<PAGE>
As filed with the Securities and Exchange Commission on October 28, 1999
Registration No.333- ______
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
TITANIUM UNIVERSAL LIFE VARIABLE ACCOUNT
(Exact name of trust)
UNITED INVESTORS LIFE INSURANCE COMPANY
(Name of depositor)
2001 Third Avenue South
Birmingham, Alabama 35233
(Complete address of depositor's principal executive offices)
(Name and complete address
of agent for service) Copy to:
John H. Livingston, Esq. Frederick R. Bellamy, Esq.
United Investors Life Insurance Company Sutherland Asbill & Brennan LLP
2001 Third Avenue South 1275 Pennsylvania Avenue, N.W.
Birmingham, Alabama 35233 Washington, D.C. 20004-2415
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration Statement
Securities Being Offered: Flexible Premium Variable Life Insurance Policies
The Registrant hereby amends this Registration Statement on such dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment that 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.
<PAGE>
PART I
<PAGE>
Prospectus
February 1, 2000
Please read this prospectus carefully before investing, and keep it for
future reference. It contains important information about the Titanium Investor
variable life insurance policy, which is issued by:
United Investors Life Insurance Co.
2001 Third Avenue South
Birmingham, Alabama 35233
The SEC maintains an Internet website (http://www.sec.gov) that contains
material incorporated by reference into this prospectus and other information.
Variable life insurance policies involve certain risks, and you may lose
some or all of your investment.
. We do not guarantee how any of the subaccounts will perform.
. The policy is not a deposit or obligation of any bank, and no bank endorses
or guarantees the policy.
. Neither the U.S. Government nor any Federal agency insures your investment
in the policy.
There is no guaranteed cash surrender value for amounts allocated to the
variable subaccounts. If the net cash surrender value (the cash surrender value
reduced by any loan balance) is insufficient to cover the charges due under the
policy, the policy may terminate without value.
Neither the SEC nor any state securities commission has approved or disapproved
these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
TITANIUM INVESTOR(SM)
VARIABLE UNIVERSAL LIFE INSURANCE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
issued by
United Investors Life Insurance Company
through
Titanium Universal Life Variable Account
The policy offers 30 funding choices--one fixed account (paying a
guaranteed minimum fixed rate of interest) and 29 variable subaccounts which
invest in the following mutual fund portfolios:
AIM Variable Insurance Funds, Inc.
. AIM V.I. Capital Appreciation Fund
. AIM V.I. Growth Fund
. AIM V.I. Growth and Income Fund
. AIM V.I. International Equity Fund
. AIM V.I. Value Fund
The Alger American Fund
. Alger American Growth
. Alger American Income and Growth
. Alger American Leveraged AllCap
. Alger American MidCap Growth
. Alger American Small Capitalization
BT Insurance Funds Trust
. EAFE(R) Equity Index Fund
. Small Cap Index Fund
Fidelity Variable Insurance Products Fund
. Fidelity VIP Equity Income
. Fidelity VIP Growth
. Fidelity VIP Growth and Income
. Fidelity VIP Growth Opportunities
. Fidelity VIP High Income
. Fidelity VIP Money Market
. Fidelity VIP Overseas
Fidelity Variable Insurance Products Fund II
. Fidelity VIP II Balanced
. Fidelity VIP II Contrafund
. Fidelity VIP II Fund
. Fidelity VIP II Index 500
INVESCO Variable Investment Funds, Inc.
. INVESCO VIF- Equity Income Fund
. INVESCO VIF- Technology Fund
. INVESCO VIF- Utilities Fund
Strong Variable Insurance Funds, Inc.
