File Nos. 333-
811-09693
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
(Check appropriate box or boxes.)
CONSECO VARIABLE ANNUITY ACCOUNT H
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(Exact Name of Registrant)
CONSECO VARIABLE INSURANCE COMPANY
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(Name of Depositor)
11825 N. Pennsylvania Street
Carmel, Indiana 46032-4572
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (317) 817-3700
Name and Address of Agent for Service
Michael A. Colliflower
Conseco Variable Insurance Company
11825 N. Pennsylvania Street
Carmel, Indiana 46032-4572
(317) 817-3700
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Title of Securities Registered:
Individual Variable Annuity Contracts
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS REFERENCE SHEET
(required by Rule 495)
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ITEM NO. Location
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PART A
Item 1. Cover Page Cover Page
Item 2. Definitions Index of Special Terms
Item 3. Synopsis Highlights
Item 4. Condensed Financial Information Not Applicable
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies Other Information -
Conseco Variable; The
Separate Accounts;
Investment Options
Item 6. Deductions and Expenses Expenses
Item 7. General Description of Variable
Annuity Contracts The Annuity Contract
Item 8. Annuity Period Annuity Payments
(The Annuity Period)
Item 9. Death Benefit Death Benefit
Item 10. Purchases and Contract Value Purchase
Item 11. Redemptions Access to Your Money
Item 12. Taxes Taxes
Item 13. Legal Proceedings None
Item 14. Table of Contents of the Statement
of Additional Information Table of Contents of the
Statement of Additional
Information
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CROSS REFERENCE SHEET
(required by Rule 495)
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ITEM NO. LOCATION
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PART B
Item 15. Cover Page Cover Page
Item 16. Table of Contents Table of Contents
Item 17. General Information and History Company
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Offered Not Applicable
Item 20. Underwriters Distribution
Item 21. Calculation of Performance Data Calculation of Performance
Information
Item 22. Annuity Payments Annuity Provisions
Item 23. Financial Statements Financial Statements
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PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered in Part C to this Registration Statement.
PART A
THE FIXED AND VARIABLE ANNUITY
ISSUED BY
CONSECO VARIABLE ANNUITY ACCOUNT H
AND
CONSECO VARIABLE INSURANCE COMPANY
(FORMERLY GREAT AMERICAN RESERVE INSURANCE COMPANY)
This prospectus describes the individual fixed and variable annuity contracts
offered by Conseco Variable Insurance Company (we, us, our). This contract
provides for the accumulation of contract values and subsequent annuity payments
on a fixed basis, a variable basis or a combination of both.
The annuity contract has 41 investment options - a fixed account of ours and 40
investment portfolios listed below. You can put your money in the fixed account
and/or the investment portfolios. Currently, you can invest in up to 15
investment portfolios at one time. In certain states, your contract may not
contain a fixed account option.
CONSECO SERIES TRUST
Managed by Conseco Capital Management, Inc.
Balanced Portfolio
Equity Portfolio
Fixed Income Portfolio
Government Securities Portfolio
Money Market Portfolio
THE ALGER AMERICAN FUND Managed by Fred Alger Management, Inc.
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization
Portfolio
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.
Managed by American Century Investment
Management, Inc.
VP Income & Growth
VP International
VP Value
BERGER INSTITUTIONAL PRODUCTS TRUST Managed by Berger Associates, Inc.
Berger IPT--100 Fund
Berger IPT--Growth and Income Fund
Berger IPT--Small Company Growth Fund
Managed by BBOI Worldwide, LLC
Berger/BIAM IPT--International Fund
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC.
Managed by The Dreyfus Corporation
DREYFUS STOCK INDEX FUND
Managed by The Dreyfus Corporation
DREYFUS VARIABLE INVESTMENT FUND
Managed by The Dreyfus Corporation
Disciplined Stock Portfolio
International Value Portfolio
FEDERATED INSURANCE SERIES
Managed by Federated Investment Management Co.
Federated High Income Bond Fund II
Federated Utility Fund II
Managed by Federated Global Investment
Management Corp.
Federated International Equity Fund II
INVESCO VARIABLE INVESTMENT FUNDS,
INC.
Managed by INVESCO Funds Group, Inc.
INVESCO VIF - High Yield Fund
INVESCO VIF - Equity Income Fund
JANUS ASPEN SERIES
Managed by Janus Capital Corporation
Aggressive Growth Portfolio
Growth Portfolio
Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC.
Managed by Lazard Asset Management
Lazard Retirement Equity Portfolio
Lazard Retirement Small Cap Portfolio
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST
Managed by Mitchell Hutchins Asset Management,
Inc.
Growth and Income Portfolio
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Managed by Neuberger Berman Management Inc.
Limited Maturity Bond Portfolio
Partners Portfolio
STRONG OPPORTUNITY FUND II, INC.
Managed by Strong Capital Management, Inc.
Opportunity Fund II
STRONG VARIABLE INSURANCE FUNDS, INC.
Managed by Strong Capital Management, Inc.
Strong MidCap Growth Fund II
VAN ECK WORLDWIDE INSURANCE TRUST
Managed by Van Eck Associates Corporation
Worldwide Bond Fund
Worldwide Emerging Markets Fund
Worldwide Hard Assets Fund
Worldwide Real Estate Fund
Please read this prospectus before investing. You should keep it for future
reference. It contains important information about the contracts.
To learn more about the contract, you can obtain a copy of our Statement of
Additional Information (SAI) dated _______, 1999. The SAI has been filed with
the Securities and Exchange Commission (SEC) and is legally a part of this
prospectus. The SEC has a Web site (http://www.sec.gov) that contains the SAI,
material incorporated by reference, and other information regarding companies
that file electronically with the SEC. The Table of Contents of the SAI is on
page __ of this prospectus. For a free copy of the SAI, call us at (800)
824-2726 or write us at our administrative office: 11815 N. Pennsylvania Street,
Carmel, Indiana 46032-4555.
The contracts:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
_________, 1999
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TABLE OF CONTENTS
INDEX OF SPECIAL TERMS............................................................................................i
FEE TABLE..........................................................................................................
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THE CONSECO ADVANTAGE PLUS ANNUITY CONTRACT......................................................................21
ANNUITY PAYMENTS (THE ANNUITY PERIOD)............................................................................22
PURCHASE.........................................................................................................24
INVESTMENT OPTIONS...............................................................................................26
EXPENSES.........................................................................................................34
TAXES............................................................................................................38
ACCESS TO YOUR MONEY.............................................................................................40
PERFORMANCE......................................................................................................42
DEATH BENEFIT....................................................................................................42
OTHER INFORMATION................................................................................................43
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.....................................................48
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INDEX OF SPECIAL TERMS
We have written this prospectus in plain English. By the very nature of the
contract, however, certain technical words or terms are unavoidable. We have
identified the following as some of these words or terms below. The page
reference indicated here is where you will find the best explanation for the
word or term. These words and terms are in italics on the indicated page.
Accumulation Period.................................
Accumulation Unit..........................
Annuitant..................................
Annuity Date...............................
Annuity Options............................
Annuity Payments...........................
Annuity Period.............................
Annuity Unit...............................
Beneficiary................................
Contract...................................
Fixed Account..............................
Investment Portfolios......................
Joint Owner................................
Non-Qualified..............................
Owner......................................
Purchase Payment...........................
Qualified..................................
Tax-Deferral...............................
HIGHLIGHTS
The variable annuity contract that we are offering is a contract between you,
the owner, and us, the insurance company. The contract provides a means for
investing on a tax-deferred basis in our fixed account (where available) and 40
investment portfolios. The contract is intended for retirement savings or other
long-term tax-deferred investment purposes.
The contract has a purchase payment credit feature under which we will credit an
additional 4% to each purchase payment you make. We call this the bonus feature.
The contract also offers an optional guaranteed minimum death benefit and an
optional guaranteed minimum income benefit option. These options guarantee
minimum death benefit and annuity payment amounts. There is an additional charge
for these options.
All deferred annuity contracts, like the contract, have two periods: the
accumulation period and the annuity period. During the accumulation period,
earnings accumulate on a tax-deferred basis and are taxed as ordinary income
when you make a withdrawal. If you make a withdrawal during the accumulation
period, we may assess a charge of up to 8% of each purchase payment withdrawn.
The annuity period occurs when you begin receiving regular annuity payments from
your contract.
You can choose to receive annuity payments on a variable basis, on a fixed basis
or a combination of both. If you choose variable payments, the amount of the
variable annuity payments will depend upon the investment performance of the
investment portfolios you select for the annuity period. If you choose fixed
payments, the amount of the fixed annuity payments are constant for the entire
annuity period.
Free Look. If you cancel the contract within 10 days after receiving it (or
whatever longer time period is required in your state), we will cancel the
contract without assessing a contingent deferred sales charge. You will receive
whatever your contract is worth on the day we receive your request (less the
purchase payment credit). This may be more or less than your original payment.
We will return your original payment if required by law.
Tax Penalty. The earnings in your contract are not taxed until you take money
out of your contract. If you take money out during the accumulation period,
earnings come out first and are taxed as ordinary income. If you are younger
than 59 1/2 when you take money out, you may be charged a 10% federal tax
penalty on those earnings. Payments during the annuity period are considered
partly a return of your original investment. The part of each payment that is a
return of your investment is not taxable as income.
Inquiries. If you need more information, please contact us at:
Conseco Variable Insurance Company
11815 N. Pennsylvania Street
Carmel, Indiana 46032
(800) 824-2726
FEE TABLE
The purpose of the Fee Table is to show you the various contract expenses you
will pay directly or indirectly. The Fee Table reflects expenses of the Separate
Account as well as the investment portfolios.
OWNER TRANSACTION EXPENSES:
Contingent Deferred Sales Charge: (as a percentage of purchase payments)(See
Note 1)
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No. of Contract Years from Contingent Deferred
Receipt of Purchase Payment Sales Charge Percent
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0-1 8%
2 8%
3 8%
4 8%
5 7%
6 6%
7 5%
8 3%
9 1%
10 and more 0%
Transfer Fee: (See Note 2) No charge for one transfer in each 30 day period
during the accumulation period. Thereafter, we
will charge a fee of $25 per transfer. We will not
charge for the two transfers allowed each
contract year during the annuity period.
Contract Maintenance Charge: (See Note 3) $30 per contract per year
Separate Account Annual Expenses: (See Note 4)
(as a percentage of average account value)
Total Separate Account
Insurance Charges Annual Expenses
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Standard contract...................................... 1.40% 1.40%
Contract with guaranteed minimum death benefit ........ 1.70% 1.70%
Contract with guaranteed minimum death benefit
and guaranteed minimum income benefit................... 2.00% 2.00%
</TABLE>
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INVESTMENT PORTFOLIO EXPENSES:
(as a percentage of the average daily net assets of an investment portfolio)
OTHER EXPENSES
(AFTER
EXPENSE TOTAL ANNUAL
REIMBURSEMENT PORTFOLIO EXPENSES
FOR CERTAIN (AFTER EXPENSE
PORTFOLIOS) REIMBURSEMENT FOR
MANAGEMENT 12b-1 CERTAIN
FEES FEES PORTFOLIOS)
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CONSECO SERIES TRUST (6)
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Balanced Portfolio (7)................................ 0.75% -- 0.00% 0.75%
Equity Portfolio (7).................................. 0.80% -- 0.00% 0.80%
Fixed Income Portfolio................................ 0.70% - - 0.00% 0.70%
Government Securities Portfolio....................... 0.70% -- 0.00% 0.70%
Money Market Portfolio (7)............................ 0.45% -- 0.00% 0.45%
THE ALGER AMERICAN FUND
Alger American Growth Portfolio....................... 0.75% -- 0.04% 0.79%
Alger American Leveraged AllCap Portfolio (8)......... 0.85% -- 0.11% 0.96%
Alger American Mid Cap Growth Portfolio............... 0.80% -- 0.04% 0.84%
Alger American Small Capitalization Portfolio......... 0.85% -- 0.04% 0.89%
AMERICAN CENTURY VARIABLE PORTFOLIOS,
INC.
VP Income & Growth.................................... 0.70% -- 0.00% 0.70%
VP International...................................... 1.50% -- 0.00% 1.50%
VP Value.............................................. 1.00% -- 0.00% 1.00%
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--100 Fund (9).............................. 0.00% -- 1.00% 1.00%
Berger IPT--Growth and Income Fund (9)................ 0.00% -- 1.00% 1.00%
Berger IPT--Small Company Growth Fund (9)............. 0.00% -- 1.15% 1.15%
Berger/BIAM IPT--International Fund (9)............... 0.00% -- 1.20% 1.20%
THE DREYFUS SOCIALLY RESPONSIBLE 0.75% -- 0.05% 0.80%
GROWTH FUND, INC
DREYFUS STOCK INDEX FUND 0.25% -- 0.01% 0.26%
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio........................... 0.75% -- 0.13% 0.88%
International Value Portfolio......................... 1.00% -- 0.29% 1.29%
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II.................... 0.60% -- 0.18% 0.78%
Federated International Equity Fund II (10)........... 0.53% -- 0.72% 1.25%
Federated Utility Fund II (10)........................ 0.68% -- 0.25% 0.93%
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield Fund (11).................... 0.60% -- 0.47% 1.07%
INVESCO VIF - Equity Income Fund (11) (12)............ 0.75% -- 0.18% 0.93%
JANUS ASPEN SERIES
Aggressive Growth Portfolio.......................... 0.72% -- 0.03% 0.75%
Growth Portfolio (13)................................. 0.65% -- 0.03% 0.68%
Worldwide Growth Portfolio (13)....................... 0.65% -- 0.07% 0.72%
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio (14)............... 0.75% 0.25% 0.25% 1.25%
Lazard Retirement Small Cap Portfolio (14)............ 0.75% 0.25% 0.25% 1.25%
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio........................... 0.50% -- 0.26% 0.76%
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio........................... 0.70% -- 0.34% 1.04%
NEUBERGER BERMAN ADVISERS MANAGEMENT
TRUST (15)
Limited Maturity Bond Portfolio....................... 0.65% -- 0.11% 0.76%
Partners Portfolio.................................... 0.78% -- 0.06% 0.84%
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II................................... 1.00% -- 0.14% 1.14%
STRONG VARIABLE INSURANCE FUNDS, INC
Strong Mid Cap Growth Fund II (16).................... 1.00% -- 0.20% 1.20%
VAN ECK WORLDWIDE INSURANCE TRUST (17)
Worldwide Bond Fund................................... 1.00% -- 0.15% 1.15%
Worldwide Emerging Markets Fund....................... 1.00% -- 0.50% 1.50%
Worldwide Hard Assets Fund............................ 1.00% -- 0.16% 1.16%
Worldwide Real Estate Fund............................ 0.89% -- 0.00% 0.89%
</TABLE>
EXAMPLES:
The Examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. For purposes
of these examples, the assumed average contract size is $_________.
The examples below assume that you do not elect the guaranteed minimum death
benefit or the guaranteed minimum income benefit. The expenses for your
contract would be higher if you elect these benefits.
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You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
(a) If you surrender your contract at the end of each time period
or if you annuitize your contract (except under certain
circumstances);
(b) If you do not surrender your contract.
TIME PERIODS
1 Year 3 Years
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CONSECO SERIES TRUST
Balanced (a) $ (a) $
(b) $ (b) $
Equity (a) $ (a) $
(b) $ (b) $
Fixed Income (a) $ (a) $
(b) $ (b) $
Government Securities (a) $ (a) $
(b) $ (b) $
Money Market (a) $ (a) $
(b) $ (b) $
THE ALGER AMERICAN FUND
Alger American Growth (a) $ (a) $
(b) $ (b) $
Alger American Leveraged AllCap (a) $ (a) $
(b) $ (b) $
Alger American MidCap Growth (a) $ (a) $
(b) $ (b) $
Alger American Small
Capitalization (a) $ (a) $
(b) $ (b) $
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth (a) $ (a) $
(b) $ (b) $
VP International (a) $ (a) $
(a) $ (b) $
VP Value (a) $ (a) $
(b) $ (b) $
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--100 (a) $ (a) $
(b) $ (b) $
Berger IPT--Growth and Income (a) $ (a) $
(b) $ (b) $
Berger IPT--Small Company
Growth (a) $ (a) $
(b) $ (b) $
Berger/BIAM IPT--International (a) $ (a) $
(b) $ (b) $
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC.
(a) $ (a) $
(b) $ (b) $
DREYFUS STOCK INDEX FUND
(a) $ (a) $
(b) $ (b) $
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock (a) $ (a) $
(b) $ (b) $
International Value (a) $ (a) $
(b) $ (b) $
FEDERATED INSURANCE SERIES
Federated High Income Bond II (a) $ (a) $
(b) $ (b) $
Federated International Equity II (a) $ (a) $
(b) $ (b) $
Federated Utility II (a) $ (a) $
(b) $ (b) $
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield (a) $ (a) $
(b) $ (b) $
INVESCO VIF - Equity Income (a) $ (a) $
(b) $ (b) $
JANUS ASPEN SERIES
Aggressive Growth (a) $ (a) $
(b) $ (b) $
Growth (a) $ (a) $
(b) $ (b) $
Worldwide Growth (a) $ (a) $
(b) $ (b) $
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity (a) $ (a) $
(b) $ (b) $
Lazard Retirement Small Cap (a) $ (a) $
(b) $ (b) $
LORD ABBETT SERIES FUND, INC.
Growth and Income (a) $ (a) $
(b) $ (b) $
MITCHELL HUTCHINS SERIES TRUST
Growth and Income (a) $ (a) $
(b) $ (b) $
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond (a) $ (a) $
(b) $ (b) $
Partners (a) $ (a) $
(b) $ (b) $
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II (a) $ (a) $
(b) $ (b) $
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong MidCap Growth II (a) $ (a) $
(b) $ (b) $
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond (a) $ (a) $
(b) $ (b) $
Worldwide Emerging Markets (a) $ (a) $
(b) $ (b) $
Worldwide Hard Assets (a) $ (a) $
(b) $ (b) $
Worldwide Real Estate (a) $ (a) $
(b) $ (b) $
</TABLE>
EXPLANATION OF FEE TABLE AND EXAMPLES:
1. Once each contract year you can take money out of your contract, without
the contingent deferred sales charge, of an amount equal to the greater of:
(i) 10% of the value of your contract (on a non-cumulative basis);
(ii) the IRS minimum distribution requirement for your contract if issued
in connection with certain Individual Retirement Annuities; or
(iii)the total of your purchase payments that have been in the contract
more than 9 complete years.
2. We will not charge you the transfer fee even if there is more than one
transfer in a 30-day period during the accumulation period if the transfer
is for the dollar cost averaging or rebalancing programs. We will also not
charge you a transfer fee on transfers made at the end of the free look
period. All reallocations made on the same day count as one transfer.
3. We will not charge the contract maintenance charge if the value of your
contract is $50,000 or more. However, if you make a complete withdrawal, we
will charge the full contract maintenance charge for the year.
4. The Fee Table and contract refer to Insurance Charges. The Insurance Charge
is equivalent to the aggregate charges that until recently were referred to
as a Mortality and Expense Risk Charge and an Administrative Charge by many
companies issuing variable annuity contracts. Throughout this prospectus we
will refer to this charge as an Insurance Charge.
