AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 21, 1999
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-6
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 3
(EXACT NAME OF TRUST)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
---------------
320 PARK AVENUE
NEW YORK, NEW YORK 10022
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
---------------
PATRICK A. BURNS, ESQ.
SENIOR EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE, NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------
COPY TO:
W. RANDOLPH THOMPSON, OF COUNSEL
JONES & BLOUCH L.L.P.
SUITE 405 WEST
1025 THOMAS JEFFERSON ST. NW
WASHINGTON, D.C. 20007
---------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of the Registration Statement.
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 THE 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),
MAY DETERMINE.
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<PAGE>
CROSS-REFERENCE SHEET
(FILE NO. 33- , VUL POLICIES)
REGISTRATION STATEMENT ON FORM N-6)
<TABLE>
<CAPTION>
FORM N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
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<S> <C>
1 Cover Page
2 Cover Page; About Mutual of America and Our Separate Account No. 3
3 Not Applicable
4 About Mutual of America and Our Separate Account No. 3;
Administrative Matters -- Distribution of the
Policies
5 About Mutual of America and Our Separate Account No. 3
6 About Mutual of America and Our Separate Account No. 3
7 Not applicable
8 Not applicable
9 Other Matters -- Legal Proceedings
10 Purchase of a Policy; Payment of Premiums; Access to Your Account
Balance; Federal Tax Considerations; Your Voting Rights for
Meetings of the Underlying Funds; Fund and Other Changes We May
Make
11 Underlying Funds Invested in by Our Separate Account
12 Cover Page; Underlying Funds Invested in by Our Separate Account
13 Charges and Deductions You Will Pay; Payment of Premiums
14 Purchase of a Policy -- Policy Issue
15 Payment of Premiums; Your Account Balance in the Separate Account
Funds
16 Your Account Balance in the Separate Account Funds
17 Access to Your Account Balance; How to Contact Us and Give Us
Instructions
18 Not Applicable
19 Administrative Matters -- Notices, Confirmation Statements and
Reports to Policyowners
20 Not Applicable
21 Access to Your Account Balance -- Policy Loans
22 Not Applicable
23 Omitted
24 Administrative Matters; Other Information
25 About Mutual of America and Our Separate Account No. 3
26 Charges and Deductions You Will Pay
27 About Mutual of America and Our Separate Account No. 3
28 Our Executive Officers and Directors
29 About Mutual of America and Our Separate Account No. 3 -- Mutual
of America
30 Not Applicable
31 Omitted
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Omitted
36 Not Applicable
37 Not Applicable
38 Administrative Matters -- Distribution of the Policies
39 Administrative Matters -- Distribution of the Policies
40 Not Applicable
41 Omitted
42 Not Applicable
43 Not Applicable
44 You Account Balance in the Separate Account Funds
45 Not Applicable
46 Your Account Balance in the Separate Account Funds; Access to Your
Account Value; Our General Account
47 Not Applicable
48 Not Applicable
49 Not Applicable
50 About Mutual of America and Our Separate Account No. 3 -- The
Separate Account
51 About Mutual of America and Our Separate Account No. 3; Purchase of
a Policy; Payment of Premiums; Insurance Benefits Upon Death of the
Insured Person
52 Funding and Other Changes We May Make
53 Federal Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
</TABLE>
<PAGE>
PROSPECTUS
----------------------------------------------------------------------------
VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
ISSUED BY
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE, NEW YORK, NEW YORK 10022
THROUGH ITS
SEPARATE ACCOUNT NO. 3
----------------------------------------------------------------------------
THE POLICIES - We offer variable universal life insurance policies
(POLICIES), without a sales charge. The Policies are designed to provide you
with life insurance protection, while giving you flexibility in the timing
and amount of premiums you pay. You also have some flexibility in the amount
of insurance coverage available to you.
In this Prospectus, a POLICYOWNER or YOU means a person to whom we have
issued a Policy. You should note that the purchase of a Policy as a
replacement for any existing insurance coverage you have may not be
advisable.
INVESTMENT ALTERNATIVES FOR YOUR ACCOUNT BALANCE - You may allocate your
Account Balance to any of the Funds of Mutual of America Separate Account
No. 3 (the SEPARATE ACCOUNT) or to our General Account. You may transfer all
or any part of your Account Balance among the Funds and the Separate Account
at any time, without charge.
The Separate Account Funds invest in similarly named funds or portfolios of
mutual funds (the UNDERLYING FUNDS), which will have varying investment
returns and performance. The Underlying Funds currently are:
o MUTUAL OF AMERICA INVESTMENT CORPORATION: Equity Index Fund, All America
Fund, Mid-Cap Equity Index Fund, Aggressive Equity Fund, Composite Fund,
Bond Fund, Mid-Term Bond Fund, Short-Term Bond Fund and Money Market
Fund;
o SCUDDER VARIABLE LIFE INVESTMENT FUND: Capital Growth Portfolio, Bond
Portfolio and International Portfolio;
o VARIABLE INSURANCE PRODUCTS FUNDS OF FIDELITY INVESTMENTS(R):
Equity-Income Portfolio of the Variable Insurance Products Fund, and
Contrafund Portfolio and Asset Manager Portfolio of the Variable
Insurance Products Fund II;
o CALVERT SOCIAL BALANCED PORTFOLIO of Calvert Variable Series, Inc.; and
o AMERICAN CENTURY VP CAPITAL APPRECIATION FUND of American Century
Variable Portfolios, Inc.
WE DO NOT GUARANTEE THE INVESTMENT PERFORMANCE OF ANY SEPARATE ACCOUNT FUND.
You bear the entire investment risk, including the risk of a decline in
value, for amounts you allocate to a Separate Account Fund.
We pay a fixed rate of interest on your Account Balance in our General
Account, and we change the rate from time to time. This Prospectus describes
the Separate Account Fund Investment Alternatives, but there is a brief
description of the General Account under the heading "Our General Account".
PROSPECTUSES - You should read this Prospectus carefully before you purchase
a Policy, and you should keep it for future reference. Attached to this
Prospectus are the prospectuses for the Underlying Funds. This Prospectus is
not valid unless the prospectuses of the Underlying Funds are attached to
it.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------------------------------------------------
DATED: , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
INTRODUCTION AND SUMMARY ........................................... 1
PURCHASE OF A POLICY ............................................... 5
Policy Issue ...................................................... 5
Basic Death Benefit Plan .......................................... 5
Supplemental Insurance Benefits ................................... 6
Changes in the Face Amount of Your Policy ......................... 6
PAYMENT OF PREMIUMS ................................................ 7
Scheduled Premiums ................................................ 7
Unscheduled Premiums .............................................. 7
Limitation on Premiums ............................................ 7
Allocation of Premiums ............................................ 8
Dollar Cost Averaging ............................................. 8
Policy Lapse and Reinstatement .................................... 8
UNDERLYING FUNDS INVESTED IN BY OUR SEPARATE ACCOUNT ............... 9
Investment Advisers for the Underlying Funds ...................... 12
YOUR ACCOUNT BALANCE IN THE SEPARATE ACCOUNT FUNDS ................. 13
OUR GENERAL ACCOUNT ................................................ 14
ACCESS TO YOUR ACCOUNT BALANCE ..................................... 15
Surrender of Policy ............................................... 15
Partial Withdrawals of Account Balance ............................ 15
Your Right to Transfer Among Investment Alternatives .............. 15
How to Tell Us an Amount for Transfers or Partial Withdrawals ..... 15
Policy Loans ...................................................... 16
Accelerated Benefit for Terminal Illness .......................... 17
Maturity Benefit .................................................. 18
When We May Postpone Payments ..................................... 18
INSURANCE BENEFITS UPON DEATH OF INSURED PERSON .................... 19
Death Proceeds .................................................... 19
Basic Death Benefit ............................................... 19
Corridor Percentages .............................................. 19
Payment Options ................................................... 20
CHARGES AND DEDUCTIONS YOU WILL PAY ................................ 21
Cost of Insurance Charges ......................................... 21
Administrative Charges ............................................ 21
Mortality and Expense Risks Charges ............................... 22
Supplemental Insurance Benefits Fee ............................... 22
Accelerated Benefit Fee ........................................... 22
Premium and Other Taxes ........................................... 22
Changes in Policy Cost Factors .................................... 22
Fees and Expenses of Underlying Funds ............................. 23
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
HOW TO CONTACT US AND GIVE US INSTRUCTIONS ..................... 24
Contacting Mutual of America .................................. 24
Requests by Telephone or Internet ............................. 24
Where You Should Direct Requests .............................. 24
ABOUT MUTUAL OF AMERICA AND OUR SEPARATE ACCOUNT NO. 3 ......... 25
FEDERAL TAX CONSIDERATIONS ..................................... 26
Obtaining Tax Advice .......................................... 26
Tax Status of the Policies .................................... 26
Tax Treatment of Policy Benefits and Access of Account Balance 27
Policy Loan Interest .......................................... 28
Estate Taxes .................................................. 29
YOUR VOTING RIGHTS FOR MEETINGS OF THE UNDERLYING FUNDS ........ 29
USE OF STANDARD & POOR'S INDICES ............................... 29
FUNDING AND OTHER CHANGES WE MAY MAKE .......................... 30
ADMINISTRATIVE MATTERS ......................................... 30
Year 2000 Compliance .......................................... 30
Notices, Confirmation Statements and Reports to Policyowners .. 31
Miscellaneous Policy Provisions ............................... 31
Distribution of the Policies .................................. 32
OTHER INFORMATION .............................................. 32
OUR EXECUTIVE OFFICERS AND DIRECTORS ........................... 32
DEFINITIONS WE USE IN THIS PROSPECTUS .......................... 35
POLICY ILLUSTRATIONS ........................................... 37
Face Amount $100,000........................................... 38
Face Amount $500,000........................................... 46
FINANCIAL STATEMENTS ........................................... 50
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
WE MAY NOT LAWFULLY OFFER THE POLICIES FOR SALE. WE HAVE NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE IN THIS PROSPECTUS. IF ANY PERSON GIVES
OR MAKES ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS TO YOU, YOU MUST
NOT RELY ON THEM IN MAKING YOUR DECISION OF WHETHER OR NOT TO PURCHASE A
POLICY.
<PAGE>
INTRODUCTION AND SUMMARY
THE DISCUSSION BELOW IS A SUMMARY OF INFORMATION IN THE PROSPECTUS. The
references in the Summary direct you to particular sections in the
Prospectus where you will find more detailed explanations. You will find
definitions under "Definitions We Use in This Prospectus".
THE POLICY WE OFFER
----------------------------------------------------------------------------
The Policy is a variable universal life insurance policy. It enables you,
within certain limits, to accommodate changes in your insurance needs and
changes in your financial condition. REFER TO "PURCHASE OF A POLICY".
As a life insurance policy, the Policy provides for:
o a death benefit, based either on the Face Amount of the Policy, or on the
Face Amount of the Policy plus the Account Balance, depending on the type
of Basic Death Benefit you select for your Policy,
o Policy Loans,
o a variety of death proceeds payment options, and
o other features traditionally associated with life insurance, such as
optional supplemental benefits.
As a variable universal life policy, the Policy provides for:
o an Account Balance that varies based on the Investment Alternatives you
select,
o allocation of your premiums and transfer of your Account Balance among
the Investment Alternatives, and
o flexibility in the timing and amount of premium payments and, subject to
certain restrictions, the amount of insurance coverage.
YOUR PREMIUM PAYMENTS
----------------------------------------------------------------------------
We will provide you with an amount of scheduled premiums, based on the
initial Face Amount you select. We will send you premium notices for
scheduled premiums, unless you have authorized withdrawals from your banking
account or other account or unless premiums are payable under a Payroll
Deduction Program.
You may adjust the timing and amount of your premium payments to suit your
individual circumstances, within certain limits. You may pay unscheduled
premiums, skip scheduled premiums, or increase or decrease your scheduled
premium. Each scheduled or unscheduled premium must be at least $50, except
that there is no minimum scheduled premium for Policies with a Payroll
Deduction Rider. REFER TO "PAYMENT OF PREMIUMS".
CHOICE OF BASIC DEATH BENEFIT
----------------------------------------------------------------------------
You may choose as your Basic Death Benefit either a Face Amount Plan, which
generally provides a level death benefit equal to the Face Amount, or a Face
Amount Plus Plan, which provides for a death benefit that varies as your
Account Balance changes. Subject to certain restrictions, you may change
from one Plan to the other while the insured is still living. We pay a death
benefit to the beneficiary upon the death of the insured person under the
Policy. REFER TO "INSURANCE BENEFITS UPON DEATH OF INSURED PERSON".
SUPPLEMENTAL BENEFITS BY RIDER TO POLICY
----------------------------------------------------------------------------
We may make available one or more supplemental insurance benefits under your
Policy, each by the addition of a rider for which you would pay an
additional monthly fee. REFER TO "PURCHASE OF A POLICY -- SUPPLEMENTAL
INSURANCE BENEFITS".
-1-
<PAGE>
INVESTMENT ALTERNATIVES FOR YOUR ACCOUNT BALANCE
----------------------------------------------------------------------------
You may allocate your premiums among the General Account and one or more of
the Separate Account Funds. You may change your allocation instructions at
any time for future premiums. You may transfer all or part of your Account
Balance among the available Investment Alternatives at any time. REFER TO
"ACCESS TO YOUR ACCOUNT BALANCE".
THE GENERAL ACCOUNT. We pay interest on the portion of your Account Balance
you allocate to our General Account, at an effective annual rate of at least
3%. In our discretion, we change the current rate of interest from time to
time. We have the full investment risk for amounts you allocate to the
General Account. We sometimes refer to the General Account Investment
Alternative as the Interest Accumulation Account.
This Prospectus serves as a disclosure document for the Separate Account
Investment Alternatives under the Policies. REFER TO "OUR GENERAL ACCOUNT"
FOR A BRIEF DESCRIPTION OF THE GENERAL ACCOUNT.
THE SEPARATE ACCOUNT. The Separate Account has Funds, or sub-accounts. The
name of each Fund corresponds to the name of its Underlying Fund. When you
allocate premiums or transfer Account Balance to a Separate Account Fund,
the Fund purchases shares in its Underlying Fund. A Separate Account Fund is
called a "variable option", because you have the investment risk that your
Account Balance in the Fund will increase or decrease based on the
investment performance of the Underlying Fund. The Mid-Cap Equity Index Fund
is available to you upon its approval by your State's insurance department.
UNDERLYING FUNDS INVESTED IN BY THE SEPARATE ACCOUNT
----------------------------------------------------------------------------
The Separate Account Funds currently invest in seventeen Underlying Funds,
which have different investment objectives, investment policies and risks.
YOU SHOULD REFER TO "UNDERLYING FUNDS INVESTED IN BY OUR SEPARATE ACCOUNT"
FOR MORE INFORMATION ABOUT THE UNDERLYING FUNDS' INVESTMENT OBJECTIVES, AND
TO THE PROSPECTUSES OF THE UNDERLYING FUNDS THAT ARE ATTACHED TO THIS
PROSPECTUS.
CHARGES UNDER YOUR POLICY
----------------------------------------------------------------------------
We deduct several charges from the net assets of each Separate Account Fund.
REFER TO "CHARGES AND DEDUCTIONS YOU WILL PAY". The charges include:
o an administrative expense charge at an annual rate of 0.40% (except that
currently the annual rate for the American Century VP Capital
Appreciation Fund is 0.20% and the annual rate for the Funds that invest
in the Fidelity Portfolios is 0.30%); and
o a risk charge at an annual rate of 0.70% for assuming certain mortality
risks under the Policies, and a charge at an annual rate of 0.15% for
assuming certain expense risks under the Policies.
We deduct certain monthly charges directly from your Account Balance. REFER
TO "CHARGES AND DEDUCTIONS YOU
WILL PAY". The monthly charges include:
o an administrative expense charge of $2.00 if you have an Account Balance
of $2,400 or more during the month, 1/12 of 1% of the Account Balance
(which will be less than $2.00) if your Account Balance is less than
$2,400 for that month, or $0 if your Account Balance is less than $300.
o a cost of insurance charge to pay for the life insurance we provide under
the Policy; and
o a deduction to pay the cost of any riders to your Policy.
Cost of insurance rates will depend on the age of the insured person at the
beginning of the most recent Policy Year and whether the insured person is
in a standard or substandard premium class. For Policies without a Payroll
Deduction Rider, the gender of the insured person will impact cost of
insurance rates, with different rates for men and women. For Policies with a
Payroll Deduction Rider, cost of insurance rates are unisex.
EXPENSES OF THE UNDERLYING FUNDS. A Separate Account Fund's value is based
on the shares it owns of the Underlying Fund. As a result, the investment
management fees and other expenses the Underlying Funds pay will impact the
value of the Separate Account Funds. You should refer to the attached
prospectuses of the Underlying Funds for a complete description of their
expenses and deductions from net assets.
-2-
<PAGE>
During 1998, the Underlying Funds incurred the following total operating
expenses as a percentage of net assets:
Mutual of America Investment Corporation Funds: Money Market -- .25%; Equity
Index -- .125%; each of All America, Bond, Short-Term Bond, Mid-Term Bond
and Composite -- .50%; and Aggressive Equity -- .85%. The expenses shown
are management fees. The Funds' adviser voluntarily pays the Funds'
operating expenses other than transaction costs and extraordinary
expenses.
Scudder Variable Life Portfolios: Capital Growth -- .50% (.46% management fee
and .04% other expenses); Bond -- .57% (.48% management fee and .09% other
expenses); International -- 1.04% (.87% management fee and .17% other
expenses).
Fidelity Portfolios: VIP Equity-Income -- .58% (.49% management fee and .09%
other expenses); VIP II Contrafund -- .70% (.59% management fee and .11%
other expenses); and VIP II Asset Manager -- .64% (.54% management fee and
.10% other expenses).
Calvert Social Balanced Portfolio -- .88% (.70% management fee and .18% other
expenses).
American Century VP Capital Appreciation Fund -- 1.00% as a management fee.
The Fund's adviser pays its operating expenses other than transaction
costs, fees of non-interested directors and extraordinary expenses.
PARTIAL WITHDRAWALS AND SURRENDER OF POLICY; TRANSFERS OF ACCOUNT BALANCE
----------------------------------------------------------------------------
You may make partial withdrawals of your Account Balance (minus any Policy
Loans) or surrender the Policy and receive the Surrender Proceeds due under
the Policy. You may take any of these actions prior to the Maturity Date of
the Policy when the insured person is still living. We may take up to seven
days following receipt of your withdrawal request to process the request and
mail a check to you. REFER TO "ACCESS TO YOUR ACCOUNT BALANCE".
You may transfer all or a portion of your Account Balance among the
Investment Alternatives. REFER TO "ACCESS TO YOUR ACCOUNT BALANCE -- YOUR
RIGHT TO TRANSFER AMONG INVESTMENT ALTERNATIVES".
We currently do not assess a charge for transfers or withdrawals under the
Policies. We reserve the right, however, to impose a charge for transfers or
withdrawals in the future.
YOUR RIGHT TO BORROW FROM THE POLICY
----------------------------------------------------------------------------
You may borrow up to 95% of your Account Balance in the General Account,
minus any existing Policy Loans. Each Policy Loan must be for at least $500,
and you must assign the Policy to us as collateral. We will charge you
interest on the Policy Loan, and we may change the interest rate from time
to time. We deduct any Policy Loans from the amount otherwise due you upon
the surrender or maturity of the Policy or from the death proceeds due upon
the death of the insured person. REFER TO "ACCESS TO YOUR ACCOUNT BALANCE --
POLICY LOANS".
HOW TO MAKE AN ALLOCATION CHANGE, TRANSFER, WITHDRAWAL, SURRENDER OR POLICY
LOAN REQUEST
----------------------------------------------------------------------------
IN WRITING. You may give instructions in writing on our forms for allocation
changes, transfers of Account Balance among Investment Alternatives, partial
withdrawals of Account Balance, surrender of the Policy and Policy Loans.
REFER TO "HOW TO CONTACT US AND GIVE US INSTRUCTIONS".
BY TELEPHONE OR INTERNET. Using a Personal Identification Number (PIN) we
have assigned, you may call us at 1-800-468-3785 or use our Internet web
site at www.mutualofamerica.com for certain transactions and information.
REFER TO "HOW TO CONTACT US AND GIVE US INSTRUCTIONS".
OUR HOME OFFICE, PROCESSING CENTER AND REGIONAL OFFICES. Our home office
address is 320 Park Avenue, New York, New York 10022. The address for our
Financial Transaction Processing Center, where you may send requests for
allocation changes or transfers among Investment Alternatives, is 1150
Broken Sound Parkway NW, Boca Raton, FL 33487. You may check the address for
the Regional Office that provides services for your Policy by calling
1-800-468-3785 or by visiting our web site at www.mutualofamerica.com.
CONFIRMATION STATEMENTS. We will send you confirmation statements (which may
be your quarterly statements) for your allocation changes and for your
premiums, transfers and withdrawals of Account Balance and Policy
-3-
<PAGE>
Loans. You must promptly notify us of any error in a confirmation statement,
or you will give up your right to have us correct the error. REFER TO
"NOTICES, CONFIRMATION STATEMENTS AND REPORTS TO POLICYOWNERS".
ACCELERATED BENEFIT FOR TERMINAL ILLNESS
----------------------------------------------------------------------------
Depending on the laws of your state, an Accelerated Benefit may be available
to you under your Policy or by rider to the Policy. Under this Benefit, you
may receive a portion of the Death Proceeds that would be payable if the
insured person died. The Accelerated Benefit is available only when the
insured person is determined to have less than one year to live. We will
deduct from the Accelerated Benefit an administrative fee of up to $250 at
the time we pay the Benefit. REFER TO "ACCESS TO YOUR ACCOUNT BALANCE --
ACCELERATED BENEFIT FOR TERMINAL ILLNESS" AND "CHARGES AND DEDUCTIONS YOU
WILL PAY -- ACCELERATED BENEFIT FEE".
YOUR INITIAL RIGHT TO RETURN POLICY
----------------------------------------------------------------------------
For a period of 10 days after you receive your Policy (or a longer period if
required by applicable state law when you purchase a Policy by direct mail
or as a replacement policy), you may return it and have your premiums
returned. REFER TO "PURCHASE OF A POLICY -- POLICY ISSUE".
FEDERAL TAX CONSIDERATIONS
----------------------------------------------------------------------------
For purposes of Federal income taxation, you are treated as not receiving
your Account Balance until you take a distribution from the Policy. As a
consequence, you do not pay taxes on the investment income and interest
credited to your Account Balance until you withdraw all or a portion of your
Account Balance. This information about Federal taxation is based on our
belief that a Policy we issue on a standard premium class basis should meet
the Code's definition of a life insurance contract. There is less guidance
available to determine whether a Policy issued on a substandard premium
class basis would satisfy that definition.
DISTRIBUTIONS UNDER THE POLICY. Your tax treatment for Policy withdrawals
and loans depends on whether or not your Policy is a "Modified Endowment
Policy".
If your Policy is not a Modified Endowment Contract:
o distributions are treated first as a return of investment (premiums) in
the Policy and then a disbursement of taxable income;
o Policy Loans are not treated as distributions; and
o neither distributions nor Policy Loans are subject to the 10% penalty
tax.
Your Policy may be treated as a special type of life insurance called a
"Modified Endowment Contract", if the cumulative premiums you have paid are
considered, under the Code, to be too large compared to the death benefit
payable. The Code imposes an annual limit on premiums, calculated on a
cumulative basis, that can be paid into a Policy during the first seven
years, or during the seven years after a material change to the Policy.
If your Policy is a Modified Endowment Contract:
o all pre-death distributions, including Policy Loans, are treated first as
a distribution of taxable income and then as a return of investment
(premiums) in the Policy; and
o if you have not reached the age of 59 1/2, a distribution usually is
subject to a 10% penalty tax.
If you send us a premium that would cause your Policy to become a Modified
Endowment Contract, we will notify you. Our notice will state that unless
you request a refund of the excess premium, your Policy will become a
Modified Endowment Contract. REFER TO "FEDERAL TAX CONSIDERATIONS".
DEATH BENEFITS. Your beneficiary receives death benefits payable under the
Policy free from Federal income tax, except in limited circumstances. If you
are the Policyowner and also the insured person, the death benefit amount
will be included in your estate in most circumstances.
-4-
<PAGE>
PURCHASE OF A POLICY
POLICY ISSUE
----------------------------------------------------------------------------
An applicant must submit to us a completed application for a Policy. The
minimum Face Amount for a Policy is $25,000, except that the minimum Face
Amount is $5,000 for any Policy with a Payroll Deduction Rider. We reserve
the right to decline to issue a Policy with a Face Amount of more than $1
million.
An employee participating in a Payroll Deduction Program may apply for
insurance for his or her spouse and minor children, or the spouse and minor
children may apply as owners of Policies. All Policies we issue in
connection with a Payroll Deduction Program will have a Payroll Deduction
Rider.
Before issuing a Policy, we will require evidence of insurability
satisfactory to us.
o If the person to be insured is less than age 50 and the Policy would have
a Face Amount of $100,000 or less, we ordinarily will determine
insurability based on information from the application.
o We usually will require a medical underwriting for a Policy with a Face
Amount above $100,000 or if the person to be insured is age 50 or older.
We may use outside sources to verify information contained in the
application. A person who does not meet standard underwriting requirements
still may be eligible to purchase a Policy, but we will increase the cost of
insurance charges on the Policy to reflect the additional mortality risks we
assume in insuring a person who is a "substandard risk". A person who is a
"substandard risk" has a greater mortality risk based on unfavorable health
characteristics.
For applications under a Payroll Deduction Program, we may use group
underwriting standards based on the nature of the employer's business and
the percentage of employees participating in the Program. Group underwriting
standards provide for guaranteed issue of a Policy in certain circumstances.
We will issue a Policy following our determination of the insurability and
rating class of the person to be insured and our approval of the
application. The Policy generally will be effective on the date our
underwriting requirements have been met and we receive the first scheduled
premium payment. The Policy Specification Pages of your Policy will show the
Policy Issue Date.
RIGHT TO EXAMINE POLICY. You have a right to examine the Policy. If, for any
reason, you are not satisfied with the Policy, you may cancel it by
returning it to us within 10 days after you receive it, along with a written
request for cancellation. Upon cancellation, we will refund any premiums
that were paid on the Policy. Some states may require us to provide you with
a longer period to examine the Policy. For example, you may have up to 30
days if you purchased the Policy in response to a direct mailing or the
Policy is replacing another life insurance policy.
BASIC DEATH BENEFIT PLAN
----------------------------------------------------------------------------
In your application for a Policy, you will choose a Basic Death Benefit. You
have the option of either a Face Amount Plan or a Face Amount Plus Plan. SEE
"Insurance Benefits Upon Death of Insured Person".
Under a Face Amount Plan:
o the death benefit generally will be the Face Amount, and
o premiums you pay and increases in your Account Balance from investment
performance of the Funds will reduce the amount for which we are "at
risk" in providing insurance coverage and on which we impose cost of
insurance charges (SEE "Charges and Deductions You Will Pay").
Under a Face Amount Plus Plan:
o the death benefit generally will be the Face Amount PLUS the Account
Balance, and
o premiums you pay and increases in your Account Balance from investment
performance of the Funds will increase the death benefit while leaving
unchanged the amount for which we are at risk and on which you must pay
cost of insurance charges.
-5-
<PAGE>
CHANGE OF BASIC DEATH BENEFIT PLAN. You may request a change in your Basic
Death Benefit plan. When we make the change, the Basic Death Benefit payable
on the effective date of the change is the same as it would have been
without the requested change, as follows:
o if you have a Face Amount Plan, you can change it to a Face Amount Plus
Plan, which will decrease your Policy's Face Amount by the amount of the
Account Balance; and
o if you have a Face Amount Plus Plan, you may be able to change it to a
Face Amount Plan, which would increase your Policy's Face Amount by the
amount of the Account Balance, except that we may require current
evidence of insurability prior to approving a change from a Face Amount
Plus Plan to a Face Amount Plan.
A change in Basic Death Benefit plan will become effective as of the first
Monthly Anniversary Day on or after we receive at our Processing Office your
Written Request (which, in the case of a change that would increase your
Policy's Face Amount, may include evidence acceptable to us of current
insurability).
SUPPLEMENTAL INSURANCE BENEFITS
----------------------------------------------------------------------------
We may make one or more supplemental insurance benefits available by rider
to your Policy, including ones providing accidental death coverage and
coverage for children of an insured person. Currently, supplemental
insurance benefits are available only for Policies with Payroll Deduction
Riders. We will charge you a monthly fee for any supplemental insurance
benefits you select. SEE "Charges and Deductions You Will Pay --
Supplemental Insurance Benefits Fee".
Under an accidental death benefit rider, if the insured person dies as a
result of an accidental bodily injury, we will pay an accidental death
benefit equal to the initial Face Amount of the Policy, up to a maximum of
$200,000.
You may obtain insurance for all your unmarried dependent children between
14 days and 18 years of age under a children's term rider. After we have
issued a rider we automatically insure each additional child when 14 days
old at no increase in premium. Insurance continues to age 21 of the child or
to age 65 of the primary insured, whichever is earlier. Upon reaching age
21, each covered child has the opportunity of purchasing $5,000 of life
insurance for each $1,000 of children's term rider. For a Policy purchased
when a child reaches age 21, we will charge premiums at our standard rates
then in effect.
CHANGES IN THE FACE AMOUNT OF YOUR POLICY
----------------------------------------------------------------------------
From time to time, your life insurance needs may change. The Policy permits
you to increase or decrease the Face Amount of your Policy in certain
circumstances. To change your Face Amount, you must submit to our Processing
Office a Written Request.
o A change in Face Amount may not cause the Face Amount to be less than
$25,000 ($5,000 for Policies with a Payroll Deduction Rider) and may not
cause the Policy to cease to qualify as life insurance under the Code.
o We reserve the right to limit the amount of any increase or decrease.
o The current minimum for any requested change in Face Amount is $5,000.
If the insured person is not living on the proposed effective date of a
change, the change will not take effect. After a change in Face Amount, we
will send you new Policy Specifications Pages to reflect the change. Certain
reductions in Face Amount may cause your Policy to become a Modified
Endowment Contract. SEE "Federal Tax Considerations".
Your request for an increase in Face Amount must be accompanied by evidence
satisfactory to us that the insured person is insurable. Cost of insurance
charges on the additional Face Amount will be based on the insured person's
premium class at the time of the increase. An increase in Face Amount will
be effective only if and when we expressly approve it.
-6-
<PAGE>
The effective date of a decrease in Face Amount will be the first Monthly
Anniversary Day on or after the date we receive your request. A decrease in
Face Amount will first reduce any prior increases in Face Amount, in reverse
of the order in which they occurred (in other words, the most recent Face
Amount increase will be the first reduced), and then will reduce the
original Face Amount.
PAYMENT OF PREMIUMS
SCHEDULED PREMIUMS
----------------------------------------------------------------------------
For your convenience, we will specify a "scheduled premium" to be paid at
intervals you select in your application. We will send you notices of when
you should pay scheduled premiums, unless you have authorized withdrawals
from your bank or other account to pay scheduled premiums or your Policy has
a Payroll Deduction Rider. If your Policy does not have a Payroll Deduction
Rider, your scheduled premium must be at least $50.
If your Policy has a Payroll Deduction Rider:
o there is no minimum amount of scheduled premiums;
o on each of your pay dates, scheduled premiums for each Policy you own
and, if applicable, each Policy owned by your spouse and minor children,
will be deducted from your payroll amount; and
o if your employer's participation in a Payroll Deduction Program ends or
you terminate employment with the employer, we will require scheduled
premiums to be paid not more frequently than monthly.
We will advise you prior to Policy issuance whether or not the payment of
proposed scheduled premiums for your Policy would cause the Policy to be a
Modified Endowment Contract. SEE "Federal Tax Considerations". We permit you
to pay scheduled premiums, even if the payment would increase the Basic
Death Benefit as a result of the Corridor Percentages described below. SEE
"Insurance Benefits Upon Death of Insured Person."
CHANGES IN SCHEDULED PREMIUMS. You ordinarily may change the amount or
timing of your scheduled premiums at any time. You may skip or reduce
scheduled premiums, but the amount of any scheduled premiums you pay must be
at least equal to the minimum for your Policy. We will require evidence of
insurability for an increase in scheduled premiums when the increase would
increase your Policy's Basic Death Benefit. SEE "Insurance Benefits Upon
Death of Insured Person" below.
EFFECT OF PAYING SCHEDULED PREMIUMS. Your failure to pay one or more
scheduled premiums will not necessarily cause your Policy to lapse; timely
payment of all scheduled premiums will not assure that your Policy will
continue in force. Whether your Policy continues in force or lapses does not
depend on whether scheduled premiums have been made, but instead on whether
on each Monthly Anniversary Day, your Account Balance is sufficient to
permit the deduction of all charges due on that day. SEE "Lapse and
Reinstatement" below.
UNSCHEDULED PREMIUMS
----------------------------------------------------------------------------
You ordinarily may pay unscheduled premiums of at least $50 at any time, but
you may not pay more than $10,000 in unscheduled premiums during any Policy
Year (premiums in addition to the amount of scheduled premiums for that
Year). We will require evidence of insurability if the unscheduled premium
would increase the Policy's Basic Death Benefit. SEE "Insurance Benefits
Upon Death of Insured Person" below.
LIMITATION ON PREMIUMS
----------------------------------------------------------------------------
We will refuse to accept and will return to you premium payments, or any
portion thereof, (whether scheduled or unscheduled) that would cause your
Policy to lose its status as a life insurance policy under the Code. SEE
"Federal Tax Considerations".
-7-
<PAGE>
ALLOCATION OF PREMIUMS
----------------------------------------------------------------------------
You may allocate your premium among the Investment Alternatives. The Mid-Cap
Equity Index Fund may not be available to Policyowners in all states, due to
insurance department regulatory filings.
You may tell us how to allocate your premium by sending us instructions with
the premium. If you do not send instructions, or we receive the premium for
a Policy with a Payroll Deduction Rider, we will allocate the premium on the
basis of your allocation request currently on file at our home office. Your
request for allocation must specify the percentage, in any whole percentage
from 0% to 100%, of each premium to be allocated to each of the Investment
Alternatives.
You may change the allocation instructions for future premiums, at any time.
You should periodically review your allocations in light of market
conditions and your financial needs. A change in allocation will be
effective when we have received it and had the opportunity to act on your
request.
DOLLAR COST AVERAGING
----------------------------------------------------------------------------
We offer a Dollar Cost Averaging program that allows you to authorize
automatic monthly transfers of a specified percentage or dollar amount from
the General Account to any of the Separate Account Funds. Each transfer
under the Dollar Cost Averaging program must be at least $100, and you must
schedule at least 12 transfers. We may discontinue the program at any time.
Your participation in the Dollar Cost Averaging program will automatically
end if your Account Balance in the General Account, minus any outstanding
Policy Loans, is insufficient to support the next scheduled transfer. You
may request termination of participation in the program at any time. We do
not charge you a fee for participating in our Dollar Cost Averaging program.
Dollar cost averaging generally reduces the risk of purchasing at the top of
a market cycle. This effect occurs from investing over a period of time
instead of investing only on one day. Your average cost of purchasing
Accumulation Units in the Separate Account Funds is reduced to less than the
average value of the Units on the same purchase dates, because you are
credited with more Units when the Unit values are lower than when Unit
values are higher. Dollar cost averaging does not assure you of a profit,
nor does it protect against losses in a declining market.
POLICY LAPSE AND REINSTATEMENT
----------------------------------------------------------------------------
If our deduction of monthly charges when due would result in your Account
Balance, minus any outstanding Policy Loans, being less than zero, a 61-day
"grace period" will begin. The Policy will remain in effect during the grace
period. If the insured person dies during the grace period, any Death
Proceeds due will be reduced by the amount of any overdue monthly deduction.
We will mail a notice to you and any assignee on our records, informing you
of when the grace period will expire and the minimum amount of premium
payment that must be paid prior to the end of the grace period in order to
prevent the Policy from lapsing. If we do not receive payment in our
Processing Office prior to the expiration of the grace period, the Policy
will lapse and have no value.
You can reinstate a lapsed Policy during the insured person's lifetime if
all of the following conditions are met:
(a) The Policy lapsed because the grace period ended without the required
payment having been made.
(b) The Policy is reinstated within three years of the end of the grace
period.
(c) The Policy has not been surrendered.
(d) We receive from you evidence that the insured person is insurable by our
standards.
(e) You pay, at time of reinstatement, premiums sufficient to keep the
Policy in effect for at least two months.
(f) You pay any insurance charges not paid during the grace period.
(g) We approve the reinstatement in accordance with our established
guidelines for reinstatement.
-8-
<PAGE>
Reinstatement of a lapsed Policy will become effective on the date we
approve it. The Account Balance on the effective date of reinstatement will
be whatever the premium paid at such time will provide. We base cost of
insurance charges subsequent to a reinstatement upon the insured person's
premium class as of the reinstatement rather than his or her premium class
when we initially issued the Policy.
UNDERLYING FUNDS INVESTED IN BY OUR SEPARATE ACCOUNT
Below are summaries of the Underlying Funds' investment objectives and
certain investment policies. The Underlying Funds sell their shares to the
separate accounts of insurance companies and do not offer them for sale to
the general public. You will find more detailed information about the
Underlying Funds in their current prospectuses, which are attached to this
Prospectus. You should read each prospectus for a complete evaluation of the
Underlying Funds, their investment objectives, principal investment
strategies and the risks related to those strategies.
EQUITY INDEX FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Equity Index Fund is to provide investment
results that correspond to the performance of the Standard & Poor's
Composite Index of 500 Stocks (the S&P 500 INDEX(R)). The Fund invests
primarily in common stocks that are included in the S&P 500 Index.
ALL AMERICA FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the All America Fund is to outperform the S&P
500 Index, by investing in a diversified portfolio primarily common stocks.
The Fund invests approximately 60% of its assets (the INDEXED ASSETS) to
provide investment results that correspond to the performance of the S&P 500
Index. The Fund invests the remaining approximately 40% of its assets (the
ACTIVE ASSETS) to seek to achieve a high level of total return, through both
appreciation of capital and, to a lesser extent, current income, by means of
a diversified portfolio of primarily common stocks with a broad exposure to
the market.
MID-CAP EQUITY INDEX FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Mid-Cap Equity Index Fund is to provide
investment results that correspond to the performance of the S&P MidCap 400
Index(R). The Fund invests primarily in common stocks that are included in
the S&P MidCap 400 Index.
AGGRESSIVE EQUITY FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Aggressive Equity Fund is capital
appreciation, by investing approximately 50% of its assets in companies
believed to possess above-average growth potential and approximately 50% of
its assets in companies believed to possess valuable assets or whose
securities are undervalued in the marketplace in relation to factors such as
the company's assets, earnings or growth potential. In utilizing the
investment styles of growth and value stock selection, the Adviser
anticipates that the percentage of the Fund's assets in either category will
range between 40% and 60%.
----------
* "Standard & Poor's," "S&P," "S&P 500" and "S&P MidCap 400" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by the
Investment Company. Standard & Poor's does not sponsor, endorse, sell or
promote the Equity Index Fund, All America Fund or Mid-Cap Equity Index
Fund. It has no obligation or liability for the sale or operation of the
Funds and makes no representations as to the advisability of investing in
the Funds.
-9-
<PAGE>
COMPOSITE FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Composite Fund is to achieve as high a total
rate of return, through both appreciation of capital and current income, as
is consistent with prudent investment risk by means of a diversified
portfolio of publicly-traded common stocks, debt securities and money market
instruments. The Fund seeks to achieve long-term growth of its capital and
increasing income by investments in common stock and other equity-type
securities, and a high level of current income through investments in
publicly-traded debt securities and money market instruments.
BOND FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The primary investment objective of the Bond Fund is to provide as high a
level of current income over time as is believed to be consistent with
prudent investment risk. A secondary objective is preservation of capital.
The Bond Fund seeks to achieve its objective by investing primarily in
investment grade, publicly-traded debt securities, such as bonds, U.S.
Government and agency securities, including mortgage-backed securities, and
zero coupon securities.
MID-TERM BOND FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The primary investment objective of the Mid-Term Bond Fund is to provide as
high a level of current income over time as is believed to be consistent
with prudent investment risk. A secondary objective is preservation of
capital. The average maturity of the Fund's securities holdings will be
between three and seven years.
The Mid-Term Bond Fund seeks to achieve its objective by investing primarily
in investment grade, publicly-traded debt securities, such as bonds, U.S.
Government and agency securities, including mortgage-backed securities, and
zero coupon securities.
SHORT-TERM BOND FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The primary investment objective of the Short-Term Bond Fund is to provide
as high a level of current income over time as is believed to be consistent
with prudent investment risk. A secondary objective is preservation of
capital. The average maturity of the Fund's securities holdings will be
between one and three years.
The Short-Term Bond Fund seeks to achieve its objective by investing
primarily in investment grade, publicly-traded debt securities, such as
bonds, U.S. Government and agency securities, including mortgage-backed
securities, and in money market instruments.
MONEY MARKET FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Money Market Fund is the realization of high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital.
The Money Market Fund invests only in money market instruments and other
short-term securities. Neither the Federal Deposit Insurance Corporation nor
any other U.S. Government agency insures or guarantees investments by the
Separate Account in shares of the Money Market Fund.
FIDELITY VIP EQUITY-INCOME PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Equity-Income Portfolio is reasonable income
by investing primarily in income-producing equity securities. In choosing
these securities, the Portfolio also considers the potential for capital
appreciation. The Portfolio's goal is to achieve a yield that exceeds the
composite yield on the securities comprising the S&P 500 Index.
-10-
<PAGE>
FIDELITY VIP II CONTRAFUND PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Contrafund Portfolio is capital
appreciation. It seeks to increase the value of an investment in the
Portfolio over the long term by investing in securities of companies whose
value its adviser believes is not fully recognized by the public. These
securities may be issued by domestic or foreign companies and many may not
be well known. The Portfolio normally invests primarily in common stocks.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Asset Manager Portfolio is high total return
with reduced risk over the long term by allocating its assets among domestic
and foreign stocks, bonds and short-term and money-market instruments.
The Portfolio's adviser normally allocates the Portfolio's assets among the
three asset classes within the following investment parameters: 0-50% in
short-term/money market instruments; 20-60% in bonds; and 30-70% in stocks.
The expected "neutral mix", which the Portfolio's adviser would expect over
the long term, is 10% in short-term/money market instruments, 40% in bonds
and 50% in stocks.
SCUDDER CAPITAL GROWTH PORTFOLIO
----------------------------------------------------------------------------
The investment objective of Scudder Capital Growth Portfolio is to maximize
long-term capital growth through a broad and flexible investment program.
The Portfolio invests in marketable securities, principally common stocks
and, consistent with its objective of long-term capital growth, preferred
stocks. The Portfolio may invest up to 25% of its assets in short-term debt
instruments, depending on market and economic conditions.
SCUDDER BOND PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Scudder Bond Portfolio is to invest for a
high level of income consistent with a high quality portfolio of debt
securities.
To attempt to achieve its objective, the Portfolio invests principally in
investment grade bonds, including those issued by the U.S. Government and
its agencies and by corporations, and other notes and bonds paying high
current income. The Portfolio may invest up to 20% of its assets in
non-investment grade debt securities.
SCUDDER INTERNATIONAL PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Scudder International Portfolio is long-term
growth of capital primarily through diversified holdings of marketable
foreign equity investments.
The Portfolio invests primarily in equity securities of established
companies that do business primarily outside the United States and that are
listed on foreign exchanges. In the event of exceptional conditions abroad,
the Portfolio may temporarily invest all or a portion of its assets in
Canadian or U.S. Government obligations or currencies, or securities of
companies incorporated in and having their principal activities in Canada or
the United States.
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
----------------------------------------------------------------------------
The investment objective of the American Century VP Capital Appreciation
Fund is capital growth by investing primarily in common stocks that meet
certain fundamental and technical standards of selection and have, in the
opinion of the Fund's manager, better-than-average prospects for
appreciation.
CALVERT SOCIAL BALANCED PORTFOLIO
----------------------------------------------------------------------------
The investment objective of Calvert Social Balanced Portfolio is to achieve
a competitive total return through an actively managed non-diversified
portfolio of stocks, bonds and money market instruments that offer income
and capital growth opportunity and satisfy the social concern criteria
established for the Portfolio.
-11-
<PAGE>
SHARED AND MIXED FUND ARRANGEMENTS. Shares of the Fidelity Portfolios, the
Scudder Portfolios, the American Century VP Capital Appreciation Fund and
the Calvert Social Balanced Portfolio (together, the SHARED FUNDS) currently
are available to the separate accounts of a number of insurance companies.
Shares of Mutual of America Investment Corporation and shares of certain of
the Shared Funds (together, the MIXED FUNDS) currently are available to
separate accounts for both variable annuity and variable life insurance
products.
The Board of Directors (or Trustees) of each Shared and Mixed Fund is
responsible for monitoring that Fund for the existence of any material
irreconcilable conflict between the interests of participants in all
separate accounts that invest in the Fund. The Board must determine what
action, if any, the Fund should take in response to an irreconcilable
conflict. If we believe that a response does not sufficiently protect our
Policyowners, we will take appropriate action, and we may modify or reduce
the Investment Alternatives available to you.
INVESTMENT ADVISERS FOR THE UNDERLYING FUNDS
----------------------------------------------------------------------------
MUTUAL OF AMERICA INVESTMENT CORPORATION: The Investment Company receives
investment advice from Mutual of America Capital Management Corporation (the
ADVISER), an indirect wholly-owned subsidiary of Mutual of America. For the
Active Assets of the All America Fund, the Adviser has entered into
subadvisory agreements with Palley-Needelman Asset Management, Inc., Oak
Associates, Ltd. and Fred Alger Management, Inc. Each of these subadvisers
provides investment advice for approximately 10% of the All America Fund's
assets.
SCUDDER VARIABLE LIFE INVESTMENT FUND: The Scudder Capital Growth, Bond and
International Portfolios receive investment advice from Scudder Kemper
Investments, Inc.
FIDELITY PORTFOLIOS: The Equity-Income Portfolio, Contrafund Portfolio and
Asset Manager Portfolio receive investment advice from Fidelity Management &
Research Company.
CALVERT SOCIAL BALANCED PORTFOLIO: The Portfolio receives investment advice
from Calvert Asset Management Company, Inc., which has entered into a
subadvisory agreement with NCM Capital Management Group, Inc. for the equity
portion of the Portfolio.
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND: The Fund receives investment
advice from American Century Investment Management, Inc.
-12-
<PAGE>
YOUR ACCOUNT BALANCE IN THE SEPARATE ACCOUNT FUNDS
ACCUMULATION UNITS IN SEPARATE ACCOUNT FUNDS
----------------------------------------------------------------------------
We use Accumulation Units to represent Account Balances in each Separate
Account Fund. We separately value the Accumulation Unit for each Fund of the
Separate Account.
We determine your Account Balance in the Separate Account as of any
Valuation Day by multiplying the number of Accumulation Units credited to
you in each Fund of the Separate Account by the Accumulation Unit value of
that Fund at the end of the Valuation Day.
