May 1, 1999,
pursuant to normal
retirement policy.
- -------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 53
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS POSITION WITH FARMERS DURING PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
Dennis I. Okamato Director Vice President, U S West
Communications
- -------------------------------------------------------------------------------
Keitha T. Schofield Director Executive Vice
President-Support Services
of FGI since 1/98 and
director of FGI since 5/97;
Senior Vice President and
Chief Information Officer
of FGI from 5/95 to 1/97;
Executive Vice President -
Support Services and Chief
Information Officer from
1/97 to 1/98; Vice
President-Technology
Division of Continental
Airlines, Inc. from 1988
to 5/95.
- -------------------------------------------------------------------------------
Gary R. Severson Director Vice Chairman, Laird
Norton Trust Company
since 1997; Chairman of
the Board, First
Interstate Bank from ___
to ___.
- -------------------------------------------------------------------------------
John F. Sullivan, Jr. Director President, G. J.
Sullivan Company since
______.
- -------------------------------------------------------------------------------
C. Paul Patsis President and Director President, Marketing One
since 1989.
- -------------------------------------------------------------------------------
</TABLE>
The following table gives the name, address and principal occupation during the
past five years of the senior officers of Farmers (other than officers listed
above as directors).
SENIOR OFFICERS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS POSITION WITH FARMERS DURING PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
John R. Patton Assistant Vice President Life Claims Manager for
Farmers from 1985 to
1998; Assistance Vice
President for Staff
Operations since 1998.
- -------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 54
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS POSITION WITH FARMERS DURING PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
Gerald E. Faulwell Vice President Senior Vice President and
Chief Financial Officer of
FGI since 9/98; Vice
President-Strategic
Planning, Budgeting and
Administration of FGI from
1/93 to 1/96 and Senior
Vice President-Strategic
Planning, Budgeting and
Administration of FGI
from 1/96 to 9/98.
- -------------------------------------------------------------------------------
Howard E. Falk, Jr. Vice President and
Assistant Treasurer
- -------------------------------------------------------------------------------
Paul G. Secord Vice President Senior Vice President and
Chief Investment Officer of
FGI since 9/98; Senior Vice
President-Asset Management
of FGI from 12/95 to 9/98;
Senior Vice
President-Equity of Penn
Mutual from 1993 to
1995.
- -------------------------------------------------------------------------------
Kathryn M. Callahan Vice President and Vice President and
Actuary Actuary at Farmers since
1987.
- -------------------------------------------------------------------------------
M. Douglas Close Vice President and
General Counsel
- -------------------------------------------------------------------------------
James I. Randolph Vice President and Vice President and
Assistant Secretary Assistant Secretary at
Farmers since 1991.
- -------------------------------------------------------------------------------
David A. Demmon Assistant Vice President Assistant Vice President
and Treasurer and Treasurer at Farmers
since 1992.
- -------------------------------------------------------------------------------
</TABLE>
Farmers holds the assets of the variable account physically segregated and
apart from the general account. Farmers maintains records of all purchases and
sales of portfolio shares by each of the subaccounts. Additional protection for
the assets of the variable account is provided by a blanket fidelity bond issued
by Federal Insurance Company to Farmers Group, Inc. providing aggregate coverage
of $30,000,000 (subject to a $500,000 deductible) for all officers and employees
of Farmers Group, Inc.
ILLUSTRATIONS
The following illustrations have been prepared to help show how certain
values under the Policy change with different rates of investment performance
over an extended period of time. The illustrations show Contract Value and
Surrender Value as well as Death Benefits. The tables illustrate how Contract
Values and Surrender Values, which reflect all applicable charges and
deductions, and Death Benefits of the Policy of lives insured of given ages,
would vary over time if the return on the assets of the portfolios was a
uniform,
48
<PAGE> 55
gross, after-tax, annual rate of 0%, 6% or 12%. The tables assume that an annual
premium of $______ was paid on the first day of the Policy year. The tables also
show how the Policy would operate if premiums accumulated at 5% interest.
The Contract Values, Surrender Values and Death Benefits shown in the tables
reflect the fact that the net rate of return for each subaccount is lower than
the gross rate of return on the portfolios as a result of expenses and fees
incurred by the portfolios and the variable account. The illustrations assume
that the assets in the portfolios are subject to an annual expense ratio of
0.___% of the average daily net assets. This annual expense ratio assumes an
equal allocation of values between all subaccounts and is based on the
arithmetic average of the expense ratios of each of the portfolios for the last
fiscal year and take into account current expense reimbursement arrangements.
The illustrations reflect the expense reimbursements in effect for the ____ and
_____ portfolios. [Details on current expense reimbursement arrangements will be
provided by subsequent amendment.] For information on portfolio expenses, see
the portfolios' prospectuses.
The illustrations also take into account the daily charge for assuming
mortality and expense risks assets against each subaccounts. This charge is
equivalent to an annual charge of 0.90% of the average net assets in the
subaccounts. The illustrations also take into account the premium charge, the
monthly deduction (using current monthly Policy charges), and the surrender
charges where applicable. Cost of insurance charges are based on the [1980
COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE.]
Taking into consideration the assumed annual average portfolio expenses of
0.___% and the 0.90% annual charge for mortality and expense risks, the gross
annual rates of return of 0%, 6% and 12% correspond to approximate net annual
rates of return of -_.___%, _.___% and _.___%.
The tables illustrating Policy values are based on the assumptions that you
pay the premiums indicated, you do not increase your principal sum, and you do
not make any withdrawals or Policy loans. The values under the Policy will be
different from those shown even if the portfolio returns averaged 0%, 6% or 12%,
but fluctuated over and under those averages throughout the years shown.
THE HYPOTHETICAL INVESTMENT RETURNS ARE PROVIDED ONLY TO ILLUSTRATE THE
MECHANICS OF A HYPOTHETICAL POLICY AND DO NOT REPRESENT PAST OR FUTURE
INVESTMENT RATES OF RETURN. Actual rates of return for a particular Policy may
be more or less than the hypothetical investment rates of return. The actual
return on your Contract Value will depend on factors such as the amounts you
allocate to particular portfolios, the amounts deducted for the Policy's monthly
charges, the portfolios' expense ratios, your Policy loan and withdrawal
history, and rates of inflation.
Separate illustrations on each of the following pages reflect our current
cost of insurance charges and the higher guaranteed maximum cost of insurance
that we have has the contractual right to charge. The illustrations assume no
charges for Federal or state taxes or charges for supplemental benefits.
The illustrations are based on Farmers' sex distinct rates for non-tobacco
users. Upon request, we will furnish a comparable illustration based upon the
proposed Insured's individual circumstances. Such illustrations may assume
different hypothetical rates of return than those illustrated in the following
illustrations.
[to be filed by subsequent amendment]
49
<PAGE> 56
APPENDIX A - GUARANTEED MAXIMUM COST OF INSURANCE RATES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
GUARANTEED MAXIMUM MONTHLY
COST OF INSURANCE RATES
Per $1000 of Risk Insurance Amount
- -------------------------------------------------------------------------------------
Attained Cost of Insurance Attained Cost of Insurance
Age Rate Age Rate
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
21 0.13788 62 1.35058
22 0.13539 63 1.50009
23 0.13207 64 1.66621
24 0.12875 65 1.84812
25 0.12459 66 2.04497
26 0.12210 67 2.25096
27 0.12044 68 2.48520
28 0.11961 69 2.73937
29 0.11961 70 3.02676
30 0.12044 71 3.35485
31 0.12293 72 3.73361
32 0.12625 73 4.16221
33 0.13124 74 4.63317
34 0.13705 75 5.13652
35 0.14370 76 5.66811
36 0.15117 77 6.22379
37 0.16114 78 6.80688
38 0.17194 79 7.43566
39 0.18357 80 8.13005
40 0.19769 81 8.90834
41 0.21264 82 9.78630
42 0.22842 83 10.75978
43 0.24586 84 11.80967
44 0.26497 85 12.91190
45 0.28656 86 14.05233
46 0.30982 87 15.21353
47 0.33474 88 16.39051
48 0.36215 89 17.59988
49 0.39205 90 18.85909
50 0.42611 91 20.19721
51 0.46514 92 21.66408
52 0.51000 93 23.40255
53 0.56150 94 25.73492
54 0.61881 95 29.22599
55 0.68276 96 34.96802
56 0.75254 97 44.93622
57 0.82646 98 61.89321
58 0.90869 99 83.06141
59 1.00089 100-109 0.00000
60 1.10389
61 1.21851
</TABLE>
If the insured is in a special premium class, the guaranteed maximum
monthly cost of insurance rate will be the rate shown in the table times the
special premium class rating factor shown on the Policy Specifications page.
A-1
<PAGE> 57
APPENDIX B - TABLE OF SURRENDER CHARGE FACTORS
To determine the total surrender charge from the table below:
1. Find the appropriate factor for the insured's age at the date of issue
and the number of full policy years completed since that date.
2. Multiply this factor by:
a. the number of thousands of principal sum on the issue date, minus
b. any reductions in principal sum for which a surrender charge has
already been imposed.
To determine the surrender charge for a decrease in principal sum:
1. Find the appropriate factor for the insured's age at the date of issue
and the number of full policy years completed since that date.
2. Multiply this factor by the number of thousands of principal sum at
the time of issue that are now being decreased.
<TABLE>
<CAPTION>
Number of Full Policy Years Completed since the Issue Date
Issue Age 0 1 2 3 4 5 6 7 8
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 8.04 8.04 8.04 8.04 8.04 8.04 7.24 6.43 5.63
22 8.28 8.28 8.28 8.28 8.28 8.28 7.45 6.62 5.80
23 8.52 8.52 8.52 8.52 8.52 8.52 7.67 6.82 5.96
24 8.76 8.76 8.76 8.76 8.76 8.76 7.88 7.01 6.13
25 9.00 9.00 9.00 9.00 9.00 9.00 8.10 7.20 6.30
26 9.60 9.60 9.60 9.60 9.60 9.60 8.64 7.68 6.72
27 10.20 10.20 10.20 10.20 10.20 10.20 9.18 8.16 7.14
28 10.80 10.80 10.80 10.80 10.80 10.80 9.72 8.64 7.56
29 11.40 11.40 11.40 11.40 11.40 11.40 10.26 9.12 7.98
30 12.00 12.00 12.00 12.00 12.00 12.00 10.80 9.60 8.40
31 12.87 12.87 12.87 12.87 12.87 12.87 11.58 10.29 9.01
32 13.73 13.73 13.73 13.73 13.73 13.73 12.36 10.99 9.61
33 14.60 14.60 14.60 14.60 14.60 14.60 13.14 11.68 10.22
34 15.47 15.47 15.47 15.47 15.47 15.47 13.92 12.37 10.83
35 16.34 16.34 16.34 16.34 16.34 16.34 14.70 13.07 11.43
36 17.14 17.14 17.14 17.14 17.14 17.14 15.43 13.71 12.00
37 17.95 17.95 17.95 17.95 17.95 17.95 16.15 14.36 12.56
38 18.76 18.76 18.76 18.76 18.76 18.76 16.88 15.00 13.13
39 19.56 19.56 19.56 19.56 19.56 19.56 17.61 15.65 13.69
40 20.37 20.37 20.37 20.37 20.37 20.37 18.33 16.30 14.26
41 21.55 21.55 21.55 21.55 21.55 21.55 19.39 17.24 15.08
42 22.72 22.72 22.72 22.72 22.72 22.72 20.45 18.18 15.91
43 23.90 23.90 23.90 23.90 23.90 23.90 21.51 19.12 16.73
44 25.07 25.07 25.07 25.07 25.07 25.07 22.57 20.06 17.55
45 26.25 26.25 26.25 26.25 26.25 26.25 23.63 21.00 18.38
46 28.03 28.03 28.03 28.03 28.03 28.03 25.23 22.42 19.62
47 29.81 29.81 29.81 29.81 29.81 29.81 26.83 23.85 20.87
48 31.59 31.59 31.59 31.59 31.59 31.59 28.43 25.27 22.11
49 33.37 33.37 33.37 33.37 33.37 33.37 30.03 26.69 23.36
50 35.15 35.15 35.15 35.15 35.15 35.12 31.63 28.12 24.60
</TABLE>
<TABLE>
<CAPTION>
Number of Full Policy Years Completed since the Issue Date
15
Issue Age 9 10 11 12 13 14 or more
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
21 4.82 4.02 3.22 2.41 1.61 0.80 0.00
22 4.97 4.14 3.31 2.48 1.66 0.83 0.00
23 5.11 4.26 3.41 2.56 1.70 0.85 0.00
24 5.26 4.38 3.50 2.63 1.75 0.88 0.00
25 5.40 4.50 3.60 2.70 1.80 0.90 0.00
26 5.76 4.80 3.84 2.88 1.92 0.96 0.00
27 6.12 5.10 4.08 3.06 2.04 1.02 0.00
28 6.48 5.40 4.32 3.24 2.16 1.08 0.00
29 6.84 5.70 4.56 3.42 2.28 1.14 0.00
30 7.20 6.00 4.80 3.60 2.40 1.20 0.00
31 7.72 6.43 5.15 3.86 2.57 1.29 0.00
32 8.24 6.87 5.49 4.12 2.75 1.37 0.00
33 8.76 7.30 5.84 4.38 2.92 1.46 0.00
34 9.28 7.73 6.19 4.64 3.09 1.55 0.00
35 9.80 8.17 6.53 4.90 3.27 1.63 0.00
36 10.29 8.57 6.86 5.14 3.43 1.71 0.00
37 10.77 8.97 7.18 5.38 3.59 1.79 0.00
38 11.25 9.38 7.50 5.63 3.75 1.88 0.00
39 11.74 9.78 7.83 5.87 3.91 1.96 0.00
40 12.22 10.19 8.15 6.11 4.07 2.04 0.00
41 12.93 10.77 8.62 6.46 4.31 2.15 0.00
42 13.63 11.36 9.09 6.82 4.54 2.27 0.00
43 14.34 11.95 9.56 7.17 4.78 2.39 0.00
44 15.04 12.54 10.03 7.52 5.01 2.51 0.00
45 15.75 13.13 10.50 7.88 5.25 2.63 0.00
46 16.82 14.01 11.21 8.41 5.61 2.80 0.00
47 17.88 14.90 11.92 8.94 5.96 2.98 0.00
48 18.95 15.79 12.63 9.48 6.32 3.16 0.00
49 20.02 16.68 13.35 10.01 6.67 3.34 0.00
50 21.09 17.57 14.06 10.54 7.03 3.51 0.00
</TABLE>
B-1
<PAGE> 58
<TABLE>
<CAPTION>
Number of Full Policy Years Completed since the Issue Date
Issue Age 0 1 2 3 4 5 6 7 8
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
51 37.00 37.00 37.00 37.00 37.00 36.30 33.30 29.60 25.90
52 38.86 38.86 38.86 38.86 38.55 37.55 34.97 31.09 27.20
53 40.72 40.72 40.72 40.72 39.94 38.87 36.64 32.57 28.50
54 42.57 42.57 42.57 42.56 41.42 40.26 38.32 34.06 29.80
55 44.43 44.43 44.43 44.21 42.97 41.73 39.99 35.54 31.10
56 47.80 47.80 47.27 45.95 44.62 43.28 41.93 38.24 33.46
57 51.17 50.63 49.22 47.80 46.36 44.92 43.47 40.94 35.82
58 54.35 52.84 51.31 49.76 48.21 46.66 45.10 43.55 38.18
59 56.83 55.18 53.52 51.86 50.18 48.51 46.84 45.18 40.54
60 58.26 56.51 54.75 52.99 51.22 49.46 47.70 45.94 42.90
</TABLE>
<TABLE>
<CAPTION>
Number of Full Policy Years Completed since the Issue Date
15
Issue Age 9 10 11 12 13 14 or more
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
51 22.20 18.50 14.80 11.10 7.40 3.70 0.00
52 23.32 19.43 15.54 11.66 7.77 3.89 0.00
53 24.43 20.36 16.29 12.21 8.14 4.07 0.00
54 25.54 21.29 17.03 12.77 8.51 4.26 0.00
55 26.66 22.22 17.77 13.33 8.89 4.44 0.00
56 28.68 23.90 19.12 14.34 9.56 4.78 0.00
57 30.70 25.59 20.47 15.35 10.23 5.12 0.00
58 32.73 27.27 21.82 16.36 10.91 5.45 0.00
59 34.75 28.96 23.17 17.38 11.58 5.79 0.00
60 36.77 30.65 24.52 18.39 12.26 6.13 0.00
</TABLE>
SURRENDER CHARGE TABLE
(Continued)
<TABLE>
<CAPTION>
Number of Full Policy Years Completed since the Issue Date
Issue Age 0 1 2 3 4 5 6 7 8
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
61 58.20 56.38 54.57 52.75 50.93 49.12 47.31 45.50 43.70
62 58.13 56.26 54.38 52.51 50.64 48.77 46.91 45.06 43.22
63 58.07 56.13 54.20 52.27 50.34 48.42 46.51 44.61 42.74
64 58.00 56.01 54.01 52.02 50.03 48.06 46.10 44.16 42.26
65 57.94 55.87 53.81 51.76 49.71 47.68 45.68 43.72 41.80
66 57.87 55.73 53.60 51.49 49.38 47.31 45.27 43.29 41.37
67 57.79 55.58 53.38 51.21 49.05 46.95 44.89 42.90 40.96
68 57.71 55.43 53.17 50.93 48.74 46.61 44.54 42.53 40.58
69 57.63 55.28 52.95 50.68 48.46 46.31 44.22 42.19 40.22
70 57.55 55.13 52.76 50.45 48.21 46.04 43.93 41.87 39.87
71 57.48 55.01 52.60 50.26 48.00 45.80 43.66 41.56 39.52
72 57.42 54.91 52.47 50.10 47.81 45.57 43.39 41.25 39.17
73 57.37 54.83 52.35 49.96 47.62 45.33 43.10 40.93 38.82
74 57.34 54.75 52.24 49.80 47.41 45.08 42.80 40.60 38.49
75 57.30 54.67 52.11 49.61 47.17 44.79 42.49 40.28 38.19
76 57.25 54.57 51.95 49.40 46.90 44.49 42.18 39.99 37.92
77 57.19 54.45 51.77 49.16 46.63 44.21 41.91 39.74 37.69
78 57.12 54.31 51.57 48.92 46.38 43.97 41.69 39.54 37.51
79 57.05 54.17 51.38 48.72 46.18 43.79 41.53 39.39 37.34
80 56.97 54.04 51.24 48.57 46.06 43.69 41.43 39.28 37.18
</TABLE>
<TABLE>
<CAPTION>
Number of Full Policy Years Completed since the Issue Date
15
Issue Age 9 10 11 12 13 14 or more
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
61 39.03 32.53 26.02 19.52 13.01 6.51 0.00
62 41.29 34.41 27.53 20.64 13.76 6.88 0.00
63 40.90 36.29 29.03 21.77 14.52 7.26 0.00
64 40.41 38.17 30.54 22.90 15.27 7.63 0.00
65 39.95 38.15 32.04 24.03 16.02 8.01 0.00
66 39.51 37.70 33.76 25.32 16.88 8.44 0.00
67 39.09 37.26 35.47 26.61 17.74 8.87 0.00
68 38.68 36.83 35.02 27.90 18.60 9.30 0.00
69 38.29 36.41 34.57 29.19 19.46 9.73 0.00
70 37.90 35.99 34.14 30.47 20.32 10.16 0.00
71 37.52 35.59 33.75 31.99 21.41 10.70 0.00
72 37.15 35.23 33.39 31.67 22.50 11.25 0.00
73 36.81 34.89 33.09 31.38 23.59 11.79 0.00
74 36.49 34.60 32.82 31.13 24.68 12.34 0.00
75 36.21 34.34 32.57 30.88 25.77 12.89 0.00
76 35.97 34.11 32.34 30.61 27.51 13.76 0.00
77 35.75 33.89 32.08 30.28 28.45 14.63 0.00
78 35.55 33.65 31.76 29.84 27.84 15.50 0.00
79 35.35 33.36 31.34 29.24 26.98 16.37 0.00
80 35.09 32.97 30.76 28.38 25.76 17.25 0.00
</TABLE>
B-2
<PAGE> 59
APPENDIX C - FINANCIAL STATEMENTS
FARMERS NEW WORLD LIFE INSURANCE COMPANY
[to be filed by subsequent amendment]
C-1
<PAGE> 60
Part II
<PAGE> 61
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.