5. Premium taxes are not reflected. Premium taxes may apply depending on the
state where you live.
6. The expense information in the table has been restated to reflect current
fees. Pursuant to a contractual arrangement with Conseco Series Trust,
Conseco Capital Management, Inc., the Trust's adviser, has agreed to waive
fees and/or reimburse portfolio expenses through 4/30/00, so that the
annual operating expenses of each portfolio are limited to the Total Annual
Expenses for each respective portfolio, as set forth above. This
arrangement does not cover interest, taxes, brokerage commissions, and
extraordinary expenses. The total percentages in the above table are after
reimbursement. In the absence of expense reimbursement, the total estimated
fees and expenses for 1999 would total: 0.83% for the Money Market
Portfolio; 0.97% for the Government Securities Portfolio; 0.89% for the
Fixed Income Portfolio; 1.01% for the Balanced Portfolio and 0.95% for the
Equity Portfolio.
7. Conseco Capital Management, Inc., since January 1, 1993, has waived its
management fees in excess of the annual rates set forth above. Absent such
fee waivers, the management fees would be: .85% for the Balanced Portfolio;
.85% for the Equity Portfolio; and .70% for the Money Market Portfolio.
8. The Alger American Leveraged AllCap Portfolio's "Other Expenses" includes
.03% of interest expense.
9. The Funds' investment advisers have agreed to waive their advisory fee and
reimburse the Funds for additional expenses to the extent that normal
operating expenses in any fiscal year, including the investment advisory
fee but excluding brokerage commissions, interest, taxes and extraordinary
expenses, of each of the Berger IPT--100 Fund and the Berger IPT--Growth
and Income Fund exceed 1.00%, the normal operating expenses in any fiscal
year of the Berger IPT--Small Company Growth Fund exceed 1.15%, and the
normal operating expenses of the Berger/BIAM IPT International Fund exceed
1.20% of the respective Fund's average daily net assets. Absent the waiver
and reimbursement, the Management Fee for the Berger IPT--100 Fund, Berger
IPT--Growth and Income Fund, the Berger IPT--Small Company Growth Fund and
the Berger/BIAM IPT--International Fund would have been .75%, .75%, .90%,
and .90% respectively, and their Total Annual Portfolio Expenses would have
been 2.88%, 1.99%, 2.19% and 2.85%, respectively.
10. In the absence of a voluntary waiver by Federated Investment Management
Company, the Funds' investment adviser, the Management Fee and Total Annual
Portfolio Expenses would have been 0.75% and 1.00%, respectively, for
Utility Fund II. Absent a voluntary waiver of the management fee and the
voluntary reimbursement of certain other operating expenses by Federated
Investment Management Company, the Management Fee and Total Annual
Portfolio Expenses for International Equity Fund II would have been 1.00%
and 1.72%, respectively.
11. The Fund's actual Total Annual Fund Operating Expenses were lower than the
figures shown because its transfer agent and/or custodian fees were reduced
under expense offset arrangements. Because of an SEC requirement, the
figures shown do not reflect these reductions.
12. Certain expenses of the Fund are being absorbed voluntarily by INVESCO
Funds Group, Inc. pursuant to a commitment to the Fund. In the absence of
such absorption, Other Expenses and Total Annual Fund Operating Expenses
for the year ended December 31, 1998 were 0.42% and 1.17%, respectively.
This commitment may be changed at any time following consultation with the
board of directors.
13. The expense figures shown are net of certain fee waivers or reductions from
Janus Capital Corporation, the investment adviser of the Janus Aspen
Series. Without such waivers or reductions, the total fees and expenses in
1998 would have totaled: 0.75% for Growth and 0.74% for Worldwide Growth.
14. Lazard Asset Management, the Fund's investment adviser, has voluntarily
agreed to reimburse all expenses through December 31, 1999 to the extent
total annual portfolio expenses exceed in any fiscal year 1.25% of the
Portfolio's average daily net assets. Absent such an agreement with the
adviser, the total annual portfolio expenses for the year ended December
31, 1998 would have been 21.32% for the Lazard Retirement Equity Portfolio
and 16.20% for the Lazard Retirement Small Cap Portfolio.
15. Neuberger Berman Advisers Management Trust is divided into portfolios
("Portfolios"), each of which invests all of its net investable assets in a
corresponding series ("Series") of Advisers Managers Trust. The figures
reported under "Management Fees" include the aggregate of the
administration fees paid by the Portfolio and the management fees paid by
its corresponding Series. Similarly, "Other Expenses" includes all other
expenses of the Portfolio and its corresponding Series.
16. Strong Capital Management, Inc., the investment adviser of the Strong Mid
Cap Growth Fund II, has voluntarily agreed to cap the Fund's total
operating expenses at 1.20%. In the absence of the expense cap, total
annual portfolio expenses for the year ended December 31, 1998 were 1.60%.
The Adviser has no current intention to, but may in the future, discontinue
or modify any waiver of fees or absorption of expenses at its discretion
with appropriate notification to its shareholders.
17. Van Eck Associates Corporation (the "Adviser") agreed to assume expenses
exceeding 1.50% of the Worldwide Emerging Markets Fund's average daily net
assets. Absent this expense reimbursement, Other Expenses would have been
0.61% and Total Portfolio Expenses would have been 1.61%. The Worldwide
Hard Assets Fund's Other Expenses was reduced by a fee arrangement based on
cash balances left on deposit with the custodian and a directed brokerage
arrangement where the Fund directs certain portfolio trades to a broker
that, in turn, pays a portion of the Fund's expenses. Absent these
arrangements, the Other Expenses would have been 0.20% and Total Portfolio
Expenses would have been 1.20%. For the Worldwide Real Estate Fund the
Adviser agreed to waive its management fees and assume certain expenses for
the period January 1, 1998 to February 28, 1998. The Adviser also agreed to
assume expenses exceeding 1.00% of the Worldwide Real Estate Fund's average
daily net assets for the period March 1, 1998 to December 31, 1998. The
Worldwide Real Estate Fund expenses were also reduced by a fee arrangement
based on cash balances left on deposit with the custodian and a directed
brokerage arrangement where the Fund directs certain portfolio trades to a
broker that, in turn, pays a portion of the Fund's expenses. Absent these
arrangements, the management fee would have been 1.00%, the Other Expenses
would have been 4.32% and Total Portfolio Expenses would have been 5.32%
for the Worldwide Real Estate Fund.
THE COMPANY
Conseco Variable Insurance Company was originally organized in 1937. Prior to
October 7, 1998, Conseco Variable Insurance Company was known as Great American
Reserve Insurance Company. In certain states, we may still use the name Great
American Reserve Insurance Company until our name change is approved in the
state.
We are principally engaged in the life insurance business in 49 states and the
District of Columbia. We are a stock company organized under the laws of the
state of Texas and are an indirect wholly-owned subsidiary of Conseco, Inc.
Headquartered in Carmel, Indiana, Conseco, Inc. is one of middle America's
leading sources for investment, insurance and lending products. Through its
subsidiaries and a nationwide network of insurance agents and finance dealers,
Conseco, Inc. provides solutions for wealth protection and wealth creation to
more than 12 million customers.
THE CONSECO ADVANTAGE PLUS ANNUITY CONTRACT
This prospectus describes the variable annuity contract we are offering. An
annuity is a contract between you, the owner, and our insurance company, where
you make purchase payments and we promise to pay you an income in the form of
periodic annuity payments. Until you decide to begin receiving annuity payments,
your contract is in the accumulation period. Once you begin receiving annuity
payments, your contract is in the annuity period.
The contract benefits from tax deferral. Tax deferral means that you are not
taxed on earnings or appreciation on the assets in your contract until you take
money out of your contract.
The contract is called a variable annuity because you can choose among the
investment portfolios, and depending upon market conditions, you can make or
lose money in any of these portfolios. If you select the variable annuity
portion of the contract, the amount of money you are able to accumulate in your
contract during the accumulation period depends upon the investment performance
of the investment portfolio(s) you select.
You can choose to receive annuity payments on a variable basis, fixed basis or a
combination of both. If you choose variable payments, the amount of the annuity
payments you receive will depend upon the investment performance of the
investment portfolio(s) you select for the annuity period. If you select to
receive payments on a fixed basis, the payments you receive will remain level.
PURCHASE
PURCHASE PAYMENTS
A purchase payment is the money you give us to buy the contract. The minimum we
will accept is $5,000 when the contract is bought as a non-qualified contract.
If you are buying the contract as a qualified contract, the minimum we will
accept is $2,000. We will accept up to $2,000,000 in purchase payments without
our prior approval.
You can make additional purchase payments of $500 or more to a non-qualified
contract and $50 each month to a qualified contract. If you select the automatic
payment check option, you can make additional payments of $200 each month for
non-qualified contracts and $50 each month for qualified contracts.
PURCHASE PAYMENT CREDIT FEATURE
Each time you make a purchase payment, we will credit an additional 4% to each
purchase payment. We refer to these amounts as purchase payment credits.
Purchase payment credits will be allocated in the same way as your purchase
payment. An amount equal to the credits will be deducted if you make a
withdrawal during the Free Look Period. After the Free Look period ends, you
will have a vested interest in the purchase payment credit amount. We will not
deduct any earnings that result from the purchase payment credit at any time.
We reserve the right to limit the amount of purchase payment credits in the
future. The purchase payment credit feature is subject to non-forfeiture laws
and may not be available in your state.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment as you
direct such as to the fixed account (if available), and/or one or more of the
investment portfolios you select. Currently, you can allocate money to as many
as 15 investment portfolios at any one time plus the fixed account. When you
make additional purchase payments, we will allocate them in the same way as your
first purchase payment, unless you tell us otherwise. Allocation percentages
must be in whole numbers.
Once we receive your purchase payment and the necessary information, we will
issue your contract and allocate your first purchase payment within 2 business
days. If you do not provide us all of the information needed, we will contact
you. If you add more money to your contract by making additional purchase
payments, we will credit these amounts to your contract as of the business day
they are received. Our business day closes when the New York Stock Exchange
closes, usually 4:00 P.M. Eastern time.
FREE LOOK
If you change your mind about owning the contract, you can cancel it within 10
days after receiving it (or whatever longer time period is required in your
state). When you cancel the contract within this time period, we will not assess
a contingent deferred sales charge. On the day we receive your request at our
administrative office we will return the value of your contract, less the
purchase payment credits. In some states, we may be required to refund your
purchase payment. If you have purchased the contract as an IRA, we are required
to give you back your purchase payment if you decide to cancel your contract
within 10 days after receiving it (or whatever period is required in your
state).
INVESTMENT OPTIONS
INVESTMENT PORTFOLIOS
The contract offers 40 investment portfolios which are listed below. You can
invest in up to 15 investment portfolios at any one time. Additional investment
portfolios may be available in the future. You should read the prospectuses for
these funds carefully before investing. Copies of these prospectuses are
attached to this prospectus.
CONSECO SERIES TRUST
Managed by Conseco Capital Management, Inc.
o Balanced Portfolio
o Equity Portfolio
o Fixed Income Portfolio
o Government Securities Portfolio
o Money Market Portfolio
THE ALGER AMERICAN FUND
Managed by Fred Alger Management, Inc.
o Alger American Growth Portfolio
o Alger American Leveraged AllCap Portfolio
o Alger American MidCap Growth Portfolio
o Alger American Small Capitalization Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
Managed by American Century Investment Management, Inc.
o VP Income & Growth
o VP International
o VP Value (long-term capital growth with income as a secondary
objective)
BERGER INSTITUTIONAL PRODUCTS TRUST Managed by Berger Associates, Inc.
o Berger IPT--100 Fund (long-term capital appreciation)
o Berger IPT--Growth and Income Fund
o Berger IPT--Small Company Growth Fund
Managed by BBOI Worldwide, LLC
o Berger/BIAM IPT--International Fund
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
Managed by The Dreyfus Corporation (NCM Capital Management Group, Inc.-sub-
investment adviser)
DREYFUS STOCK INDEX FUND
Managed by The Dreyfus Corporation (Mellon Equity Associates-index fund manager)
DREYFUS VARIABLE INVESTMENT FUND
Managed by The Dreyfus Corporation
o Disciplined Stock Portfolio (seeks to outperform the total return
performance of the Standard & Poor's 500 Composite Stock Price Index)
o International Value Portfolio
FEDERATED INSURANCE SERIES
Managed by Federated Investment Management Company
o Federated High Income Bond Fund II
o Federated Utility Fund II
Managed by Federated Global Investment Management Corp.
o Federated International Equity Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
Managed by INVESCO Funds Group, Inc.
o INVESCO VIF - High Yield Fund (seeks high level of current income)
o INVESCO VIF - Equity Income Fund (seeks high current income with
growth of capital as a secondary goal)
JANUS ASPEN SERIES
Managed by Janus Capital Corporation
o Aggressive Growth Portfolio
o Growth Portfolio
o Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC.
Managed by Lazard Asset Management
o Lazard Retirement Equity Portfolio
o Lazard Retirement Small Cap Portfolio
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
o Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST
Managed by Mitchell Hutchins Asset Management, Inc.
o Growth and Income Portfolio
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Managed by Neuberger Berman Management Inc.
o Limited Maturity Bond Portfolio
o Partners Portfolio (capital growth)
STRONG OPPORTUNITY FUND II, INC.
Managed by Strong Capital Management, Inc.
o Opportunity Fund II (capital growth)
STRONG VARIABLE INSURANCE FUNDS, INC.
Managed by Strong Capital Management, Inc.
o Strong Mid Cap Growth Fund II
VAN ECK WORLDWIDE INSURANCE TRUST
Managed by Van Eck Associates Corporation
o Worldwide Bond Fund
o Worldwide Emerging Markets Fund
o Worldwide Hard Assets Fund
o Worldwide Real Estate Fund
The investment objectives and policies of certain investment portfolios are
similar to the investment objectives and policies of other mutual funds that the
investment advisers manage. Although the objectives and policies may be similar,
the investment results of the investment
portfolios may be higher or lower than the results of such other mutual funds.
The investment advisers cannot guarantee, and make no representation, that the
investment results of similar funds will be comparable even though the funds
have the same advisers.
Shares of the investment portfolios may be offered in connection with certain
variable annuity contracts and variable life insurance policies of various life
insurance companies which may or may not be affiliated with us. Certain
investment portfolios may also be sold directly to qualified plans. The funds
believe that offering their shares in this manner will not be disadvantageous to
you.
We may enter into certain arrangements under which we are reimbursed by the
investment portfolios' advisers, distributors and/or affiliates for the
administrative services which we provide to the funds.
THE FIXED ACCOUNT
You can invest in the fixed account. The fixed account offers an interest rate
that is guaranteed to be no less than 3% annually. If you select the fixed
account, your money will be placed with our other general account assets. The
fixed account option may not be available in your state.
THE GENERAL ACCOUNT
During the annuity period, if you elect a fixed annuity your annuity payments
will be paid out of our general account. We guarantee a specified interest rate
used in determining the payments. If you elect a fixed annuity, the payments you
receive will remain level. Fixed annuity payments from our general account are
only available during the annuity period.
VOTING RIGHTS
We are the legal owner of the investment portfolio shares. However, when an
investment portfolio solicits proxies in conjunction with a vote of
shareholders, we are required to obtain from you and other owners instructions
as to how to vote those shares. When we receive those instructions, we will vote
all of the shares we own in proportion to those instructions. Should we
determine that we are no longer required to follow this voting procedure, we
will vote the shares ourselves.
SUBSTITUTION
We may be required to substitute one of the investment portfolios you have
selected with another investment option. We would not do this without the prior
approval of the Securities and Exchange Commission. We may also limit further
investment in an investment portfolio. We will give you notice of our intent to
take either of these actions.
TRANSFERS
You can transfer money among the fixed account and the investment portfolios.
However, you cannot be invested in more than 15 investment portfolios, plus the
fixed account at any time.
Transfers During The Accumulation Period. You can make a transfer to or from the
fixed account, and to or from any investment portfolio by providing us with a
written request. The following apply to any transfer during the accumulation
period:
1. Currently, there are no limits on the number of transfers that
can be made. However, if you make more than one transfer in a
30-day period, a transfer fee of $25 may be deducted.
2. The minimum amount which you can transfer is $500 or your
entire value in the investment portfolio. This requirement is
waived if the transfer is pursuant to the dollar cost
averaging or rebalancing programs, or made at the end of the
Free Look Period.
3. You must leave at least $500 in each investment portfolio
after you make a transfer unless the entire amount is being
transferred.
4. Transfers out of the Fixed Account are limited to 20% of the
value of your contract in the fixed account every 6 months.
5. Your right to make transfers is subject to modification if we
determine, in our sole opinion, that the exercise of the right
by one or more owners is, or would be, to the disadvantage of
other owners. Restrictions may be applied in any manner
reasonably designed to prevent any use of the transfer right
which is considered by us to be to the disadvantage of other
owners. A modification could be applied to transfers to, or
from, one or more of the investment portfolios and could
include, but is not limited to:
a. the requirement of a minimum time period between each
transfer;
b. not accepting a transfer request from an agent acting
under a power of attorney on behalf of more than one
owner; or
c. limiting the dollar amount that may be transferred
between investment portfolios by an owner at any one
time.
6. We reserve the right, at any time, and without prior notice to
any party, to terminate, suspend or modify the transfer
privilege during the accumulation period.
Transfers During The Annuity Period. You can only make 2 transfers every
contract year during the annuity period. The 2 transfers are free. The following
also apply to any transfer during the annuity period:
1. You can make transfers at least 30 days before the due date of
the next annuity payment for which the transfer will apply.
2. The minimum amount which you can transfer is $500 or your
entire value in the investment portfolio.
3. You must leave at least $500 in each investment portfolio (or
$0 if you are transferring the entire amount) after a
transfer.
4. No transfers can be made between the general account and the
investment portfolios. You may only make transfers between the
investment portfolios.
5. We reserve the right, at any time, and without prior notice to
any party, to terminate, suspend or modify the transfer
privilege during the annuity period.
Telephone Transfers. You can elect to make transfers by telephone. You can also
authorize someone else to make transfers for you. If you own the contract with a
joint owner, unless we are instructed otherwise, we will accept instructions
from either you or the other owner. We will use reasonable procedures to confirm
that instructions given to us by telephone are genuine. All telephone calls will
be recorded and the caller will be asked to produce personalized data about the
owner before we will make the telephone transfer. We will send you a written
confirmation of the transfer. If we fail to use such procedures, we may be
liable for any losses due to unauthorized or fraudulent instructions.
This product is not designed for professional market timing organizations. We
reserve the right to modify the transfer privileges described above.
DOLLAR COST AVERAGING PROGRAM
The dollar cost averaging program allows you to systematically transfer a set
amount either monthly, quarterly, semi-annually or annually from the Money
Market Portfolio or the fixed account to any of the other investment
portfolio(s). By allocating amounts on a regular schedule as opposed to
allocating the total amount at one particular time, you may be less susceptible
to the impact of market fluctuations.
You must have at least $2,000 in the Money Market Portfolio or the fixed account
in order to participate in the dollar cost averaging program.