. Strong Discovery Fund II
. Strong Mid Cap Growth Fund II
. Strong Opportunity Fund II
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary .................................................................. 1
The Policy ............................................................. 1
Payment of Premiums .................................................... 1
Funding Choices ........................................................ 1
Charges and Deductions ................................................. 2
Taxes .................................................................. 4
Cash Benefits .......................................................... 4
Death Benefit .......................................................... 4
Termination ............................................................ 4
Other Information ...................................................... 5
Inquiries .............................................................. 5
Titanium Universal Life Variable Account ................................. 6
The Portfolios. ........................................................ 6
Fund Management and Fees ............................................... 8
Fixed Account ............................................................ 9
The Policy ............................................................... 9
Applying for a Policy .................................................. 9
"Free Look" Right to Cancel the Policy ................................. 9
Premiums ............................................................... 10
Transfers .............................................................. 12
Dollar-Cost Averaging .................................................. 12
Automatic Asset Rebalancing.............................................. 13
Surrender of the Policy ................................................ 13
Withdrawals ............................................................ 13
Loan Benefits .......................................................... 13
Requesting Payments .................................................... 14
Policy Changes ......................................................... 15
Reports to Owners ...................................................... 15
Other Policy Provisions ................................................ 16
Assignment and Change of Owner ......................................... 16
Death Benefits ........................................................... 17
Amount of Death Benefit Payable ........................................ 17
Death Benefit Options .................................................. 17
Adjustable Term Insurance Rider and Target Face Amount ................. 18
Changing the Death Benefit Option ...................................... 19
Changing the Face Amount ............................................... 19
Effect of Withdrawals on the Death Benefit ............................. 20
Beneficiary ............................................................ 20
Supplemental Benefits .................................................. 20
Charges and Deductions ................................................... 21
Premium Expense Charges ................................................ 22
Mortality and Expense Risk Charge ...................................... 22
Monthly Deduction ...................................................... 22
Surrender Charge ....................................................... 23
Transaction Charges .................................................... 24
Other Charges .......................................................... 24
</TABLE>
ii
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<TABLE>
<S> <C>
Cost of Insurance ...................................................... 25
Reduction in Charges for Certain Groups ................................ 25
Policy Values ............................................................ 26
Policy Value ........................................................... 26
Variable Account Value ................................................. 26
Fixed Account Value .................................................... 28
Tax Considerations ....................................................... 28
Introduction ........................................................... 28
Tax Status of the Policy ............................................... 29
Tax Treatment of Policy Benefits ....................................... 29
Taxation of United Investors ........................................... 31
Employment-Related Benefit Plans ....................................... 31
Other Information ........................................................ 32
United Investors Life Insurance Company ................................ 32
Sale of the Policies ................................................... 32
Changing the Variable Account .......................................... 32
Voting of Portfolio Shares ............................................. 32
Addition, Deletion, or Substitution of Investments ..................... 33
Other Information ...................................................... 34
Litigation ............................................................. 34
Legal Matters .......................................................... 34
Experts ................................................................ 34
Financial Statements ................................................... 34
Appendix A: Hypothetical Illustrations ................................... 35
Appendix B: Directors and Officers of United Investors ................... 44
Appendix C: Glossary ..................................................... 45
Appendix D: Financial Statements ......................................... F-1
</TABLE>
________________________________________________________________________________
This prospectus generally describes only the variable portion of the policy,
except where the fixed account is specifically mentioned.
Buying this policy might not be a good way of replacing your existing insurance
or adding more insurance if you already own a flexible premium variable life
insurance policy.
Certain terms and phrases used in this prospectus are explained in Appendix C.
iii
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Summary
- --------------------------------------------------------------------------------
This is a summary of some of the more important points that you should know
and consider before purchasing the Titanium Investor variable life insurance
policy.
The Policy
The Titanium Investor variable life insurance policy is an individual
flexible premium variable life insurance policy issued by United Investors Life
Insurance Company. Among other things, the policy:
(a) provides insurance protection on the life of the insured until the policy's
maturity date.
(b) allows you to vary the amount and timing of the premiums you pay and to
change the amount of the death benefit payable under the policy.