Investment experience by the Separate Account Funds does not impact the
number of Accumulation Units credited to your Account Balance. The value of
an Accumulation Unit for a Fund, however, will change as a result of the
Fund's investment experience, in the manner described below.
CALCULATION OF ACCUMULATION UNIT VALUES
----------------------------------------------------------------------------
We determine Accumulation Unit values for the Funds as of the close of
business on each Valuation Day (generally at the close of the New York Stock
Exchange). A Valuation Period is from the close of a Valuation Day until the
close of the next Valuation Day.
The dollar value of an Accumulation Unit for each Fund of the Separate
Account will vary from Valuation Period to Valuation Period. The changes in
Accumulation Unit values for the Separate Account Funds will reflect:
o changes in the net asset values of the Underlying Funds, depending on the
investment experience and expenses of the Underlying Funds, and
o Separate Account charges under the Policies, with the annual rates
calculated as a daily charge. (SEE "Charges and Deductions You Will
Pay".)
ACCUMULATION UNIT VALUES FOR TRANSACTIONS
----------------------------------------------------------------------------
When you allocate premiums to a Separate Account Fund or transfer any
Account Balance to a Fund, we credit Accumulation Units to your Account
Balance. When you withdraw or transfer any Account Balance from a Separate
Account Fund, we cancel Accumulation Units from your Account Balance.
The Accumulation Unit value for a transaction is the Unit value for the
Valuation Period during which we receive the premium or request. As a
result, we will effect the transaction at the Accumulation Unit value we
determine at the NEXT CLOSE of a Valuation Day (generally the close of the
New York Stock Exchange on that business day).
We calculate the number of Accumulation Units for a particular Fund by
dividing the dollar amount you have allocated to, or withdrawn from, the
Fund during the Valuation Period by the applicable Accumulation Unit value
for that Valuation Period. We round the resulting number of Accumulation
Units to two decimal places.
-13-
<PAGE>
OUR GENERAL ACCOUNT
SCOPE OF PROSPECTUS
----------------------------------------------------------------------------
This Prospectus serves as a disclosure document for the variable, or
Separate Account, interests under the Policies. We have not registered the
Policies under the Securities Act of 1933 for allocations to the General
Account, nor is the General Account registered as an investment company
under the 1940 Act. The staff of the Commission has not reviewed the
disclosures in this Prospectus that relate to the General Account.
Disclosures regarding the fixed portion of the Policies and the General
Account, however, generally are subject to certain provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
GENERAL DESCRIPTION
----------------------------------------------------------------------------
Amounts that you allocate to the General Account become part of our general
assets. Our General Account supports our insurance and annuity obligations.
The General Account consists of all of our general assets, other than those
in the Separate Account and other segregated asset accounts.
We bear the full investment risk for all amounts that Policyowners allocate
to the General Account. We have sole discretion to invest the assets of the
General Account, subject to applicable law. Your allocation of Account
Balance to the General Account does not entitle you to share in the
investment experience of the General Account.
We guarantee that we will credit interest to Policyowners' Account Balances
in the General Account at an effective annual rate of at least 3%. In our
sole discretion, we may credit a higher rate of interest to Account Balances
in the General Account, although WE ARE NOT OBLIGATED TO CREDIT INTEREST IN
EXCESS OF 3% PER YEAR. Your initial Policy Specification Pages will show the
initial current interest rate, and we will send you notice when we change
the current rate. We credit interest daily and compound it annually. The
interest rates may be different for your Account Balance in the General
Account representing borrowed and unborrowed amounts under your Policy. SEE
"Access to Your Account Balance -- Policy Loans".
TRANSFERS AND WITHDRAWALS
----------------------------------------------------------------------------
You may transfer any portion of your Account Balance to or from the General
Account and may withdraw any portion of your Account Balance from the
General Account, except that you may not withdraw from the General Account
the amount of any Policy Loans you have outstanding. SEE "Your Right to
Transfer Among Investment Alternatives" and "Policy Loans" under "Access to
Your Account Balance" below. We have the right to delay transfers and
withdrawals from the General Account for up to six months following the date
that we receive the transaction request.
-14-
<PAGE>
ACCESS TO YOUR ACCOUNT BALANCE
You may obtain all or part of your Account Balance by surrendering your
Policy, by making a partial withdrawal from your Policy or by taking a
Policy Loan. You also may transfer all or any part of your Account Balance
among the available Investment Alternatives. If the insured person has a
terminal illness, you may be eligible to obtain an Accelerated Benefit
payment, as described below. Certain of these transactions may have tax
consequences, and some transactions may cause your Policy to become a
Modified Endowment Contract. SEE "Federal Tax Considerations" below.
SURRENDER OF POLICY
----------------------------------------------------------------------------
You may surrender your Policy and obtain the Surrender Proceeds at any time
prior to the Maturity Date. Surrender Proceeds equal your Account Balance
minus any Policy Loans you have outstanding at the time of surrender. To
surrender your Policy, you must submit the Policy and a Written Request to
our Processing Office, and the insured person must be alive on the surrender
date. We will calculate the Surrender Proceeds as of the Valid Transaction
Date of the surrender, and all insurance benefits under your Policy will
then cease.
PARTIAL WITHDRAWALS OF ACCOUNT BALANCE
----------------------------------------------------------------------------
You may withdraw any portion of your Account Balance (before the death of
the insured person). A partial withdrawal must be in an amount of at least
$500, may not reduce the Account Balance to less than $100, and cannot
exceed the Account Balance minus any Policy Loans. We reserve the right to
limit the number of partial withdrawals in one Policy Year, although we do
not currently impose a limit.
A partial withdrawal will affect both your Account Balance and the amount
of your Basic Death Benefit.
o If you have a Face Amount Plan, we will reduce both your Account Balance
and your Face Amount by the amount of any withdrawal, and we will send
you revised Policy Specification Pages reflecting the Face Amount
decrease. The reduction in amount of insurance due to a withdrawal
generally will be applied in the order of the effective dates of such
amounts of insurance, the most recent first. We will not permit a partial
withdrawal that would reduce the Face Amount below the minimum for the
Policy.
o If you have a Face Amount Plus Plan, we will reduce your Account Balance
by the amount of the withdrawal.
YOUR RIGHT TO TRANSFER AMONG INVESTMENT ALTERNATIVES
----------------------------------------------------------------------------
You may transfer all or a portion of your Account Balance among Funds of the
Separate Account, and between the Separate Account and the General Account.
There are no tax consequences to you for transfers among Investment
Alternatives. We currently do not impose a charge for transfers, but we
reserve the right to impose a transfer charge in the future. SEE "How to
Contact Us and Give Us Instructions -- Requests by Telephone or Internet"
below.
HOW TO TELL US AN AMOUNT FOR TRANSFERS OR PARTIAL WITHDRAWALS
----------------------------------------------------------------------------
To tell us the amount of your Account Balance to transfer or withdraw, you
may specify to us:
o the dollar amount to be taken from each Investment Alternative,
o for Separate Account Funds, the number of Accumulation Units to be
transferred or withdrawn, or
o the percentage of your Account Balance in a particular Investment
Alternative to be transferred or withdrawn.
-15-
<PAGE>
For transfers, you also must specify the Investment Alternative(s) to which
you are moving the transferred amount. You should use the form we provide to
give us instructions. Your request for a transfer or withdrawal is not
binding on us until we receive all information necessary to process your
request.
POLICY LOANS
----------------------------------------------------------------------------
You may request a Policy Loan only on your Account Balance in the General
Account. You will pay interest on the Policy Loan, but the amount we hold in
the General Account as collateral for your Policy Loan will accrue interest
at a rate equal to the interest you pay on the Policy Loan minus 2%.
We will grant you a Policy Loan if you meet all of the following
conditions.
o We receive at our Processing Office your Written Request for a loan.
o The amount of the requested loan is 95% or less of your Account Balance
in the General Account minus any existing Policy Loans you have.
o The amount of the requested loan is at least $500.
o The sole security for the loan will be the Policy.
o You have assigned the Policy to us in a form acceptable to us.
o Your Policy is in effect.
The interest rate on a Policy Loan will be the maximum interest rate that we
can charge under applicable law,
and the rate will change from time to time. The maximum interest rate is the
greater of:
o our guaranteed rate of interest (3% per annum) plus 1% per year, or
o the "Published Monthly Average" for the calendar month ending two months
before the date on which the rate is determined. The Published Monthly
Average is the Term Monthly Average Corporates yield shown in Moody's
Corporate Bond Yield Averages published by Moody's Investors Service,
Inc., or any successor thereto or, if that Moody's average is no longer
published, a substantially similar average, as established by insurance
regulation in the jurisdiction in which the Policy is delivered.
A new interest rate for Policy Loans will be effective beginning on the next
January 1 following a change in
the maximum rate.
o We determine the maximum rate of interest on Policy Loans on each
December 1 after the Policy is issued.
o We may increase the Policy Loan interest rate whenever the maximum
interest rate increases by 0.5% or more a year.
o We will reduce the Policy Loan interest rate whenever the maximum
interest rate decreases by 0.5% or more a year.
We will notify you, and any assignee on our records:
o at the time you take a Policy Loan, of the initial rate of interest on
that loan, and
o at least 28 days before an interest rate increase, of the terms of that
increase.
We will include in each notice the substance of the Policy provisions
permitting an adjustable maximum interest rate, and we will specify the
frequency of interest rate determinations, as permitted by law.
Interest on Policy Loans accrues daily. Interest is due and payable at the
end of the Policy Month in which the loan is made and at the end of each
following Policy Month. Any interest that you do not pay when due becomes
part of the Policy Loan and increases the loan amount outstanding.
If your Policy Loans exceed your Account Balance on any Monthly Anniversary
Day, the grace period provisions of your Policy will apply. We will notify
you of the minimum payment you will have to make to prevent the
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<PAGE>
Policy from lapsing at the end of the grace period. SEE "How to Purchase a
Policy and Pay Premiums -- Policy Lapse and Reinstatement". Depending on the
percentage of your Account Balance that you request as a Policy Loan, by
taking a Loan you will increase the possibility of lapsing the Policy and
incurring adverse tax consequences. SEE "Federal Tax Considerations -- Tax
Treatment of Policy Benefits and Access of Account Balance".
We will not terminate your Policy in a Policy Year solely as the result of a
change in the interest rate on a Policy Loan during the Policy Year, or in
other words if the Policy Loans exceed your Account Balance only because we
increased the interest rate due on Policy Loans. We will maintain coverage
during that Policy Year until the time at which the Policy otherwise would
have terminated if there had been no interest rate change during that Policy
Year.
You can repay Policy Loans in part or in full at any time if the insured
person is living and your Policy is in effect. If you do not repay a Policy
Loan, we will deduct the Policy Loan from your Surrender Proceeds or
Maturity Proceeds or from the Death Proceeds we pay to your
beneficiary(ies).
ACCELERATED BENEFIT FOR TERMINAL ILLNESS
----------------------------------------------------------------------------
You may be eligible, under the terms of your Policy or a rider to your
Policy, to receive a lump-sum Accelerated Benefit, when the insured person
is determined to have a terminal illness (a state of health where the
insured person's life expectancy is 12 months or less). We will deduct a fee
when we pay the Accelerated Benefit. SEE "Charges and Deductions You Will
Pay -- Accelerated Benefit Fee".
The amount of the Accelerated Benefit will be the LESSER OF:
o $200,000, or
o the present value (discounted for a one-year period) of 50% of the Death
Proceeds that would be payable upon the Valid Transaction Date as of
which the Accelerated Benefit is calculated.
The interest rate we use in discounting the Accelerated Benefit will not be
more than THE GREATER OF:
o the current yield on 90-day U.S. treasury bills on the Valid Transaction
Date, or
o the then-current maximum rate of interest on Policy Loans.
For the Accelerated Benefit to be payable, the following requirements must
be met.
(a) We must receive at our Processing Office:
o the Policy or, if applicable, the Accelerated Benefit rider;
o your Written Request for payment of the Accelerated Benefit;
o the Written Consent of all irrevocable beneficiaries, if any, under the
Policy; and
o evidence satisfactory to us of the insured person's terminal illness.
(b) The Policy must be in force on the date of your request and must not
have been assigned, other than to us as security for a Policy Loan.
(c) The insured person's terminal illness must not be a consequence of
intentionally self-inflicted injuries.
If the insured person dies before we pay a requested Accelerated Benefit, we
will instead pay the Death Proceeds to the beneficiary in accordance with
the Policy.
The required evidence of terminal illness may include, but is not limited
to:
(a) a certification of state of health by a licensed physician who:
o has examined the insured person,
o is qualified to provide that certification, and
o is neither the Policyowner, the insured person, nor a family member of
either; and
(b) a second opinion or examination by a physician we designate, which
will be at our expense.
-17-
<PAGE>
After we make an Accelerated Benefit payment, your Policy will continue in
force, but amounts otherwise payable under the Policy and any riders to it
will be reduced.
o The amounts will decrease by the percentage of the Death Proceeds
"accelerated" under the Accelerated Benefit. We calculate the percentage
by dividing the Accelerated Benefit by the Death Proceeds at the Valid
Transaction Date. We reduce the Policy's Face Amount, Account Balance,
Policy Loans and any Proceeds payable after the Accelerated Benefit
payment by that percentage.
o We will base subsequent premiums and cost of insurance charges under the
Policy on the Account Balance and Face Amount that are in effect after
the payment of the Accelerated Benefit.
MATURITY BENEFIT
----------------------------------------------------------------------------
The Maturity Date for a Policy occurs when the insured person attains the
age of 100. If on the Maturity Date the insured person is living and the
Policy is still in effect, the Maturity Proceeds become payable. The
Maturity Proceeds are equal to your Account Balance, minus any Policy Loans
and unpaid monthly deductions.
We will pay Maturity Proceeds in one lump sum, unless you have selected an
optional payment plan for the Proceeds. A lump sum payment will include
interest from the Maturity Date to the date of payment.
The minimum amount of each payment under any optional payment plan is $100.
Once we have begun making payments under any of these optional payment
plans, the payment plan may not be changed.
The payment plans available for Maturity Proceeds are the same as those
available for Death Proceeds. SEE "Insurance Benefits Upon Death of Insured
Person -- Payment Options".
WHEN WE MAY POSTPONE PAYMENTS
----------------------------------------------------------------------------
We will pay any amounts due from the Separate Account for a partial
withdrawal, death benefit or surrender and will transfer any amount from the
Separate Account to the General Account, within seven days, unless:
o The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on that Exchange is restricted as determined by the
Commission; or
o The Commission by order permits postponement for the protection of
Policyowners; or
o An emergency exists, as determined by the Commission, as a result of
which disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate Account's
net assets.
-18-
<PAGE>
INSURANCE BENEFITS UPON DEATH OF INSURED PERSON
DEATH PROCEEDS
----------------------------------------------------------------------------
When we receive due proof of the death of the insured person (while the
Policy is in effect), the Death Proceeds become payable to the beneficiary.
We calculate the Death Proceeds as of the date of the insured person's
death. The beneficiary(ies) should provide us with written proof of death as
soon as is reasonably possible.
The Death Proceeds under a Policy are equal to:
o the Basic Death Benefit, plus any insurance benefits payable under any
riders to the Policy, MINUS
o the sum of any Policy Loans and unpaid monthly deductions before the
death of the insured person.
BASIC DEATH BENEFIT
----------------------------------------------------------------------------
Your Policy has as its Basic Death Benefit plan either a Face Amount Plan or
a Face Amount Plus Plan. SEE "Basic Death Benefit Plan" under "How to
Purchase a Policy and Pay Premiums".
The Face Amount Plan provides a fixed death benefit, because the Basic Death
Benefit is the Face Amount (unless the Corridor Percentage applies). The
Face Amount Plus Plan provides a variable death benefit, because your
Account Balance, which is a factor in the amount of the death proceeds due,
will vary.
Under the Face Amount Plan, the Basic Death Benefit will be the GREATER of
o the Policy's Face Amount on the date of the insured person's death, or
o the Policy's Account Balance on the date of the insured person's death
multiplied by the appropriate Corridor Percentage from the Corridor
Percentage Chart set forth below.
Under the Face Amount Plus Plan, the Basic Death Benefit will be the
GREATER of
o the Face Amount on the date of the insured person's death plus the
Account Balance on that date, or
o the Account Balance on the date of the insured person's death multiplied
by the appropriate Corridor Percentage from the Corridor Percentage Chart
set forth below.
CORRIDOR PERCENTAGES
----------------------------------------------------------------------------
Corridor Percentages are based upon the age of the insured person at the
date of death. The purpose of the Corridor Percentages is to ensure that a
Policy will qualify as life insurance under the Code, at the time the
insured person dies.
The Corridor Percentages require us to provide a death benefit that is
greater than the Account Balance, or in other words to maintain an amount
for which we are "at risk", until the insured person reaches age 95. The
percentages shown below reflect requirements under the Code, and we reserve
the right to change them if the Code is revised.
-19-
<PAGE>
CORRIDOR PERCENTAGE CHART
<TABLE>
<CAPTION>
ATTAINED CORRIDOR ATTAINED CORRIDOR ATTAINED CORRIDOR
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
- ---------- ------------ ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
0-40 250% 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 or older 100
53 164 67 118
</TABLE>
PAYMENT OPTIONS
----------------------------------------------------------------------------
We will pay Death Proceeds in one lump sum, unless you selected an optional
payment plan for the Proceeds or the beneficiary selects an optional payment
plan. A lump sum payment will include interest from the date of death to the
date of payment, at the rate of interest we are then crediting for amounts
under the Interest Payments plan described below.
You may choose an optional payment plan for all or any part of Death Benefit
Proceeds that will become payable under your Policy, and you may modify your
selection from time to time, when the insured person is living. The minimum
amount of each payment under any optional payment plan is $100.
If you change a beneficiary, your previous selection of an optional payment
plan will no longer be in effect unless you make a Written Request that it
continue. You must send a choice or change of optional payment plan in
writing to our Processing Office.
Once the Proceeds are applied under any of the optional plans, the payments
are not affected by the investment experience of any Separate Account Fund.
In addition, the beneficiary may not change the form of payment plan once we
have begun making payments.
The optional payment plans available under the Policy are:
INTEREST PAYMENTS PLAN. We hold the Proceeds and pay interest to the payee
at an effective rate of at least 3% compounded yearly. We will pay the
principal amount to the payee after the term of years specified when the
Interest Payment plan is elected.
LIFE PAYMENTS PLAN. We make equal monthly payments for a guaranteed minimum
period to a payee, who must be a natural person for whom we have been
provided written proof of the date of birth. If the payee lives longer than
the minimum period, payments will continue for the lifetime of the payee.
The minimum period can be either ten years or until the sum of the payments
equals the amount of Proceeds applied under this plan. If the payee dies
before the end of the guaranteed period, we will discount the amount of
remaining guaranteed payments for the minimum period at an effective rate of
3% compounded yearly. We will pay the discounted amount in one lump sum to
the payee's estate, unless otherwise provided.
PAYMENTS FOR A FIXED PERIOD PLAN. We make payments for a period of no more
than 25 years in annual, semi-annual, quarterly or monthly installments. The
payments include interest at an effective rate of at least 3% compounded
yearly. We may credit an effective annual rate of interest of more than 3%,
and to the extent and for the period we do so, the payments will be greater.
PAYMENTS OF A FIXED AMOUNT PLAN. We make equal annual, semi-annual,
quarterly or monthly payments until all of the Proceeds have been paid. We
credit the unpaid balance with interest at an effective rate of at least 3%
compounded yearly. The final payment under this option is any balance equal
to or less than one fixed amount payment.
We also have a Specified Payments Option available, which allows you to
designate a fixed amount (at least $100) to withdraw each month.
-20-
<PAGE>
CHARGES AND DEDUCTIONS YOU WILL PAY
COST OF INSURANCE CHARGES
----------------------------------------------------------------------------
On each Monthly Anniversary Day under a Policy, we deduct charges to
compensate us for the life insurance coverage we will be providing in the
next month. The amount we deduct is equal to:
o the amount for which we are "at risk", which is the Policy's Basic Death
Benefit minus the Account Balance as of the Monthly Anniversary Day,
divided by $1,000, TIMES
o the cost per $1,000 of insurance coverage for the insured person, also
called the "cost of insurance rate". The rate will be no greater than
permitted under the 1980 Commissioners Standard Ordinary mortality table
for the insured person's premium class.
Cost of insurance rates will vary according to the insured person's age and
premium class, and may vary by
gender, meaning whether the insured person is male or female.
o If your Policy does not have a Payroll Deduction Rider, the rates vary
according to the insured person's gender.
o If your Policy has a Payroll Deduction Rider or if applicable state law
requires unisex rates for any Policy, cost of insurance rates are unisex,
meaning that the same rates apply for male and female insured persons of
the same age and rating classification.
Unisex rates are more favorable to males than gender based rates, and gender
based rates are more favorable to females than unisex rates. The guaranteed
maximum cost of insurance rates for Policies with a Payroll Deduction Rider
also are unisex.
We separately calculate cost of insurance for the amount at risk under a
Policy's initial Face Amount and for the additional amount at risk under
each increase in the Face Amount. For the initial Face Amount, we use the
premium class on the Issue Date. For any increase in Face Amount, we use the
premium class in effect at the time of that increase.
We determine cost of insurance rates based on our estimates of future cost
factors such as mortality, investment income, expenses, and the length of
time Policies stay in force. We have the right to adjust our cost of
insurance rates from time to time. Any adjustments we make will be on a
uniform basis. If the insured person's premium class is standard, the rates
we use will never be greater than the guaranteed cost of insurance rates
shown in your Policy Specification Pages.
We deduct cost of insurance charges from your Account Balance, if any, in
our General Account. If you do not have sufficient Account Balance allocated
to the General Account, we will deduct the charges from your Account Balance
allocated to one or more of the Separate Account Funds. We look to the Funds
in the following order:
(a) Investment Company Money Market Fund, (b) Investment Company
Short-Term Bond Fund, (c) Investment Company Mid-Term Bond Fund, (d)
Investment Company Bond Fund, (e) Scudder Bond Fund, (f) Investment
Company Composite Fund, (g) Fidelity VIP II Asset Manager Fund, (h)
Calvert Social Balanced Fund, (i) Fidelity VIP Equity-Income Fund, (j)
Investment Company All America Fund, (k) Investment Company Equity Index
Fund, (l) Investment Company Mid-Cap Equity Index Fund, (m) Fidelity VIP
II Contra Fund, (n) Investment Company Aggressive Equity Fund, (o) Scudder
Capital Growth Fund, (p) Scudder International Fund, and (q) American
Century VP Capital Appreciation Fund.
ADMINISTRATIVE CHARGES
----------------------------------------------------------------------------
We deduct, on each Valuation Day, from the value of the net assets in each
Fund of the Separate Account a charge for administrative expenses at an
annual rate of 0.40%, except that we reduce the administrative charge to the
extent we receive a reimbursement for administrative expenses.
-21-
<PAGE>
o For the Separate Account Fund that invests in the American Century VP
Capital Appreciation Fund, the annual rate currently is 0.20%, because
the adviser for the American Century VP Capital Appreciation Fund
reimburses us at an annual rate of 0.20% for administrative expenses.
o For the Funds that invest in the Fidelity Portfolios, the annual rate
currently is 0.30%, because the transfer agent and distributor for the
Fidelity Portfolios reimburse us at an aggregate annual rate of 0.10% for
administrative expenses.
o We make an additional deduction for administrative expenses, on each
Monthly Anniversary Day, from your Account Balance. The charge is $2.00
per month, except that we will reduce the charge to 1/12 of 1.00% if your
Account Balance for the month is less than $2,400, and we waive the
charge if your Account Balance is under $300. We deduct the
administrative expense charge from your Account Balance in the same
manner as described above for cost of insurance charges.
o We reserve the right to increase our administrative charges if the
revenues from these charges are insufficient to cover our costs of
administering the Policies. In no event will we increase the .40% charge
to more than an annual rate of .65% or the $2.00 per month charge to more
than $10 per month.
MORTALITY AND EXPENSE RISKS CHARGES
----------------------------------------------------------------------------
We deduct, on each Valuation Day, from the value of the net assets in each
Fund of the Separate Account a charge for mortality and expense risks we
assume under the Policies. The mortality risk charge, at an annual rate of
0.70%, compensates us for assuming the risk that insured persons may live
for a shorter period of time than we estimated. The expense risk charge, at
an annual rate of 0.15%, compensates us for the risk that our expenses in
administering the Policies will be greater than we estimated. We will
realize a gain from these charges to the extent that they are not needed to
provide benefits and pay expenses under the Policies.
SUPPLEMENTAL INSURANCE BENEFITS FEE
----------------------------------------------------------------------------
We deduct the cost of any supplemental benefits you may have from your
Account Balance on each Monthly Anniversary Day. The current monthly cost
per thousand of coverage for the accidental death benefit rider is $.10. The
total monthly cost per $1,000 of coverage for all covered children under a
children's term rider currently is $.60. The maximum insurance coverage per
child currently is $5,000. SEE "How to Purchase a Policy and Pay Premiums --
Supplemental Insurance Benefits".
ACCELERATED BENEFIT FEE
----------------------------------------------------------------------------
We deduct a one-time administrative fee from the Accelerated Benefit when we
pay the Accelerated Benefit. The amount of the Accelerated Benefit fee is
$250 "(or a lesser amount when required by your state). SEE "Access to Your
Account Balance -- Accelerated Benefit for Terminal Illness".
PREMIUM AND OTHER TAXES
----------------------------------------------------------------------------
We currently do not deduct state premium taxes from your premium payments.
We reserve the right to deduct all or a portion of the amount of any
applicable taxes, including state premium taxes, from premiums prior to any
allocation of those premiums among the General Account and the Separate
Account Funds. Currently, most state premium taxes range from 2% to 4%. SEE
"Federal Tax Considerations".
CHANGES IN POLICY COST FACTORS
----------------------------------------------------------------------------
From time to time we may make adjustments in policy cost factors, which
include interest credited on amounts in our General Account, cost of
insurance deductions and administrative charges. We base adjustments upon
changes in our expectations for our investment earnings, mortality of
insured persons, persistency (how long
-22-
<PAGE>
Policies stay in effect), expenses, and taxes. We make any adjustments "by
class", meaning that all Policies within the same class will have the same
adjustment.
We determine changes in policy cost factors for a Policy in accordance with
procedures and standards on file with the insurance regulator of the
jurisdiction in which we delivered the Policy. We review policy cost factors
for in-force Policies once every five Policy Years, or whenever we change
the premiums or factors for comparable new Policies. We will never make a
change in the guaranteed cost of insurance rates and the Guaranteed Rate of
Interest shown on the Specification Pages of your Policy that would be
unfavorable to you.
FEES AND EXPENSES OF UNDERLYING FUNDS
----------------------------------------------------------------------------
Each Separate Account Fund purchases shares of an Underlying Fund at net
asset value. That net asset value reflects investment management and other
fees and expenses incurred by that Underlying Fund. Detailed information
concerning those fees and expenses is set forth in the prospectuses for the
Underlying Funds that are attached to this Prospectus.
-23-
<PAGE>
HOW TO CONTACT US AND GIVE US INSTRUCTIONS
CONTACTING MUTUAL OF AMERICA
----------------------------------------------------------------------------
You should send in writing all notices, requests and elections required or
permitted under the Policies, except that you may give certain instructions
by telephone or Internet, as described below. Our home office address is:
Mutual of America Life Insurance Company
320 Park Avenue
New York, New York 10022
You can check the address for your Regional Office by calling 1-800-468-3785
or by visiting our Website at www.mutualofamerica.com, and you can check for
the appropriate Processing Office by calling our 800 number.
REQUESTS BY TELEPHONE OR INTERNET
----------------------------------------------------------------------------
You may make requests by telephone for transfers of Account Balance among
Investment Alternatives, withdrawals of Account Balance, Policy Loans, or to
change the Investment Alternatives to which we will allocate your future
Premiums. You may make requests through our Internet web site for transfers
of Account Balance among Investment Alternatives or to change your
allocation instructions for future Premiums. On any Valuation Day, we will
consider requests by telephone or Internet that we receive by 4 p.m. Eastern
Time (or the close of the New York Stock Exchange, if earlier) as received
that day. We will consider requests that we receive after 4 p.m. (or the
Exchange close) as received the next Valuation Day.
You must use a Personal Identification Number (PIN) to make telephone or
Internet requests. We automatically send a PIN to you, and your use of the
PIN constitutes your agreement to use the PIN in accordance with our rules
and requirements. You may call us to change or cancel the PIN that we have
assigned.
We reserve the right to suspend or terminate at any time, without notice,
the right of Policyowners to request transfers or reallocations by telephone
or Internet. We may use this right, upon prior notice, to terminate, suspend
or limit the right of any Policyowner, or any group of Policyowners, to make
transfers by telephone or our Internet web site if we determine that the
frequency of trading activity by the Policyowner or group of Policyowners is
detrimental to the interests of our other Policyowners, based on additional
costs incurred and negative effect on investment performance by the
Underlying Fund(s). In addition, we reserve the right not to accept, or to
revoke, powers of attorney or other trading authorizations granted by any
Policyowner to a third party who regularly engages in market timing trading
activity.
Although our failure to follow reasonable procedures may result in our
liability for any losses due to unauthorized or fraudulent telephone or
Internet transactions, we will not be liable for following instructions
communicated by telephone or Internet that we reasonably believe to be
genuine. We will employ reasonable procedures to confirm that instructions
communicated by telephone or Internet are genuine. Those procedures are to
confirm your Social Security number, check the Personal Identification
Number, tape record all telephone transactions and provide written
confirmation of telephone and Internet transactions.
WHERE YOU SHOULD DIRECT REQUESTS
----------------------------------------------------------------------------
You may make requests for allocation changes or transfers of Account Balance
by calling 1-800-468-3785, by writing to our Processing Center, or by using
our web site at www.mutualofamerica.com. For withdrawals and Policy Loans,
you must make your request according to our procedures, which we may change
from time to time. Under our current procedures, you should make a
withdrawal or loan request to our 800 number or in writing to our Processing
Center. The address for our Processing Center is:
Mutual of America Life Insurance Company
Financial Transaction Processing Center
1150 Broken Sound Parkway NW
Boca Raton, FL 33487
You should use our forms to submit written requests to us.
-24-
<PAGE>
ABOUT MUTUAL OF AMERICA AND OUR SEPARATE ACCOUNT NO. 3
MUTUAL OF AMERICA
----------------------------------------------------------------------------
We are a mutual life insurance company organized under the laws of the State
of New York. We are authorized to transact business in 50 states and the
District of Columbia. Our home office address is 320 Park Avenue, New York,
New York 10022. The Insurance Company was incorporated in 1945 as a
nonprofit retirement association to provide retirement and other benefits
for non-profit organizations and their employees in the health and welfare
field. In 1978 we reorganized as a mutual life insurance company.
We sell individual and group life insurance and annuities, including
variable accumulation annuity contracts and variable life insurance
policies. We also provide group and individual annuities and related
services for the pension, retirement, and long-range savings needs of
corporate, charitable, religious, educational and government organizations
and their employees. We invest the assets we derives from our business as
permitted under applicable state law. As of December 31, 1998, we had total
assets, on a consolidated basis, of approximately $10.1 billion. We are
registered as a broker-dealer under the Securities Exchange Act of 1934, and
also are registered as an investment adviser under the Investment Advisers
Act of 1940.
Our operations as a life insurance company are reviewed periodically by
various independent rating agencies. These agencies, such as A.M. Best
Company, Standard & Poor's Insurance Rating Service and Duff & Phelps Credit
Rating Company, publish their ratings. From time to time we reprint and
distribute the rating reports in whole or in part, or summaries of them, to
the public. The ratings concern our operation as a life insurance company
and do not imply any guarantees of performance of the Separate Account.
THE SEPARATE ACCOUNT
----------------------------------------------------------------------------
We established the Separate Account under a resolution of our Board of
Directors adopted on June 25, 1998. The Separate Account is registered with
the Securities and Exchange Commission (COMMISSION) as a unit investment
trust under the Investment Company Act of 1940 (1940 ACT). The Commission
does not supervise the management or investment practices or policies of the
Separate Account or Mutual of America. The 1940 Act, however, does regulate
certain actions by the Separate Account.
We divide the Separate Account into distinct Funds. Each Fund invests its
assets in an Underlying Fund, and the name of each Separate Account Fund
reflects the name of the corresponding Underlying Fund.
The assets of the Separate Account are our property. The Separate Account
assets attributable to Policyowners' Account Balances and any other policies
funded through the Separate Account cannot be charged with liabilities from
other businesses that we conduct. The income, capital gains and capital
losses of each Fund of the Separate Account are credited to, or charged
against, the net assets held in that Fund. We separately determine each
Fund's net assets, without regard to the income, capital gains and capital
losses from any of the other Funds of the Separate Account or from any other
business that we conduct.
The Separate Account and Mutual of America are subject to supervision and
regulation by the Superintendent of Insurance of the State of New York, and
by the insurance regulatory authorities of each State in which we are
licensed to do business.
-25-
<PAGE>
FEDERAL TAX CONSIDERATIONS
For Federal income tax purposes, the Separate Account is not separate from
us, and its operations are considered part of our operations. Under existing
Federal income tax law, we do not pay taxes on the net investment income and
realized capital gains earned by the Separate Account. We reserve the right,
however, to make a deduction for taxes if in the future we must pay tax on
the Separate Account's operations.
OBTAINING TAX ADVICE
----------------------------------------------------------------------------
THE DESCRIPTION BELOW OF THE CURRENT FEDERAL TAX STATUS AND CONSEQUENCES FOR
POLICYOWNERS DOES NOT COVER EVERY POSSIBLE SITUATION AND IS FOR INFORMATION
PURPOSES ONLY. TAX PROVISIONS AND REGULATIONS MAY CHANGE AT ANY TIME. The
discussion below of Federal tax considerations is based upon our
understanding of current Federal income tax laws as they are currently
interpreted and is not intended as tax advice. We do not make any guarantee
regarding the tax status of any Policy or any transaction involving a
Policy.
Tax results may vary depending upon your individual situation, and special
rules may apply to you in certain cases. You also may be subject to State
and local taxes, which may not correspond to the Federal tax provisions. For
these reasons, you should consult a qualified tax adviser for detailed
information and advice regarding the tax consequences to you of purchasing a
Policy or of effecting any transaction under a Policy.
TAX STATUS OF THE POLICIES
----------------------------------------------------------------------------
Section 7702 of the Code defines "insurance contract" for Federal income tax
purposes. The Secretary of the Treasury (the TREASURY) is authorized to
formulate regulations that implement Section 7702. The Treasury has proposed
regulations and issued other interim guidance, but it has not adopted final
regulations. Accordingly, guidance concerning how Section 7702 is to be
applied is limited. If a Policy were determined not to be a life insurance
contract for purposes of Section 7702, that Policy would not provide the tax
advantages normally provided by a life insurance policy.
We believe that a Policy issued on the basis of a standard premium class
should meet the Section 7702 definition of a life insurance contract. Our
interpretation is based primarily on IRS Notice 88-128 and the proposed
mortality charge regulations under Section 7702 issued on July 5, 1991.
For a Policy issued on a substandard basis (in other words, the insured
person's premium class indicates a higher than standard mortality risk),
there is less guidance as to whether the Policy would meet the Section 7702
definition of life insurance contract. Particularly if the Policyowner pays
the full amount of premiums permitted under the Policy, there may be a
question as to whether the Policy is a life insurance policy.
If it is subsequently determined that a Policy we have issued does not
satisfy Section 7702, we may take whatever steps are appropriate and
reasonable to attempt to cause that Policy to comply with Section 7702. For
this purpose, we reserve the right to restrict Policy transactions as
necessary to attempt to qualify the Policy as a life insurance contract
under Section 7702.
Section 817(h) of the Code requires that the Separate Account's investments
be "adequately diversified" in accordance with Treasury regulations in order
for the Policy to qualify as a life insurance contract under Section 7702 of
the Code. The Separate Account, through the Underlying Funds, intends to
comply with the diversification requirements prescribed in Treasury
Regulation Section 1.817-5. We believe that the Separate Account meets the
diversification requirement, and we will monitor continued compliance with
the requirement.
The Treasury has announced that the diversification regulations do not
provide guidance concerning the issue of the number of investment options
and switches among such options a Policyowner may have before being
considered to have investment control and thus to be the owner of the
related assets in the Separate Account. If the Treasury provides additional
guidance on this issue, the Policy may need to be modified to comply with
that guidance. Accordingly, we reserve the right to modify the Policy as
necessary to attempt to prevent the Policyowner from being considered the
owner of the assets of the Separate Account or otherwise to qualify the
Policy for favorable tax treatment.
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<PAGE>
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS AND ACCESS OF ACCOUNT BALANCE
----------------------------------------------------------------------------
IN GENERAL. Proceeds and Account Balance increases should be treated in a
manner consistent with a fixed-benefit life insurance policy for Federal
income tax purposes. You will not be considered to have received the Account
Balance, including investment earnings and interest earned, until there is a
distribution of Account Balance.
The tax consequences of distributions from, and loans taken from or secured
by, a Policy depend on whether the Policy is classified as a MODIFIED
ENDOWMENT CONTRACT, discussed below. Depending on the circumstances, the
exchange of a Policy, a change in the Policy's Basic Death Benefit option, a
Policy Loan, a partial withdrawal, a surrender, a change in ownership, a
change of insured person, the payment of an Accelerated Benefit or an
assignment of the Policy may have Federal income tax consequences. In
addition, Federal, state and local transfer and other tax consequences of
ownership or receipt of Policy proceeds depend on the circumstances of each
Policyowner or beneficiary.
When you receive a distribution under the Policy, an important factor in
determining whether all or any portion of the distribution is taxable to you
is your INVESTMENT IN THE POLICY. Your investment in the Policy generally is
the amount of premiums or other consideration you have paid for the Policy
which you have not previously withdrawn.
DEATH BENEFITS. The death benefit under the Policy should be excludable from
the gross income of the beneficiary under Section 101(a)(1) of the Code.
SURRENDER OR LAPSE OF POLICY; MATURITY PROCEEDS. Upon a complete surrender
or lapse of a Policy or when benefits are paid at the Maturity Date, if the
amount you receive plus the amount of your outstanding Policy Loans exceeds
your total investment in the Policy, the excess will be treated as ordinary
income subject to tax, regardless of whether the Policy is considered to be
a Modified Endowment Contract.
DISTRIBUTIONS FROM A POLICY THAT IS NOT A MODIFIED ENDOWMENT CONTRACT. The
general rule is that a distribution from a Policy that is not a Modified
Endowment Contract is tax-free to you up to the amount of your investment in
the Policy. Any distribution or portion of a distribution that exceeds the
investment in the Policy is taxable income to you. In effect, all
distributions are treated as first a return to you of your investment in the
Policy, prior to the return to you of interest and earnings on your Account
Balance.
An exception to this general rule applies if:
o the Policy's death benefit decreases, or any other change occurs that
reduces benefits under the Policy, during the first 15 years after the
Policy was issued, and
o the decrease or change results in a cash distribution to the Policyowner
in order for the Policy to continue to comply with the limits defined in
Section 7702.
In such a case, the cash distribution will be taxed in whole or in part as
ordinary income (to the extent of any
gain in the Policy) under rules prescribed in Section 7702.
Loans from, or secured by, a Policy that is not a Modified Endowment
Contract are not treated as distributions. Instead, such loans are treated
as indebtedness of the Policyowner.
CHARACTERIZATION AS A MODIFIED ENDOWMENT CONTRACT. Section 7702A of the Code
establishes a class of life insurance contracts designated as Modified
Endowment Contracts. A Policy is considered to be a Modified Endowment
Contract if it fails the "seven pay test" described below. A Policy that
fails the test is treated in effect as an investment contract rather than a
life insurance policy when loans or withdrawals are made from the Policy.
SEE "Distributions from a Policy that is a Modified Endowment Contract"
below.
The seven pay test is failed if the cumulative amount of premiums paid under
a Policy at any time during its first seven years (or seven years from the
date of a material change to the Policy) is greater than the cumulative
amount of seven-pay premiums. "Seven-pay premiums" are the seven level
annual premiums that would be payable if the Policy provided for paid-up
future benefits after the payment of those premiums. The determination of
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<PAGE>
whether a Policy will be a Modified Endowment Contract after a material
change generally depends upon the relationship of the death benefit and
Account Balance at the time of that change and the additional premiums paid
in the seven years following the material change. If the death benefit under
a Policy is reduced by a decrease in the Face Amount or a partial withdrawal
during either the first seven years after Policy issuance or a material
change to the Policy, the seven-pay test will be recalculated as though the
new death benefit had applied since the Policy was issued or materially
changed. Due to the Policy's payment flexibility, classification as a
Modified Endowment Contract will depend on the individual circumstances of
each Policy.
If a premium is credited to your Policy that would cause the Policy to
become a Modified Endowment Contract, we will notify you that unless you
request a refund of the excess premium, the Policy will become a Modified
Endowment Contract. Our notification will provide you with instructions and
the time requirements for making the request.
The rules relating to whether a Policy will be treated as a Modified
Endowment Contract are extremely complex and cannot be described adequately
in this summary. Therefore, a current or prospective Policyowner should
consult with a competent advisor to determine whether a particular
transaction will cause the Policy to be treated as a Modified Endowment
Contract.
DISTRIBUTIONS FROM A POLICY THAT IS A MODIFIED ENDOWMENT CONTRACT. A Policy
classified as Modified Endowment Contract is subject to the tax rules below.
In effect, all distributions are treated as first a return to you of
interest and earnings on your Account Balance, prior to the return to you of
your investment in the Policy.
1) All distributions you receive under the Policy, including Surrender
Proceeds, partial withdrawals and distributions within two years before
the Policy became a Modified Endowment Contract, are treated as taxable
ordinary income to you, in an amount up to:
o your Account Balance immediately before the distribution, minus
o your investment in the Policy at that time.
2) Second, any loans you take from or secure by the Policy are treated as
distributions and are taxed as described in 1) above, and past due loan
interest that is added to the loan amount is treated as a loan.
3) A 10 percent additional income tax is imposed on the portion of any
distribution that is included in your taxable income in accordance with 1)
above, unless the distribution or loan
o is made when you are age 59 1/2 or older,
o is attributable to you becoming disabled, or
o 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 the you and your beneficiary.
All Modified Endowment Contracts that we (or any affiliates of ours) issue
to the same Policyowner during any calendar year are treated as one Modified
Endowment Contract for purposes of determining the amount includable in the
Policyowner's gross income under Section 72(e) of the Code.
POLICY LOAN INTEREST
----------------------------------------------------------------------------
If you are an individual, you may not deduct personal interest paid on any
loan under a Policy, in most circumstances. Interest on any loan under a
Policy owned by a taxpayer and covering the life of any individual who is an
officer or employee of that taxpayer, or who is financially interested in
the business carried on by that taxpayer, will not be tax deductible to the
extent the aggregate amount of the loans under Policies covering that
individual exceeds $50,000. The deduction of interest on Policy Loans also
may be subject to other restrictions under Section 264 of the Code.
ESTATE TAXES
----------------------------------------------------------------------------
The Death Proceeds payable under the Policy are includable in the insured
person's gross estate for federal estate tax purposes if the Death Proceeds
are paid:
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o to the insured person's estate, or
o to a beneficiary other than the estate and the insured person either
possessed incidents of ownership in the Policy at the time of death or
transferred incidents of ownership in the Policy to another person within
three years of death.
Death Proceeds paid to a surviving spouse as beneficiary are not includable
in your Federal gross estate because of a 100% estate tax marital deduction.
In addition, Death Proceeds paid to a tax-exempt charity may not be taxable
in your estate because of the allowance of an estate tax charitable
deduction. When Death Proceeds are paid to other beneficiaries, whether or
not any Federal estate tax is payable on that amount depends on a variety of
factors, including the size of the gross estate. There is an estate tax
credit that is equivalent to an exemption of $650,000 in 1999, which will
increase in increments until 2006, when it will reach the equivalent of an
exemption of $1 million.
If you are not the insured person, and your death occurs before the death of
the insured person, the value of the Policy, as determined under Internal
Revenue Service regulations, is includable in your gross estate for Federal
estate tax purposes.
YOUR VOTING RIGHTS FOR MEETINGS OF THE UNDERLYING FUNDS
We will vote the shares of the Underlying Funds owned by the Separate
Account at regular and special meetings of the shareholders of the
Underlying Funds. We will cast our votes according to instructions we
receive from Policyowners. The number of Underlying Fund shares that we may
vote at a meeting of shareholders will be determined as of a record date set
by the Board of Directors or Trustees of the Underlying Fund. If permitted
under Federal securities laws, we may instead vote the shares of the
Underlying Funds held by our Separate Account in our own discretion.
We will vote 100% of the shares that a Separate Account Fund owns. If you do
not send us voting instructions, we will vote the shares attributable to your
Account Balance in the same proportion as we vote shares for which we have
received voting instructions from Policyowners. We will determine the number
of Accumulation Units attributable to each Policyowner for purposes of giving
voting instructions as of the same record date used by the Underlying Fund.
Each Policyowner who has the right to give us voting instructions for a
shareholders' meeting of an Underlying Fund will receive information about the
matters to be voted on, including the Underlying Fund's proxy statement and a
voting instructions form to return to us.
USE OF STANDARD & POOR'S INDICES
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. (S&P),
makes no representation or warranty, express or implied, to the Separate
Account or the Policyowners regarding the advisability of investing in, or
allocating Account Balance to, the Investment Company Equity Index, All
America or Mid-Cap Equity Index Funds (together, the INDEXED PORTFOLIOS) or
the ability of the S&P 500 Index or the S&P MidCap 400 Index to track
general stock market performance. S&P has no obligation to take the needs of
the Indexed Portfolios or the owners of the Indexed Portfolios into
consideration in determining, composing or calculating the S&P 500 Index or
the S&P MidCap 400 Index. S&P is not responsible for and has not
participated in the calculation of the net asset values of the Indexed
Portfolios, the amount of the shares of the Indexed Portfolios or the timing
of the issuance or sale of the Indexed Portfolios. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Indexed Portfolios.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR THE S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE INDEXED
PORTFOLIOS, OWNERS OF THE INDEXED PORTFOLIOS, OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE S&P 500 INDEX, THE S&P MIDCAP 400 INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX, THE S&P MIDCAP 400 INDEX
OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY USE OF THE FOREGOING, IN
NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT,
OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
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FUNDING AND OTHER CHANGES WE MAY MAKE
We reserve the right to make certain changes to the Separate Account Funds
and to the Separate Account's operations. In making changes, we will comply
with applicable law and will obtain the approval of Policyowners, if
required. We may:
o create new investment funds of the Separate Account at any time;
o to the extent permitted by state and federal law, modify, combine or
remove investment funds in the Separate Account;
o transfer assets we have determined to be associated with the class of
contracts to which the Policies belong from one investment fund of the
Separate Account to another investment fund;
o create additional separate accounts or combine any two or more accounts
including the Separate Account;
o transfer assets we have determined to be associated with the class of
contracts to which the Policies belong from the Separate Account to
another separate account of ours by withdrawing the same percentage of
each investment in the Separate Account, with appropriate adjustments to
avoid odd lots and fractions;
o operate the Separate Account as a diversified, open-end management
investment company under the 1940 Act, or in any other form permitted by
law, and designate an investment advisor for its management, which may be
us, an affiliate of ours or another person;
o deregister the Separate Account under the 1940 Act; and
o operate the Separate Account under the general supervision of a
committee, any or all the members of which may be interested persons (as
defined in the 1940 Act) of ours or our affiliates, or discharge the
committee for the Separate Account.