All dollar cost averaging transfers will be made on the first business day of
the month. Dollar cost averaging must be for 6-60 months. Dollar cost averaging
will end when the value in the Money Market Portfolio or the fixed account is
zero. We will notify you when that happens.
If you participate in the dollar cost averaging program, the transfers made
under the program are not taken into account in determining any transfer fee.
There is no additional charge for this program. However, we reserve the right to
charge for this program in the future.
REBALANCING PROGRAM
Once your money has been allocated among the investment portfolios, the
performance of each portfolio may cause your allocation to shift. If the value
of your contract is at least $5,000, you can direct us to automatically
rebalance your contract to return to your original percentage allocations by
selecting our rebalancing program. You can tell us whether to rebalance
quarterly, semi-annually or annually. We will measure these periods from the
date you selected. You must use whole percentages in 1% increments for
rebalancing. There will be no rebalancing within the fixed account. You can
discontinue rebalancing at any time. You can change your rebalancing requests at
any time in writing which we must receive before the next rebalancing date. If
you participate in the rebalancing program, the transfers made under the program
are not taken into account in determining any transfer fee. Currently, there is
no charge for participating in the rebalancing program. We reserve the right, at
any time and without prior notice, to terminate, suspend or modify this program.
EXAMPLE: Assume that you want your initial purchase payment split
between 2 investment portfolios. You want 40% to be in the Fixed Income
Portfolio and 60% to be in Growth Portfolio. Over the next 2 1/2 months
the bond market does very well while the stock market performs poorly.
At the end of the first quarter, the Fixed Income Portfolio now
represents 50% of your holdings because of its increase in value. If
you had chosen to have your holdings rebalanced quarterly, on the first
day of the next quarter, we would sell some of your units in the Fixed
Income Portfolio to bring its value back to 40% and use the money to
buy more units in the Growth Portfolio to increase those holdings to
60%.
ASSET ALLOCATION PROGRAM
We understand the importance to you of having advice from a financial adviser
regarding your investments in the contract (asset allocation program). Certain
investment advisers have made arrangements with us to make their services
available to you. Conseco Variable has not made any independent investigation of
these advisers and is not endorsing such programs. You may be required to enter
into an advisory agreement with your investment adviser to have the fees paid
out of your contract during the accumulation phase.
Conseco Variable will, pursuant to an agreement with you, make a partial
withdrawal from the value of your contract to pay for the services of the
investment adviser. If the contract is non-qualified, the withdrawal will be
treated like any other distribution and may be included in gross income for
federal tax purposes. Further, if you are under age 59 1/2, it may be subject to
a tax penalty. If the contract is qualified, the withdrawal for the payment of
fees may not be treated as a taxable distribution if certain conditions are met.
Additionally, any withdrawals for this purpose may be subject to a contingent
deferred sales charge. You should consult a tax adviser regarding the tax
treatment of the payment of investment adviser fees from your contract.
SWEEP PROGRAM
You can elect to transfer (sweep) your earnings from the fixed account to the
investment portfolios on a periodic and systematic basis.
EXPENSES
There are charges and other expenses associated with the contract that reduce
the return on your investment in the contract. These charges and expenses are:
INSURANCE CHARGES
Each day we make a deduction for our insurance charges. The insurance charges,
on an annual basis, are equal to 1.40% of the average daily value of the
contract invested in an investment portfolio if you do not select either the
guaranteed minimum death benefit or the guaranteed minimum income benefit. We
may increase the insurance charge, but it will not increase by more than 0.25%,
on an annual basis.
If, at the time of application, you select the guaranteed minimum death benefit,
the insurance charges for your contract are equal to 1.70% on an annual basis.
If, at the time of application, you select the guaranteed minimum death benefit
and the guaranteed minimum income benefit, the insurance charges for your
contract are equal to 2.00% on an annual basis. We may increase the insurance
charges for your contract up to 1.90%, on an annual basis, if you select the
guaranteed minimum death benefit. We may increase the insurance charges for your
contract up to 2.40%, on an annual basis, if you select the guaranteed minimum
death benefit and the guaranteed minimum income benefit.
This charge is included in part of our calculation of the value of the
accumulation units and the annuity units. The insurance charge is for all the
insurance benefits, e.g., guarantee of annuity rates, the death benefit, for
certain expenses of the contract, and for assuming the risk (expense risk) that
the current charges will be insufficient in the future to cover the cost of
administering the contract. If the charges are insufficient, then we will bear
the loss. We do, however, expect to profit from this charge.
CONTRACT MAINTENANCE CHARGE
During the accumulation period, every year on the anniversary of the date when
your contract was issued, we deduct $30 from your contract as a contract
maintenance charge. This charge is for certain administrative expenses
associated with the contract.
We reserve the right to change this charge but it will not be more than $60 each
year. No contract maintenance charge is deducted during the annuity period. We
do not deduct this charge if the value of your contract is $50,000 or more on
the contract anniversary. If you make a full withdrawal on other than a contract
anniversary, and the value of your contract is less than $50,000, we will deduct
the full contract maintenance charge at the time of the full withdrawal. We may
discontinue this practice and deduct the charge in the future. If, when you
begin to receive annuity payments, the annuity date is a different date than
your contract anniversary we will deduct the full contract maintenance charge on
the annuity date unless the contract value on the annuity date is $50,000 or
more.
The contract maintenance fee will be deducted first from the fixed account. If
there is insufficient value in the fixed account, the fee will then be deducted
from the investment portfolio with the largest balance.
CONTINGENT DEFERRED SALES CHARGE
During the accumulation period, you can make withdrawals from your contract. A
contingent deferred sales charge may be assessed against purchase payments
withdrawn. We keep track of each purchase payment you make. Subject to the
waivers discussed below, if you make a withdrawal and it has been less than the
stated number of years since you made your purchase payment, we will assess a
contingent deferred sales charge. The contingent deferred sales charge
compensates us for expenses associated with selling the contract. The charge is
as follows:
<TABLE>
<CAPTION>
No. of Contract Years from Contingent Deferred
Receipt of Purchase Payment Sales Charge
---------------------------- ------------
<S> <C> <C>
0-1 8%
2 8%
3 8%
4 8%
5 7%
6 6%
7 5%
8 3%
9 1%
10 and more 0%
</TABLE>
Each purchase payment has its own contingent deferred sales charge period. When
you make a withdrawal, the charge is deducted first from purchase payments
(oldest to newest), and then from earnings.
For tax purposes, withdrawals are generally considered to have come from
earnings first.
Free Withdrawals. Once each contract year you can take money out of your
contract, without the contingent deferred sales charge, of an amount equal to
the greater of:
o 10% of the value of your contract (on a non-cumulative basis);
o the IRS minimum distribution requirement for this contract if it was
issued as an individual retirement annuity; or
o the total of your purchase payments that have been in the contract
more than 9 complete years.
Unemployment Benefit. We will allow a one time free partial withdrawal of up to
50% of your contract value if:
o your contract has been in force for at least 1 year;
o you provide us with a letter of determination from your state's
Department of Labor indicating that you qualify for and have been
receiving unemployment benefits for at least 60 consecutive days;
o you were employed on a full time basis and working at least 30 hours
per week on the date your contract was issued;
o your employment was involuntarily terminated by your employer; and
o you certify to us that you are still unemployed when you make the
withdrawal request.
This benefit may not be available in your state.
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
We will reduce or eliminate the amount of the contingent deferred sales charge
when the contract is sold under circumstances which reduce its sales expenses.
Some examples are: if there is a large group of individuals that will be
purchasing the contract or a prospective purchaser already had a relationship
with us. We will not deduct a contingent deferred sales charge when a contract
is issued to an officer, director or employee or our company or any of our
affiliates. Any circumstances resulting in the reduction or elimination of the
contingent deferred sales charge requires our prior approval. In no event will
reduction or elimination of the contingent deferred sales charge be permitted
where it would be unfairly discriminatory to any person.
TRANSFER FEE
You can make one free transfer every 30 days during the accumulation period. If
you make more than one transfer in a 30-day period, you may be charged a
transfer fee of $25 per transfer. The two transfers permitted each year during
the annuity period are free. We reserve the right to change the transfer fee.
The transfer fee is deducted from the investment option that you transfer you
funds from. If you transfer your entire interest from an investment option, the
transfer fee is deducted from the amount transferred. If there are multiple
investment options from which you transfer funds, the transfer fee will be
deducted first from the fixed account, and then from the investment portfolio
with the largest balance that is involved in the transfer.
Transfers made at the end of the free look period by us are not counted in
determining the transfer fee. If the transfer is part of the dollar cost
averaging or rebalancing program it will not count in determining the transfer
fee. All reallocations made on the same date count as one transfer.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for the payment of these
taxes and will make a deduction from the value of the contract for them. These
taxes are due either when the contract is issued or when annuity payments begin.
It is our current practice to deduct these taxes when either annuity payments
begin, a death benefit is paid or upon partial or full surrender of the
contract. We may in the future discontinue this practice and assess the charge
when the tax is due. Premium taxes currently range from 0% to 3.5%, depending on
the jurisdiction.
INCOME TAXES
We will deduct from the contract for any income taxes which it incurs because of
the contract. At the present time, we are not making any such deductions.
INVESTMENT PORTFOLIO EXPENSES
There are deductions from and expenses paid out of the assets of the various
investment portfolios, which are described in the attached fund prospectuses.
CONTRACT VALUE
Your contract value is the sum of your interest in the various investment
portfolios and our fixed account. Your interest in the investment portfolio(s)
will vary depending upon the investment performance of the portfolios you
choose. In order to keep track of your contract value in an investment
portfolio, we use a unit of measure called an accumulation unit. During the
annuity period of your contract we call the unit an annuity unit.
ACCUMULATION UNITS
The accumulation unit value for each account was arbitrarily initially set.
Every business day we determine the value of an accumulation unit for each of
the investment portfolios by multiplying the accumulation unit value for the
previous period by a factor for the current period. The factor is determined by:
1. dividing the value of an investment portfolio share at the end of the
current period (and any charges for taxes) by the value of an
investment portfolio share for the previous period; and
2. subtracting the daily amount of the insurance charges.
The value of an accumulation unit may go up or down from business day to
business day.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing the
amount of the purchase payment allocated to an investment portfolio by the value
of the accumulation unit for that investment portfolio. When you make a
withdrawal, we debit accumulation units from your contract representing the
withdrawal. We also debit accumulation units when we deduct certain charges
under the contract.
We calculate the value of an accumulation unit for each investment portfolio
after the New York Stock Exchange closes each day and then credit your contract.
EXAMPLE: On Wednesday we receive an additional purchase payment of
$4,000 from you. You have told us you want this to go to the Equity
Portfolio. When the New York Stock Exchange closes on that Wednesday,
we determine that the value of an accumulation unit for the Equity
Portfolio is $12.25. We then divide $4,000 by $12.25 and credit your
contract on Wednesday night with 326.53 accumulation units for the
Equity Portfolio.
ACCESS TO YOUR MONEY
You can have access to the money in your contract:
o by making a withdrawal (either a partial or a complete withdrawal);
o by electing to receive annuity payments; or
o when a death benefit is paid to your beneficiary.
Withdrawals can only be made during the accumulation period. When you make a
complete withdrawal, you will receive the value of the contract on the day you
made the withdrawal, less any applicable contingent deferred sales charge, less
any contract maintenance charge and less any applicable premium tax. This amount
is the contract withdrawal value.
You must tell us which account (investment portfolio(s), and/or the fixed
account) you want the partial withdrawal to come from. Under most circumstances,
the amount of any partial withdrawal from any investment portfolio, or the fixed
account must be for at least $500. We require that after a partial withdrawal is
made, there must be at least $500 left in at least one investment portfolio. If
you do not have at least $500 in one investment portfolio, we reserve the right
to terminate the contract and pay you the contract withdrawal value.
Once we receive your written request for a withdrawal from an investment
portfolio we will pay the amount of any withdrawal within 7 days.
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
SYSTEMATIC WITHDRAWAL PROGRAM
The systematic withdrawal program allows you to choose to receive your automatic
payments either monthly, quarterly, semi-annually or annually. You must have at
least $5,000 in your contract to start the program. You can instruct us to
withdraw a specific amount which can be a percentage of the value of your
contract or a dollar amount. All systematic withdrawals will be withdrawn from
the fixed account and investment portfolios on a pro-rata basis. The systematic
withdrawal program will end any time you designate. If you make a partial
withdrawal outside the program and the value of your contract is less than
$5,000 the program will automatically terminate. We do not have any charge for
this program, however, the withdrawal may be subject to a contingent deferred
sales charge.
You may not participate in the systematic withdrawal program and the dollar cost
averaging program at the same time.
Income taxes, tax penalties and certain restrictions may apply to systematic
withdrawals.
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments for withdrawals or transfers
for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
investment portfolios is not reasonably practicable or we cannot
reasonably value the shares of the investment portfolios;
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of owners.
We have reserved the right to defer payment for a withdrawal or transfer from
the fixed account for the period permitted by law but not for more than six
months.
DEATH BENEFIT
UPON YOUR DEATH DURING THE ACCUMULATION PERIOD
If you, or your joint owner, die before annuity payments begin, we will pay a
death benefit to your beneficiary. If you have a joint owner, the surviving
joint owner will be treated as the primary beneficiary. Any other beneficiary
designation on record at the time of death will be treated as a contingent
beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD
If death occurs prior to age 80, the amount of the death benefit will be the
greater of:
(1) the value of your contract as of the business day we receive proof of
death and a payment election; or
(2) the total purchase payments you have made, less any adjusted partial
withdrawals and contingent deferred sales charges.
If you are age 80 or over, the death benefit will be equal to the value of your
contract.
Optional Guaranteed Minimum Death Benefit. For an extra charge, at the time you
purchase the contract, you can choose the optional guaranteed minimum death
benefit option. Under this option, if you die before age 80, the death benefit
will be the greater of:
(1) the total purchase payments you have made, less all partial
withdrawals, contingent deferred sales charges and any applicable
premium taxes; or
(2) the value of your contract as of the business day we receive proof of
death and a payment election;
(3) the largest contract value on any contract anniversary before the
owner or joint owner's death, less any adjusted partial withdrawals,
and limited to no more than twice the amount of purchase payments paid
less any adjusted partial withdrawals.
Adjusted partial withdrawal means:
o the amount of the partial withdrawal (including the applicable
contingent deferred sales charges and premium taxes); multiplied by
o the amount of the death benefit just before the partial withdrawal;
divided by
o the value of your contract just before the partial withdrawal.
If death occurs at age 80 or later, the death benefit will be the greater of:
(1) the contract value as of the business day we receive proof of death and a
payment election; or (2) the death benefit as of the last contract anniversary
before your 80th birthday, less any adjusted partial withdrawal.
If joint owners are named, the death benefit is determined based on the age of
the oldest owner and is payable on the first death. If the owner is a
non-natural person, the death of an annuitant will be treated as the death of
the owner.
This benefit may not be available in your state.
The value of your contract for purposes of calculating any death benefit amount
will be determined as of the business day we receive due proof of death and an
election for the payment method (see below). After the death benefit amount is
calculated, it will remain in the investment options and/or the fixed account
until distribution begins. Until we distribute the death benefit amount, the
death benefit amount in the investment portfolios will be subject to investment
risk.
PAYMENT OF THE DEATH BENEFIT DURING THE ACCUMULATION PERIOD
Unless already selected by you, a beneficiary must elect the death benefit to be
paid under one of the options described below in the event of your death during
the accumulation period.
Option 1 - lump sum payment of the death benefit; or
Option 2 - the payment of the entire death benefit within 5 years of the date of
death of the owner or any joint owner; or
Option 3 - payment of the death benefit under an annuity option over the
lifetime of the beneficiary, or over a period not extending beyond the life
expectancy of the beneficiary, with distribution beginning within 1 year of the
date of your death or of any joint owner.
Any portion of the death benefit not applied under Option 3 within 1 year of the
date of your death, or that of a joint owner, must be distributed within 5 years
of the date of death.
Unless you have previously designated one of the payment options above, a
beneficiary who is a spouse of the owner may elect to:
o continue the contract in his or her own name at the then current
contract value;
o elect a lump sum payment of the death benefit; or
o apply the death benefit to an annuity option.
If a lump sum payment is requested, the amount will be paid within 7 days,
unless the suspension of payments provision is in effect. Payment to the
beneficiary, in any other form than a lump sum, may only be elected during the
60 day period beginning with the date of receipt by us of proof of death.
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD
If you or a joint owner, who is not the annuitant, dies during the annuity
period, any remaining payments under the annuity option elected will continue to
be made at least as rapidly as under the method of distribution in effect at the
time of the owner's or joint owner's death. Upon the owner's or joint owner's
death during the annuity period, the beneficiary becomes the owner.
DEATH OF ANNUITANT
If the annuitant, who is not an owner or joint owner, dies during the
accumulation period, you will automatically become the annuitant. You may
designate a new annuitant subject to our approval. If the owner is a non-natural
person (for example, a corporation), then the death of the annuitant will be
treated as the death of the owner, and a new annuitant may not be named.
Upon the death of the annuitant during the annuity period, the death benefit, if
any, will be as provided for in the annuity option selected. The death benefit
will be paid at least as rapidly as under the method of distribution in effect
at the annuitant's death.
ANNUITY PAYMENTS (THE ANNUITY PERIOD)
Under the contract you can receive regular income payments. We call these
payments annuity payments. You can choose the month and year in which those
payments begin. We call that date the annuity date. Your annuity date must be
the first day of a calendar month and cannot be any earlier than 90 days after
we issue the contract. Annuity payments must begin by the earlier of the
annuitant's 90th birthday or the maximum date allowed by law. To receive the
guaranteed minimum income benefit, there are certain annuity date requirements
(see below). The annuitant is the person whose life we look to when we determine
annuity payments. You can change the annuity date at any time prior to 30 days
of the annuity date by providing us with a written request.
You can also choose among income plans. We call those annuity options. You can
elect an annuity option by providing us with a written request. You can change
the annuity option any time before 30 days of the annuity date. If you do not
choose an annuity option, we will assume that you selected Option 2 which
provides a life annuity with 10 years of guaranteed payments.
During the annuity period, you can choose to have payments come from the
investment portfolios, the fixed Account or both. If you do not tell us
otherwise, your annuity payments will be based on the investment allocations in
the investment portfolios and fixed account that were in place on the annuity
date.
ANNUITY PAYMENT AMOUNT
If you choose to have any portion of your annuity payments come from the
investment portfolio(s), the dollar amount of your payment will depend upon 3
things:
1) The value of your contract in the investment portfolio(s) on the
annuity date;
2) The 3% or 5% (as you selected) assumed investment rate used in the
annuity table for the contract; and
3) The performance of the investment portfolio(s) you selected.
You can choose either a 3% or a 5% assumed investment rate. If the actual
performance exceeds the 3% or 5% (as you selected) assumed investment rate, your
annuity payments will increase. Similarly, if the actual rate is less than 3% or
5% (as you selected) your annuity payments will decrease.
On the annuity date the value of your contract, less any premium tax, less any
contingent deferred sales charge, and less any contract maintenance charge will
be applied under the annuity option you selected. If you select an annuity date
that is on or after the 5th contract anniversary, and you choose an annuity
option that has a life contingency for a minimum of 5 years, we will apply the
value of your contract, less any premium tax and less any contract maintenance
charge to the annuity option you elect.