STATEMENT WITH RESPECT TO INDEMNIFICATION
Under its By-laws, Farmers, to the full extent permitted by the Washington
Business Corporation Act, will indemnify any person who was or is a party to any
proceeding by reason of the fact that he or she is or was a director of Farmers,
as provided below.
By-laws of Farmers New World Life Insurance Company (as amended October 24,
1995)
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
SECTION 47. (a) RIGHT OF INDEMNITY. Each person who acts as a Director, officer
or employee of the corporation shall be indemnified by the corporation for all
sums which he becomes obligated to pay, (including counsel fees, expenses and
court costs actually and necessarily incurred by him) in connection with any
action, suit or proceeding in which he is made a party by reason of his being,
or having been a Director, officer, or employee of the corporation, except in
relation to matters as to which he shall be adjudged in such action, suit or
proceeding to be liable for bad faith or misconduct in the performance of his
duties as such Director, officer or employee, and except any sum paid to the
corporation in settlement of an action, suit or proceeding based upon bad faith
or misconduct in the performance of his duties.
(b) SCOPE OF INDEMNITY. The right of indemnification in this article
provided shall inure to each Director, officer and employee of the corporation,
whether or not he is such Director, officer or employee at the time he shall
become obligated to pay such sums, and whether or not the claim asserted against
him is based on matters which antedate the adoption of this article; and in the
event of his death shall extend to his legal representatives. Each person who
shall act as a Director, officer or employee of the corporation shall be deemed
to be doing so in reliance upon such right of indemnification; and such right
shall not be deemed exclusive of any other right to which any such person may be
entitled, under any by-law, agreement, vote of stockholders, or otherwise.
(c) DETERMINATION OF CLAIMS FOR INDEMNITY. The Board of Directors of the
corporation, acting at a meeting at which a majority of the quorum is unaffected
by self-interest (notwithstanding that other members of the quorum present but
not voting may be so affected), shall determine the propriety and reasonableness
of any indemnity claimed under this article, and such determination shall be
final and conclusive. If, however, a majority of a quorum of the Board which is
unaffected by self-interest and willing to act is not obtainable, the Board in
its discretion may appoint from among the stockholders who are not Directors or
officers or
1
<PAGE> 62
employees of the corporation, a committee of two or more persons to consider and
determine any such question, and the determination of such committee shall be
final and conclusive.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") 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.
REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A)
Farmers New World Life Insurance Company hereby represents that the fees
and charges deducted under the Policy, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
2
<PAGE> 63
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 57 pages.
Undertaking to file reports.
Statement with respect to indemnification.
Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written consents of the following persons: ____________________________.
The following exhibits, corresponding to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
1.
A.
(1) Resolution of the Board of Directors of Farmers New World
Life Insurance Company establishing Farmers Variable Life
Separate Account A
(2) Not Applicable
(3) (a) Form of Underwriting Agreement (1)
(b) Form of Distribution Agreement (1)
(c) Schedule of Sales Commissions (1)
(4) Not applicable
(5) (a) Specimen Flexible Premium Variable Life Insurance
Policy
(b) Monthly Disability Benefit Rider
(c) Waiver of Deduction Benefit Rider
(d) Accidental Death Benefit Rider
(e) Additional Insured Term Insurance Rider
(f) Children's Term Insurance Rider
(6) (a) Articles of Incorporation of Farmers New World Life
Insurance Company
(b) By-laws of Farmers New World Life Insurance Company
(7) Not applicable
(8) Form of participation agreements (1)
(9) Not applicable
(10) Application form (1)
(11) Description of issuance, transfer and redemption
procedures (1)
B. Not applicable
C. Not applicable
3
<PAGE> 64
2. Opinion and consent of M. Douglas Close, Esq. as to the legality
of the securities being registered (1)
3. Not applicable
4. Not applicable
5. Not applicable
6. Opinion and consent of ________________________, as to actuarial
matters pertaining to the securities being registered (1)
7. (a) Consent of Independent Accountants (1)
(b) Consent of Sutherland Asbill & Brennan LLP (1)
8. Powers of Attorney
- -----------------
(1) To be filed by amendment.
4
<PAGE> 65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Farmers Variable Life Separate Account A, has duly caused this initial
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 of Mercer Island the State of Washington, on this 27th day of July, 1999.
Farmers Variable Life Separate Account A
(SEAL) (Registrant)
By: Farmers New World Life Insurance Company
(Depositor)
Attest: /s/ John R. Patton By: /s/ C. Paul Patsis
------------------------------ --------------------------------
John R. Patton C. Paul Patsis
Assistant Vice President President
Farmers New World Life Farmers New World Life Insurance
Insurance Company Company
Pursuant to the requirements of the Securities Act of 1933, Farmers New World
Life Insurance Company has duly caused this initial 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 of Mercer Island and the
State of Washington, on the 27th day of July, 1999.
Farmers New World Life Insurance Company
(SEAL)
Attest: /s/ John R. Patton By: /s/ C. Paul Patsis
----------------------------- --------------------------------
John R. Patton C. Paul Patsis
Assistant Vice President President
Farmers New World Life Farmers New World Life Insurance
Insurance Company Company
5
<PAGE> 66
Pursuant to the requirements of the Securities Act of 1933, this initial
registration statement has been signed below by the following persons in the
capacities indicated on the date(s) set forth below.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ C. Paul Patsis President and Director July 27, 1999
- ----------------------------- (Principal Executive Officer)
C. Paul Patsis
/s/ David A. Demmon Assistant Vice President and Treasurer July 27, 1999
- ----------------------------- (Principal Accounting Officer and
David A. Demmon*/ Principal Financial Officer)
/s/ Richard E. Bangert Director July 27, 1999
- -----------------------------
Richard E. Bangert*/
/s/ Donald J. Covey Director July 27, 1999
- -----------------------------
Donald J. Covey*/
/s/ Martin D. Feinstein Director July 27, 1999
- -----------------------------
Martin D. Feinstein*/
/s/ James A. MacKinnon Director July 27, 1999
- -----------------------------
James A. MacKinnon*/
/s/ Dennis I. Okamoto Director July 27, 1999
- -----------------------------
Dennis I. Okamoto*/
/s/ Keitha T. Schofield Director July 27, 1999
- -----------------------------
Keitha T. Schofield*/
/s/ Gary R. Severson Director July 27, 1999
- -----------------------------
Gary R. Severson*/
/s/ John F. Sullivan, Jr. Director July 27, 1999
- -----------------------------
John F. Sullivan, Jr.*/
</TABLE>
*/ By C. Paul Patsis, pursuant to powers of attorney filed herewith.
6
<PAGE> 67
Exhibit Index
1.A.(1) Resolution of the Board of Directors of Farmers New World Life
Insurance Company establishing Farmers Variable Life Separate
Account A
1.A.(5)(a) Specimen Flexible Premium Variable Life Insurance Policy
1.A.(5)(b) Monthly Disability Benefit Rider
1.A.(5) (c) Waiver of Deduction Benefit Rider
1.A.(5) (d) Accidental Death Benefit Rider
1.A.(5) (e) Additional Insured Term Insurance Rider
1.A.(5) (f) Children's Term Insurance Rider
1.A.(6)(a) Articles of Incorporation of Farmers New World Life Insurance
Company
1.A.(6)(b) By-laws of Farmers New World Life Insurance Company
8. Powers of Attorney
<PAGE> 1
EXHIBIT 1.A.(1)
FARMERS NEW WORLD LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT A RESOLUTION
BE IT RESOLVED, That the Board of Directors of Farmers New World Life Insurance
Company (the "Company"), hereby establishes a separate account, pursuant to the
provisions of Section 48.18A.020 of the Washington Insurance Laws, designated
Farmers Variable Life Separate Account A (hereinafter the "Variable Account"),
for the following use and purposes, and subject to such conditions as
hereinafter set forth; and
FURTHER RESOLVED, That the Variable Account is established for the purpose of
providing for the issuance by the Company of certain variable life insurance
policies (the "Policies"), and shall constitute a funding medium to support
reserves under such Policies issued by the Company; and
FURTHER RESOLVED, That the income, gaines and losses, realized or unrealized,
from assets allocated to the Variable Account shall be credited to or charged
against the Variable Account, without regard to other income, gaines or losses
of the Company; and
FURTHER RESOLVED, That the assets of the Variable Account equal to the reserves
and other liabilities under the Policies and any other policies issued through
the Variable Account may not be charged with liabilities arising out of any
other business the Company may conduct; and
FURTHER RESOLVED, That the Variable Account shall be divided into investment
subaccounts (the "Subaccounts"), each of which shall invest in the shares of a
mutual fund portfolio, and net premiums under the Policies shall be allocated in
accordance with instructions received from owners of the Policies; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, be, and they hereby
are, severally] authorized to add or remove any Subaccount of the Variable
Account or add or remove any mutual fund as may hereafter be deemed necessary or
appropriate; and
FURTHER RESOLVED, That the income, gains and losses, realized or unrealized,
from assets allocated to each Subaccount of the Variable Account shall be
credited to or charged against such Subaccount of the Variable Account, without
regard to other income, gains or losses of any other Subaccount of the Variable
Account; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, be, and they hereby
are, severally authorized to invest
1
<PAGE> 2
such amount or amounts of the Company's cash in the Variable Account or in any
Subaccount thereof or in any mutual fund as may be deemed necessary or
appropriate to facilitate the commencement of the Variable Account's and/or the
fund's operations and/or to meet any minimum capital requirements under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President, David A. Demmon, Treasurer and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, be, and they hereby
are, severally authorized to transfer cash from time to time from the Company's
general account to the Variable Account, or from the Variable Account to the
general account, as deemed necessary or appropriate and consistent with the
terms of the Policies; and
FURTHER RESOLVED, That the Board of Directors of the Company reserves the right
to change the designation of the Variable Account hereafter to such other
designation as it may deem necessary or appropriate; and
FURTHER RESOLVED, That the C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, with such
assistance from the Company's independent certified public accounts, legal
counsel and independent consultants or others as they may require, be, and they
hereby are, severally authorized and directed to take all action necessary to:
(a) register the Variable Account as a unit investment trust under the 1940 Act;
(b) register the Policies in such amounts, which may be an indefinite amount, as
such officers of the Company shall from time to time deem appropriate under the
Securities Act of 1933 (the "1933 Act"); and (c) take all other actions that are
necessary in connection with the offering of the Policies for sale and the
operation of the Variable Account in order to comply with the 1940 Act, the
Securities Exchange Act of 1934, the 1933 Act, and other applicable Federal
laws, including the filing of any registration statements, and undertakings,
no-action requests, consents, and any applications for exemptions from the 1940
Act or other applicable federal laws and any amendments to the foregoing as the
officers of the Company shall deem necessary or appropriate; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, are severally
authorized and empowered to prepare, execute and cause to be filed with the
Securities and Exchange Commission on behalf of the Variable Account, and by the
Company as sponsor and depositor, a Notification of Registration on Form N-8A, a
registration statement registering the Account as an investment Company under
the 1940 Act, and the Policies under the 1933 Act, and any and all amendments to
the foregoing on behalf of the Variable Account and the Company and on behalf of
and as attorneys-in-fact for the principal executive officer and/or the
principal financial officer and/or the principal account officer and/or any
other officer of the Company; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President;
2
<PAGE> 3
David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel, is duly
appointed as agent for service under any such registration statement, duly
authorized to receive communications and notices from the Securities and
Exchange Commission with respect thereto; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, are severally
authorized on behalf of the Variable Account and on behalf of the Company to
take any and all actions that each of them may deem necessary or advisable in
order to offer and sell the Policies, including any registrations, filings and
qualifications both of the Company, its officers, agents and employees, and of
the Policies, under the insurance and securities laws of any of the states of
the United States of America or other jurisdictions, and in connection therewith
to prepare, execute, deliver and file all such applications, requests,
undertakings, reports, covenants, resolutions, applications for exemptions,
consents to service of process and other papers and instruments as may be
required under such laws, and to take any and all further action which such
officers or legal counsel of the Company may deem necessary or desirable
(including entering into whatever agreements and contracts may be necessary) in
order to maintain such registrations or qualifications for as long as the
officers or legal counsel deem it to be in the best interests of the Variable
Account and the Company; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, be, and they hereby
are, severally authorized in the names and on behalf of the Variable Account and
the Company to execute and file irrevocable written consents on the part of the
Variable Account and of the Company to be used in such states wherein such
consents to service of process may be required under the insurance or securities
laws therein in connection with the registration or qualification of the
Policies and to appoint the appropriate state official, or such other person as
may be allowed by insurance or securities laws, agent of the Variable Account
and of the Company for the purpose of receiving and accepting process; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, be, and hereby are,
severally authorized to establish procedures under which the Company will
provide voting rights for owners of the Policies with respect to securities
owned by the Variable Account; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, are hereby
severally authorized to execute such agreement or agreements as deemed necessary
and appropriate (i) with [name of Broker-Dealer] or other qualified entity under
which [name of Broker-Dealer] or such other entity will be appointed principal
underwriter and distributor for the Policies, (ii) with one or more qualified
banks or other qualified entities to provide administrative and/or custody
services in connection
3
<PAGE> 4
with the establishment and maintenance of the Variable Account and the design,
issuance, and administration of the Policies, and (iii) with the designated
mutual funds and/or the principal underwriter and distributor of those funds for
the purchase and redemption of fund shares; and
FURTHER RESOLVED, That C. Paul Patsis, President; Paul G. Secord, Vice
President; David A. Demmon, Treasurer, and M. Douglas Close, Corporate Counsel,
and each of them, with full power to act without the others, are hereby
severally authorized to execute and deliver such agreements and other documents
and do such acts and things as each of them may deem necessary or desirable to
carry out the foregoing resolutions and the intent and purposes thereof; and
FURTHER RESOLVED, That the Company hereby adopts and establishes the following
Standards of Suitability for its officers, employees, and agents with respect to
the suitability of the Policies for applicants:
1. No recommendation shall be made to an applicant to purchase a
Policy, and no Policy shall be issued, in the absence of
reasonable grounds to believe that the purchase of the Policy is
suitable for the applicant on the basis of information furnished
after reasonable inquiry of the applicant concerning the
applicant's insurance and investment objectives, financial
situation and needs, and any other information known to the
Company or to the agent making the recommendation;
2. A good faith, reasonable inquiry shall be made as to the facts and
circumstances concerning a prospective contractowner's insurance
and financial needs and shall make no recommendation that the
prospective contractowner purchase a Policy when such a purchase
is not reasonably consistent with the information that is known or
reasonably should be known to the Company or its agents. In making
such recommendation, factors which may be considered are: age,
earnings, marital status, number and age of dependents, the value
of savings or other assets, and current life insurance program.
Additionally, the Company's agents, as registered representatives, will
be subject to supervision by a registered broker-dealer with respect to
suitability and other sales practices under the rules of the National
Association of Securities Dealers, Inc.; and
FURTHER RESOLVED, That the Company hereby adopts and establishes the following
Standards of Conduct for itself and its officers, directors, and employees
(each, an "Employee") with respect to the purchase or sale of investments of the
Variable Account:
No Employee shall:
1. Employ any device, scheme or artifice to defraud the Variable
Account or the owners of the Policies;
2. Make any untrue statement of a material fact with respect to the
investments of the
4
<PAGE> 5
Variable Account or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances
in which they were made, not misleading;
3. Engage in any act, practice or course of business that operates or
would operate as a fraud or deceit upon the Variable Account or
the owners of the Policies;
4. Engage in any manipulative practice with respect to the Variable
Account or the owners of the Policies;
5. Sell to, or purchase from, the Variable Account any securities or
other property, except as permitted under applicable laws, rules,
regulations, order, or other interpretation of any government
agency, or self-regulatory organization.
6. Purchase or allow to be purchased for the Variable Account any
securities of which the Company or an affiliated company is the
issuer, except as permitted under applicable laws, rules,
regulations, order, or other interpretation of any government,
agency, or self-regulatory organization;
7. Accept any compensation other than a regular salary or wages from
the Company or an affiliated company for the sale or purchase of
investment securities to or from the Variable Account except as
permitted under applicable laws, rules, regulations, orders, or
other interpretations of any government, agency or self-regulatory
organization;
8. Engage in any joint transaction, participation or common
undertaking whereby the Company or an affiliated company
participates with the Variable Account in any transaction in which
the Company or an affiliated company obtains an advantage in the
price or quality of the item purchased, the service received or in
the cost of such service, and the Variable Account or the owners
of the Policies are disadvantaged in any of these respects by the
same transaction; or
9 Borrow money or securities from the Variable Account other than
under a policy loan provisions.
FURTHER RESOLVED, That the Company shall require any third party providing
administrative services to the Variable Account to adopt Standards of Conduct
encompassing the standards set forth above.
5
<PAGE> 6
April 6, 1999
6
<PAGE> 1
EXHIBIT 1.A.(5)(a)
FARMERS NEW WORLD LIFE INSURANCE COMPANY
Home Office: 3003 77th Avenue S.E., Mercer Island, Washington 98040 /
(206) 232-8400
A STOCK COMPANY
Insured JOHN A DOE 001234567 Policy Number
In this policy the owner will be referred to as "you" or "the owner" and Farmers
New World Life Insurance Company will be referred to as "us" or "we."
In consideration of the application and payment of premiums we insure the person
named above in accordance with the provisions of all the pages of this policy.
We will pay the proceeds in the manner provided in the section titled Payment of
Proceeds.