If our exercise of any of these rights results in a material change to the
Investment Alternatives of the Separate Account, we will advise you of the
change.
ADMINISTRATIVE MATTERS
YEAR 2000 COMPLIANCE
----------------------------------------------------------------------------
Many of the services that we provide to you depend on the proper functioning
of our computer and computer-based systems, as well as those of our outside
service providers. Many computers cannot distinguish the year 2000 from the
year 1900, and this inability potentially could have an adverse impact on
the handling of your premium, transfer and withdrawal transactions, the
crediting of Accumulation Units, accounting and other recordkeeping
services.
We have performed a comprehensive review of our computer systems, made the
necessary modifications or replacements and successfully completed system
testing of our in-house software, the largest and most critical project
under our Year 2000 program. For the balance of 1999, we will continue to
monitor and verify Year 2000 compliance. We also have contacted our vendors
and service providers as to the status of their Year 2000 compliance.
Vendors and service providers whose systems are material to our operations
have indicated they are, or expect to be, Year 2000 compliant. Although we
anticipate that our computer systems and those of our providers will be
adapted in time for the year 2000, it is possible Year 2000 problems still
may occur. We have developed written contingency plans to ensure our
business continuity through the year 2000.
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NOTICES, CONFIRMATION STATEMENTS AND REPORTS TO POLICYOWNERS
----------------------------------------------------------------------------
Approximately 20 days before a scheduled premium, we will send you a notice
of the amount and due date of that scheduled premium, except that we will
not send notices for scheduled premiums payable under a Payroll Deduction
Program or if you have authorized withdrawals from your bank or other
account to pay scheduled premiums.
Within 30 days after each calendar quarter, we will send you a statement
showing your Account Balance, premiums received, charges incurred and
information concerning any Policy Loans as of the end of the quarter. We
will send you a confirmation statement within five business days after any
transaction involving purchase, sale or transfer of Accumulation Units and
for any change in allocation instructions. If your Policy has a Payroll
Deduction Rider, however, your quarterly statement, which we will send
within five business days of quarter-end, will serve as the confirmation
statement for your purchase, sale and transfer transactions. You must notify
us of any error in a statement within 30 days after the date we processed
the allocation change or transaction, or within 30 days after the end of the
period covered by the quarterly statement that serves as the confirmation
statement, or you will give up your right to have us correct the error.
We also will send to you annual and semi-annual reports for each Underlying
Fund, which will include financial statements.
MISCELLANEOUS POLICY PROVISIONS
----------------------------------------------------------------------------
LIMIT ON RIGHT TO CONTEST. We will not contest the insurance coverage under
a Policy after it has been in force:
(a) for two years from the Issue Date with respect to the initial amount of
insurance coverage;
(b) for two years from the effective date of an increase in the amount of
insurance requiring evidence of insurability; and
(c) for two years from the effective date of the reinstatement with respect
to any amount of insurance that was reinstated.
If we contest a Face Amount increase or a reinstatement, the contest will be
based only on the application for that increase or reinstatement.
SUICIDE EXCLUSION. If the insured person commits suicide within two years
from the Issue Date, we will not pay the Death Proceeds that would otherwise
be payable under a Policy. We will pay no more than (a) the sum of the
Account Balance and any insurance charges; minus (b) the sum of any Policy
Loans. If there was an increase in the Basic Death Benefit for which we had
the right to require (or did require) evidence of insurability (other than
an increase due solely to a change in the Basic Death Benefit plan) and if
the insured person commits suicide within two years from the effective date
of that increase, then with respect to that increase we will pay no more
than the insurance charges deducted for that increase.
MISREPRESENTATION OR MISSTATEMENT OF AGE OR SEX. If a misrepresentation is
made on the application for your Policy or if the age or sex of the insured
person is misstated on your Policy Specifications Pages, then the Proceeds
payable upon proof of the death of the insured person will be that which
would have been purchased by the most recent monthly deduction for the cost
of insurance on the basis of the correct age and sex or as adjusted for the
misrepresentation.
ASSIGNMENT. You must notify us in writing if you assign your Policy. No
assignment will be binding on us until we receive and record it at our
Processing Office. An assignment will not apply to any payment made before
the assignment was recorded. We will not be responsible for the validity of
any assignment.
PARTICIPATION IN DIVISIBLE SURPLUS. We are a mutual life insurance company
and consequently have no stockholders. Policyowners share in our earnings
with respect to amounts they allocate to our General Account. We can give no
assurance as to the amount of divisible surplus, if any, that will be
available for distribution under the Contracts in the future. The
determination of such surplus is within the sole discretion of our Board of
Directors.
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<PAGE>
DISTRIBUTION OF THE POLICIES
----------------------------------------------------------------------------
We offer the Policies continuously without a sales charge through our
employees. These employees receive a salary from us and do not receive
commissions for sales of the Policies. All persons engaged in selling the
Policies are our licensed agents and are duly qualified registered
representatives of Mutual of America. Each sales representative will receive
a yearly cash bonus based on aggregate sales by all representatives in the
representative's regional office compared to sales targets we established
for the office in that year. In addition, representatives from the top five
regional offices will receive a trip to a conference site to attend a sales
meeting.
Because the Policies have no sales load, the costs of distribution will
necessarily be paid out of our profits, including any profits from the
Policies' mortality and expense risks charges. We also serve as principal
underwriter for the Mutual of America Investment Corporation and for
variable accumulation annuity contracts we offer through our Separate
Account No. 2.
OTHER INFORMATION
LEGAL PROCEEDINGS
----------------------------------------------------------------------------
From time to time we may engage in litigation. In our judgment, our current
litigation is not of material importance in relation to our total assets.
The Separate Account is not a party to any pending legal proceedings.
LEGAL MATTERS
----------------------------------------------------------------------------
Patrick A. Burns, Senior Executive Vice President and General Counsel of
Mutual of America, has passed upon all matters of applicable state law
relating to the Policies, including our right to issue the Policies. Jones &
Blouch L.L.P., Washington, D.C., has passed upon certain legal matters
relating to Federal securities laws that are applicable to our offering of
the Policies.
EXPERTS
----------------------------------------------------------------------------
Arthur Andersen LLP, independent public accountants, has audited the
December 31, 1998 financial statements included in this prospectus, as
indicated in their report on the financial statements. We have included the
report of Arthur Andersen in reliance upon their authority as experts in
giving reports on financial statements.
ADDITIONAL INFORMATION AVAILABLE
----------------------------------------------------------------------------
We have filed with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933 relating to the offering of
Policies described in this Prospectus. This Prospectus does not include all
the information contained in that registration statement. You may obtain the
omitted information at the principal office of the Securities and Exchange
Commission in Washington, D.C. upon payment of their prescribed fee.
OUR EXECUTIVE OFFICERS AND DIRECTORS
The name and position of each of our executive officers and directors, and
his or her principal occupation during the past five years, are set forth
below. The business address of each person listed below is 320 Park Avenue,
New York, NY 10022 unless otherwise noted.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION
NAME WITH MUTUAL OF AMERICA DURING PAST FIVE YEARS
- ---------------------- ------------------------ ---------------------------------------
<S> <C> <C>
OFFICERS-DIRECTORS:
William J. Flynn Chairman of the Board Chairman of the Board; Chief Executive
Officer until October 1994
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION
NAME WITH MUTUAL OF AMERICA DURING PAST FIVE YEARS
- ------------------------------- ------------------------ ---------------------------------------------
<S> <C> <C>
OFFICERS-DIRECTORS: (CONTINUED)
Thomas J. Moran
President, Chief President and Director; Chief Executive
Executive Officer and Officer since October 1994
Director
Manfred Altstadt Senior Executive Vice Senior Executive Vice President and Chief
President, Chief Financial Officer, Mutual of America;
Financial Officer and Director since October 1998
Director
Patrick A. Burns Senior Executive Vice Senior Executive Vice President and General
President, General Counsel, Mutual of America; Director since
Counsel and Director October 1998
Salvatore R. Curiale Senior Executive Vice Senior Executive Vice President, Mutual of
President and Director America since March 1995; prior thereto,
Superintendent of Insurance, State of New
York; Director since October 1998
DIRECTORS:
Clifford L. Alexander, Jr. Director President, Alexander & Associates, Inc.
Washington, DC
Patricia A. Cahill Director Chief Executive Officer, Catholic Health
Denver, Colorado Initiatives
Roselyn P. Epps Director Medical and Public Health Consultant
Bethesda, Maryland
Dudley H. Hafner Director Executive Vice President (Past)
Dallas, Texas American Heart Association
Earle H. Harbison, Jr. Director Chairman, Harbison Corporation
St. Louis, Missouri
Frances R. Hesselbein Director Chairman, The Drucker Foundation
New York, New York
William Kahn Director Professor, George Warren Brown
St. Louis, Missouri School of Social Work, Washington
University
LaSalle D. Leffall, Jr., MD Director Charles R. Drew Professor of Surgery,
Washington, DC Howard University Hospital
Michael A. Pelavin Director President, Pelavin & Powers, P.C.
Flint, Michigan
Fioravante G. Perrotta Director Partner (Past), Rogers & Wells
New York, New York
Francis H. Schott Director Senior Vice President and Chief Economist
New York, New York (Past), The Equitable Life Assurance Society
O. Stanley Smith, Jr. Director Chairman and Chief Executive Officer,
Columbia, South Carolina Constan Development Company
Sheila M. Smythe Director Executive Vice President of the University
Valhalla, New York and Dean of the Graduate School of Health
Sciences, New York Medical College
Elie Wiesel Director Andrew W. Mellon Professor in the
New York, New York Humanities, Boston University; Founder, The
Elie Wiesel Foundation for Humanity
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION
NAME WITH MUTUAL OF AMERICA DURING PAST FIVE YEARS
- ------------------------- --------------------------- -----------------------------------------------
<S> <C> <C>
EXECUTIVE OFFICERS:
Diane M. Aramony Senior Vice President, Senior Vice President, Corporate Secretary
Corporate Secretary and and Assistant to the Chairman, Mutual of
Assistant to the America, since September 1998; prior
Chairman thereto, Senior Vice President
William Breneisen Executive Vice President, Executive Vice President, Office of
Office of Technology Technology, Mutual of America, since March
1996; prior thereto, Senior Vice President
Jeremy J. Brown Executive Vice President Executive Vice President and Chief Actuary,
and Chief Actuary Mutual of America, since March 1997; prior
thereto, Consulting Actuary, Milliman &
Robertson
William S. Conway Executive Vice President, Executive Vice President, Marketing and
Marketing and Corporate Corporate Communications, Mutual of
Communications America, since October 1998; prior thereto,
Executive Vice President, Marketing
William A. DeMilt Executive Vice President, Executive Vice President, Real Estate, Mutual
Real Estate Management of America, since May 1997; prior thereto,
Executive Vice President and Treasurer
Thomas E. Gilliam Executive Vice President Executive Vice President and Assistant to the
and Assistant to the President and Chief Executive Officer,
President and Chief Mutual of America
Executive Officer
John R. Greed Executive Vice President Executive Vice President and Treasurer,
and Treasurer Mutual of America, since May 1997; Senior
Vice President from July 1996 to May 1997;
prior thereto, Partner, Arthur Andersen LLP
Gregory A. Kleva, Jr. Executive Vice President Executive Vice President and Deputy General
and Deputy General Counsel, Mutual of America, since February
Counsel 1995; prior thereto, Senior Vice President and
Deputy General Counsel
George L. Medlin Executive Vice President, Executive Vice President, Internal Audit,
Internal Audit Mutual of America, since March 1998; prior
thereto, Senior Vice President
</TABLE>
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<PAGE>
DEFINITIONS WE USE IN THIS PROSPECTUS
ACCELERATED BENEFIT -- The portion of the Death Proceeds payable before the
death of the insured person when
the insured person is determined to have a terminal illness and is expected
to live for one year or less.
ACCOUNT BALANCE -- The value of a Policyowner's Accumulation Units in the
Separate Account Funds plus the value of amounts held in the General Account
for the Policyowner. As used in this Prospectus, the term "Account Balance"
may mean all or any part of your total Account Balance.
ACCUMULATION UNIT -- A measure we use to calculate the value of a
Policyowner's interest in each of the Funds of the Separate Account. Each
Fund has its own Accumulation Unit value.
BASIC DEATH BENEFIT -- The primary component of the Death Proceeds payable
upon the death of the insured person when the Policy is in effect. The Basic
Death Benefit is the greater of:
o the Face Amount under a Face Amount Policy, or the Face Amount plus the
Account Balance under a Face Amount Plus Policy (you select the type of
Policy upon purchase), and
o the Account Balance times the applicable Corridor Percentage.
BENEFICIARY -- The person(s) you designate in your application or in a
change of beneficiary form filed with us
to receive the Death Proceeds payable upon the death of the insured person.
BUSINESS DAY -- Any day the New York Stock Exchange is open for trading. For
purposes of determining a Valid Transaction Date, our Business Day will end
as of the close of business of the New York Stock Exchange (normally 4:00
p.m. Eastern Time).
CODE -- The Internal Revenue Code of 1986, as amended, or any corresponding
provisions of future United States revenue laws. Depending on the context,
the term Code includes the regulations adopted by the Internal Revenue
Service for the Code section being discussed.
CORRIDOR PERCENTAGE -- A percentage established under the Code, based on the
insured person's age. The Corridor Percentage is multiplied by your Account
Balance to establish the minimum death benefit amount required for the
Policy to be treated as life insurance under the Code.
DEATH PROCEEDS -- An amount equal to the sum of the Basic Death Benefit and
amounts payable under any policy riders, minus the sum of any Policy Loans
and any unpaid monthly deductions, subject to any applicable adjustments for
misrepresentation, suicide or misstatement of age and/or sex.
FACE AMOUNT -- The amount of life insurance coverage as set forth on the
Policy Specification Pages of your Policy. The Face Amount must be at least
$25,000, except that the minimum Face Amount is $5,000 for Policies issued
with a Payroll Deduction Rider.
FIDELITY PORTFOLIOS -- The Equity-Income Portfolio of the Variable Insurance
Products Fund (FIDELITY VIP) and the Contrafund and Asset Manager Portfolios
of the Variable Insurance Products Fund II (FIDELITY VIP II).
FUND OF THE SEPARATE ACCOUNT (OR FUND) -- One of the subaccounts of the
Separate Account. Each Fund's name corresponds to the name of the Underlying
Fund in which it invests.
GENERAL ACCOUNT -- Assets we own that are not in a separate account, but
rather are held as part of our general assets. We sometimes refer to the
General Account as the INTEREST ACCUMULATION ACCOUNT, because amounts you
allocate to the General Account earn interest at a fixed rate that we change
from time to time.
INSURED PERSON -- The person on whose life a Policy is issued, or in other
words the person whose death will trigger payment of a death benefit under
your Policy.
INSURED PERSON'S AGE -- The insured person's age as of his or her last
birthday preceding the Policy Date. The insured person's "attained age" at
any time is the age on the Policy Date plus the number of successive twelve
month periods elapsed since the Policy Date.
INVESTMENT ALTERNATIVES -- Our General Account and the Funds of the Separate
Account. You may allocate your premiums and transfer your Account Balance
among the Investment Alternatives.
INVESTMENT COMPANY -- Mutual of America Investment Corporation.
-35-
<PAGE>
ISSUE DATE -- The date as of which we issued a Policy to you, as shown on
the Policy Specification Pages of your Policy.
MATURITY DATE -- The Policy Anniversary on which the insured person's attained
age equals 100.
MONTHLY ANNIVERSARY DAY -- The same day each month as the day on which the
Policy Date occurred.
PAYROLL DEDUCTION PROGRAM -- A program established by an employer under
which it agrees with its participating employees to deduct on each pay date
from the employees' salaries the scheduled premium payments for Policies
owned by the employees, their spouses or minor children. The employer remits
the premiums to us.
PAYROLL DEDUCTION RIDER -- A rider to a Policy issued under a Payroll
Deduction Program or, if required by any State, the provisions regarding
Payroll Deduction incorporated into the Policy.
POLICY ANNIVERSARY -- The day each calendar year which is the anniversary of
the Policy Date.
POLICY DATE -- The effective date of the Policy, as shown on the Policy
Specification Pages of your Policy, which will not be later than the 28th
day of any month. The Policy goes into effect as of 12:01 a.m. on the Policy
Date.
POLICY LOAN -- The outstanding principal and unpaid accrued interest for any
loan in effect under a Policy.
POLICY MONTH -- The period beginning on the Policy Date or any Monthly
Anniversary Day and ending immediately before the next Monthly Anniversary
Day.
POLICYOWNER -- The person designated on the Policy Specification Pages of your
Policy as the owner.
POLICY YEAR -- The twelve-month period beginning on (a) the Policy Date, or
(b) each Policy Anniversary.
PREMIUM CLASS -- The mortality risk class of the insured person that we used
in setting rates for cost of insurance charges.
PROCEEDS -- The amount we will pay upon (a) surrender of the Policy, (b) the
death of the insured person or (c) the Maturity Date, which amount will vary
depending on the type of Proceeds being paid.
PROCESSING OFFICE -- The office of Mutual of America shown on the cover page
of this Prospectus, or any other location we may announce by advance written
notice to Policyowners, a field office we have designated, our toll-free
telephone facility or our Financial Transaction Processing Center, depending
on the transaction requested.
SCHEDULED PREMIUMS -- Premiums in the amount and at the intervals specified in
your Policy.
SCUDDER PORTFOLIOS -- The following three portfolios of the Scudder Variable
Life Investment Fund: Capital Growth Portfolio, Bond Portfolio and
International Portfolio.
SEPARATE ACCOUNT -- Mutual of America Separate Account No. 3, a separate
account of Mutual of America maintained under the laws of New York State and
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940. The assets of the Separate Account are set aside and
kept separate from our other assets.
UNDERLYING FUNDS -- The funds or portfolios that are invested in by the
Separate Account Funds.
UNSCHEDULED PREMIUMS -- Premiums other than scheduled premiums that you are
permitted to pay under your Policy.
VALID TRANSACTION DATE -- The Business Day on which all of the requirements
for the completion of a transaction have been met. This includes receipt by
us at our Processing Office of all information, remittances, notices and
papers necessary to process the requested transaction. If requirements are
met on a day that is not a Business Day, or after the close of a Business
Day, the Valid Transaction Date will be the next following Business Day.
VALUATION DAY -- Each day that the New York Stock Exchange is open for
business until the close of the New York Stock Exchange that day.
VALUATION PERIOD -- A period beginning on the close of business of a
Valuation Day and ending on the close of the next Valuation Day.
WE, US, OUR, MUTUAL OF AMERICA -- Refer to Mutual of America Life Insurance
Company.
WRITTEN REQUEST -- A written request on an administrative form provided by us
or in a form otherwise acceptable to us.
YOU, YOUR -- Refer to a Policyowner.
-36-
<PAGE>
POLICY ILLUSTRATIONS
We have prepared the following tables to help show you how Account Balance
and Death Proceeds under a
Policy change with investment performance. The illustrations cover:
o both a Face Amount Plan and a Face Amount Plus Plan, for Face Amounts of
$100,000 and $500,000,
o both gender based cost of insurance rates applicable to standard Policies
and unisex cost of insurance rates applicable to Policies with a Payroll
Deduction Rider for Face Amounts of $100,000, and
o both our current cost of insurance rates and our guaranteed cost of
insurance rates.
The tables illustrate how Account Balance, which reflects all applicable
charges and deductions, and Death Proceeds of a Policy issued on an insured
person of a specified age would vary over time if the investment return on
the assets of each Underlying Fund was a uniform, after-tax, annual rate of
0%, 6% or 12%. The annual rate is assumed to be gross, or in other words is
before fees or expenses incurred by each Underlying Fund, other than
transaction expenses such as brokerage commissions. The Account Balance and
Death Proceeds would be different from those shown if the returns averaged
0%, 6% or 12%, but fluctuated over and under those averages throughout the
years.
The charges reflected in the tables using current cost of insurance charges
include those for monthly deductions for administration ($2 per month) and
cost of insurance, and daily charges for mortality and expense risks (0.85%
on an annual basis) and administration (0.40%, except that an administration
fee of 0.20% is shown for the American Century VP Capital Appreciation Fund
and an administrative fee of .30% is shown for the Fidelity VIP Funds,
because of current reimbursement arrangements).
The charges reflected in the tables using guaranteed cost of insurance
charges include maximum monthly deductions for administration ($10 per
month) and cost of insurance, daily charges for mortality and expense risks
(0.85% on an annual basis) and the maximum administration fee (0.65%, except
that an administration fee of 0.45% is shown for the American Century VP
Capital Appreciation Fund and an administrative fee of .55% is shown for the
Fidelity VIP Funds, based on current reimbursement arrangements).
A simple average of the investment management fees and other expenses of the
available Underlying Funds is reflected in all the tables. That average
total expense figure is 0.57%, based upon the 1998 expense ratios of the
Underlying Funds and the estimated expenses of the Investment Company
Mid-Cap Equity Index Fund. The expenses of the Underlying Funds may
fluctuate from year to year, but we have assumed they remain constant for
purposes of these tables. The Adviser for the Investment Company voluntarily
pays the expenses of each Fund of the Investment Company other than its
investment advisory fee and portfolio transaction expenses. If the
Investment Company Funds paid all of their expenses, the average total
expense figure would be higher and the death benefit and account balance
numbers in the illustrations would be lower.
After subtracting the average total expenses for the Underlying Funds and
the current expenses of the Separate Account Funds, the gross annual
investment returns shown in the illustrations of 0%, 6% and 12% are reduced
to - 1.79%, 4.21% and 10.21%. After subtracting the average total expenses
for the Underlying Funds and maximum expenses for the Separate Account
Funds, the gross annual investment returns shown in the illustrations of 0%,
6% and 12% are reduced to - 2.04%, 3.96% and 9.96%.
The tables assume that the insured person is a standard risk (non-smoker),
that scheduled premiums of the amounts specified in notes following the
tables are paid on each Policy Anniversary and that no transfers, partial
withdrawals, Policy Loans, changes in Basic Death Benefit plan or changes in
Face Amount are made.
The tables reflect the fact that no charges for federal, state or local
taxes are currently made against the Separate Account. If such a charge is
made in the future, it would take a higher gross rate of return to produce
after-tax returns of 0%, 6% and 12% than it does now. The tables show
Account Balances and Death Proceeds using current cost of insurance rates
and using the maximum cost of insurance rates (based on the 1980
Commissioners Standard Ordinary Smoker/Nonsmoker Mortality Tables).
-37-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE 35 FACE AMOUNT PLAN
STANDARD NON-SMOKER FACE AMOUNT $100,000
USING OUR CURRENT COST OF INSURANCE CHARGES
-------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
----------------------------------- ------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST ----------------------------------- ------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------- --------------- ----------- ----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............... $ 1,365 $100,000 $100,000 $100,000 $ 1,089 $ 1,160 $ 1,232
2 ............... 2,798 100,000 100,000 100,000 2,150 2,361 2,581
3 ............... 4,303 100,000 100,000 100,000 3,181 3,601 4,057
4 ............... 5,883 100,000 100,000 100,000 4,183 4,884 5,675
5 ............... 7,542 100,000 100,000 100,000 5,159 6,212 7,450
6 ............... 9,285 100,000 100,000 100,000 6,107 7,588 9,400
7 ............... 11,114 100,000 100,000 100,000 7,030 9,014 11,541
8 ............... 13,035 100,000 100,000 100,000 7,928 10,492 13,896
9 ............... 15,051 100,000 100,000 100,000 8,801 12,026 16,488
10 .............. 17,169 100,000 100,000 100,000 9,639 13,607 19,331
11 .............. 19,392 100,000 100,000 100,000 10,422 15,218 22,433
12 .............. 21,727 100,000 100,000 100,000 11,172 16,881 25,844
13 .............. 24,178 100,000 100,000 100,000 11,890 18,601 29,599
14 .............. 26,752 100,000 100,000 100,000 12,568 20,371 33,727
15 .............. 29,455 100,000 100,000 100,000 13,215 22,203 38,280
16 .............. 32,292 100,000 100,000 100,000 13,823 24,093 43,298
17 .............. 35,272 100,000 100,000 100,000 14,372 26,027 48,820
18 .............. 38,401 100,000 100,000 100,000 14,884 28,025 54,921
19 .............. 41,686 100,000 100,000 101,153 15,379 30,112 61,679
20 .............. 45,135 100,000 100,000 108,558 15,859 32,290 69,145
30 (age 65) ..... 90,689 100,000 100,000 243,092 17,093 58,366 199,256
35 (age 70) ..... 123,287 100,000 100,000 379,068 13,601 75,350 326,782
40 (age 75) ..... 164,892 100,000 104,218 568,062 4,570 97,400 530,899
</TABLE>
(1) Assumes that a premium of $1,300 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The death benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The death benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-38-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE 35 FACE AMOUNT PLAN
STANDARD NON-SMOKER FACE AMOUNT $100,000
USING OUR GUARANTEED COST OF INSURANCE CHARGES
-------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
-------------------------------------- --------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST -------------------------------------- --------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------- --------------- ------------ ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............... $ 1,365 $ 100,000 $ 100,000 $ 100,000 $ 1,051 $ 1,121 $ 1,192
2 ............... 2,798 100,000 100,000 100,000 2,061 2,266 2,480
3 ............... 4,303 100,000 100,000 100,000 3,020 3,424 3,862
4 ............... 5,883 100,000 100,000 100,000 3,942 4,607 5,358
5 ............... 7,542 100,000 100,000 100,000 4,815 5,805 6,968
6 ............... 9,285 100,000 100,000 100,000 5,642 7,019 8,702
7 ............... 11,114 100,000 100,000 100,000 6,425 8,250 10,574
8 ............... 13,035 100,000 100,000 100,000 7,154 9,487 12,587
9 ............... 15,051 100,000 100,000 100,000 7,830 10,733 14,775
10 .............. 17,169 100,000 100,000 100,000 8,468 12,000 17,169
11 .............. 19,392 100,000 100,000 100,000 9,056 13,288 19,782
12 .............. 21,727 100,000 100,000 100,000 9,587 14,593 22,630
13 .............. 24,178 100,000 100,000 100,000 10,073 15,924 25,748
14 .............. 26,752 100,000 100,000 100,000 10,504 17,276 29,160
15 .............. 29,455 100,000 100,000 100,000 10,883 18,649 32,899
16 .............. 32,292 100,000 100,000 100,000 11,211 20,047 37,004
17 .............. 35,272 100,000 100,000 100,000 11,480 21,461 41,512
18 .............. 38,401 100,000 100,000 100,000 11,682 22,886 46,463
19 .............. 41,686 100,000 100,000 100,000 11,807 24,314 51,908
20 .............. 45,135 100,000 100,000 100,000 11,858 25,748 57,911
30 (age 65) ..... 90,689 100,000 100,000 197,339 6,588 39,543 161,753
35 (age 70) ..... 123,287 0 100,000 302,230 0 44,638 260,543
40 (age 75) ..... 164,892 0 100,000 444,669 0 45,916 415,578
</TABLE>
(1) Assumes that a premium of $1,300 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-39-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
WITH PAYROLL DEDUCTION RIDER
MALE/FEMALE ISSUE AGE 35 FACE AMOUNT PLAN
STANDARD NON-SMOKER FACE AMOUNT $100,000
USING OUR CURRENT COST OF INSURANCE CHARGES
-------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
-------------------------------------- --------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST -------------------------------------- --------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------- --------------- ------------ ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............... $ 1,313 $ 100,000 $ 100,000 $ 100,000 $ 1,052 $ 1,121 $ 1,190
2 ............... 2,691 100,000 100,000 100,000 2,077 2,280 2,492
3 ............... 4,138 100,000 100,000 100,000 3,083 3,488 3,928
4 ............... 5,657 100,000 100,000 100,000 4,060 4,737 5,501
5 ............... 7,252 100,000 100,000 100,000 5,011 6,030 7,226
6 ............... 8,928 100,000 100,000 100,000 5,935 7,368 9,120
7 ............... 10,686 100,000 100,000 100,000 6,834 8,755 11,200
8 ............... 12,533 100,000 100,000 100,000 7,707 10,191 13,486
9 ............... 14,472 100,000 100,000 100,000 8,556 11,681 16,001
10 .............. 16,508 100,000 100,000 100,000 9,370 13,216 18,758
11 .............. 18,646 100,000 100,000 100,000 10,139 14,788 21,774
12 .............. 20,891 100,000 100,000 100,000 10,876 16,410 25,089
13 .............. 23,248 100,000 100,000 100,000 11,581 18,087 28,736
14 .............. 25,723 100,000 100,000 100,000 12,245 19,810 32,744
15 .............. 28,322 100,000 100,000 100,000 12,889 21,602 37,169
16 .............. 31,050 100,000 100,000 100,000 13,493 23,450 42,042
17 .............. 33,915 100,000 100,000 100,000 14,037 25,337 47,401
18 .............. 36,924 100,000 100,000 100,000 14,555 27,295 53,325
19 .............. 40,082 100,000 100,000 100,000 15,055 29,338 59,881
20 .............. 43,399 100,000 100,000 105,399 15,539 31,469 67,133
30 (age 65) ..... 87,201 100,000 100,000 236,450 17,106 57,007 193,812
35 (age 70) ..... 118,545 100,000 100,000 369,250 14,213 73,607 318,319
40 (age 75) ..... 158,550 100,000 101,593 554,162 6,443 94,946 517,909
</TABLE>
(1) Assumes that a premium of $1,250 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-40-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
WITH PAYROLL DEDUCTION RIDER
MALE/FEMALE ISSUE AGE 35 FACE AMOUNT PLAN
STANDARD NON-SMOKER FACE AMOUNT $100,000
USING OUR GUARANTEED COST OF INSURANCE CHARGES
-----------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
-------------------------------------- --------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST -------------------------------------- --------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------- --------------- ------------ ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............... $ 1,313 $ 100,000 $ 100,000 $ 100,000 $ 1,002 $ 1,069 $ 1,137
2 ............... 2,691 100,000 100,000 100,000 1,965 2,162 2,366
3 ............... 4,138 100,000 100,000 100,000 2,890 3,276 3,695
4 ............... 5,657 100,000 100,000 100,000 3,766 4,403 5,122
5 ............... 7,252 100,000 100,000 100,000 4,596 5,543 6,655
6 ............... 8,928 100,000 100,000 100,000 5,380 6,696 8,306
7 ............... 10,686 100,000 100,000 100,000 6,121 7,865 10,086
8 ............... 12,533 100,000 100,000 100,000 6,820 9,049 12,008
9 ............... 14,472 100,000 100,000 100,000 7,468 10,240 14,091
10 .............. 16,508 100,000 100,000 100,000 8,077 11,448 16,370
11 .............. 18,646 100,000 100,000 100,000 8,638 12,672 18,854
12 .............. 20,891 100,000 100,000 100,000 9,152 13,917 21,569
13 .............. 23,248 100,000 100,000 100,000 9,621 15,187 24,540
14 .............. 25,723 100,000 100,000 100,000 10,036 16,473 27,786
15 .............. 28,322 100,000 100,000 100,000 10,398 17,777 31,341
16 .............. 31,050 100,000 100,000 100,000 10,709 19,101 35,241
17 .............. 33,915 100,000 100,000 100,000 10,961 20,438 39,518
18 .............. 36,924 100,000 100,000 100,000 11,154 21,790 44,220
19 .............. 40,082 100,000 100,000 100,000 11,281 23,150 49,390
20 .............. 43,399 100,000 100,000 100,000 11,332 24,510 55,083
30 (age 65) ..... 87,201 100,000 100,000 188,343 6,792 37,831 154,380
35 (age 70) ..... 118,545 0 100,000 289,215 0 42,900 249,324
40 (age 75) ..... 158,550 0 100,000 426,632 0 44,581 398,722
</TABLE>
(1) Assumes that a premium of $1,250 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-41-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE 35 FACE AMOUNT PLUS PLAN
STANDARD NON-SMOKER FACE AMOUNT $100,000
USING OUR CURRENT COST OF INSURANCE CHARGES
-------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
----------------------------------- -------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST ----------------------------------- -------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- --------------- --------------- ----------- ----------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ........... $ 2,205 $101,864 $101,983 $102,102 $ 1,864 $ 1,983 $ 2,102
2 ........... 4,520 103,692 104,047 104,417 3,692 4,047 4,417
3 ........... 6,951 105,474 106,185 106,954 5,474 6,185 6,954
4 ........... 9,504 107,213 108,401 109,738 7,213 8,401 9,738
5 ........... 12,184 108,909 110,697 112,794 8,909 10,697 12,794
6 ........... 14,998 110,562 113,078 116,149 10,562 13,078 16,149
7 ........... 17,953 112,174 115,547 119,834 12,174 15,547 19,834
8 ........... 21,056 113,745 118,108 123,882 13,745 18,108 23,882
9 ........... 24,314 115,276 120,764 128,331 15,276 20,764 28,331
10 .......... 27,734 116,756 123,508 133,209 16,756 23,508 33,209
11 .......... 31,326 118,162 126,318 138,535 18,162 26,318 38,535
12 .......... 35,097 119,519 129,221 144,378 19,519 29,221 44,378
13 .......... 39,057 120,828 132,223 150,794 20,828 32,223 50,794
14 .......... 43,215 122,078 135,314 157,826 22,078 35,314 57,826
15 .......... 47,581 123,282 138,510 165,551 23,282 38,510 65,551
16 .......... 52,165 124,428 141,804 174,027 24,428 41,804 74,027
17 .......... 56,978 125,495 145,176 183,304 25,495 45,176 83,304
18 .......... 62,032 126,507 148,653 193,491 26,507 48,653 93,491
19 .......... 67,339 127,489 152,264 204,706 27,489 52,264 104,706
20 .......... 72,910 128,441 156,014 217,053 28,441 56,014 117,053
30 (age 65) . 146,498 133,184 198,691 430,379 33,184 98,691 330,379
35 (age 70) . 199,156 130,560 222,010 638,498 30,560 122,010 538,498
40 (age 75) . 266,364 122,360 244,001 969,236 22,360 144,001 869,236
</TABLE>
(1) Assumes that a premium of $2,100 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-42-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE 35 FACE AMOUNT PLUS PLAN
STANDARD NON-SMOKER FACE AMOUNT $100,000
USING OUR GUARANTEED COST OF INSURANCE CHARGES
-------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
-------------------------------------- --------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST -------------------------------------- --------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------- --------------- ------------ ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............... $ 2,205 $ 101,824 $ 101,942 $ 102,060 $ 1,824 $ 1,942 $ 2,060
2 ............... 4,520 103,583 103,930 104,291 3,583 3,930 4,291
3 ............... 6,951 105,265 105,952 106,696 5,265 5,952 6,696
4 ............... 9,504 106,885 108,021 109,301 6,885 8,021 9,301
5 ............... 12,184 108,432 110,126 112,112 8,432 10,126 12,112
6 ............... 14,998 109,909 112,271 115,172 9,909 12,271 15,172
7 ............... 17,953 111,318 114,474 118,512 11,318 14,474 18,512
8 ............... 21,056 112,658 116,728 122,147 12,658 16,728 22,147
9 ............... 24,314 113,935 119,034 126,106 13,935 19,034 26,106
10 .............. 27,734 115,162 121,407 130,434 15,162 21,407 30,434
11 .............. 31,326 116,329 123,838 135,155 16,329 23,838 35,155
12 .............. 35,097 117,424 126,315 140,296 17,424 26,315 40,296
13 .............. 39,057 118,461 128,854 145,910 18,461 28,854 45,910
14 .............. 43,215 119,429 131,445 152,034 19,429 31,445 52,034
15 .............. 47,581 120,331 134,089 158,717 20,331 34,089 58,717
16 .............. 52,165 121,166 136,788 166,015 21,166 36,788 66,015
17 .............. 56,978 121,925 139,534 173,977 21,925 39,534 73,977
18 .............. 62,032 122,598 142,314 182,655 22,598 42,314 82,655
19 .............. 67,339 123,173 145,119 192,110 23,173 45,119 92,110
20 .............. 72,910 123,654 147,949 202,418 23,654 47,949 102,418
30 (age 65) ..... 146,498 121,652 175,533 373,290 21,652 75,533 273,290
35 (age 70) ..... 199,156 113,630 185,349 532,485 13,630 85,349 432,485
40 (age 75) ..... 266,364 0 187,053 776,680 0 87,053 676,680
</TABLE>
(1) Assumes that a premium of $2,100 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-43-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
WITH PAYROLL DEDUCTION RIDER
MALE/FEMALE ISSUE AGE 35 FACE AMOUNT PLUS PLAN
STANDARD NON-SMOKER FACE AMOUNT $100,000
USING OUR CURRENT COST OF INSURANCE CHARGES
-------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
-------------------------------------- --------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST -------------------------------------- --------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------- --------------- ------------ ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............... $ 2,100 $ 101,779 $ 101,892 $ 102,006 $ 1,779 $ 1,892 $ 2,006
2 ............... 4,305 103,522 103,860 104,213 3,522 3,860 4,213
3 ............... 6,620 105,233 105,911 106,645 5,233 5,911 6,645
4 ............... 9,051 106,901 108,035 109,312 6,901 8,035 9,312
5 ............... 11,604 108,528 110,237 112,239 8,528 10,237 12,239
6 ............... 14,284 110,114 112,519 115,453 10,114 12,519 15,453
7 ............... 17,098 111,659 114,885 118,982 11,659 14,885 18,982
8 ............... 20,053 113,165 117,338 122,858 13,165 17,338 22,858
9 ............... 23,156 114,632 119,882 127,118 14,632 19,882 27,118
10 .............. 26,414 116,049 122,509 131,787 16,049 22,509 31,787
11 .............. 29,834 117,406 125,209 136,895 17,406 25,209 36,895
12 .............. 33,426 118,714 127,999 142,499 18,714 27,999 42,499
13 .............. 37,197 119,974 130,881 148,650 19,974 30,881 48,650
14 .............. 41,157 121,177 133,848 155,392 21,177 33,848 55,392
15 .............. 45,315 122,346 136,928 162,808 22,346 36,928 62,808
16 .............. 49,681 123,459 140,100 170,945 23,459 40,100 70,945
17 .............. 54,265 124,492 143,345 179,848 24,492 43,345 79,848
18 .............. 59,078 125,483 146,702 189,635 25,483 46,702 89,635
19 .............. 64,132 126,445 150,188 200,409 26,445 50,188 100,409
20 .............. 69,439 127,377 153,808 212,270 27,377 53,808 112,270
30 (age 65) ..... 139,522 132,301 195,278 417,512 32,301 95,278 317,512
35 (age 70) ..... 189,673 130,245 218,361 618,183 30,245 118,361 518,183
40 (age 75) ..... 253,680 123,129 240,712 937,556 23,129 140,712 837,556
</TABLE>
(1) Assumes that a premium of $2,000 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-44-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
WITH PAYROLL DEDUCTION RIDER
MALE/FEMALE ISSUE AGE 35 FACE AMOUNT PLUS PLAN
STANDARD NON-SMOKER FACE AMOUNT $100,000
USING OUR GUARANTEED COST OF INSURANCE CHARGES
----------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
----------------------------------- ------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST ----------------------------------- ------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------- --------------- ----------- ----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............... $ 2,100 $101,727 $101,839 $101,951 $ 1,727 $ 1,839 $ 1,951
2 ............... 4,305 103,392 103,721 104,064 3,392 3,721 4,064
3 ............... 6,620 104,995 105,646 106,352 4,995 5,646 6,352
4 ............... 9,051 106,525 107,603 108,817 6,525 7,603 8,817
5 ............... 11,604 107,987 109,593 111,476 7,987 9,593 11,476
6 ............... 14,284 109,380 111,617 114,364 9,380 11,617 14,364
7 ............... 17,098 110,708 113,691 117,514 10,708 13,691 17,514
8 ............... 20,053 111,975 115,822 120,952 11,975 15,822 20,952
9 ............... 23,156 113,179 118,000 124,694 13,179 18,000 24,694
10 .............. 26,414 114,336 120,241 128,784 14,336 20,241 28,784
11 .............. 29,834 115,433 122,533 133,244 15,433 22,533 33,244
12 .............. 33,426 116,472 124,880 138,109 16,472 24,880 38,109
13 .............. 37,197 117,454 127,282 143,422 17,454 27,282 43,422
14 .............. 41,157 118,369 129,731 149,213 18,369 29,731 49,213
15 .............. 45,315 119,218 132,228 155,530 19,218 32,228 55,530
16 .............. 49,681 120,002 134,774 162,426 20,002 34,774 62,426
17 .............. 54,265 120,771 137,360 169,945 20,711 37,360 69,945
18 .............. 59,078 121,345 139,988 178,151 21,345 39,988 78,151
19 .............. 64,132 121,896 142,645 187,097 21,896 42,645 87,097
20 .............. 69,439 122,352 145,323 196,847 22,352 45,323 96,847
30 (age 65) ..... 139,522 120,916 171,965 359,141 20,916 71,965 259,141
35 (age 70) ..... 189,673 113,869 182,033 510,881 13,869 82,033 410,881
40 (age 75) ..... 253,680 0 185,161 744,380 0 85,161 644,380
</TABLE>
(1) Assumes that a premium of $2,000 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-45-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE 45 FACE AMOUNT PLAN
STANDARD NON-SMOKER FACE AMOUNT $500,000
USING OUR CURRENT COST OF INSURANCE CHARGES
-------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
------------------------------------ ----------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST ------------------------------------ ----------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------ --------------- ----------- ----------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 .............. $ 10,763 $500,000 $500,000 $ 500,000 $ 8,702 $ 9,273 $ 9,845
2 .............. 22,063 500,000 500,000 500,000 17,154 18,842 20,601
3 .............. 33,929 500,000 500,000 500,000 25,424 28,786 32,431
4 .............. 46,388 500,000 500,000 500,000 33,405 39,011 45,335
5 .............. 59,470 500,000 500,000 500,000 41,161 49,593 59,495
6 .............. 73,206 500,000 500,000 500,000 48,699 60,552 75,049
7 .............. 87,628 500,000 500,000 500,000 55,920 71,807 92,051
8 .............. 102,772 500,000 500,000 500,000 62,887 83,433 110,721
9 .............. 118,673 500,000 500,000 500,000 69,763 95,607 131,396
10 ............. 135,370 500,000 500,000 500,000 76,498 108,307 154,247
11 ............. 152,901 500,000 500,000 500,000 82,996 121,465 179,430
12 ............. 171,308 500,000 500,000 500,000 89,168 135,024 207,138
13 ............. 190,636 500,000 500,000 500,000 95,072 149,062 237,716
14 ............. 210,930 500,000 500,000 500,000 100,671 163,576 271,477
15 ............. 232,239 500,000 500,000 500,000 105,927 178,566 308,787
16 ............. 254,614 500,000 500,000 500,000 110,851 194,078 350,095
17 ............. 278,107 500,000 500,000 506,720 115,362 210,090 395,875
18 ............. 302,775 500,000 500,000 562,440 119,518 226,693 446,381
19 ............. 328,676 500,000 500,000 622,336 123,283 243,915 501,884
20 (age 65) .... 355,872 500,000 500,000 686,698 126,580 261,762 562,867
25 (age 70) .... 513,663 500,000 500,000 1,125,549 135,376 362,925 970,301
30 (age 75) .... 715,048 500,000 527,972 1,737,859 125,906 493,432 1,624,167
</TABLE>
(1) Assumes that a premium of $10,250 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-46-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE 45 FACE AMOUNT PLAN
STANDARD NON-SMOKER FACE AMOUNT $500,000
USING OUR GUARANTEED COST OF INSURANCE CHARGES
----------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
-------------------------------------- ---------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST -------------------------------------- ---------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ----------------- --------------- ------------ ------------ ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............. $ 10,763 $ 500,000 $ 500,000 $ 500,000 $ 7,678 $ 8,214 $ 8,752
2 ............. 22,063 500,000 500,000 500,000 14,975 16,528 18,149
3 ............. 33,929 500,000 500,000 500,000 21,986 25,038 28,353
4 ............. 46,388 500,000 500,000 500,000 28,668 33,703 39,401
5 ............. 59,470 500,000 500,000 500,000 35,032 42,542 51,394
6 ............. 73,206 500,000 500,000 500,000 41,089 51,569 64,444
7 ............. 87,628 500,000 500,000 500,000 46,794 60,748 78,626
8 ............. 102,772 500,000 500,000 500,000 52,107 70,046 94,026
9 ............. 118,673 500,000 500,000 500,000 56,986 79,429 110,750
10 ............ 135,370 500,000 500,000 500,000 61,445 88,917 128,974
11 ............ 152,901 500,000 500,000 500,000 65,444 98,484 148,850
12 ............ 171,308 500,000 500,000 500,000 68,943 108,103 170,560
13 ............ 190,636 500,000 500,000 500,000 72,007 117,845 194,401
14 ............ 210,930 500,000 500,000 500,000 74,541 127,645 220,589
15 ............ 232,239 500,000 500,000 500,000 76,557 137,528 249,463
16 ............ 254,614 500,000 500,000 500,000 77,961 147,438 281,350
17 ............ 278,107 500,000 500,000 500,000 78,710 157,362 316,678
18 ............ 302,775 500,000 500,000 500,000 78,756 167,291 355,956
19 ............ 328,676 500,000 500,000 500,000 77,951 177,140 399,760
20 (age 65) ... 355,872 500,000 500,000 546,926 76,239 186,906 448,300
25 (age 70) ... 513,663 500,000 500,000 889,990 50,811 234,063 767,233
30 (age 75) ... 715,048 0 500,000 1,356,392 0 274,516 1,267,656
</TABLE>
(1) Assumes that a premium of $10,250 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-47-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE 45 FACE AMOUNT PLUS PLAN
STANDARD NON-SMOKER FACE AMOUNT $500,000
USING OUR CURRENT COST OF INSURANCE CHARGES
-------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
------------------------------------- ----------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST ------------------------------------- ----------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------- --------------- ----------- ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 ............... $ 16,380 $513,930 $ 514,821 $ 515,712 $ 13,930 $ 14,821 $ 15,712
2 ............... 33,579 527,493 530,143 532,902 27,493 30,143 32,902
3 ............... 51,638 540,753 546,049 551,784 40,753 46,049 51,784
4 ............... 70,600 553,597 562,440 572,404 53,597 62,440 72,404
5 ............... 90,510 566,093 579,399 595,002 66,093 79,399 95,002
6 ............... 111,415 578,246 596,949 619,782 78,246 96,949 119,782
7 ............... 133,366 589,944 614,993 646,838 89,944 114,993 146,838
8 ............... 156,414 601,254 633,612 676,467 101,254 133,612 176,467
9 ............... 180,615 612,362 653,015 709,121 112,362 153,015 209,121
10 .............. 206,026 623,212 673,173 745,045 123,212 173,173 245,045
11 .............. 232,707 633,689 693,996 784,448 133,689 193,996 284,448
12 .............. 260,723 643,682 715,389 827,557 143,682 215,389 327,557
13 .............. 290,139 653,258 737,437 874,815 153,258 237,437 374,815
14 .............. 321,026 662,365 760,106 926,582 162,365 260,106 426,582
15 .............. 353,457 670,953 783,362 983,254 170,953 283,362 483,254
16 .............. 387,510 679,031 807,229 1,045,333 179,031 307,229 545,333
17 .............. 423,265 686,489 831,609 1,113,244 186,489 331,609 613,244
18 .............. 460,808 693,397 856,587 1,187,646 193,397 356,587 687,646
19 .............. 500,229 699,707 882,125 1,269,138 199,707 382,125 769,138
20 (age 65) ..... 541,620 705,309 908,124 1,358,317 205,309 408,124 858,317
25 (age 70) ..... 781,770 721,862 1,044,355 1,948,464 221,862 544,355 1,448,464
30 (age 75) ..... 1,088,268 712,985 1,184,199 2,876,346 212,985 684,199 2,376,346
</TABLE>
(1) Assumes that a premium of $15,600 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-48-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE 45 FACE AMOUNT PLUS PLAN
STANDARD NON-SMOKER FACE AMOUNT $500,000
USING OUR GUARANTEED COST OF INSURANCE CHARGES
-----------------------------------------------
<TABLE>
<CAPTION>
DEATH BENEFIT ACCOUNT BALANCE
------------------------------------ ----------------------------------
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
PREMIUMS GROSS ANNUAL INVESTMENT GROSS ANNUAL INVESTMENT
END OF ACCUMULATED RETURN OF RETURN OF
POLICY AT 5% INTEREST ------------------------------------ ----------------------------------
YEAR PER YEAR(1) 0% 6% 12% 0% 6% 12%
- ------------------ --------------- ----------- ----------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 .............. $ 16,380 $512,849 $513,705 $ 514,563 $ 12,849 $ 13,705 $ 14,563
2 .............. 33,579 525,199 527,708 530,324 25,199 27,708 30,324
3 .............. 51,638 537,118 542,082 547,465 37,118 42,082 47,465
4 .............. 70,600 548,557 556,779 566,060 48,557 56,779 66,060
5 .............. 90,510 559,526 571,814 586,255 59,526 71,814 86,255
6 .............. 111,415 570,033 587,199 608,208 70,033 87,199 108,208
7 .............. 133,366 580,029 602,887 632,032 80,029 102,887 132,032
8 .............. 156,414 589,466 618,828 657,849 89,466 118,828 157,849
9 .............. 180,615 598,294 634,971 685,796 98,294 134,971 185,796
10 ............. 206,026 606,527 651,325 716,084 106,527 151,325 216,084
11 ............. 232,707 614,118 667,837 748,883 114,118 167,837 248,883
12 ............. 260,723 621,019 684,450 784,380 121,019 184,450 284,380
13 ............. 290,139 627,306 701,231 822,907 127,306 201,231 322,907
14 ............. 321,026 632,870 718,064 864,640 132,870 218,064 364,640
15 ............. 353,457 637,728 734,951 909,897 137,728 234,951 409,897
16 ............. 387,510 641,774 751,771 958,904 141,774 251,771 458,904
17 ............. 423,265 644,967 768,461 1,011,970 144,967 268,461 511,970
18 ............. 460,808 647,264 784,954 1,069,436 147,264 284,954 569,436
19 ............. 500,229 648,505 801,057 1,131,553 148,505 301,057 631,553
20 (age 65) .... 541,620 648,653 816,696 1,198,718 148,653 316,696 698,718
25 (age 70) .... 781,770 630,846 884,060 1,626,285 130,846 384,060 1,126,285
30 (age 75) .... 1,088,268 570,315 914,777 2,255,008 70,315 414,777 1,755,008
</TABLE>
(1) Assumes that a premium of $15,600 is paid at the beginning of each
Policy Year.