Annuity payments are made monthly unless you have less than $5,000 to apply
toward a payment. In that case, we may make a single lump sum payment to you
instead of annuity payments. Likewise, if your annuity payments would be less
than $50 a month, we have the right to change the frequency of payments so that
your annuity payments are at least $50.
Optional Guaranteed Minimum Income Benefit. For an extra charge, you can elect
the guaranteed minimum income benefit. You may not select this benefit unless
you also select the optional guaranteed minimum death benefit.
Under the guaranteed minimum income benefit, a guaranteed minimum amount will be
applied to your annuity option to provide annuity payments. Prior to your
80th birthday, this amount is equal to:
1) the largest contract value on any contract anniversary; less
2) any adjusted partial withdrawals.
This amount is limited to no more than twice the amount of purchase payments
made less any adjusted partial withdrawals. Adjusted partial withdrawal is equal
to the partial withdrawal amount, including the contingent deferred sales charge
and any applicable premium taxes; multiplied by the amount of the guaranteed
minimum income benefit just before the partial withdrawal; divided by the
value of your contract just before the partial withdrawal.
The guaranteed minimum income amount after your 80th birthday is equal to the
greater of (1) the value of your contract, less any premium tax, less any
contingent deferred sales charge, and less any contract maintenance charge;
or (2) the guaranteed minimum income benefit as of the last contract
anniversary before your 80th birthday less any adjusted partial withdrawals.
If you elect this benefit, the following limitations will apply:
o You must choose either annuity option 2 or 4, unless otherwise agreed
by us. If you do not choose an annuity option, Annuity Option 2. Life
Income With Period Certain, will be applied.
o If you are age 50 or over on the date we issue the contract, the
annuity date must be the later of your 65th birthday, or the 7th
contract anniversary.
o If you are under age 50 on the date we issue your contract, the
annuity date must be after the 15th contract anniversary.
o The annuity date selected must occur within 30 days following a
contract anniversary.
o If there are joint owners, the age of the oldest owner will be used to
determine the guaranteed minimum income benefit. If the contract is
owned by a non-natural person, then owner will mean the annuitant for
purposes of this benefit.
This benefit may not be available in your state.
ANNUITY OPTIONS
You can choose one of the following annuity options or any other annuity option
which is acceptable to us. After annuity payments begin, you cannot change the
annuity option.
OPTION 1. Income for a Specified Period. We will pay an income for a
specific number of years in equal installments. However, you may elect to
receive a single lump sum payment according to the terms of the contract.
OPTION 2. Life Income With Period Certain. We will make monthly annuity
payments so long as the annuitant is alive and then for a specified period
certain. If an annuitant, who is not the owner, dies before we have made
all of the payments, we will continue to make the payments for the
remainder of the guaranteed period to you. If you do not want to receive
payments, you can request a single lump sum according to the terms of the
contract.
OPTION 3. Income of Specified Amount. We will pay income of a specified
amount until the principal and interest are exhausted. However, you may
elect to receive a single lump sum payment according to the terms of the
contract.
OPTION 4. Joint And Survivor Annuity. We will make monthly annuity payments
so long as the annuitant and a joint annuitant are both alive. The
annuitant must be at least 50 years old, and the joint annuitant must be at
least 45 years old at the time of the first payment.
TAXES
Note: We have prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. We have
included an additional discussion regarding taxes in the Statement of Additional
Information.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs, usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax-deferral. There are different rules as to how you will be
taxed depending on how you take the money out and the type of
contract--qualified or non-qualified (see following sections).
You, as the owner, will not be taxed on increases in the value of your contract
until a distribution occurs--either as a withdrawal or as annuity payments. When
you make a withdrawal you are taxed on the amount of the withdrawal that is
earnings. For annuity payments, different rules apply. A portion of each annuity
payment is treated as a partial return of your purchase payments and will not be
taxed. The remaining portion of the annuity payment will be treated as ordinary
income. How the annuity payment is divided between taxable and non-taxable
portions depends upon the period over which the annuity payments are expected to
be made. Annuity payments received after you have received all of your purchase
payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an Individual Retirement Annuity (IRA), your
contract is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored program
or an IRA, your contract is referred to as a qualified contract.
WITHDRAWALS-NON-QUALIFIED CONTRACTS
If you make a withdrawal from your contract, the Code generally treats such a
withdrawal as first coming from earnings and then from your purchase payments.
Such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in the
Code);
(4) paid in a series of substantially equal payments made annually (or
more frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which are allocable to purchase payments made prior to August 14,
1982.
WITHDRAWALS-QUALIFIED CONTRACTS
If you make a withdrawal from your qualified contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax purchase payments to the after-tax purchase payments in your contract.
If all of your purchase payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of qualified contracts.
The Code also provides that any amount received under a qualified contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in the
Code);
(4) paid to you after leaving your employment in a series of substantially
equal payments made annually (or more frequently) under a lifetime
annuity;
(5) paid to you after you have attained age 55 and left your employment;
(6) paid for certain allowable medical expenses (as defined in the Code);
(7) paid pursuant to a qualified domestic relations order;
(8) paid from an IRA for medical insurance (as defined in the Code);
(9) paid from an IRA for qualified higher education expenses; or
(10) up to $10,000 for qualified first time homebuyer expenses (as defined
in the Code).
The exceptions in (5) and (7) above do not apply to IRAs. The exception in (4)
above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion in the Statement of Additional
Information.
WITHDRAWALS - TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of amounts attributable to purchase payments made
by owners under a salary reduction agreement. Withdrawals can only be made when
a contract owner:
(1) reaches age 59 1/2;
(2) leaves his or her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code);
(5) in the case of hardship; or
(6) pursuant to a qualified domestic relations order, if otherwise
permitted.
However, in the case of hardship, the owner can only withdraw the purchase
payments and not any earnings.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. We believe that the investment portfolios are being managed so
as to comply with the requirements.
INVESTOR CONTROL
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not us would be
considered the owner of the shares of the investment portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the contract. It is unknown to what extent under federal tax
law owners are permitted to select investment portfolios, to make transfers
among the investment portfolios or the number and type of investment portfolios
owners may select from without being considered the owner of the shares. If any
guidance is provided which is considered a new position, then the guidance would
generally be applied prospectively. However, if such guidance is considered not
to be a new position, it may be applied retroactively. This would mean that you,
as the owner of the contract, could be treated as the owner of the investment
portfolios.
Due to the uncertainty in this area, we reserve the right to modify the contract
as reasonably deemed necessary to maintain favorable tax treatment.
PERFORMANCE
We may periodically advertise performance of the annuity investment in the
various investment portfolios. We will calculate performance by determining the
percentage change in the value of an accumulation unit by dividing the increase
(decrease) for that unit by the value of the accumulation unit at the beginning
of the period. This performance number reflects the deduction of the insurance
charges and the fees and expenses of the investment portfolio. It does not
reflect the deduction of any applicable contract maintenance charge and
contingent deferred sales charge. The deduction of any applicable contract
maintenance charge and contingent deferred sales charge would reduce the
percentage increase or make greater any percentage decrease. Any advertisement
will also include standardized average annual total return figures which reflect
the deduction of the insurance charges, contract maintenance charge, contingent
deferred sales charge and the fees and expenses of the investment portfolio.
For periods starting prior to the date the contracts were first offered, the
performance will be based on the historical performance of the corresponding
portfolios, modified to reflect the charges and expenses of the contract as if
the contract had been in existence during the period stated in the
advertisement. These figures should not be interpreted to reflect actual
historic performance.
We may, from time to time, include in its advertising and sales materials, tax
deferred compounding charts and other hypothetical illustrations, which may
include comparisons of currently taxable and tax deferred investment programs,
based on selected tax brackets.
OTHER INFORMATION
THE SEPARATE ACCOUNT
We established a separate account, Conseco Variable Annuity Account H (Separate
Account), to hold the assets that underlie the contracts. Our Board of Directors
adopted a resolution to establish the Separate Account under Texas Insurance law
on November 1, 1999. The Separate Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940.
The assets of the Separate Account are held in our name on behalf of the
Separate Account and legally belong to us. However, those assets that underlie
the contracts, are not chargeable with liabilities arising out of any other
business we may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
contracts and not against any other contracts we may issue.
DISTRIBUTOR
Conseco Equity Sales, Inc. (CES), 11815 N. Pennsylvania Street, Carmel, Indiana
46032, acts as the distributor of the contracts. CES, our affiliate, is
registered as a broker-dealer under the Securities Exchange Act of 1934. CES is
a member of the National Association of Securities Dealers, Inc.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers commissions may cost up to ___% of purchase payments and may
include reimbursement of promotional or distribution expenses associated with
the marketing of the contracts. We may, by agreement with the broker-dealer, pay
commissions as a combination of a certain percentage amount at the time of sale
and a trail commission. This combination may result in the broker-dealer
receiving more commission over time than would be the case if it had elected to
receive only a commission at the time of sale. The commission rate paid to the
broker-dealer will depend upon the nature and level of services provided by the
broker-dealer.
OWNERSHIP
Owner. You, as the owner of the contract, have all the rights under the
contract. The owner is as designated at the time the contract is issued, unless
changed. You can change the owner at any time. A change will automatically
revoke any prior owner designation. The change request must be in writing.
Joint Owner. The contract can be owned by joint owners. Any joint owner must be
the spouse of the other owner (except where not permitted under state law). Upon
the death of either joint owner, the surviving joint owner will be the primary
beneficiary. Any other beneficiary designation at the time the contract was
issued or as may have been later changed will be treated as a contingent
beneficiary unless otherwise indicated in a written notice.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued. Unless an
irrevocable beneficiary has been named, you can change the beneficiary at any
time before you die.
ASSIGNMENT
You can assign the contract at any time during your lifetime. We will not be
bound by the assignment until we receive the written notice of the assignment.
We will not be liable for any payment or other action we take in accordance with
the contract before we receive notice of the assignment. An assignment may be a
taxable event.
If the contract is issued pursuant to a qualified plan, there are limitations
on your ability to assign the contract.
FINANCIAL STATEMENTS
Our consolidated financial statements have been included in the Statement of
Additional Information. There are no financial statements for the Separate
Account because the Separate Account commenced operations as of the date of this
prospectus.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Company
Independent Accountants
Legal Opinions
Distribution
Reduction or Elimination of Contingent Deferred Sales Charge
Calculation of Performance Information
Federal Tax Status
Annuity Provisions
Financial Statements
Part B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL VARIABLE DEFERRED ANNUITY CONTRACTS
issued by
CONSECO VARIABLE ANNUITY ACCOUNT H
and
CONSECO VARIABLE INSURANCE COMPANY
(formerly Great American Reserve Insurance Company)
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED _____, 1999, FOR THE INDIVIDUAL
VARIABLE DEFERRED ANNUITY CONTRACTS WHICH ARE DESCRIBED HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL US AT (800)
342-6307 OR WRITE US AT OUR ADMINISTRATIVE OFFICE: 11815 N. PENNSYLVANIA STREET,
CARMEL, INDIANA 46032.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED __________, 1999.
TABLE OF CONTENTS
PAGE
COMPANY...................................................................
INDEPENDENT ACCOUNTANTS...................................................
LEGAL OPINIONS............................................................
DISTRIBUTION..............................................................
Reduction or Elimination of the Contingent Deferred Sales Charge......
CALCULATION OF PERFORMANCE INFORMATION....................................
Total Return..........................................................
Performance Information...............................................
Historical Unit Values................................................
Reporting Agencies....................................................
FEDERAL TAX STATUS........................................................
General...............................................................
Diversification.......................................................
Multiple Contracts....................................................
Contracts Owned by Other than Natural Persons.........................
Tax Treatment of Assignments..........................................
Death Benefits........................................................
Income Tax Withholding................................................
Tax Treatment of Withdrawals - Non-Qualified Contracts................
Individual Retirement Annuities.......................................
Roth IRAs.............................................................
Tax Treatment of Withdrawals - Individual Retirement Annuities........
ANNUITY PROVISIONS........................................................
Variable Annuity Payout...............................................
Annuity Unit..........................................................
Fixed Annuity Payout..................................................
FINANCIAL STATEMENTS .....................................................
=============================================================================
COMPANY
Information regarding Conseco Variable Insurance Company ("Company" or
"Conseco Variable") is contained in the prospectus. On October 7, 1998, the
Company changed its name from Great American Reserve Insurance Company to its
present name.
INDEPENDENT ACCOUNTANTS
The financial statements of Conseco Variable as of December 31, 1998 and
1997, and for the years ended December 31, 1998, 1997 and 1996, included in this
statement of additional information, have been audited by ____________,
independent accountants, as set forth in their report appearing therein.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C. of Westport, Connecticut has provided
advice on certain matters relating to the federal securities and income tax laws
in connection with the Contracts described in the prospectus.
DISTRIBUTION
Conseco Equity Sales, Inc., an affiliate of the Company, acts as the
distributor. The offering is on a continuous basis.
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals in a manner that results in savings of sales expenses.
The entitlement to reduction of the Contingent Deferred Sales Charge will be
determined by the Company after examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made will be
considered. Generally, the sales expenses for a larger group are less than for a
smaller group because of the ability to implement large numbers of Contracts
with fewer sales contacts.
2. The total amount of purchase payments to be received will be considered.
Per Contract sales expenses are likely to be less on larger purchase payments
than on smaller ones.
3. Any prior or existing relationship with the Company will be considered.
Per Contract sales expenses are likely to be less when there is a prior existing
relationship because of the likelihood of implementing the Contract with fewer
sales contacts.
4. There may be other circumstances, of which the Company is not presently
aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines
that there will be a reduction in sales expenses, the Company may provide for a
reduction or elimination of the Contingent Deferred Sales Charge.
The Contingent Deferred Sales Charge may be eliminated when the Contracts
are issued to an officer, director or employee of the Company or any of its
affiliates. In no event will any reduction or elimination of the Contingent
Deferred Sales Charge be permitted where the reduction or elimination will be
unfairly discriminatory to any person.
CALCULATION OF PERFORMANCE INFORMATION
TOTAL RETURN
From time to time, we may advertise performance data. Such data
will show the percentage change in the value of an Accumulation Unit based on
the performance of an investment portfolio over a period of time, usually a
calendar year, determined by dividing the increase (decrease) in value for that
unit by the Accumulation Unit value at the beginning of the period.
Any such advertisement will include standardized average annual total
return figures for the time periods indicated in the advertisement. Such total
return figures will reflect the deduction of the Insurance Charge and the
expenses for the underlying investment portfolio being advertised and any
applicable Contract Maintenance Charges and Contingent Deferred Sales Charges.
The Company may also advertise performance data which will be calculated in
the same manner as described above but which will not reflect the deduction of
any Contract Maintenance Charge and Contingent Deferred Sales Charge. The
deduction of any Contract Maintenance Charge and Contingent Deferred Sales
Charge would reduce any percentage increase or make greater any percentage
decrease.
The hypothetical value of a Contract purchased for the time periods
described in the advertisement will be determined by using the actual
Accumulation Unit values for an initial $1,000 purchase payment, and deducting
any applicable Contract Maintenance Charges and any applicable Contingent
Deferred Sales Charges to arrive at the ending hypothetical value. The average
annual total return is then determined by computing the fixed interest rate that
a $1,000 purchase payment would have to earn annually, compounded annually, to
grow to the hypothetical value at the end of the time periods described. The
formula used in these calculations is:
P (1 + T)^n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used (or
fractional portion thereof) of a hypothetical $1,000 payment made at the
beginning of the time periods used.
You should note that the investment results of each investment portfolio
will fluctuate over time, and any presentation of the investment portfolio's
total return for any period should not be considered as a representation of what
an investment may earn or what an your total return may be in any future period.
Performance Information
The Contracts and the Separate Account are new and therefore do not have a
meaningful investment performance history. However, the corresponding Portfolios
have been in existence for some time and consequently have investment
performance history. In order to demonstrate how the actual investment
experience of the Portfolios affects Accumulation Unit values, the Company may
develop performance information. The information will be based upon the
historical experience of the Portfolios and will be for the periods shown.
Actual performance will vary and the results which may be shown are not
necessarily representative of future results. Performance for periods ending
after those shown may vary substantially. The performance of the Accumulation
Units will be calculated for a specified period of time assuming an initial
Purchase Payment of $1,000 allocated to each Portfolio and a deduction of all
charges and deductions (see "Expenses" in the Prospectus for more information).
Performance may also be shown without certain charges being included. If
the charges were included in the calculations, the performance would be lower.
The percentage increases are determined by subtracting the initial Purchase
Payment from the ending value and dividing the remainder by the beginning value.
HISTORICAL UNIT VALUES
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the investment
portfolios against established market indices such as the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average or other
management investment companies which have investment objectives similar to the
investment portfolio being compared. The Standard & Poor's 500 Composite Stock
Price Index is an unmanaged, unweighted average of 500 stocks, the majority of
which are listed on the New York Stock Exchange. The Dow Jones Industrial
Average is an unmanaged, weighted average of thirty blue chip industrial
corporations listed on the New York Stock Exchange. Both the Standard & Poor's
500 Composite Stock Price Index and the Dow Jones Industrial Average assume
quarterly reinvestment of dividends.
REPORTING AGENCIES
The Company may also distribute sales literature which compares the
performance of the Accumulation Unit values of the Contracts with the unit
values of variable annuities issued by other insurance companies. Such
information will be derived from the Lipper Variable Insurance Products
Performance Analysis Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is
published by Lipper Analytical Services, Inc., a publisher of statistical data
which currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges. The Company's sales literature utilizing these rankings will
indicate whether or not such charges have been deducted. Where the charges have
not been deducted, the sales literature will indicate that if the charges had
been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled
by Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking may address the question as to which funds
provide the highest total return with the least amount of risk. Other ranking
services may be used as sources of performance comparison, such as
CDA/Weisenberger. Morningstar rates a variable annuity against its peers with
similar investment objectives. Morningstar does not rate any variable annuity
that has less than three years of performance data.
FEDERAL TAX STATUS
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING
OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE
COMPANY CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE
MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF
THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE
TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE
FURTHER UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT
SPECIAL RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS.
MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX
LAWS.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended ("Code")
governs taxation of annuities in general. An Owner is not taxed on increases in
the value of a Contract until distribution occurs, either in the form of a lump
sum payment or as annuity payments under the annuity option selected. For a lump
sum payment received as a total withdrawal (total surrender), the recipient is
taxed on the portion of the payment that exceeds the cost basis of the Contract.
For non-qualified Contracts, this cost basis is generally the purchase payments,
while for qualified Contracts there may be no cost basis. The taxable portion of
the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments based
on a fixed annuity option is determined by multiplying the payment by the ratio
that the cost basis of the Contract (adjusted for any period or refund feature)
bears to the expected return under the Contract. The exclusion amount for
payments based on a variable annuity option is determined by dividing the cost
basis of the Contract (adjusted for any period certain or refund guarantee) by
the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludable amount equals the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income tax rates. For certain
types of Qualified Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Owners, annuitants and beneficiaries under
the Contracts should seek competent financial advice about the tax consequences
of any distributions.