(c) provides the opportunity for cash value build-up on a tax-deferred basis,
depending on investment performance of the underlying mutual fund
portfolios. However, there is no guaranteed policy value and you bear the
risk of poor investment performance.
(d) permits you to borrow against the policy value, to make withdrawals, or to
surrender the policy completely. Loans and withdrawals will affect the
policy value and may affect the death benefit and termination of the
policy. Loans, withdrawals and surrenders may be taxable and subject to a
10% tax penalty before age 59-1/2.
In addition to providing life insurance, the policy provides a means of
investing for your retirement or other long-term purposes. Tax deferral allows
the entire amount you have invested (net of charges) to remain in the policy
where it can continue to produce an investment return. Therefore, your money
could grow faster than in a comparable taxable investment where current income
taxes would be due each year.
You may divide your Titanium Investor policy value among the fixed account
and 29 variable subaccounts which invest in specified portfolios of underlying
mutual funds. We guarantee the principal and a minimum interest rate you will
receive from the fixed account. However, the value of what you allocate to the
variable subaccounts is not guaranteed. Instead, your investment in the variable
subaccounts will go up or down with the performance of the particular mutual
fund portfolios you select (and the deduction of charges). You will lose money
on policy value allocated to the variable subaccounts if performance is not
sufficiently positive to cover the charges under the policy.
Payment of Premiums
Although you select a premium payment plan, you are not required to follow
it. (The minimum initial premium and planned premium depend on age, sex, and
risk class of the insured, on the face amount of the policy, and on any
supplemental benefit riders to the policy.) Within limits, you can vary the
frequency and amount of premium payments and can skip planned premiums. However,
extra premiums may be required to prevent policy termination under certain
circumstances.
Funding Choices
We deduct premium expense charges from each premium payment, and then we
allocate the net premium among the variable subaccounts and the fixed account
according to your written instructions.
You may allocate each premium (and your existing policy value) among
variable subaccounts which invest in the following 29 mutual fund portfolios:
AIM Variable Insurance Funds, Inc.
. AIM V.I. Capital Appreciation Fund
. AIM V.I. Growth Fund
. AIM V.I. Growth and Income Fund
. AIM V.I. International Equity Fund
. AIM V.I. Value Fund
The Alger American Fund
. Alger American Growth Portfolio
. Alger American Income and Growth Portfolio
. Alger American Leveraged AllCap Portfolio
. Alger American MidCap Growth Portfolio
. Alger American Small Capitalization
BT Insurance Funds Trust
. EAFE(R) Equity Index Fund
. Small Cap Index Fund
Fidelity Variable Insurance Products Fund
. Fidelity VIP Equity Income
1
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. Fidelity VIP Growth
. Fidelity VIP Growth and Income
. Fidelity VIP Growth Opportunities
. Fidelity VIP High Income
. Fidelity VIP Money Market
. Fidelity VIP Overseas
Fidelity Variable Insurance Products Fund II
. Fidelity VIP II Balanced
. Fidelity VIP II Contrafund
. Fidelity VIP II Fund
. Fidelity VIP II Index 500
INVESCO Variable Investment Funds, Inc.
. INVESCO VIF- Equity Income Fund
. INVESCO VIF- Technology Fund
. INVESCO VIF- Utilities Fund
Strong Variable Insurance Funds, Inc.
. Strong Discovery Fund II
. Strong Mid Cap Growth Fund II
. Strong Opportunity Fund II
You may also allocate each premium (and your existing policy value) to the
fixed account. We guarantee your fixed account allocation will earn at least
3.5% interest per year.
Charges and Deductions
We deduct a 2.5% premium expense charge from each premium payment for state
and local taxes and a 1.5% premium expense charge for the estimated cost of the
federal income tax treatment of deferred acquisition costs. In addition, we
deduct a 4% sales charge from each premium payment, until premiums paid equal 10
Target premiums (or the premiums paid allocated to an increase in the policy's
base face amount equal 10 Target premiums for the increase).