In evaluating the above illustration, you should consider that:
o The hypothetical investment rates of return shown above are for
illustration purposes only, and you should not view them as indicative of
past or future investment rates of return. We do not make any
representation that these hypothetical rates of return can be achieved for
any one year or sustained over any period of time. Actual rates of return
may be more or less than those shown.
o The Death Benefits and Account Balances would be different from the
amounts shown if the rates of return averaged 0%, 6% or 12% over a period
of years, but varied above or below those averages in individual policy
years.
o The Death Benefits and Account Balances also would be different from the
amounts shown, depending on the allocation of Account Balance to the
Separate Account Funds, if the rates of return over all Funds averaged 0%,
6% or 12% but varied above or below those averages for individual Separate
Account Funds, or if any policy loan were made during the period.
-49-
<PAGE>
FINANCIAL STATEMENTS
The Separate Account had not commenced operations as of the date of this
Prospectus. Accordingly, no financial statements of the Separate Account are
included in the Prospectus.
Below are the financial statements of Mutual of America for the year ended
December 31, 1998. You should consider these financial statements as bearing
upon the ability of Mutual of America to meet its obligations under the
Policies. You should not consider them as bearing upon the investment
experience of the Separate Account Funds.
<TABLE>
<S> <C>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
PAGE
----
Report of Independent Public Accountants ........... 51
Consolidated Statements of Financial Condition ..... 52
Consolidated Statements of Operations and Surplus .. 53
Consolidated Statements of Cash Flows .............. 54
Notes to Consolidated Financial Statements ......... 55
</TABLE>
-50-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Mutual of America Life Insurance Company:
We have audited the accompanying consolidated statements of financial
condition of Mutual of America Life Insurance Company and its subsidiaries as
of December 31, 1998 and 1997, and the related consolidated statements of
operations and surplus and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in Note 1, the accompanying statutory-basis financial
statements were prepared in conformity with the accounting practices prescribed
or permitted by the State of New York Insurance Department which practices
differ from generally accepted accounting principles. The variances between
such practices and generally accepted accounting principles and the effects on
the accompanying financial statements are described in Note 9.
In our opinion, because of the effects of the matter described in the
third paragraph and more fully discussed in Note 9, the financial statements
referred to above do not present fairly, in conformity with generally accepted
accounting principles, the financial position of Mutual of America Life
Insurance Company and its subsidiaries as of December 31, 1998 and 1997, or the
results of their operations or their cash flows for the years then ended.
Furthermore, in our opinion, the supplemental data included in Note 9
reconciling net income and surplus as shown in the financial statements to net
income and surplus as determined in conformity with generally accepted
accounting principles, present fairly, in all material respects, the
information shown therein.
However, in our opinion, the statutory-basis consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of Mutual of America Life Insurance Company and its
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the State of New York Insurance
Department.
/s/ ARTHUR ANDERSEN LLP
New York, New York
February 19, 1999
-51-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
<S> <C> <C>
ASSETS
GENERAL ACCOUNT ASSETS
Bonds and notes ................................... $ 4,874,244,008 $4,795,022,564
Common stocks ..................................... 339,524,394 413,939,170
Preferred stocks .................................. 55,771,462 59,466,239
Cash and short-term investments ................... 98,685,966 67,164,422
Guaranteed funds transferable (Note 3) ............ 115,902,196 121,130,991
Mortgage loans .................................... 19,289,253 41,315,430
Real estate ....................................... 324,024,030 331,991,341
Policy loans ...................................... 100,633,395 97,854,314
Other invested assets ............................. 33,606,096 20,137,960
Investment income accrued ......................... 90,018,584 79,087,631
Receivables ....................................... 8,363,971 9,307,851
Other assets ...................................... 10,847,128 31,266,929
--------------- --------------
Total general account assets .................... 6,070,910,483 6,067,684,842
SEPARATE ACCOUNT ASSETS ............................ 4,039,275,044 3,456,072,983
--------------- --------------
TOTAL ASSETS ....................................... $10,110,185,527 $9,523,757,825
=============== ==============
LIABILITIES AND SURPLUS
GENERAL ACCOUNT LIABILITIES
Insurance and annuity reserves .................... $ 4,925,407,081 $4,929,073,256
Other contract liabilities and reserves ........... 12,086,713 11,303,835
Dividends payable to contract and policyholders ... 93,791 106,329
Note payable (Note 5) ............................. 137,021,175 137,021,175
Interest maintenance reserve ...................... 213,674,120 253,944,200
Other liabilities ................................. 69,310,429 95,801,345
--------------- --------------
Total general account liabilities ............... 5,357,593,309 5,427,250,140
SEPARATE ACCOUNT RESERVES AND OTHER LIABILITIES .... 4,039,275,044 3,456,072,983
--------------- --------------
Total liabilities ............................... 9,396,868,353 8,883,323,123
--------------- --------------
ASSET VALUATION RESERVE ............................ 118,485,383 116,494,396
--------------- --------------
SURPLUS
Assigned surplus .................................. 1,150,000 1,150,000
Unassigned surplus ................................ 593,681,791 522,790,306
--------------- --------------
Total surplus ................................... 594,831,791 523,940,306
--------------- --------------
TOTAL LIABILITIES AND SURPLUS ...................... $10,110,185,527 $9,523,757,825
=============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
-52-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND SURPLUS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
<S> <C> <C>
INCOME
Annuity considerations and deposits ..................... $ 824,131,791 $ 740,959,658
Life and disability insurance premiums .................. 27,318,300 28,214,541
-------------- --------------
Total considerations and premiums ..................... 851,450,091 769,174,199
Separate account investment and administrative fees ..... 43,186,358 35,376,990
Net investment income (Notes 2 and 3) ................... 414,565,840 441,059,670
Other, net .............................................. (1,966,715) (336,265)
-------------- --------------
Total income .......................................... 1,307,235,574 1,245,274,594
-------------- --------------
DEDUCTIONS
Increase in insurance and annuity reserves .............. 81,812,257 41,301,697
Annuity and surrender benefits .......................... 999,743,408 973,365,824
Death and disability benefits ........................... 20,153,378 20,161,949
Operating expenses ...................................... 151,448,387 147,172,396
-------------- --------------
Total deductions ...................................... 1,253,157,430 1,182,001,866
-------------- --------------
Net gain before dividends ............................. 54,078,144 63,272,728
DIVIDENDS TO CONTRACT AND POLICYHOLDERS .................. 117,182 147,104
-------------- --------------
Net gain from operations .............................. 53,960,962 63,125,624
FEDERAL INCOME TAX BENEFIT ............................... 1,150,189 367,818
NET REALIZED CAPITAL GAINS (NOTE 2) ...................... 16,642,540 10,778,415
-------------- --------------
Net income ............................................ 71,753,691 74,271,857
SURPLUS TRANSACTIONS
Change in asset valuation reserve ....................... (1,990,987) (8,818,100)
Change in net unrealized capital gains .................. 7,239,633 32,160,963
Change in non-admitted assets and other, net ............ (6,110,852) (4,719,810)
-------------- --------------
Net change in surplus ................................. 70,891,485 92,894,910
SURPLUS, AT BEGINNING OF YEAR ............................ 523,940,306 431,045,396
-------------- --------------
SURPLUS, AT END OF YEAR .................................. $ 594,831,791 $ 523,940,306
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
-53-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
<S> <C> <C>
CASH PROVIDED
Premium and annuity funds received .................................. $ 851,727,947 $ 769,846,793
Investment income received .......................................... 338,956,078 437,472,096
Separate account investment and administrative fees ................. 43,186,358 35,376,990
Other, net .......................................................... 1,739,776 (1,619,142)
-------------- ---------------
Total receipts .................................................... 1,235,610,159 1,241,076,737
-------------- ---------------
Benefits paid ....................................................... 1,019,758,402 989,719,884
Dividends paid to contract and policyholders ........................ 129,722 147,127
Insurance and operating expenses paid ............................... 155,490,995 146,405,004
Net transfers to separate accounts .................................. 84,395,589 286,778,743
-------------- ---------------
Total payments .................................................... 1,259,774,708 1,423,050,758
-------------- ---------------
Net cash used by operations ....................................... (24,164,549) (181,974,021)
Proceeds from long-term investments sold, matured or repaid ......... 4,672,189,185 10,907,067,504
Proceeds from dollar roll transactions -- repurchase agreements ..... -- 700,714,763
Other, net .......................................................... 47,407,939 44,741,139
-------------- ---------------
Total cash provided ............................................... 4,695,432,575 11,470,549,385
-------------- ---------------
CASH APPLIED
Cost of long-term investments acquired .............................. 4,606,240,005 10,730,606,933
Repayment of dollar roll transactions -- repurchase agreements ...... -- 700,714,763
Other, net .......................................................... 57,671,026 32,548,605
-------------- ---------------
Total cash applied ................................................ 4,663,911,031 11,463,870,301
-------------- ---------------
Net change in cash and short-term investments ..................... 31,521,544 6,679,084
CASH AND SHORT-TERM INVESTMENTS
Beginning of year ................................................... 67,164,422 60,485,338
-------------- ---------------
End of year ......................................................... $ 98,685,966 $ 67,164,422
============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
-54-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the consolidated accounts of
Mutual of America Life Insurance Company ("Mutual of America") and its wholly
owned subsidiaries (collectively referred to as the "Company"). Significant
intercompany balances and transactions have been eliminated in consolidation.
NATURE OF OPERATIONS
Mutual of America provides retirement and employee benefit plans in the
small to medium size case area, principally to employees in the not-for-profit
social health and welfare field. In recent years, through a wholly owned
subsidiary, the Company has expanded the scope of the field it serves to
include for-profit organizations in the small to medium size case area. The
principal insurance companies in the group are licensed in all fifty states and
the District of Columbia. Operations are conducted primarily through a network
of regional field offices staffed by salaried consultants.
BASIS OF PRESENTATION
The financial statements are presented in conformity with statutory
accounting practices prescribed or permitted by the State of New York Insurance
Department, which practices differ from generally accepted accounting
principles ("GAAP"). The variances between such practices and GAAP and the
effects on the accompanying financial statements are described in Note 9. The
ability of the Company to fulfill its obligations to contractholders and
policyholders is of primary concern to insurance regulatory authorities. As
such, the financial statements are oriented to the insuring public.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
Certain 1997 amounts included in the accompanying consolidated financial
statements have been reclassified to conform with the 1998 presentation.
Accounting policies applied in the preparation and presentation of these
financial statements follow.
ASSET VALUATIONS
Investment valuations are prescribed by the National Association of
Insurance Commissioners ("NAIC"). Bonds qualifying for amortization are stated
at amortized cost; short-term investments in good standing are stated at cost.
Fair value for these securities (approximately $5.0 billion in 1998 and $4.9
billion in 1997) is determined by reference to market prices quoted by the
NAIC. If quoted market prices are not available, fair value is determined using
quoted prices for similar securities. All other bonds and short-term notes are
stated at market value which approximates fair value.
Common stocks in good standing are stated at market value, which
approximates fair value. Market value is determined by reference to valuations
quoted by the NAIC. Unrealized gains and losses are applied directly to
unassigned surplus.
Mortgage loans are carried at amortized indebtedness. Fair value for these
loans (approximately $19.6 million in 1998 and $46.8 million in 1997) is
determined by discounting the expected future cash flows using the current rate
at which similar loans would be made to borrowers with similar credit ratings
and remaining maturities. Impairments of individual assets that are considered
other than temporary are recognized when incurred. There were no impairments
recorded during 1998 or 1997.
Real estate, which is classified as Company occupied property, is carried
at cost, including capital improvements, net of accumulated depreciation, and
depreciated on a straight line basis over 39 years. Tenant improvements on real
estate investments are depreciated over the shorter of the lease term or the
estimated life of the improvement.
Policy loans are stated at the unpaid balance of the loan. The majority of
such loans are issued with variable interest rates which are periodically
adjusted based on changes in the rates credited to these policies and therefore
are considered to be stated at fair value.
-55-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)
Certain other assets, such as furniture and fixtures and prepaid expenses,
are excluded from the consolidated statements of financial condition
("non-admitted assets").
INTEREST MAINTENANCE AND ASSET VALUATION RESERVES
Realized gains and losses, net of applicable taxes, arising from changes
in interest rates are accumulated in the Interest Maintenance Reserve ("IMR")
and are amortized into net investment income over the estimated remaining life
of the investment sold. All other realized gains and losses are reported in the
consolidated statements of operations and surplus.
An Asset Valuation Reserve ("AVR") applying to the specific risk
characteristics of all invested asset categories excluding cash, policy loans
and investment income accrued has been established based on a statutory
formula. Realized and unrealized gains and losses arising from changes in the
creditworthiness of the borrower are included in the appropriate subcomponent
of the AVR. Changes in the AVR are applied directly to unassigned surplus.
GUARANTEED FUNDS TRANSFERABLE
Guaranteed funds transferable consist of funds held by a former reinsurer
and are stated at the total principal amount of future guaranteed transfers to
Mutual of America, which approximates fair value.
SEPARATE ACCOUNT OPERATIONS
Certain annuity considerations may be invested at the participant's
discretion in separate accounts; either a multifund account, which is managed
by Mutual of America Capital Management Corporation, or certain other funds,
which are managed by outside investment advisors. All of the funds' investment
experience, including net realized and unrealized capital gains in the separate
accounts (net of investment advisory fees and administration fees assessed), is
allocated to participants. Charges for investment advisory fees and
administration fees are assessed as a percentage of the assets under management
and vary based upon the investment objectives of the fund and level of
administrative services provided. During 1998 and 1997 such fees were equal to
approximately 1.10% of the total average assets under management.
Investments held in the separate accounts are stated at market value,
which approximates fair value. Participants' corresponding equity in the
separate accounts are reported as liabilities in the accompanying statements.
Premiums and benefits related to the separate accounts are combined with the
general account in the accompanying statements. Net operating gains are offset
by increases to reserve liabilities in the respective separate accounts.
INSURANCE AND ANNUITY RESERVES
Reserves for annuity contracts are computed on the net single premium
method and represent the estimated present value of future retirement benefits.
These reserves are based on mortality and interest rate assumptions (ranging
predominately from 5.00% to 9.25%) which meet or exceed statutory requirements.
Reserves for contractual funds not yet used for the purchase of annuities are
accumulated at various interest rates which, during 1998 and 1997, averaged
5.00% and 5.50%, respectively and are deemed sufficient to provide for
contractual surrender values of these funds. Reserves for life and disability
insurance are based on mortality, morbidity and interest rate assumptions which
meet statutory requirements.
Contractual funds not yet used to purchase retirement annuities and other
deposit liabilities are stated at their cash surrender value, which
approximates fair value ($7.6 billion and $7.0 billion), at December 31, 1998
and 1997, respectively. The fair value of annuity contracts (approximately $1.6
billion and $1.5 billion at December 31, 1998 and 1997, respectively) was
determined by discounting expected future retirement benefits using current
mortality tables and interest rates based on the duration of expected future
benefits. Weighted average interest rates of 5.38% and 6.12% were used at
December 31, 1998 and 1997, respectively.
PREMIUMS, ANNUITY CONSIDERATIONS, INVESTMENT INCOME AND EXPENSES
Insurance premiums and annuity considerations derived from defined
contribution plans are recognized as income when due. Voluntary savings-type
and defined benefit considerations and other deposits are recognized as income
when received. Group life and disability insurance premiums are recognized as
income over the contract period.
-56-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)
General account investment income is reported as earned and is presented
net of related investment expenses; operating expenses, including acquisition
costs for new business and income taxes, are charged to operations as incurred.
DIVIDENDS
Dividends are based on formulas and scales approved by the Board of
Directors and are accrued currently for payment subsequent to plan anniversary
dates.
2. FIXED MATURITY AND EQUITY SECURITIES
The statement values and NAIC market values of investments in fixed
maturity securities (bonds and notes) at December 31, 1998 are shown below.
Excluding U.S. government and government agency investments, the Company is not
exposed to any significant concentration of credit risk.
<TABLE>
<CAPTION>
GROSS GROSS NAIC
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUE GAINS LOSSES VALUE
- ----------------------------------------------------------- -------------- ------------ ------------ --------------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. Government
corporations and agencies ................................ $ 2,030,666 $ 15,527 $ 1,071 $ 2,045,122
Obligations of states and political subdivisions .......... 10,727 2,086 -- 12,813
Debt securities issued by foreign governments ............. 106,243 6,112 -- 112,355
Corporate securities ...................................... 2,834,819 50,542 33,067 2,852,294
----------- -------- -------- -----------
Total .................................................... $ 4,982,455 $ 74,267 $ 34,138 $ 5,022,584
=========== ======== ======== ===========
</TABLE>
Short-term fixed maturity securities with a statement value and NAIC
market value of $108.2 million at December 31, 1998 are included in the above
table. As of December 31, 1998, the Company had $6.2 million (par value $6.0
million) of its long-term fixed maturity securities on deposit with various
state regulatory agencies.
The statement values and NAIC market values of investments in fixed
maturity securities by contractual maturity (except for mortgage-backed
securities which are stated at expected maturity) at December 31, 1998 are
shown below. Expected maturities may differ from contractual maturities because
borrowers may have the right to prepay obligations with or without prepayment
penalties.
<TABLE>
<CAPTION>
NAIC
STATEMENT MARKET
VALUE VALUE
-------------- --------------
(000'S OMITTED)
<S> <C> <C>
Due in one year or less ............... $ 261,253 $ 263,498
Due after one year through five years . 1,553,255 1,567,426
Due after five years through ten years 1,417,466 1,498,422
Due after ten years ................... 1,750,481 1,693,238
----------- -----------
Total ............................... $ 4,982,455 $ 5,022,584
=========== ===========
</TABLE>
Proceeds from the sale of investments in fixed maturity securities during
1998 were $4.2 billion. Gross gains of $20.0 million and gross losses of $6.0
million were realized on these sales, of which $14.0 million of gains were
accumulated in the IMR. Such amounts will be amortized into net investment
income over the estimated remaining life of the investment sold.
During 1998, $54.2 million of the IMR was amortized and included in net
investment income. Included in IMR amortization income for the year is a $34.5
million net adjustment related to realized capital gains that should have been
exempted from IMR since they were associated with higher than normal general
account withdrawal activity (including transfers to the Separate Account) that
occurred last year.
-57-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. FIXED MATURITY AND EQUITY SECURITIES -- (Continued)
The statement values and NAIC market values of investments in fixed
maturity securities at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS NAIC
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUE GAINS LOSSES VALUE
- ----------------------------------------------------------- -------------- ------------ ------------ --------------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. Government
corporations and agencies ............................... $ 2,414,115 $ 7,846 $ 412 $ 2,421,549
Obligations of states and political subdivisions .......... 13,421 1,704 -- 15,125
Debt securities issued by foreign governments ............. 101,186 4,624 28 105,782
Corporate securities ...................................... 2,329,186 25,640 9,123 2,345,703
----------- -------- ------- -----------
Total ................................................... $ 4,857,908 $ 39,814 $ 9,563 $ 4,888,159
=========== ======== ======= ===========
</TABLE>
Short-term fixed maturity securities with a statement value and NAIC
market value of $62.9 million at December 31, 1997, are included in the above
table. As of December 31, 1997, the Company had $6.2 million (par value $6.0
million) of its long-term fixed maturity securities on deposit with various
state regulatory agencies.
Proceeds from the sale of investments in fixed maturity securities during
1997 were $11.1 billion. Gross gains of $145.1 million and gross losses of
$16.0 million were realized on those sales, of which $126.4 million of gains
were accumulated (net of applicable tax benefits of $2.7 million) in the IMR.
Such amounts will be amortized into net investment income over the estimated
remaining life of the investment sold. During 1997, $18.0 million of the IMR
was amortized and included in net investment income.
Net realized capital gains (losses) reflected in the statements of
operations for the years ended December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(000'S OMITTED)
<S> <C> <C>
Equity securities (common and preferred stocks) $ 16,010 $ 19,606
Mortgage loans and other ....................... 633 (8,828)
-------- --------
Net realized capital gains .................... $ 16,643 $ 10,778
======== ========
</TABLE>
At December 31, 1998 and 1997, net unrealized appreciation of common
equity securities was $51.3 million and $44.1 million, respectively.
3. REINSURANCE AND RELATED TRANSACTIONS
In 1980, Mutual of America terminated a reinsurance arrangement and
assumed direct ownership of funds held by the reinsurer and direct liability
for the contractual obligations of the reinsurer. Such amounts are reported as
guaranteed funds transferable and as insurance and annuity reserves in the
consolidated statements of financial condition.
The guaranteed funds are transferable to Mutual of America over time and
are stated at the total principal amount of future guaranteed transfers to
Mutual of America of $115.9 million and $121.1 million at December 31, 1998 and
1997, respectively.
The guaranteed interest and other allocated investment earnings on the
funds held by the reinsurer, amounting to $12.2 million and $33.8 million in
1998 and 1997, respectively, are included in net investment income. Such
amounts include participating dividends from a contingency fund that was
previously held by the reinsurer (but not recorded as an asset of Mutual of
America) of $25.9 million in 1997. This amount includes the receipt of a $21.5
million special dividend related to the termination of the contingency fund
previously held by the reinsurer.
-58-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. REAL ESTATE
Real estate consists primarily of an office building that Mutual of
America purchased for its corporate headquarters. The purchase price of the
building was fully financed. The Company occupies approximately one-third of
this office building as its corporate headquarters and leases the remaining
space. Depreciation expense for 1998 and 1997 was $5.2 million in both years.
5. NOTE PAYABLE
In connection with the acquisition of its corporate headquarters, Mutual
of America obtained a $135.0 million, seven-year, 6.91% fixed rate secured term
note. Fair value of the note was approximately $137.0 million at December 31,
1998 and 1997. The note matures and is payable in full on October 15, 1999 and
is not redeemable prior to that date. Interest on the note is payable
semiannually in April and October. The terms of the note require that Mutual of
America pledge collateral, consisting of securities issued by the United States
Government or its agencies. The aggregate book and market values of the
collateral must be maintained at a level greater than or equal to 100% and
110%, respectively, of the outstanding balance of the note. At December 31,
securities with a book and market value of approximately $166.7 million and
$169.9 million in 1998 and $167.9 million and $167.5 million in 1997,
respectively, were pledged as collateral.
6. PENSION PLAN AND POSTRETIREMENT BENEFITS
The Company has a qualified, non-contributory defined benefit pension plan
covering virtually all employees. Benefits are generally based on years of
service and final average salary. The Company's funding policy is to contribute
annually, at a minimum, the amount necessary to satisfy the funding
requirements under the Employee Retirement Income Security Act of 1974
("ERISA"). The Company also maintains two non-qualified defined benefit pension
plans. The first provides benefits to employees whose total compensation
exceeds the maximum allowable compensation limits for qualified retirement
plans under ERISA. The second provides benefits to non-employee members of the
Board of Directors.
The Company has two defined benefit postretirement plans covering
substantially all salaried employees. Employees may become eligible for such
benefits upon attainment of retirement age while in the employ of the Company
and upon satisfaction of service requirements. One plan provides medical and
dental benefits and the second plan provides life insurance benefits. The
postretirement plans are contributory for those individuals who retire with
less than twenty years of eligible service, with retiree contributions adjusted
annually and contain other cost-sharing features, such as deductibles and
coinsurance.
Pension expense for all pension plans in 1998 and 1997 was $8.9 million
and $5.4 million, respectively. The 1998 amount includes $2.8 million of
expense related to the lump-sum settlement of approximately $24.2 million in
pension benefits during the year. Prior to 1997, pension plan expense was
computed on a modified GAAP basis. Effective January 1, 1997 the expense and
liability related to all of the Company's pension plans and its long term
incentive compensation plan (described below) are calculated in accordance with
GAAP. This change resulted in a charge to surplus, net of the change in the
prepaid pension cost, of $9.7 million at January 1, 1997.
The components of net pension expense related to all of the Company's
pension plans are as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
(000'S OMITTED)
<S> <C> <C>
Service cost ...................................... $ 5,353 $ 4,596
Interest cost on projected benefit obligation ..... 6,189 5,159
Expected return on plan assets .................... (6,870) (5,469)
Amortization of initial net asset ................. (211) (211)
Amortization of unrecognized loss ................. 1,639 1,291
Settlement loss ................................... 2,768 --
-------- --------
Net pension expense ............................. $ 8,868 $ 5,366
======== ========
</TABLE>
-59-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. PENSION PLAN AND POSTRETIREMENT BENEFITS -- (Continued)
The funded status of all of the Company's pension plans at December 31,
1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
(000'S OMITTED)
<S> <C> <C>
Projected benefit obligation .............................. $ (93,544) $ (77,322)
Plan assets at fair value ................................. 60,470 58,619
---------- ----------
Projected benefit obligation in excess of plan assets ..... (33,074) (18,703)
Remaining unrecognized initial net asset .................. (450) (841)
Unrecognized prior service cost ........................... 4,564 5,177
Unrecognized net loss from past experience
different from that assumed ............................. 40,079 17,546
---------- ----------
Prepaid pension cost, end of year ......................... $ 11,119 $ 3,179
========== ==========
</TABLE>
For financial reporting purposes, the prepaid pension cost at December 31,
1998 and 1997, has been classified as a non-admitted asset. At December 31,
1998 all of the qualified pension plan assets are invested in one of the
Company's separate accounts (consisting primarily of equity securities) and
participation in certain other funds managed by outside investment advisors.
The discount rate used in determining the actuarial present value of the
projected benefit obligation was 6.80% and 7.25% at December 31, 1998 and 1997,
respectively. This .45% decrease in the discount rate together with a change in
employee mortality and turnover rates resulted in a $17.3 million increase in
the projected benefit obligation (PBO) for the year. The assumed rate of
increase in future compensation levels was 4.00% in 1998 and 1997. The assumed
long-term rate of return on assets used in determining the net periodic pension
cost was 11.30% in 1998 and 1997. The change in the PBO during 1998 and 1997 is
as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(000'S OMITTED)
<S> <C> <C>
January 1 balance .................. $ 77,322 $ 60,351
Service cost ....................... 5,353 4,596
Interest cost ...................... 6,189 5,159
Change in assumptions .............. 17,298 7,850
Actuarial loss ..................... 11,775 4,326
Benefits and expenses paid ......... (24,393) (4,960)
--------- --------
December 31 balance ................ $ 93,544 $ 77,322
========= ========
</TABLE>
The Company funds the qualified non-contributory defined benefit pension
plan in accordance with the requirements of ERISA. Plan assets at fair value
for the qualified pension plan were $52.3 million and $47.4 million at December
31, 1998 and 1997, respectively. The actuarial present value of accumulated
benefits for the qualified pension plan were $32.6 million and $50.0 million at
December 31, 1998 and 1997, respectively. During 1998 and 1997, the Company
made contributions to the qualified plan of $13.3 million and $4.4 million,
respectively.
The change in plan assets for all of the Company's pension plans is as
follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(000'S OMITTED)
<S> <C> <C>
January 1 balance .................. $ 58,619 $ 43,718
Employer contributions ............. 16,807 12,127
Return on Plan assets .............. 9,437 7,734
Benefits and expenses paid ......... (24,393) (4,960)
--------- --------
December 31 balance ................ $ 60,470 $ 58,619
========= ========
</TABLE>
-60-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. PENSION PLAN AND POSTRETIREMENT BENEFITS -- (Continued)
In addition to the above noncontributory plans, all employees may
participate in a 401(k) savings plan under which the Company matches half of
the employees' basic contribution up to 6% of salary. The cost of this plan was
approximately $1.7 million and $1.6 million in 1998 and 1997, respectively. The
Company also has a long-term performance based incentive compensation plan for
certain employees. Shares are granted each year and generally vest over a
three-year period. The value of such shares is based upon increases in the
Company's statutory surplus and the maintenance of certain financial ratios.
Compensation expense recognized in 1998 and 1997 related to this plan was $3.2
million and $3.0 million respectively.
The components of net postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
(000'S OMITTED)
<S> <C> <C>
Service cost ...................................... $ 609 $ 600
Interest cost on projected benefit obligation ..... 1,272 1,175
Actuarial loss .................................... 156 --
------ ------
Net postretirement benefit cost ................... $2,037 $1,775
====== ======
</TABLE>
The following table shows the plans' combined status reconciled with the
amounts reported in the Company's consolidated statements of financial
condition:
<TABLE>
<CAPTION>
1998 1997
---------- ------------
(000'S OMITTED)
<S> <C> <C>
Accumulated postretirement benefit obligation
("APBO"):
Retirees ...................................... $ 7,854 $ 5,911
Fully eligible active plan participants ....... 3,367 3,456
Other active plan participants ................ 6,817 6,239
-------- --------
Total APBO ................................... 18,038 15,606
Plan assets at fair value ....................... -- --
-------- --------
APBO in excess of plan assets ................... 18,038 15,606
Unrecognized net loss ........................... (5,615) (4,920)
-------- --------
Accrued postretirement obligation ............... $ 12,423 $ 10,686
======== ========
</TABLE>
The weighted average annual assumed rate of increase in the per capita
cost of covered benefits (i.e., health care cost trend rate) for the medical
plan is approximately 7.00% in 1998. The health care cost trend rate assumption
has a significant affect on the amounts reported. For example, increasing the
assumed health care cost trend rate by one percentage point in each year would
increase the accumulated postretirement obligation for the plan as of December
31, 1998 by $1.3 million and the aggregate of the service and interest cost
components of the net periodic benefit cost for 1998 by $.3 million.
The discount rate used in determining the APBO was 6.80% at December 31,
1998 and 7.25% at December 31, 1997.
7. COMMITMENTS AND CONTINGENCIES
Rental expenses were $17.3 million and $16.7 million in 1998 and 1997,
respectively. The approximate minimum rental commitments under noncancelable
operating leases are as follows: 1999, $2.8 million, 2000, $2.1 million, 2001,
$1.7 million, 2002, $1.6 million and 2003, $1.0 million, and 2004 and beyond,
$.8 million. Such leases are principally for leased office space, furniture and
equipment. Certain office space leases provide for adjustments to reflect
changes in real estate taxes and other operating expenses.
The Company is involved in various legal actions which have arisen in the
course of the Company's business. In the opinion of management, the ultimate
liability with respect to such lawsuits as well as other contingencies is not
considered to be material in relation to the Company's consolidated financial
statements.
-61-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. FEDERAL INCOME TAXES
Mutual of America's pension business was exempt from federal income
taxation under Section 501(a) of the Internal Revenue Code ("Code") in 1997.
Effective January 1, 1998 Mutual of America's pension business became subject
to federal income tax. Mutual of America and its life subsidiary file federal
tax returns on a separate company basis. Mutual of America's non-insurance
subsidiaries file a consolidated tax return. The Federal income tax benefit for
the year ended December 31, 1998 amounted to $1.2 million as compared to
benefit of $.4 million in 1997. The 1998 and 1997 tax benefits reflected in the
accompanying statements of operations and surplus arose principally from the
operating results of its insurance and non-insurance subsidiaries.
The difference between the actual tax benefit reflected in the
accompanying consolidated statements of operations and the expected tax
provision computed by applying the statutory rate of 35% to operating income
arises principally from the differing statutory and tax treatment of IMR income
and realized capital gains and losses on investment transactions and from the
differences between the tax and statutory basis of Mutual of America's assets
and liabilities. Such differences resulted from transition rules under the Code
as of January 1, 1998, which accompanied the change in taxation of Mutual of
America's pension business. These transition rules will moderate Mutual of
America's tax expense over the next several years.
9. RECONCILIATION OF STATUTORY BASIS FINANCIAL RESULTS TO A GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES BASIS
The accompanying financial statements are presented in conformity with
statutory accounting practices prescribed or permitted by the State of New York
Insurance Department which practices differ from GAAP. The variances between
such practices and GAAP and the effects on the accompanying financial
statements follow:
ASSET VALUATIONS AND INVESTMENT INCOME RECOGNITION
GAAP requires the Company's bonds and notes to be classified as either
held to maturity ("HTM") or available for sale ("AFS"); whereas for statutory
accounting no such classification is required. In addition, for GAAP, AFS bonds
and notes are carried at their fair market value with the unrealized gains and
losses applied directly to surplus; whereas for statutory accounting all bonds
and notes are carried at their amortized cost.
Realized capital gains and losses, net of applicable taxes, arising from
changes in interest rates are recognized in income currently for GAAP
accounting, rather than accumulated in the IMR and amortized into income over
the remaining life of the security sold for statutory accounting. Additionally,
capital gains and losses are not recognized when a security is sold and the
same or substantially the same security is repurchased, unless the repurchase
occurs after a reasonable exposure to market risk.
A general formula based Asset Valuation Reserve (AVR) is recorded for
statutory accounting purposes, whereas such reserves are established under GAAP
only when an asset's impairment is considered to be other than temporary.
Certain assets, principally furniture and fixtures and prepaid expenses,
for statutory accounting, are excluded from the statement of financial
condition by a charge to surplus; whereas under GAAP, such assets are carried
at their amortized cost.
POLICY ACQUISITION COSTS
Under GAAP, policy acquisition costs that are directly related to and vary
with the production of new business are deferred and amortized over the
estimated life of the applicable policies, rather than being expensed as
incurred.
INSURANCE AND ANNUITY RESERVES
Under statutory accounting practices the interest rates and mortality and
morbidity assumptions used are those which are prescribed or permitted by the
State of New York Insurance Department. Under GAAP, for annuities the interest
rate assumptions used are generally those assumed in the pricing of the
contract at issue; for disability benefits the interest rates assumed are those
anticipated to be earned over the duration of the benefit period. Mortality and
morbidity assumptions are based on Company experience.
-62-
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. RECONCILIATION OF STATUTORY BASIS FINANCIAL RESULTS TO A GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES BASIS -- (Continued)
PREMIUM RECOGNITION
Insurance contracts that do not subject the insurer to significant
mortality or morbidity risk are considered, under GAAP, to be primarily
investment contracts. GAAP requires all amounts received from policyholders
under these investment contracts to be recorded as a policyholder deposit
rather than as premium income.
DEFERRED INCOME TAXES
GAAP requires that a deferred tax asset or liability be established to
provide for temporary differences between the tax and financial reporting bases
of assets and liabilities. Deferred income taxes are not recorded for statutory
accounting purposes.
The tables that follow provide a reconciliation of the 1998 and 1997
statutory financial results reflected in the accompanying financial statements
to a GAAP basis (000's omitted):
<TABLE>
<CAPTION>
RECONCILIATION OF STATUTORY TO GAAP SURPLUS 1998 1997
-------------------------------------------------------------- --------------- ------------
<S> <C> <C>
STATUTORY SURPLUS ............................................ $ 594,832 $ 523,940
Market value adjustment related to AFS bonds and notes ..... 170,821 160,980
Realized capital gains ..................................... 136,019 163,422
AVR ........................................................ 118,485 116,494
Deferred policy acquisition costs .......................... 39,761 36,905
Policy reserve adjustments ................................. (21,815) (17,510)
Non-admitted assets ........................................ 16,196 9,563
Federal income taxes ....................................... 163,130 (20,571)
Other ...................................................... 1,663 1,135
----------- ---------
GAAP SURPLUS ................................................. $ 1,219,092 $ 974,358
=========== =========
</TABLE>
<TABLE>
<CAPTION>
RECONCILIATION OF STATUTORY TO GAAP NET INCOME 1998 1997
-------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
STATUTORY NET INCOME ............................................... $ 71,754 $ 74,272
Investment income adjustments .................................... (52,750) (8,020)
Realized capital gains ........................................... 25,342 145,791
Policy reserve adjustments ....................................... (3,463) 3,781
Deferred acquisition costs ....................................... 5,969 2,518
Deferred income taxes ............................................ 237,051 (6,559)
Dividend related to termination of contingency fund (Note 3) ..... -- (20,920)
Other ............................................................ (1,488) (4,485)
--------- ---------
GAAP NET INCOME .................................................... $ 282,415 $ 186,378
========= =========
</TABLE>
<TABLE>
<CAPTION>
RECONCILIATION OF GAAP TO STATUTORY PREMIUMS 1998 1997
-------------------------------------------- ----------- ------------
<S> <C> <C>
GAAP PREMIUM INCOME .................... $ 61,073 $ 104,129
Premiums from investment contracts ... 790,377 665,045
--------- ---------
STATUTORY PREMIUM INCOME ............... $ 851,450 $ 769,174
========= =========
</TABLE>
-63-
<PAGE>
PART II. OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
UNDERTAKING PURSUANT TO RULE 484
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant, 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.
REPRESENTATIONS
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
Registrant makes the following representations: The fees and charges deducted
under the Policies, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The prospectus, consisting of 63 pages;
The undertaking required by Section 15(d) of the Securities Exchange Act of
1934;
The undertaking pursuant to Rule 484;
The representations pursuant to Rule 6e-3(T);
The signatures;
II-1
<PAGE>
Written consents of the following persons:
Patrick A. Burns, Esq.
Joseph A. Gross, F.S.A., M.A.A.A.
Jones & Blouch L.L.P.
Arthur Andersen LLP
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<S> <C>
1(1). Resolution of the Board of Directors of Mutual of America Life Insurance Company ("Mutual of
America") authorizing establishment of Separate Account No. 3 (the "Separate Account")
1(5)(a). Form of Variable Universal Life Insurance Policy (3410-VUL)
1(5)(b). Payroll Deduction Rider
1(5)(c). Accidental Death Benefit Rider
1(5)(d). Children's Term Rider
1(6)(a). Charter of Mutual of America
1(6)(b). By-Laws of Mutual of America
1(10)(a). Form of Application for Variable Universal Life Insurance Policy with Conditional Receipt of
Premium [to be filed by amendment]
1(10)(b). Form of Application for Variable Universal Life Insurance Policy for Policies with Payroll
Deduction Rider [to be filed by amendment]
2. See Exhibit 1(5)
3(a). Opinion and consent of Patrick A. Burns, Esq., Senior Executive Vice President and General
Counsel of Mutual of America
4. No financial statements are omitted from the prospectus pursuant to instruction 1(b) or (c) of Part I
6. Opinion and consent of Joseph A. Gross, Vice President and Actuary of Mutual of America
8(a)(i). Participation Agreement, dated December 30, 1993, among Scudder Variable Life Investment Fund,
Mutual of America and The American Life Insurance Company of New York ("American Life")(the
"Scudder Participation Agreement")
8(a)(ii). Notice to include the Separate Account under the Scudder Participation Agreement
8(b)(i). Fund Participation Agreement - Separate Account No. 2, dated as of December 30, 1988, among
Mutual of America, American Century Investment Management, Inc. ("ACIM") (formerly Investors
Research Corporation), and American Century Variable Portfolios, Inc. ("ACVP") (formerly TCI
Portfolios, Inc.)
8(b)(ii). Amendment No. 1 to Fund Participation Agreement - Separate Account No. 2, dated as of April 29,
1994, among Mutual of America, ACVP and ACIM
8(b)(iii). Amendment No. 2 to Fund Participation Agreement - Separate Account No. 2, among Mutual of
America, ACVP and ACIM with respect to the Separate Account
8(c)(i). Shared Funding Agreement, dated November 7, 1990, among American Life, Mutual of America
and Calvert Securities Corporation ("Calvert")
8(c)(ii). Amendment to the November 7, 1990 Shared Funding Agreement to include the Separate Account
8(d)(i). Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation
and Mutual of America, dated of April 30th, 1995, with revised Schedule A
8(d)(ii). Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors
Corporation and Mutual of America, dated of April 30th, 1995, with revised Schedule A
9. Memorandum regarding Issuance, Face Amount Increase, Transfer and Redemption Procedures for
the Policies
10. Consent of Arthur Andersen LLP
11. Consent of Jones & Blouch L.L.P.
</TABLE>
- ---------
Powers of Attorney of Messrs. Flynn, Moran, Altstadt, Burns, Curiale,
Alexander, Hafner, Harbison, Kahn, Leffall, Pelavin, Perrotta, Schott and
Wiesel and Mesdames Cahill, Epps, Hesselbein and Smythe are incorporated by
reference to Post-Effective Amendment No. 20 to the Registration Statement on
Form N-4 (File No. 33-11023) filed with the Commission on March 1, 1999 by
Mutual of America and its Separate Account No. 2.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, the State of
New York, the 21st day of July, 1999.
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 3
(Registrant)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
(Depositor)
By: /s/ MANFRED ALTSTADT
-------------------------------------
MANFRED ALTSTADT
SENIOR EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on July 21, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------- ------------------------------------------------------
<S> <C>
* Chairman of the Board; Director
- --------------------------------------
WILLIAM J. FLYNN
* Chief Executive Officer and President; Director
- -------------------------------------- (Principal Executive Officer)
THOMAS J. MORAN
/s/ MANFRED ALTSTADT Senior Executive Vice President and Chief Financial
- -------------------------------------- Officer; Director (Principal Financial and Accounting
MANFRED ALTSTADT Officer)
* Director
- --------------------------------------
CLIFFORD L. ALEXANDER, JR.
* Senior Executive Vice President and General Counsel;
- -------------------------------------- Director
PATRICK A. BURNS
* Director
- --------------------------------------
PATRICIA A. CAHILL
* Senior Executive Vice President; Director
- --------------------------------------
SALVATORE R. CURIALE
* Director
- --------------------------------------
ROSELYN P. EPPS, M.D.
* Director
- --------------------------------------
DUDLEY H. HAFNER
* Director
- --------------------------------------
EARLE H. HARBISON, JR.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------- ---------
<S> <C>
* Director
- --------------------------------------
FRANCES R. HESSELBEIN
* Director
- --------------------------------------
WILLIAM KAHN
* Director
- --------------------------------------
LASALLE D. LEFFALL, JR., M.D.
* Director
- --------------------------------------
MICHAEL A. PELAVIN
* Director
- --------------------------------------
FIORAVANTE G. PERROTTA
* Director
- --------------------------------------
FRANCIS H. SCHOTT
* Director
- --------------------------------------
O. STANLEY SMITH, JR.
* Director
- --------------------------------------
SHEILA M. SMYTHE
* Director
- --------------------------------------
ELIE WIESEL
*By: /s/ MANFRED ALTSTADT
-----------------------------------
MANFRED ALTSTADT
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------------------------ ---------------------------------------------------------------------------------------- -----
<S> <C> <C>
1(1). Resolution of the Board of Directors of Mutual of America Life
Insurance Company ("Mutual of America") authorizing establishment
of Separate Account No. 3 (the "Separate Account")
1(5)(a). Form of Variable Universal Life Insurance Policy (3410-VUL)
1(5)(b). Payroll Deduction Rider
1(5)(c). Accidental Death Benefit Rider
1(5)(d). Children's Term Rider
1(6)(a). Charter of Mutual of America
1(6)(b). By-Laws of Mutual of America
3(a). Opinion and consent of Patrick A. Burns, Esq., Senior Executive
Vice President and General Counsel of Mutual of America
6. Opinion and consent of Joseph A. Gross, Vice President and Actuary
of Mutual of America
8(a)(i). Participation Agreement, dated December 30, 1993, among Scudder
Variable Life Investment Fund, Mutual of America and The American
Life Insurance Company of New York ("American Life")(the "Scudder
Participation Agreement")
8(a)(ii). Notice to include the Separate Account under the Scudder
Participation Agreement
8(b)(i). Fund Participation Agreement - Separate Account No. 2, dated as
of December 30, 1988, among Mutual of America, American Century
Investment Management, Inc. ("ACIM") (formerly Investors Research
Corporation), and American Century Variable Portfolios, Inc.
("ACVP") (formerly TCI Portfolios, Inc.)