The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
Regulations issued by the Treasury Department ("the Regulations") amplify
the diversification requirements for variable contracts set forth in the Code
and provide an alternative to the safe harbor provision described above. Under
the Regulations, an investment portfolio will be deemed adequately diversified
if: (1) no more than 55% of the value of the total assets of the portfolio is
represented by any one investment; (2) no more than 70% of the value of the
total assets of the portfolio is represented by any two investments; (3) no more
than 80% of the value of the total assets of the portfolio is represented by any
three investments; and (4) no more than 90% of the value of the total assets of
the portfolio is represented by any four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment portfolios underlying the Contracts
will be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations
do not provide guidance regarding the circumstances in which Owner control of
the investments of the Separate Account will cause the Owner to be treated as
the owner of the assets of the Separate Account, thereby resulting in the loss
of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
In the event any forthcoming guidance or ruling is considered to set forth
a new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Owners
being retroactively determined to be the owners of the assets of the Separate
Account.
Due to the uncertainty in this area, the Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a Contract held by a trust or other entity as an
agent for a natural person nor to Contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. You should
therefore consult competent tax advisers should you wish to assign or pledge
your Contract.
If the Contract is issued pursuant to a retirement plan which receives
favorable treatment under the provision of Section 408 of the Code, it may not
be assigned, pledged or otherwise transferred except as allowed under applicable
law.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Owner, in many cases, may
elect not to have taxes withheld or to have withholding done at a different
rate.
Certain distributions from retirement plans qualified under Section 401 or
Section 403(b) of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for federal
income tax. The 20% withholding requirement generally does not apply to: a) a
series of substantially equal payments made at least annually for the life or
life expectancy of the participant or joint and last survivor expectancy of the
participant and a designated beneficiary or for a specified period of 10 years
or more; or b) distributions which are required minimum distributions; or c) the
portion of the distributions not includible in gross income (i.e. returns of
after-tax contributions); or d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after you reach age 59 1/2; (b) after your death; (c) if you
become totally disabled (for this purpose disability is as defined in Section
72(m)(7) of the Code); (d) in a series of substantially equal periodic payments
made not less frequently than annually for your life (or life expectancy) or for
the joint lives (or joint life expectancies) of you and your Beneficiary; (e)
under an immediate annuity; or (f) which are allocable to purchase payments made
prior to August 14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However,
separate tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts are designed to be suitable for use under various types of
Qualified Plans. Taxation of participants in each Qualified Plan varies with the
type of plan and terms and conditions of each specific plan. Owners, annuitants
and beneficiaries are cautioned that benefits under a Qualified Plan may be
subject to the terms and conditions of the plan regardless of the terms and
conditions of the Contracts issued pursuant to the plan. Some retirement plans
are subject to distribution and other requirements that are not incorporated
into the Company's administrative procedures. Owners, participants and
beneficiaries are responsible for determining that contributions, distributions
and other transactions with respect to the Contracts comply with applicable law.
Following are general descriptions of the types of Qualified Plans with which
the Contracts may be used. Such descriptions are not exhaustive and are for
general informational purposes only. The tax rules regarding Qualified Plans are
very complex and will have differing applications depending on individual facts
and circumstances. Each purchaser should obtain competent tax advice prior to
purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
a. TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employees until the
employees receive distributions from the Contracts. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations" below.) Any employee should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
b. INDIVIDUAL RETIREMENT ANNUITIES
The Contracts offered by the prospectus are designed to be suitable for use as
an Individual Retirement Annuity (IRA). Generally, individuals who purchase IRAs
are not taxed on increases to the value of the contributions until distribution
occurs. Following is a general description of IRAs with which the Contract may
be used. The description is not exhaustive and is for general informational
purposes only.
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an IRA. Under applicable limitations,
certain amounts may be contributed to an IRA which will be deductible from the
individual's taxable income. These IRAs are subject to limitations on
eligibility, contributions, transferability and distributions. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.) Under certain
conditions, distributions from other IRAs and other Qualified Plans may be
rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
ROTH IRAs
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues apply to all of
a taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held a Roth IRA for at
least five taxable years and, in addition, that the distribution is made: (i)
after the individual reaches age 59 1/2, (ii) on the individual's death or
disability, or (iii) as a qualified first-time home purchase (subject to a
$10,000 lifetime maximum) for the individual, a spouse, child, grandchild, or
ancestor. Any distribution which is not a qualified distribution is taxable to
the extent of earnings in the distribution. Distributions are treated as made
from contributions first and therefore no distributions are taxable until
distributions exceed the amount of contributions and conversions to the Roth
IRA. The 10% penalty tax and the regular IRA exceptions to the 10% penalty tax
apply to taxable distributions from a Roth IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, ("conversion deposits") unless the individual has adjusted gross income
over $100,000 or the individual is a married taxpayer filing a separate return.
The individual must pay tax on any portion of the IRA being rolled over that
represents income or a previously deductible IRA contribution. However, for
rollovers in 1998, the individual may pay that tax ratably over the four taxable
year period beginning with tax year 1998. In addition, distribution of amounts
attributable to conversion deposits held for less than 5 taxable years will also
be subject to the penalty tax.
Purchasers of Contracts intended to be qualified as a Roth IRA should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
c. PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employees until distributed from the
Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Special considerations apply to plans covering self-employed
individuals, including limitations on contributions and benefits for key
employees or 5 percent owners. (See "Tax Treatment of Withdrawals - Qualified
Contracts" below.) Purchasers of Contracts for use with Pension or Profit
Sharing Plans should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
d. GOVERNMENT AND TAX-EXEMPT ORGANIZATION'S DEFERRED COMPENSATION PLAN
Under Code provisions, employees and independent contractors performing services
for state and local governments and other tax-exempt organizations may
participate in Deferred Compensation Plans. While participants in such Plans may
be permitted to specify the form of investment in which their Plan accounts will
participate, all such investments are owned by the sponsoring employer and are
subject to the claims of its creditors until December 31, 1998, or such earlier
date as may be established by Plan amendment. However, amounts deferred under a
Plan created on or after August 20, 1996 and amounts deferred under any 457 Plan
after December 31, 1998 must be held in trust, custodial account or annuity
contract for the exclusive benefit of Plan participants and their beneficiaries.
The amounts deferred under a Plan which meets the requirements of Section 457 of
the Code are not taxable as income to the participant until paid or otherwise
made available to the participant or beneficiary. As a general rule, the maximum
amount which can be deferred in any one year is the lesser of $7,500 ($8,000
beginning in 1998, as indexed for inflation) or 33 1/3 percent of the
participant's includable compensation. However, in limited circumstances, up to
$15,000 may be deferred in each of the last three years before normal retirement
age. Furthermore, the Code provides additional requirements and restrictions
regarding eligibility and distributions.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been rolled over to an IRA or to another eligible Qualified Plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) made on or after the date on which the Owner or Annuitant (as
applicable) reaches age 59 1/2 (b) following the death or disability of the
Owner or Annuitant (as applicable) (for this purpose disability is as defined in
Section 72(m) (7) of the Code); (c) after separation from service, distributions
that are part of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the Owner or Annuitant (as
applicable) or the joint lives (or joint life expectancies) of such Owner or
Annuitant (as applicable) and his or her designated Beneficiary; (d) to an Owner
or Annuitant (as applicable) who has separated from service after he has
attained age 55; (e) made to the Owner or Annuitant (as applicable) to the
extent such distributions do not exceed the amount allowable as a deduction
under Code Section 213 to the Owner or Annuitant (as applicable) for amounts
paid during the taxable year for medical care; (f) made to an alternate payee
pursuant to a qualified domestic relations order;(g) from an Individual
Retirement Annuity for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as applicable) and
his or her spouse and dependents if the Owner or Annuitant (as applicable) has
received unemployment compensation for at least 12 weeks (this exception will no
longer apply after the Owner or Annuitant (as applicable) has been re-employed
for at least 60 days); (h) from an Individual Retirement Annuity made to the
Owner or Annuitant (as applicable) to the extent such distributions do not
exceed the qualified higher education expenses (as defined in Section 72(t)(7)
of the Code) of the Owner or Annuitant (as applicable) for the taxable year; and
(i) distributions up to $10,000 from an Individual Retirement Annuity made to
the Owner or Annuitant (as applicable) which are qualified first-time home buyer
distributions (as defined in Section 72(t)(8) of the Code). The exceptions
stated in (d) and (f) above do not apply in the case of an Individual Retirement
Annuity. The exception stated in (c) above applies to an Individual Retirement
Annuity without the requirement that there be a separation from service. With
respect to (c) above, if the series of substantially equal periodic payments is
modified before the later of your attaining age 59 1/2 or 5 years from the date
of the first periodic payment, then the tax for the year of the modification is
increased by an amount equal to the tax which would have been imposed (the 10%
penalty tax) but for the exception, plus interest for the tax years in which the
exception was used.
TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); (5) in the case of hardship; or (6) made pursuant
to a qualified domestic relations order, if otherwise permissible. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers and transfers between certain Qualified Plans. Owners should
consult their own tax counsel or other tax adviser regarding any distributions.
MANDATORY DISTRIBUTIONS - QUALIFIED PLANS
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. There are no madatory distribution requirements for Roth IRAs prior to
death. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
ANNUITY PROVISIONS
The Company makes available payment plans on a fixed and variable basis.
VARIABLE ANNUITY PAYOUT
A variable annuity is an annuity with payments which: (1) are not
predetermined as to dollar amount; and (2) will vary in amount with the net
investment results of the applicable investment portfolio. Annuity payments also
depend upon the age of the annuitant and any joint annuitant and the assumed
interest factor utilized. The Annuity Table used will depend upon the annuity
option chosen. The dollar amount of annuity payments after the first is
determined as follows:
1. The dollar amount of the first variable annuity payment is divided by
the value of an annuity unit for each investment portfolio as of the annuity
date. This sets the number of annuity units for each monthly payment for the
applicable investment portfolio.
2. The fixed number of annuity units for each payment in each investment
portfolio is multiplied by the annuity unit value for that investment portfolio
for the last valuation period of the month preceding the month for which the
payment is due. This result is the dollar amount of the payment for each
applicable investment portfolio.
The total dollar amount of each variable annuity payment is the sum of all
variable annuity payments reduced by the applicable portion of the Contract
Maintenance Charge.
ANNUITY UNIT
The value of an annuity unit was arbitrarily set initially at $10. The
annuity unit value at the end of any subsequent valuation period is determined
as follows:
1. The net investment factor for the current valuation period is multiplied
by the value of the annuity unit for investment portfolio for the immediately
preceding valuation period.
2. The result in (1) is then divided by the assumed investment rate factor
which equals 1.00 plus the assumed investment rate for the number of days
since the previous valuation period.
The owner can choose either a 5% or a 3% assumed investment rate.
FIXED ANNUITY PAYOUT
A fixed annuity is an annuity with payments which are guaranteed as to
dollar amount by the Company and do not vary with the investment experience of
the investment portfolios. The dollar amount of each fixed annuity payment is
determined in accordance with Annuity Tables contained in the Contract.
FINANCIAL STATEMENTS
The financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The financial statements of Conseco Variable Insurance Company
(the "Company") will be filed by Pre-Effective Amendment.
B. EXHIBITS
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Separate Account.
2. Not Applicable.
3. (i) Form of Principal Underwriters Agreement.(To be filed by amendment)
(ii) Form of Selling Agreement. (To be filed by amendment)
4. (i) Individual Variable Deferred Annuity Contract.
(ii) Guaranteed Minimum Death Benefit Rider
(iii) Guaranteed Minimum Income Benefit Rider
(iv) Unemployment Benefit Rider
5. Application Form. (To be filed by amendment)
6. (i) Articles of Incorporation of the Company.*
(ii) Bylaws of the Company.*
7. Not Applicable.
8. (i) Form of Fund Participation Agreement by and among The Alger American
Fund, Great American Reserve Insurance Company and Fred Alger and
Company, Incorporated.**
(ii) Form of Fund Participation Agreement by and among Great American
Reserve Insurance Company, Berger Institutional Products Trust and
BBOI Worldwide LLC.**
(iii)Form of Fund Participation by and between Great American Reserve
Insurance Company, Insurance Management Series and Federated
Securities Corp.**
(iv) Form of Fund Participation between Great American Reserve Insurance
Company, Van Eck Worldwide Insurance Trust and Van Eck Associates
Corporation.**
(v) Form of Fund Participation Agreement by and between Lord Abbett Series
Fund, Inc., Lord, Abbett and Co. and Great American Reserve Insurance
Company.**
(vi) Form of Fund Participation Agreement by and between American Century
Investment Services, Inc. and Great American Reserve Insurance
Company.**
(vii)Form of Fund Participation Agreement between INVESCO Variable
Investment Funds, Inc., INVESCO Funds Group, Inc. and the Company.***
9. Opinion and Consent of Counsel. (To be filed by amendment)
10. Consent of Independent Accountants. (To be filed by amendment)
11. Not Applicable.
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. Company Organizational Chart.**
*Incorporated by reference to Form N-4 (Conseco Variable Annuity Account F -
File Nos. 333-40309 and 811-08483) filed electronically on November 14, 1997.
**Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4
(Conseco Variable Annuity Account F - File Nos. 333-40309 and 811-08483) filed
electronically on February 3, 1998.
***Incorporated by reference to Conseco Variable Annuity Account G, Form N-4,
File Nos. 333-00373 and 811-07501, filed electronically on January 23, 1996.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Executive Officers and Directors of the Company which
are engaged directly or indirectly in activities relating to the Registrant or
the Contracts offered by the Registrant:
Name and Principal Position and Offices
Business Address* with Depositor
- ------------------- ---------------------------------------
Ngaire E. Cuneo Director
Stephen C. Hilbert Director and Chairman of the Board
Rollin M. Dick Director, Executive Vice President and
Chief Financial Officer
Thomas J. Kilian Director and President
John J. Sabl Director, Executive Vice President, General
Counsel and Secretary
James S. Adams Senior Vice President and Treasurer
*The Principal business address for all officers and directors listed above is
11825 N. Pennsylvania Street, Carmel, Indiana 46032.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Company organizational chart was filed as Exhibit 15 in Form N-4
(Conseco Variable Annuity Account F, File Nos. 333-40309 and 811-08483) and is
incorporated herein by reference.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable
ITEM 28. INDEMNIFICATION
The Bylaws (Article VI) of the Company provide, in part, that:
The Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative,
by reason of the fact that he is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (collectively, "Agent") against expenses
(including attorneys' fees), judgments, fines, penalties, court costs and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement (whether with or
without court approval), conviction or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the Agent did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. If several claims, issues or matters are involved, an
Agent may be entitled to indemnification as to some matters even though he is
not entitled as to other matters. Any director or officer of the Corporation
serving in any capacity of another corporation, of which a majority of the
shares entitled to vote in the election of its directors is held, directly or
indirectly, by the Corporation, shall be deemed to be doing so at the request of
the Corporation.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company 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, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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
Company 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.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Conseco Equity Sales, Inc. is the principal underwriter for the following
investment companies (other than the Registrant):
Conseco Variable Annuity Account C
Conseco Variable Annuity Account E
Conseco Variable Annuity Account G
Conseco Fund Group
Rydex Advisor Variable Annuity Account
BMA Variable Life Account A
(b) Conseco Equity Sales, Inc. ("CES") is the principal underwriter for the
Contracts. The following persons are the officers and directors of CES. The
principal business address for each officer and director of CES is 11815 N.
Pennsylvania Street, Carmel, Indiana 46032.
Name and Principal Positions and Offices
Business Address with Underwriter
------------------------ ---------------------------------------
L. Gregory Gloeckner President and Director
William P. Kovacs Vice President, Senior Counsel,
Secretary and Director
James S. Adams Senior Vice President, Treasurer
and Director
William T. Devanney, Jr. Senior Vice President, Corporate
Taxes
Christene H. Darnell Vice President, Management
Reporting
Donald B. Johnston Vice President, National Sales Director
Christine E. Monical Second Vice President and Assistant General
Counsel
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
K. Lowell Short, whose address is 11825 N. Pennsylvania Street, Carmel, IN
46032, maintains physical possession of the accounts, books or documents of the
Separate Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. Conseco Variable Insurance Company (the "Company") hereby represents
that the fees and charges deducted under the Contracts described in the
Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
e. The Securities and Exchange Commission (the "SEC") issued the American
Counsel of Life Insurance an industry wide no-action letter dated November 28,
1988, stating that the SEC would not recommend any enforcement action if
registered separate accounts funding tax-sheltered annuity contracts restrict
distributions to plan participants in accordance with the requirements of
Section 403(b)(11), provided certain conditions and requirements were met. Among
these conditions and requirements, any registered separate account relying on
the no-action position of the SEC must:
(1) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in each registration statement,
including the prospectus, used in connection with the offer of the
contract;
(2) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403 (b)(11) in any sales literature used in
connection with the offer in the contract;
(3) Instruct sales representatives who solicit participants to
purchase the contract specifically to bring the redemption restrictions
imposed by Section 403(b)(11) to the attention of the potential
participants; and
(4) Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (i) the
restrictions on redemption imposed by Section 403(b)(11), and (ii) the
investment alternatives available under the employer's Section 403(b)
arrangement, to which the participant may elect to transfer his contract
value.
The Registrant is relying on the no-action letter. Accordingly, the
provisions of paragraphs (1) - (4) above have been complied with.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it has caused this Registration Statement to
be signed on its behalf, in the City of Carmel, and State of Indiana on this 4th
day of November, 1999.