We also make certain periodic deductions from your policy value. Each
month, we deduct a "monthly deduction" from your policy value, which is the sum
of the following:
(a) the cost of insurance charge;
(b) the initial policy charge ($20 per month for the first 12 months);
(c) the monthly administrative charge (currently $6.00, and guaranteed not
to exceed $10.00); and
(d) any supplemental benefit or rider charges.
Each day, we deduct a charge from the assets in the variable subaccounts
for certain mortality and expense risks we bear under the policy. This charge is
at an effective annual rate of 0.75% of those assets during the first ten policy
years, .50% during the second ten policy years, and 0.25% thereafter. We
guarantee not to increase this mortality and expense risk charge above these
annual rates.
We deduct a surrender charge from the policy value upon a full surrender
before the 14th policy anniversary (or the 14th anniversary of any increase in
the policy's base face amount). The surrender charge consists of two charges:
the administrative surrender charge and the sales surrender charge.
The administrative surrender charge is $4 per $1,000 of base face amount
for the first 9 policy years (or for the 9 years following an increase in the
policy's base face amount), and then decreases annually to zero at the 14th
policy anniversary.
The sales surrender charge for the first 2 policy years (or for the 2 years
following an increase in the policy's base face amount) is:
. 26% of premium paid up to one target premium, plus
. 6% of premium paid above one target up to two target premiums, plus
. 5% of premium paid above two target premiums.
The sales surrender charge for policy years 3 through 9 (or for years 3
through 9 following an increase in the policy's base face amount) is:
. 46% of premium paid up to one target premium, plus
. 44% of premium paid above one target up to two target premiums.
The sales surrender charge then decreases annually to zero at the 14th
policy anniversary.
In addition, investment management fees, operating expenses, and in some
cases 12b-1 fees are deducted from each portfolio of the underlying mutual
funds. See the table below for a summary of these portfolio expenses for the
last year.
2
<PAGE>
Portfolio Annual Expenses/(1)/
(% of net assets of the portfolio)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Management 12b-1 Other Total Portfolio
Portfolio Fee Fees Expenses Expenses
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds, Inc.
. AIM V.I. Capital Appreciation Fund
. AIM V.I. Growth Fund
. AIM V.I. Growth and Income Fund
. AIM V.I. International Equity Fund
. AIM V.I. Value Fund
- ------------------------------------------------------------------------------------------------------------
The Alger American Fund
. Alger American Growth Portfolio
. Alger American Income and Growth Portfolio
. Alger American Leveraged AllCap Portfolio
. Alger American MidCap Growth Portfolio
. Alger American Small Capitalization Portfolio
- ------------------------------------------------------------------------------------------------------------
BT Insurance Funds Trust
. EAFE(R) Equity Index Fund
. Small Cap Index Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund
. Fidelity VIP Equity Income
. Fidelity VIP Growth
. Fidelity VIP Growth and Income
. Fidelity VIP Growth Opportunities
. Fidelity VIP High Income
. Fidelity VIP Money Market
. Fidelity VIP Overseas
- ------------------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II
. Fidelity VIP II Balanced
. Fidelity VIP II Contrafund
. Fidelity VIP II Fund
. Fidelity VIP II Index 500
- ------------------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds, Inc.
. INVESCO VIF- Equity Income Fund
. INVESCO VIF- Technology Fund
. INVESCO VIF- Utilities Fund
- ------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.
. Strong Discovery Fund II
. Strong Mid Cap Growth Fund II
. Strong Opportunity Fund II
- ------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ These expenses are deducted directly from the assets of the underlying
mutual fund portfolios and therefore reduce their net asset value. The expenses
shown are those incurred for the year ended December 31, 1998. Current or future
expenses may be greater or less than those shown. The investment adviser of each
underlying mutual fund supplied the above information, and we have not
independently verified it. See the underlying mutual funds' prospectuses for
more complete information.
3
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We also deduct a portion of the surrender charge if you reduce the base
face amount of the policy, or if a withdrawal causes the base face amount to be
reduced.