Your benefits under this policy, the amount of the premium, the premium due
dates, and other policy data are shown as the Policy Specifications on the last
page of this policy.
THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY INCREASE OR DECREASE AS
DESCRIBED IN THIS CONTRACT, DEPENDING ON THE INVESTMENT EXPERIENCE OF THE
SUBACCOUNTS.
THE CONTRACT VALUE OF THIS CONTRACT MAY INCREASE OR DECREASE DAILY DEPENDING ON
THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS. THERE IS NO GUARANTEED MINIMUM
CONTRACT VALUE.
NOTICE OF YOUR RIGHT TO RETURN THIS POLICY
RIGHT TO EXAMINE PERIOD: YOU MAY CANCEL THIS POLICY AT ANY TIME WITHIN 10 DAYS
AFTER YOU RECEIVE IT BY DELIVERING OR MAILING IT TO THE AGENT THROUGH WHOM YOU
PURCHASED IT, TO A BRANCH OFFICE, OR TO OUR HOME OFFICE AT MERCER ISLAND,
WASHINGTON. THIS SHALL VOID THE POLICY FROM THE BEGINNING AND THE PARTIES SHALL
BE IN THE SAME POSITION AS IF NO POLICY OR CONTRACT HAD BEEN ISSUED. ALL
PREMIUMS PAID FOR THE POLICY WILL BE REFUNDED TO YOU.
Paul Patsis
President
Jeffrey T. Blackburn
Secretary
<TABLE>
<S> <C>
1998-XXX NONPARTICIPATING FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE. 00523
ADJUSTABLE DEATH BENEFIT. DEATH BENEFIT PAYABLE BEFORE MATURITY
DATE. SURRENDER VALUE PAYABLE AT MATURITY DATE.
</TABLE>
<PAGE> 2
This policy is a legal contract between you and us. READ YOUR POLICY CAREFULLY.
This LIFE INSURANCE policy provides death protection for as long as the insured
lives during the period of coverage. That period, the premium payment details,
and other policy data, are shown in the Policy Specifications on the last page
of this policy.
ALPHABETIC GUIDE TO YOUR POLICY
<TABLE>
<CAPTION>
PAGE
<S> <C>
Annual Report....................................................................................11
Assignments.......................................................................................5
Beneficiary.......................................................................................5
Cash Value.......................................................................................11
Change of Death Benefit Option...................................................................14
Conformity to State Law...........................................................................5
Continuation of Coverage..........................................................................8
Contract Value....................................................................................8
Death Benefit Options.............................................................................6
Death Benefit Proceeds............................................................................6
Decrease in Principal Sum........................................................................15
General Provisions................................................................................4
Guaranteed Maximum Monthly Cost of Insurance Rates..............................................10
Grace Period......................................................................................8
Incontestability..................................................................................4
Increase in Principal Sum........................................................................14
Interest Rate - Fixed Account....................................................................10
Interest Rate - Loans............................................................................13
Maturity.........................................................................................12
Minimum Premium...................................................................................7
Monthly Deduction.................................................................................9
Nonparticipating..................................................................................5
Ownership.........................................................................................5
Planned Premium Payments..........................................................................7
Policy Changes...................................................................................14
Policy Loans.....................................................................................13
Policy Specifications...................................................................Last Page of Policy
Policy Values.....................................................................................8
Premium Payments..................................................................................7
Reinstatement.....................................................................................8
Cost of Insurance Charge.........................................................................10
Settlement Privileges............................................................................21
Suicide...........................................................................................4
Surrender Charge Table...........................................................................16
Surrender Value..................................................................................11
Surrender Value Options..........................................................................11
Unscheduled Premium Payments......................................................................7
</TABLE>
ADDITIONAL BENEFITS
The additional benefits, if any, shown on the Policy Specifications page are
described in the additional benefit agreements that follow the Settlement
Privileges.
Page 1
<PAGE> 3
DEFINITIONS
<TABLE>
<S> <C>
ACCUMULATION UNIT An accounting unit used to calculate the variable account
value. It is a measure of the net investment results of
each of the variable subaccounts.
ATTAINED AGE The sum of the insured's age at issue plus the number of
years completed since the policy was issued.
CASH VALUE The contract value minus any applicable surrender charge.
CONTRACT VALUE The sum of the values you have in the variable account
and the fixed account (including the loan account value).
COST OF INSURANCE The portion of the monthly deduction that pays for the cost of
CHARGE providing this policy's Death Benefit.
EVIDENCE OF INSURABILITY Information about a person that we use to approve or reinstate
the policy, or increase the principal sum or other benefits of
the policy.
FIXED ACCOUNT An account that is part of our general account, and is not
part of or dependent on the investment performance of the
variable account.
FIXED ACCOUNT VALUE Your contract value in the fixed account.
IN FORCE In effect. A life insurance policy that is in force will
provide a death benefit if the insured loss occurs. If the
policy is not in force there will be no death benefit.
ISSUE AGE A person's age as of last birthday on the date the policy was
issued.
ISSUE DATE The effective date for coverage. Policy months, years, and
anniversaries are measured from the Issue Date. The initial
premium (times the percent of premium factor) is allocated to
the money market subaccount on the Issue Date. The first
Monthly Deduction occurs on the Issue Date. Funds (less
charges) remain in the money market subaccount until the
Reallocation Date.
MINIMUM PREMIUM The lowest amount that must be paid if the surrender value is
zero.
MONTHLY ADMINISTRATION A deduction from the contract value that covers the cost of
CHARGE managing the policy. The monthly administration charge is
shown on the Policy Specifications page.
MONTHLY DEDUCTION The amount deducted from the contract value each month to pay
for the insurance coverage. This includes the monthly Cost of
Insurance charge and any monthly administration charge. The
monthly deduction for the policy and the riders are separate
deductions. The first Monthly Deduction occurs on the Issue
Date.
MONTHLY DUE DATE The day of each month on which policy charges are determined
and deducted from the contract value. The monthly due date is
shown on the Policy Specifications page.
</TABLE>
Page 2
<PAGE> 4
<TABLE>
<S> <C>
MORTALITY AND EXPENSE A charge deducted from the subaccounts on each Valuation Day
RISK CHARGE that compensates us for providing the mortality and expense
guarantees and assuming the risks under this contract.
NET INVESTMENT FACTOR The ratio of the subaccount value at the end of the current
valuation day to its value at the end of the immediately
preceding valuation day. The subaccount value reflects gains
and losses in the subaccounts, dividends paid, any capital
gains and losses, any taxes paid, and the deduction of the
Mortality and Expense Risk Charge.
PERCENT OF PREMIUM The factor multiplied by all premium payments to determine the
FACTOR amount of premium credited to the contract value. This factor is
shown on the Policy Specifications page.
PREMIUM CLASS A classification that affects the Cost of Insurance rate and the
premium required to insure an individual.
PRINCIPAL SUM The amount of initial death benefit shown on the Policy
Specifications page. You may increase or decrease the
principal sum, subject to certain conditions. The actual
death benefit proceeds paid may be more or less than the
principal sum.
REALLOCATION DATE The date the contract value in the money market subaccount is
allocated to the subaccounts and to the fixed account based on
the premium payment allocation percentages specified in the
application. The reallocation date is 35 days after the issue
date.
SEC The US Securities and Exchange Commission.
SUBACCOUNT A division of the variable account. The assets of each
subaccount are invested in a corresponding portfolio of a
designated mutual fund.
SURRENDER To cancel the policy by signed request from the owner.
SURRENDER VALUE The cash value minus any outstanding policy loan and accrued
loan interest.
TERMINATE When the benefits and insurance end under the terms of the policy.
VALUATION DAY Each day on which both the New York Stock Exchange and Farmers
New World Life are open for business.
VALUATION PERIOD The interval of time commencing at the close of business one
valuation day and ending at the close of business on the next
succeeding valuation day.
VARIABLE ACCOUNT The variable account is named on the Policy Specifications
page (last page of the policy). The variable account is not
part of our general account. The variable account has
subaccounts, each of which is invested in a corresponding
portfolio of a designated mutual fund.
VARIABLE ACCOUNT VALUE The portion of the total value of your contract that is
allocated to the subaccounts of the variable account.
</TABLE>
Page 3
<PAGE> 5
GENERAL PROVISIONS
<TABLE>
<S> <C>
CONTRACT The entire contract is:
1. this policy;
2. the application attached at issue;
3. any attached amendments and supplements to the application;
4. any attached riders and endorsements; and
5. any attached application for reinstatement, increase in
principal sum, or change in death benefit option.
In the absence of fraud, we will consider all statements in the
application to be representations and not warranties. No
statement will be used by us to contest a claim unless that
statement is in an attached application or in an amendment or
supplement to the application attached to this policy.
CHANGE OF Any change in the terms of this contract must be in writing and signed
CONTRACT by one of our officers. A copy of the change will be attached to
this policy. No agent has the authority to change any terms or
conditions of this contract.
INCONTESTABILITY We will not contest this policy after it has been in force for
two years during the insured's lifetime. We will not contest any
increase in principal sum after the increase has been in force
for two years during the insured's lifetime. This provision does
not apply to any additional benefits for disability or accidental
death, or to riders that provide term insurance on any person(s)
other than the insured.
If this policy is reinstated, we will not contest any statements
on the reinstatement application after the policy has been in
force for two years from its date of reinstatement during the
insured's lifetime.
SUICIDE If, within two years from the issue date, the insured dies by
suicide, while sane or insane, we will limit the proceeds to:
1. the premiums paid; less
2. any policy loans; less
3. any partial surrender amounts previously paid.
A new two-year period will apply to each increase in principal
sum starting on the effective date of each increase. During this
two-year period the proceeds paid due to an increase in principal
sum will be limited to the monthly Cost of Insurance charges for
the increase.
MISSTATEMENT If the insured's age or sex has been misstated, we will adjust the death
OF AGE OR SEX benefit. The adjusted death benefit will be that which would have been
purchased by the most recent monthly deduction based on the correct age or
sex.
You may file proof of age or sex at any time. Once the insured's
age or sex is established to our satisfaction we will use this
age or sex in any settlement.
</TABLE>
Page 4
<PAGE> 6
<TABLE>
<S> <C>
CONFORMITY TO This policy is subject to the laws of the state in which it is delivered. Any terms
STATE LAWS that are in conflict with these laws are amended to conform.
COMPLIANCE WITH All provisions, benefits amounts, and other details of this policy will automatically
FEDERAL TAX CODE be adjusted at all times, in whatever ways are necessary to maintain the policy's
compliance with the definition of life insurance under Internal Revenue Code Section
7702. This section overrides all other provisions to the contrary anywhere within
this contract, but only to the extent that the policy cannot legally be kept in
compliance with Section 7702 through any other means such as a premium refund.
NONPARTICIPATING This policy is nonparticipating. It does not share in our surplus earnings. We will
pay no dividends on this policy.
</TABLE>
OWNERSHIP
<TABLE>
<S> <C>
OWNER The insured is the owner of this policy unless:
1. another person is named as owner in the application; or
2. a new person is named as provided in the Change of Owner section below.
During the insured's lifetime, the owner may exercise all the rights and benefits
provided by this policy.
SUCCESSOR The successor owner becomes owner at the death of the owner. If the owner and
OWNER successor owner die before the insured dies, the insured will become the owner of
this policy.
CHANGE OF The owner may name a new owner by notifying us in writing while the insured is alive.
OWNER When we receive acceptable signed notice, the change will take effect on the date the
notice was signed. The change is subject to any action we may have taken before
receiving the notice.
ASSIGNMENTS The owner may assign this policy. We are not bound by an assignment unless duplicate
signed forms are filed with us. We are not responsible for the validity of an
assignment. The rights of the owner and the beneficiary are subject to the rights of
the assignee.
</TABLE>
BENEFICIARY
<TABLE>
<S> <C>
BENEFICIARY The beneficiary is the person or persons named to receive the proceeds at the
DESIGNATION insured's death. The beneficiary is as named in the application or as changed by
the owner's signed request while the insured is living.
If no beneficiary is living when the insured dies, we will pay the proceeds to the
owner or to the owner's estate.
</TABLE>
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<TABLE>
<S> <C>
Change of The beneficiary may be changed at any time before the insured dies. The change must
Beneficiary be signed by the owner and sent to us. The change will take effect on the date it
was signed, subject to any action taken by us before we receive the request.
Delay Clause A delay clause may be requested by the owner in the application or in any acceptable
signed request filed with us while the insured is living. This clause provides that
if the beneficiary dies within the specified number of days following the insured's
death (not including the date of death), the proceeds will be paid as if the
beneficiary had died first. The number of days specified cannot exceed 180 days.
Future A clause including future children as beneficiaries may be requested by the owner in
Children any acceptable signed request filed with us. This clause provides that children born
Clause of the insured's present marriage to the primary beneficiary prior to the end of 10
months after the date of the insured's death shall share equally with the other
children in the beneficiary class designated. This clause does not provide for
payment to children born of these future children.
</TABLE>
DEATH BENEFIT PROCEEDS
<TABLE>
<S> <C>
PAYMENT OF PROCEEDS If the insured dies while this policy is in force, we will pay the proceeds to the
beneficiary on receipt of proof of death. If no beneficiary survives the insured, we
will pay the proceeds to the owner or the owner's estate. Payment will be made in one
sum unless a settlement option with a different method of payment is chosen.
AMOUNT PAYABLE At the insured's death we will pay:
1. the death benefit then in effect; less
2. any monthly deductions due and unpaid at the date of death; less
3. any loans and accrued loan interest; plus
4. the amounts to be paid under the terms of any attached riders.
</TABLE>
DEATH BENEFIT OPTIONS
<TABLE>
<S> <C>
DEATH BENEFIT This policy offers two death benefit options. Option A is a variable death benefit.
Option B is a level death benefit. The option you have selected is shown on the
Policy Specifications page. For attained ages after age 99 the death benefit equals
the Contract Value.
OPTION A The death benefit is the greater of:
VARIABLE DEATH BENEFIT 1. the principal sum plus the contract value on the date of death; or
2. the contract value times the death benefit percentage shown in the following
table.
OPTION B The death benefit through attained age 99 is the greater of:
LEVEL DEATH BENEFIT 1. the principal sum on the date of death; or
2. the contract value times the death benefit percentage shown in the following
table.
</TABLE>
Page 6
<PAGE> 8
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Death Benefit Percentage
- ------------------------------------------------------------------------------------------------------------------------
Attained Percentage Attained Percentage Attained Percentage
Age % Age % Age %
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 or less 250 54 157 68 117
41 243 55 150 69 116
42 236 56 146 70 115
43 229 57 142 71 113
44 222 58 138 72 111
45 215 59 134 73 109
46 209 60 130 74 107
47 203 61 128 75 to 90 105
48 197 62 126 91 104
49 191 63 124 92 103
50 185 64 122 93 102
51 178 65 120 94 101
52 171 66 119 95 to 99 100
53 164 67 118
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PREMIUMS AND REINSTATEMENTS
<TABLE>
<S> <C>
PREMIUM PAYMENTS After the first premium payment has been paid, subsequent premiums can be paid at
any time. The amount of premium payments is flexible after issue, subject to limits
imposed by tax laws and by minimum premium requirements. The actual amount and
frequency of the premium payments will affect the values and duration of the
insurance. No premiums can be paid after the insured reaches attained age 100.
Premiums are payable at our home office or to one of our authorized agents. We
will provide a receipt signed by one of our officers upon request.
MINIMUM PREMIUM The minimum premium must be paid unless the policy has a positive surrender value.
The initial minimum premium is shown on the Policy Specifications page. The minimum
premium will change if the principal sum changes. Paying the minimum premium will
not necessarily be sufficient to keep the policy in force if there is a policy loan
or if the contract value is less than the monthly deduction due.
PLANNED PREMIUM PAYMENTS The amount and frequency of the planned premium payment is shown on the Policy
Specifications page. You may change the amount or frequency of the planned premium
by sending us a signed request. We have the right to limit the amount of any
increase. We will not limit your right to pay the minimum amount required to keep
this policy in force to the end of the policy year.
UNSCHEDULED PREMIUM Premium payments in addition to the planned payments may be made, subject to a minimum
PAYMENTS of $25 per payment. We have the right to limit the number and amount of any
unscheduled premium payments.
PREMIUM REFUNDS We have the right to limit or refund any premium, whether scheduled or not, if the
premium would disqualify the policy as a life insurance contract under the Internal
Revenue Code or regulations or if the payment would increase the death benefit by
more than the amount of the premium.
</TABLE>
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<TABLE>
<S> <C>
GRACE PERIOD If the surrender value becomes zero, the policy will enter a 61-day grace period
unless cumulative premiums less withdrawals exceed cumulative minimum premiums. If
cumulative premiums less withdrawals exceed cumulative minimum premiums, the policy
will enter the 61-day grace period when the contract value minus any outstanding
policy loan and accrued loan interest is insufficient to pay the entire monthly
deduction due. At the end of the grace period the policy will terminate without
value unless a premium payment or loan repayment is made and is sufficient to cause
either one of the following conditions:
1. The surrender value exceeds zero, after deducting all due and unpaid monthly
deductions; or
2. Both of the following occur:
a. cumulative premiums less withdrawals exceed cumulative minimum
premiums; and
b. the contract value minus any outstanding policy loan and accrued
loan interest exceeds zero, after deducting all due and unpaid
monthly deductions.
The policy will continue in force during the grace period. If the insured dies
during the grace period, the proceeds will be reduced by any overdue monthly
deductions.
We will mail the owner or any assignee notice at least 31 days before the end of a
grace period.
CONTINUATION OF COVERAGE You may stop paying premiums at any time. Your policy will continue in Maturity
Date or the date when one of force until the earlier of the the following occurs:
1. The insured dies.
2. The surrender value has been exhausted. The surrender value will be
exhausted when the grace period begins. In this case, the policy will
terminate at the end of the grace period.
3. We receive your signed request to surrender this policy.
REINSTATEMENT Unless this policy has been surrendered for its surrender value, or its surrender
value has been exhausted, the policy will be reinstated to a premium-paying status
at any time within three years from the date of premium default.
To reinstate this policy to a premium-paying status, we must receive payment of at
least two monthly minimum premiums.
</TABLE>
POLICY VALUES
<TABLE>
<S> <C>
CONTRACT VALUE The contract value on the issue date is equal to:
1. the initial premium paid times the percent of premium factor; less
2. the monthly deduction.
On each date after the issue date, the contract value is equal to the fixed account
value plus the variable account value.
</TABLE>
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<TABLE>
<S> <C>
FIXED ACCOUNT VALUE On each valuation day the fixed account value will be equal to:
A + B + C - D - E - F
"A" is the fixed account value on the preceding valuation day plus interest from
the preceding valuation day to the date of calculation.
"B" is the portion of the premium, times the percent of premium factor, that is
allocated to the fixed account and received since the preceding valuation day, plus
interest from the date such net premiums were received to the date of calculation.
"C" is the amount of any transfers from the subaccounts to the fixed account since
the preceding valuation day, plus interest on such transferred amounts from the
effective dates of such transfers to the date of calculation.