CONSECO VARIABLE ANNUITY
ACCOUNT H
Registrant
By: CONSECO VARIABLE INSURANCE COMPANY
By: /s/THOMAS J. KILIAN
------------------------------
Thomas J. Kilian
President and Director
By: CONSECO VARIABLE INSURANCE COMPANY
Depositor
By: /s/THOMAS J. KILIAN
-------------------------------
Thomas J. Kilian
President and Director
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------ -------------------------- ---------------
/s/NGAIRE E. CUNEO Director 11/4/99
- ------------------------ -----------------
Ngaire E. Cuneo
/s/THOMAS J. KILIAN Director 11/4/99
- ------------------------ -----------------
Thomas J. Kilian
Director and Chairman of
/s/STEPHEN C. HILBERT of the Board (Principal 11/4/99
- ------------------------ Executive Officer) -----------------
Stephen C. Hilbert
/s/ROLLIN M. DICK Director, Executive Vice 11/4/99
- ------------------------ President and Chief -----------------
Rollin M. Dick Financial Officer
(Principal Financial
Officer)
/s/JOHN J. SABL Director 11/4/99
- ----------------------- ----------------
John J. Sabl
/s/JAMES S. ADAMS Senior Vice President and 11/4/99
- ----------------------- Treasurer (Chief Accounting ----------------
James S. Adams Officer)
EXHIBITS TO FORM N-4
INDEX TO EXHIBITS
EX-99.B1 Resolution of Board of Directors of the Company authorizing the
establishment of the Separate Account
EX-99.B4(i) Individual Variable Deferred Annuity Contract
EX-99.B4(ii) Guaranteed Minimum Death Benefit Rider
EX-99.B4(iii) Guaranteed Minimum Income Benefit Rider
EX-99.B4(iv) Unemployment Benefit Rider
WRITTEN CONSENT TO RESOLUTIONS
OF THE BOARD OF DIRECTORS OF
CONSECO VARIABLE INSURANCE COMPANY
The undersigned, being all of the members of the Board of Directors of
Conseco Variable Insurance Company (the "Company") hereby unanimously consent
to the adoption of the following resolutions without a meeting of the Board of
Directors of the Company:
RESOLVED, that the Company develop and implement a program for the offer
and sale of individual fixed and variable annuity contracts (the "Contracts")
with variable separate account and fixed general account options, to be issued
by the Company; and
RESOLVED, that the Company establish a separate account pursuant to the
Texas Insurance Code, said separate account being designated "Conseco Variable
Insurance Variable Account H" (the "Variable Account"); and
RESOLVED, that the Contracts issued pursuant to these resolutions from the
Variable Account shall provide that the assets of the Variable Account, equal to
the reserves and other contract liabilities with respect to the Variable
Account, are not chargeable with liabilities out of any other business the
Company may conduct; and
RESOLVED, that the filing with the U.S. Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 of a Form N-4 registration
statement for the Variable Account and Contracts, including the filing of any
amendments thereto and all matters properly incident thereto, is hereby
authorized and approved; and
RESOLVED, that the filing with the U.S. Securities and Exchange Commission
pursuant to Section 8 of the Investment Company Act of 1940 ("1940 Act"),
registering the Variable Account as a unit investment trust under said Act,
including the filing of any amendments thereto and all matters properly incident
thereto, is hereby authorized and approved; and
RESOLVED, that the filing with the U.S. Securities and Exchange Commission
of applications, and amendments thereto, for exemptions from the provisions of
the Investment Company Act of 1940 and the rules and regulations thereunder as
may be necessary or appropriate to effectuate the purposes of these resolutions,
are hereby authorized and approved; and
RESOLVED, that the officers of the Company be, and each of them hereby is,
authorized to make all actions necessary to maintain the registration of the
Variable Account as a unit investment trust under the 1940 Act, and to take such
related actions as they deem necessary or appropriate to carry out the
foregoing, including, without limitation, the following: determining that the
fundamental investment policy of the Variable Account shall be to invest and
reinvest its assets in securities issued by such open-end management investment
companies registered under the 1940 Act as the officers may designate consistent
with provisions of the Contracts issued by the Company; establishing one or more
sub-accounts of the Variable Account to which payments under the Contracts will
be allocated in accordance with orders received from Contract owners or
Participants; reserving to the officers the authority to increase or decrease
the number of sub-accounts in the Variable Account as they deem necessary or
appropriate; investing each sub-account only in shares of a single investment
company or a single portfolio of an investment company organized as a series
fund pursuant to the 1940 Act, including substituting from time to time shares
of another single investment company or single portfolio of a series fund for
such shares then invested in such sub-account, as the officers acting in
accordance with the provisions of the Contracts deem necessary or appropriate;
and the aforesaid being subject to the commencement of the Variable Account's
operations as a unit investment trust which invests in shares of one or more
portfolios of the Conseco Series Trust; and
RESOLVED, that in connection with the Variable Account and the offer and
sale of Contracts, the officers of the Company be, and each of them hereby is,
authorized to execute and file with such authorities of the states of the United
States of America, and to take such related actions as they deem necessary or
appropriate to carry out the foregoing, including without limitation, the
following: such applications, notices, certificates, affidavits, powers of
attorney, consents of service of process, covenants of an issuer, bonds, escrow
and impending agreements, and other writing and instruments as may be necessary
or appropriate in order to render permissible the offering and sale of Contracts
in any jurisdiction within the United States of America; the forms of any
resolutions required by any state authority to be filed in connection with any
of the documents or instruments referred to above be, and the same hereby are,
adopted by this Board of Directors as if such resolutions were fully set forth
herein if (i) in the opinion of the officers of the Company, the adoption of
such resolutions is necessary or advisable, and (ii) the Secretary or any
Assistant Secretary of the Company evidences the adoption of any such resolution
by filing a copy of such resolution with this Written Consent; and
RESOLVED, that the officers of the Company be and hereby are authorized to
take such further action and to execute such additional documents as they deem
necessary or appropriate to effectuate the purposes of the foregoing
resolutions.
The resolutions adopted pursuant to this Written Consent shall be effective
as of November 1, 1999.
/s/NGAIRE E. CUNEO /s/ ROLLIN M. DICK
- ---------------------------- ------------------------------
Ngaire E. Cuneo Rollin M. Dick
/s/STEPHEN C. HILBERT /s/THOMAS J. KILIAN
- ---------------------------- ------------------------------
Stephen C. Hilbert Thomas J. Kilian
/s/JOHN J. SABL
- ------------------------
John J. Sabl
CONSECO VARIABLE INSURANCE COMPANY
Administrative Office: 11815 N. Pennsylvania Street, Carmel, Indiana 46032-4555
[Telephone: (317) 817-3700]
A Stock Company
- --------------------------------------------------------------------------------
This is a legal Contract between the Contract Owner and THE Company
READ YOUR CONTRACT CAREFULLY
Conseco Variable Insurance Company ("the Company") agrees with the contract
Owner ("You/Your") to provide benefits to You, subject to the provisions set
forth in this contract and in consideration of the Purchase Payments received.
Right of Return. Within 10 days of the receipt of this contract by the Owner, it
may be returned by delivering or mailing it to the Company at its Administrative
Office. The Company will refund the Contract Value computed as of the business
day the Company receives the returned contract at its Administrative Office.
ANNUITY PAYMENTS, WITHDRAWAL VALUES AND DEATH BENEFITS PROVIDED BY THIS CONTRACT
MAY INCREASE OR DECREASE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
Signed for the Company at its Administrative Office in Carmel, Indiana.
Secretary President
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACT
VARIABLE ACCOUNTS
Non-participating
<TABLE>
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TABLE OF CONTENTS
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PROVISIONS PAGE NUMBERS
<S> <C>
CONTRACT SCHEDULE [3
DEFINITIONS 7
PURCHASE PAYMENTS PROVISIONS 9
SEPARATE ACCOUNT PROVISIONS 9
CONTRACT VALUE PROVISION 10
CONTRACT MAINTENANCE FEE PROVISION 10
TRANSFER PROVISIONS 11
WITHDRAWAL PROVISIONS 12
PROCEEDS PAYABLE AT DEATH PROVISIONS 13
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISONS 14
OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISONS 15
ANNUITIZATION PROVISIONS 16
GENERAL CONTRACT PROVISIONS 17
ANNUITY TABLES 19]
</TABLE>
<TABLE>
<CAPTION>
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CONTRACT SCHEDULE
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
CONTRACT NUMBER: [3456]
OWNER: [JOHN DOE]
JOINT OWNER: [NONE]
Annuitant: [JANE DOE]
JOINT ANNUITANT: [NONE]
CONTRACT ISSUE dATE: [JulY 1, 1999]
Annuity Date: [July 1, 2025]
PURCHASE PAYMENT CREDIT: Each Purchase Payment received will be credited with a
Purchase Payment Credit at the rate shown below. The
Purchase Payment Credit will be allocated in the same
manner as the Purchase Payments at the time of receipt.
The dollar amount of any Purchase Payment Credit will be
excluded from the contract value if You exercise the
Right of Return.
PURCHASE PAYMENT CREDIT RATE: 4%
INITIAL PURCHASE PAYMENT: [$XXX]
initial Purchase Payment Credit: [$XXX]
BENEFICIARY: As designated by the Owner at the Contract Issue Date or
as subsequently changed by the Owner.
MINIMUM INITIAL PURCHASE PAYMENT: $5,000 Nonqualified / $2,000 IRA's
Minimum Subsequent Purchase
Payment: [Nonqualified - $500; or if using automatic payment
check, $200/month.
IRA's - $50 per month.]
MAXIMUM TOTAL PURCHASE PAYMENTS: $2,000,000 (without prior Company approval)
ALLOCATION GUIDELINES: The Owner can select from among all the Sub-Accounts of
the Separate account. However, Owners are limited to 15
Sub-accounts at any one time.
If the initial Purchase Payments and forms required to
issue the Contract have been received, the Purchase
Payment will be credited within two Business Days after
its receipt at the Company's Administrative Office.
Additional Purchase Payments will be credited to the
Contract as of the Business Day they are received.
Allocation percentages must be in whole numbers. Each
allocation must be at least 1%.
SEPARATE ACCOUNT: [Conseco Variable Annuity Account H.]
</TABLE>
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CONTRACT SCHEDULE (continued)
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<S> <C>
INSURANCE CHARGES: The insurance charges, on an annual basis, are equal to
1.40% of the average daily net asset value of the Separate
Account. The Company may increase insurance charges,
however, the maximum charge increase will never exceed a
total of 0.25% of the average daily net asset value of the
Separate Account. In the event of an increase, the Company
will give you 90 days prior notice.
If elected at time of application, the Minimum Guaranteed
Death Benefit and the Minimum Guaranteed Income Benefit
riders will each incur additional insurance charges equal to
0.15%, on an annual basis, of the daily net asset value of
the Separate Account.
CONTRACT MAINTENANCE Fee: [The contract maintenance fee is $30 each Contract Year.
The Company reserves the right to change the contract
maintenance fee but the fee will never exceed $60 per
Contract Year.
During the Accumulation Period, if the Contract Value on the
Contract Anniversary is at least $50,000, the contract
maintenance fee will be waived. During the Accumulation
Period, if a full withdrawal is made on other than a
Contract Anniversary and the Contract Value for the Business
Day during which the full withdrawal is made is less than
$50,000, the full contract maintenance fee will be deducted
at the time of full withdrawal. If, at annuitization, the
Annuity Date is not the Contract Anniversary and the
Contract Value on the Annuity Date is less than $50,000,
then the full contract maintenance fee will be deducted on
the Annuity Date. During the Annuity Period, all contract
maintenance fees will be waived.]
DISTRIBUTION EXPENSE CHARGE: [None]
TRANSFERS PERMITTED: [Subject to terms of the contract, there are currently no
limits on the number of transfers that can be made during
the Accumulation Period. Owners are permitted two transfers
per contract year during the annuity period.]
- -------------------------------------------------------------------------------------------------------------------
CONTRACT SCHEDULE (continued)
- -------------------------------------------------------------------------------------------------------------------
TRANSFER FEE: [During the Accumulation Period, the Company allows a
transfer among Sub-accounts once every 30 days without a
charge. If you transfer more often, you will be assessed a
$25 transfer fee for each additional transfer.
During the Annuity Period, the Owner is allowed two (2)
transfers per Contract Year without charge. The Company
reserves the right to change the amount of the transfer fee
and the frequency of permitted transfers.
All reallocations made on a given date count as one (1)
transfer. Transfer fees will be waived for transfers made by
the Company at the end of the 10-day right to return
period.]
MINIMUM TRANSFER AMOUNT: [$500 from any Sub-account or the Owner's entire interest in
the Sub-account, if less.]
MINIMUM ACCOUNT BALANCE
AFTER TRANSFER: [$500 must remain in a Sub-account after a transfer is made
from it, unless the entire amount in the Sub-account is
transferred, creating a zero (0) balance.]
CONTINGENT DEFERRED SALES
CHARGE: A contingent deferred sales charge may be assessed against
each Purchase Payment withdrawn and will result in a
reduction of the Contract Value. Each Purchase Payment is
tracked from its date of receipt and will be subject to its
own contingent deferred sales charge. For the purpose of
calculating contingent deferred sales charges, withdrawals
are assumed to be made first from Purchase Payments (oldest
to newest) and then from earned income. Charges are
determined as indicated below:
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No. of Years from Receipt Contingent Deferred
------------------------- -------------------
<S> <C> <C> <C>
0 to 1 8%
2 8%
3 8%
4 8%
5 7%
6 6%
7 5%
8 3%
9 1%
10 and more 0%
</TABLE>
<TABLE>
<CAPTION>
CONTRACT SCHEDULE (continued)
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<S> <C>
WAIVER OF CONTINGENT
DEFERRED SALES CHARGE: Once each Contract Year a withdrawal is
available free of contingent deferred sales charges in an
amount equal to the greater of: (i) 10% of the Contract
Value, on a non-cumulative basis; (ii) the IRS minimum
distribution requirement, if the Contract was issued in
connection with certain IRAs; or (iii) the Purchase Payment
withdrawn that has been in the contract for more than nine
(9) complete years.
MINIMUM PARTIAL WITHDRAWAL: [$500 from any Account. This includes withdrawals from any
Sub-account of the Separate Account. The minimum withdrawal
requirement is waived if the partial withdrawal from any
Account is a result of a systematic withdrawal program or
minimum distribution requirement if contract was issued in
connection with certain IRAs.]
MINIMUM CONTRACT VALUE AFTER
withdrawal: $500 must remain in at
least one Sub-account of the Separate Account after a
partial withdrawal. If the amount of a withdrawal results
in an amount less than this amount, then the Company
reserves the right to terminate the contract, and pay you
the Contract Withdrawal Value. The Company will mail you a
notice of its intent to terminate the contract.
RIDERS: [None]
COMPANY ADDRESS: [Conseco Variable Insurance Company
Administrative Office: 11815 N. Pennsylvania Street
P.O. Box 1927
Carmel, IN 46032
Telephone Numbers: (317) 817-3700
Toll Free (800) 824-2726]
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
DEFINITIONS
- --------------------------------------------------------------------------------
ACCOUNT(S). One or more of the Sub-accounts of the Separate Account.
ACCUMULATION PERIOD. The period prior to the Annuity Date during which Purchase
Payments may be made by an Owner.
ACCUMULATION UNIT(S). A unit of measure used to determine the value of an
Owner's interest in a Sub-account of the Separate Account during the
Accumulation Period.
ADJUSTED CONTRACT VALUE. The Contract Value less any applicable premium tax, and
contract maintenance fee. This amount is applied to the applicable annuity table
to determine Annuity Payments.
AGE. The Age of any Owner or Annuitant on his/her last birthday. For Joint
Owners, all provisions that are based on Age are based on the Age of the older
of the Joint Owners.
ADMINISTRATIVE OFFICE. The Company's administrative address is indicated on the
Contract Schedule. All notices, requests and Purchase Payments must be sent to
this address. All sums payable to the Company under this contract are payable to
this address unless otherwise designated in writing by the Company.
ANNUITANT. The natural person on whose life Annuity Payments are based. On or
after the Annuity Date, the Annuitant shall also include any Joint Annuitant.
ANNUITY DATE. The date that Annuity Payments begin. The Annuity Date is shown on
the Contract Schedule.
ANNUITY OPTION(S). The different payment options available for Annuity Payments
under this contract.
ANNUITY PAYMENTS. A series of payments made to the Owner, or a named payee,
after the Annuity Date under the Annuity Option selected.
ANNUITY PERIOD. The period of time beginning with the Annuity Date during which
Annuity Payments are made.
ANNUITY UNIT. An accounting unit of measure used to calculate the amount of
Annuity Payments.
BENEFICIARY. The person(s) or entity(ies) who will receive the death benefit
payable under this contract.
BUSINESS DAY. Each day that the New York Stock Exchange is open for business.
The Separate Account will be valued each Business Day.
CONTRACT ANNIVERSARY. One year from your Contract Issue Date and every year
thereafter on the same month and day.
CONTRACT ISSUE DATE. The Contract Issue Date shown on the schedule page of this
contract.
CONTRACT VALUE. On a given business day, the contract value will equal the sum
of Purchase Payments, the initial Purchase Payment credit, earned interest, if
any, less withdrawals and/or charges.
CONTRACT WITHDRAWAL VALUE. The Contract Value, less any applicable premium tax,
less any contingent deferred sales charge and less any applicable contract
maintenance charge.
CONTRACT YEAR(S). The annual period begins on the Contract Issue Date.
Subsequent Contract Years begin on each anniversary day of the Contract Issue
Date.
- --------------------------------------------------------------------------------
DEFINITIONS (continued)
- --------------------------------------------------------------------------------
ELIGIBLE FUND. An investment entity that is made available for this contract.
FIXED ANNUITY. A series of payments made during the Annuity Period that are
guaranteed as to dollar amount by the Company.
OWNER/JOINT OWNER. The person(s) entitled to exercise all rights under this
contract (You, Your).
PORTFOLIO. A segment of an Eligible Fund which constitutes a separate and
distinct class of shares.
PREMIUM TAX(ES). Any Premium Taxes payable to any government entity and assessed
against Purchase Payments or Contract Value.
PURCHASE PAYMENT(s). A payment made by or for an Owner with respect to this
contract. All payments must be made payable to the Company.
SEPARATE ACCOUNT. A Separate Account is an account that provides investment
options where the benefits are held separate from other Company assets. The
Separate Account is not guaranteed as to the dollar amount shown on the contract
schedule.
Sub-account(S). Separate Account assets are divided into Sub-accounts. Each
Sub-account will invest its assets in shares of a single Eligible Fund or a
single Portfolio of an Eligible Fund.
WE, US, OUR. The Company.
WRITTEN REQUEST. A request in writing, in a form satisfactory to the Company,
that is received by the Administrative Office.
- --------------------------------------------------------------------------------
PURCHASE PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
PURCHASE PAYMENTS. The initial Purchase Payment is due on the Contract Issue
Date. Subject to the maximum and minimum amounts shown on the contract schedule,
subsequent Purchase Payments may be made at any time during the Accumulation
Period. You may increase, decrease and change the frequency of such payments.
The Company reserves the right to reject any Application or Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS. Purchase Payments are allocated to one or more
Sub-accounts of the Separate Account in accordance with the selections made by
the Owner. The allocation of the initial Purchase Payment is made in accordance
with the selection made by the Owner at the Contract Issue Date. Unless
otherwise changed by the Owner, subsequent Purchase Payments are allocated in
the same manner as the initial Purchase Payment. Allocation of Purchase Payments
are subject to the allocation guidelines shown on the contract schedule.
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SEPARATE ACCOUNT PROVISIONS
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THE SEPARATE ACCOUNT. The Separate Accounts consist of assets set aside by the
Company, which are kept separate from that of the general assets and any other
Separate Account assets of the Company. The assets of the Separate Account will
not be charged with liabilities arising out of any other business the Company
may conduct.
The Separate Account assets are divided into Sub-accounts. The assets of the
Sub-accounts are allocated to the Eligible Fund(s) and the Portfolio(s), if any,
within an Eligible Fund. Should the shares of any such Eligible Fund(s), or any
Portfolio(s) within an Eligible Fund, become unavailable for investment by the
Separate Account, or the Company's Board of Directors deems further investment
in these shares inappropriate, the Company may limit further purchase of such
shares or substitute shares of another Eligible Fund or Portfolio for shares
already purchased under this contract.
VALUATION OF ASSETS. The assets of the Sub-accounts are valued at their fair
market value in accordance with Company procedures.