8(b)(ii). Amendment No. 1 to Fund Participation Agreement - Separate
Account No. 2, dated as of April 29, 1994, among Mutual of
America, ACVP and ACIM
8(b)(iii). Amendment No. 2 to Fund Participation Agreement - Separate
Account No. 2, among Mutual of America, ACVP and ACIM with respect
to the Separate Account
8(c)(i). Shared Funding Agreement, dated November 7, 1990, among American
Life, Mutual of America and Calvert Securities Corporation
("Calvert")
8(c)(ii). Amendment to the November 7, 1990 Shared Funding Agreement
between Mutual of America and Calvert with respect to the Separate
Account
8(d)(i). Participation Agreement among Variable Insurance Products Fund,
Fidelity Distributors Corporation and Mutual of America Life
Insurance Company, dated as of April 30th, 1995, with revised
Schedule A
8(d)(ii). Participation Agreement among Variable Insurance Products Fund
II, Fidelity Distributors Corporation and Mutual of America Life
Insurance Company, dated as of April 30th, 1995, with revised
Schedule A
9. Memorandum regarding Issuance, Face Amount, Increase, Transfer and
Redemption Procedures for the Policies
10. Consent of Arthur Andersen LLP
11. Consent of Jones & Blouch L.L.P.
</TABLE>
Exhibit 1(1)
Mutual of America Life Insurance Company
Meeting of the Board of Directors
June 25, 1998
Separate Account for Variable Contracts
RESOLVED, that a unit investment trust separate account, which shall be known as
Mutual of America Separate Account-3 (SA-3) or such other name as management
deems appropriate, be and it hereby is, established in accordance with Section
4240 of the New York Insurance Law, as amended, for the purpose of providing an
investment medium for such variable contracts including individual and group
life policies, annuities and funding agreements as may be designated as
participating therein. Any such account shall receive, hold, invest and reinvest
only the monies arising from: (i) contributions made pursuant to the variable
contracts participating therein, (ii) such assets of the Company as it shall
deem appropriate to be invested to facilitate the commencement of operations or
comply with minimum capital requirements required by law or in the same manner
as the assets applicable to its reserve liability under such participating
contracts, and (iii) any dividends, interest, gains or other earnings produced
by the foregoing; and
RESOLVED, that the following be approved and authorized:
(a) Establishment of Mutual of America Separate Account-3 (SA-3) as a unit
investment trust, with one or more subaccounts each of which will invest
or reinvest in the shares of one or more investment companies registered
under the Investment Company Act of 1940 ("1940 Act") including Mutual of
America Investment Corporation, investment companies currently being
utilized by the Company in its other separate accounts, and in portfolios
of such other investment company or companies as the Board shall from time
to time approve;
(b) Registration and maintenance of: (i) such account as a unit investment
trust under the 1940 Act, and (ii) all contracts participating in such
account under the Securities Act of 1933 ("1933 Act") to the extent such
registration shall be necessary or deemed desirable by the Chairman of the
Board, President or their designee;
(c) Action by the proper officers to sign and file, or cause to be signed and
filed with the Securities and Exchange Commission (SEC), the following
with respect to SA-3: (i) a registration statement on behalf of SA-3 as
registrant under the 1940 Act and amendments thereto (Investment Company
Act Registration), (ii) one or more applications for an order under
Section 6(c) of that Act, and requests for no-action or interpretive
letters with respect to that Act or the rules and regulations thereunder,
as may be necessary, desirable or appropriate (Investment Company Act
Application) and (iii) periodic and other reports under the 1940 Act or
1933 Act;
(d) Action by the proper Officers to sign and file, or cause to be filed with
the SEC, on behalf of SA-3 as registrant and the Company, as depositor, a
registration statement for the offering and sale of SA-3 contracts under
the 1933 Act (Securities Act Registration);
<PAGE>
(e) Signature of any Director or Officer required by law to affix his or her
signature to such Investment Company Act Registration, Investment Company
Act Application or Securities Act Registration or any amendment thereof,
or any periodic reports or documents may be affixed by such Director or
Officer personally or by an attorney in-fact duly constituted in writing
by such Director or Officer to sign his or her name thereto;
(f) Provision by the Company or any of its subsidiaries, as may be necessary
or appropriate to such separate account of the following services:
(i) Administrative, actuarial and legal functions other than sales or
marketing in connection with the writing of and securing of state
approvals of any variable contracts which are designated by the
Company as participating in SA-3 or any other such account, together
with the issuance, installation, service, administration and payment
of any such contracts. Any charges for such services to be asset
charges, front-end charges, or back-end charges, or any combination
thereof, all as specified in the various participating contracts;
(ii) Assumption of whatever insurance or mortality risks and/or expense
guarantees may be provided by the contracts so participating in
consideration of any asset and/or other charges specified in said
contracts;
(iii) Sales, distribution and marketing services, including acting as
principal underwriter for participating contracts; in accordance
with and appropriate Underwriting Agreement;
(iv) Such other services and functions as may be deemed by the Officers
to be necessary, desirable or appropriate;
(v) That the foregoing authorizations: (1) be subject to the approval by
the Chairman of the Board, President, or their designee, of all
charges, rates of compensation and other specifications in all
contracts or agreements or arrangements entered into with any such
account, and (2) include authority to the Officers to make such
later changes or modifications in any of said contracts, or
agreements, or arrangements as may be necessary, desirable or
appropriate to meet the requirements of the 1940 Act or any other
applicable law and the regulations issued thereunder;
(g) The Officers of the Company are authorized to enter into such contracts as
are appropriate with its subsidiaries to carry out these purposes;
(h) Development of variable contracts for participation in said account or
accounts, with such specifications, changes or modifications as may be
approved by the Chairman of the Board, President, or their designee, and
the filing to the extent required of such contracts and all applications
and other forms relating thereto with appropriate state agencies;
(i) Allocation by the Company to SA-3 and to any other account created
pursuant to the foregoing authorizations of such amount as may be required
by the federal or state law and
<PAGE>
as the Chairman of the Board, President, or their designee, may deem
appropriate for the initial funding of each such account, said allocation
to be made and withdrawn in accordance with the applicable requirements or
approved procedures of the New York Insurance Department;
(j) Action by the proper officers to obtain all requisite authorizations,
approvals and licenses from the State of New York, and all other states,
or the District of Columbia or the Virgin Islands, as they deem necessary
or desirable; and
(k) The doing by the Officers of all acts and things from time to time
necessary, desirable or appropriate to be done in order to effectuate the
purposes of the foregoing authorizations or any of them.
FURTHER RESOLVED, that the appropriate Officers of the Company be, and they
hereby are, authorized to establish one or more additional separate accounts in
accordance with the same provisions as are set forth in the preceding
paragraphs, except that the designation of any such additional account shall be
determined by the Officers.
Exhibit 1(5)(a)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE, NEW YORK, NY 10022 (212) 224-1600
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
We will pay Proceeds and provide all other benefits and rights in accordance
with the provisions of this policy. The provisions of this page and the
following pages are part of the policy. A summary of the policy appears on page
3.
PLEASE READ YOUR POLICY CAREFULLY; IT IS A LEGAL CONTRACT BETWEEN YOU AND US.
This policy is issued in consideration of the application for this policy and
payment of the first premium, as required.
RIGHT TO EXAMINE POLICY. As the policy owner, you may examine this policy and,
if for any reason you are not satisfied with it, you may cancel it by returning
this policy, along with a written request for cancellation, to us within [10]
days after you receive it. Upon such cancellation, we will refund any premiums
that were paid on this policy.
Signed for MUTUAL OF AMERICA LIFE INSURANCE COMPANY:
/s/Mary-Clare Swanke /s/ Thomas J. Moran
- -------------------------------- -------------------------------------
Vice President President and Chief Executive Officer
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
o FLEXIBLE PREMIUMS PAYABLE UNTIL MATURITY DATE OR INSURED'S DEATH
o PROCEEDS PAYABLE UPON SURRENDER OF POLICY, MATURITY DATE OR INSURED'S
DEATH
o PARTICIPATING POLICY
o COVERAGE TO MATURITY DATE NOT GUARANTEED
ASSETS HELD IN CONNECTION WITH THIS POLICY MAY BE HELD IN OUR GENERAL ACCOUNT
AND/OR THE SEPARATE ACCOUNT THAT WE MAINTAIN IN CONNECTION WITH THIS POLICY AND
CERTAIN OTHER POLICIES. THE ASSETS OF THE SEPARATE ACCOUNT ARE NOT GUARANTEED AS
TO FIXED DOLLAR AMOUNTS AND WILL INCREASE OR DECREASE IN VALUE BASED UPON THE
INVESTMENT RESULTS OF THE SEPARATE ACCOUNT. A DESCRIPTION OF THE SEPARATE
ACCOUNT APPEARS IN THE "INVESTMENTS" SECTION OF THIS POLICY.
THE AMOUNT OF THE DEATH BENEFIT AND DURATION OF COVERAGE MAY BE FIXED OR
VARIABLE AS DESCRIBED IN THE "DEATH BENEFIT" SECTION OF THIS POLICY.
<PAGE>
Table of Contents
1 POLICY SPECIFICATIONS .................................................... 2
2 POLICY SUMMARY ........................................................... 5
3 DEFINITIONS .............................................................. 6
4 POLICY OWNER AND BENEFICIARY ............................................. 8
5 PREMIUMS ................................................................. 9
6 INTEREST ACCUMULATION AND INVESTMENTS .................................... 11
7 ACCOUNT VALUE ............................................................ 13
8 TRANSFERS ................................................................ 14
9 CHARGES .................................................................. 15
10 DEATH BENEFIT ........................................................... 17
11 ACCELERATED DEATH BENEFIT ............................................... 20
12 MATURITY BENEFIT ........................................................ 22
13 SURRENDER OF POLICY ..................................................... 23
14 CHANGES IN EXISTING COVERAGE ............................................ 24
15 POLICY LOANS ............................................................ 25
16 GENERAL PROVISIONS ...................................................... 27
17 INCOME PAYMENT OPTIONS .................................................. 30
18 BASIS OF COMPUTATION .................................................... 35
19 APPENDIX ................................................................ 36
Page 1
<PAGE>
Section 1 - POLICY SPECIFICATIONS
POLICY NUMBER: [000-000E]
POLICY OWNER: [John A. Doe]
POLICY DATE: [July 1, 1999]
ISSUE DATE: [July 15, 1999]
INSURED: [Jane A. Doe] INITIAL AMOUNT OF
INSURANCE: [$100,000]
INSURED'S AGE AT ISSUE: [25] METHOD OF PREMIUM
PAYMENT: [Monthly]
INSURED'S SEX: [Female]
PREMIUM CLASS: [Standard]
BASIC DEATH BENEFIT PLAN: [Face Amount Plan]
INITIAL POLICY LOAN
VARIABLE INTEREST RATE: [January 1, 1999 - December 31, 1999: X.XX%]
THEREAFTER - MAXIMUM PERMITTED BY LAW
INTEREST RATE ON INTEREST ACCUMULATION ACCOUNT FOR -
FUNDS NOT BORROWED:
CURRENT RATE AT ISSUE: [3%]
GUARANTEED MINIMUM RATE: 3%
FUNDS BORROWED: Policy Loan interest rate minus 2%, but not less than the
Guaranteed Rate of Interest.
INTEREST RATES SHOWN ON THIS PAGE ARE EFFECTIVE ANNUAL RATES.
GUARANTEED MAXIMUM ADMINISTRATIVE CHARGE: $10 per month
GUARANTEED MAXIMUM SEPARATE ACCOUNT CHARGE, EXCLUSIVE OF EXPENSE AND MORTALITY
RISK CHARGE:
0.65% annually of the net assets of each Investment Fund of the Separate
Account.
Page 2
<PAGE>
POLICY SPECIFICATIONS (continued)
POLICY NUMBER: [000-000E]
SCHEDULE OF BENEFITS AND PREMIUMS
SCHEDULED PREMIUM NUMBER OF YEARS
PAYABLE PREMIUMS PAYABLE
[$100] [75]
POLICY MINIMUMS POLICY MAXIMUMS
AMOUNT OF INSURANCE: [$25,000] [$1,000,000]
CHANGE IN AMOUNT OF [$5,000] [Subject to Policy Maximums]
INSURANCE:
UNSCHEDULED PREMIUM: [$50.00] [$10,000(Annually)]
SCHEDULED PREMIUM: [$50.00] [Subject to Amount of
Insurance]
Page 3
<PAGE>
POLICY SPECIFICATIONS (continued)
POLICY NUMBER: [000-000E]
TABLE OF GUARANTEED INSURANCE RATES PER $1,000
INSURED'S MONTHLY INSURED'S MONTHLY INSURED'S MONTHLY
ATTAINED AGE RATE ATTAINED AGE RATE ATTAINED AGE RATE
0 0.16 35 0.14 70 1.93
1 0.07 36 0.15 71 2.12
2 0.07 37 0.16 72 2.37
3 0.06 38 0.18 73 2.66
4 0.06 39 0.19 74 3.00
5 0.06 40 0.21 75 3.37
6 0.06 41 0.23 76 3.78
7 0.06 42 0.25 77 4.22
8 0.06 43 0.27 78 4.69
9 0.06 44 0.29 79 5.21
10 0.06 45 0.31 80 5.80
11 0.06 46 0.33 81 6.48
12 0.06 47 0.35 82 7.26
13 0.06 48 0.37 83 8.15
14 0.07 49 0.40 84 9.12
15 0.07 50 0.43 85 10.17
16 0.08 51 0.46 86 11.30
17 0.08 52 0.49 87 12.49
18 0.08 53 0.53 88 13.76
19 0.09 54 0.57 89 15.10
20 0.09 55 0.61 90 16.54
21 0.09 56 0.65 91 18.11
22 0.09 57 0.69 92 19.86
23 0.09 58 0.72 93 21.91
24 0.10 59 0.77 94 24.56
25 0.10 60 0.82 95 28.37
26 0.10 61 0.88 96 34.43
27 0.10 62 0.96 97 44.70
28 0.11 63 1.05 98 61.90
29 0.11 64 1.16 99 83.20
30 0.11 65 1.27
31 0.12 66 1.39
32 0.12 67 1.51
33 0.13 68 1.63
34 0.13 69 1.77
Page 4
<PAGE>
Section 2 - POLICY SUMMARY
The purpose of this summary is to help you to understand this policy. This
summary does not change, and is not intended as a substitute for, any of the
policy provisions.
This is a variable universal life insurance policy. Subject to the policy
requirements stated herein, you can:
(a) increase or decrease the amount of insurance;
(b) make premium payments at any time and in any amount;
(c) change the death benefit option;
(d) change the allocation of premiums among your interest or investment
options;
(e) transfer and withdraw amounts from your interest or investment options;
and
(f) receive part of the death benefit as an Accelerated Benefit Payment, if
the insured becomes terminally ill and you request such payment.
This policy provides that the Account Value may be either fixed or variable or a
combination of fixed and variable, depending on your allocation of premiums and
on your transfer and withdrawal of amounts under the policy. You may allocate
premiums to the Interest Accumulation Account of the General Account, to one or
more of the Investment Accounts maintained in the Separate Account, or to any
combination of these accounts. Amounts held in any of the Investment Accounts of
the Separate Account support the benefits provided by the variable portion of
this policy. Any portion of the Account Value arising from any of these
Investment Accounts of the Separate Account is not guaranteed and will vary with
the investment performance of that Investment Account.
Each month before the Maturity Date, we will deduct charges under this policy.
If on any Monthly Anniversary Day, the Account Value, before the deduction of
charges, is not enough to cover the charges, there is a grace period during
which you may pay a premium to cover the charges. If you do not pay the amount
before the grace period is over, the policy will lapse. The policy does provide
for reinstatement under certain circumstances. In addition, sufficient premiums
must be paid to continue the amount of insurance in force.
Proceeds are the amounts that become payable under the policy. Such amounts will
be paid upon the surrender or maturity of the policy or upon due proof of the
death of the insured, and are described in detail in the policy.
Coverage under this policy will end on the first to occur of the following
dates: the date the policy is surrendered in full; the insured's date of death;
the Maturity Date; or the end of the grace period, if the amount needed to keep
the policy in effect is not paid to us in time.
Page 5
<PAGE>
Section 3 - DEFINITIONS
ACCELERATED BENEFIT PAYMENT
The amount we calculate as payable to you as an accelerated death benefit.
ACCOUNT VALUE
An amount equal to the total current value, as of a given date, of the Interest
Accumulation Account and the Investment Accounts maintained for you under this
policy. Determination of Account Value is described in the "Account Value"
section of this policy.
BUSINESS DAY
Any day on which we are open for business and the New York Stock Exchange is
open for trading. For purposes of determining a Valid Transaction Date, our
Business Day will end as of the close of business of the New York Stock Exchange
(normally 4:00 p.m. Eastern Time).
CODE
The Internal Revenue Code, as amended, or any corresponding provisions of future
United States revenue laws.
GUARANTEED RATE OF INTEREST
The minimum effective annual rate of interest, as shown in the Policy
Specifications, which is to be credited to the Interest Accumulation Account of
the General Account.
INSURED'S AGE
The insured's age last birthday on the Policy Date as shown in the Policy
Specifications. The insured's Attained Age at any time is the age on the Policy
Date plus the number of successive twelve month periods elapsed since the Policy
Date.
INTEREST ACCUMULATION ACCOUNT
The Interest Accumulation Account of the General Account.
INVESTMENT ACCOUNT(S)
Accounts through which you may allocate amounts to the Investment Funds of the
Separate Account.
INVESTMENT COMPANY
Mutual of America Investment Corporation, a diversified, open-end investment
company.
INVESTMENT FUND(S)
Subaccounts of the Separate Account to which funds held in the Investment
Account may be allocated.
ISSUE DATE
The date as of which the policy is issued as shown in the Policy Specifications.
MATURITY DATE
The Policy Anniversary on which the insured's Attained Age equals 100.
MONTHLY ANNIVERSARY DAY
The same day each month as the day on which the Policy Date occurred.
POLICY ANNIVERSARY
The day each calendar year which is the anniversary of the Policy Date.
POLICY DATE
The effective date of the policy as shown in the Policy Specifications. The
policy goes into effect as of 12:01 a.m. on the Policy Date.
Page 6
<PAGE>
POLICY LOAN
The outstanding principal and unpaid accrued interest for any loan in effect
under this policy.
POLICY MONTH
The period beginning on the Policy Date or any Monthly Anniversary Day and
ending immediately before the next Monthly Anniversary Day.
POLICY YEAR
The twelve month period beginning on (a) the Policy Date, or (b) each Policy
Anniversary.
PROCEEDS
The amount we will pay upon (a) surrender of the policy, (b) the death of the
insured, or (c) the Maturity Date. Proceeds are payable in a lump-sum or under
an optional payment plan described in the "Income Payment Options" section of
this policy.
PROCESSING OFFICE
Our office at the address shown on the cover page of this policy, or such other
location as we may announce by advance written notice to you.
SEPARATE ACCOUNT
Mutual of America Separate Account No. 3, as further described in the "Interest
Accumulation and Investments" section of this policy, which is (a) maintained by
us under the laws of New York State, and (b) registered with the Securities and
Exchange Commission under the Investment Company Act of 1940.
UNDERLYING INVESTMENT COMPANY(IES)
A management investment company(ies) registered under the Investment Company Act
of 1940 that has (have) at least one fund or portfolio in which the Separate
Account invests.
VALID TRANSACTION DATE
The Business Day on which all of the requirements for the completion of a
transaction have been met. This includes receipt by us of all information,
remittances, notices and papers necessary to process the given transaction. If
such requirements are met on a day that is not a Business Day, or after the
close of a Business Day, the Valid Transaction Date will be the next following
Business Day.
VALUATION DAY
For each Investment Fund of the Separate Account, each day the New York Stock
Exchange is open for business, or any other day on which a share value is
declared by the applicable investment company for that investment company's
shares in which the given Investment Fund of the Separate Account is invested.
VALUATION PERIOD
A period beginning at the close of business on each Valuation Day and ending at
the close of business on the next Valuation Day.
WE, OUR, US
Mutual of America Life Insurance Company, its successors or assigns.
YOU, YOUR
The policy owner.
Page 7
<PAGE>
Section 4 - POLICY OWNER AND BENEFICIARY
POLICY OWNER
The policy owner and the insured are named in the Policy Specifications. They
need not be the same person. As the policy owner, you have the following rights
during the insured's lifetime; you can:
(a) take out a Policy Loan;
(b) assign the policy as collateral security;
(c) withdraw all or part of the Account Value minus any Policy Loans;
(d) allocate to or transfer between and among the Interest Accumulation
Account and the Investment Accounts;
(e) change the owner of the policy;
(f) change the beneficiary of the policy;
(g) name a contingent policy owner who will become the policy owner if you die
while the policy is in effect (If you have not named a contingent owner,
your estate will become the owner of the policy.); and
(h) receive part of the death benefit as an Accelerated Benefit Payment, if
the insured becomes terminally ill and you request such payment.
BENEFICIARY
You can name one or more primary and contingent beneficiaries. Your original
selections are shown in the application for this policy. You can change the
beneficiary while the policy is in effect.
Unless you or the beneficiary choose an optional payment plan, the Proceeds
payable at the insured's death will be paid in a lump sum to the primary
beneficiary. If the primary beneficiary dies before the insured, the Proceeds
will be paid to the contingent beneficiary. If more than one beneficiary has
been named in either class, the Proceeds will be paid in equal shares to the
survivors in the appropriate beneficiary class, unless you have requested
otherwise. If no beneficiary survives the insured, the Proceeds will go to you,
if living, or to your estate, if you are deceased. Any beneficiary's interest is
subject to the rights of any assignee of whom we have been notified.
Before making a payment, we reserve the right to verify any relevant facts about
the beneficiaries.
CHANGING THE POLICY OWNER OR BENEFICIARY
Any designation or change of policy owner or beneficiary shall be by written
notice filed with us at our Processing Office in a form satisfactory to us. Upon
receipt of such notice by us, such designation or change shall take effect as of
the date the notice was signed, whether or not the insured is living at the time
of receipt, but without prejudice to us by reason of any payment made by us
before receipt of said notice.
Page 8
<PAGE>
Section 5 - PREMIUMS
PREMIUM PAYMENTS
Scheduled premiums are shown in the Policy Specifications. The first premium
payment is due on the Policy Date shown in the Policy Specifications. The
scheduled premium payment intervals are shown under the Method of Premium
Payment in the Policy Specifications; however, premiums after the first may vary
as to amount, timing and frequency. We will send you premium notices based on
the scheduled premiums.
You may change the amount of the scheduled premiums, subject to our right to
limit the amount of any increase or decrease.
You may also make unscheduled premium payments at any time if (a) this policy is
then in effect, and (b) the unscheduled premium payments are within the minimum
and maximum limits shown in the Policy Specifications.
The scheduled premium initially shown on the Policy Specifications page may not
continue the policy in force to the Maturity Date even if the amount is paid as
scheduled. The period for which the policy will continue will depend on:
(a) the amount, timing, and frequency of premium payments;
(b) changes in the amount of insurance and death benefit option;
(c) changes in the Account Value and insurance costs;
(d) changes in the deductions for riders, if any;
(e) withdrawals and loans.
PREMIUM LIMITS
Total scheduled and unscheduled premium payments will be limited so that this
policy will continue to be qualified as a life insurance policy under the Code.
To maintain such tax qualification, we will refuse to accept any further premium
payments when the sum of your payments has reached this limit. In such event, we
will return any excess premium.
We may require evidence satisfactory to us that the insured is insurable before
accepting any unscheduled premium or allowing any increase in scheduled premium.
Such evidence will be required if the unscheduled premium, or increase in
scheduled premium, would increase the basic death benefit as a result of the
corridor percentages described in the "Death Benefit" section of this policy.
PREMIUM ALLOCATION
You have the right to designate the percentage of premiums that is to be
allocated to the Interest Accumulation Account or to any of the Investment
Accounts. We will allocate all premiums paid under this policy in the manner you
designate. Such allocation for the Interest Accumulation Account or a given
Investment Account must be shown as a percentage of the total premium, using any
whole percentage up to 100%. The sum of such allocation percentages at any one
time must equal 100% of the premium then being paid.
Any premium allocated to the Interest Accumulation Account and/or to an
Investment Account will be credited as of the Valid Transaction Date.
You may at any time change how premiums are allocated under this policy. A
request for such change must be made in a manner satisfactory to us. No change
of allocation will be effective until the request for change has been received
and recorded by us. All premiums paid on or after the effective date of the
change will be allocated in the manner requested.
APPLICABLE TAX
Anything in the foregoing provisions of this section to the contrary
notwithstanding, we reserve the right to deduct from premiums received the
amount of any premium tax or other applicable tax. Such deduction will be made
before any allocation of such premiums among the Interest Accumulation Account
and the Investment Accounts.
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<PAGE>
GRACE PERIOD
On any Monthly Anniversary Day, the Account Value, as reduced by any Policy
Loans, might be less than zero after the monthly deduction described in the
"Charges" section of this policy. If this occurs, a 61-day grace period will
begin on that Monthly Anniversary Day. This policy will remain in effect during
the grace period. We will mail a notice to you and any assignee on our records
showing the minimum payment amount required to keep the policy in effect. If the
required amount is not received by us by the end of the grace period, the policy
will lapse and have no value.
If the insured dies during the grace period, any Proceeds due will be reduced by
any overdue monthly deduction.
POLICY REINSTATEMENT
This policy can be reinstated during the insured's lifetime if all of the
following conditions are met:
(a) The policy lapsed because the grace period ended without the required
payment having been made.
(b) The policy is reinstated within three years of the end of the grace
period.
(c) The policy has not been surrendered for payment of its surrender Proceeds.
(d) We receive from you evidence that the insured is insurable by our
standards.
(e) You pay, at time of reinstatement, premiums sufficient to keep the policy
in effect for at least two months.
(f) You pay any insurance charges not paid during the grace period.
(g) We approve the reinstatement.
The reinstatement will become effective on the date it is approved by us. The
Account Value on the effective date of reinstatement will be whatever the
premium paid at such time will provide.
Page 10
<PAGE>
Section 6 - INTEREST ACCUMULATION AND INVESTMENTS
TYPES OF ACCOUNTS
The Company will maintain the Interest Accumulation Account and the Investment
Accounts under the policy as listed in the Appendix.
GENERAL ACCOUNT
All amounts allocated to the Interest Accumulation Account will become part of
our general assets which are held in our General Account. Amounts allocated to
the Interest Accumulation Account will be credited with interest at the current
rate of interest described below. Such interest will be credited daily and
compounded annually.
The current rate of interest will be the rate we declare from time to time for
the class of policies to which this policy belongs. Such rate may be different
for those portions of the Interest Accumulation Account representing borrowed
and unborrowed amounts. In no event will the current rate of interest be less
than a daily rate based on the Guaranteed Rate of Interest. The current rate of
interest as of the Policy Date is shown in the Policy Specifications. If it is
later changed, we will send you notice of that change. The interest rate at
which borrowed amounts in the Interest Accumulation Account will be credited
will be the policy loan interest rate, as described in the "Policy Loans"
section of this policy, less 2%, but in no event a rate less than the Guaranteed
Rate of Interest.
The current rate of interest means that if $1.00 is kept on deposit for an
entire calendar year at the declared rate it will earn interest at that rate
computed on the sum of the $1.00 and any accrued interest.
SEPARATE ACCOUNT
All amounts allocated to Investment Accounts will become part of the Separate
Account. The Separate Account is an investment vehicle which we maintain
separately from our General Account, and to which a portion of our assets in
connection with this and certain other policies may be allocated.
The Separate Account consists of Investment Funds that invest in corresponding
funds or portfolios of Underlying Investment Companies.
The assets of each Investment Fund of the Separate Account are our property
exclusively. We will not be considered a trustee of those assets for the benefit
of any person allocating amounts to the Separate Account.
All income, gains and losses of an Investment Fund of the Separate Account will
be credited to or charged against that Investment Fund without regard to our
other income, gains or losses. The assets of each Investment Fund of the
Separate Account are not chargeable with any liabilities arising out of any
other business we may conduct. If the assets of an Investment Fund of the
Separate Account exceed such Investment Fund's reserves and other liabilities,
we may, in our sole discretion, transfer the excess assets either to another
Investment Fund of the Separate Account or to our General Account.
SEPARATE ACCOUNT VALUATION
The asset value of each Investment Fund of the Separate Account is the total
value of the shares owned in the corresponding fund or portfolio of the
Underlying Investment Company. Such asset value will increase or decrease in
keeping with the results of such investment during each Valuation Period.
We calculate the asset value of an Investment Fund of the Separate Account by
reference to Accumulation Unit, Accumulation Unit Value and Accumulation Unit
Value Change Factor, which are explained as follows:
(a) Accumulation Unit: Each Investment Fund of the Separate Account is
maintained in Accumulation Units. The number of Accumulation Units will
change based on any amounts allocated to, or withdrawn, deducted or
transferred from each such Investment Fund during each Valuation Period.
The number of Accumulation Units to be credited or charged to each such
Investment Fund at the end of each Valuation Period is equal to (i) the
net amount allocated, withdrawn or transferred with respect to such
Investment Fund during that Valuation Period, divided by (ii) the
Accumulation Unit Value for that Valuation Period.
(b) Accumulation Unit Value: Each Investment Fund of the Separate Account has
its own distinct Accumulation Unit Value which will change for each
Valuation Day to reflect the investment results of that Investment Fund on
that Valuation Day. For any Valuation Period the Accumulation Unit Value
is (i) the Accumulation Unit Value applicable to that Investment Fund for
the preceding Valuation Period,
Page 11
<PAGE>
multiplied by (ii) the Accumulation Unit Value Change Factor for that
Investment Fund for the current Valuation Period.
(c) Accumulation Unit Value Change Factor: For any Valuation Period, the
Accumulation Unit Value Change Factor for each Investment Fund of the
Separate Account is (i) divided by (ii), where:
(i) is the ratio of (A) the asset value of the Investment Fund at the
end of the current Valuation Period before any amounts are allocated
to, or withdrawn, deducted or transferred from, that Investment Fund
during that Valuation Period, to (B) the asset value of that
Investment Fund at the end of the preceding Valuation Period after
any change in the number of Accumulation Units for the Period; and
(ii) is 1.00 plus the total of all Separate Account charges, as described
in the "Separate Account Charge" provision of the "Charges" section
of this policy, for the number of days from the end of the preceding
Valuation Period to the end of the current Valuation Period.
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<PAGE>
Section 7 - ACCOUNT VALUE
ACCOUNT VALUE
The Account Value of this policy at any time is the total current value of the
Interest Accumulation Account and the Investment Accounts, determined as the sum
of (a) and (b) following:
(a) The current value of the Interest Accumulation Account, which is equal to
(i) the total of all amounts allocated under this policy to the Interest
Accumulation Account, plus (ii) all interest accrued thereon, minus (iii)
the sum of any withdrawals or transfers under this policy from the
Interest Accumulation Account and all charges deducted from the Interest
Accumulation Account pursuant to the "Charges" section of this policy.
(b) The current value of any Investment Account associated with an Investment
Fund of the Separate Account on any Valuation Day, which is equal to (i)
the number of Accumulation Units credited to the policy for that
Investment Account on that Valuation Day, multiplied by (ii) the
Accumulation Unit Value for that Investment Fund for the Valuation Period
which includes that Valuation Day.
Amounts allocated to any Investment Account associated with an Investment
Fund of the Separate Account will credit this policy with Accumulation
Units. On any Valuation Day when an amount is allocated to, or withdrawn,
transferred or deducted from such Investment Account, the number of
Accumulation Units to be credited to or charged against this policy will
be (i) the amount so allocated, withdrawn, transferred or deducted,
divided by (ii) the Accumulation Unit Value for the specified Investment
Fund for the current Valuation Day. The number of Accumulation Units
credited to such Investment Account on any Valuation Day will be (i) the
sum of any Accumulation Units credited to that Investment Account, minus
(ii) the sum of any Accumulation Units charged against that Investment
Account.
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Section 8 - TRANSFERS
RIGHT TO TRANSFER
You may transfer all or any part of the Account Value, excluding amounts in the
Interest Accumulation Account representing any Policy Loans, between and among
the Interest Accumulation Account and any of the Investment Accounts.
REQUEST
All requests for transfer must be made in a manner satisfactory to us, including
specification of the Interest Accumulation Account or the Investment Accounts
involved. Requests for transfer will be effective on their Valid Transaction
Dates.
AMOUNT OF TRANSFER
The amount to be transferred may be designated as (a) a dollar amount, (b) a
number of Accumulation Units, if the source is an Investment Account associated
with an Investment Fund of the Separate Account, or (c) any whole percentage of
the value of the selected Interest Accumulation Account or Investment Account.
The amount to be transferred from the Interest Accumulation Account or any
Investment Account will be the lesser of (a) the amount requested, or (b) the
amount as of the date of transfer, (i) in the Interest Accumulation Account,
that exceeds any amount therein representing Policy Loans, and (ii) in the case
of any Investment Account, that is then in such Investment Account.
EFFECT OF TRANSFER
A transfer involving the Interest Accumulation Account will result in a change
in the dollar amount of the Interest Accumulation Account. A transfer involving
an Investment Account associated with an Investment Fund of the Separate Account
will result in a change in the number of Accumulation Units credited to this
policy for that Investment Account. Any amount transferred between the Interest
Accumulation Account and the Investment Accounts or between the Investment
Accounts will be allocated to the receiving Interest Accumulation Account or
Investment Account on the date of transfer.
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Section 9 - CHARGES
MONTHLY DEDUCTION
The monthly deduction is the amount by which the Account Value immediately
before such deduction is reduced on the Policy Date and on each Monthly
Anniversary Day. This will be done in accordance with a uniform policy
established by us for the class of policies to which this policy belongs. The
monthly deduction will be equal to the sum of
(a) the cost of insurance as described in this policy;
(b) the administrative charge as described in this policy; and
(c) the cost of any rider, as described in the rider itself.
COST OF INSURANCE
The cost of insurance, as determined and deductible on each Monthly Anniversary
Day, is equal to the product of (a) and (b) as follows:
(a) An amount equal to the basic death benefit minus the Account Value as of
the Monthly Anniversary Day.
(b) An amount equal to the cost per $1,000 of insurance rate divided by
$1,000.
The cost of insurance is computed separately for the initial amount of insurance
and each increase in the amount of insurance. Additionally, the cost of
insurance rates are determined separately for the initial amount of insurance
and each increase in the amount of insurance. The cost of insurance rates are
based on the Insured's Age and sex at the beginning of the Policy Year, and on
the applicable premium class. For the initial amount of insurance, the premium
class on the policy's Issue Date will be used. For any increase in the amount of
insurance, the premium class in effect at the time of that increase will be
used.
The cost of insurance rates will be determined by us based on our estimates of
future cost factors such as mortality, investment income, expenses, and the
length of time policies stay in force. The cost of insurance rates may be
adjusted by us from time to time. Any adjustments will be made on a uniform
basis. If the insured's premium class is [standard], then the rates will never
be greater than the guaranteed rates shown in the Policy Specifications.
ADMINISTRATIVE CHARGE
A monthly charge for our administration of this policy will be deducted in
accordance with the "Monthly Deduction" provision above. This charge will be
[$2.00] per month, [but not to exceed 1/12 of 1% of the Account Value in any
month,] subject to our right to change it and to any maximums for such charge
under applicable laws and regulations. In no event, however, will this charge be
more than a maximum of $10.00 per month.
SEPARATE ACCOUNT CHARGE
The Separate Account charge is a daily charge, expressed as a percentage of the
net assets of each Investment Fund of the Separate Account. It will be obtained
through operation of the Accumulation Unit Change Factor described in the
"Separate Account Valuation" section of this policy. This charge is equal to the
sum of three subcharges which, on a daily basis, correspond to the following
annual rates:
(a) Subject to a maximum of 0.65% annually, a daily charge at the annual rate
of [0.40%] covering the expenses we incur for administration of this
policy;
(b) A daily charge at the annual rate of 0.15% for the expense risks we assume
under this policy; and
(c) A daily charge at the annual rate of 0.70% for the mortality risks we
assume under this policy.
RIGHT TO CHANGE
We reserve the right, upon advance written notice to you, to
(a) increase or decrease the charges described above under "Administrative
Charge" and under Clause (a) of "Separate Account Charge", subject to the
applicable maximums as described in those provisions; and
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(b) decrease the charge described above under Clause (c) of "Separate Account
Charge".
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Section 10 - DEATH BENEFIT
DEATH PROCEEDS
Proceeds will be payable upon due proof of the death of the insured while the
policy is still in effect. Except for any adjustments for misrepresentation,
suicide or misstatement of age and/or sex, the Proceeds will be equal to:
(a) the sum of the basic death benefit and any insurance benefits payable
under policy riders; minus
(b) the sum of any Policy Loans and any unpaid monthly deductions prior to the
date of death.
BASIC DEATH BENEFIT
The basic death benefit is one of the components used in determining the
Proceeds that are payable upon the insured's death. It depends on the plan that
is in effect at the time of the insured's death. Your original choice of plan
appears in the Policy Specifications. There are two basic death benefit plans
available under this policy, as described below:
(A) Face Amount Plan
Under this plan, the basic death benefit will be the greater of:
(1) the amount of insurance on the date of the insured's death; or
(2) the Account Value on the date of the insured's death multiplied by
the appropriate corridor percentage. The current percentages are
shown in the Corridor Percentage Chart below.
(B) Face Amount Plus Plan
Under this plan, the basic death benefit will be the greater of:
(1) the amount of insurance plus the Account Value on the date of the
insured's death; or
(2) the Account Value on the date of the insured's death multiplied by
the appropriate corridor percentage. The current percentages are
shown in the Corridor Percentage Chart below.
CORRIDOR PERCENTAGE CHART
The corridor percentage is based on the insured's Attained Age on the date of
the insured's death. We reserve the right to change these percentages in
accordance with future revisions of the Code, in order that this policy's
coverage remains qualified as life insurance.
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================================================================================
Attained Age Corridor
Percentage
- --------------------------------------------------------------------------------
40 or younger 250%
- --------------------------------------------------------------------------------
41 243
- --------------------------------------------------------------------------------
42 236
- --------------------------------------------------------------------------------
43 229
- --------------------------------------------------------------------------------
44 222
- --------------------------------------------------------------------------------
45 215
- --------------------------------------------------------------------------------
46 209
- --------------------------------------------------------------------------------
47 203
- --------------------------------------------------------------------------------
48 197
- --------------------------------------------------------------------------------
49 191
- --------------------------------------------------------------------------------
50 185
- --------------------------------------------------------------------------------
51 178
- --------------------------------------------------------------------------------
52 171
- --------------------------------------------------------------------------------
53 164
- --------------------------------------------------------------------------------
54 157
- --------------------------------------------------------------------------------
55 150
- --------------------------------------------------------------------------------
56 146
- --------------------------------------------------------------------------------
57 142
- --------------------------------------------------------------------------------
58 138
- --------------------------------------------------------------------------------
59 134
- --------------------------------------------------------------------------------
60 130
- --------------------------------------------------------------------------------
61 128
- --------------------------------------------------------------------------------
62 126
- --------------------------------------------------------------------------------
63 124
- --------------------------------------------------------------------------------
64 122
- --------------------------------------------------------------------------------
65 120
- --------------------------------------------------------------------------------
66 119
- --------------------------------------------------------------------------------
67 118
- --------------------------------------------------------------------------------
68 117
- --------------------------------------------------------------------------------
69 116
- --------------------------------------------------------------------------------
70 115
- --------------------------------------------------------------------------------
71 113
- --------------------------------------------------------------------------------
72 111
- --------------------------------------------------------------------------------
73 109
- --------------------------------------------------------------------------------
74 107
- --------------------------------------------------------------------------------
75 to 90 105
- --------------------------------------------------------------------------------
91 104
- --------------------------------------------------------------------------------
92 103
- --------------------------------------------------------------------------------
93 102
- --------------------------------------------------------------------------------
94 101
- --------------------------------------------------------------------------------
95 or older 100
================================================================================
FILING A CLAIM
We must be notified of the insured's death and of a claim for the Proceeds or
benefits payable upon such death in writing, in a form satisfactory to us, by
you, the beneficiary or a representative of the insured's estate. We must
receive the notice as soon after the insured's death as is reasonably possible.
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When we receive notice of the insured's death, we will send forms for filing
proof of loss. If we do not send these forms within fifteen (15) days after
receiving notice of the claim, a proof of loss may be filed with us in the form
of a written notice that includes the following information:
(a) the date of the insured's death;
(b) an original or certified copy of the death certificate; and
(c) sufficient information to identify the insured.
We must receive written proof of loss as soon as is reasonably possible. We
reserve the right to investigate the circumstances of the insured's death.
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Section 11 - ACCELERATED DEATH BENEFIT
REQUEST/CONDITIONS
In accordance with the provisions of this section and of the policy to which it
is a part, we will make an Accelerated Benefit Payment to you, the policy owner,
if the insured becomes terminally ill and you request such payment.
For purposes of this section, the following additional terms are here defined:
Accelerated Benefit
All or any part of the Eligible Death Proceeds you elect to have accelerated
under this provision.
Accelerated Benefit Fee
A one-time administrative fee which we charge when an Accelerated Benefit
Payment is made. Such fee will be [$250].
Eligible Death Proceeds
An amount equal to 50% of the death Proceeds that would be payable under the
policy on the Valid Transaction Date as of which we calculate the Accelerated
Benefit Payment, if such Proceeds became payable on such Date, subject to a
maximum of $200,000.
Terminal Illness
A state of health of the insured in which the insured's life expectancy is
twelve months or less. The Accelerated Benefit Payment will become payable only
if all of the following conditions have been met:
(a) We must receive at our Processing Office:
(i) the policy;
(ii) your written request, in a form acceptable to us, for payment of the
Accelerated Benefit;
(iii) the written consent, in a form acceptable to us, of the following
persons to payment of such benefit: (A) all irrevocable
beneficiaries, if any, and (B) such other interested parties as we
may specify, including the insured, a spouse, or a non-irrevocable
beneficiary; and
(iv) evidence satisfactory to us of the insured's Terminal Illness.
(b) The policy must be in force on the date of your request.
(c) The policy must have covered the insured for at least two Policy Years.
(d) The policy must not have been assigned, other than to us as security for a
policy loan.
(e) The insured's Terminal Illness must not be the consequence of
intentionally self-inflicted injuries.
(f) PROOF OF TERMINAL ILLNESS
Proof of Terminal Illness will be such evidence as we may, in our sole
discretion, determine to be acceptable. Such proof may include but is not
limited to the following:
(a) Certification of such condition by a licensed physician who has
examined the insured, who is qualified to provide such
certification, and who is neither yourself, the insured, nor a
family member of either.
(b) Evidence in the form of a second opinion or examination by a
physician we designate, any such determination to be at our expense.
(g) AMOUNT OF ACCELERATED BENEFIT PAYMENT
We will calculate the amount of the Accelerated Benefit Payment as of the
Valid Transaction Date, taking into account, as applicable, the following
factors:
(a) the amount of Accelerated Benefit you requested;
(b) the current Account Value;
(c) expected future premiums under the policy;
(d) interest at a rate determined by us;
(e) the Accelerated Benefit Fee.
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Interest, for purposes of this calculation, will be subject to a maximum
interest rate equal to the greater of (a) or (b) as follows:
(a) The then current yield on the 90 day Treasury Bills available on the
Valid Transaction Date.
(b) The then current adjustable maximum rate of interest on Policy Loans
as described in the "Loans" section of the policy.
(h) SINGLE SUM PAYMENT
If the Accelerated Benefit Payment becomes payable, we will pay it to you
in a single sum.
(i) LIMITATIONS
If the insured dies before the Accelerated Benefit Payment is paid to you,
we will instead pay the death Proceeds to the beneficiary in accordance
with the policy.
This system is not intended to result in your involuntarily having to use
death Proceeds intended to be paid to the designated beneficiary.
Therefore, an Accelerated Benefit Payment is available to you only on a
voluntary basis, which means that you are not eligible for such Payment in
the following circumstances:
(a) If you would be legally required to use such Payment to satisfy the
claims of any creditors, in bankruptcy or otherwise;
(b) If you would be required to use the Payment in order to apply for,
obtain, or retain any governmental benefit.
(j) EFFECTS ON POLICY
When we have paid the Accelerated Benefit Payment to you, the policy will
continue in force subject to the following:
(a) Amounts otherwise payable under the policy and under any riders to
it will be reduced on a basis corresponding to the percentage of the
total death Proceeds accelerated by means of the Accelerated Benefit
Payment; that is, there will be no more than a pro-rata reduction in
the amount of insurance, Account Value, Policy Loans, and any
Proceeds becoming payable thereafter.
(b) Any subsequent premiums and cost of insurance charges will be
payable on the reduced policy values that are in effect after the
payment of the Accelerated Benefit Payment.
Amounts paid as an Accelerated Benefit Payment (a) may be taxable, and (b)
may affect eligibility for governmental programs such as Medicaid. You
should therefore consult a competent tax advisor or attorney to learn the
latest tax implications before making any request for an Accelerated
Benefit.
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Section 12 - MATURITY BENEFIT
MATURITY PROCEEDS
Proceeds will be payable on the Maturity Date if the insured is still living and
the policy is still in effect. Except for any adjustments for misrepresentation
or misstatement of age and/or sex, the Proceeds will be equal to:
(a) the basic maturity benefit; minus
(b) the sum of any Policy Loans and any unpaid monthly deductions.
BASIC MATURITY BENEFIT
If the insured is living on the Maturity Date and the policy is still in effect,
the basic maturity benefit will be equal to the Account Value. If there is no
positive Account Value on the Maturity Date of the policy, then the basic
maturity benefit will be equal to zero.
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Section 13 - SURRENDER OF POLICY
REQUIREMENTS
Subject to prior satisfaction of all of the following conditions, you can
surrender this policy in part or in full:
(a) We must receive in our Processing Office the policy and a written request
in a form acceptable to us;
(b) The insured must be alive on the effective date of the surrender;
(c) The surrender must occur before the Maturity Date; and
(d) Our rules about minimum and maximum amounts of surrender must be followed.
SURRENDER PROCEEDS
Except for any adjustments for misrepresentation or misstatement of age and/or
sex, the maximum Proceeds payable upon withdrawal will be the Account Value
minus any Policy Loans.
WITHDRAWAL
If you have a Face Amount Plan, as described in the "Death Benefit" section of
this policy, we will reduce both the Account Value and the amount of insurance
by the amount of any withdrawal. The reduction in amount of insurance due to a
withdrawal will be applied in the order of the effective dates of such amounts
of insurance, the most recent first. If you have a Face Amount Plus Plan, as
described in the "Death Benefit" section of this policy, we will reduce the
Account Value by the amount of any withdrawal. We will not permit a withdrawal
to reduce the amount of insurance to less than the minimum shown in the Policy
Specifications. We will not permit a withdrawal to reduce the Account Value to
less than $100.00. The amount of any partial withdrawal cannot exceed the
Account Value less any amounts in the Interest Accumulation Account representing
Policy Loans. The amount of any withdrawal must be at least $500. We reserve the
right to limit the number of withdrawals in any one Policy Year.
FULL SURRENDER
When you surrender the policy in full, we will pay you the maximum surrender
Proceeds on the surrender date. We will make no monthly deduction on the
surrender date. All insurance benefits under this policy cease on the surrender
date.