"D" is the amount of any transfers from the fixed account to the subaccounts since
the preceding valuation day, plus interest on each such transferred amount from the
effective date of each transfer to the date of calculation.
"E" is the amount of any partial surrenders and any applicable surrender charges
deducted from the fixed account since the preceding valuation day, plus interest on
these surrendered amounts from the effective date of each partial surrender to the
date of calculation.
"F" is zero except on the monthly due date, when it is a pro-rata share of the
monthly deduction for the month beginning on that monthly due date.
Guaranteed minimum fixed account values are not less than the minimum values
required by the state in which this policy is delivered. Where required, a
statement of the method of computing these values has been filed with the state
insurance department.
VARIABLE ACCOUNT The variable account value is the sum of the values of the subaccounts under this
VALUE contract.
MONTHLY DEDUCTION The monthly deduction will be calculated each month on the monthly due date. The
monthly deduction is:
1. the cost of insurance charge for the policy; plus
2. the charges for any attached riders; plus
3. the monthly administration charge; plus
4. the flat extra charge for a special premium class, if any, shown on the Policy
Specifications page.
The guaranteed maximum monthly administration charge is $8 per month. The actual
charge may be less; the actual charge on the issue date is shown on the Policy
Specifications page. This may change at any time after issue.
</TABLE>
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<TABLE>
<S> <C>
COST OF INSURANCE CHARGE The cost of insurance charge for the policy is the monthly cost of insurance rate
per $1,000 of Risk Insurance Amount at the insured's attained age, times the
number of thousands of Risk Insurance Amount. The Risk Insurance Amount is:
1. The current death benefit; minus
2. the contract value at the end of the valuation day preceding the monthly
due date; plus
3. the monthly administrative charge for the month that begins on the monthly
due date; plus
4. any charges for riders for the month that begins on the monthly due date.
The Guaranteed Maximum Monthly Cost of Insurance Rates are shown in the table
below. We may use rates less than those shown, but not greater unless the insured
is in a special premium class. The charge for any attached rider is a separate
calculation.
If the insured is in a special premium class, the guaranteed maximum monthly cost
of insurance rate will be the rate shown in the table times the special premium
class rating factor shown on the Policy Specifications page.
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
GUARANTEED MAXIMUM MONTHLY
COST OF INSURANCE RATES
Per $1000 of Risk Insurance Amount
- -------------------------------------------------------------------------------------------------------------------------------
Attained Cost of Attained Cost of Attained Cost of Attained Cost of Attained Cost of Attained Cost of
Age Insurance Age Insurance Age Insurance Age Insurance Age Insurance Age Insurance
Rate Rate Rate Rate Rate Rate
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 0.13788 35 0.14370 49 0.39205 62 1.35058 75 5.13652 88 16.39051
22 0.13539 36 0.15117 50 0.42611 63 1.50009 76 5.66811 89 17.59988
23 0.13207 37 0.16114 51 0.46514 64 1.66621 77 6.22379 90 18.85909
24 0.12875 38 0.17194 52 0.51000 65 1.84812 78 6.80688 91 20.19721
25 0.12459 39 0.18357 53 0.56150 66 2.04497 79 7.43566 92 21.66408
26 0.12210 40 0.19769 54 0.61881 67 2.25096 80 8.13005 93 23.40255
27 0.12044 41 0.21264 55 0.68276 68 2.48520 81 8.90834 94 25.73492
28 0.11961 42 0.22842 56 0.75254 69 2.73937 82 9.78630 95 29.22599
29 0.11961 43 0.24586 57 0.82646 70 3.02676 83 10.75978 96 34.96802
30 0.12044 44 0.26497 58 0.90869 71 3.35485 84 11.80967 97 44.93622
31 0.12293 45 0.28656 59 1.00089 72 3.73361 85 12.91190 98 61.89321
32 0.12625 46 0.30982 60 1.10389 73 4.16221 86 14.05233 99 83.06141
33 0.13124 47 0.33474 61 1.21851 74 4.63317 87 15.21353 100-109 0.00000
34 0.13705 48 0.36215
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTEREST RATE FOR FIXED ACCOUNT VALUE
<S> <C>
GUARANTEED The guaranteed minimum rate used to calculate interest on the fixed account is 4%
RATE per year, compounded annually. This is equal to .32737% per month, compounded
monthly.
CURRENT RATE We may use rates that are higher than the guaranteed minimum rate to calculate
interest on the fixed account. These rates are subject to change at any time and
may apply to all or a portion of the fixed account.
</TABLE>
Page 10
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<TABLE>
<S> <C>
CASH VALUE The cash value of this policy on any date is:
1. the contract value; minus
2. the surrender charge, if any, that you would incur if you surrendered the
entire policy on that date.
Surrender charges are shown in the attached Surrender Charge Table.
SURRENDER VALUE The surrender value of this policy on any date is:
1. the cash value, minus
2. any outstanding policy loan plus due but unpaid loan interest to the date of
computation.
RESERVE BASIS Reserves are based on the Commissioners 1980 Standard Ordinary Mortality Table,
the Commissioners Reserve Valuation Method, and age last birthday. The statutory
valuation interest rate does not exceed the maximum rate allowed by the valuation
law of the state in which the policy is delivered.
</TABLE>
ANNUAL REPORT
<TABLE>
<S> <C>
ANNUAL REPORT At least annually we will mail you a report about your policy. This report will
show:
1. the current principal sum;
2. the current death benefit;
3. the contract value;
4. the value in the fixed account;
5. the number of accumulation units, the accumulation unit value and the
total value in each of the subaccounts of the variable account;
6. the surrender value;
7. any partial surrenders since the last report;
8. premiums paid since the last report;
9. fixed account transactions since the last report;
10. all deductions since the last report;
11. the amount of outstanding loans, if any;
12. loan repayments since the last report; and
13. the dollar amount, the number of accumulation units involved, and the
accumulation unit value of each subaccount transaction.
Upon request, we will send a report at other than the regularly scheduled
interval. We will charge a fee for this requested report. The fee is shown on
the Policy Specifications page.
</TABLE>
SURRENDER VALUE OPTIONS
<TABLE>
<S> <C>
CASH SURRENDER You may surrender this policy for the surrender value after we receive your signed
request with the policy. We have the right to defer payment for up to six months
or the period allowed by law, whichever is less.
We will determine the surrender value at the accumulation unit value next
determined as of the close of business on the day we receive your surrender
</TABLE>
Page 11
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<TABLE>
<S> <C>
request at our home office.
PARTIAL After the 2nd policy year, you may withdraw a part of the surrender value subject
SURRENDER to the following:
1. You must send us a signed request for the amount of the partial surrender.
2. You may make only 1 partial surrender per calendar quarter.
3. The amount requested must be at least $500.
4. The amount requested may not exceed 75% of the surrender value.
5. We will deduct a $25 processing fee from the contract value for each partial
surrender.
6. The contract value will be reduced by the amount of the partial surrender, the
processing fee, and the surrender charge, if any.
7. The partial surrender will be processed at the accumulation unit values next
determined after receipt of your request.
Units equal to the partial surrender, fees and charges described above will be
cancelled from the subaccounts and/or the fixed account according to your
instructions. If you provide no instructions, these units will be cancelled from
the subaccounts and the fixed account on a pro-rata basis.
If you have a level death benefit (Option B) at the time of the partial surrender,
the principal sum will be reduced by the amount of the partial surrender. This
reduction in principal sum will be subject to the terms of the Decrease in
Principal Sum section.
MATURITY The maturity date is shown on the Policy Specifications page. If this policy is in
force on the maturity date we will send you the surrender value and all coverage
will end.
TIME PERIOD Any surrender or loan will usually be paid within seven days of receiving your
FOR PAYMENTS written request in our home office. However, we have the right to suspend or delay
the date of any surrender, partial surrender, loan, maturity payment or death
benefit payment from the subaccounts for any period during which:
1. the New York Stock Exchange is closed, other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission; or
2. the Securities and Exchange Commission permits by an order the postponement
for the protection of contract owners; or
3. the Securities and Exchange Commission determines that an emergency exists
that would make the disposal of securities held in the variable account or the
determination of the value of the variable account's net assets not reasonably
practicable.
For any surrender, partial surrender, loan or transfer from the fixed account, we
may defer payment for up to 6 months, or the period allowed by law, if less.
</TABLE>
Page 12
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POLICY LOANS
<TABLE>
<S> <C>
POLICY LOANS While this policy is in force, you may make a loan for all or part of the loan
value. You must assign this policy to us as sole security.
An amount equal to the loan will be transferred from the fixed and variable
accounts and transferred to the loan account. The loan account is part of the
fixed account, which is part of our general account. If allocation instructions
are not specified in your loan application, the loan will be withdrawn from the
subaccounts and the fixed account on a pro-rata basis.
Amounts transferred to the loan account do not participate in the investment
experience of the fixed or variable account from which they were withdrawn.
Amounts in the loan account will earn interest at the guaranteed minimum rate of
4% per year, compounded annually. This is equal to .32737% per month, compounded
monthly. Different interest rates may be applied to the loan account than the
fixed account.
LOAN VALUE The loan value is the surrender value less loan interest to the next policy
anniversary date.
INTEREST RATE The maximum loan interest rate is eight percent (8%) per year, compounded
(LOANS) annually. We may change the interest rate, but it will never exceed the maximum
rate of 8%. We will notify you of any increase in loan interest at least 30 days
before the new rate becomes effective.
INTEREST DUE Interest is charged daily on the loan. Interest is due and payable at the end of
each policy year or, if earlier, on the date of any policy loan increase or
repayment. Any interest not paid when due will be transferred from the fixed and
variable accounts to the loan account on a pro-rata basis. It becomes part of the
loan and accrues interest.
LOAN You may repay all or part of your policy loan balance at any time. Any loan
REPAYMENT repayment must be for at least $25. Repayments must be clearly marked as "loan
repayments" or they will be credited as premiums. Each loan repayment will result
in a transfer of an amount equal to the loan repayment from the loan account to
the fixed and/or variable account. Your current premium allocation schedule will
be used to allocate the loan repayments.
UNPAID We will deduct any unpaid loans from the surrender value and the death benefit
LOANS proceeds. If the unpaid loan, which includes accrued interest, equals or exceeds
the cash value, causing the surrender value to become zero, this policy will end
except as described in the grace period provision.
</TABLE>
Page 13
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POLICY CHANGES
<TABLE>
<S> <C>
POLICY After the first policy year, you may change the death benefit option or the amount
CHANGES of principal sum, subject to the following:
1. You must send us a signed request for a change.
2. We may require evidence of insurability.
3. You may make no more than one change per policy year.
4. The change will take effect on the monthly due date following our approval of
the request.
5. We will send you a policy endorsement with the change to attach to your policy.
CHANGE OF To change from Option B (level death benefit) to Option A (variable death
DEATH BENEFIT benefit):
OPTION 1. The insured must provide evidence of insurability satisfactory to us.
2. The principal sum will change. The new Option A principal sum will equal the
Option B principal sum less the contract value immediately before the change,
but in no case will the new principal sum be less than the minimum principal
sum amount shown on the Policy Specifications page. No surrender charge will be
imposed solely as a result of this change in principal sum.
3. The minimum premium will decrease as a result of any decrease in the principal
sum.
To change from Option A (variable death benefit) to Option B (level death
benefit):
1. Evidence of insurability is not required.
2. The principal sum will change. The new Option B principal sum will equal the
Option A principal sum plus the contract value.
3. The minimum premium will increase.
After either change, the total surrender charge for the policy will continue to be
based on the principal sum at the time of issue on which surrender charges have
not already been imposed.
INCREASE IN Increases in principal sum require evidence of insurability satisfactory to us.
PRINCIPAL SUM The minimum increase is $10,000. We will deduct a processing fee of $1.50 per
$1,000 of increase, but not more than $300, from the contract value. If the
amount in the contract value is insufficient to cover this fee, sufficient
additional premium will be required before the increase will become effective.
The minimum premium will increase.
</TABLE>
Page 14
<PAGE> 16
<TABLE>
<S> <C>
DECREASE IN You may decrease the principal sum, but not below the minimum principal sum amount
PRINCIPAL SUM shown on the Policy Specifications page. The minimum premium will be reduced.
Decreases in principal sum will reduce:
1. the most recent increase, if any; then
2. prior increases in succession; and then
3. the principal sum at the time of issue (subject to a surrender charge as
described in the Surrender Charge Table.).
A decrease in principal sum may require that a portion of the policy's surrender
value be distributed as a partial surrender in order to continue federal tax
compliance. It may also alter your tax obligation on exercise of certain
ownership privileges.
</TABLE>
Page 15
<PAGE> 17
SURRENDER CHARGE TABLE
To determine the total surrender charge from the table below:
1. Find the appropriate factor for the insured's age at the date of issue and
the number of full policy years completed since that date.
2. Multiply this factor by:
a. the number of thousands of principal sum on the issue date, minus
b. any reductions in principal sum for which a surrender charge has
already been imposed.
To determine the surrender charge for a decrease in principal sum:
1. Find the appropriate factor for the insured's age at the date of issue and
the number of full policy years completed since that date.
2. Multiply this factor by the number of thousands of principal sum at the time
of issue that are now being decreased.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Number of Full Policy Years Completed since the Issue Date
Issue 0 1 2 3 4 5 6
Age
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
21 8.04 8.04 8.04 8.04 8.04 8.04 7.24
22 8.28 8.28 8.28 8.28 8.28 8.28 7.45
23 8.52 8.52 8.52 8.52 8.52 8.52 7.67
24 8.76 8.76 8.76 8.76 8.76 8.76 7.88
25 9.00 9.00 9.00 9.00 9.00 9.00 8.10
26 9.60 9.60 9.60 9.60 9.60 9.60 8.64
27 10.20 10.20 10.20 10.20 10.20 10.20 9.18
28 10.80 10.80 10.80 10.80 10.80 10.80 9.72
29 11.40 11.40 11.40 11.40 11.40 11.40 10.26
30 12.00 12.00 12.00 12.00 12.00 12.00 10.80
31 12.87 12.87 12.87 12.87 12.87 12.87 11.58
32 13.73 13.73 13.73 13.73 13.73 13.73 12.36
33 14.60 14.60 14.60 14.60 14.60 14.60 13.14
34 15.47 15.47 15.47 15.47 15.47 15.47 13.92
35 16.34 16.34 16.34 16.34 16.34 16.34 14.70
36 17.14 17.14 17.14 17.14 17.14 17.14 15.43
37 17.95 17.95 17.95 17.95 17.95 17.95 16.15
38 18.76 18.76 18.76 18.76 18.76 18.76 16.88
39 19.56 19.56 19.56 19.56 19.56 19.56 17.61
40 20.37 20.37 20.37 20.37 20.37 20.37 18.33
41 21.55 21.55 21.55 21.55 21.55 21.55 19.39
42 22.72 22.72 22.72 22.72 22.72 22.72 20.45
43 23.90 23.90 23.90 23.90 23.90 23.90 21.51
44 25.07 25.07 25.07 25.07 25.07 25.07 22.57
45 26.25 26.25 26.25 26.25 26.25 26.25 23.63
46 28.03 28.03 28.03 28.03 28.03 28.03 25.23
47 29.81 29.81 29.81 29.81 29.81 29.81 26.83
48 31.59 31.59 31.59 31.59 31.59 31.59 28.43
49 33.37 33.37 33.37 33.37 33.37 33.37 30.03
50 35.15 35.15 35.15 35.15 35.15 35.12 31.63
51 37.00 37.00 37.00 37.00 37.00 36.30 33.30
52 38.86 38.86 38.86 38.86 38.55 37.55 34.97
53 40.72 40.72 40.72 40.72 39.94 38.87 36.64
54 42.57 42.57 42.57 42.56 41.42 40.26 38.32
55 44.43 44.43 44.43 44.21 42.97 41.73 39.99
56 47.80 47.80 47.27 45.95 44.62 43.28 41.93
57 51.17 50.63 49.22 47.80 46.36 44.92 43.47
58 54.35 52.84 51.31 49.76 48.21 46.66 45.10
59 56.83 55.18 53.52 51.86 50.18 48.51 46.84
60 58.26 56.51 54.75 52.99 51.22 49.46 47.70
- -------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
Number of Full Policy Years Completed since the Issue Date
Issue 7 8 9 10 11 12 13 14 15
Age or more
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 6.43 5.63 4.82 4.02 3.22 2.41 1.61 0.80 0.00
22 6.62 5.80 4.97 4.14 3.31 2.48 1.66 0.83 0.00
23 6.82 5.96 5.11 4.26 3.41 2.56 1.70 0.85 0.00
24 7.01 6.13 5.26 4.38 3.50 2.63 1.75 0.88 0.00
25 7.20 6.30 5.40 4.50 3.60 2.70 1.80 0.90 0.00
26 7.68 6.72 5.76 4.80 3.84 2.88 1.92 0.96 0.00
27 8.16 7.14 6.12 5.10 4.08 3.06 2.04 1.02 0.00
28 8.64 7.56 6.48 5.40 4.32 3.24 2.16 1.08 0.00
29 9.12 7.98 6.84 5.70 4.56 3.42 2.28 1.14 0.00
30 9.60 8.40 7.20 6.00 4.80 3.60 2.40 1.20 0.00
31 10.29 9.01 7.72 6.43 5.15 3.86 2.57 1.29 0.00
32 10.99 9.61 8.24 6.87 5.49 4.12 2.75 1.37 0.00
33 11.68 10.22 8.76 7.30 5.84 4.38 2.92 1.46 0.00
34 12.37 10.83 9.28 7.73 6.19 4.64 3.09 1.55 0.00
35 13.07 11.43 9.80 8.17 6.53 4.90 3.27 1.63 0.00
36 13.71 12.00 10.29 8.57 6.86 5.14 3.43 1.71 0.00
37 14.36 12.56 10.77 8.97 7.18 5.38 3.59 1.79 0.00
38 15.00 13.13 11.25 9.38 7.50 5.63 3.75 1.88 0.00
39 15.65 13.69 11.74 9.78 7.83 5.87 3.91 1.96 0.00
40 16.30 14.26 12.22 10.19 8.15 6.11 4.07 2.04 0.00
41 17.24 15.08 12.93 10.77 8.62 6.46 4.31 2.15 0.00
42 18.18 15.91 13.63 11.36 9.09 6.82 4.54 2.27 0.00
43 19.12 16.73 14.34 11.95 9.56 7.17 4.78 2.39 0.00
44 20.06 17.55 15.04 12.54 10.03 7.52 5.01 2.51 0.00
45 21.00 18.38 15.75 13.13 10.50 7.88 5.25 2.63 0.00
46 22.42 19.62 16.82 14.01 11.21 8.41 5.61 2.80 0.00
47 23.85 20.87 17.88 14.90 11.92 8.94 5.96 2.98 0.00
48 25.27 22.11 18.95 15.79 12.63 9.48 6.32 3.16 0.00
49 26.69 23.36 20.02 16.68 13.35 10.01 6.67 3.34 0.00
50 28.12 24.60 21.09 17.57 14.06 10.54 7.03 3.51 0.00
51 29.60 25.90 22.20 18.50 14.80 11.10 7.40 3.70 0.00
52 31.09 27.20 23.32 19.43 15.54 11.66 7.77 3.89 0.00
53 32.57 28.50 24.43 20.36 16.29 12.21 8.14 4.07 0.00
54 34.06 29.80 25.54 21.29 17.03 12.77 8.51 4.26 0.00
55 35.54 31.10 26.66 22.22 17.77 13.33 8.89 4.44 0.00
56 38.24 33.46 28.68 23.90 19.12 14.34 9.56 4.78 0.00
57 40.94 35.82 30.70 25.59 20.47 15.35 10.23 5.12 0.00
58 43.55 38.18 32.73 27.27 21.82 16.36 10.91 5.45 0.00
59 45.18 40.54 34.75 28.96 23.17 17.38 11.58 5.79 0.00
60 45.94 42.90 36.77 30.65 24.52 18.39 12.26 6.13 0.00
- --------------------------------------------------------------------------------------------------
</TABLE>
Page 16
<PAGE> 18
mn
SURRENDER CHARGE TABLE
(Continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Number of Full Policy Years Completed since the Issue Date
Issue 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Age or more
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
61 58.20 56.38 54.57 52.75 50.93 49.12 47.31 45.50 43.70 39.03 32.53 26.02 19.52 13.01 6.51 0.00
62 58.13 56.26 54.38 52.51 50.64 48.77 46.91 45.06 43.22 41.29 34.41 27.53 20.64 13.76 6.88 0.00
63 58.07 56.13 54.20 52.27 50.34 48.42 46.51 44.61 42.74 40.90 36.29 29.03 21.77 14.52 7.26 0.00
64 58.00 56.01 54.01 52.02 50.03 48.06 46.10 44.16 42.26 40.41 38.17 30.54 22.90 15.27 7.63 0.00
65 57.94 55.87 53.81 51.76 49.71 47.68 45.68 43.72 41.80 39.95 38.15 32.04 24.03 16.02 8.01 0.00
66 57.87 55.73 53.60 51.49 49.38 47.31 45.27 43.29 41.37 39.51 37.70 33.76 25.32 16.88 8.44 0.00
67 57.79 55.58 53.38 51.21 49.05 46.95 44.89 42.90 40.96 39.09 37.26 35.47 26.61 17.74 8.87 0.00
68 57.71 55.43 53.17 50.93 48.74 46.61 44.54 42.53 40.58 38.68 36.83 35.02 27.90 18.60 9.30 0.00
69 57.63 55.28 52.95 50.68 48.46 46.31 44.22 42.19 40.22 38.29 36.41 34.57 29.19 19.46 9.73 0.00
70 57.55 55.13 52.76 50.45 48.21 46.04 43.93 41.87 39.87 37.90 35.99 34.14 30.47 20.32 10.16 0.00
71 57.48 55.01 52.60 50.26 48.00 45.80 43.66 41.56 39.52 37.52 35.59 33.75 31.99 21.41 10.70 0.00
72 57.42 54.91 52.47 50.10 47.81 45.57 43.39 41.25 39.17 37.15 35.23 33.39 31.67 22.50 11.25 0.00
73 57.37 54.83 52.35 49.96 47.62 45.33 43.10 40.93 38.82 36.81 34.89 33.09 31.38 23.59 11.79 0.00
74 57.34 54.75 52.24 49.80 47.41 45.08 42.80 40.60 38.49 36.49 34.60 32.82 31.13 24.68 12.34 0.00
75 57.30 54.67 52.11 49.61 47.17 44.79 42.49 40.28 38.19 36.21 34.34 32.57 30.88 25.77 12.89 0.00
76 57.25 54.57 51.95 49.40 46.90 44.49 42.18 39.99 37.92 35.97 34.11 32.34 30.61 27.51 13.76 0.00
77 57.19 54.45 51.77 49.16 46.63 44.21 41.91 39.74 37.69 35.75 33.89 32.08 30.28 28.45 14.63 0.00
78 57.12 54.31 51.57 48.92 46.38 43.97 41.69 39.54 37.51 35.55 33.65 31.76 29.84 27.84 15.50 0.00
79 57.05 54.17 51.38 48.72 46.18 43.79 41.53 39.39 37.34 35.35 33.36 31.34 29.24 26.98 16.37 0.00
80 56.97 54.04 51.24 48.57 46.06 43.69 41.43 39.28 37.18 35.09 32.97 30.76 28.38 25.76 17.25 0.00
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 17
<PAGE> 19
m
THE VARIABLE ACCOUNT
<TABLE>
<S> <C>
GENERAL DESCRIPTION The name of the variable account is shown on the Policy Specifications
page. The variable account is administered and accounted for as part of
our general business, but the income, gains and losses of the variable
account are credited to or charged against the assets held in the variable
account, without regard to any other income, gains or losses of any other
variable account or arising out of any other business we may conduct.