There is also a $25 transaction charge for transactions in excess of the
following limits:
. each withdrawal after the 1st in a policy year (the charge is limited to 2%
of the withdrawal);
. each transfer between subaccounts and/or the fixed account after the 12th
in a policy year;
. each requested policy illustration after the 1st in a policy year.
Taxes
We intend for the policy to satisfy the definition of life insurance under
the Internal Revenue Code. Therefore, the death benefit generally should be
excludable from the gross income of its recipient. Similarly, you should not be
deemed to be in constructive receipt of the policy value, and therefore should
not be taxed on increases in the policy value until you take out a loan or
withdrawal, surrender the policy, or we pay the maturity benefit. Under certain
circumstances, a policy could be treated as a modified endowment contract. See
"Tax Considerations" for a discussion of when distributions, such as
withdrawals, surrenders and loans, from policy value could be subject to Federal
income tax and penalty tax.
Cash Benefits
Your policy value is the sum of the amounts allocated to the variable
subaccounts (variable account value) and the amount allocated to the fixed
account (fixed account value). The cash surrender value (the policy value less
any applicable surrender charge) may be substantially less than the premiums
paid.
Policy Loans. You may take loans in aggregate amounts of up to 90% of the
policy's cash surrender value. Policy loans reduce the amount available for
allocations and transfers.
Full Surrender. You may surrender the policy at any time for its net cash
surrender value. The net cash surrender value is the cash surrender value less
any loan balance.
Withdrawal. You generally may make a withdrawal from the net cash surrender
value at any time during the insured's life, provided that the policy has
sufficient net cash surrender value remaining.
Death Benefit
You must select one of two death benefit options under the policy:
(a) Option A: the greater of the policy's base face amount or a multiple of its
policy value; or
(b) Option B: the greater of (i) the policy's base face amount plus its policy
value or (ii) a multiple of its policy value.
The total death benefit equals the base death benefit above, plus any amounts
provided by the adjustable term insurance rider and any other riders payable on
the death of the insured.
Subject to certain limits, you may change the policy's face amount and
death benefit.
The policy's no-lapse guarantee feature will keep the policy in force
during the first three policy years even if there is insufficient cash surrender
value to pay the cost of insurance and other periodic charges. The no-lapse
guarantee remains effective during the first three policy years so long as
cumulative premiums paid on the policy, less gross withdrawals and any
outstanding loan balance, equals or exceeds the cumulative no-lapse monthly
premiums for the number of months the policy has been in force.
An optional death benefit guarantee rider is available, which allows you to
choose one of two guarantee periods at the time of application:
. to the later of the insured's age 65 or 10 years, or
. for the lifetime of the insured, or to the maturity date.
Each guarantee period requires the payment of higher premiums, and the guarantee
does not apply to any rider benefits. As long as the guarantee is in force, we
will deduct a monthly charge for the rider from your policy value. This optional
benefit rider is not available in all states.
Termination
There is no minimum guaranteed policy value. The policy value may decrease
if the investment performance of the variable subaccounts (to which
4
<PAGE>
policy value is allocated) is not sufficiently positive to cover the charges
deducted under the policy.
If the net cash surrender value (based on the policy value) becomes
insufficient to cover the monthly deduction when due, and the no-lapse guarantee
or an optional death benefit guarantee is not in effect, the policy will
terminate without value after a grace period, even if all planned premiums have
been paid in full and on schedule. Additional premium payments will be necessary
during the grace period to keep the policy in force if this occurs.
Other Information
Free Look: For a limited time after the policy's effective date, you may
cancel the policy and receive a full refund of all premiums paid.