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Section 14 - CHANGES IN EXISTING COVERAGE
You may request an increase or decrease in the amount of insurance. Such change
will become effective only if the following conditions are met:
(a) We receive at our Processing Office both the policy and your written
request in a form acceptable to us; and
(b) If the request is for an increase in amount of insurance, (i) we receive
from you evidence satisfactory to us that the insured is insurable, and
(ii) we expressly approve the increase.
The effective date of such change will be (a) for a decrease in amount of
insurance, the first Monthly Anniversary Day on or after the date we receive
your request, and (b) for an increase in amount of insurance, the date we
approve the change.
As described in the following two paragraphs, you may request a change in your
basic death benefit plan with the basic death benefit payable on the effective
date of such change remaining the same.
If you have a Face Amount Plan, you can change it to a Face Amount Plus Plan.
This will decrease the amount of insurance by the amount of the Account Value as
of the effective date of the change.
If you have a Face Amount Plus Plan, you can change it to a Face Amount Plan.
This will increase the amount of insurance by the amount of the Account Value as
of the effective date of the change. As such a change results in an increase in
the amount of insurance, we may require current evidence of insurability.
A change in your basic death benefit plan will become effective as of the first
Monthly Anniversary Day on or after we receive at our Processing Office your
written request in a form acceptable to us.
To the extent applicable, a decrease in the amount of insurance will reduce (a)
first, any prior increases in the amount of insurance in reverse of the order in
which they occurred, and (b) then, the amount of insurance under the original
application.
We can limit the amount of any increase or decrease, and the amount of insurance
cannot fall below the minimum shown in the Policy Specifications. Changes may be
made only if the policy will continue to qualify as life insurance under the
Code. If the insured is not living on the effective date of a change, the change
will not take effect.
If there is a change in your amount of insurance, we will send you a new Policy
Specifications page with the updated information.
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Section 15 - POLICY LOANS
CONDITIONS
You may request a Policy Loan on amounts held in or transferred to the Interest
Accumulation Account only.
We will grant a Policy Loan if the following prior conditions are met.
(a) We receive at our Processing Office your written loan request in a form
acceptable to us;
(b) The amount of the loan does not exceed (i) ninety-five percent (95%) of
the current value of the Interest Accumulation Account, minus (ii) any
existing Policy Loans;
(c) The amount of the loan is at least $500;
(d) The sole security for the loan is the policy;
(e) The policy is assigned to us in a form acceptable to us; and
(f) The policy is in effect.
LOAN INTEREST
The Policy Loan interest rate will be the adjustable maximum interest rate that
we can charge under applicable law. A new interest rate for Policy Loans will be
effective beginning on the January 1 next following a change in the maximum
rate.
The adjustable maximum rate of interest on Policy Loans for each policy is
determined each December 1 on or after the policy is issued.
The Policy Loan interest rate may be changed only if such maximum rate, as
described below, changes by at least 1/2 of 1%. Thus, the Policy Loan interest
rate may be increased whenever the maximum rate increases by 1/2 of 1% or more a
year; and the Policy Loan interest rate must be reduced whenever the maximum
rate decreases by 1/2 of 1% or more a year.
The adjustable maximum rate is the greater of (a) or (b) as follows:
(a) The Guaranteed Rate of Interest plus 1% per year.
(b) The Published Monthly Average for the calendar month ending two months
before the date on which the rate is determined, where Published Monthly
Average means (i) or (ii) as follows:
(i) The Term Monthly Average Corporates yield shown in Moody's Corporate
Bond Yield Averages published by Moody's Investors Service, Inc. or
any successor thereto;
(ii) If the Moody's averages are no longer published, a substantially
similar average, as established by insurance regulation in the
jurisdiction in which this policy is delivered.
Interest accrues daily and is due and payable at the end of the month in which
the loan is made and at the end of each subsequent month. Any interest not paid
when due becomes part of the policy and bears interest.
We will notify you and any assignee on our records (a) at the time a loan is
made under this policy, of the initial rate of interest on that loan, and (b) at
least 28 days in advance of an interest rate increase, of the terms of such
increase. We will also include in such notices the substance of the pertinent
policy provisions permitting an adjustable maximum interest rate, and specifying
the frequency of interest rate determinations as permitted by law. We will not
terminate this policy in a Policy Year solely as the result of a change in the
interest rate during the Policy Year, and we will maintain coverage during that
Policy Year until the time at which the policy would otherwise have terminated
if there had been no such interest change during that Policy Year.
MINIMUM PAYMENT
If the Policy Loans exceed the value of the Interest Accumulation Account and
the Investment Accounts on any Monthly Anniversary Day, the grace period
provisions, as described in the "Premiums" section of this policy, will apply
and you must pay a minimum amount. We will send notice of the minimum amount to
you, any assignee on our records, and to the insured if you are not the insured.
If you do not pay this minimum amount within the grace period, this policy will
lapse.
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REPAYMENT
You can repay Policy Loans in part or in full at any time if the insured is
living and this policy is in effect. If you do not repay a Policy Loan, it will
be deducted from the Proceeds payable at the insured's death, on maturity or on
withdrawal. The amount required to repay a Policy Loan in full is the sum of the
outstanding principal and any unpaid accrued interest on such loan.
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Section 16 - GENERAL PROVISIONS
THE CONTRACT
This policy is issued in consideration of the written application and the
payment of the first premium, as required. A copy of the application is attached
as part of this policy. This policy, including any attached applications and any
amendments now attached or later added, constitute the entire contract between
you and us.
No change to this policy will be valid without the written consent of the
President or a Vice President of Mutual of America Life Insurance Company. No
change will affect any benefits which became payable prior to the effective date
of such change.
INCONTESTABILITY
The insurance issued under this policy will not be contestable after it has been
in force during the insured's lifetime:
(a) with respect to the initial amount of insurance, for two years from the
Issue Date;
(b) with respect to each increase in the amount of insurance requiring
evidence of insurability, for two years from the effective date for that
increase; and
(c) with respect to any amount of insurance that is reinstated, for two years
from the effective date of reinstatement.
A contest of an increase in the amount of insurance or of a reinstatement will
be based only on the application for such increase or reinstatement.
SUICIDE EXCLUSION
If the insured commits suicide within two years from the Issue Date, we will pay
no more than an amount equal to:
(a) the sum of the Account Value and any insurance charges; minus
(b) the sum of any Policy Loans.
If there has been an increase in the basic death benefit requiring evidence of
insurability and if the insured commits suicide within two years from the
effective date of that increase, then with respect to that increase we will pay
no more than the insurance charges deducted for that increase. This paragraph
does not apply to any increase in the amount of insurance due solely to a change
in the basic death benefit plan.
MISSTATEMENT OF AGE OR SEX
If the Insured's Age and/or sex is misstated as shown in the Policy
Specifications, then the Proceeds payable upon the insured's death will be that
which would have been purchased by the most recent monthly deduction for the
cost of insurance on the basis of the correct age and sex.
ASSIGNMENT
You must notify us in writing if you assign the policy. No assignment will be
binding until it has been received and recorded at our Processing Office. It
will not apply to any payment made before the assignment was recorded. We will
not be responsible for its validity.
Your rights and the rights of the beneficiary may be affected by an assignment.
DEFERRED PAYMENT
We can defer, for up to six months after the Valid Transaction Date, any
transaction involving payment or transfer of an amount from the Interest
Accumulation Account.
We will make any payment or transfer affecting an Investment Account associated
with an Investment Fund of the Separate Account within seven days of its Valid
Transaction Date; except that we may defer any such transaction if (a) the New
York Stock Exchange is closed for other than usual weekends or holidays, or (b)
trading on the Exchange is restricted, as determined by the Securities and
Exchange Commission, or (c) an emergency exists, as determined by Securities and
Exchange Commission, in which disposing of securities
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is not practicable, or it is not reasonably practicable to determine the share
values of the Investment Funds of the Separate Account.
CURRENCY
Any money paid by us or payable to us must be in United States currency and is
payable at our Processing Office.
PARTICIPATING CONTRACT
This is a participating policy. Each year the Company will determine the amount
of divisible surplus, if any, to be apportioned to this policy. The amount of
any such divisible surplus will be credited to this policy as dividends.
DIVIDENDS
Dividends will be applied to increase the Account Value of this policy.
Dividends will be credited to the Interest Accumulation Account unless you
designate in the applicable form that dividends are to be allocated in whole or
part to any of the Investment Accounts.
Any dividend apportioned by not yet paid upon your death will be paid in the
same manner as the other benefits payable under this policy.
NOTICES AND REPORTS
Each calendar quarter while the policy is in effect, we will send you a report
showing the following information:
(a) the amount of insurance;
(b) the Account Value;
(c) premiums paid, interest credited, and monthly charges deducted since the
last report;
(d) the dollar value of the Interest Accumulation Account and of each of the
Investment Accounts;
(e) the Unit Value for each Investment Account associated with an Investment
Fund of the Separate Account;
(f) the amount, if any, withdrawn by you since the last such report;
(g) any Policy Loan and applicable loan interest rate;
(h) the basic death benefits effective at that time;
(i) any other information required by applicable laws, including those of the
jurisdiction in which this policy is delivered.
All notices and reports required under this policy will be deemed delivered to
the person entitled to them when they are mailed to such person at the last
known address on our records.
CHANGES TO SEPARATE ACCOUNT
Subject to applicable law, we reserve the right to:
(a) at any time add new Investment Funds or modify existing Investment Funds
in the Separate Account and have the Separate Account invest in other
investment companies;
(b) remove Investment Funds from the Separate Account or combine any two or
more Investment Funds;
(c) create additional separate accounts or combine any two or more separate
accounts, including the Separate Account;
(d) transfer the assets determined by us to be attributable to the class of
policies to which this policy belongs from the Separate Account to another
separate account of Mutual of America Life Insurance Company;
(e) cause the registration or deregistration of any of Mutual of America's
separate accounts, including the Separate Account, under the Investment
Company Act of 1940 and, if registered, the deregistration of units in
connection with the policy under the Securities Act of 1933; and
(f) operate the Separate Account or any of the Investment Funds in any other
form the law allows, including a form that allows us to select
investments.
In the event that a material change in the underlying investments of the
Separate Account results from our exercise of these rights, we will advise you
of the change.
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ADJUSTMENTS IN POLICY COST FACTORS
Adjustments in policy cost factors (interest credited, insurance deductions,
administrative charges) will be by class and based upon changes in future
expectations for such elements as: investment earnings, mortality, persistency,
expenses, and tax. Any change in policy cost factors will be determined in
accordance with procedures and standards on file with the insurance regulator of
the jurisdiction in which this policy is delivered.
The frequency with which policy cost factors for in-force policies will be
reviewed will be once every five policy years, or whenever the premiums or
factors for comparable new issues are changed. In no event, however, may the
Guaranteed Insurance Rates and the Guaranteed Rate of Interest shown in the
Policy Specifications be changed.
SURVIVAL OF PAYEE
We may require proof acceptable to us that any payee is living on any date a
payment is due to such payee under this policy. Such proof may be by personal
endorsement of the check drawn for payment or by any other means acceptable to
us.
REQUIRED INFORMATION
We must be furnished by you with any information that may reasonably be required
for the operation of this policy. Such information may be the original or
photocopy of any pertinent records. We will be fully protected in relying upon
the information furnished, even if we do not inquire as to the accuracy or
completeness of such information.
NON-WAIVER
Our rights under this policy will not be reduced or denied due to any failure on
our part to perform or insist upon the strict performance of any provision or
condition of this policy.
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Section 17 - INCOME PAYMENT OPTIONS
CHOOSING AN OPTION
Unless otherwise specified in this policy, Proceeds will be paid in one lump
sum. If the Proceeds payable upon death or maturity are paid in a lump sum,
payment will include interest from the date of such death or maturity to the
date of payment, credited at the rate then used for optional payment plan (A)
below.
However, while the insured is living, you may choose, or change the choice of,
an optional payment plan for all or part of the Proceeds that may arise from the
policy. If you do not arrange for a specific choice before the insured dies, the
beneficiary will have the right to choose an optional payment plan for all or
part of any Proceeds that become payable to such person when the insured dies.
If you do arrange for a specific choice, however, the beneficiary cannot change
it after the insured dies.
There are several rules applicable to optional payment plans:
(a) The payees under the Life Payments plan (optional payment plan (B) below)
must be natural persons.
(b) If you change a beneficiary, any optional payment plan chosen previously
will no longer be in effect unless you request in writing that it
continue.
(c) A choice or a change of optional payment plan must be sent in writing to
our Processing Office.
(d) The amount of each payment made under a given optional payment plan must
be at least $100.
(e) Once payments have commenced under any of these optional payment plans,
the option may not be changed for one with payments based on an
alternative form.
We will apply all or part of the Proceeds, in accordance with the election, to
provide the optional payment plan or plans chosen. Payments under the optional
payment plans will not be affected by the investment experience of any
Investment Account after the Proceeds are applied under such options.
OPTIONAL PAYMENT PLANS
(A) Interest Payments
We will hold an amount at interest. We will pay interest at an effective
rate of at least 3% compounded yearly ($30.00 annually, $14.89
semi-annually, $7.42 quarterly or $2.47 monthly per $1,000 of applied
account balance). We may make payments at a higher effective annual rate
of interest.
(B) Life Payments
We will make equal monthly payments for a guaranteed minimum period. If
the payee lives longer than the minimum period, payments will continue for
the lifetime of the payee. The minimum period can be either ten (10) years
or until the sum of the payments equals the amount put under this plan. If
the payee dies before the end of the guaranteed period, the amount of
remaining guaranteed payments for the minimum period will be discounted at
an effective rate of 3% compounded yearly. The discounted amounts will be
paid in one lump sum to the payee's estate unless otherwise provided. If
at any age the same monthly installment payment is paid for different
periods certain, we will deem an election to have been made for the
longest period certain which could have been elected for such age and
amount.
We must have written proof of the date of birth of the person on whose
life the settlement is based.
The attached Plan (B) table shows the monthly installments based on each
$1,000 applied. We may increase the effective annual rate of interest and
the amount of any payment.
(C) Payments for a Fixed Period
We will make payments for a period of no more than twenty-five (25) years
in annual, semi-annual, quarterly or monthly installments. Such payments
will include interest at an effective rate of 3% compounded yearly. We may
increase the effective annual rate of interest. If and while we do so, the
payments will be greater.
The attached Plan (C) table shows the installments based on each $1,000
applied.
(D) Payments of a Fixed Amount
We will make equal annual, semi-annual, quarterly or monthly payments. We
will credit the unpaid balance with interest at an effective rate of at
least 3% compounded yearly. We may increase the
Page 30
<PAGE>
effective annual rate of interest. The final payment under this option
will be any balance equal to or less than one fixed amount payment.
Page 31
<PAGE>
PLAN (B) TABLE
Monthly Installment for Each $1,000 Payable under Plan (B)
Male Payee
Period Certain Period Certain
Age 10 Yrs. 20 Yrs. Age 10 Yrs. 20 Yrs.
11 $2.90 $2.89 50 $4.36 $4.20
12 2.91 2.91 51 4.44 4.26
13 2.93 2.92 52 4.53 4.32
14 2.94 2.94 53 4.62 4.39
15 2.96 2.96 54 4.71 4.46
16 2.98 2.97 55 4.81 4.52
17 3.00 2.99 56 4.92 4.59
18 3.01 3.01 57 5.03 4.66
19 3.03 3.03 58 5.15 4.73
20 3.05 3.05 59 5.27 4.80
21 3.08 3.07 60 5.40 4.87
22 3.10 3.09 61 5.53 4.94
23 3.12 3.11 62 5.68 5.00
24 3.14 3.14 63 5.83 5.07
25 3.17 3.16 64 5.98 5.13
26 3.20 3.19 65 6.15 5.18
27 3.22 3.21 66 6.32 5.24
28 3.25 3.24 67 6.50 5.28
29 3.28 3.27 68 6.68 5.33
30 3.31 3.30 69 6.88 5.36
31 3.34 3.33 70 7.07 5.40
32 3.38 3.36 71 7.27 5.42
33 3.41 3.39 72 7.48 5.45
34 3.45 3.43 73 7.68 5.46
35 3.49 3.46 74 7.88 5.48
36 3.53 3.50 75 8.08 5.49
37 3.57 3.54 76 8.27 5.50
38 3.62 3.58 77 8.46 5.50
39 3.67 3.62 78 8.63 5.51
40 3.72 3.67 79 8.79 5.51
41 3.77 3.71 80 8.94 5.51
42 3.82 3.76 81 9.07 5.51
43 3.88 3.81 82 9.18 5.51
44 3.94 3.86 83 9.28 5.51
45 4.00 3.91 84 9.36 5.51
46 4.07 3.97 85 9.42 5.51
47 4.14 4.02
48 4.21 4.08
49 4.28 4.14
Ages younger than 11 are the same as shown for age 11, and ages older than 85
are the same as shown for age 85.
Page 32
<PAGE>
PLAN (B) TABLE (continued)
Monthly Installment for Each $1,000 Payable under Plan (B)
Female Payee
Period Certain Period Certain
Age 10 Yrs. 20 Yrs. Age 10 Yrs. 20 Yrs.
11 $2.83 $2.83 50 4.03 3.96
12 2.84 2.84 51 4.10 4.02
13 2.86 2.85 52 4.17 4.08
14 2.87 2.87 53 4.25 4.14
15 2.88 2.88 54 4.33 4.21
16 2.90 2.90 55 4.42 4.28
17 2.91 2.91 56 4.51 4.35
18 2.93 2.93 57 4.61 4.42
19 2.95 2.94 58 4.71 4.50
20 2.96 2.96 59 4.82 4.57
21 2.98 2.98 60 4.94 4.65
22 3.00 2.99 61 5.06 4.72
23 3.02 3.01 62 5.19 4.80
24 3.04 3.03 63 5.33 4.88
25 3.06 3.05 64 5.47 4.95
26 3.08 3.07 65 5.63 5.02
27 3.10 3.10 66 5.79 5.09
28 3.12 3.12 67 5.96 5.15
29 3.15 3.14 68 6.14 5.21
30 3.17 3.17 69 6.33 5.27
31 3.20 3.19 70 6.53 5.32
32 3.23 3.22 71 6.73 5.36
33 3.26 3.25 72 6.94 5.40
34 3.29 3.28 73 7.16 5.43
35 3.32 3.31 74 7.38 5.45
36 3.35 3.34 75 7.60 5.47
37 3.39 3.37 76 7.82 5.48
38 3.42 3.41 77 8.04 5.49
39 3.46 3.44 78 8.25 5.50
40 3.50 3.48 79 8.45 5.51
41 3.54 3.52 80 8.64 5.51
42 3.59 3.56 81 8.82 5.51
43 3.63 3.60 82 8.97 5.51
44 3.68 3.65 83 9.11 5.51
45 3.73 3.69 84 9.23 5.51
46 3.78 3.74 85 9.32 5.51
47 3.84 3.79
48 3.90 3.85
49 3.96 3.90
Ages younger than 11 are the same as shown for age 11, and ages older than 85
are the same as shown for age 85.
Page 33
<PAGE>
PLAN (C) TABLE
Installment for Each $1,000 Payable under Plan (C)
Multiply the Monthly Installment by 11.83895 for Annual,
by 5.96322 for Semi-Annual, or
by 2.99263 for Quarterly Installments
Years Monthly Years Monthly Years Monthly
Certain Installment Certain Installment Certain Installment
1 $84.47 11 $8.86 21 $5.32
2 42.86 12 8.24 22 5.15
3 28.99 13 7.71 23 4.99
4 22.06 14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.48
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
Page 34
<PAGE>
Section 18 - BASIS OF COMPUTATION
For insurance provided prior to the Maturity Date, we use the Commissioners 1980
Standard Ordinary Mortality Table (for male and for female, respectively) on an
age last birthday basis with the appropriate increase for substandard risk.
Interest at an effective rate of 3% compounded yearly is guaranteed. All
premiums that we refer to in this policy are based on the insured's issue age
and sex and on the length of time since the Policy Date.
The Account Value and other values in this policy are at least as large as those
required by law where it is delivered. Where required, we have given the
insurance regulator there a detailed statement of how we compute values and
benefits.
Page 35
<PAGE>
Section 19 - APPENDIX
The following Interest Accumulation Account and Investment Accounts are
available under this policy:
<TABLE>
<CAPTION>
=================================================================================================
Interest Accumulation The General Account
Account
- -------------------------------------------------------------------------------------------------
Investment Accounts Applicable Investment Medium
- -------------------------------------------------------------------------------------------------
<S> <C>
[All America Account The All America Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Money Market Account The Money Market Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Bond Account The Bond Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Composite Account The Composite Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Equity Index Account The Equity Index Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Short-Term Bond Account The Short-Term Bond Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Mid-Term Bond Account The Mid-Term Bond Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Aggressive Equity Account The Aggressive Equity Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Mid-Cap Equity Index The Mid-Cap Equity Index Fund of the Separate Account]
Account
- -------------------------------------------------------------------------------------------------
[Scudder Capital Growth The Scudder Capital Growth Fund of the Separate Account]
Account
- -------------------------------------------------------------------------------------------------
[Scudder Bond Account The Scudder Bond Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[Scudder International The Scudder International Fund of the Separate Account]
Account
- -------------------------------------------------------------------------------------------------
[American Century VP The American Century VP Capital Appreciation Fund of the
Capital Appreciation Separate Account]
Account
- -------------------------------------------------------------------------------------------------
[Calvert Social Balanced The Calvert Social Balanced Fund of the Separate Account]
Account
- -------------------------------------------------------------------------------------------------
[VIP Equity-Income Account The VIP Equity-Income Fund of the Separate Account]
- -------------------------------------------------------------------------------------------------
[VIP II Asset Manager The VIP II Asset Manager Fund of the Separate Account]
Account
- -------------------------------------------------------------------------------------------------
[VIP II Contrafund Account The VIP II Contrafund Fund of the Separate Account]
=================================================================================================
</TABLE>
Page 36
Exhibit 1(5)(b)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE, NEW YORK, NY 10022 o (212) 224-1600
This rider is attached to and made part of the policy as of the Issue Date shown
below.
In accordance with the provisions of this rider and of the policy to which it is
attached, we will issue the policy in connection with a payroll deduction
agreement between the policy owner and the Employer. The Employer is the group
that employs the policy owner.
Upon written request at any time by the policy owner to the Employer and to us
at our Processing Office, the payroll deduction agreement will be terminated.
The policy owner may continue the policy at the same premium, subject to the
requirements stated in the policy for owners remitting premiums directly to us.
As long as this rider is in force, the following provisions of the policy are
changed as follows:
1. The Table of Guaranteed Insurance Rates Per $1,000 appearing in the Policy
Specifications is replaced by the attached table.
2. In Section 16, the Misstatement of Age or Sex provision is changed to
read:
MISSTATEMENT OF AGE
If the Insured's Age is misstated as shown in the Policy Specifications,
then the Proceeds payable upon the insured's death will be that which
would have been purchased by the most recent monthly deduction for the
cost of insurance on the basis of the correct age.
3. Plan (B) Tables appearing in Section 17 are replaced by the attached
table.
4. The first paragraph of Section 18 is replaced by the following:
For insurance provided prior to the Maturity Date, we use the 1980
Commissioners Standard Ordinary-B Mortality Table on an age last birthday
basis with the appropriate increase for substandard risk. Interest at an
effective rate of 3% compounded yearly is guaranteed. All premiums that we
refer to in this policy are based on the insured's issue age and on the
length of time since the Policy Date.
This rider executed at New York, N.Y. this day of ______________________
in the year _____.
MUTUAL OF AMERICA
LIFE INSURANCE COMPANY
/s/Mary-Clare Swanke
-----------------------------
Title: Vice President
Page 1
<PAGE>
TABLE OF GUARANTEED INSURANCE RATES PER $1,000
INSURED'S MONTHLY INSURED'S MONTHLY INSURED'S MONTHLY
ATTAINED AGE RATE ATTAINED AGE RATE ATTAINED AGE RATE
0 0.21 35 0.18 70 3.11
1 0.09 36 0.19 71 3.41
2 0.08 37 0.20 72 3.76
3 0.08 38 0.22 73 4.15
4 0.08 39 0.24 74 4.59
5 0.08 40 0.26 75 5.06
6 0.07 41 0.28 76 5.55
7 0.07 42 0.30 77 6.06
8 0.07 43 0.33 78 6.59
9 0.07 44 0.35 79 7.17
10 0.07 45 0.38 80 7.81
11 0.07 46 0.41 81 8.53
12 0.08 47 0.44 82 9.34
13 0.09 48 0.48 83 10.25
14 0.10 49 0.52 84 11.24
15 0.11 50 0.56 85 12.27
16 0.13 51 0.61 86 13.36
17 0.14 52 0.66 87 14.48
18 0.14 53 0.72 88 15.64
19 0.15 54 0.79 89 16.85
20 0.15 55 0.86 90 18.13
21 0.15 56 0.93 91 19.52
22 0.15 57 1.01 92 21.06
23 0.15 58 1.09 93 22.90
24 0.14 59 1.18 94 25.34
25 0.14 60 1.29 95 28.96
26 0.14 61 1.40 96 34.83
27 0.14 62 1.53 97 44.95
28 0.14 63 1.68 98 62.07
29 0.14 64 1.84 99 83.33
30 0.14 65 2.02
31 0.15 66 2.21
32 0.15 67 2.40
33 0.16 68 2.62
34 0.17 69 2.85
Page 2
<PAGE>
PLAN (B) TABLE
Monthly Installment for Each $1,000 Payable under Plan (B)
Period Certain Period
Certain
Age 10 Yrs. 20 Yrs. Age 10 Yrs. 20 Yrs.
11 $2.83 $2.83 50 4.03 3.96
12 2.84 2.84 51 4.10 4.02
13 2.86 2.85 52 4.17 4.08
14 2.87 2.87 53 4.25 4.14
15 2.88 2.88 54 4.33 4.21
16 2.90 2.90 55 4.42 4.28
17 2.91 2.91 56 4.51 4.35
18 2.93 2.93 57 4.61 4.42
19 2.95 2.94 58 4.71 4.50
20 2.96 2.96 59 4.82 4.57
21 2.98 2.98 60 4.94 4.65
22 3.00 2.99 61 5.06 4.72
23 3.02 3.01 62 5.19 4.80
24 3.04 3.03 63 5.33 4.88
25 3.06 3.05 64 5.47 4.95
26 3.08 3.07 65 5.63 5.02
27 3.10 3.10 66 5.79 5.09
28 3.12 3.12 67 5.96 5.15
29 3.15 3.14 68 6.14 5.21
30 3.17 3.17 69 6.33 5.27
31 3.20 3.19 70 6.53 5.32
32 3.23 3.22 71 6.73 5.36
33 3.26 3.25 72 6.94 5.40
34 3.29 3.28 73 7.16 5.43
35 3.32 3.31 74 7.38 5.45
36 3.35 3.34 75 7.60 5.47
37 3.39 3.37 76 7.82 5.48
38 3.42 3.41 77 8.04 5.49
39 3.46 3.44 78 8.25 5.50
40 3.50 3.48 79 8.45 5.51
41 3.54 3.52 80 8.64 5.51
42 3.59 3.56 81 8.82 5.51
43 3.63 3.60 82 8.97 5.51
44 3.68 3.65 83 9.11 5.51
45 3.73 3.69 84 9.23 5.51
46 3.78 3.74 85 9.32 5.51
47 3.84 3.79
48 3.90 3.85
49 3.96 3.90
Ages younger than 11 are the same as shown for age 11, and ages older than 85
are the same as shown for age 85.
Page 3
Rider 1(5)(c)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE, NEW YORK, NY 10022 (212) 224-1600
ACCIDENTAL DEATH BENEFIT
This rider is attached to and made part of the policy as of the Issue Date shown
below.
In accordance with the provisions of this rider and of the policy to which it is
a part, if the insured dies as the result of Accidental Bodily Injury, we will
pay an Accidental Death Benefit to the beneficiary(ies) designated to receive
Proceeds under the policy.
For purposes of this rider, the following additional terms are here defined:
Accidental Bodily Injury
Injury which is effected, directly and independently of all other causes, by an
accident that occurs while this rider is in force, and which results in the
insured's death within 90 days from the date of the accident.
Accidental Death Benefit
The amount of benefit that is payable in the event that the insured dies as the
result of Accidental Bodily Injury. The amount of Accidental Death Benefit is
shown on the application for the policy.
EXCLUSIONS
No benefit will be payable under this rider for any Accidental Bodily Injury
occurring as the result of (a) suicide, attempted suicide or intentionally
self-inflicted injury; (b) any poison or gas voluntarily or involuntarily,
accidentally or otherwise taken, administered, absorbed, or inhaled; (c)
bacterial infection except infection occurring through or with an accidental cut
or wound; (d) disease; (e) bodily or mental infirmity; (f) declared or
undeclared war, or any act of war; (g) travel, flight or any activities in or
from any kind of aircraft except as a farepaying passenger in an aircraft
operated on a regular schedule by a common carrier for passenger service over an
established air route; (h) service in the armed forces of any country at war;
(i) police duty as a member of any military or armed forces; (j) committing or
attempting to commit a felony; or (k) drugs or alcohol.
VERIFICATION
We will have the right to examine the body of the insured and to request an
autopsy to determine the cause of death, unless prohibited by law. Such
examination or autopsy will be at our expense.
CONSIDERATION
We have issued this rider in consideration of the application and payment of the
premiums. A copy of the application is attached to the policy. The premium is
shown as part of the scheduled premium in the policy specifications and is
payable as provided in the policy. When this rider terminates, the part of the
premium that provides this benefit will no longer be payable.
TERMINATION
This rider will automatically terminate, upon the earliest of the following
events:
(a) if the required premium for this rider remains unpaid after the end of the
grace period;
(b) on the date the policy is surrendered;
(c) on the date the policy terminates; or
(d) on the Policy Anniversary on which the insured's Attained Age equals 65.
Page 1
<PAGE>
CANCELLATION
Upon written request by you, the policy owner, this rider may be canceled on any
date on which a scheduled premium is payable.
This rider executed at New York, N.Y. this _____________ day of ________________
in the year _____.
MUTUAL OF AMERICA
LIFE INSURANCE COMPANY
/s/Mary-Clare Swanke
-----------------------------
Title: Vice President
Page 2
Exhibit 1(5)(d)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE, NEW YORK, NY 10022 (212) 224-1600
LEVEL TERM INSURANCE ON CHILDREN BENEFIT
This rider is attached to and made part of the policy as of the Issue Date shown
below.
In accordance with the provisions of this rider and of the policy to which it is
a part, if a Child dies (a) prior to his or her twenty-first birthday and (b)
prior to the Policy Anniversary on which the insured's Attained Age equals 65,
while the policy is in force, we will pay the Level Term Insurance on Children
Benefit to the insured.
For purposes of this rider, the following additional terms are here defined:
Child
Any child born to or legally adopted by the insured, or any stepchild of the
insured, who is named in the application for this rider and is at least 14 days
old or becomes 14 days old and has not yet reached his or her nineteenth
birthday; and any child born to or legally adopted by the insured, or any
stepchild of the insured, after the date of application, who becomes 14 days old
and, at date of adoption, has not yet reached his or her nineteenth birthday.
Level Term Insurance on Children Benefit
The amount of benefit that is payable in the event a Child dies (a) prior to his
or her twenty-first birthday and (b) prior to the Policy Anniversary on which
the insured's Attained Age equals 65, while the policy is in force. The amount
of benefit is shown in the application for this rider. The benefit will be
payable upon receipt at our Processing Office of due proof of the Child's death,
satisfactory to us.
PAID-UP TERM LIFE INSURANCE
If the insured dies while this rider is in force, this rider will automatically
be changed to non-participating paid-up term life insurance for each Child. The
same amount of paid-up life insurance as is provided by the Level Term Insurance
on Children Benefit for that Child will be provided to that Child's twenty-first
birthday. We will pay such paid-up term life insurance to the first surviving
class of the following beneficiaries: (a) to the Child's surviving parents in
equal shares; or (b) to the child's surviving brothers and sisters in equal
shares; or (c) to the executor or administrator of the Child's estate.
Cash values and reserves of the paid-up term life insurance will be based on the
1980 Commissioners Standard Ordinary (non-smoker and smoker distinct) Tables and
3% interest.
CONVERSION
Any Level Term Insurance on Children Benefit which terminates under the
provisions of this rider, as well as any such insurance on a Child who marries,
may be converted to any plan of whole life insurance as then issued by us, as
follows:
(a) Insurance on each Child may be converted (i) on that Child's twenty-first
birthday or (ii) on the Policy Anniversary on which the insured's Attained
Age equals 65.
(b) A written request for conversion of any terminating insurance and payment
of the required premium must be received at our Processing Office before,
or within 31 days after, the date allowed for conversion, as indicated in
(a) above. The terminating insurance will not be in force during the
31-day period following the date allowed for conversion.
(c) The face amount of each new policy may not be less than our published
minimum for the plan of whole life insurance selected nor greater than
five times the amount of this rider's Level Term Insurance on Children
Benefit. We will offer for conversions at least one policy with coverage
as low as $1,000. Any new policy's suicide exclusion and contestability
periods will not continue beyond two years of the effective date of the
Child's coverage under this rider.
(d) Each new policy will become effective on the date of conversion, as
indicated in (a) above.
Page 1
<PAGE>
(e) The premium for each new policy will be at our published rate for the plan
of whole life insurance selected at the time of conversion. The premium
class indicated in the policy specifications and the age of the Child on
the date of conversion will be used to determine this rate.
CONSIDERATION
We have issued this rider in consideration of the application and payment of the
premiums. A copy of the application is attached to the policy. The premium is
shown as part of the scheduled premium in the policy specifications and is
payable as provided in the policy. When this rider terminates, the part of the
premium that provides this benefit will no longer be payable.
TERMINATION
This rider will automatically terminate, upon the earliest of the following
events:
(a) if the required premium for this rider remains unpaid after the end of the
grace period;
(b) on the date the policy is surrendered;
(c) on the date the policy terminates; or
(d) on the Policy Anniversary on which the insured's Attained Age equals 65.
Insurance on a Child under this rider will automatically terminate on such
Child's twenty-first birthday.
REINSTATEMENT
In addition to the policy provisions relating to reinstatement, this rider may
be reinstated only if each Child continues to be insurable by our standards.
INCONTESTABILITY
The insurance issued under this rider will not be contestable after it has been
in force during the insured's lifetime for two years from the effective date of
this rider.
CANCELLATION
Upon written request by you, the policy owner, this rider may be canceled on the
next Monthly Anniversary Day after such request is received at our Processing
Office.
This rider executed at New York, N.Y. this _____________ day of ________________
in the year _____.
MUTUAL OF AMERICA
LIFE INSURANCE COMPANY
/s/Mary-Clare Swanke
-----------------------------
Title: Vice President
Page 2
Exhibit 1(6)(a)
CHARTER OF MUTUAL OF AMERICA LIFE INSURANCE COMPANY
As Amended, Effective December 18, 1998
ARTICLE I NAME
The name of the Company is Mutual of America Life Insurance Company. It
was formed originally under the name of National Health & Welfare Retirement
Association, Inc. by Constitution filed with the New York State Insurance
Department on January 3, 1945. The name National Health & Welfare Mutual Life
Insurance Association, Inc. was adopted by a Certificate of Amendment filed with
the New York State Insurance Department on December 31, 1978. The name was
changed to Mutual of America Life Insurance Company by Certificate of Amendment
filed with the New York State Insurance Department as of January 1, 1984.
ARTICLE II OFFICE
The Home Office of the Company shall be located in the State of New York.
ARTICLE III PURPOSE
SECTION 1. The kind or kinds of insurance to be transacted by the Company
are those kinds specified in Paragraphs "1", "2", and "3", Subsection (a),
Section 1113, of Article 11 of the Insurance Law of the State of New York as
they may be amended from time to time, which are:
(a) Life Insurance,
(b) Annuities - funding agreements as defined by Section 3222 of the
Insurance Law of the State of New York are an included form of annuity
hereunder, and
(c) Accident and Health Insurance.
Notwithstanding the foregoing the Company may transact any kind of life
insurance, annuities, or accident and health insurance permitted to be
transacted by a mutual life insurance company under the laws of the State
of New York.
SECTION 2. In transacting the kinds of insurance business specified in
Section 1 of this Article, the Company shall be empowered to engage in such
other kind or kinds of business to the extent necessarily or properly incidental
to the kind or kinds of insurance business which the Company is authorized to
do.
SECTION 3. This Charter shall be construed to be in furtherance of and not
in limitation of the general powers expressly conferred upon, or not denied to,
mutual life insurance companies by the laws of the State of New York.
ARTICLE IV BOARD OF DIRECTORS
SECTION 1. The corporate powers of the Company shall be exercised through
a Board of Directors and through such committees of the Board of Directors and
such officers as such Board or the By-Laws of the Company shall empower.
Officers required by the By-Laws to be elected by the Board shall be
elected by the Board at a meeting held not more than 30 days after each annual
election of directors. Officers not required by the By-Laws to be elected by the
Board may be appointed by the Board or the Chief Executive Officer.
SECTION 2. The Board of Directors of the Company shall be not less than
thirteen nor more than twenty-four in number; the number of directors may be
fixed by the By-Laws, but if not so fixed, by action of the directors.
1
<PAGE>
SECTION 3. Each director shall be at least 18 years of age. At all times a
majority of the directors shall be citizens and residents of the United States,
and not less than three thereof shall be residents of New York State. All but
four shall either be members of the Company in accordance with the New York
Insurance Law, or shall be officers of member organizations, and at least two
shall be officers of the Company.
SECTION 4. The directors shall be elected by the policyholders in
accordance with the provisions of the Insurance Law of the State of New York.
Every policyholder of the Company whose insurance shall be in force for one year
shall be entitled to vote upon the election of directors without other
qualification. Such votes may be cast in person, by proxy, or by mail. The
directors shall be chosen by the plurality of the whole number of votes cast
upon the election.
SECTION 5. The election of directors shall be held upon a day designated
by the Board of Directors which shall be a working day in April.
SECTION 6. "Independent Directors" as used herein shall mean persons who
are not officers or employees of the Company or of any entity controlled by or
under common control with the Company. A majority of the total number of
directors, at least one of whom shall be an independent director, shall
constitute a quorum of directors. A number less than a quorum may meet and
adjourn from time to time until a quorum is present.
SECTION 7. A director may be removed for cause by the vote of a majority
of the remaining directors at a special meeting of the Board of Directors called
by the Chairman of the Board, the Chief Executive Officer, or the Chairman of
the Executive Committee.
SECTION 8. Whenever a vacancy in the Board shall occur, the remaining
directors may elect a new director or directors to fill such vacancy or
vacancies as permitted by the By-Laws and by law.
ARTICLE V LIMITATION OF DIRECTORS' LIABILITY
No director shall be personally liable to the Company or any of its
policyholders for damages for any breach of duty as a director; provided, that
the foregoing provision shall not eliminate or limit (i) the liability of a
director if a judgement or other final adjudication adverse to the director
establishes that the director's acts or omissions were in bad faith or involved
intentional misconduct or were acts or omissions (a) which the director knew or
reasonably should have known violated the New York Insurance Law or (b) which
violated a specific standard of care imposed on directors directly, and not by
reference, by a provision of the New York Insurance Law (or any regulations
promulgated thereunder) or (c) which constituted a knowing violation of any
other law, or establishes that the director personally gained in fact a
financial profit or other advantage to which the director was not legally
entitled; or (ii) the liability of a director for any act or omission prior to
the adoption of this amendment by the Company.
ARTICLE VI AMENDMENTS, BY-LAWS, CORPORATE EXISTENCE
SECTION 1. The Board of Directors shall have power to make, and from time
to time to amend or repeal such By-Laws, rules and regulations for the
transaction of business of the Company, not inconsistent with the Company's
Charter or the laws of the State of New York, as may be necessary for the proper
management of the Company.
SECTION 2. Subject to the approval of the Superintendent of Insurance of
the State of New York, the Company reserves the right to amend, alter, change or
repeal any provision contained in this Charter in the manner now or hereafter
prescribed by statute.
SECTION 3. The duration of the corporate existence of the Company shall be
perpetual.
2
Exhibit 1(6)(b)
BY-LAWS OF MUTUAL OF AMERICA LIFE INSURANCE COMPANY
As Amended, Effective November 16, 1989
These By-Laws supersede all By-Laws of Mutual of America Life Insurance
Company heretofore in effect.
ARTICLE I. OFFICE
SECTION 1. Location. The home office of Mutual of America Life Insurance
Company (the Company) shall be located in the State of New York. The Company may
have such other offices as may be necessary for the conduct of its business.
ARTICLE II. DIRECTORS
SECTION 1. Independent Director. "Independent Director" as used herein
shall mean a person who is not an officer or employee of the Company or of any
entity controlled by or under common control with the Company.
SECTION 2. Election of Directors. The Board shall appoint a Committee of
Independent Directors. The Committee shall consist of at least three members.
Such Committee shall propose a slate of Directors for consideration by the
Board of Directors as the Administration Ticket at the meeting of the Board held
not later than seven months preceding the date of the election.
At such Board Meeting, the Board shall nominate candidates as the
Administration Ticket for every vacancy to be filled at the election of
Directors, and shall appoint three persons, jointly or severally, to receive
proxies to be voted for such nominees.
The election of Directors shall be held annually, as prescribed by law,
during the month of April, on a date designated by the Board of Directors.
SECTION 3. Number. The number of Directors constituting the entire Board
of Directors shall not be less than thirteen nor more than twenty-four. The
Board of Directors by resolution may from time to time, within the limits fixed
by these By-Laws, determine the number of Directors constituting the entire
Board and until so fixed such number shall be twenty-four provided that such
resolution shall require the favorable vote of a majority of the entire Board
and that no decrease in the number shall shorten the term of any incumbent
Director. At least two officers of the Company shall be members of the Board.
SECTION 4. Powers and Duties of the Board of Directors. The business and
affairs of the Company shall be managed by the Board of Directors, which may
adopt such rules and regulations for that purpose and for the conduct of its
meetings as it may deem proper. In addition to the powers and authority
expressly conferred upon it by these By-Laws, the Board of Directors may
exercise all such powers of the Company and do all such lawful acts and things
as are allowed by the Charter or by law.
SECTION 5. Quorum. A majority of the total number of Directors, at least
one of whom must be an Independent Director, shall constitute a quorum to do
business. A number less than a quorum may meet and adjourn from time to time
until a quorum is present. The number of officers and salaried employees who are
members of the Board of Directors shall at all times be less than a quorum. In
order to vote to constitute an action by the Board of Directors, it must be
agreed upon by a majority of those present and voting. This limitation shall
also apply to "Director Action without Meeting", as set forth in Section 11 of
this Article.
SECTION 6. Annual Meeting of the Board of Directors. The first meeting of
the Board of Directors held after the annual election of such Directors, shall
be called the Annual Meeting and shall be held for the purpose of organization,
the election or appointment of officers, and the transaction of such other
business as may be stated in the notice thereof.
1
<PAGE>
SECTION 7. Regular Meetings. In addition to the annual meeting of the
Board of Directors, at least four regular meetings shall be held in each year at
such time and place as may be determined by resolution of the Board in
accordance with the Insurance Law of the State of New York. No less than one
week written notice shall be given for any regular meeting. Except as otherwise
provided by law, any business may be transacted at any regular meeting.
SECTION 8. Special Meetings. Special meetings of the Board of Directors
may, unless otherwise prescribed by law, be called from time to time by the
Chairman of the Board, the Chief Executive Officer or the Executive Committee.
SECTION 9. Notice of Special Meetings. Notice of the time and place of
each special meeting of the Board, other than any meeting the giving of notice
of which is otherwise prescribed by law, shall be given to each Director at
least one week prior to the date of such meeting.
SECTION 10. Compensation of Directors and Members of Committees. Directors
and members of the Committees of the Board, and members of Committees appointed
by the Board, shall receive compensation for services to the Company and
reimbursement for expenses incurred on behalf of the Company in such amounts and
in such manner as may be authorized by the Board from time to time.
SECTION 11. Director Action without Meeting. Any action required or
permitted to be taken by the Board of Directors or any Committee thereof may be
taken without a meeting if all members of the Board or Committee, as the case
may be, consent in writing to the adoption of a resolution authorizing the
action; provided that the procedure set forth in this paragraph shall not be
used in lieu of a regularly scheduled meeting. The resolution or resolutions and
the written consent thereto by the members of the Board or Committee shall be
filed with the minutes of the proceedings of the Board or Committee.
SECTION 12. Participation by Telephone. Any one or more members of the
Board of Directors or of any Committee thereof may participate in a meeting of
such Board of Directors or Committee by means of a conference telephone or
similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
ARTICLE III. COMMITTEES
SECTION 1. Committees. At any regular or special meeting called for the
purpose, the Board of Directors, by resolution adopted by a majority of the
entire Board, may designate from among its members an Executive Committee and
other Committees (in addition to the Committee provided in Article II, Section
2), each consisting of three or more directors and each of which, to the extent
provided in the resolution shall have all the authority of the Board relating to
the portions of the business and affairs of the Company which are under its
control and supervision, except that no such Committee shall have authority as
to the following matters:
1. The filling of vacancies in Board of Directors or in any Committee.
2. The fixing of compensation of the directors for serving on the Board
or any other Committee.
3. The amendment or repeal of the By-Laws, or the adoption of any
By-Laws, or
4. The amendment or repeal of any resolution of the Board which by its
terms shall not be so amendable or repealable.
SECTION 2. Membership. The membership of each Committee, and quorum
requirements, shall be as specified by the Board, but not less than one-third of
the members of each Committee shall be Independent Directors and at least one
Independent Director must be included in any Committee quorum. Actions taken by
a Committee must be by majority vote of Committee members present.
2
<PAGE>
SECTION 3. Independent Director Committees. The Board shall establish one
or more Committees composed of Independent Directors responsible for
recommending the selection of independent certified public accountants,
reviewing the Company's financial condition, the scope and results of the
independent audit and any internal audit, nominating candidates for director for
election by policyholders, and evaluating the performance of officers deemed by
it to be principal officers of the Company and recommending to the Board of
Directors the selection and compensation of such principal officers and
recommending to the Board of Directors the compensation of officers and
employees whose salaries are required by statute.
ARTICLE IV. OFFICERS
SECTION 1. Designation. At the first meeting following the annual election
of Directors, the Board shall appoint a Chairman of the Board, a President, and
a Secretary, and may appoint a Vice Chairman of the Board, and such other
Officers as the Board shall determine, each of whom shall hold office at the
pleasure of the Board. Any one person may hold any two or more such offices,
except that no person may hold the office of both President and Secretary. The
Chairman of the Board or the President shall be the Chief Executive Officer of
the Company as the Board from time to time shall determine. In default of any
such designation by the Board, the Chairman of the Board shall be the Chief
Executive Officer.
The Board may, at any meeting, appoint such officers whose appointment is
not otherwise provided for, or as may be deemed necessary and may define their
duties.
SECTION 2. Removal. All Officers appointed by the Board are subject to
removal by a majority vote of the Directors present at a meeting of the Board.
ARTICLE V. NEGOTIABLE INSTRUMENTS, CONTRACTS, ETC.