The assets of the variable account are segregated by investment options,
thus establishing a series of subaccounts within the variable account.
When permitted by law, we reserve the right to:
1. create new variable accounts;
2. combine variable accounts;
3. remove, combine or add subaccounts and make the new subaccounts
available to you at our discretion;
4. substitute shares of another portfolio of the funds or shares of
another investment company for those of the funds;
5. deregister the variable account under the Investment Company Act of
1940 if registration is no longer required;
6. make any changes required by the Investment Company Act of 1940 or
any other law; and
7. operate the variable account as a managed investment company under
the Investment Company Act of 1940 or any other form permitted by
law.
If a change is made, we will send you a revised prospectus and any notice
required by law. If required, we would first seek the approval of the
Securities and Exchange Commission, and when required, the appropriate
state regulatory authorities before making a change in the investment
options.
SUBACCOUNTS The subaccounts are separate investment accounts named by the company. The
subaccount values will fluctuate in accordance with the investment
experience of the applicable portfolio of the fund held within the
subaccount.
The subaccount value is determined by multiplying the number of
accumulation units credited to the subaccount by the appropriate
accumulation unit value.
The number of accumulation units to be purchased or redeemed in a
transaction is found by dividing:
1. the dollar amount of the transaction; by
2. the subaccount's unit value for the valuation period for that
transaction.
</TABLE>
Page 18
<PAGE> 20
<TABLE>
<S> <C>
The number of units in any subaccount will be increased at the end of the
valuation period by any net premiums allocated to the subaccount during
the current valuation period and by any transfers to the subaccount from
another subaccount or from the fixed account during the current valuation
period. The number of units in any subaccount will be decreased at the end
of the valuation period by any amounts transferred from the subaccount to
another subaccount or the fixed account or surrendered during the current
valuation period. The number of units in any subaccount will also be
reduced on each monthly due date by a pro-rata share of the monthly
deduction. The monthly deduction will reduce the subaccount units in
proportion to each subaccount's value to the entire contract value.
The value of an accumulation unit for each of the subaccounts has been
arbitrarily set at $10 when the first investments were bought. The value
for any later valuation period is equal to:
A x B
"A" is equal to the subaccount's accumulation unit value for the end of
the immediately preceding valuation day.
"B" is equal to the net investment factor for the most current valuation
day.
The net investment factor equals:
X
--- - Z
Y
"X" equals:
1. the net asset value per accumulation unit held in the subaccount at
the end of the current valuation day; plus
2. the per accumulation unit amount of any dividend or capital gain
distribution on shares held in the subaccount during the current
valuation day; less
3. the per accumulation unit amount of any capital loss distribution on
shares held in the subaccount during the current valuation day; less
4. the per accumulation unit amount of any taxes or any amount set aside
during the valuation day as a reserve for taxes.
"Y" equals the net asset value per accumulation unit held in the
subaccount as of the end of the immediately preceding valuation day.
"Z" equals the mortality and expense risk charge. The mortality and
expense risk charges are deducted from each of the subaccounts on each
valuation day. They compensate us for providing the mortality and expense
guarantees and assuming the risks under this contract. These charges are
shown on the Policy Specifications page.
The net investment factor may be greater, less than or equal to one.
Therefore, the value of the subaccount may increase, decrease or remain
the same.
</TABLE>
Page 19
<PAGE> 21
<TABLE>
<S> <C>
ALLOCATIONS This contract provides investment options for the amount in the contract
value. The initial premium allocation percentages are indicated in the
application for this contract, a copy of which is attached.
These percentages will also apply to subsequent premium allocations until
you change them. Such allocation percentages may be changed by written
notice to us.
Allocation percentages must be zero or a whole number not greater than
100. The sum of the premium allocation percentages must equal 100.
We reserve the right to limit the number of subaccount allocations in
effect at any one time.
On the issue date the contract value will be allocated to the money market
subaccount. We will process the allocation at the accumulation unit value
next determined as of the end of the issue date. Any subsequent premiums
that are received from this time until the reallocation date will also be
allocated to the money market subaccount.
On the reallocation date, the contract value in the money market
subaccount will be reallocated to the subaccounts at the accumulation unit
value next determined and to the fixed account based on the premium
payment allocation percentages in the contract application.
After the reallocation date, planned periodic premiums and unscheduled
premiums will be invested as requested on the valuation day they are
received by our home office. The premium payments will be credited to the
subaccounts at the accumulation unit value next determined after receipt
of each payment.
</TABLE>
TRANSFER PRIVILEGE
<TABLE>
<S> <C>
TRANSFER FEES Six transfers per year may be made from subaccounts and the fixed account
free of charge. Any unused free transfers do not carry over to the next
contract year. Any additional transfers during a contract year will be
charged a $25 transfer fee. For the purpose of assessing a fee, each
written request or telephone request is considered to be one transfer.
The processing fee will be deducted from the amount being transferred, or
from the remaining contract value, according to your instructions.
TRANSFERS FROM After the Right to Examine Period, you may transfer all or a part of an
SUBACCOUNTS amount from the value in any subaccount of the variable account to one or
more of the subaccounts of the variable account or to the fixed account.
The minimum amount that you may transfer is the lesser of:
1. $250; or
2. the total value in that subaccount on that date.
Any transfer that would reduce the amount in a subaccount below $250 will be
</TABLE>
Page 20
<PAGE> 22
<TABLE>
<S> <C>
treated as a transfer request for the entire amount in that subaccount.
A transfer fee may apply as described above.
We may suspend or modify this transfer privilege at any time.
Transfers will be processed based on values determined at the end of the
Valuation Day during which the transfer request is received at our home
office.
</TABLE>
Page 21
<PAGE> 23
<TABLE>
<S> <C>
TRANSFERS FROM At your request you may also transfer an amount from the unloaned value in
THE FIXED ACCOUNT the fixed account to one or more subaccounts of the variable account. We
must receive the request in writing or other form acceptable to us. Only
one transfer may be made from the fixed account each contract year.
Transfers will only be made if the amount requested is not more than 25%
of the unloaned value in the fixed account.
We will not transfer more than 25% of the unloaned fixed account value
unless the balance after the transfer is less than $250, in which case the
entire amount will be transferred. A transfer fee may apply as described
above.
We may suspend or modify this transfer privilege at any time.
</TABLE>
SETTLEMENT PRIVILEGES
<TABLE>
<S> <C>
SETTLEMENT The proceeds of this policy may be paid in one sum. The proceeds may also
be paid under any reasonable settlement that may be arranged with our
consent.
When the proceeds from a death claim are payable as one sum, the
beneficiary may select a reasonable settlement.
When you select a settlement, the beneficiary may not assign or receive
payments before they are due unless expressly given this right by you.
A payee may name a contingent payee to receive any final amount that would
otherwise be paid to the payee's estate.
Any settlement requires the proceeds to be at least $2500 and any periodic
payment to be at least $25.
The first installment will be due, or interest will begin on the date of
death, maturity, or surrender.
OPTIONS A brief outline of several specific fixed settlements is shown below. The
amounts and interest rates shown in the options are based on guaranteed
minimum interest rates. We may choose to use rates that are higher than
the guaranteed minimum rate. These rates are subject to change at any
time. Information regarding current rates is available from our home
office.
INTEREST Proceeds will earn interest at the rate of 3 1/2 percent per year
ACCUMULATION compounded annually.
We may retain these funds under this option for not longer than five
years. If the beneficiary is a minor we may retain these funds until the
beneficiary attains the age of majority.
</TABLE>
Page 22
<PAGE> 24
<TABLE>
<S> <C>
INTEREST Each $1000 of proceeds will yield an income of not less than $35.00
INCOME annually, $17.35 semi-annually, $8.64 quarterly, or $2.87 monthly.
Unless you direct otherwise, the payee may withdraw the proceeds at any
time. After the first year, we may defer such withdrawal for up to six
months.
INCOME -- We will pay installments for a specified period. The amount of each
PERIOD CERTAIN installment will not be less than those shown in the table below.
If the payee dies prior to the end of the specified period, the
installments remaining to the end of the period will be paid to the
contingent payee
</TABLE>
<TABLE>
<CAPTION>
Amount of Each Amount of Each
Number of Monthly Number of Monthly
Installments Installment Installments Installment
<S> <C> <C> <C>
12 $84.65 96 $11.90
24 43.05 108 10.75
36 29.19 120 9.83
48 22.27 180 7.10
60 18.11 240 5.75
72 15.35 300 4.96
84 13.38
</TABLE>
<TABLE>
<S> <C>
INCOME -- We will pay installments of a specified amount until the proceeds,
AMOUNT CERTAIN together with 3 1/2 percent interest compounded annually, are paid in
full.
INCOME -- We will pay installments for the lifetime of the payee but for not less
LIFE than a guaranteed period. If the payee dies prior to the end of the
guaranteed period, the installments remaining will be paid to the
contingent payee.
The installments will not be less than those determined using the method
and table below:
1. If you chose the payments for the beneficiary before the insured's
death, we will add three years to the beneficiary's age at last
birthday prior to the date of the first payment.
2. For any other payee the age used shall be the age at last birthday
prior to the date of the first payment.
We may request proof of age of the payee.
</TABLE>
Page 23
<PAGE> 25
<TABLE>
<CAPTION>
AMOUNT OF EACH MONTHLY INSTALLMENT
(Per $1,000 of Proceeds)
- ----------------------------------------------------------------------------------------------------------------
Age of Payee Number of Installments Guaranteed Age of Payee Number of Installments Guaranteed
- ---------------- --------------
Male Female 60 120 180 240 Male Female 60 120 180 240
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 and 15 and 3.01 3.01 3.01 3.01 45 50 4.10 4.08 4.05 3.99
under under 46 51 4.17 4.15 4.11 4.06
47 52 4.26 4.23 4.18 4.12
11 16 3.03 3.02 3.02 3.02 48 53 4.34 4.31 4.26 4.19
12 17 3.04 3.04 3.03 3.03 49 54 4.43 4.40 4.34 4.25
13 18 3.05 3.05 3.05 3.05
14 19 3.06 3.06 3.06 3.06 50 55 4.53 4.49 4.42 4.32
51 56 4.63 4.58 4.50 4.39
15 20 3.08 3.08 3.08 3.07 52 57 4.73 4.68 4.59 4.46
16 21 3.09 3.09 3.09 3.09 53 58 4.83 4.78 4.67 4.53
17 22 3.11 3.11 3.10 3.10 54 59 4.94 4.88 4.76 4.60
18 23 3.12 3.12 3.12 3.12
19 24 3.14 3.14 3.14 3.13 55 60 5.07 4.99 4.86 4.67
56 61 5.18 5.09 4.95 4.74
20 25 3.16 3.16 3.15 3.15 57 62 5.30 5.20 5.04 4.81
21 26 3.18 3.17 3.17 3.17 58 63 5.43 5.32 5.13 4.87
22 27 3.19 3.19 3.19 3.19 59 64 5.57 5.44 5.22 4.94
23 28 3.21 3.21 3.21 3.21
24 29 3.23 3.23 3.23 3.23 60 65 5.72 5.57 5.32 5.00
61 66 5.87 5.70 5.43 5.07
25 30 3.26 3.25 3.25 3.25 62 67 6.04 5.84 5.53 5.13
26 31 3.28 3.28 3.27 3.27 63 68 6.21 5.99 5.64 5.19
27 32 3.30 3.30 3.30 3.29 64 69 6.40 6.14 5.74 5.25
28 33 3.33 3.32 3.32 3.31
29 34 3.35 3.35 3.35 3.34 65 70 6.61 6.31 5.85 5.31
66 71 6.82 6.48 5.95 5.36
30 35 3.38 3.38 3.37 3.36 67 72 7.05 6.65 6.06 5.40
31 36 3.41 3.40 3.40 3.39 68 73 7.30 6.83 6.16 5.44
32 37 3.44 3.43 3.43 3.42 69 74 7.56 7.01 6.26 5.48
33 38 3.47 3.46 3.46 3.45
34 39 3.50 3.49 3.49 3.48 70 75 7.84 7.20 6.36 5.52
71 76 8.10 7.37 6.43 5.54
35 40 3.53 3.53 3.52 3.51 72 77 8.39 7.55 6.51 5.56
36 41 3.58 3.57 3.56 3.55 73 78 8.68 7.72 6.58 5.57
37 42 3.62 3.62 3.61 3.59 74 79 9.00 7.90 6.65 5.59
38 43 3.66 3.66 3.65 3.63
39 44 3.72 3.71 3.70 3.68 75 80 9.32 8.07 6.70 5.60
76 81 9.71 8.26 6.76 5.61
40 45 3.77 3.76 3.75 3.72 77 82 10.12 8.44 6.81 5.62
41 46 3.83 3.82 3.80 3.78 78 83 10.54 8.62 6.85 5.62
42 47 3.89 3.88 3.86 3.83 79 84 10.99 8.78 6.89 5.63
43 48 3.96 3.94 3.92 3.88
44 49 4.03 4.01 3.98 3.94 80 and 85 11.45 8.94 6.91 5.63
over
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Page 24
<PAGE> 26
FARMERS NEW WORLD LIFE INSURANCE COMPANY
Policy Specifications
<TABLE>
<S> <C> <C> <C> <C>
INSURED JOHN A DOE PRINCIPAL SUM $150,000
POLICY NUMBER 001234567 DEATH BENEFIT OPTION LEVEL[VARIABLE]]]
ISSUE DATE OCTOBER 1, 1998 ISSUE AGE 35 SEX M
MATURITY DATE OCTOBER 1, 2073 MONTHLY DUE DATE 01
OWNER GEORGE B DOE
</TABLE>
VARIABLE ACCOUNT: FARMERS NEW WORLD LIFE VARIABLE LIFE SEPARATE ACCOUNT "A"
<TABLE>
<S> <C>
SCHEDULE OF BENEFITS MAXIMUM PERIOD OF COVERAGE
BASIC POLICY $150,000 TO AGE 110
PREMIUM CLASS
INSURED NON-NICOTINE
PREMIUMS* ANNUAL XXMODE
MINIMUM PREMIUM $XXX.XX $XXX.XX
PLANNED PREMIUM PAYMENTS $XXX.XX $XXX.XX
</TABLE>
*THESE PREMIUMS INCLUDE THE PREMIUMS FOR ANY BENEFITS PROVIDED BY RIDER.