ACCUMULATION UNITS. Accumulation Units shall be used to account for all amounts
allocated to, or withdrawn from, the Sub-accounts of the Separate Account as a
result of Purchase Payments, withdrawals, transfers, fees and charges. The
Company will determine the number of Accumulation Units of a Sub-account
purchased or cancelled. This will be done by dividing the amount allocated to
(or the amount withdrawn from) the Sub-account by the dollar value of one
Accumulation Unit of the Sub-account as of the Business Day that the request for
the transaction is received at Our Administrative Office.
ACCUMULATION UNIT VALUE. The initial Accumulation Unit value for each
Sub-account was arbitrarily set at $10. Subsequent Accumulation Unit values for
each Sub-account are determined each Business Day by multiplying the
Accumulation Unit value for the immediately preceding Business Day by the net
investment factor for the Sub-account for the current Business Day. The net
investment factor for each Sub-account is determined by dividing A by B and
subtracting C where:
A is: (i) the net asset value per share of the Eligible Fund or
Portfolio of an Eligible Fund held by the Sub-account as of the
current Business Day; plus
(ii) any dividend or capital gain per share declared on behalf of such
Eligible Fund or Portfolio that has an ex-dividend date as of the
current Business Day; plus
(iii)a charge-factor, if any, for any taxes or any tax reserve
established by the Company as a result of the operation or
maintenance of the Sub-account(s).
B is the net asset value per share of the Eligible Fund or Portfolio
held by the Sub-account for the immediately preceding Business Day.
C is the Business Day equivalent of the insurance charges, if any, that
are shown in the contract schedule.
The accumulation unit value may increase or decrease from Business Day to
Business Day.
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT PROVISIONS (continued)
- --------------------------------------------------------------------------------
INSURANCE CHARGES. Each business day the Company deducts insurance charges from
the Separate Account that are equal, on an annual basis, to the amount shown on
the contract schedule. The insurance charges compensate the Company for assuming
the mortality and expense risks, costs associated with the administration of
this contract, and if so elected, to provide for certain benefits.
- --------------------------------------------------------------------------------
CONTRACT VALUE PROVISION
- --------------------------------------------------------------------------------
CONTRACT VALUE. The Contract Value as of any Business Day is the sum of the
Contract Value in each of the Sub-accounts of the Separate Account.
The Contract Value in a Sub-account of the Separate Account is determined by
multiplying the number of Accumulation Units allocated to the Owner's account
for the Sub-account by the Accumulation Unit value.
Withdrawals will result in the cancellation of Accumulation Units in a
Sub-account.
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CONTRACT MAINTENANCE FEE PROVISION
- --------------------------------------------------------------------------------
CONTRACT MAINTENANCE FEE DEDUCTION. On each Contract Anniversary the Company
will deduct a contract maintenance fee from the Contract Value for reimbursement
of expenses relating to maintenance of the contract as shown on the contract
schedule. The Company will do this by canceling Accumulation Units from each
applicable Sub-account. The contract maintenance fee will be deducted from the
Sub-account of the Separate Account with the largest balance.
- --------------------------------------------------------------------------------
TRANSFER PROVISIONS
- --------------------------------------------------------------------------------
TRANSFERS DURING THE ACCUMULATION PERIOD. Subject to any limitation imposed by
the Company on the number of transfers during the Accumulation Period, shown on
the contract schedule, an Owner may transfer all or part of the Contract Value
in a Sub-account. The Owner may do this by Written Request. All transfers are
subject to the following:
1. If more than the number of free transfers have been made in a 30-day
period, the Company will deduct a transfer fee for each subsequent transfer
made. The frequency and number of free transfers are shown on the contract
schedule. The transfer fee is deducted from the Account that is the source
of the transfer. However, if the Owner's entire interest in an Account is
being transferred, then the transfer fee will be deducted from the amount
being transferred. If there are multiple-source Accounts, the transfer fee
will be allocated to the Sub-account with the largest balance that is
involved in the transfer transaction.
2. The contract schedule shows: a) the minimum amount that may be transferred
from a Sub-account; b) the minimum amount that must remain in a
Sub-account.
3. An Owner's right to make transfers is subject to modification if the
Company determines, in the Company's sole opinion, that the exercise of the
right by one or more Owners is or would be to the disadvantage of other
Owners. Restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by the Company to
be to the disadvantage of the Owners. A modification could be applied to
the transfers to or from one or more of the Sub-accounts and could include,
but not be limited to: a) the requirement of a minimum time period between
each transfer; b) not accepting a transfer request from an agent acting
under a power of attorney on behalf of more than one Owner; or c) limiting
the dollar amount that may be transferred between the Sub-accounts by an
Owner at any one time.
4. The Company reserves the right, at any time, and without prior notice to
any party, to terminate, suspend or modify the transfer privilege described
above.
If an Owner elects to use this transfer privilege, the Company will not be
liable for transfers made in accordance with the instructions received from the
Owner or other authorized persons. All amounts and Accumulation Units will be
determined as of the Business Day during which the request for transfer is
received at Our Administrative Office.
- --------------------------------------------------------------------------------
TRANSFER PROVISIONS (continued)
- --------------------------------------------------------------------------------
TRANSFERS DURING THE ANNUITY PERIOD. Subject to any limitations imposed by the
Company on the number of transfers allowed during the Annuity Period, shown on
the contract schedule, the Owner may transfer Annuity Units as follows:
1. Transfers may be made upon Written Request to the Company at least thirty
(30) days before the due date of the next Annuity Payment for which the
change will apply. Transfers will be made by converting the number of
Annuity Units being transferred to the number of Annuity Units of the
selected Sub-account to which the transfer is made, so that the next
Annuity Payment, if it were made at that time, would be the same amount
that it would have been without the transfer. Thereafter, Annuity Payments
will reflect changes in the value of the new Annuity Units.
2. If more than the number of free transfers, shown on the contract schedule,
have been made in a Contract Year, the Company will deduct a transfer fee,
shown on the contract schedule, for each subsequent transfer. The transfer
fee is deducted from the Account that is the source of the transfer.
However, if the Owner's entire interest in an Account is being transferred,
the transfer fee will be deducted from the amount that is transferred. If
there are multiple-source Accounts, the transfer fee will be deducted from
the Sub-account with the largest balance that was involved in the
transaction.
3. The minimum amount that can be transferred from a Sub-account is shown on
the contract schedule. The minimum amount that must remain in a Sub-account
and Fixed Account after a transfer is shown on the contract schedule.
4. The Company reserves the right, at any time and without prior notice, to
terminate, suspend or modify the transfer privilege described above.
If an Owner elects to use the transfer privilege, the Company will not be liable
for transfers made in accordance with instructions received from the Owner or
other authorized persons. All amounts and Annuity Units will be determined as of
the Business Day during which the request for transfer is received at Our
Administrative Office.
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
WITHDRAWALS. During the Accumulation Period, the Owner may make full or partial
withdrawals of the Contract Withdrawal Value by Written Request. The Owner must
indicate in the Written Request which Sub-account is intended to be the source
of the partial withdrawal.
We will pay the amount of any withdrawal from the Separate Account within seven
(7) days of receipt of a Written Request unless the Suspension or Deferral of
Payments provision is in effect.
Each partial withdrawal must be for an amount that is not less than the minimum
amount shown on the contract schedule. The minimum Contract Value that must
remain in a Sub-account after a partial withdrawal is shown on the contract
schedule.
CONTINGENT DEFERRED SALES CHARGE. Upon withdrawal of all or part of the
Contract, a contingent deferred sales charge may be assessed as stated on the
contract schedule,
- --------------------------------------------------------------------------------
PROCEEDS PAYABLE AT DEATH PROVISIONS
- --------------------------------------------------------------------------------
DEATH OF OWNER DURING ACCUMULATION PERIOD. Upon the death of the Owner, or any
Joint Owner, during the Accumulation Period, the death benefit will be paid to
the beneficiary(ies) designated by the Owner(s). Upon the death of a Joint
Owner, the surviving Owner will be treated as the primary beneficiary. Any other
beneficiary designation on record at the time of death will be treated as a
contingent beneficiary. The death benefit must be paid under one of the death
benefit options below. However, if the beneficiary is the spouse of the Owner,
he or she may elect to continue the contract, at the then current Contract
Value, in his or her own name and exercise all the ownership rights under the
contract.
DEATH BENEFIT AMOUNT. During the Accumulation Period, if death of an Owner
occurs prior to age 80, the death benefit will be the greater of: a) the
Contract Value; or b) total Purchase Payments less any partial withdrawals and
contingent deferred sales charges. If age 80 or older, the death benefit will be
equal to the Contract Value. The Contract Value will be determined as of the
Business Day the Company receives both due proof of death and an election for
the payment method. If Joint Owners are named, the death benefit is determined
based on the age of the oldest Owner.
After the death benefit amount is determined, it remains in the Separate Account
until distribution begins. From the time the death benefit is determined until
complete distribution is made, any amount in the Sub-account will be subject to
investment risk, which is borne by the Beneficiary.
DEATH BENEFIT OPTIONS DURING ACCUMULATION PERIOD. The Owner may designate in
writing that the death benefit be paid under one of the options available below.
It the Owner doesn't designate an option, then the Beneficiary must elect the
death benefit to be paid under one of the following options in the event of the
death of the Owner or a Joint Owner during the Accumulation Period:
o Option 1 - Lump sum payment of the death benefit; or
o Option 2 - Payment of the entire death benefit within five (5) years of the
date of the death of the Owner or any Joint Owner; or
o Option 3 - Payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary, or over a period not extending beyond the life
expectancy of the Beneficiary, with distribution beginning within one (1)
year of the date of death of the Owner or Joint Owner.
Any portion of the death benefit not applied under Option 3, within one (1) year
of the date of the Owner's death, must be distributed within five (5) years of
the date of death.
Unless the Owner has previously designated one of the above payment options, a
Beneficiary who is a spouse of the Owner may elect to: a) continue the contract
in his or her own name at the then current Contract Value; b) elect a lump sum
payment of the death benefit; or c) or apply the death benefit to an Annuity
Option.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the payment election, unless the
Suspension or Deferral of Payments provision, as set forth on page 13 is in
effect. Payment to the Beneficiary, other than in a lump sum, may only be
elected during the sixty-day (60) period beginning with the date of receipt of
proof of death.
DEATH BENEFIT OPTION DURING THE ANNUITY PERIOD. If the Owner, or any Joint
Owner, who is not the Annuitant, dies during the Annuity Period, any remaining
payments under the Annuity Option elected will continue at least as rapidly as
under the method of distribution in effect at such Owner's or Joint Owner's
death. Upon the death of any Owner during the Annuity Period, the Beneficiary
becomes the Owner. Upon the death of any Joint Owner during the Annuity period,
the surviving owner, if any, will be treated as the primary Beneficiary. Any
other Beneficiary designation on record at the time of death will be treated as
a Contingent Beneficiary.
- --------------------------------------------------------------------------------
PROCEEDS PAYABLE AT DEATH PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
DEATH OF ANNUITANT. Upon the death of an Annuitant, who is not the Owner, during
the Accumulation Period, the Owner automatically becomes the Annuitant. The
Owner may designate a new Annuitant, subject to the Company's underwriting rules
then in effect. If the Owner is a non-natural person, the death of an Annuitant
will be treated as the death of the Owner and a new Annuitant may not be
designated.
Upon the death of an Annuitant during the Annuity Period, the death benefit, if
any, will be as specified in the Annuity Option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
PAYMENT OF DEATH BENEFIT: The Company will require due proof of death of the
Annuitant before any death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company
All death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
BENEFICIARY. The Beneficiary designation in effect on the Contract Issue Date
will remain in effect until changed. The Beneficiary is entitled to receive the
benefits to be paid at the death of the Owner.
Unless the Owner provides otherwise, the death benefit will be paid in equal
shares to the survivor(s) as follows:
1. the Primary Beneficiary(ies) who survive the Owner's and/or the
Annuitant's death, as applicable; or if none
2. the Contingent Beneficiary(ies) who survive the Owner's and/or the
Annuitant's death, as applicable; or if none
3. the estate of the Owner.
BENEFICIARY CHANGE. Subject to the rights of any irrevocable Beneficiary(ies),
the Owner may change the primary Beneficiary(ies) or contingent
Beneficiary(ies). A change may be made by Written Request. The change will take
effect as of the date the Written Request is signed. The Company will not be
liable for any payment made or action taken before it records the change.
- --------------------------------------------------------------------------------
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
- --------------------------------------------------------------------------------
The Company reserves the right to suspend or postpone payments from the Separate
Account for a withdrawal or transfer for any period listed below, provided that
applicable rules and regulations of the Securities and Exchange Commission will
govern as to whether the conditions described in (2) and (3) below exist.
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings); or
2. trading on the New York Stock Exchange is restricted; or
3. an emergency exists as a result of which disposal of securities held
in the Separate Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate
Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits consistent with the protection of Owners.
- --------------------------------------------------------------------------------
OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
- --------------------------------------------------------------------------------
OWNER. The Owner has all interest and right to amounts held in this contract.
The Owner is the person designated as such on the Contract Issue Date, unless
changed.
The Owner may change ownership of the contract at any time by Written Request. A
change of ownership will automatically revoke any prior designation of Owner.
The change will become effective as of the date the Written Request is received
by Us. The Company will not be liable for any payment made or action taken
before it records the change.
JOINT OWNER. A contract may be owned by Joint Owners. If Joint Owners are named,
the Joint Owner must be the spouse of the other Owner, unless limited by law.
Upon the death of either Owner, the surviving Joint Owner will be the primary
Beneficiary. Any other Beneficiary designation will be treated as a contingent
Beneficiary unless otherwise indicated in a Written Request.
ANNUITANT/JOINT ANNUITANT. The Annuitant(s) is the person on whose life Annuity
Payments are based. The Annuitant(s) is the person designated by the Owner at
the Contract Issue Date, unless changed prior to the Annuity Date. The Annuitant
may not be changed in a contract that is owned by a non-natural person. Any
change of Annuitant(s) is subject to the Company's underwriting rules in effect
at the time the Written Request is recorded by the Company.
ASSIGNMENT OF CONTRACT. A Written Request specifying the terms of an assignment
of a contract must be provided to Our Administrative Office. The Company will
not be liable for any payment made or action taken before it records the
assignment. The Company will not be responsible for the validity or tax
consequences of any assignment. Any assignment made after the Annuity Date, or
after the death benefit has become payable will be valid only with the Company's
consent. If the contract is assigned, the Owner's rights may only be exercised
with the consent of the assignee of record.
- --------------------------------------------------------------------------------
ANNUITIZATION PROVISIONS
- --------------------------------------------------------------------------------
GENERAL. On the Annuity Date, the Contract Withdrawal Value will be applied
under the Annuity Option selected by the Owner. The Owner may elect to have the
Contract Withdrawal Value applied to provide a Fixed Annuity, a Variable Annuity
or a combination Fixed and Variable Annuity. The Contract Value may be applied
under the Annuity Option selected if the Annuity Date occurs on or after the
fifth (5) Contract Anniversary and the Annuity Option is life contingency for a
minimum of five (5) years. If an Annuity Option combination is elected, the
Owner must specify what portion of the Contract Withdrawal Value is to be
applied to the fixed and variable options. In addition, the Owner may select a
lump sum payment .
ANNUITY DATE. The Annuity Date is selected by the Owner at the Contract Issue
Date. The Annuity Date must be the first day of a calendar month and must be at
least ninety (90) days after the Contract Issue Date. The Annuity Date may not
be later than the earlier of: a) the date the Annuitant reaches attained age 90;
or b) the maximum date permitted under applicable law.
Prior to the Annuity Date, the Owner, subject to the above, may change the
Annuity Date by Written Request. Any change must be requested at least thirty
(30) days prior to the new Annuity Date.
SELECTION OF AN ANNUITY OPTION: An Annuity Option may be selected by Written
Request of the Owner. If no Annuity Option is selected, Option 2 with 120
monthly payments guaranteed will automatically be applied. Unless specified
otherwise, that portion of the Contract Withdrawal Value allocated to the
Separate Account shall be used to provide a variable annuity, and that portion
of the Contract Withdrawal Value allocated to the Fixed Account will be used to
provide a Fixed Annuity. Prior to the Annuity Date, the Owner can change the
Annuity Option selected by Written Request. Any change must be requested at
least thirty (30) days prior to the Annuity Date.
- --------------------------------------------------------------------------------
ANNUITIZATION PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS. Annuity Payments are paid in monthly
installments. The Contract Withdrawal Value is applied to the annuity table for
the Annuity Option selected. If the Contract Withdrawal Value applied under an
Annuity Option is less than $5,000, the Company reserves the right to make a
lump sum payment in lieu of Annuity Payments. If the Annuity Payment is ever
less than $50, the Company reserves the right to reduce the frequency of
payments to an interval which will result in each payment being at least $50.
ANNUITY OPTIONS: The following Annuity Options or any other Annuity Option
acceptable to the Company may be selected:
OPTION 1. INCOME FOR SPECIFIED PERIOD. We will pay an income for a specific
number of years in equal installments. We guarantee these payments to be at
least those shown in Table 1. However, when the Annuitant dies, if We have
made Annuity Payments for less than the specified period elected, We will
continue to make Annuity Payments to the Owner for the rest of the
specified period. If an Owner does not want to receive Annuity Payments, he
or she may ask Us for a single lump sum. A single sum payment will be equal
to the present value of remaining payments as of the date of receipt of
proof of death commuted at the assumed investment rate for a Variable
Annuity Option and at a Fixed Account guaranteed rate for a Fixed Annuity
option.
OPTION 2. LIFE INCOME WITH PERIOD CERTAIN. We will pay equal monthly
payments for a specified period certain and then for the life of the
Annuitant. If the Annuitant dies during period certain, We will continue to
make payments to the Owner (or any person designated by the Owner) for the
rest of the guaranteed specified period. If the Owner does not want to
receive payments after the Annuitant's death, he/she can ask Us for a lump
sum. A single sum payment will be equal to the present value of remaining
payments as of the date of receipt of proof of death commuted at the
assumed investment rate for a Variable Annuity Option and at a Fixed
Account guaranteed rate for a Fixed Annuity option.
OPTION 3. INCOME OF SPECIFIED AMOUNT. We will pay income of a specified
amount until the principal and interest are exhausted. However, when the
Annuitant dies, if We have made annuity payments for less than the
specified amount, We will continue to make annuity payments to the Owner
for the balance of the specified amount. If the Owner does not want to
receive annuity payments, he or she can ask Us for a single lump sum. A
single sum payment will be equal to the present value of remaining payments
as of the date of receipt of proof of death commuted at the assumed
investment rate for a Variable Annuity Option and at a Fixed Account
guaranteed rate for a Fixed Annuity option.
OPTION 4. JOINT AND SURVIVOR INCOME. We will pay equal monthly payments
during the joint lifetime of the Annuitant and the named Joint Annuitant.
We will determine the payment from Table 4 based on the Age of each person.
The Annuitant must be at least 50 years old, and the Joint Annuitant must
be at least 45 years old, at the time of the first monthly payment.