SECTION 1. Signature on Checks, etc. All checks, drafts, bills of
exchange, notes or other obligations or orders for the payment of money shall be
signed in the name of the Company by such officer or officers, person or persons
as the Board of Directors may from time to time designate by resolution.
SECTION 2. Execution of Contract, Deeds, etc. The Board of Directors or
the Executive Committee may authorize any officer or officers, agent or agents,
in the name of and on behalf of the Company, to enter into or execute and
deliver any and all deeds, bonds, mortgages, contracts and other obligations or
instruments and to vote on behalf of the Company shares of stock of other
domestic or foreign corporations standing in the name of the Company and such
authority may be general or confined to specific instances.
ARTICLE VI. CORPORATE SEAL
SECTION 1. The seal of the Company shall be circular in form and shall
contain the name of the Company and the words and figures "Corporate Seal - 1945
- - New York."
ARTICLE VII. FISCAL YEAR
SECTION 1. The fiscal year of the Company shall be from the 1st day of
January to the 31st day of December, inclusive, in each year.
ARTICLE VIII. INDEMNIFICATION
SECTION 1. (a) The Company shall to the fullest extent permitted by law
indemnify any person made, or threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by or in the right of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise for which any Company person served in any capacity to procure
a judgment in its favor against any such person serving them in any capacity at
the request of the Company, by reason of the fact that
3
<PAGE>
such person is or was a director, officer, employee or agent of the Company, or
is or was serving at the request of the Company in any capacity for another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and reasonably incurred by the
person in connection with such action, suit or proceeding, or any appeal
therein, if the person acted in good faith and for a purpose which the person
necessarily believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
said conduct was unlawful.
(b) The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and for a purpose which the person reasonably believed to be
in, or, in the case of service for any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, not opposed to, the
best interests of the Company, and, with respect to any criminal action or
proceeding, that the person had reasonable cause to believe that such conduct
was unlawful.
(c) The Company shall to the fullest extent permitted by law
indemnify any person made, or threatened to be made, a party to an action by or
in the right of the Company to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director or
officer of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by the person in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or officer
acted, in good faith and for a purpose which the person reasonably believed to
be in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the Company, except that no indemnification under this
subsection shall be made in respect of (i) a threatened action, or a pending
action which is settled or otherwise disposed of, or (ii) any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Company, unless and only to the extent that the court in which the action was
brought, or, if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such portion or
the settlement amount and expenses as the court deems proper.
(d) For purposes of this Section, the Company shall be deemed to
have requested a person to serve an employee benefit plan where the performance
by such person of the person's duties to the Company also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Company.
SECTION 2. A person who has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1 of this
Article or in defense of any claim, issue or matter therein, shall be entitled
to indemnification as authorized in Section 1 without the necessity of any
determination of the nature described in Section 3.
SECTION 3. In cases not covered by Section 2, any indemnification under
Section 1 of this Article or as otherwise permitted (unless ordered by a court)
shall be made by the Company only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because the person has met the applicable
standard of conduct set forth in said Section 1 or as otherwise permitted. Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action,
4
<PAGE>
suit or proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable and a quorum of Independent Directors so directs, by independent
legal counsel (compensated by the Company) in a written opinion.
SECTION 4. Expenses incurred in defending a civil, criminal,
administrative or investigative action, suit or proceeding, or threat thereof,
may be paid by the Company in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount if it is ultimately
determined that such person is not entitled to be indemnified by the Company as
authorized in this Article, or where indemnification is granted, to repay any
amount by which the expenses advanced by the Company exceed the indemnification
to which such person is entitled.
SECTION 5. The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any agreement, vote of Independent Directors or otherwise, both as to
action in this official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person, provided that no
indemnification may be made to or on behalf of any person if a judgment or other
final adjudication adverse to the person establishes that the person's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that the person
gained in fact a financial profit or other advantage to which the person was not
legally entitled.
SECTION 6. The Company may purchase and maintain insurance:
(a) To indemnify the Company for any obligation which it incurs as a
result of the indemnification of any director, officer, employee or agent under
the provisions of this Article.
(b) To indemnify directors, officers, employees or agents in
instances in which they may be indemnified by the Company under the provisions
of this Article.
(c) To indemnify directors, officers, employees or agents in
instances in which they may not otherwise be indemnified by the Company under
the provisions of this Article provided the contract of insurance covering such
Directors and officers provides, in a manner acceptable to the Superintendent of
Insurance, for a retention amount and for coinsurance.
SECTION 7. No payment of indemnification shall be made under this Article
unless a notice has been filed with the Superintendent of Insurance, not less
than thirty days prior to such payment, specifying the person or persons to be
paid, the amounts to be paid, the manner in which such payment is to be
authorized and the nature and status, at the time of such notice, of the
litigation or threatened litigation.
SECTION 8. The provisions of this Article shall be deemed retroactive and
include all acts, as consistent herein with the other sections of this Article
VIII of the directors, officers, employees or agents of the Company since the
date of incorporation.
ARTICLE IX. POLICIES
All policies shall be valid when signed by the Chairman of the Board,
President, a Vice President, an Attorney-in-fact or any other duly authorized
official or agent of the Company, and, where required by law, such policies may
be attested and sealed with the seal of the Company.
The Chairman of the Board, President or a Vice President or any person
designated by them may appoint and authorize Attorneys-in-fact, officials and
agents of the Company to accomplish the purposes set forth in this Article.
5
<PAGE>
All provisions of Article I, II, IV, and V of the By-Laws of the Company
as amended, and the definitions pertaining hereto, in force as of the date of
conversion of the Company from a Section 200 retirement association into a
mutual life insurance company are hereby continued in full force and effect and
incorporated herein by reference; such provisions may be amended from time to
time as provided in Article XI hereof; and all contracts and policies issued by
the Company prior thereto and in force as of the date of said conversion are
hereby continued in full force and effect.
ARTICLE X. ACUTE EMERGENCY
During a period of acute emergency, as defined in Article 7-A of Chapter 1
of Title 26 of the Unconsolidated Laws of the State of New York, all of the
provisions of such Article 7-A shall apply.
ARTICLE XI. AMENDMENTS
Except as otherwise provided by the law, these By-Laws may be amended,
added to, altered or repealed or new By-Laws may be adopted, at any regular or
special meeting of the Board of Directors at which a quorum is present, by the
affirmative vote of a majority of the Directors then in office, and upon the
approval in writing by the Superintendent of Insurance, pursuant to New York
Insurance Law.
6
Exhibit 3(a)
[Mutual of America Letterhead]
July 21, 1999
Mutual of America Life Insurance Company
320 Park Avenue
New York, New York 10022
Dear Sirs/Madams:
This opinion is furnished in connection with the filing of the Registration
Statement on Form S-6 ("Registration Statement") of Mutual of America Separate
Account No. 3 (the "Separate Account") of Mutual of America Life Insurance
Company ("Mutual of America") and of Mutual of America, as depositor. The
Registration Statement covers an indefinite number of units of interest in the
Separate Account. Premiums to be received under individual variable universal
life policies ("Policies") offered by Mutual of America may be allocated by
Mutual of America to the Separate Account at Policyowners' discretion, to
support reserves for the Policies.
The Policies are designed to provide life insurance protection and are to be
offered in the manner described in the Prospectus included in the Registration
Statement. The Policies will be sold only in jurisdictions where sales are
authorized.
I have examined all corporate records of Mutual of America, other documents and
laws as I consider appropriate as a basis for the opinion hereinafter expressed.
On the basis of my examination, it is my opinion that:
1. Mutual of America is a corporation duly organized and validly existing
under the laws of the State of New York.
2. The Separate Account is an account established and maintained by Mutual of
America pursuant to the laws of the State of New York, under which income,
gains and losses, whether or not realized, from assets allocated to the
Separate Account are, in accordance with the Policies, credited to or
charged against the Separate Account without regard to other income, gains
or losses of Mutual of America. Although contractual obligations with
respect to the funds of the Separate Account constitute corporate
obligations of Mutual of America, the specific amounts payable from
accumulation in the Separate Account in accordance with the Policies
depend upon the investment experience of the Separate Account.
<PAGE>
3. Assets allocated to the Separate Account will be owned by Mutual of
America; Mutual of America is not a trustee with respect thereto. The
Policies provide that the portion of assets of the Separate Account equal
to the reserves and other Policy liabilities with respect to the Separate
Account will not be chargeable with liabilities arising out of any other
business Mutual of America may conduct, and that Mutual of America
reserves the right to transfer assets of the Separate Account in excess of
reserves and Policy liabilities to the general account of Mutual of
America.
4. When issued and sold as described above, the Policies will be duly
authorized and will constitute validly issued and binding obligations of
Mutual of America in accordance with their terms. Purchasers of the
Policies are subject only to the deductions, charges and fees set forth in
the Prospectus.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Legal Matters" in
the Prospectus.
Sincerely,
/s/ Patrick A. Burns
Patrick A. Burns
Senior Executive Vice President
and General Counsel
Exhibit 6
July 21, 1999
Mutual of America Life Insurance Company
320 Park Avenue
New York, New York 10022
This opinion is furnished in connection with the Registration Statement on Form
S-6 ("Registration Statement") of Mutual of America Separate Account No. 3 (the
"Separate Account") of Mutual of America Life Insurance Company ("Mutual of
America") and Mutual of America covering an indefinite number of units of
interest in the Separate Account under individual flexible premium variable life
insurance policies ("Policies"). Net premium received under the Policies may be
allocated to the Separate Account as described in the Prospectus included in the
Registration Statement.
I participated in the preparation of the Policies, and I am familiar with their
provisions. I am also familiar with the description contained in the Prospectus.
In my opinion:
The illustrations of death benefits, account values and accumulated
premiums for the Policies in the Prospectus, based on the assumptions
stated in the illustrations, are consistent with the provisions of the
Policies. The assumptions upon which the illustrations are based,
including the current cost of insurance and expense charges, are
reasonable. The rate structure of the Policies has not been designed so as
to make the relationship between premiums and benefits, as shown in the
illustrations, appear disproportionately more favorable to a prospective
purchaser of Policies for non-smoker standard risk males age 35 or 45 than
to prospective purchasers of Policies for a male at other ages or in other
underwriting classes or for a female. The particular illustrations shown
were not selected for the purpose of making this relationship appear more
favorable.
I consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Joseph A. Gross
Joseph A. Gross
Vice President and Actuary
Exhibit 8(a)(i)
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT (the "Agreement") made by and among SCUDDER
VARIABLE LIFE INVESTMENT FUND (the "Fund"), a Massachusetts business trust
created under a Declaration of Trust dated March 15, 1985, as amended, with a
principal place of business in Boston, Massachusetts, MUTUAL OF AMERICA LIFE
INSURANCE COMPANY and THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK, each a
New York corporation (together, the "Company"), each with a principal place of
business in New York, New York on behalf of each of their Separate Accounts No.
1 and Separate Accounts No. 2, and any other separate account of the Company as
designated by the Company from time to time, upon written notice to the Fund in
accordance with Section 10 herein (together, the "Account")
WHEREAS, the Fund acts as the investment vehicle for the separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively referred to herein as "Variable Insurance Products") to be offered
by insurance companies which have entered into participation agreements
substantially identical to this Agreement ("Participating Insurance Companies")
and their affiliated insurance companies; and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares of beneficial interest ("Shares"), and additional series of
Shares may be established, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities; and
WHEREAS, it is in the best interest of Participating Insurance Companies
to make capital contributions if required so that the
<PAGE>
annual expenses of each Portfolio of the Fund in which a Participating Insurance
Company is a shareholder will not exceed a fixed percentage of the Portfolio's
average annual net assets; and
WHEREAS, the Parties desire to evidence their agreement as to certain
other matters,
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereto agree as follows:
1. Additional Definitions.
For the purposes of this Agreement, the following definitions shall apply:
(a) The "expenses of a Portfolio" for any fiscal year shall mean the
expenses for such fiscal year as shown in the Statement of Operations (or
similar report) certified by the Fund's independent public accountants;
(b) A "Portfolio's average daily net assets" for each fiscal year
shall mean the sum of the net asset values determined throughout the year for
the purpose of determining net asset value per Share, divided by the number of
such determinations during such year;
(c) The Company's "Required Contribution" on behalf of the Account
in respect of a Portfolio for any fiscal year shall mean an amount equal to the
expenses of that Portfolio for such year minus the below-indicated percentage
of that Portfolios s average daily net assets for the year:
International Portfolio ............................ 1.50%
Each other Portfolio ............................... 0.75%
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<PAGE>
multiplied by a fraction the denominator of which is the average daily net
assets of that Portfolio and the numerator of which is the average daily net
asset value of the Shares of that Portfolio owned by the Account (referred to
herein as a "Participating Shareholder"). The Company's Required Contribution in
respect of a Portfolio shall be pro-rated based on the number of business days
on which this Agreement is in effect for periods of less than a fiscal year.
(d) The "average daily net asset value of the Shares of the
Portfolio " owned by the Account for any fiscal year of the Fund shall mean the
greater of (i) $500,000 or (ii) the sum of the aggregate net asset values of the
Shares so owned determined during the fiscal year, as of each determination of
the net asset value per Share, divided by the total number of determinations of
net asset value during such year.
(e) "Shares" means shares of beneficial interest, without par value,
of any Portfolio, now or hereafter created, of the Fund.
2. Capital Contribution.
The Company on behalf of the Account shall, within sixty days after the
end of each fiscal year of the Fund, make a capital contribution to the Fund in
respect of each Portfolio equal to the Required Contribution for that Portfolio
for such year; provided, however, that in the event that both clauses (i) and
(ii) of paragraph (d) of Section 1 of this Agreement or similar agreements are
applicable to different Participating Insurance Companies during the same fiscal
year, there shall be a proportionate reduction of the Required Contribution of
each Participating
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<PAGE>
Insurance Company to which said clause (ii) is applicable so that the total of
all required capital contributions to the Fund on behalf of any Portfolio is not
greater than the excess of the expenses of that Portfolio for that fiscal year
less the percentage of that Portfolio's total expenses set forth in paragraph
(c) of Section 1 of this Agreement for such fiscal year.
3. Duty of Fund to Sell.
The Fund shall make its Shares available for purchase at the applicable
net asset value per Share by Participating Insurance Companies and their
affiliates and separate accounts on those days on which the Fund calculates its
net asset value pursuant to rules of the Securities and Exchange Commission;
provided, however, that the Trustees of the Fund may refuse to sell Shares of
any Portfolio to any person, or suspend or terminate the offering of Shares of
any Portfolio, if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees, necessary in
the best interest of the shareholders of any Portfolio.
4. Requirement to Execute Participation Agreement; Requests.
Each Participating Insurance Company shall, prior to purchasing Shares in
the Fund, execute and deliver a participation agreement in a form substantially
identical to this Agreement.
The Fund shall make available, upon written request from the Participating
Insurance Company given in accordance with Paragraph 10, to each Participating
Insurance Company which has executed an Agreement and which Agreement has not
been terminated pursuant to Paragraph 8 (i) a list of all other Participating
Insurance
4
<PAGE>
Companies, and (ii) a copy of the Agreement as executed by any other
Participating Insurance Company.
The Fund shall also make available upon request to each Participating
Insurance Company which has executed an Agreement and which Agreement has not
been terminated pursuant to Paragraph 8, the net asset value of any Portfolio of
the Fund as of any date upon which the Fund calculates the net asset value of
its Portfolios for the purpose of purchase and redemption of Shares.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Fund and each of
its Trustees and officers and each person, if any, who controls the Fund within
the meaning of Section 15 of the Securities Act of 1933 (the "Act") against any
and all losses, claims, damages, liabilities or litigation (including legal and
other expenses), arising out of the acquisition of any Shares by any person, to
which the Fund or such Trustees, officers or controlling person may become
subject under the Act, under any other statute, at common law or otherwise,
which (i) may be based upon any wrongful act by the Company, any of its
employees or representatives, any affiliate of or any person acting on behalf of
the Company or a principal underwriter of its insurance products, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering Shares or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or omission was made
in reliance upon information furnished to the
5
<PAGE>
Fund by the Company, or (iii) may be based on any untrue statement or alleged
untrue statement of a material fact contained in a registration statement or
prospectus covering insurance products sold by the Company or any insurance
company which is an affiliate thereof, or any amendments or supplement thereto,
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or statements therein not
misleading, unless such statement or omission was made in reliance upon
information furnished to the Company or such affiliate by or on behalf of the
Fund; provided, however, that in no case (i) is the Company's indemnity in favor
of a Trustee or officer or any other person deemed to protect such Trustee or
officer or other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties or by reason of his reckless
disregard of obligations and duties under this Agreement or (ii) is the Company
to be liable under its indemnity agreement contained in this Paragraph 5 with
respect to any claim made against the Fund or any person indemnified unless the
Fund or such person, as the case may be, shall have notified the Company in
writing pursuant to Paragraph 10 within a reasonable time after the summons or
other first legal process giving information of the nature of the claims shall
have been served upon the Fund or upon such person (or after the Fund or such
person shall have received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not relieve the Company
from any liability which it has to the Fund or any person against whom such
action is brought otherwise than on
6
<PAGE>
account of its indemnity agreement contained in this Paragraph 5. The Company
shall be entitled to participate, at its own expense, in the defense, or, if it
so elects, to assume the defense of any suit brought to enforce any such
liability, but, if it elects to assume the defense, such defense shall be
conducted by counsel chosen by it and satisfactory to the Fund, to its officers
and Trustees, or to any controlling person or persons, defendant or defendants
in the suit. In the event that the Company elects to assume the defense of any
such suit and retain such counsel, the Fund, such officers and Trustees or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Company does not elect to assume the defense of any such suit, the Company
will reimburse the Fund, such officers and Trustees or controlling person or
persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them. The Company agrees promptly to notify
the Fund pursuant to Paragraph 10 of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any Shares.
(b) The Fund agrees to indemnify and hold harmless the Company and each of
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the Act against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
it or such directors, officers or controlling person may become subject under
the Act, under any other statute, at common law or otherwise, arising out of the
acquisition of any Shares by any person which
7
<PAGE>
(i) may be based upon any wrongful act by the Fund, any of its employees or
representatives or a principal underwriter of the Fund, or (ii) may be based
upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering Shares or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading unless such statement or omission was made
in reliance upon information furnished to the Fund by the Company or (iii) may
be based on any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering insurance products
sold by the Company, or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund; provided, however, that in no case (i) is
the Fund's indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement or (ii) is the Fund to be liable under its indemnity agreement
contained in this Paragraph 5 with respect to any claims made against the
Company or any such director, officer or controlling person unless it or such
director, officer or controlling person,
8
<PAGE>
as the case may be, shall have notified the Fund in writing pursuant to
Paragraph 10 within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon it or upon such director, officer or controlling person (or after the
Company or such director, officer or controlling person shall have received
notice of such service on any designated agent), but failure to notify the Fund
of any claim shall not relieve it from any liability which it may have to the
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this Paragraph. The Fund will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Company, its directors, officers or controlling
person or persons, defendant or defendants, in the suit. In the event the Fund
elects to assume the defense of any such suit and retain such counsel, the
Company, its directors, officers or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, but, in case the Fund does not elect to assume the
defense of any such suit, it will reimburse the Company or such directors,
officers or controlling person or persons, defendant or defendants in the suit,
for the reasonable fees and expenses of any counsel retained by them. The Fund
agrees promptly to notify the Company pursuant to Paragraph 10 of the
commencement of any litigation or proceedings against it or any of
9
<PAGE>
its officers or Trustees in connection with the issuance or sale of any Shares.
6. Procedure for Resolving Irreconcilable Conflicts.
(a) The Trustees of the Fund will monitor the operations of the Fund for
the existence of any material irreconcilable conflict among the interests of all
the contract holders and policy owners of Variable Insurance Products (the
"Participants") of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise, among other things, from: (a) an
action by any state insurance regulatory authority; (b) a change in applicable
insurance laws or regulations; (c) a tax ruling or provision of the Internal
Revenue Code or the regulations thereunder; (d) any other development relating
to the tax treatment of insurers, contract holders or policy owners or
beneficiaries of Variable Insurance Products; (e) the manner in which the
investments of any Portfolio are being managed; (f) a difference in voting
instructions given by variable annuity contract holders, on the one hand, and
variable life insurance policy owners, on the other hand, or by the contract
holders or policy owners of different participating insurance companies; or (g)
a decision by an insurer to override the voting instructions of Participants.
(b) The Company will be responsible for reporting any potential or
existing conflicts to the Trustees of the Fund. The Company will be responsible
for assisting the Trustees in carrying out their responsibilities under this
Paragraph 6(b) and Paragraph 6(a), by providing the Trustees with all
information reasonably necessary for the Trustees to consider the issues raised.
The Fund
10
<PAGE>
will also request its investment adviser to report to the Trustees any such
conflict which comes to the attention of the adviser.
(c) If it is determined by a majority of the Trustees of the Fund, or a
majority of its disinterested Trustees, that a material irreconcilable conflict
exists involving the Company, the Company shall, at its expense, and to the
extent reasonably practicable (as determined by a majority of the disinterested
Trustees), take whatever steps are necessary to eliminate the irreconcilable
material conflict, including withdrawing the assets allocable to some or all of
the separate accounts from the Fund or any Portfolio and reinvesting such assets
in a different investment medium, including another Portfolio of the Fund,
offering to the affected Participants the option of making such a change or
establishing a new funding medium including a registered investment company.
For purposes of this Paragraph 6(c), the Trustees, or the disinterested
Trustees, shall determine whether or not any proposed action adequately remedies
any irreconcilable material conflict. In the event of a determination of the
existence of an irreconcilable material conflict, the Trustees shall cause the
Fund to take such action, such as the establishment of one or more additional
Portfolios, as they in their sole discretion determine to be in the interest of
all shareholders and Participants in view of all applicable factors, such as
cost, feasibility, tax, regulatory and other considerations. In no event will
the Fund be required by this Paragraph 6(c) to establish a new funding medium
for any variable contract or policy.
The Company shall not be required by this Paragraph 6(c) to establish a
new funding medium for any variable contract or policy
11
<PAGE>
if an offer to do so has been declined by a vote of a majority of the
Participants materially adversely affected by the material irreconcilable
conflict. The Company will recommend to its Participants that they decline an
offer to establish a new funding medium only if the Company believes it is in
the best interest of the Participants.
(d) The Trustees' determination of the existence of an irreconcilable
material conflict and its implications promptly shall be communicated to all
Participating Insurance Companies by written notice thereof delivered or mailed,
first class postage prepaid.
7. Voting Privileges.
The Company shall be responsible for assuring that its separate account or
accounts participating in the Fund shall use a calculation method of voting
procedures substantially the same as the following: those Participants permitted
to give instructions and the number of Shares for which instructions may be
given will be determined as of the record date for the Fund shareholders'
meeting, which shall not be more than 60 days before the date of the meeting.
Whether or not voting instructions are actually given by a particular
Participant, all Fund shares held in any separate account or sub-account thereof
and attributable to policies will be voted for, against, or withheld from voting
on any proposition in the same proportion as (i) the aggregate record date cash
value held in such sub-account for policies giving instructions, respectively,
to vote for, against, or withhold votes on such proposition, bears to (ii) the
aggregate record date cash value held in the sub-account for all policies for
which voting
12
<PAGE>
instructions are received. Participants continued in effect under lapse options
will not be permitted to give voting instructions. Shares held in any other
insurance company general or separate account or sub-account thereof will be
voted in the proportion specified in the second preceding sentence for shares
attributable to policies.
8. Duration and Termination.
This Agreement shall remain in force one year from the date of its
execution (such date and any anniversary of such date being hereinafter called a
"Renegotiation Date"), and from year to year thereafter provided that neither
the Company nor the Fund shall have given written notice to the other within
thirty (30) days prior to a Renegotiation Date that it desires to renegotiate
the amount of contribution to capital due hereunder ("Renegotiation Notice"). If
a Renegotiation Notice is properly given as aforesaid and the Fund and the
Company shall fail, within sixty (60) days after the Renegotiation Date, either
to enter into an amendment to this Agreement or a written acknowledgment that
the Agreement shall continue in effect, this Agreement shall terminate as of the
one hundred twentieth day after such Renegotiation Date. If this Agreement is so
terminated, the Fund may, at any time thereafter, automatically redeem the
Shares of any Portfolio held by a Participating Shareholder. This Agreement may
be terminated at any time, at the option of either of the Company or the Fund,
when neither the Company, any insurance company nor the separate account or
accounts of such insurance company which is an affiliate thereof which is not a
Participating Insurance Company own any Shares of the Fund or may be terminated
by either party to the Agreement upon
13
<PAGE>
a determination by a majority of the Trustees of the Fund, or a majority of its
disinterested Trustees, following certification thereof by a Participating
Insurance Company given in accordance with Paragraph 10 that an irreconcilable
conflict exists among the interests of (i) all contract holders and policy
holders of Variable Insurance Products of all separate accounts or (ii) the
interests of the Participating Insurance Companies investing in the Fund.
Notwithstanding anything to the contrary in this Agreement or its termination as
provided herein, the Company's obligation to make a capital contribution to the
Fund in accordance with this Agreement at the time in effect shall continue (i)
following a properly given Renegotiation Notice, in the absence of agreement
otherwise, until termination of this Agreement, and (ii) (except termination due
to the existence of an irreconcilable conflict), following termination of this
Agreement, until the later of the anniversary of the date of this Agreement or
the date on which the Company, its separate account(s) or the separate
account(s) of any affiliated insurance company owns no Shares.
9. Compliance.
The Fund will comply with the provisions of Section 4240 (a) of the New
York Insurance Law.
Each Portfolio of the Fund will comply with the provisions of Section
817(h) of the Internal Revenue Code of 1986, as amended (the "Code"), relating
to diversification requirements for variable annuity, endowment and life
insurance contracts. Specifically, each Portfolio will comply with either (i)
the requirement of Section 817(h)(1) of the Code that its assets be adequately
diversified, or (ii) the "Safe Harbor for Diversification"
14
<PAGE>
specified in Section 817(h)(2) of the Code, or (iii) the diversification
requirement of Section 817(h)(1) of the Code by having all or part of its assets
invested in U.S. Treasury securities which qualify for the "Special Rule for
Investments in United States Obligations" specified in Section 817(h)(3) of the
Code.
The provisions of Paragraphs 6 and 7 of this Agreement shall be
interpreted in a manner consistent with any Rule or order of the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended,
applicable to the parties hereto.
No Shares of any Portfolio of the Fund may be sold to the general public.
10. Notices.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Scudder Variable Life Investment Fund
175 Federal Street
Boston, Massachusetts 02110
(617) 482-3990
Attn.: David B. Watts
If to the Company:
Mutual of America Life Insurance Company
and The American Life Insurance Company of New York
666 Fifth Avenue
New York, New York 10138
Attn.: Law Department
15
<PAGE>
11. Massachusetts Law to Apply.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
12. Miscellaneous.
The name "Scudder Variable Life Investment Fund" is the designation of the
Trustees for the time being under a Declaration of Trust dated March 15, 1985,
as amended, and all persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund. No Portfolio shall
be liable for any obligations properly attributable to any other Portfolio.
The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which taken together shall
constitute one and the same instrument.
The American Life Insurance Company of New York is an indirect
wholly-owned subsidiary of Mutual of America Life Insurance Company and each
company shall be jointly and severally responsible for obligations of the
Company under the Agreement.
16
<PAGE>
13. Entire Agreement.
This Agreement incorporates the entire understanding and agreement among
the parties hereto, and supersedes any and all prior understandings and
agreements between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the 30th day of December, 1993.
SEAL SCUDDER VARIABLE LIFE
INVESTMENT FUND
By: /s/ David B. Watts
------------------------------------
David B. Watts
President
SEAL MUTUAL OF AMERICA LIFE
INSURANCE COMPANY
By: /s/ William S. Conway
------------------------------------
Name: William S. Conway
Title: EVP
SEAL THE AMERICAN LIFE INSURANCE
COMPANY OF NEW YORK
By: /s/ Theodore L. Herman
------------------------------------
Name: Theodore L. Herman
Title: Vice Chairman
17
Exhibit 8(a)(ii)
[Mutual of America Letterhead]
, 1999
Scudder Variable Life Investment Fund
175 Federal Street
Boston, MA 02110
Re: Participation Agreement with Mutual of America and American Life
Dear Sirs/Madams:
Pursuant to the provisions of the Participation Agreement (the "Agreement") made
by and among Scudder Variable Life Investment Fund (the "Fund"), Mutual of
America Life Insurance Company ("Mutual of America") and The American Life
Insurance Company of New York, dated December 30, 1993, and in accordance with
the notice provisions of Section 10 of the Agreement, Mutual of America hereby
designates its Separate Account No. 3 as an additional separate account included
within the definition of "Account" for purposes of the Agreement and entitled to
participate in the Fund.
Sincerely,
Mutual of America Life Insurance Company
By:
-------------------------------
Manfred Altstadt
Senior Executive Vice President
and Chief Financial Officer
Exhibit 8(b)(i)
FUND PARTICIPATION AGREEMENT
SEPARATE ACCOUNT NO. 2
THIS FUND PARTICIPATION AGREEMENT ("Agreement") is made and entered into
this 30th day of December, 1988, by and among Mutual of America Life Insurance
Company, a mutual life insurance company licensed under New York insurance law
("Mutual"), Investors Research Corporation, a Delaware corporation ("IRC") and
TCI Variable Portfolios, Inc., a Maryland corporation (the "Fund").
WITNESSETH:
WHEREAS, Mutual has established Separate Account No. 2 (the "Account"), a
registered unit investment trust which offers to the public tax sheltered
annuity contracts (the "Contracts");
WHEREAS, the Contracts provide that the net amounts received by Mutual
from Contract owners shall be invested in specified investment companies which
are selected by Contract owners to act as underlying investment media; and
WHEREAS, Mutual, IRC and the Fund desire that shares of the Fund be made
available to serve as underlying investment media for the Contracts to be
offered by Mutual.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants, conditions, representations and agreements contained herein, the
parties hereto agree as follows:
SECTION 1. Establishment of Account; Availability of Funds.
Mutual hereby represents that it has established the Account, a separate
account under New York law, and has registered such Account as a unit investment
trust under the Investment Company Act of 1940 (the "Act") to serve as an
investment vehicle for the Contracts. Mutual represents that net amounts
received by it under the Contracts are invested by the Account in selected
investment companies designated by Contract owners.
Subject to the terms and conditions contained herein, Mutual, IRC and the
Fund agree to make shares of the Fund available as underlying investment media
for owners of the Contracts. The parties agree that selection of a particular
investment company, including the Fund, as underlying investment media of a
Contract will be made by the Contract owner, who may change such selection from
time to time in accordance with the terms of the Contract owner's applicable
Contract.
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<PAGE>
SECTION 2. Marketing and Promotion.
Mutual will use its best efforts to market and promote its Contracts.
Mutual will give the same emphasis and promotion to shares of the Fund as is
given to any other underlying investment media available to Contract owners.
In marketing its Contracts, Mutual will comply with all applicable State
and Federal laws. Mutual. and its agents shall make no representations or
warranties concerning the Fund or Fund shares except those contained in the then
current prospectus of the Fund and in the Fund's current printed sales
literature. Advertising and sales literature describing or concerning the Fund
which is prepared by Mutual or its agents for use in marketing its Contracts
will be submitted to the Fund for approval before such material is released to
the public, agents or brokers or is submitted to the Securities and Exchange
Commission ("SEC"), National Association of Securities Dealers, Inc. ("NASD") or
other regulatory body for review. Mutual shall be responsible for compliance
with any State or Federal filing or review requirements concerning advertising
and sales literature.
SECTION 3. Pricing Information; Orders.
IRC or any other agency specified by it will provide to Mutual closing net
asset value, dividend, and capital gain information as soon as practicable after
the close of trading on each business day. Mutual will use this Fund data to
calculate unit values, which will in turn be used to process that same business
day's Contract owner accounts. Contract owner account processing will be done
the same evening, and any orders will be placed the morning of the following
business day. Orders will be sent directly to the Fund and payment for purchases
will be wired to a custodial account designated by the Fund, so as to coincide
with the order for Fund shares.
The Fund hereby appoints Mutual as its agent for the limited purpose of
accepting orders for Fund shares for the Contracts. The Fund will execute orders
at the net asset value as determined as of the close of trading on the day of
receipt of such orders by Mutual, acting as agent. However, any orders received
by Mutual, acting as agent, after the close of the New York Stock Exchange will
be executed at the net asset value determined at the end of the following
business day. Dividends and capital gains distributions shall be reinvested in
additional shares at the ex-date net asset value.
SECTION 4. Administration of Accounts.
The performance of all administrative services relating to the Contract
owner accounts shall be the sole responsibility of Mutual and the Account and
shall not be the responsibility of IRC or the Fund. The Fund and Mutual
acknowledge that the Account will be the sole shareholder of Fund shares issued
pursuant to the Contracts.
IRC recognizes that it will derive a savings of administrative expense,
such as reductions in processing, postage and shareholder
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<PAGE>
communication expense, by virtue of having a single account in the name of the
Account rather than multiple accounts in the names of the Contract owners. In
consideration of the administrative savings resulting from such arrangement, IRC
agrees to make a monthly payment to Mutual for servicing the Contract owner
accounts which have allocated purchase payments to the Fund. The amount of such
payments, and the manner in which such payments shall be made to Mutual, are set
forth on Exhibit A, a copy of which is attached hereto and incorporated herein
by reference. The parties understand that IRC customarily pays, out of its total
investment management fee from the Fund, another affiliated corporation for the
type of administrative services to be provided by Mutual. The parties agree that
IRC's payments to Mutual, like IRC's payments to its affiliated corporation, are
for administrative services only and do not constitute payment in any manner for
investment advisory services or Mutual's sales or marketing expenses in
promoting the Contracts.
Mutual will distribute all proxy materials furnished by the Fund and will
vote Fund shares in accordance with instructions received from the Contract
owners of such Fund shares. Mutual shall vote the Fund shares for which no
instructions have been received in the same proportion as Fund shares for which
instructions have been received from Contract owners. Mutual and its agents will
in no way recommend action in connection with or oppose or interfere with the
solicitation of proxies for the Fund shares held for such Contract owners.
SECTION 5. Expenses.
All expenses incident to the performance by IRC or the Fund of their
obligations under this Agreement shall be paid by IRC or the Fund, respectively.
IRC shall pay the cost of registration of Fund shares with the SEC. The Fund
shall distribute to Mutual its proxy materials, periodic Fund reports to
shareholders and other material the Fund may require to be sent to Contract
owners. IRC shall pay the cost of qualifying Fund shares in states where such
qualification is required. The Fund shall provide Mutual with a reasonable
quantity of the Fund's prospectus and sales literature to be used in connection
with the transactions contemplated by this Agreement. If, however, Mutual elects
to print the Fund's prospectus with the Account's prospectus as a single
document, the Fund agrees to pay that portion of Mutual's printing costs which
directly relates to the printing of the Fund's prospectus.
SECTION 6. Effective Date; Termination.
This Agreement shall be effective on the date set forth in the first
paragraph hereof, and shall terminate as provided below in this Section 6.
With respect to the sale and issuance of new Contracts only (or, at the
option of Mutual, with respect to both new and existing contracts), this
Agreement shall terminate:
-3-
<PAGE>
a. at the option of Mutual, the Fund or IRC upon six months' advance
written notice to the others;
b. at the option of Mutual, if Fund shares are not available for any
reason to meet the requirements of Contracts as determined by
Mutual. Reasonable advance notice of election to terminate shall be
furnished by Mutual;
c. at the option of Mutual, the Fund or IRC, upon institution of formal
proceedings against the broker-dealer or broker-dealers marketing
the Contracts, the Account, Mutual, IRC or the Fund by the NASD, the
SEC or any other regulatory body;
d. upon assignment of this Agreement unless such assignment is made
with the written consent of each of the other parties; or
e. in the event Fund shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of Fund
shares as an underlying investment medium of Contracts issued or to
be issued by Mutual.
Termination as the result of any cause listed in paragraphs (a) through
(e) above shall not affect the Fund's obligation to furnish Fund shares for
Contracts then in force for which the shares of the Fund are then serving as
underlying investment medium, unless such action is proscribed by law, the SEC
or other regulatory body, or unless Mutual, at its option, specifies that Fund
shares shall no longer be made available for existing Contracts.
SECTION 7. Indemnification.
a. Mutual agrees to indemnify and hold harmless IRC, the Fund and each of
their respective directors, officers, employee, agents and each person, if any,
who controls IRC or the Fund within the meaning of the Act against any losses,
claims, damages or liabilities to which IRC or the Fund or any such director,
officer, employee, agent or controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Account or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and Mutual will reimburse any legal or other expenses reasonably
incurred by IRC or the Fund or any such director, officer, employee, agent or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Mutual will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or omission or
alleged omission made in such Registration Statement or prospectus or sales
literature in conformity with written information furnished to Mutual by IRC or
the Fund specifically for use therein. This indemnity will be in addition to any
liability which Mutual may otherwise have.
-4-
<PAGE>
b. IRC agrees to indemnify and hold harmless Mutual and each of its
directors, officers, employees, agents and each person, if any, who controls
Mutual within the meaning of the Act against any losses, claims, damages or
liabilities to which Mutual or any such director, officer, employee, agent or
controlling person may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement or prospectus or
sales literature of the Fund or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and IRC will
reimburse any legal or other expenses reasonably incurred by Mutual or any such
director, officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that IRC will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or omission or alleged omission made in such Registration
Statement or prospectus or sales literature in conformity with written
information furnished to IRC and the Fund by Mutual specifically for use
therein. This indemnity will be in addition to any liability which IRC may
otherwise have.
c. Promptly after receipt by an indemnified party under this paragraph of
notice of the commencement of an action or claim, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party, and
upon notice to the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, assume the defense thereof, with counsel satisfactory to such
indemnified party, and shall be responsible for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
SECTION 8. Notice.
Any notice required by this Agreement shall be given orally, by telegram
or by wire and shall immediately be confirmed by letter to:
Mutual of America Life Insurance Company
666 Fifth Avenue
New York, New York 10022
Attn: Patrick A Burns Esq.
(212) 399-1600
Investors Research Corporation
4500 Main Street
Kansas City, Missouri 64111
Attn: William M. Lyons, Esq.
(816) 531-5575
-5-
<PAGE>
TCI Variable Portfolios, Inc.
4500 Main Street
Kansas City, Missouri 64111
Attn: William M. Lyons, Esq.
(816) 531-5575
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives on the day and date first above written.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
December 30, 1988 BY /s/ Dwight K. Bartlett, III
- -------------------- ---------------------------------------
Date Name: Dwight K. Bartlett, III
Title: President
INVESTORS RESEARCH CORPORATION
December 29, 1988 BY /s/ Irving Kuraner
- -------------------- ---------------------------------------
Date Name: Irving Kuraner
Title: Executive Vice President
TCI VARIABLE PORTFOLIOS, INC.
December 29, 1988 BY /s/ William M. Lyons
- -------------------- ---------------------------------------
Date Name: William M. Lyons
Title: Vice President
-6-
<PAGE>
EXHIBIT A
Pursuant to Section 4 of the accompanying Fund Participation Agreement,
IRC shall reimburse the expenses of Mutual in administering Contract owner
accounts as follows:
1. Commencing with the month in which the aggregate market value of
investments by the Account (on behalf of the Contract owners) in the
Fund exceeds $10 million, IRC shall pay to Mutual $.50 per month per
Contract owner who has allocated purchase payments under his
Contract to the Fund. No payment obligation shall arise until the
Account's aggregate investment in the Fund reaches $10 million, and
such payment obligation, once commenced, shall be suspended with
respect to any month during which Mutual's average aggregate
investment drops below $10 million. The average aggregate amount
invested by the Account in the Fund over a one month period shall be
computed by totalling the Account's aggregate investment on each
business day during the month and dividing by the total number of
business days during such month.
2. The number of Contract owners for which IRC is billed will be based
on the average number of Contract owners allocating purchase
payments to the Fund during a month. This average will be determined
by adding the number of Contract owners allocating purchase payments
to the Fund at the beginning of the month and the number of Contract
owners allocating purchase payments to the Fund at month-end, and
dividing the total by two.
3. Notwithstanding paragraphs 1 and 2 of this Exhibit A, the maximum
payment which IRC shall be obligated to make to Mutual with respect
to any month shall be 1.667 basis points (0.01667%) of the average
aggregate amount invested by the Account in the Fund over such
month. The average aggregate amount invested by the Account in the
Fund over a one month period shall be computed by totalling the
Account's aggregate investment on each business day during the month
and dividing by the total number of business days during such month.
4. Mutual will bill IRC quarterly for any reimbursement which becomes
payable for each of the three months in that quarter. The bill will
be payable on receipt. The bill will be mailed after the close of
each calendar quarter, and will show by month the amount payable by
IRC. Each bill will be accompanied by supporting data which shows
Mutual's average aggregate investment in the Fund for each month and
the average number of Contract owners allocating purchase payments
to the Fund during each month.
-7-
Exhibit 99.8(b)(ii)
AMENDMENT NO. 1 TO
------------------
FUND PARTICIPATION AGREEMENT - SEPARATE ACCOUNT NO. 2
-----------------------------------------------------
THIS AMENDMENT NO. 1 TO FUND PARTICIPATION AGREEMENT - SEPARATE ACCOUNT
NO. 2 ("Amendment") is made and entered into as of this 1st day of May, 1989, by
and among Mutual of America Life Insurance Company ("Mutual"), Investors
Research Corporation ("Investors Research") and TCI Portfolios, Inc. (the
"Fund").
WHEREAS, Mutual, Investors Research and the Fund entered into a Fund
Participation Agreement - Separate Account No. 2 ("Agreement") dated December
30, 1988, and
WHEREAS, the parties to this Agreement desire to amend such Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. COMPLIANCE WITH EXEMPTIVE ORDER CONDITIONS. The practice of
providing investment company shares as underlying investment media for both
variable annuity and variable life contracts is known as "mixed and shared
funding." In order for the Fund to undertake mixed and shared funding, the Fund
and Investors Research filed an application (File No. 812-6937) for an order of
the Securities and Exchange Commission ("Commission") pursuant to section 6(c)
of the 1940 Act, exempting the Fund and certain life insurance companies from
certain provisions of the 1940 Act and the rules thereunder. The order was
granted in SEC Release No. IC-16322 (the "Order"), subject to certain conditions
contained in the Application (the "Conditions"). The following is a summary of
the Conditions as set forth in the Notice of Application for Exemption (SEC
Release No. IC-16287):
a. A majority of the Board of the Fund shall consist of persons who
are not "interested persons" of the Fund as defined by the 1940
Act.
b. The Board of the Fund will monitor the Fund for the existence of
any material irreconcilable conflict between the interests of
contract owners of all separate accounts investing in the Fund.
1
<PAGE>
c. Each separate account investing in the Fund shall report any
potential or existing conflict it discovers to the Fund's Board.
d. The Board of the Fund shall promptly notify each separate
account in writing of any irreconcilable material conflict and
its implications.
e. If an irreconcilable material conflict exists, each separate
account shall, to the extent practicable, take whatever steps
are necessary to remedy or eliminate such a conflict.
f. Each separate account shall consider whether disclosure in the
prospectus of the separate account regarding potential risks of
mixed and shared funding is appropriate.
g. Each separate account shall vote shares of the Fund in
accordance with instructions received from the contract owners
whose contract cash values are invested in shares of the Fund.
Each separate account shall vote shares of the Fund for which no
instructions have been received in the same proportion as shares
of the Fund for which instructions have been received from
contract owners.
h. All reports of potential or existing conflicts received by the
Board of the Fund, and all Board action with respect thereto,
shall be recorded in the minutes of the Board and such records
shall be made available to the Commission upon request.
Mutual hereby agrees to comply with all the Conditions, as applicable,
and the Fund reaffirms its undertaking to comply with the Conditions. The
provisions of this Amendment are not subject to termination pursuant to section
7 of the Agreement and shall remain in effect for as long as necessary to
satisfy the Conditions.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by
their duly authorized officers as of the day and date first above written.
2
<PAGE>
MUTUAL OF AMERICA LIFE
INSURANCE COMPANY
May 1, 1989 By: /s/ Manfred Altstadt
- ---------------------------- --------------------
Date
INVESTORS RESEARCH CORPORATION
May 1, 1989 By: /s/
- ---------------------------- --------------------
Date
TCI PORTFOLIOS, INC.
May 1, 1989 By: /s/
- ---------------------------- ---------------------
Date
3
Exhibit 99.8(b)(iii)
AMENDMENT NO. 2 TO
FUND PARTICIPATION AGREEMENT - SEPARATE ACCOUNT NO. 2
THIS AMENDMENT NO. 2 TO FUND PARTICIPATION AGREEMENT - SEPARATE ACCOUNT NO. 2 is
made and entered into as of the ________ day of ______________, 1999, by and
among MUTUAL OF AMERICA LIFE INSURANCE COMPANY, (the "Company"), AMERICAN
CENTURY VARIABLE PORTFOLIOS, INC. ("ACVP") and its investment advisor, AMERICAN
CENTURY INVESTMENT MANAGEMENT, INC. ("ACIM"). Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Agreement
(defined below).
WITNESSETH
WHEREAS, the Company, ACVP and ACIM are parties to a Fund Participation
Agreement - Separate Account No. 2 (the "Agreement") dated as of December 30,
1988; and
WHEREAS, the Company, ACVP and ACIM are parties to Amendment No. 1 to the
Agreement, dated as of May 1, 1989; and
WHEREAS, the Company, ACVP and ACIM now desire to modify the Agreement so that
shares of VP Capital Appreciation (the "Fund") may be made available to the
Company to serve as underlying investment media for variable annuity contracts
and variable life policies offered to the public by the Company.
NOW THEREFORE, in consideration of the premises and the mutual covenants and
promises expressed herein, the parties agree as follows:
1. The parties agree that, pursuant to the terms of the Agreement, shares
of the Fund shall be made available to serve as underlying investment
media for variable annuity contracts and variable life insurance
policies (the "Policies") offered to the public by the Company, as well
as for public tax sheltered annuity contracts.
2. The Company represents that it has established Separate Account No. 3
("Account No. 3") as a separate account under New York Insurance Law to
serve as an investment vehicle for the Policies. The Company further
represents that Account No. 3 will be registered as a unit investment
trust under the Investment Company Act of 1940 prior to the sale of the
Policies.
3. All references to "Contracts" under the Agreement shall be deemed to
include the Policies under this Amendment No. 2.
4. All references to "Accounts" under the Agreement shall be deemed to
include Account No. 3 under this Amendment No. 2.
<PAGE>
5. In the event that there is any conflict between the terms of this
Amendment No. 2 and the Agreement, it is the intention of the parties
hereto that the terms of this Amendment No. 2 shall control, and the
Agreement shall be interpreted on that basis. To the extent that the
provisions of the Agreement have not been amended by this Amendment No.