MINIMUM PRINCIPAL SUM AT ATTAINED AGE 21-50 IS $75,000 AND $50,000 AT ATTAINED
AGES ABOVE AGE 50.
<TABLE>
<S> <C> <C>
SPECIAL PREMIUM RATING FACTOR X.XX PAYABLE TO INSURED'S AGE 100 [and/or]
FLAT EXTRA CHARGE PER MONTH $.XX PAYABLE TO INSURED'S AGE 100 [or FOR X YEARS]
SPECIAL PREMIUM RATING FACTOR X.XX PAYABLE TO ADDITIONAL INSURED'S AGE 70
FLAT EXTRA CHARGE PER MONTH $.XX PAYABLE TO ADDITIONAL INSURED'S AGE 70
PERCENT OF PREMIUM FACTOR .95
MONTHLY ADMINISTRATION CHARGE
FIRST POLICY YEAR: $26.00
AFTER FIRST YEAR: $5.00 [ages 21-50, $7 ages 51-80]
MORTALITY AND EXPENSE RISK CHARGE 0.90% (ON AN ANNUAL BASIS) OF THE AVERAGE DAILY
NET ASSETS OF THE VARIABLE ACCOUNT.
REQUESTED ANNUAL REPORT FEE $5.00
</TABLE>
<TABLE>
<S> <C> <C>
1998-XXX NONPARTICIPATING FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE. 00523
ADJUSTABLE DEATH BENEFIT. DEATH BENEFIT PAYABLE BEFORE
MATURITY DATE. SURRENDER VALUE PAYABLE AT MATURITY DATE.
</TABLE>
<PAGE> 1
EXHIBIT 1.A.(5)(b)
MONTHLY DISABILITY BENEFIT RIDER
BENEFIT When we receive due proof that the insured is totally
disabled as defined in the Disability Defined section,
we will add a monthly benefit to the fixed account of
this policy during the insured's continued disability,
but not beyond the insured's attained age 65. The monthly
benefit is the monthly disability benefit rider amount
multiplied by the percent of premium factor. The monthly
disability benefit rider amount and the percent of premium
factor are shown on the policy specifications page.
DISABILITY Disability shall mean that as a result of bodily injury
DEFINED or disease starting after the date of issue, the insured
is totally disabled so that the insured:
1. is and for a continuous period of at least 180 days
has been prevented from working in any occupation
for which the insured is reasonably qualified by
education, training, or experience; or
2. has suffered total and irrecoverable loss of the
sight of both eyes, or the loss of both hands, or
both feet, or one hand and one foot.
START OF Disability must start:
DISABILITY
1. while this policy and rider are in force, and
2. before the insured's attained age 60.
NOTICE OF Written notice of disability must be received by us at the
DISABILITY home office during the insured's continuing disability
unless it can be shown that notice was given as soon as
reasonably possible.
GENERAL If the claim is approved, we will add the monthly benefit
TERMS to the fixed account of this policy beginning on the first
monthly due date after the start of the insured's
disability.
ALL BENEFITS PROVIDED BY THIS RIDER WILL BE ALLOCATED TO THE
FIXED ACCOUNT.
We will add no more than 12 retroactive benefits in cases of
delayed notice of a claim.
EXCLUSIONS We will not pay monthly benefits if the disability results
FROM COVERAGE from:
1. intentionally self-inflicted injury, or
2. war or any act attributable to war, declared or
undeclared, while the insured is in the military
service of any country.
TERMINATION The owner must give proof of the insured's continuing
OF DISABILITY disability upon request unless benefits are being paid under
Item 2 of the Disability Defined section. This proof may
require that the insured be examined by a physician
acceptable to us. If this proof is not furnished within 91
days of a request, the monthly benefit for this disability
will end.
We will notify you of the termination of the monthly
disability benefit.
CHARGE FOR The charge for this rider will be added to the monthly
THIS RIDER deduction for this policy. The monthly charge for this
rider is the sum of:
1. the monthly disability benefit rider amount shown on
the policy specifications page times a percentage
at the insured's attained age; plus
2. the extra monthly charge for a special premium class
for this rider, if any.
The guaranteed maximum monthly percentages are shown in the
following table.
<PAGE> 2
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
GUARANTEED MAXIMUM MONTHLY PERCENTAGES
- ----------------------------------------------------------------------------------
Attained Percentage Attained Percentage
Age % Age %
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
21-30 6.0 51-55 15.0
31-40 7.0 56-59 20.0
41-45 8.0 60 and 20.0
46-50 10.0 above
- ----------------------------------------------------------------------------------
</TABLE>
TERMINATION This rider will end when:
OF RIDER
1. the insured attains age 60 before the start of any
disability.
2. the owner is receiving the benefits of this rider and
the insured attains age 65.
3. the policy ends for any reason.
4. the owner's signed request for termination is
received.
PROCEEDS Any proceeds paid under this policy will not be reduced by
any monthly benefits paid by this rider.
GUARANTEED This rider does not increase or decrease any guaranteed
VALUES values of this policy.
CONTRACT This rider is subject to all the terms of this policy except
as modified in this rider.
Attached to and made a part of this policy effective as of
the date of issue of the rider.
FARMERS NEW WORLD LIFE INSURANCE COMPANY
/s/ JEFFREY T. BLACKBURN
C. Paul Patsis
President Secretary
<PAGE> 1
EXHIBIT 1.A.(5)(c)
WAIVER OF DEDUCTION RIDER
BENEFIT When we receive proof that the insured is totally disabled
as defined in the section entitled Disability Defined, we
will waive the monthly deductions due after the start of
and during [your] continued total disability subject to the
terms below.
DISABILITY Disability means that as a result of bodily injury or
DEFINED disease starting after the date of issue, the insured is
totally disabled so that the insured:
1. is and for a continuous period of at least six months
has been prevented from working in any occupation for
which the insured is reasonably qualified by
education, training or experience; or
2. has suffered total and irrecoverable loss of the
sight of both eyes, or the loss of both hands, or
both feet, or one hand and one foot.
START OF Disability must start:
DISABILITY 1. while this policy and rider are in force, and
2. before the insured reaches attained age 60.
NOTICE OF Written notice of disability must be received by us at
DISABILITY the home office during the insured's continuing
disability unless it can be shown that notice was given
as soon as reasonably possible. No monthly deduction
will be waived which became due more than 12 months
before receipt of written notice of claim.
GENERAL The monthly deduction must be paid until the claim is
TERMS approved. If the claim is approved, we will credit the
accumulation account with all monthly deductions that were
deducted from the accumulation account since the start of
the disability.
EXCLUSIONS FROM We will not waive monthly deductions if disability results
COVERAGE from:
1. Intentional self-inflicted injury.
2. War or any act attributable to war, declared or
undeclared, while the insured is in the military,
naval or air service of any country.
3. Participation in aviation, except as a passenger.
TERMINATION OF The owner must give proof of the insured's continuing
DISABILITY disability upon request unless benefits are being paid
under Paragraph 2 of the section entitled Disability
Defined. This proof may require that the insured be
examined by a physician acceptable to us. If this proof is
not furnished within 91 days of a request, this
disability benefit will end. We will notify the owner of
the monthly deduction then due.
CHARGE FOR The charge for this rider will be added to the monthly
THIS RIDER deduction for this policy. The monthly charge for this
rider is a percentage of the sum of:
1. the cost of insurance charge for the policy; and
2. the monthly charges for any other riders attached to
this policy; and
3. the monthly administration charge; and
4. the flat extra monthly charge for a special premium
class, if any.
This percentage is based on the insured's attained age and
the death benefit option. The guaranteed maximum
percentages are shown in the following table.
<PAGE> 2
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
GUARANTEED MAXIMUM PERCENTAGES
- --------------------------------------------------------------------
Attained Percentage Attained Percentage
Age % Age %
- --------------------------------------------------------------------
<S> <C> <C> <C>
16-30 6.0
31-40 7.0 51-55 15.0
41-45 8.0 56-59 20.0
46-50 10.0 60 and above 0.0
- --------------------------------------------------------------------
</TABLE>
TERMINATION This rider will end when:
OF RIDER 1. the insured attains age 60 before the start of any
disability; or
2. the policy ends; or
3. the owner's signed request for termination is
received.
PROCEEDS Any proceeds paid under this policy will not be reduced by
any monthly deductions waived under this rider.
CONTRACT This rider is subject to all the terms of this policy
except as modified in this rider.
Attached to and made a part of this policy effective as of
the date of issue of the rider.
FARMERS NEW WORLD LIFE INSURANCE COMPANY
/s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary
<PAGE> 1
EXHIBIT 1.A.(5)(d)
ACCIDENTAL DEATH BENEFIT RIDER
BENEFIT We will pay the Accidental Death Benefit amount to the
beneficiary upon receipt of due proof that the insured's
death was caused by accidental bodily injury subject to
the terms below. The Accidental Death Benefit amount is
shown on the policy specifications page. This Accidental
Death Benefit provides insurance on the life of the
Insured, but does not provide insurance on any other
person or persons insured.
ACCIDENTAL Death must occur:
DEATH 1. as a direct result of accidental bodily injury and
BENEFIT independently of all other causes; and
2. within 90 days of such injury; and
3. before the insured reaches attained age 70; and
4. while this policy and rider are in force.
EXCLUSIONS FROM We will not pay this benefit if the death results from:
COVERAGE 1. suicide whether sane or insane;
2. war or any act attributable to war, declared or
undeclared, whether the insured is in the military
service or not;
3. bodily or mental infirmity, illness or disease of
any kind;
4. bacterial infection other than infection occurring
as a result of accidental or external bodily
injuries;
5. committing or attempting to commit an assault or
felony;
6. the voluntary taking of any poison, drug or
sedative, asphyxiation from voluntary inhalation of
gas;
7. participation in aviation, except as a passenger.
CHARGE FOR The charge for this rider will be added to the monthly
THIS RIDER deduction for this policy. The monthly charge for this
rider is the sum of:
1. the risk rate at the insured's attained age times
the number of thousands of Accidental Death Benefit
amount shown on the policy specifications page;
plus
2. the extra monthly charge for a special premium
class for this rider, if any.
If this policy provides for Waiver of Deduction, the
monthly charge for this rider will be waived if the
monthly deduction for the policy is waived.
Guaranteed maximum monthly risk rates are shown in the
following table.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
GUARANTEED MAXIMUM RISK RATES PER $1,000 BY ATTAINED AGE
- ------------------------------------------------------------------------------------------------------------------
AGE RISK RATE AGE RISK RATE AGE RISK RATE AGE RISK RATE AGE RISK RATE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0.104 15 0.104 29 0.083 43 0.104 57 0.125
2 0.104 16 0.125 30 0.083 44 0.104 58 0.125
3 0.083 17 0.146 31 0.083 45 0.104 59 0.125
4 0.083 18 0.146 32 0.083 46 0.104 60 0.125
5 0.083 19 0.146 33 0.083 47 0.104 61 0.146
6 0.083 20 0.146 34 0.083 48 0.104 62 0.146
7 0.083 21 0.146 35 0.083 49 0.104 63 0.146
8 0.083 22 0.125 36 0.083 50 0.104 64 0.167
9 0.083 23 0.125 37 0.083 51 0.104 65 0.167
10 0.083 24 0.104 38 0.083 52 0.104 66 0.167
11 0.083 25 0.104 39 0.083 53 0.104 67 0.188
12 0.083 26 0.104 40 0.083 54 0.104 68 0.188
13 0.083 27 0.104 41 0.083 55 0.125 69 0.188
14 0.083 28 0.083 42 0.083 56 0.125
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
TERMINATION This rider will end when:
OF RIDER 1. the insured attains age 70; or
2. the policy ends; or
3. the owner's signed request for termination is
received.
GUARANTEED This rider does not increase or decrease the guaranteed
VALUES values of this policy.
CONTRACT This rider is subject to all the terms of the policy,
except as modified in this rider.
Attached to and made a part of this policy effective as
of the date of issue of the policy.
FARMERS NEW WORLD LIFE INSURANCE COMPANY
/s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary
This Accidental Death Benefit provides insurance on the life of the Insured,
but does not provide insurance on any other person or persons insured.
<PAGE> 1
EXHIBIT 1.A.(5)(e)
<TABLE>
<CAPTION>
FARMERS NEW WORLD LIFE INSURANCE COMPANY
ADDITIONAL INSURED TERM INSURANCE RIDER
<S> <C>
ADDITIONAL INSURED The person named in the application for this rider is the additional insured. This rider provides
level term insurance to the additional insured's attained age 70. Attained age is the additional
insured's age at issue plus the number of years since issue of this rider.
Benefit Upon receipt of due proof of the death of the additional insured while this rider is in force we
will pay the additional insured rider amount shown on the Policy Specifications page. The
additional insured rider amount may not exceed the principal sum of the policy to which this rider
is attached.
BENEFICIARY The insured is the beneficiary of this rider. If the insured and the additional insured die at
the same time, or if the order of the deaths cannot be determined, the benefits of this rider will
be paid as if the additional insured died first.
CONVERSION While this policy and rider are in force, the insurance on the additional insured may be
PRIVILEGE converted to a permanent plan of life insurance available at the time of conversion.
This rider may be converted:
1. prior to the additional insured's attained age 59; or
2. within 60 days of the insured's death prior to the additional insured's attained age 70.
Conversion is subject to the following:
1. The new policy will be based on the additional insured's attained age on the date it takes
effect. The new policy will contain the provisions then being included in new policies. It will
be based on the policy minimums and rates in effect at that time. The additional insured will
retain the same rating classification as on this rider.
2. Evidence of insurability will not be required for the new policy. It will be required for:
a. accidental death benefits, or
b. disability benefits, or
c. any other benefits which increase the insurance risk.
3. The suicide and incontestable periods for the new policy will be measured from the date of issue
of this rider.
4. The principal sum of the new policy may not exceed the death benefit amount of this rider.
5. If the charge for this rider is being waived under the Waiver of Deduction rider at the date of
conversion, the charge or premium for the new policy will not continue to be waived.
6. The required premium and this policy must accompany the owner's signed request for conversion.
TERMINATION OF RIDER This rider will end when:
1. the policy ends for any reason;
2. we receive the owner's signed request for termination; or
3. the additional insured attains age 70.
CHARGE FOR The charge for this rider will be added to the monthly deduction for this policy. The monthly
THIS RIDER charge for this rider is the risk rate per $1000 at the additional insured's attained age times
the number of thousands of additional insured rider amount shown on the Policy Specifications
page.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
If the additional insured is in a special premium class, the charge for this rider will be increased
by an extra monthly charge.
If this policy provides for Waiver of Deduction, the charge for this rider will be waived if the
monthly deduction for the policy is waived.
Guaranteed maximum monthly risk rates are shown in the following table. These will be increased by a
rating factor if the additional insured is in a special premium class.
</TABLE>
<TABLE>
<CAPTION>
GUARANTEED MAXIMUM MONTHLY RISK RATES PER $1,000
OF ADDITIONAL INSURED RIDER AMOUNT
AT ADDITIONAL INSURED'S ATTAINED AGE:
-----------------------------------------------------------------------------------------
RISK RATE RISK RATE RISK RATE RISK RATE
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
21 0.09884 34 0.15782 46 0.42611 58 0.95936
22 0.10133 35 0.16695 47 0.45601 59 1.01169
23 0.10383 36 0.18107 48 0.48840 60 1.07398
24 0.10632 37 0.19769 49 0.52412 61 1.15206
25 0.10881 38 0.21679 50 0.56233 62 1.25257
26 0.11296 39 0.23756 51 0.60303 63 1.37467
27 0.11629 40 0.26247 52 0.64954 64 1.51089
28 0.12044 41 0.28905 53 0.70104 65 1.65458
29 0.12542 42 0.31563 54 0.75337 66 1.80077
30 0.13124 43 0.34221 55 0.80736 67 1.94198
31 0.13622 44 0.36879 56 0.86052 68 2.08484
32 0.14204 45 0.39703 57 0.91035 69 2.24017
33 0.14951
</TABLE>
<TABLE>
<S> <C>
INCONTESTABILITY We will not contest this rider after it has been in force for two years from the effective date of
this rider during the additional insured's lifetime.
SUICIDE If, within two years from the effective date of this rider, the additional insured dies by suicide,
while sane or insane, we will limit the proceeds to the sum of monthly charges deducted for the
additional insured under this rider.
RESERVE BASIS The reserves for this rider are based on the Commissioners 1980 Standard Ordinary Table, the
Commissioners Reserve Valuation Method and age last birthday. The statutory valuation interest rate
does not exceed the maximum rate allowed by the valuation law of the state in which this rider is
delivered.
GUARANTEED VALUES This rider does not increase or decrease the guaranteed values of this policy.
CONTRACT The rider is subject to all the terms of the policy except as modified in this rider.
Attached to and made a part of this policy effective as of the date of issue of the policy, unless
the rider is added at a later date.
</TABLE>
FARMERS NEW WORLD LIFE INSURANCE COMPANY
/s/ JAMES I. RANDOLPH /s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary
<PAGE> 1
EXHIBIT 1.A.(5)(f)
<TABLE>
<CAPTION>
FARMERS NEW WORLD LIFE INSURANCE COMPANY
CHILDREN'S TERM INSURANCE RIDER
<S> <C>
BENEFITS A. Upon receipt of due proof of the death of an insured child, we will pay to the beneficiary of
this rider the Children's Term Rider amount shown on the policy specifications page, provided:
1. the rider is in force on the date of death, and
2. death occurred prior to the child's 22nd birthday.
B. Upon receipt of due proof of the insured's death while this rider is in force, we will waive the
monthly charges for this rider and continue the term insurance to age 22 on each insured child.
INSURED Each of the children described below is insured from age 15 days until the earliest of either the
CHILDREN child's 22nd birthday or the insured's attained age 65.
1. Each child listed in the application who is not yet 20 years of age on the effective date of this
rider.
2. Each future child born to the insured.
3. Each child legally adopted by the insured before the child is age 20 and before the insured
attains age 63.
BENEFICIARY The insured is the beneficiary under this rider. If the owner is living at the time of the
insured's death, the owner will become the beneficiary. If the owner is not living, the surviving
insured children will share and share alike.
CHARGE FOR The charge for this rider will be added to the monthly deduction for this policy. The guaranteed
THIS RIDER maximum monthly charge for this rider is $0.87 times the number of thousands of Children's Term Rider
amount.
If this policy provides for Waiver of Deduction, the monthly charge for this rider will be waived if
the monthly deduction for the policy is waived.
TERMINATION This rider will end when:
OF RIDER 1. the insured attains age 65; or
2. the youngest child covered by this rider reaches age 22; or
3. the policy ends; or
4. the owner's signed request for termination is received.