ANNUITY. If the Owner selects a Fixed Annuity, the Contract Withdrawal Value
will be allocated to the General Account and the Annuity paid as a Fixed
Annuity. If the Owner selects a variable annuity, the Contract Withdrawal Value
will be allocated to the Sub-accounts of the Separate Account in accordance with
the selection made by the Owner, and the annuity will be paid as a variable
annuity. If no selection is made, the Contract Withdrawal Value will be applied
in the same proportions, to the same Sub-accounts, as the allocations are at the
time of election. Unless the Owner specifies otherwise, the payee of the Annuity
Payments shall be the Owner. The Contract Withdrawal Value will be applied to
the applicable annuity table contained in this contract based upon the Annuity
Option selected by the Owner. The amount of the first payment for each $1,000 of
Contract Withdrawal Value is shown in the annuity tables.
FIXED ANNUITY. The Owner may elect to have the Contract Withdrawal Value applied
to provide a Fixed Annuity. The dollar amount of each Fixed Annuity Payment
shall be determined in accordance with Annuity tables contained in contract
which are based on the minimum guaranteed interest rate of 3% per year.
VARIABLE ANNUITY. The Owner may elect to have the Contract Withdrawal Value
applied to provide a variable annuity. Variable Annuity Payments reflect the
investment performance of the Separate Account in accordance with the allocation
of the Contract Withdrawal Value to the Sub-accounts during the Annuity Period.
Variable Annuity Payments are not guaranteed as to dollar amount.
- --------------------------------------------------------------------------------
ANNUITIZATION (CONTINUED)
- --------------------------------------------------------------------------------
The dollar amount of the first Variable Annuity Payment is determined in
accordance with the description above. The dollar amount of the variable Annuity
Payment for each applicable Sub-account after the first variable Annuity Payment
is determined as follows:
1. The dollar amount of the first variable Annuity Payment is divided by
the value of an Annuity Unit for each applicable Sub-account as of the
Annuity Date. This sets the number of Annuity Units for each monthly
payment for the applicable Sub-accounts.
2. The fixed number of Annuity Units per payment in each Sub-account is
multiplied by the Annuity Unit value for that Sub-account for the last
Business Day of the month proceeding the month for which the payment
is due. This result is the dollar amount of the payment for each
applicable Sub-account.
The total dollar amount of each variable Annuity Payment is the sum of all
Sub-account variable Annuity Payments reduced by the applicable portion of the
contract maintenance fee.
ANNUITY UNIT. The value of any Annuity Unit for each Sub-account of the Separate
Account was initially set at $10.
The Sub-account Annuity Unit Value for any subsequent Business Day is determined
as follows:
1. The net investment factor for the current Business Day is multiplied by the
value of the Annuity Unit for the Sub-account for the immediately preceding
Business Day.
2. The result in (1) is then divided by the assumed investment rate factor,
which equals 1.00, plus the assumed investment rate for the number of days
since the preceding Business Day. The Owner can choose either a 5% or a 3%
assumed investment rate.
Mortality tables. The Annuity 2000 Mortality Table is used in establishing the
annuity table.
The dollar amount of an Annuity Payment for any age or combination of ages not
shown in the tables, or for any other form of Annuity Option agreed to by the
Company, will be provided by the Company upon request.
- --------------------------------------------------------------------------------
GENERAL CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
THE CONTRACT. The entire contract consists of this contract, the application, if
any, amendments and any riders or endorsements attached to it. This contract may
be changed or altered in writing only, by the President, Senior Vice President
or Secretary of the Company. No agent has the authority to change or waive any
provision of this contract.
EVIDENCE OF SURVIVAL. The Company may require satisfactory evidence of the
continued survival of any person(s) on whose life Annuity Payments are based.
INCONTESTABILITY. This contract will be incontestable from the Contract Issue
Date.
MISSTATEMENT OF AGE OR SEX. If the age or sex of any Annuitant has been
misstated, any annuity benefits payable will be the annuity benefits that would
have been provided at the correct age and sex. After Annuity Payments have
begun, any underpayments will be made up in one sum with the next Annuity
Payment. Any overpayment will be deducted from future Annuity Payments until the
total is repaid.
MODIFICATION. This contract may be modified in order to maintain compliance with
applicable state and/or federal law.
NON-PARTICIPATING. This contract will not share in any distribution of
dividends, profits or income of the Company.
PREMIUM TAXES. Any taxes paid to any governmental entity relating to the
contract will be deducted from the Purchase Payment or Contract Value. The
Company may, at its sole discretion, pay taxes when due and deduct that amount
from the Contract Value at a later date. Payment of taxes at an earlier date
does not waive the rights of the Company to deduct that amount from the Contract
Value at a later date.
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GENERAL CONTRACT PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
PROOF OF AGE AND SEX. The Company may require evidence of age and sex of any
Annuitant and any Owner.
PROTECTION OF PROCEEDS. To the extent permitted by law, death benefits and
Annuity Payments shall be free from legal process and the claim of any creditor
other than the person entitled to them under a valid legal contract. No payment,
nor any amount under this contract, shall be taken or assigned in advance of its
payment date unless the Company receives the Owner's Written Request.
OTHER TAXES. The Company reserves the right to establish a provision for federal
income taxes if it determines, at its sole discretion, that it will incur a tax
as a result of the operation of the Separate Account. The Company will deduct
for any income taxes incurred by it as a result of the operation of the Separate
Account whether or not there was a provision for taxes and whether or not that
provision was sufficient. The Company will deduct any withholding taxes required
by applicable law.
REGULATORY REQUIREMENTS. All values payable under any contract will not be less
than the minimum benefits required by the laws and regulations of the state in
which the contract is delivered.
Reports. At least once each calendar year, the Company will furnish each Owner
with an annual report showing the Contract Value and any other information
required by law.
<TABLE>
<CAPTION>
TABLE 1
Income for Specified period factors
Installments shown are for each $1,000 of net proceeds applied. Interest is 3%,
and is subject to change as described in the Interest on Settlement Options
Section.
<S> <C>
1 N/A N/A N/A N/A
2 N/A N/A N/A N/A
3 N/A N/A N/A N/A
4 N/A N/A N/A N/A
5 $211.99 $106.78 $53.59 $17.91
6 179.22 90.27 45.30 15.14
7 155.83 78.49 39.39 13.16
8 138.31 69.66 34.96 11.68
9 124.69 62.81 31.52 10.53
10 113.82 57.33 28.77 9.61
11 104.93 52.85 26.52 8.86
12 97.54 49.13 24.65 8.24
13 91.29 45.98 23.08 7.71
14 85.95 43.29 21.73 7.26
15 81.33 40.96 20.56 6.87
16 77.29 38.93 19.54 6.53
17 73.24 37.14 18.64 6.23
18 70.59 35.56 17.84 5.96
19 67.78 34.14 17.13 5.73
20 65.26 32.87 16.50 5.51
<FN>
* Equal monthly payment for the number of years elected, not to exceed 25
years. Payments will begin on the option date selected.
</FN>
</TABLE>
<TABLE>
<CAPTION>
TABLE 2
MONTHLY INCOME FOR LIFE WITH GUARANTEED PERIOD certain
Equal monthly payments for a guaranteed period of 10, 15, or 20 years, as
elected, and for life thereafter as shown in the table below. Amount of each
monthly installment per $1,000 net proceeds. Amounts based on Annuity 2000
Mortality Tables and 3% interest.
MALE
- ------------------------------------------------------------------------------------------------------------------------
Age of Payee 10 Years 15 Years 20 Years Age of Payee 10 Years 15 Years 20 Years
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25 $3.08 $3.08 $3.07 53 $4.25 $4.20 $4.12
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
26 3.10 3.10 3.09 54 4.33 4.27 4.18
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
27 3.12 3.12 3.11 55 4.41 4.34 4.24
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
28 3.15 3.14 3.14 56 4.49 4.42 4.30
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
29 3.17 3.17 3.16 57 4.58 4.49 4.36
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
30 3.20 3.19 3.19 58 4.68 4.58 4.43
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
31 3.22 3.22 3.21 59 4.78 4.66 4.49
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
32 3.25 3.25 3.24 60 4.88 4.75 4.56
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
33 3.28 3.28 3.27 61 4.99 4.84 4.62
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
34 3.31 3.31 3.30 62 5.10 4.93 4.69
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
35 3.34 3.34 3.33 63 5.23 5.03 4.75
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
36 3.38 3.37 3.36 64 5.35 5.13 4.82
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
37 3.41 3.40 3.39 65 5.48 5.22 4.88
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
38 3.45 3.44 3.42 66 5.62 5.33 4.94
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
39 3.49 3.48 3.46 67 5.77 5.43 5.00
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
40 3.53 3.52 3.50 68 5.92 5.53 5.06
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
41 3.57 3.56 5.53 69 6.07 5.63 5.11
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
42 3.62 3.60 3.57 70 6.23 5.73 5.16
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
43 3.66 3.64 3.62 71 6.39 5.83 5.21
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
44 3.71 3.69 3.66 72 6.56 5.93 5.25
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
45 3.76 3.74 3.70 73 6.73 6.02 5.29
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
46 3.81 3.79 3.75 74 6.90 6.11 5.33
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
47 3.87 3.84 3.80 75 7.08 6.20 5.36
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
48 3.92 3.89 3.85 76 7.25 6.28 5.39
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
49 3.98 3.95 3.90 77 7.43 6.35 5.41
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
50 4.05 4.01 3.95 78 7.61 6.42 5.43
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
51 4.11 4.07 4.00 79 7.78 6.49 5.45
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
52 4.18 4.13 4.06 80 7.95 6.55 5.46
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TABLE 2
MONTHLY INCOME FOR LIFE WITH GUARANTEED PERIOD CERTAIN
Equal monthly payments for a guaranteed period of 10, 15, or 20 years, as
elected, and for life thereafter as shown in the table below. Amount of each
monthly installment per $1,000 net proceeds. Amounts based on Annuity 2000
Mortality Tables and 3% interest.
FEMALE
- ------------------------------------------------------------------------------------------------------------------------
Age of Payee 10 Years 15 Years 20 Years Age of Payee 10 Years 15 Years 20 Years
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25 $2.99 $2.99 $2.99 53 $3.99 $3.96 $3.92
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
26 3.01 3.01 3.00 54 4.06 4.02 3.97
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
27 3.03 3.03 3.02 55 4.13 4.09 4.03
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
28 3.05 3.05 3.04 56 4.20 4.16 4.09
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
29 3.07 3.07 3.06 57 4.28 4.23 4.15
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
30 3.09 3.09 3.09 58 4.36 4.30 4.22
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
31 3.11 3.11 3.11 59 4.45 4.38 4.28
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
32 3.14 3.14 3.13 60 4.54 4.46 4.35
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
33 3.16 3.16 3.15 61 4.63 4.55 4.42
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
34 3.19 3.19 3.18 62 4.73 4.64 4.49
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
35 3.22 3.21 3.21 63 4.84 4.73 4.57
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
36 3.24 3.24 3.23 64 4.95 4.83 4.64
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
37 3.27 3.27 3.26 65 5.07 4.93 4.71
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
38 3.30 3.30 3.29 66 5.20 5.03 4.78
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
39 3.34 3.33 3.32 67 5.33 5.14 4.85
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
40 3.37 3.36 3.35 68 5.47 5.25 4.92
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
41 3.41 3.40 3.39 69 5.62 5.36 4.99
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
42 3.44 3.44 3.42 70 5.78 5.47 5.05
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
43 3.48 3.47 3.46 71 5.94 5.58 5.11
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
44 3.52 3.51 3.50 72 6.11 5.70 5.17
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
45 3.57 3.55 3.54 73 6.29 5.81 5.22
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
46 3.61 3.60 3.58 74 6.48 5.92 5.27
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
47 3.66 3.64 3.62 75 6.67 6.03 5.31
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
48 3.71 3.69 3.66 76 6.86 6.13 5.35
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
49 3.76 3.74 3.71 77 7.06 6.22 5.38
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
50 3.81 3.79 3.76 78 7.26 6.31 5.40
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
51 3.87 3.85 3.81 79 7.46 6.39 5.43
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
52 3.93 3.90 3.86 80 7.66 6.47 5.45
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
TABLE 3
EQUAL PAYMENTS OF A SPECIFIED AMOUNT
Equal monthly payments of at least $4.71 per month for each $1,000 of proceeds.
Payments will begin on the option date and will continue until the proceeds and
interest, at a rate of 3% compounded annually, are exhausted.
<TABLE>
<CAPTION>
TABLE 4
JOINT SURVIVOR INCOME FACTORS
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3.34 $3.41 $3.46 $3.50 $3.54 $3.58
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
3.44 3.54 3.62 3.69 3.74 3.79
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
3.53 3.66 3.79 3.90 3.99 4.06
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
3.60 3.78 3.95 4.12 4.27 4.38
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
3.66 3.87 4.10 4.34 4.57 4.77
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
3.71 3.95 4.22 4.54 4.87 5.19
- -------------------------------------------------------------------------------------------------
</TABLE>
Installments shown are monthly and are for each $1,000 of net proceeds applied.
Based on Annuity 2000 Tables and 3% interest. Amounts are subject to change as
described in the Interest On Settlement Options Section.
We will furnish values for age combinations not shown in the table upon request.
CVIC-2001
CONSECO VARIABLE INSURANCE COMPANY
Administrative Office: 11815 N. Pennsylvania Street
Carmel, Indiana 46032-4555
Telephone: (317) 817-3700
A Stock Company
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACT
VARIABLE ACCOUNTS
Non-participating
CONSECO VARIABLE INSURANCE COMPANY
Administrative Office: 11815 N. Pennsylvania Street, Carmel, Indiana 46032
GUARANTEED MINIMUM DEATH BENEFIT RIDER
This rider forms a part of the contract to which it is attached. The rider is
subject to the terms of the contract except to the extent it changes the
contract. The effective date of this rider is the same as the Contract Issue
Date. If You elect this benefit, We will deduct an Insurance Charge as stated on
the contract schedule page.
The following hereby amends and replaces the section of the contract captioned
"Proceeds Payable on Death, Death Benefit Amount."
PROCEEDS PAYABLE AT DEATH
DEATH BENEFIT AMOUNT. During the Accumulation Period, if death of the Owner(s)
occurs prior to age 80, the Death Benefit will be the greater of:
1) The total of all Purchase Payments, less all partial withdrawals,
contingent deferred sales charges deducted and any premium taxes as
applicable.
2) The Contract Value determined as of the Business Day during which the
Company received both due proof of death and an election of the payment
method; or
3) The largest Contract Value on any Contract Anniversary prior to the death
of the Owner(s), less any Adjusted Partial Withdrawals, and limited to no
more than twice the amount of Purchase Payments paid less any Adjusted
Partial Withdrawals.
An Adjusted Partial Withdrawal is equal to:
a) the partial withdrawal amount including the contingent deferred sales
charges and any applicable premium taxes withheld; multiplied by
b) the Death Benefit immediately prior to the partial withdrawal; divided
by
c) the Contract Value immediately prior to the withdrawal.
If the death of an Owner occurs after the Owner's attained age 80, the Death
Benefit will be the greater of: (1) the Contract Value determined as of the
Business Day during which the Company receives both due proof of death and
an election for the payment method; or (2) the Death Benefit as of the last
Contract Anniversary, prior to age 80, less any Adjusted Partial Withdrawals.
After the death benefit amount is determined, it remains in the Separate Account
and/or Fixed Account until distribution begins. From the time the death benefit
is determined until complete distribution is made, any amount in the Sub-account
will be subject to investment risks, which are borne by the Beneficiary.
If Joint Owners are named:
1) the Death Benefit is determined based on the Age of the oldest Owner; and
2) the Death Benefit is payable upon the first death.
If the Owner is a non-natural person, the death of an Annuitant will be treated
as the death of the Owner.
Signed for Conseco Variable Insurance Company.
/S/ JOHN J. SABL
Secretary
CONSECO VARIABLE INSURANCE COMPANY
Administrative Office: 11815 N. Pennsylvania Street, Carmel, Indiana 46032
GUARANTEED MINIMUM INCOME BENEFIT RIDER
This rider forms a part of the contract to which it is attached. This rider is
subject to the terms of the contract except to the extent it changes the
contract. The effective date of this rider is the same as the Contract Issue
Date. If You elect this benefit, We will deduct an Insurance Charge equal to the
percentage shown on the contract schedule page.
The rider amends the section of the Contract captioned Annuitization to include
the following:
GUARANTEED MINIMUM INCOME BENEFIT. This rider provides that a guaranteed minimum
amount, as set forth below, will be used to provide annuity payments. The
following limitations apply to this rider:
1) You must elect to receive annuity payments under Annuity Options 2 or 4,
set forth in the contract, unless otherwise agreed to by the Company.
Annuity Option 2 will be applied if no election is made under this rider.
2) If you are age 50 or older on the Contract Issue Date, the Annuity Date
must be the later of your attained age of 65 or the 7th Contract
Anniversary.
3) If you are less than age 50 on the Contract Issue Date, the Annuity Date
must be after the 15th Contract Anniversary.
4) The Annuity Date selected must occur within 30 days following a Contract
Anniversary.
On the Annuity Date the initial income benefit amount will not be less than the
Guaranteed Minimum Income Benefit base applied to guaranteed annuity payout
factors under the Annuity Option selected.
The Guaranteed Minimum Income Benefit base, prior to the Owner's 80th birthday,
is equal to:
1) the largest Contract Value on any Contract Anniversary; less
2) any Adjusted Partial Withdrawals; and
3) limited to no more than twice the amount of Purchase Payments made less any
Adjusted Partial Withdrawals.
An Adjusted Partial Withdrawal is equal to: (a) the partial withdrawal amount
including the contingent deferred sales charges and any applicable premium taxes
withheld; multiplied by (b) the Guaranteed Minimum Income Benefit Base
immediately prior to the partial withdrawal; divided by (c) the Contract
Value immediately prior to the withdrawal.
The Guaranteed Minimum Income Benefit base on or after the Owner's 80th
birthday is equal to the greater of: (1) the Contract Withdrawal Value; or (2)
the Guaranteed Minimum Income Benefit Base as of the last Contract Anniversary,
prior to age 80, less any Adjusted Partial Withdrawals.
If Joint Owners are named, the age of the oldest Owner will be used to determine
the Guaranteed Minimum Income Benefit. If the Contract is owned by a non-natural
person, then Owner shall mean the Annuitant for purposes of this rider.
Signed for Conseco Variable Insurance Company.
/S/ JOHN J. SABL
Secretary
CONSECO VARIABLE INSURANCE COMPANY
Administrative Office: 11815 N. Pennsylvania Street, Carmel, Indiana 46032
UNEMPLOYMENT BENEFIT RIDER
This rider forms a part of the contract to which it is attached. The rider is
subject to the terms of the contract except to the extent it changes the
contract. The effective date of this rider is the same as the Contract Issue
Date.
This rider allows for a one-time increase in the amount of a free partial
withdrawal, up to a maximum of 50% of the contract value under the following
circumstances:
o The contract to which this rider is attached must be in force for one full
year.
o You must submit a letter of determination from your state's Department of
Labor indicating that you qualify for and have been receiving unemployment
benefits for at least 60 consecutive days.
o You were employed on a full time basis, working at least 30 hours per week,
on the Contract Issue Date.
o Employment must have been involuntarily terminated by Your employer.
o When the withdrawal request is made You must certify in writing that You
are still unemployed.
Signed for Conseco Variable Insurance Company.
Secretary