2, the parties hereby confirm and ratify the Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 as of the
date first written above.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
By:__________________________________
Name: _______________________________
Title: ________________________________
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
By:__________________________________
Name: _______________________________
Title: ________________________________
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
By:__________________________________
Name: _______________________________
Title: ________________________________
Exhibit 8(c)(i)
SHARED FUNDING AGREEMENT FOR SEPARATE ACCOUNT NO. 2
1.0 SHARED FUNDING AGREEMENT
1.1 This Agreement, dated November 7, 1990, between Mutual of America
Life Insurance Company, a New York mutual life insurance corporation
with principal offices at 666 Fifth Avenue, New York, New York 10103
(Mutual), and Calvert Securities Corporation with principal offices
at 4550 Montgomery Avenue, Bethesda, Maryland 20814 ("Calvert"),
which serves as principal underwriter to Acacia Capital Corporation,
a registered investment company with principal offices at 51
Louisiana Avenue, N.W., Washington, D.C. 20001, (the "Fund"),
1.2 In consideration of the promises, representations, warranties,
covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the transactions
contemplated hereby and the mode of carrying the same into effect,
and intending to be legally bound, the parties hereto agree to the
provisions set forth below.
2.0 THE VARIABLE ANNUITY CONTRACTS AND THE SEPARATE ACCOUNT
2.1 Mutual shall maintain variable annuity contracts (the "Contracts")
designed to provide, under current law, the benefits of a
tax-deferred accumulation of income for retirement and other
purposes.
2.2 Purchase payments for the Contracts may be invested by Mutual in
Separate Account No. 2 (separate account), registered with the
Securities and Exchange Commission as a unit investment trust under
the Investment Company Act of 1940 (1940 Act). Such payments will
constitute assets of the separate account and shall be invested, as
directed by purchasers, in certain open-end diversified management
companies registered under the 1940 Act.
2.3 One of the open-end diversified management companies is the Fund, an
open-end diversified management investment company with eight
separate series, registered under the 1940 Act. Each series is a
separate investment portfolio with distinct investment objectives.
2.4 Mutual will offer one of the series of the Fund, specifically the
Calvert Socially Responsible Series (the "Series"), through the
separate account to its Contract Owners and their participants where
applicable (Contract Owners).
2.5 Mutual will use the name "Calvert Socially Responsible Fund" with
respect to the Separate Account, the name "Calvert Socially
Responsible Series" with respect to the Fund and the names "Calvert"
or "Calvert Series" where appropriate in its marketing and sales
literature when referring to investments in the Series.
<PAGE>
-2-
2.5.1 Mutual will use its best efforts to market and promote its
Contracts.
2.5.2 In marketing its Contracts, Mutual will comply with all
applicable state and federal laws. Mutual and its agents shall
make no representations or warranties concerning the Fund or
Series shares except those contained in the then current
prospectuses of the Fund and in the Fund's current printed
sales literature. Copies of all advertising and sales
literature describing or concerning the Fund which is prepared
by Mutual or its agents for use in marketing its Contracts
will be sent to Calvert for approval prior to use. Calvert
will give its approval or comments as soon as is reasonably
practical, but in no event later than 7 business days after
receipt. Mutual shall be responsible for compliance with any
state or federal filing or review requirements concerning
advertising and sales literature.
2.5.3 Mutual and its agents will not oppose voting recommendations
from Calvert or the Fund's Board of Directors or interfere
with the solicitation of proxies for the Fund shares held by
Mutual for Mutual Contract Owners, unless Mutual deems such
recommendations detrimental to it or to its Contract Owners.
Calvert agrees to prepare and print any proxy statements
required for Series' shareholder meetings, and to provide
sufficient number of copies of such proxy statements to
Mutual. Mutual agrees to timely distribute such proxy
statements to its Contract Owners. Mutual agrees to provide
pass-through voting privileges to all Mutual Contract Owners
and to assure that its separate account participating in the
Fund calculates voting privileges in a manner consistent with
all other separate accounts of any insurance company investing
in the Fund, as required by the exemptive order referenced in
Section 3.2.3 of this Agreement.
2.5.4 Mutual will be responsible for reporting to the Fund's Board
of Directors any potential or existing conflicts among the
interests of the Contract Owners of all its separate accounts
investing in the Fund, and to assist the Board by providing it
with all information reasonably necessary for the Board to
consider any issued raised. Mutual will be responsible for
taking remedial action as may be necessary with respect to its
separate account in the event of a Board determination of an
irreconcilable material conflict and to bear the cost of such
remedial action. Other relevant insurance companies will be
responsible for taking similar remedial action with respect to
their respective separate accounts and will bear the costs of
such actions.
2.6 Mutual will bear the costs of, and have the primary responsibility
for:
<PAGE>
-3-
2.6.1 Registering the Contracts and the separate account with the
SEC;
2.6.2 Developing all policy forms, application forms, confirmations
and other administrative forms or documents and filing such of
these as are necessary to comply with the requirements of all
insurance laws and regulations in each state in which the
Contracts are offered;
2.6.3 Administration of the Contracts and the separate account,
including all Contract Owner service and communication
activities;
2.6.4 Preparing and approving all marketing and sales literature
involving the sale of Mutual's separate account fund which
invests in shares of the Fund;
2.6.5 Printing (from camera ready copy provided to Mutual by
Calvert) and distributing to Mutual Contract Owners copies of
the current prospectuses, statements of additional information
(as requested by Contract Owners) and periodic reports for the
separate account and the Fund. Mutual is hereby authorized to
reproduce in any manner whatsoever, at a cost borne by Mutual,
the Series prospectus, statement of additional information,
and annual and semi-annual reports.
2.6.6 Preparing and filing any reports or other filings as may be
required under state insurance laws or regulations with
respect to the Contracts or separate account; and
2.6.7 Providing Calvert with any and all amendments to the
registration statement of the Separate Account as they are
filed with the SEC, and where such registration statement
references the Series, the Fund, or Calvert, providing Calvert
an opportunity to comment on same prior to the effective date.
2.6.8 Reimbursing the Fund up to $1,500 for the cost of obtaining a
separate audit opinion for the 1990 fiscal year for the
Series, distinct from the other seven series; and further,
Mutual agrees that for every year thereafter, it will
reimburse the Fund for Mutual's pro rata share of the cost of
obtaining a separate audit opinion for the Series distinct
from the Fund's other seven series. Mutual's share of this
expense will be in direct proportion to the percentage of
Series assets held by all of Mutual's separate accounts.
3.0 THE SERIES
3.1 The Fund and Calvert shall make available shares of the Series as an
underlying investment medium for Mutual Contract Owners.
<PAGE>
-4-
3.2 The Fund shall bear the costs of, and shall have, or shall cause the
Fund and the Series to assume, the primary responsibility for:
3.2.1 Registering the Fund with the SEC including a separate
prospectus for the series which does not reference the
other seven series of the Fund. The costs of printing and
distributing such prospectus to Mutual Contract Owners
shall be borne by Mutual as provided in Section 2.6.5
above;
3.2.2 Preparing, producing and maintaining the effectiveness of
such registration statements for the Fund as are required
under federal and state securities law, and clearing such
registration statements through the SEC and pursuant to the
securities laws and regulations in each state in which the
contracts are offered;
3.2.3 Preparing and filing an Application for Exemptive Relief
which grants appropriate exemptive relief from the relevant
provisions of the 1940 Act ("Application") which permits
Mutual Contracts to use the Fund as an underlying
investment alternative;
3.2.4 Operating and maintaining the Fund in accordance with
applicable law, including the diversification standards of
the Internal Revenue Code of 1986 applicable to variable
annuity contracts;
3.2.5 Preparing and filing any reports or other filings as may be
required with respect to the Fund under federal or state
securities laws;
3.2.6 Using its best efforts to provide Mutual with the daily net
asset values of the Series by 5:00 p.m. E.S.T. on each day
the New York Stock Exchange is open;
3.2.7 Providing Mutual with camera-ready copy necessary for the
printing of the periodic shareholder reports and the
prospectus for the Fund;
3.2.8 Providing Mutual with monthly performance data by the 6th
business day after the close of a month and with such
information and data related to the portfolio
characteristics, holdings, and performance of the Fund, as
may reasonably be requested from time to time;
3.2.9 Informing Mutual in writing whenever the Series declares an
income dividend or a capital gain distribution, specifying
the amount per unit, the declaration date, the ex-dividend
date, and the payment date.
3.2.10 Providing Mutual with drafts of financial statements
(semi-annual and annual) no later than 4 weeks after the
close of June 30 and December 31 respectively; and
<PAGE>
-5-
3.2.11 Providing Mutual with any and all amendments to the Fund's
registration statement and financial statements as they are
filed with the SEC. and where such registration statement
references Mutual, providing Mutual an opportunity to
comment on same prior to the effective date and providing
such material on a timely basis for inclusion in any
federal or state securities law filing of Mutual's separate
account of which the Series is a part.
3.3 The Fund or Calvert shall maintain records in accordance with the
1940 Act or other statutes, rules and regulations applicable to the
Fund's operation in connection with the performance of its duties.
Mutual shall have the right to access such records, upon reasonable
notice and during business hours, in order to respond to regulatory
requirements, inquiries, complaints or judicial proceedings. Fund
and Calvert records of all transactions with respect to the
Contracts shall be retained for a period of not less than six (6)
years from each transaction.
3.4 The parties or their duly authorized independent auditors have the
right under this Agreement to perform on-site audits of records
pertaining to the Contracts and the Fund, at such frequencies as
each shall determine, upon reasonable notice and during normal
business hours. At the request of the other, each will make
available to the other's auditors and/or representatives of the
appropriate regulatory agencies, all requested records, data, and
access to operating procedures.
4.0 COST AND EXPENSES
4.1 Except for costs and expenses for which indemnification is required
pursuant to Section 7.19 or Section 7.20 or as otherwise agreed in
writing by the parties in specific instances or, as set forth
herein, the parties shall each pay their respective costs and
expenses incurred by them in connection with this Agreement.
4.2 Calvert agrees that through May 1, 1991 it shall cause the annual
operating expenses of the Series to not exceed 0.85% of the Series'
average annual daily net assets. If Calvert intends to cause or
allow such expenses to exceed this amount after May 1, 1991, Calvert
will notify Mutual in writing of the new expense guarantee no later
than February 15, 1991, or no later than February 15 of any
subsequent year in which it may cause or allow such expenses to
exceed 0.85% in the subsequent 12 month period ending April 30 of
the following year. Calvert will notify Mutual in writing if, at any
time it decides to discontinue guaranteeing the level of annual
operating expenses of the Series.
5.0 TERM OF AGREEMENT
5.1 The term of this Agreement shall be indefinite unless terminated
pursuant to Section 6 of this Agreement.
<PAGE>
-6-
6.0 TERMINATION
6.1 This Agreement will terminate:
6.1.1 At the option of any party upon 90 days' prior written notice
to the other parties. If a party notifies the other parties
that it intends to terminate, or is terminating, this
Agreement, the affected parties shall immediately file with
the SEC such documents, if any, as are necessary to permit the
offering of shares of the Series to Mutual Contract Owners to
be discontinued; or
6.1.2 Upon assignment of this Agreement unless the assignment is
made with the written consent of the other party.
6.2.3 In the event of termination of this Agreement pursuant to this
Section 6.0, the provisions of Sections 4.0, and 7.0 shall
survive such termination.
7.0 GENERAL PROVISIONS
7.1 This Agreement is the complete and exclusive statement of the
agreement between the parties as to the subject matter hereof which
supersedes all proposals or agreements, oral or written, and all
other communications between the parties related to the subject
matter of this Agreement.
7.2 This Agreement can only be modified by a written agreement duly
signed by the persons authorized to sign agreements on behalf of the
respective party.
7.3 If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or be impaired thereby.
7.4 This Agreement and the rights, duties and obligations of the parties
hereto shall not be assignable by either party hereto without the
prior written consent of the other.
7.5 No waiver by either party of any default by the other in the
performance of any promise, term or condition of this Agreement
shall be construed to be a waiver by such party of any other or
subsequent default in performance of the same or any other covenant,
promise, term or condition of this Agreement. No prior transactions
or dealings between the parties shall be deemed to establish any
custom or usage waiving or modifying any provision hereof.
7.6 No liability shall result to any party, nor shall any party be
deemed to be in default hereunder, as the result of delay in its
performance or from its non-performance hereunder caused by
circumstances beyond its control, including but limited to: act
<PAGE>
-7-
of God, act of war, riot, epidemic; fire; flood or other disaster;
or act of government. Nevertheless, the party shall be required to
be diligent in attempting to remove such cause or causes.
7.7 Each of the parties will act as an independent contractor under the
terms of this Agreement and neither is now, or in the future, an
agent or a legal representative of the other for any purpose.
Neither party has any right or authority to supervise or control the
activities of the other party's employees in connection with the
performance of this Agreement or to assign or create any application
of any kind, express or implied, on behalf of the other party or to
bind it in any way, to accept any service of process upon it or to
receive any notice of any nature whatsoever on its behalf.
7.8 This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York.
7.9 Nothing herein shall prevent either party from participating in any
proceeding before any regulatory authority having jurisdiction over
any matter relating to this Agreement, the Contracts, the separate
account or the Fund which may affect the parties to it. The parties
shall each give the others prompt notice of any such proceeding.
7.10 In all matters relating to the preparation, review, prior approval
and filing of documents, the parties shall cooperate in good faith.
Neither party shall unreasonably withhold its consent with respect
to the filing of any document with any federal or state regulatory
authority having jurisdiction over the Contracts, the separate
account or the Fund.
7.11 Captions contained in this Agreement are for reference purposes only
and do not constitute part of this Agreement.
7.12 All notices which are required to be given or submitted pursuant to
this Agreement shall be in writing and shall be sent by registered
or certified mail, return receipt requested, to the addresses set
forth below:
Patrick A. Burns William M. Tartikoff
Executive Vice President General Counsel
and General Counsel Calvert Securities Corp.
Mutual of America Life 4550 Montgomery Avenue
Insurance Company Suite 1000 N
666 Fifth Avenue Bethesda, MD 20814
New York, New York 10103
or to such other address as the parties may from time to time
designate. Any notice of one party refunds the other shall be deemed
recent as of the date of said refund.
7.13 Each party hereto shall promptly notify the other in writing of any
claims, demands or actions having any bearing on this Agreement.
<PAGE>
-8-
7.14 Each party agrees to perform its obligations hereunder in accordance
with all applicable laws, rules and regulations now or hereafter in
effect.
7.15 If this Agreement is terminated for other than default, it is
specifically agreed that neither party shall be entitled to
compensation of any kind except as specifically set forth herein.
7.16 In any litigation or arbitration between the parties, the prevailing
party shall be entitled to reasonable attorneys' fees and all costs
of proceedings incurred in enforcing this Agreement.
7.17 This Agreement shall be binding upon an inure to the benefit of the
parties hereto, their successors and permitted assigns.
7.18 Each party represents that it has full power and authority to enter
into and perform this Agreement, and the person signing this
Agreement on behalf of it has been properly authorized and empowered
to enter into this Agreement. Each party further acknowledges that
it has read this Agreement, understands it, and agrees to be bound
by it.
7.19 Mutual shall indemnify and hold the Fund and Calvert and each of
their respective directors, officers, employees and agents harmless
from any liability or expense (including reasonable attorneys' fees)
arising from any failure of Mutual or the separate account to
fulfill their respective obligations under this Agreement.
7.20 Calvert shall indemnify and hold Mutual and its directors, officers,
employees and agents harmless from all liabilities or expenses
(including reasonable attorney's fees) arising from any failure of
the Fund or Calvert to fulfill their respective obligations under
this Agreement and Calvert shall indemnify and hold such parties
harmless from a failure of the Fund's investment adviser to manage
the Fund in compliance with the diversification requirements of the
Internal Revenue Code of 1986, as amended, or any regulations
thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
CALVERT SECURITIES CORPORATION MUTUAL OF AMERICA LIFE
INSURANCE COMPANY
BY: /s/ John P. Comerford BY: /s/ Manfred Altstadt
--------------------------- ---------------------------
John P. Comerford Manfred Altstadt
Vice President Executive Vice President
and Treasurer
Exhibit 8(c)(ii)
AMENDMENT TO THE NOVEMBER 7, 1990 SHARED FUNDING AGREEMENT
AMONG MUTUAL OF AMERICA LIFE INSURANCE COMPANY,
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
AND CALVERT SECURITIES CORPORATION
The Shared Funding Agreement for Separate Account No. 2 dated November 7,
1990, between Mutual of America Life Insurance Company ("Mutual"), a New York
mutual life insurance corporation with principal offices currently at 320 Park
Avenue, New York, New York 10022, and Calvert Securities Corporation, principal
underwriter to Calvert Variable Series, Inc., a registered investment company,
with principal offices at 4550 Montgomery Avenue, Bethesda, Maryland 20814, as
amended to include The American Life Insurance Company of New York ("American
Life"), a New York mutual life insurance company with principal offices
currently at 320 Park Avenue, New York, New York 10022, is hereby amended as
follows:
2.1 is revised to read:
Mutual shall maintain variable annuity contracts and variable life
insurance policies and American Life may maintain variable annuity
contracts and variable life insurance policies (such contracts and
policies, the "Contracts") designed to provide, under current law, the
benefits of a tax-deferred accumulation of income for retirement and other
purposes and/or life insurance protection.
The first sentence of 2.2 is revised to read:
2.2 Purchase payments for the Contracts may be invested in by Mutual in its
Separate Accounts No. 2 and No. 3 and by American Life in its Separate
Accounts No. 2 and No. 3, each a "separate account" registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940 (1940 Act).
IN WITNESS WHEREOF, the parties to the Agreement have executed this Agreement as
of __________, 1999.
CALVERT SECURITIES CORPORATION MUTUAL OF AMERICA LIFE
INSURANCE COMPANY
BY: BY:
-------------------------------- -------------------------------
William M. Tartikoff Manfred Altstadt
Senior Vice President, Secretary Senior Executive Vice President
and General Counsel and Chief Financial Officer
THE AMERICAN LIFE INSURANCE
COMPANY OF NEW YORK
BY:
-------------------------------
Manfred Altstadt
Senior Executive Vice President
and Chief Financial Officer
Exhibit 8(d)(i)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 30th day of April,
1995 by and among MUTUAL OF AMERICA LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts (hereinafter
the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
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WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and/or variable annuity contracts under the 1933 Act;
and
WHEREAS, the Company may also issue certain variable annuity
contracts that are exempt from registration under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable life insurance
and variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as
a unit investment trust under the 1940 Act if such Account is required to be
registered under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and/or variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the
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Fund receives notice of such order by 9:00 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available in the Accounts and under the variable annuity policies
and/or variable annuity contracts with the form number(s) which are listed on
Schedule A attached hereto and incorporated herein by this reference, as such
Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund then utilized by the
Accounts; or (b) the Company gives
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the Fund and the Underwriter 45 days written notice of its intention to make
such other investment company available as a funding vehicle for the Contracts;
or (c) such other investment company was available as a funding vehicle for the
Contracts prior to the date of this Agreement and the Company so informs the
Fund and Underwriter prior to their signing this Agreement (a list of such funds
appearing on Schedule C to this Agreement); or (d) the Fund or Underwriter
consents to the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire,
and if more than one Account is entering a purchase order on a particular day
payments on behalf of multiple Accounts may be aggregated for purchases of
Portfolio shares. However, if one or more Accounts are redeeming shares on a
given day the amount of any redemptions may NOT be netted against any purchases,
by that Account or other Accounts. For purpose of Section 2.10 and 2.11, upon
receipt by the Fund of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act if registration is required under the 1933
Act; that the Contracts will be issued and sold in compliance in all material
respects with all applicable Federal and State laws and that the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established each Account prior to any issuance
or sale thereof as a segregated asset
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account under Section 4240 of the New York Insurance Code and has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated investment account for the Contracts if such registration is
required under the 1940 Act.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities jaws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently treated
as endowment, life insurance or annuity contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-l under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-l Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-l to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further
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represents that it will sell and distribute the Fund shares in accordance with
the laws of the State of New York and all applicable state and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film (in either or both of two
sizes, per the Company's request: 8.375" by 10.875" and 5.375" by 8.375")
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies' prospectuses
and statements of
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additional information. Except as provided in the following three sentences, all
expenses of printing and distributing Fund prospectuses and Statements of
Additional Information shall be the expense of the Company. For prospectuses and
Statements of Additional Information provided by the Company to its existing
owners of Contracts in order to update disclosure as required by the 1933 Act
and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the
Company chooses to receive camera-ready film or computer diskettes in lieu of
receiving printed copies of the Fund's prospectus, the Fund will reimburse the
Company in an amount equal to the product of A and B where A is the number of
such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners. If requested by the
Company, the Fund shall provide camera ready film containing the Fund's
semiannual and annual reports to shareholders.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received
in a particular separate account in the same proportion as
Fund shares of such portfolio for which instructions have been
received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
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3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
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contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other securities regulatory authorities, and brochures for
Contracts not registered under the 1933 Act, contemporaneously with their first
use by the Company.
4.7. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e. any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
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5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the
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assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented to a vote of all
affected Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account, provided,
however, that the Company shall have the right to choose which course of action
is appropriate if more than one is available to remedy the problem.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
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7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained
in the Contracts or sales literature for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to the
Company by or on behalf of the Fund for use in the Registration
Statement or prospectus for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Fund shares or
approved by the Fund or its designee under Section 4.1 hereof; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained
in the Registration Statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its
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<PAGE>
control) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts
or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation. The
Indemnified Parties shall not settle or
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<PAGE>
otherwise compromise any claim for which indemnification may be
sought from the Company without the Company's prior written consent.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of
the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of the
Company for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or
Underwriter or persons under their control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or
statements
14
<PAGE>
therein not misleading, if such statement or omission was made
in reliance upon information furnished to the Company by or on
behalf of the Fund or the approval of the Fund or its designee
under Section 4.1 hereof; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and
in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to partcipate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnified Parties shall not settle or otherwise compromise
any claim for which indemnification may be sought from the Underwriter without
the Underwriter's prior written consent.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
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<PAGE>
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to partcipate, at its
own expense, in the defense thereof. The Fund also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
16
<PAGE>
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by ninety (90) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any
of the Portfolio's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
17
<PAGE>
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by 30 days'
written notice to the Company (or by immediate written notice
to the Company in the event of a material adverse change in
financial condition), if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in
its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice
to the Company, if the Company gives the Fund and the
Underwriter the written notice specified in Section 1.6(b)
hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision of
this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty five (45) days after
the notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the
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<PAGE>
Company shall not prevent Contract Owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund or the Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company before 6/2/95:
Mutual of America Life Insurance Company
666 Fifth Avenue
New York, NY 10103
Attention: General Counsel
If to the Company after 6/1/95
Mutual of America Life Insurance Company
320 Park Avenue
New York, NY 10022
Attn: General Counsel
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
19
<PAGE>
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any), as
soon as practical and in any event within 120 days after the
end of each fiscal year, in each case with any report thereon
submitted to the Company by independent accountants;
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(b) the Company's quarterly statements (statutory) (and GAAP, if
any), as soon as practical and in any event within 60 days
after the end of each quarterly period;
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon
as practical after the delivery thereof to stockholders,
excluding regular or periodic notices and reports to
policyholders and contract owners pertaining to the
operations, benefits or status of their contracts with the
Company;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission not provided under Section 4.6 hereof, and any
other financial statement filed with any state insurance
regulator, together with any report thereon submitted to the
Company by independent accountants, as soon as practical after
the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof, provided that nothing in
this subsection (e) shall require the Company to provide any
information that is otherwise privileged or confidential.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
By: /s/ Manfred Altstadt
-------------------------------------
Name: Manfred Altstadt
-----------------------------------
Title: Sr. Executive V.P. & CFO
----------------------------------
VARIABLE INSURANCE PRODUCTS FUND FIDELITY DISTRIBUTORS CORPORATION
By: /s/ J. Gary Burkhead By: /s/ Kurt A. Lange
-------------------------------- -------------------------------------
J. Gary Burkhead Kurt A. Lange
Senior Vice President President
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<PAGE>
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
Separate Account No. 1 DCC-3050
DAC-DB-NC/C Series
PIC-DB-8720
IAC-8700
Separate Account No. 2 TDA-3300
VEC-3200
PEDC-3085
3805-FPA
3809-FPA(E)
3814-IRA
IAC-8700
Separate Account No. 3 3410-VUL
22
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than
two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
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5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as
quickly as possible and that their vote is important. One copy
will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal as to references to the
Fund, the Underwriter or any affiliate of either.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
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<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate
the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
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SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Scudder Variable Life Insurance Fund
Capital Growth Portfolio
Bond Portfolio
International Portfolio
American Century Variable Portfolios, Inc.
VP Capital Appreciation Fund
Calvert Social Balanced Portfolio
26
Exhibit 8(d)(ii)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 30th day of April,
1995 by and among MUTUAL OF AMERICA LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
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WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and/or variable annuity contracts under the 1933 Act;
and
WHEREAS, the Company may also issue certain variable annuity
contracts that are exempt from registration under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable life insurance
and variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as
a unit investment trust under the 1940 Act if such Account is required to be
registered under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and/or variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:00 a.m. Boston time on
the next following Business Day.
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"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available in the Accounts and under the variable annuity policies
and/or variable annuity contracts with the form number(s) which are listed on
Schedule A attached hereto and incorporated herein by this reference, as such
Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund then utilized by the
Accounts; or (b) the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other
3
<PAGE>
investment company available as a funding vehicle for the Contracts; or (c) such
other investment company was available as a funding vehicle for the Contracts
prior to the date of this Agreement and the Company so informs the Fund and
Underwriter prior to their signing this Agreement (a list of such funds
appearing on Schedule C to this Agreement); or (d) the Fund or Underwriter
consents to the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire,
and if more than one Account is entering a purchase order on a particular day
payments on behalf of multiple Accounts may be aggregated for purchases of
Portfolio shares. However, if one or more Accounts are redeeming shares on a
given day the amount of any redemptions may NOT be netted against any purchases,
by that Account or other Accounts. For purpose of Section 2.10 and 2.11, upon
receipt by the Fund of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act if registration is required under the 1933
Act; that the Contracts will be issued and sold in compliance in all material
respects with all applicable Federal and State laws and that the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established each Account prior to any issuance
or sale thereof as a segregated asset account under Section 4240 of the New York
Insurance Code and has registered or, prior to any
4
<PAGE>
issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts if such registration is required
under the 1940 Act.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently treated
as endowment, life insurance or annuity contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State
5
<PAGE>
of New York and all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film (in either or both of two
sizes, per the Company's request: 8.375" by 10.875" and 5.375" by 8.375")
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies' prospectuses
and statements of additional information. Except as provided in the following
three sentences, all expenses of
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<PAGE>
printing and distributing Fund prospectuses and Statements of Additional
Information shall be the expense of the Company. For prospectuses and Statements
of Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or the
1940 Act, the cost of printing shall be borne by the Fund. If the Company
chooses to receive camera-ready film or computer diskettes in lieu of receiving
printed copies of the Fund's prospectus, the Fund will reimburse the Company in
an amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same procedures
shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners. If requested by the
Company, the Fund shall provide camera ready film containing the Fund's
semi-annual and annual reports to shareholders.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate
account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
7
<PAGE>
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
8
<PAGE>
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other securities regulatory authorities, and brochures for
Contracts not registered under the 1933 Act, contemporaneously with their first
use by the Company.
4.7. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
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<PAGE>
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the
10
<PAGE>
assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented to a vote of all
affected Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account, provided,
however, that the Company shall have the right to choose which course of action
is appropriate if more than one is available to remedy the problem.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
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7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained
in the Contracts or sales literature for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to the
Company by or on behalf of the Fund for use in the Registration
Statement or prospectus for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Fund shares or
approved by the Fund or its designee under Section 4.1 hereof; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained
in the Registration Statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its
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<PAGE>
control) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts
or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation. The
Indemnified Parties shall not settle or
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<PAGE>
otherwise compromise any claim for which indemnification may be sought from the
Company without the Company's prior written consent.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the Registration Statement or prospectus or sales
literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of
the Company for use in the Registration Statement or
prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration Statement,
prospectus or sales literature for the Contracts not
supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or
Underwriter or persons under their control, with respect
to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the
Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements
14
<PAGE>
therein not misleading, if such statement or omission
was made in reliance upon information furnished to the
Company by or on behalf of the Fund or the approval of
the Fund or its designee under Section 4.1 hereof; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any
other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnified Parties shall not settle or otherwise compromise
any claim for which indemnification may be sought from the Underwriter without
the Underwriter's prior written consent.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
15
<PAGE>
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement (including a failure to comply with
the diversification requirements specified in Article VI
of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
16
<PAGE>
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by ninety (90) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any
of the Portfolio's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
17
<PAGE>
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by 30 days'
written notice to the Company (or by immediate written notice
to the Company in the event of a material adverse change in
financial condition), if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in
its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice
to the Company, if the Company gives the Fund and the
Underwriter the written notice specified in Section 1.6(b)
hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision of
this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty five (45) days after
the notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the
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Company shall not prevent Contract Owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund or the Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company before 6/2/95:
Mutual of America Life Insurance Company
666 Fifth Avenue
New York, NY 10103
Attention: General Counsel
If to the Company after 6/1/95
Mutual of America Life Insurance Company
320 Park Avenue
New York, NY 10022
Attn: General Counsel
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
19
<PAGE>
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any), as
soon as practical and in any event within 120 days after the
end of each fiscal year, in each case with any report thereon
submitted to the Company by independent accountants;
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(b) the Company's quarterly statements (statutory) (and GAAP, if
any), as soon as practical and in any event within 60 days
after the end of each quarterly period;
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon
as practical after the delivery thereof to stockholders,
excluding regular or periodic notices and reports to
policyholders and contract owners pertaining to the
operations, benefits or status of their contracts with the
Company;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission not provided under Section 4.6 hereof, and any
other financial statement filed with any state insurance
regulator, together with any report thereon submitted to the
Company by independent accountants, as soon as practical after
the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof, provided that nothing in
this subsection (e) shall require the Company to provide any
information that is otherwise privileged or confidential.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
By: /s/ Manfred Altstadt
-------------------------------------
Name: Manfred Altstadt
-----------------------------------
Title: Sr. Executive V.P. & CFO
----------------------------------
VARIABLE INSURANCE PRODUCTS FUND II FIDELITY DISTRIBUTORS CORPORATION
By: /s/ J. Gary Burkhead By: /s/ Kurt A. Lange
-------------------------------- -------------------------------------
J. Gary Burkhead Kurt A. Lange
Senior Vice President President
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Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Date Policy Form Numbers of Contracts
Established by Board of Directors Funded By Separate Account
- --------------------------------- --------------------------
Separate Account No. 1 DCC-3050
DAC-DB-NC/C Series
PIC-DB-8720
IAC-8700
Separate Account No. 2 TDA-3300
VEC-3200
PEDC-3085
3805-FPA
3809-FPA(E)
3814-IRA
IAC-8700
Separate Account No. 3 3410-VUL
22
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than
two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
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5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as
quickly as possible and that their vote is important. One copy
will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal as to references to the
Fund, the Underwriter or any affiliate of either.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
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<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate
the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
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SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Scudder Variable Life Insurance Fund
Capital Growth Portfolio
Bond Portfolio
International Portfolio
American Century Variable Portfolios, Inc.
VP Capital Appreciation Fund
Calvert Social Balanced Portfolio
26
Mutual of America Life Insurance Company
Exhibit 9
Description of
Issuance, Face Amount Increase
Transfer and Redemption Procedures
Required by Rule 6e-3(T)(b)(12)(iii)
Under the Investment Company Act of 1940
July 21, 1999
BACKGROUND
Rule 6e-3(T)(b)(12) under the Investment Company Act of 1940 ("1940 Act")
provides an exemption for separate accounts, their investment advisers,
principal underwriters and sponsoring insurance company from Section 22(d),
22(e) and 27(c)(1) of the 1940 Act and Rule 22c-1 thereunder, for issuance, face
amount increase, transfer and redemption procedures under flexible premium
variable life insurance policies to the extent necessary to comply with Rule
6e-3(T), state administrative law or established administrative procedures of
the life insurance company. In order to qualify for the exemption, procedures
must be reasonable, fair and not discriminatory, and they must be disclosed in
the registration statement filed by the separate account.
This exhibit is furnished in connection with the registration statement on Form
S-6 (the "Registration Statement") filed under the Securities Act of 1933 (the
"1933 Act") by Mutual of America Separate Account No. 3 (the "Account") of
Mutual of America Life Insurance Company ("Mutual of America") and Mutual of
America covering certain variable universal life insurance policies, policy form
No. (the "policies"). Concurrently with the filing of the Registration
Statement, a notification of registration on Form N-8A and a registration
statement on Form N-8B-2 was filed under the 1940 Act, registering the Account
as a unit investment trust.
The Account is currently divided into seventeen sub-accounts ("investment
funds"), each of which invests in one of: (a) the following nine Funds of Mutual
of America Investment Corporation (the "Investment Corporation"): the Money
Market, All America, Aggressive Equity, Equity Index, Mid-Cap Eqity Index, Bond,
Short-Term Bond, Mid-Term Bond and Composite Funds; or (b) the following three
Portfolios of Scudder Variable Life Investment Fund ("Scudder"): Capital Growth,
Bond and International Portfolios; or (c) the Equity-Income Portfolio of the
Variable Insurance Products Fund ("Fidelity VIP") and the Asset Manager and
Contrafund Portfolios of the Variable Insurance Products Fund II ("Fidelity VIP
II"); or (d) the VP Capital Appreciation Fund of American Century Variable
Portfolios, Inc. ("American Century"); or (e) the Calvert Social Balanced
Portfolio of Calvert Variable Series, Inc. ("Calvert"). The Investment
Corporation, Scudder, Fidelity VIP and VIP II, American Century and Calvert are
together referred to as the "Underlying Funds" and their respective Funds or
Portfolios as the "Underlying Fund Portfolios." Each Underlying Fund is
registered under the 1940 Act as an open-end, management investment company of
the "series type."
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Each investment fund is available for allocation of premiums under the policies.
Procedures apply equally to each investment fund and for purposes of this
description are defined in terms of the Account, except where a discussion of
both the Account and its investment funds is necessary. The investment
experience of the investment funds depends on the investment performance of the
corresponding Underlying Fund Portfolios. Although variable universal life
insurance policies funded through the Account may also provide for fixed
benefits funded through Mutual of America's general account, except as otherwise
explicitly stated herein, this description assumes that premiums are allocated
exclusively to the Account and that all transactions involve only the investment
funds of the Account.
Mutual of America believes its procedures meet the requirements of Rule
6e-3(T)(b)(12)(iii) and states the following:
1. Because of the insurance nature of the policies and due to the
requirements of state insurance laws, the procedures necessarily differ in
significant respects from procedures for mutual funds and contractual
plans for which the 1940 Act was designed.
2. Many of the procedures used by Mutual of America have been adopted from
established procedures for variable universal life insurance policies of
other companies, including those of its wholly-owned subsidiary, The
American Life Insurance Company of New York.
3. In structuring its procedures to comply with Rule 6e-3(T), state insurance
laws and established administrative procedures, Mutual of America has
attempted to comply with the intent of the 1940 Act, to the extent deemed
feasible.
4. In general, state insurance laws require that Mutual of America's
procedures be reasonable, fair and not discriminatory.
5. Because of the nature of the insurance product, it is often difficult to
determine precisely when Mutual of America's procedures deviate from those
required under Section 22(d), 22(e) or 27(c)(1) of the 1940 Act or Rule
22c-1 thereunder. Accordingly, set out below is a summary of the principal
policy provisions and procedures not otherwise described in the prospectus
which may be deemed to constitute, either directly or indirectly, such a
deviation. The summary, while comprehensive, does not attempt to treat
each and every procedure or variation which might occur and does include
certain procedural steps which do not constitute deviations from the
above-cited sections or rule.
PROCEDURES
I. Public Offering Price: Purchase and Related Transactions - Section 22(d)
and Rule 22c-2
This section outlines those principal policy provisions and administrative
procedures which might be deemed to constitute, either directly or indirectly, a
"purchase" transaction. Because of
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the insurance nature of the policies, the procedures involved necessarily differ
in certain significant respects from the purchase procedures for mutual funds
and contractual plans. The chief differences revolve around the structure of the
cost of insurance charges and the insurance underwriting (i.e., evaluation of
risk) process. There are also certain policy provisions--such as reinstatement
and loan repayment--which do not result in the issuance of a policy but which
require certain payments by the policyowner and may involve a transfer of assets
supporting the policy reserve into the Account.
a. Insurance Charges and Underwriting Standards
Cost of insurance charges for Mutual of America's policies will not be the same
for all policyowners. The chief reason is that the principle of pooling and
distribution of mortality risks is based upon the assumption that each
policyowner pays a cost of insurance charge commensurate with the insured's
mortality risk. Mortality risk is actuarially determined based upon factors such
as age, sex, health, smoking status and occupation, except that sex is not a
factor (rates are unisex) for policies purchased under payroll deduction
programs. In the context of life insurance, a uniform mortality charge (the
"cost of insurance charge") for all insureds would discriminate unfairly in
favor of those insured's representing greater mortality risks to the
disadvantage of those representing lesser risks.
Accordingly, although there will be a uniform "public offering price" for all
policyowners, because premiums are flexible and amounts allocate to the account
will be subject to the same deductions (as described above), there will be a
different "price" for each actuarial category of policyowners because different
cost of insurance rates will apply. The "price" will also vary based on net
amount at risk. The policies will be offered and sold pursuant to this cost of
insurance schedule and our underwriting standards and in accordance with state
insurance laws. State laws prohibit unfair discrimination among insureds, but
recognize that premiums must be based upon mortality factors. A table showing
the maximum cost of insurance charges will be delivered as part of the policy.
Those maximum cost of insurance charges will not exceed rates permitted by the
1980 Commissioner's Standard Ordinary mortality table for the insured's premium
class.
b. Application and Initial Premium Processing
Upon receipt of a completed application from a prospective policyowner, Mutual
of America will follow certain insurance underwriting (i.e., evaluation of
risks) procedures designed to determine whether the proposed insured is
insurable. This process may involve such verification procedures as medical
examinations and may require that further information be provided by the
proposed policyowner before a determination can be made. A policy cannot be
physically issued through Mutual of America's computerized issue system until
this underwriting procedure has been completed. These processing procedures will
not dilute any benefit payable to any existing policyowner.
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i. Direct Mail Sales
We may solicit sales of the policies by mail. To request issuance of a policy,
an applicant will complete an application for a policy with a face amount of no
more than $100,000 and pay an initial premium based on the age and sex of the
proposed insured and the requested face amount. We will determine whether or not
to issue a policy based on our underwriting standards. A medical underwriting
may be required. Under our current underwriting guidelines, which we may change
from time to time, no medical underwriting is required if the applicant's
responses to medical and health questions on the application are acceptable to
us and the face amount is $100,000 or less for persons age 50 or less, $50,000
or less for persons age 50 to 60, and $25,000 for persons age 61 to 65. If the
proposed insured is determined by us to be an insurable risk at a standard
rating class as of the date of the application, the policy will be issued. In
such case the effective date of the policy will be the date we receive the
application, provided the first scheduled premium was paid with the application
and the check was honored on first presentation or the authorization for
transmittal of funds to us was properly in effect. Cost of insurance charges
will be assessed for the period prior to policy issuance if a standard policy is
issued. Until the date the policy is issued, the initial premium will be placed
in Mutual of America's general account and credited with interest at an annual
rate of not less than 3%. If the policy is not issued, the premium will be
returned with interest.
ii. Conditional Receipt of Premium Prior to Policy Issuance
For policies with a certain face amount (generally over $100,000) and policies
with any face amount sold in person by one of our representatives, generally an
applicant may make an initial payment and receive a conditional receipt for the
money paid at the time the application is submitted. The issuance of a policy to
the applicant is conditioned upon the satisfactory completion of our
underwriting process, which generally will require a medical underwriting for
face amount of more than $100,000 for up to age 50, more than $50,000 for ages
51-60 and $25,000 for ages 61-65 and for all face amounts for ages over 65.
If the total of the face amount (including any accidental death benefit) applied
for plus any face amount in force under any existing policies with Mutual of
America on any one life exceeds $1,000,000, or if the total amount of the
current application, together with insurance in force in all companies exceeds
$1,500,000, no money may be collected when the application is completed or at
any later date preceding the date when underwriting has been completed and an
issued policy is being delivered. Should any money be collected contrary to this
rule, such money will be refunded immediately, directly to the proposed
policyholder. However, the underwriting processing will continue.
If after the medical examination the proposed insured is determined to be an
insurable risk at a standard rating class as of the time of the application and
for the face amount requested, the policy will be effective from the date such
requirements are met, regardless of any subsequent change in the insurability of
the insured, limited to $150,000 of life insurance for a person age 16-65 and
$100,000 for all other persons, provided the check was honored on first
presentation
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<PAGE>
or the authorization for transmittal of funds to us was in effect. A policy will
be issued if the application is approved upon completion of the underwriting.
The maximum deposit that may be taken is $25,000. Deposits will be placed in
Mutual of America's general account and will be credited with interest at an
annual rate of not less than 3%. If the application is rejected after the
underwriting is completed, or the underwriting process is not completed within
60 days, or it appears the rating classification applied for (or within certain
parameters) will not be approved, we will refund the deposit with interest.
iii. Payroll Deduction Program
We may sell policies and collect premiums through payroll deduction programs
established with employers. Under such a program, an employer will act as agent
for its participating employees to collect and remit premium payments from
policyowners to us. We may use group underwriting guidelines for the program,
such as simplified underwriting or guaranteed issue rules, based on the nature
of the employer's business and the percentage of employees participating. Each
participating employee will sign a payroll deduction authorization at the time
an application is completed. If applicable underwriting standards are met,
insurance coverage will begin at the time of the application and authorization.
If underwriting standards are not met, the application (or the excess face
amount over guaranteed issue or simplified underwriting) will be underwritten in
accordance with underwriting guidelines for individual applicants. In that case,
insurance coverage, or coverage for amounts in excess of the plan amounts if
applicable, will begin only at the time the first full premium for such coverage
is paid and the policy is delivered. Payroll deductions will be made for excess
amounts during the time an application is being individually underwritten and
will be refunded if the coverage is not approved. Due to the possibility of
small scheduled premiums under a payroll deduction program, a policy will be
dated as of a payroll date during the second month of payroll deductions for the
policy, and cost of insurance charges will not be imposed until after that date.
c. Lapse and Reinstatement
A lapsed policy may be reinstated if our underwriting requirements for lapsed
policies are satisfied. Underwriting requirements are based on the number of
days the policy has been lapsed, the age of the insured and the face amount of
the policy to be reinstated. A reinstatement application may be sufficient, or a
medical examination may be required to determine insurability. If the policy has
been lapsed for one year or less, we will reinstate the policy even if the
current mortality rating classification of the insured is more substandard than
the mortality rating classification under the policy to be reinstated, with the
number of days of lapse determining the extent of the variation we will accept.
II. Face Amount Increases or Decreases
For a face amount increase, new evidence of the insured's insurability may be
required and a determination will be made regarding the cost of insurance rate
classification of the insured with
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<PAGE>
respect to the portion of face amount to be added by the increase. A decrease in
face amount generally will be applied to face amount increases in reverse order
of when they were made (i.e., the face amount added by the most recent increase
will be the first to be reduced) and then will reduce the original face amount.
III. Redemption Procedures: Surrender and Related Transactions
Mutual of America's policies provide for the payment of monies to a policyowner
or beneficiary (the "payee") upon presentation of a policy. Generally, except
for the payment of death benefits and the imposition of cost of insurance and
administrative charges, the payee will receive his or her allocated share of the
Account's assets within the meaning of the 1940 Act in any transaction involving
"redemption procedures". The amount received by the payee will depend upon the
particular benefit for which the policy is presented, including, for example,
the "Surrender Proceeds", "Death Proceeds" or "Accelerated Benefit". For partial
withdrawals and policy loans, the policy need not be presented to Mutual of
America, but such transactions will affect the policyowner's benefits and may
involve a transfer of the assets out of the Account. Any combined transactions
on the same day which counteract the effect of each other will be allowed. We
will assume the policyowner is aware of the conflicting nature of these
transactions and desires their combined result. In addition, if a transaction is
requested which we will not allow (for example, a request for a decrease in face
amount which lowers the face amount below our minimum) we will reject the whole
request and not just the portion which causes the disallowance. Policyowners
will be informed of the rejection and will have an opportunity to give new
instructions. Finally, state insurance law may require that certain requirements
be met before Mutual of America is permitted to make payments to the payee.
a. Surrender Proceeds
Mutual of America will pay Surrender Proceeds out of its general account within
seven days of its receipt of the policy and a written surrender request in a
form satisfactory to Mutual of America. At the same time that such a payment is
made from the general account, Mutual of America will transfer assets from the
Account to the general account in an amount attributable to the policy. The
amount of the Surrender Proceeds will be calculated based upon the account value
next computed after the receipt of the policy and the written surrender request
in a form satisfactory to Mutual of America.
b. Death Proceeds
Mutual of America will pay Death Proceeds to the beneficiary of a policy within
seven days after receipt, at its Processing Office, of the policy, due proof of
death of the insured, and satisfaction of all other requirements necessary to
make payment, including state insurance law provisions. For example, state
insurance laws impose various requirements, such as receipt of a tax waiver,
before payment of Death Proceeds may be made. In addition payment of Death
Proceeds is subject to the policies' provisions regarding suicide,
incontestability and misrepresentation or misstatement of age or sex.
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Mutual of America will pay Death Proceeds out of its general account and will
transfer assets from the Account to the general account in an amount
attributable to the policy. The excess, if any, of the death benefit over that
amount transferred will be paid out of the general account.
c. Transfers of Policy Values
The policies permit transfers of values among the investment funds, from any
investment fund to the general account and from the general account to any of
the investment funds. All transfers out of an investment fund will be effected
at the accumulation unit value next computed after receipt of a valid transfer
request. All transfers into an investment fund will be effected at the
accumulation unit value next computed after receipt of a valid transfer request.
d. Policy Loans
Policy loans are permitted only from amounts in the general account.
Accordingly, if the amounts in the general account are not sufficient for the
size of loan desired, the policy owner must first transfer values from one or
more of the investment funds to the general account. Such transfers will be
effected in the same way as other transfers.
e. Accelerated Benefits
To the extent permitted by state law, a policyowner may be eligible to be paid a
lump-sum Accelerated Benefit equal to a portion of the Death Proceeds that would
be payable upon the "valid transaction date" (as defined in the policy and
registration statement) as of which the Accelerated Benefit is calculated,
provided that the insured is determine to have terminal illness (a state of
health where the insured's life expectancy is 12 months or less).
Mutual of America will pay the Accelerated Benefit out of its general account
and, in connection with a reduction in the account value of the policy by the
same proportion as the Accelerated Death Benefit bears to the Death Proceeds
that otherwise would have been payable, may transfer assets from the Account to
the general account.
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Exhibit 10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
New York, New York
July 21, 1999
Exhibit 11
[Jones & Blouch L.L.P. Letterhead]
July 21, 1999
Mutual of America Life Insurance Company
320 Park Avenue
New York, New York 10022
Gentlemen/Ladies:
We hereby consent to the reference to this firm under the caption "Legal
Matters" in the prospectus contained in the registration statement on Form S-6
of Mutual of America Separate Account No. 3 and Mutual of America Life Insurance
Company to be filed with the Securities and Exchange Commission.
Very truly yours,
/s/ Jones & Blouch L.L.P.