CONVERSION The insurance on each child may be converted to a permanent plan of life insurance available at the
PRIVILEGE time of conversion. Conversion is subject to the following terms:
1. The new policy will be based on the child's attained age on the date it takes effect. The new
policy will contain the provisions then being included in new policies. It will be based on the
policy minimums and rates in effect at that time.
2. The amount of the policy may not exceed $1,000 for each $1,000 of insurance provided by this
rider. If the conversion is made within 31 days following the earliest of either the child's
22nd birthday or the insured's attained age 65, the amount of the new policy may not exceed
$5,000 for each $1,000 of insurance provided by this rider.
3. If the charge for this rider is being waived under the Waiver of Deduction rider at the date of
conversion, the charge or premium for the new policy will not
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
continue to be waived.
4. Evidence of insurability will not be required for the new policy. It will be required for:
a. accidental death benefits, or
b. disability benefits, or
c. any other benefits which increase the insurance risk.
5. The suicide and incontestability periods on the new policy will be measured from the effective
date of this rider.
6. We must receive the owner's signed request for conversion while this policy and rider are in
force or within 31 days of the end of this rider.
7. The required premium and this policy must accompany the request for conversion. We will endorse
this rider to exclude the child with the new policy and return the policy to the owner.
Upon receipt of due proof that the death of a child eligible to be insured under a new policy
occurred during the 31 days following the expiry of that child's insurance under this rider and
before any new policy had become effective, we will pay to the beneficiary of this rider the amount
which would have been paid if such child's term insurance had not expired.
INCONTESTABILITY We will not contest this rider after it has been in force for two years from the effective date of
the rider during the insured children's lifetimes.
CONTRACT This rider is subject to all the terms of this policy, except as modified in this rider.
Attached to and made a part of this policy effective as of the date of issue of the policy, unless
the rider is added at a later date.
</TABLE>
FARMERS NEW WORLD LIFE INSURANCE COMPANY
/s/ JEFFREY T. BLACKBURN
C. Paul Patsis Jeffrey T. Blackburn
President Secretary
<PAGE> 1
EXHIBIT 1.A.(6)(a)
STATE OF WASHINGTON
[LOGO]
OFFICE OF INSURANCE COMMISSIONER
NO. 107834
I, DEBORAH SENN, State Insurance Commissioner, do hereby certify that I
am the state official charged with the general control and supervision of all
insurance business (except State Worker's Compensation) transacted in the State
of Washington and charged with the administration of the laws relating to
insurance in said jurisdiction, and that this office is a department of record,
having the custody of original documents.
I FURTHER CERTIFY that the attached is a full, true, and accurate copy of
the Articles of Incorporation of FARMERS NEW WORLD LIFE INSURANCE COMPANY,
Mercer Island, Washington; the same as the original filed in the Office of the
Insurance Commissioner for the state of Washington.
[SEAL]
IN WITNESS WHEREOF, I have hereunto set my
hand and affixed the official seal of the Insurance Commissioner of the State of
Washington, this 13th day of May, 1993.
/s/ DEBORAH SENN
-----------------------------------
State Insurance Commissioner
By: /s/ John B. Woodall
-------------------------------
Deputy Commissioner
<PAGE> 2
FARMERS NEW WORLD LIFE INSURANCE COMPANY
MERCER ISLAND, WASHINGTON
CERTIFIED COPY OF ARTICLES OF INCORPORATION
I, James I. Randolph, Vice President and Assistant Secretary, do hereby
certify that I am the duly elected, qualified and acting Vice President and
Assistant Secretary of said Corporation and that the attached is a full, true
and correct copy of the Articles of Incorporation of this company.
IN WITNESS WHEREOF, I have signed this instrument and affixed the
corporate seal of said Corporation this 31st day of March, 1993.
/s/ James I. Randolph
---------------------
James I. Randolph, CPCU
Vice President and Assistant Secretary
(Corporate Seal)
<PAGE> 3
FARMERS NEW WORLD LIFE INSURANCE COMPANY
ARTICLES OF INCORPORATION
KNOW ALL MEN BY THESE PRESENTS: THAT WE, THE UNDERSIGNED, EDWARD J.
CANNON, HENRY B. LUHN, EDWARD J. O'SHEA, THOMAS J. ENNIS, THOMAS A. E. LALLY,
EDMUND BURKE, AND JOHN J. CADIGAN, CITIZENS OF THE UNITED STATES, AND RESIDENTS
OF THE STATE OF WASHINGTON, DO HEREBY ASSOCIATE OURSELVES TOGETHER UNDER THE
GENERAL CORPORATION LAWS OF THE STATE OF WASHINGTON, AND DO HEREBY ADOPT THE
FOLLOWING ARTICLES OF INCORPORATION AND CERTIFY AS FOLLOWS, TO-WIT:
ARTICLE I(1)
The names of this Corporation shall be, and is "Farmers New World Life
Insurance Company."
ARTICLE II(2)
The objects for which this Corporation is formed are, and shall be:
To do a general life insurance business including the issuing of policies
entitled to participate from time to time in the earnings of the corporation
through dividends and including endowments and annuities and to do a general
accident insurance and sickness or health insurance business, including
insurance against injury, disablement and resulting from sickness and every
insurance pertaining thereto, and issue participating life insurance policies,
and to have, engage and exercise each and all of the powers which are conferred
upon corporations engaged in insurance business of the classes hereinabove
specified
ARTICLE III(3)
The amount of the authorized capital of this Corporation shall be
$25,000,000 divided into 25,000,000 shares of capital stock of the par value of
$1.00 each.
No holder of any stock of this Corporation shall be entitled, as such, to
any preemptive right to subscribe to any new, additional or unissued stock of
this Corporation of any class and all such rights are waived by each holder of
the stock of the Corporation.
- ------------------------------
(1) As amended at the Annual Stockholders Meeting on September 15, 1953.
(2) As amended at the Annual Stockholders Meeting on April 7, 1992.
(3) As amended at the Annual Stockholders Meeting on April 19, 1973.
1
<PAGE> 4
ARTICLE IV(4)
The time of the existence of this Corporation shall be unlimited.
ARTICLE V(5)
The principal place of business of this Corporation shall be in the City
of Mercer Island, King County, Washington.
ARTICLE VI(6)
The number of Directors of this corporation shall be not less than five
(5) nor more than eleven (11) of whom at least three-fourths shall be citizens
of the United States. Within the foregoing limitations, the number of Directors,
their qualifications, classifications, terms of office and compensation shall be
prescribed by the By-laws of the corporation.
The authority to make, alter or repeal By-laws is vested in the
Directors, subject to the power of stockholders to change or repeal such Bylaws.
Until otherwise provided by law, the Directors shall not make any By-laws fixing
their qualifications, classifications, terms of office or compensation.
- ------------------------------
(4) As amended at the Annual Stockholders Meeting on September 22, 1910.
(5) As amended at the Annual Stockholders Meeting on March 28, 1961.
(6) As amended at the Annual Stockholders Meeting on April 7, 1992.
2
<PAGE> 1
EXHIBIT 1.A.(6)(b)
BY-LAWS
OF
FARMERS NEW WORLD LIFE INSURANCE COMPANY
(AS AMENDED OCTOBER 24, 1995)
<PAGE> 2
BY-LAWS
OF
FARMERS NEW WORLD LIFE INSURANCE COMPANY
OFFICES
SECTION 1. PRINCIPAL OFFICE. (a) The principal offices of the corporation
shall be in the county of King, State of Washington. (b) Corporation may also
have and maintain offices in such other places within or without the State of
Washington as the Board of Directors may from time to time appoint.
SEAL
SECTION 2. The Corporation seal shall be in the form of a circle and shall
Bear the name of the corporation, year of its incorporation, and the words
"Corporate Seal."
STOCKHOLDERS' MEETINGS
(1)SECTION 3. PLACE OF MEETING. All annual meetings of stockholders shall be
held at the place so designated by the Board of Directors.
(2)SECTION 4. TIME AND ANNUAL MEETING. The Annual Meeting of Stockholders shall
be held at 10:00 o'clock a.m. on the third Thursday of each April of each year
if such day is not a legal holiday in said state; if such day falls on a legal
holiday in said state, then such Annual Meeting shall be held on the first day
preceding which is not a legal holiday at the same hour. The Annual Meeting may
be held on such other date and time as determined by the Board of Directors and
as indicated by the Notice to Stockholders as required under these By-laws.
SECTION 5. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person, or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
law, by the Articles of Incorporation, or by these Bylaws. If, however, such
majority shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of voting stock shall be
present. At such adjourned meetings at which the requisite amount of voting
stock shall be represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
- ------------------------------
(1) As amended at the Board of Directors Meeting of February 21, 1978.
(2) As amended at the Stockholders Meeting of March 12, 1986.
1
<PAGE> 3
(3)SECTION 6. VOTING. Only persons in whose names shares entitled to vote stand
on the stock records of the corporation on the day twenty days prior to any
meeting of stockholders, excluding the day of such meeting, or if some other day
be fixed by resolution of the Board of Directors for the determination of
stockholders of record, then on such other day, shall be entitled to vote at
such meetings, and each such person shall be entitled to one vote for each of
said shares. The vote shall not be by ballot except when demanded by a
stockholder entitled to vote, represented in person or by proxy.
The Chairman of the meeting shall declare the persons receiving the
highest number of votes to be elected as Directors of the corporation.
The Board of Directors may fix a time, in the future not exceeding fifty
days preceding the date of any meeting of stockholders, or the date fixed for
the payment of any dividend or distribution, or for the allotment of rights, or
when any change or conversion or exchange of shares shall go into effect, as a
record for the determination of the stockholders entitled to notice of and to
vote at any such meeting or entitled to receive any such dividend or
distribution, or any such allotment of rights, or to exercise the rights in
respect to any such change, conversion, or exchange of shares, and in such case
only stockholders of record on the date so fixed shall be entitled to notice of
and to vote at such meeting or to receive such dividend distribution or
allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
any record date fixed as aforesaid. The Board of Directors may close the books
of the corporation against transfer of any shares during the whole or any part
of such period.
SECTION 7. PROXIES. Every person entitled to vote or execute consent shall
have the right to do so either in person or by an agent or agents authorized by
a written proxy executed by such person or his duly authorized agent and filed
with the secretary of the corporation.
No proxy shall be valid after the expiration of eleven (11) months from
the date of its execution unless the stockholder executing it specified therein
the length of time for which such proxy is to continue in force, which in no
case shall exceed three (3) years from the date of its execution. Any proxy duly
executed shall be deemed not to have been revoked, and to be in full force and
effect, unless and until an instrument revoking said proxy, or a duly executed
proxy bearing a later date, is filed with the secretary. Notwithstanding that a
valid proxy may be outstanding, the powers of the proxy holder or holders shall
be suspended, except in the case of a proxy coupled with an interest, which
shall state that fact on its face, if the person or persons executing such proxy
shall be present at the meeting and elect to vote in person.
SECTION 8. ADJOURNMENT. When a meeting of shareholders is adjourned for
thirty days or more, notice of the adjourned meeting shall be given as in the
case of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of
- ------------------------------
(3) As amended at Board of Directors Meeting of April 17, 1975.
2
<PAGE> 4
the business to be transacted at an adjourned meeting other than by announcement
at the meeting at which such adjournment is taken.
(4)SECTION 9. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS. Written notice of the
annual meeting shall be mailed to each stockholder entitled to vote thereat at
such address as appears on the records of the corporation not less than twenty
(20) nor more than fifty (50) days prior to the date of the meeting; provided,
however, that all notices to stockholders whose addresses do not appear upon the
records of the corporation shall be mailed to such stockholders in care of
General Delivery, Main Post Office, Seattle, Washington; and such notice shall
be deemed to be given at the time when the same shall be thus mailed.
SECTION 10. SPECIAL MEETINGS OF STOCKHOLDERS. Special meetings of the
stockholders for any purpose or purposes, unless otherwise prescribed by
statute, may be called by the Chairman of the Board of Directors or by the
President and shall be called by the Chairman of the Board of Directors or by
the President or Secretary at the request in writing of a majority of the Board
of Directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
(5)SECTION 11. NOTICE OF SPECIAL MEETINGS OF STOCKHOLDERS. Written notice of
special meetings of stockholders stating the time and place and object thereof
shall be mailed, postage prepaid, not less than twenty (20) days, nor more than
fifty (50) days prior to the date of such meeting to each stockholder entitled
to vote thereat at such address as appears on the records of the corporation;
provided, however, that such notice to stockholders whose addresses do not
appear upon the records of the corporation shall be mailed to each stockholder
in care of General Delivery, Main Post Office, Seattle, Washington; and such
notices shall be deemed to be given at the time when the same shall be thus
mailed.
SECTION 12. WAIVER OF NOTICE OF CONSENT TO MEETINGS. Whenever all
stockholders entitled to vote at any meeting consent to the same in writing,
either before or subsequent to such meeting, or are present at such meeting and
participate therein without objection, or are present at such meeting and orally
consent thereto, such meeting, and all the acts and proceedings thereat, shall
be as valid as if such meeting had been duly and regularly called and noticed
and at such meeting any business may be transacted which is not excepted from
the written consent or to the consideration of which no objection for want of
notice is made at the time, and if any meeting be irregular for want of notice
or of such consent, provided a quorum was present at such meeting, the
proceedings of said meeting may be ratified and approved and rendered likewise
valid and the irregularity or defect therein waived by a writing signed by all
parties having the right to vote at such meeting. Such consent or approval of
stockholders may be by proxy or attorney, but all such proxies and powers of
attorney must be in writing.
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(4) As amended at the Regular Meeting of the Board of Directors, April 17, 1975.
(5) As amended at the Board of Directors Meeting of February 21, 1978.
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(6)SECTION 13. NUMBERS-POWERS-QUALIFICATIONS-TERM OF OFFICE. The corporate
powers, business and property of this corporation shall be exercised, conducted
and controlled by a Board of not less than five (5) nor more than eleven (11)
Directors of whom not less than three-fourths shall be citizens of the United
States.
At each Annual Meeting of Stockholders, the Directors shall be elected by ballot
for a term of one year by a majority vote of the Capital Stock of the Company
which is represented at such meeting either in person or by proxy.
No Director who has attained 70 years of age shall be elected or re-elected to
the Board of Directors on or after January 1, 1996, unless specifically
requested by the Board each year to stand for re-election. No Director who is
also an officer or employee of this company shall stand for re-election to the
Board after he has retired as an active officer or employee of the company.
(7)SECTION 13.1. OFFICE OF DIRECTOR EMERITUS AND ADVISORY DIRECTOR: In addition
to the regularly elected Directors there shall be an office of Director
Emeritus: To be eligible for appointment a person shall have been a Director of
this Company for fifteen years. Any person becoming eligible for appointment as
Director Emeritus after January 1, 1996 shall be appointed to said office for a
term not to exceed one year. Appointments to the office of Director Emeritus
shall be by appropriate action of the Board of Directors.
All Directors after their retirement from the Board may be appointed Advisory
Directors with the privilege of attending meetings of the Board for the purpose
of giving counsel and advice but they shall have no vote. Appointments to the
office of Advisory Director shall be by appropriate action of the Board of
Directors.
Any Director Emeritus or Advisory Director shall serve without compensation but
shall be reimbursed for his necessary and appropriate travel expenses incurred
in connection with meetings of this Board of Directors which from time to time
he may at his election attend.
SECTION 14. VACANCIES. A vacancy or vacancies in the Board of Directors
shall be deemed to exist in case of the death resignation or removal of any
Director or Directors, or if the authorized number of Directors be increased or
if the shareholders, at any annual or special meeting of shareholders, at which
any Director or Directors are elected, fail to elect the full authorized number
of Directors to be voted for at that meeting.
Vacancies in the Board of Directors may be filled by a majority of the
remaining Directors, though less than a quorum, and each Director so elected
shall hold office until his successor is elected at an Annual Meeting of
Stockholders or at a special meeting called for that purpose.
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(6) As amended at a Regular Meeting of the Board of Directors held October 24,
1995.
(7) As amended at a regular Meeting of the Board of Directors held October 24,
1995
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The stockholders may at any time elect Directors to fill any
vacancies not filled by the Directors, and may elect the additional Directors at
the meeting at which an amendment of the Bylaws is voted authorizing an increase
in the number of Directors.
If any Director tenders his resignation to the Board of Directors,
the Board shall have power to elect a successor to take office at such time as
the resignation shall become effective.
No reduction in the number of Directors shall have the effect of
removing any Director prior to the expiration of his term of office.
SECTION 15. ADDITIONAL POWERS. In addition to the powers and authorities by
these Bylaws expressly conferred upon them, the Board may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the Articles of Incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders.
SECTION 16. ANNUAL REPORT. The Board of Directors shall cause an annual
report to be sent to the shareholders not later than one hundred twenty (120)
days after the close of the fiscal or calendar year of the corporation, which
report shall be a full and adequate financial report.
COMMITTEES
SECTION 17. CREATION-POWERS. There shall be an Executive Committee composed
of the President and two or more members of the Board of Directors appointed by
a majority of the whole Board. The Executive Committee, during the intervals
between meetings of the Board of Directors, shall possess all the powers of such
Board in the management, direction and supervision of the business, affairs and
property of the Company.
The President may, from time to time appoint such other Committee or
Committees as in his judgment may seem necessary or proper. The members of such
other Committee or Committees need not necessarily be members of the Board and
such other Committee or Committees shall have such powers and shall perform such
duties as the President may determine.
SECTION 18. MINUTES. The Committees shall keep regular minutes of their
proceedings and shall report the same to the Board of Directors when required.
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COMPENSATION OF DIRECTORS
(8)SECTION 19. COMPENSATION OF DIRECTORS. The Directors of this corporation
other than salaried officers or employees of this corporation, in lieu of all
other compensation for services as Directors shall receive such sums in salary
and/or attendance fees as may from time to time be fixed by resolution adopted
by a two-thirds vote of the Board of Directors. In addition, thereto, the
out-of-town members of said Board shall be allowed their actual expenses of
attendance, provided, that nothing herein contained shall be construed to
preclude any Director from serving the corporation in any other capacity and
receiving compensation therefore. Director's salary or attendance fees for any
officer or employee of any of the Farmers Insurance Group of Companies shall not
be paid to such Director but shall be allocated to his respective employer
through the inter-company billing process.
SECTION 20. COMPENSATION OF COMMITTEE MEMBERS. Members of special or standing
committees who are not salaried officers or employees of this corporation may be
allowed such compensation as is fixed by resolution of the Board for attending
committee meetings and out-of-town members of said committees may be allowed
their actual expenses of attendance.
MEETINGS OF THE BOARD
SECTION 21. ANNUAL ORGANIZATION MEETING. The newly elected Board may meet
immediately following the Annual Meeting of Stockholders and no notice of such
meeting shall be necessary to the newly elected Directors in order legally to
constitute the meeting, provided a majority of the whole Board shall be present;
or they may meet at such place and time as shall be fixed by the consent in
writing of all of the newly elected Directors, or shall be fixed in a notice to
be sent by the Chairman of the Board of Directors or by the President or
Secretary to the newly elected Directors.