Supplemental Benefits: Your policy may have one or more supplemental
benefits which are attached to the policy by rider. Each is subject to its own
requirements as to eligibility and additional cost. In addition to the optional
death benefit guarantee rider previously described, other benefits currently
available under the policy are:
. accelerated death benefit rider;
. accidental death benefit rider;
. additional insured term insurance rider;
. adjustable term insurance rider;
. change of person insured rider;
. children's term insurance rider;
. disability waiver of monthly deductions rider;
. disability waiver of specified premium rider; and
. option to purchase additional insurance rider.
Other supplemental benefits may also be available, and all benefits may not
be available in all states.
Transfers: Within certain limits, you may transfer all or part of your
policy value among the variable subaccounts and the fixed account.
Dollar-Cost Averaging: You may have automatic monthly transfers of a
predetermined dollar amount made from the fixed account or any subaccount to
other variable subaccounts. Certain minimums and other restrictions apply.
Automatic Asset Rebalancing: You may have automatic transfers occur at
selected intervals that will match your policy value allocation between
subaccounts to your allocation percentage for new premiums. Certain minimums and
other restrictions apply.
Illustrations: Sample projections of hypothetical death benefits and policy
values are in Appendix A to this prospectus. These projections may help you:
(a) understand (i) the long-term effects of different levels of investment
performance and (ii) the charges and deductions under the policy; and
(b) compare the policy to other life insurance policies.
The projections also show the value of the annual premiums accumulated with
interest and demonstrate that the policy value may be low (compared to the
premiums plus accumulated interest) if the policy is surrendered in the early
policy years. Therefore, the policy should not be purchased as a short-term
investment.
Financial Information: Our financial statements are in Appendix D to this
prospectus.
Inquiries
If you have questions about your policy or need to make changes, contact
your financial representative who sold you the policy, or contact us at:
United Investors Life Insurance Company
Administrative Office
2001 Third Avenue South (35233)
P.O. Box 10287
Birmingham, Alabama 35202-0287
Telephone: (800)xxx-xxxx
________________________________________________________________________________
The policy is not available in all states. This prospectus does not offer
the policies in any jurisdiction where they cannot be lawfully sold. You should
rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
5
<PAGE>
NOTE: Because this is a summary, it does not contain all the information
that may be important to you. You should read this entire prospectus and the
underlying mutual funds' prospectuses carefully before investing.
Titanium Universal Life Variable Account
- --------------------------------------------------------------------------------
The variable subaccounts are divisions of the Titanium Universal Life
Variable Account (the "Variable Account"). We established the Variable Account
as a segregated asset account on September 15, 1999. The Variable Account will
receive and invest the premiums allocated to the variable subaccounts. Our
Variable Account is currently divided into 29 subaccounts. Each subaccount
invests exclusively in shares of a single mutual fund portfolio. Income, gains
and losses arising from the assets of each subaccount are credited to or charged
against that subaccount without regard to income, gains or losses from any other
subaccount of the Variable Account or arising out of any other business we may
conduct.
The assets in the Variable Account are our property. However, the assets
allocated to the variable subaccounts under the policy are not chargeable with
liabilities arising out of any other business that we may conduct.
The Variable Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"). It meets the
definition of a "separate account" under the Federal securities law. However,
the SEC does not supervise the management or investment practices or policies of
the Variable Account or us.
The Portfolios
Each subaccount of the Variable Account invests exclusively in shares of a
particular mutual fund portfolio. The assets of each portfolio are separate from
the assets of the other portfolios. Thus, each portfolio operates separately,
and the income, gains, or losses of one portfolio have no effect on the
investment performance of any other portfolio.
The investment objectives and policies of each mutual fund portfolio are
summarized below. There is no assurance that any of the portfolios will achieve
their stated objectives. More detailed information, including a description of
risks, is in the prospectuses of the portfolios which accompany this prospectus.
The following 29 mutual fund portfolios are currently offered to policy
owners through the subaccounts of the Variable Account:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Portfolio Investment Objective and Certain Policies
- ----------------------------------------------------------------------------------------
<S> <C>
AIM V.I. Capital
Appreciation Fund
- ----------------------------------------------------------------------------------------
AIM V.I.
Growth Fund
- ----------------------------------------------------------------------------------------
AIM V.I. Growth and
Income Fund
- ----------------------------------------------------------------------------------------
AIM V.I.
International Equity
- ----------------------------------------------------------------------------------------
AIM V.I.
Value Fund
- ----------------------------------------------------------------------------------------
Alger American
Growth
- ----------------------------------------------------------------------------------------
Alger American
Income and Growth
- ----------------------------------------------------------------------------------------
Alger American
Leveraged AllCap
- ----------------------------------------------------------------------------------------
Alger American
MidCap Growth
- ----------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Portfolio Investment Objective and Certain Policies
- ----------------------------------------------------------------------------------------
<S> <C>
Alger American
Small Capitalization
- ----------------------------------------------------------------------------------------
BT Funds Trust
EAFE(R) Equity Index
- ----------------------------------------------------------------------------------------
BT Funds Trust
Small Cap Index
- ----------------------------------------------------------------------------------------
Fidelity VIP
Equity Income
- ----------------------------------------------------------------------------------------
Fidelity VIP
Growth
- ----------------------------------------------------------------------------------------
Fidelity VIP
Growth and Income
- ----------------------------------------------------------------------------------------
Fidelity VIP
Growth Opportunities
- ----------------------------------------------------------------------------------------
Fidelity VIP
High Income
- ----------------------------------------------------------------------------------------
Fidelity VIP
Money Market
- ----------------------------------------------------------------------------------------
Fidelity VIP
Overseas
- ----------------------------------------------------------------------------------------
Fidelity VIP II
Balanced
- ----------------------------------------------------------------------------------------
Fidelity VIP II
Contrafund
- ----------------------------------------------------------------------------------------
Fidelity VIP II
Fund
- ----------------------------------------------------------------------------------------
Fidelity VIP II
Index 500
- ----------------------------------------------------------------------------------------
INVESCO VIF-
Equity Income
- ----------------------------------------------------------------------------------------
INVESCO VIF-
Technology Fund
- ----------------------------------------------------------------------------------------
INVESCO VIF-
Utilities
- ----------------------------------------------------------------------------------------
Strong Discovery Fund
II
- ----------------------------------------------------------------------------------------
Strong Mid Cap Growth
Fund II
- ----------------------------------------------------------------------------------------
Strong Opportunity
Fund II
- ----------------------------------------------------------------------------------------
</TABLE>
Each mutual fund portfolio is designed to provide an investment vehicle for
variable annuity and variable life insurance contracts issued by various
insurance companies. For more information about the risks associated with the
use of the same funding vehicle for both variable annuity and variable life
insurance contracts of various insurance companies, see the prospectuses of the
portfolios which accompany this prospectus.
These mutual fund portfolios are not available for purchase directly by the
general public, and are not the same as other mutual fund portfolios with very
similar or nearly identical names that are sold directly to the public. However,
the investment objectives and policies of certain portfolios available under the
policy are very similar to the investment objectives and policies of other
portfolios that are or may be managed by the same investment adviser or manager.
Nevertheless, the investment performance and results of the portfolios available
under the policy may be lower, or higher, than the investment results of such
other (publicly available) portfolios. There can
7
<PAGE>
be no assurance, and no representation is made, that the investment results of
any of the portfolios available under the policy will be comparable to the
investment results of any other mutual fund portfolio, even if the other
portfolio has the same investment adviser or manager and the same investment
objectives and policies, and a very similar name.
We may receive payments or revenues from some or all of the mutual fund
portfolios or their investment advisers. The amount we receive may depend on how
much of our policy value is invested in the applicable portfolios.
Fixed Account
- --------------------------------------------------------------------------------
The funding choice guaranteeing your principal and a minimum fixed rate of
interest is called the "fixed account." It is not registered under the
Securities Act of 1933, and it is not registered as an investment company under
the Investment Company Act of 1940. Accordingly, neither the fixed account nor
any interests therein are subject to the provisions or restrictions of these
Federal securities laws, and the disclosure regarding the fixed account has not
been reviewed by the staff of the SEC.