SECTION 22. REGULAR MEETINGS. Meetings of the Board of Directors may be held
quarterly at the Home Office of the corporation, or at such other place, whether
within or without the State of Washington, as a majority of the Directors may
from time to time appoint, on such day and hour as may be fixed by the President
of the corporation, upon due notice given by the Secretary to each Director.
Such meetings of the Board may be called by the Chairman of the Board of
Directors or by the President on three (3) days' notice to each Director either
personal, or by mail, or by telegram; such meetings shall be called by the
Chairman of the Board of Directors or by the President in like manner and on
like notice on the written request of three (3) Directors.
SECTION 23. SPECIAL MEETINGS. Special meetings of the Board may be called by
the Chairman of the Board of Directors or by the President or the Executive Vice
President on three (3) days' notice to each Director, either personally or by
mail or by telegram; special meetings shall be called by the Chairman of the
Board of Directors or by the President or Executive Vice President in like
manner and on like notice on the written request of three (3) Directors.
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(8) As amended at the Board of Directors Meeting of October 26, 1976.
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SECTION 24. QUORUM. At all meetings of the Board a majority of the
Directors shall be necessary and sufficient to constitute a quorum for the
transaction of business and the act of the majority of the Directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by the
Articles of Incorporation or by these By-Laws. A resolution in writing signed by
all the members of the Board of Directors or Executive Committee shall be deemed
to be action by such Board or Executive Committee as the case may be to the
effect therein expressed with the same force and effect as if the same had been
duly passed by the same vote at a fully convened meeting and the Secretary shall
record such resolution in the minute book under its proper date.
(9)SECTION 24.1. ACTION WITHOUT A MEETING. Any action proper to be taken by the
Board of Directors of this corporation may be taken without a meeting, if all
members of the Board shall individually or collectively consent in writing to
such action. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board. Such action by written consent shall have the same
force and effect as a unanimous vote of such Directors.
OFFICERS
(10)SECTION 25. OFFICERS. The officers of the corporation shall be elected by
the Directors and may be a Chairman of the Board of Directors, Co-Chairmen of
the Board of Directors, a President, a Vice President, a Secretary, a Treasurer,
an Actuary, a Medical Director, a Controller, and a General Counsel.
SECTION 26. HOW CHOSEN. The Board of Directors at its first meeting after
each Annual Meeting of Stockholders shall elect a Chairman of the Board of
Directors or Co-Chairmen and a President from their own number. and shall elect
a Vice President, a Secretary, a Treasurer, an Actuary, a Medical Director, A
Controller; and may elect an Executive Vice President, an Administrative Vice
President, and a General Counsel, none of whom are required to be members of the
Board.
SECTION 27. ADDITIONAL OFFICERS. The Board may appoint a General Manager,
an Assistant General Manager, Additional Vice Presidents and Assistant
Secretaries and Assistant Treasurers and such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
SECTION 28. SALARIES. The salaries of the Chairman of the Board of
Directors, President, Executive Vice President, Secretary and Treasurer, shall
be fixed by the Board of Directors.
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(9) As amended at the Board of Directors Meeting of December 7, 1961.
(10) As amended at the Board of Directors Meeting of March 26,1963.
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SECTION 29. TERMS OF OFFICE-REMOVAL-VACANCIES. The officers of the
corporation shall hold office until their successors are chosen and qualify in
their stead.
Any officer elected or appointed by the Board of Directors may be removed
at any time by the affirmative vote of two-thirds of the whole Board of
Directors. If the office of any officer becomes vacant for any reason the
vacancy may be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
SECTION 30. POWERS AND DUTIES. (a) The Chairman of the Board of Directors
shall be the Senior Officer of the corporation; he shall have broad supervision
of the general business policy of the corporation, and subject to the Board of
Directors, he shall supervise and direct such policy; he shall preside at all
meetings of the Board of Directors and of the stockholders. In the absence of
the Chairman of the Board, the President shall have and may exercise all of the
powers of said Chairman.
The Chairman of the Board shall be ex officio a member of all standing
committees.
(b) The office of the Chairman of the Board of Directors may be left
vacant, if so determined by the Board of Directors. In that event all the powers
of the Chairman of the Board shall be possessed, and all of the duties of the
Chairman of the Board shall be performed, by the President.
THE PRESIDENT
SECTION 31. POWERS AND DUTIES. (a) The President shall be the first
Executive Officer of the corporation; in the absence of the Chairman of the
Board of Directors he shall preside at all meetings of the stockholders and
Directors; he shall have general and active supervision of the corporation and
shall see that all orders and resolutions of the Board are carried into effect.
(b) He shall execute bonds, mortgages and other contracts requiring a
seal under the seal of the corporation.
(c) He shall have such other duties and powers as may be conferred
upon him by the By-Laws and the Board of Directors.
(d) He shall be ex officio a member of all standing committees and
shall have the general powers and duties of supervision and management usually
vested in the office of President of a corporation.
(e) All the powers and duties imposed by law or these By-Laws may be
exercised by him either within or without the State of Washington.
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(f) In the absence of the Chairman of the Board of Directors and the
President, and the Executive Vice President, and of the Vice Presidents at any
meeting of the stockholders or Directors, they may choose a President pro
tempore to preside at such meeting.
EXECUTIVE VICE PRESIDENT
SECTION 32. POWERS AND DUTIES. (a) The Executive Vice President shall be
the senior vice president of the corporation.
(b) He shall be ex officio a member of all standing committees.
(c) He shall have the general superintendence of all affairs and
business of the corporation, subject to the advice and control of the Chairman
of the Board of Directors and the President of the corporation.
(d) In the absence of both the Chairman of the Board of Directors and
the President he shall have temporary power to carry on the necessary business
of the corporation.
VICE PRESIDENT
SECTION 33. POWERS AND DUTIES. The Vice Presidents in the order of their
seniority shall in the absence or disqualification of the President and
Executive Vice President perform the duties and exercise the powers of the
President and shall perform such other duties as the Board of Directors shall
prescribe. In such acts and in the execution of writings by such vice presidents
it shall not be necessary to recite the absence or inability of any preceding
officer to act.
ADMINISTRATIVE VICE PRESIDENT
SECTION 33.1. POWERS AND DUTIES. (a) The Administrative Vice President shall
be the immediate and direct assistant of and to the President and Executive Vice
President of the corporation.
(b) He shall be ex officio a member of all standing committees.
(c) He shall aid and assist the President and Executive Vice President
of the corporation in the performance of such of their duties and the detailed
activities incident thereto as they or either of them may from time to time
require, and shall act for them on matters not requiring their personal
attention.
(d) He shall confer and advise with the President and the Executive
Vice President of the corporation on all matters of administrative policy, as
they or he may deem necessary or desirable with a view of carrying out the
objects, purposes and policies of the corporation, to the end that proper action
may be taken with respect thereto.
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(e) He shall have such other and further duties, obligations and
powers as may from time to time be conferred upon him by the President and the
Executive Vice President of the corporation or by either of them.
SECRETARY AND ASSISTANT SECRETARIES
SECTION 34. SECRETARY'S POWERS AND DUTIES. (a) The Secretary shall attend
all sessions of the Board and all meetings of the stockholders and record all
votes and the minutes of all proceedings in a book kept for that purpose; and
shall perform like duties for the standing committees when required. He shall
give or cause to be given notice of all meetings of the stockholders and of the
Board of Directors and shall perform such other duties as may be prescribed by
the Board of Directors or President under whose supervision he shall be. He
shall keep in safe custody the seal of the corporation and affix the same to any
instrument requiring a seal, and when so affixed it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Secretary.
(b) ASSISTANT SECRETARIES' POWERS AND DUTIES. The Assistant
Secretaries in the order of seniority, shall in the absence or the disability,
or the neglect or the refusal of the Secretary to act, perform the duties and
exercise the powers of the Secretary and shall perform such other duties as the
Board of Directors shall prescribe.
TREASURER AND ASSISTANT TREASURERS
SECTION 35. TREASURER'S POWERS AND DUTIES. (a) The Treasurer shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation and
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation in such depositories as may be designated by the
Board of Directors.
(b) DISBURSEMENT OF FUNDS. He shall disburse the funds of the
corporation, taking proper vouchers for such disbursements, and shall render to
the President and Directors at the regular meetings of the Board, or whenever
they may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation.
(c) FIDELITY BONDS. If required by the Board of Directors, the
Treasurer and Assistant Treasurer shall give the corporation a bond, the premium
on which shall be paid by the corporation, in such sum and with such surety or
sureties satisfactory to the Board for the faithful performance of the duties of
their offices and for the restoration to the corporation in case of their death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in their possession or under their
control belonging to the corporation.
(d) ASSISTANT TREASURERS' POWERS AND DUTIES. The Assistant Treasurers
in the order of their seniority shall, in the absence or disability of the
Treasurer, perform the duties and
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exercise the powers of the Treasurer and shall perform such other duties as the
Board of Directors shall prescribe.
ACTUARY
SECTION 35.1. POWERS AND DUTIES. The Actuary shall perform the usual duties
of the Actuary and in addition any duties assigned to him by the President or
the Board of Directors.
MEDICAL DIRECTOR
SECTION 35.2. POWERS AND DUTIES. The Medical Director shall have general
control and supervision of the medical examiners and of the medical examinations
of applicants for policies to be issued by this company, the character and
nature thereof and all matters pertaining thereto. He shall also perform such
services in connection with medical matters pertaining to the affairs of the
corporation as are assigned to him by the President and the Board of Directors.
CONTROLLER
SECTION 35.3. POWERS AND DUTIES. (a) The Controller shall have the general
supervision of and be responsible to the Board of Directors for the conduct and
proper functioning of the Service Department of the corporation and the
coordination of inter-departmental procedures and systems. He shall, in
conjunction with other officers and Department Heads initiate and enforce
measures and procedures whereby the business of the corporation shall be
conducted with the maximum of safety, efficiency, and economy.
(b) He shall have such other duties and powers as may be conferred
upon him by the By-Laws and the Board of Directors.
GENERAL COUNSEL
SECTION 35.4. POWERS AND DUTIES. (a) The General Counsel shall be the chief
counseling officer of the corporation in all legal matters. He shall, subject to
the Board of Directors:
(1) Have control of all matters of legal import to the corporation;
(2) Have the general supervision and be responsible for the conduct
and proper functioning of the Legal Department of the corporation;
(3) Whenever requested so to do give any officer of the corporation
his opinion, verbally or in writing as circumstances may require
upon any question that may be referred to him affecting the
interests of the corporation;
(4) With the approval and consent of the President or the Executive
Vice President and Vice President-in-Charge of Claims, employ
independent attorneys for the
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prosecution and defense of actions in the course of the business
of this corporation.
(b) He shall have such other duties and powers as may be conferred upon
him by the Board of Directors.
DUTIES OF OFFICERS MAY BE DELEGATED
SECTION 36. In the case of the absence of any officer of the corporation,
the Board may delegate for the time being the powers or duties or any of them of
such officer to any other officer or to any Director.
CERTIFICATES OF STOCK
SECTION 37. Certificates of stock of the corporation shall be issued under
the seal of the corporation and shall be numbered and shall be entered in the
books of the corporation as they are issued. They shall exhibit the holder's
name and the number of shares owned by him and shall be signed by the President
or Vice President and the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer. If the corporation has a transfer agent or a transfer
clerk and a registrar acting on its behalf, the signature of any such officer
may be facsimile- Such certificates shall set forth the designations,
preferences, and relative participating optional or other special rights of the
various classes of stock or series thereof and the qualifications, limitations
or restrictions of such rights.
TRANSFER OF STOCK
SECTION 38. Transfers of stock shall be made on the books of the
corporation only upon the surrender of the certificate therefor, endorsed by the
person named in the certificate or by attorney lawfully constituted in writing.
No surrendered certificate shall be cancelled by the Secretary before a new one
be issued in lieu thereof and the Secretary shall preserve the certificate so
cancelled as a voucher.
REGISTERED STOCKHOLDERS
SECTION 39. The corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof, and accordingly
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the laws of Washington.
LOST CERTIFICATES
SECTION 40. The Board of Directors may direct the terms, conditions and
requirements under which a new certificate or certificates of stock shall be
issued in place of any certificate or certificates theretofore issued by the
Corporation and alleged to have been lost or destroyed.
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INSPECTION OF BOOKS
SECTION 41. The Directors shall determine from time to time whether, and if
allowed, when and under what conditions and regulations the accounts and books
of the corporation (except such as need by statute be specifically open to
inspection) or any of them, shall be open to inspection of the stockholders and
the stockholders rights in this respect are and shall be restricted and limited
accordingly.
CHECKS
SECTION 42. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers as the Board of Directors may from
time to time designate.
FISCAL YEAR
SECTION 43. The fiscal year shall begin the first day of January in each
year.
DIVIDENDS
SECTION 44. (a) Dividends upon the capital stock of the corporation may be
declared by the Board of Directors at any regular or special meeting from the
surplus of its assets over its liabilities.
(b) Before payment of any dividend or making any distribution of proceeds
there may be set aside out of the surplus or net proceeds of the corporation
such sum or sums as the Directors from time to time in their absolute discretion
think proper as a reserve fund to meet contingencies or for equalizing dividends
or for repairing or maintaining any property of the corporation, or for such
other purpose as the Directors shall think conducive to the interests of the
corporation and the Directors may abolish any such reserve in the manner in
which it was created.
NOTICES
SECTION 45. Whenever under the provisions of these By-Laws notice is
required to be given to any Director, officer or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in the manner
provided in these By-Laws.
Meetings of the stockholders may be held at any time without notice when all the
stockholders are present in person or by proxy. Meetings of the Board of
Directors may be held without notice when all the members are present.
SECTION 46. Any stockholder or Director may waive any notice required to be
given under these By-Laws by a writing signed by him either before or after the
meeting. Directors
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present at any meeting of the Board shall be deemed to have waived notice of the
time and place and objects of such meeting.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEE
SECTION 47. (a) RIGHT OF INDEMNITY. Each person who acts as a Director,
officer or employee of the corporation shall be indemnified by the corporation
for all sums which he becomes obligated to pay, (including counsel fees,
expenses and court costs actually and necessarily incurred by him) in connection
with any action, suit or proceeding in which he is made a party by reason of his
being, or having been a Director, officer, or employee of the corporation,
except in relation to matters as to which he shall be adjudged in such action,
suit or proceeding to be liable for bad faith or misconduct in the performance
of his duties as such Director, officer or employee, and except any sum paid to
the corporation in settlement of an action, suit or proceeding based upon bad
faith or misconduct in the performance of his duties.
(b) SCOPE OF INDEMNITY. The right of indemnification in this article
provided shall inure to each Director, officer and employee of the corporation,
whether or not he is such Director, officer or employee at the time he shall
become obligated to pay such sums, and whether or not the claim asserted against
him is based on matters which antedate the adoption of this article; and in the
event of his death shall extend to his legal representatives. Each person who
shall act as a Director, officer or employee of the corporation shall be deemed
to be doing so in reliance upon such right of indemnification; and such right
shall not be deemed exclusive of any other right to which any such person may be
entitled, under any by-law, agreement, vote of stockholders, or otherwise.
(c) DETERMINATION OF CLAIMS FOR INDEMNITY. The Board of Directors of the
corporation, acting at a meeting at which a majority of the quorum is unaffected
by self-interest (notwithstanding that other members of the quorum present but
not voting may be so affected), shall determine the propriety and reasonableness
of any indemnity claimed under this article, and such determination shall be
final and conclusive. If, however, a majority of a quorum of the Board which is
unaffected by self-interest and willing to act is not obtainable, the Board in
its discretion may appoint from among the stockholders who are not Directors or
officers or employees of the corporation, a committee of two or more persons to
consider and determine any such question, and the determination of such
committee shall be final and conclusive.
AMENDMENTS
(11)SECTION 48. These By-Laws may be altered or amended or repealed by:
(a) the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat at any regular meeting of the
stockholders, or
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(11) As amended at Board of Directors Meeting on February 10, 1959.
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(b) at any special meeting of the stockholders if notice of the proposed
alteration or amendment or repeal be contained in the notice of such special
meeting, or
(c) by the written consent of the shareholders holding at least
two-thirds of the voting stock of this corporation without any meeting and
without notice, or
(d) by the affirmative vote of a majority of the Board of Directors at
any regular meeting of the Board, or
(e) at any special meeting of the Board if notice of the proposed
alteration, amendment or repeal be contained in the notice of such meeting;
provided, however, that no change of the time or place for the election of
Directors shall be made "within thirty (30) days next before the day on which
such election is to be held, and that in case of any change of such time or
place, notice thereof shall be given to each stockholder in person or by letter
mailed to his last known post office address at least ten (10) days before the
election is held."
(12)SECTION 49. OBJECTS OF THIS CORPORATION. The objects for which this
corporation is formed are and shall be:
To do a general life insurance business including the issuing of policies
entitled to participate from time to time in the earnings of the Corporation
through dividends and including endowments and annuities and to do a general
accident insurance and sickness or health insurance business, including
insurance against injury, disablement and resulting from sickness and every
insurance pertaining thereto, and to issue participating life insurance
policies, and to have, engage and exercise each and all of the powers which are
conferred upon corporations engaged in insurance business of the classes
hereinabove specified.
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(12) As amended at the Board of Directors Meeting of April 7, 1992.
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POWER OF ATTORNEY
The undersigned directors and officers of Farmers New World Life Insurance
Company, a Washington corporation (the "Company"), hereby constitute and appoint
C. Paul Patsis, Paul G. Secord, David A. Demmon, and M. Douglas Close, and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 and under the Investment Company Act of 1940 with respect to the
variable life insurance policies to be issued through the Farmers Variable Life
Separate Account A: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and him or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand on the date
set forth below.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
/s/C. Paul Patsis President and Director July 27, 1999
- ---------------------------------
C. Paul Patsis
/s/David A. Demmon Assistant Vice President and Treasurer July 20, 1999
- ---------------------------------
David A. Demmon
/s/Richard E. Bangert Director July 20, 1999
- ---------------------------------
Richard E. Bangert
/s/Donald J. Covey Director July 20, 1999
- ---------------------------------
Donald J. Covey
/s/Martin D. Feinstein Director July 20, 1999
- ---------------------------------
Martin D. Feinstein
/s/James A. MacKinnon Director July 20, 1999
- ---------------------------------
James A. MacKinnon
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
/s/Dennis I. Okamoto Director July 20, 1999
- ---------------------------------
Dennis I. Okamoto
/s/Keitha T. Schofield Director July 20, 1999
- ---------------------------------
Keitha T. Schofield
/s/Gary R. Severson Director July 20, 1999
- ---------------------------------
Gary R. Severson
/s/John F. Sullivan, Jr. Director July 20, 1999
- ---------------------------------
John F. Sullivan, Jr.
</TABLE>