The fixed account is part of our general account assets. It is not a
separate account. Amounts allocated to the fixed account are credited with
interest at rates determined in our sole discretion, but in no event will
interest credited on these amounts be less than an effective annual rate of
3.5%. The current interest rate is the guaranteed minimum interest rate plus any
excess interest rate. The current interest rate is determined periodically. The
current interest rate will be guaranteed for at least a one-year period. You
assume the risk that interest credited may not exceed the guaranteed minimum
rate of 3.5% per year. We may credit interest at a rate in excess of 3.5% per
year, but any excess interest credited will be determined in our sole
discretion. The policy owner assumes the risk that interest credited to the
fixed account may not exceed 3.5% per year. The fixed account may not be
available in all states.
Our general account assets are used to support our insurance and annuity
obligations other than those funded by separate accounts. Subject to applicable
law, we have sole discretion over the investment of the assets of the fixed
account.
As the policy owner, you determine the allocation of policy value to the
fixed account. There are significant limits on your right to transfer policy
value into and out of the fixed account. (See "Transfers.")
The Policy
- --------------------------------------------------------------------------------
Applying for a Policy
To purchase a policy, you must complete an application, submit it to our
administrative office (at the address listed on page 5 of this prospectus), and
pay an initial premium which varies by age, sex and risk class. (See "Premiums"
below.) The initial premium must be paid prior to the policy's effective date.
(We will only accept a premium that complies with our underwriting rules.)
Coverage becomes effective as of the policy's effective date. If the proposed
insured dies before the policy's effective date, our sole obligation will be to
return the premium paid plus any interest earned on it (unless a temporary
insurance agreement is in effect).
Generally, we will issue a policy covering an insured up to attained age 75
(on the policy's effective date) if evidence of insurability satisfies our
underwriting rules. Evidence of insurability may include, among other things, a
medical examination of the insured. We may, in our sole discretion, issue a
policy covering an insured over age 75. We reserve the right not to accept an
application for any lawful reason.
"Free Look" Right to Cancel the Policy
8
<PAGE>
During the "free look" period, you may cancel your policy and receive a
refund of all premiums paid. The "free look" period expires the later of:
(a) 20 days after you receive your policy; or
(b) 45 days after you sign the application for the policy.
Some states may require a longer period or a different refund amount. In
order to cancel the policy, you must return it by mail or other delivery before
the end of the "free look" period to our administrative office or to the agent
who sold it to you.
Premiums
The premium amounts sufficient to fund a policy depend on a number of
factors, such as:
(a) the age, sex and risk class of the proposed insured;
(b) the face amount of the policy;
(c) any supplemental benefits under the policy; and
(d) the investment performance of the portfolios you choose.
The initial premium must be at least equal to the no-lapse monthly premium.
After the initial premium is paid, additional premiums may be paid in any amount
and at any time. We may require that any additional premiums be at least a
specified amount. We will give you 90 days' advance written notice if we
establish such a minimum.
Total premiums paid in a policy year may not exceed guideline premium
limitations for life insurance set forth in the Internal Revenue Code. We
reserve the right to reject any premium that would result in the policy being
disqualified as life insurance under the Code and will refund any rejected
premium. (See "Tax Considerations.")
Planned Premiums. When you apply for a policy, you select a quarterly,
semi-annual or annual premium payment plan. You may also arrange for premiums to
be paid monthly via automatic deduction from your checking account or other
payment methods approved by us. You are not required to pay premiums in
accordance with this premium plan; rather, you can pay more or less than planned
premiums (subject to the $25 minimum), or skip a planned premium entirely. You
can change the amount of planned premiums and payment arrangements, or switch
payment frequencies, whenever you want by providing satisfactory written
instructions to our administrative office. Such changes will be effective upon
our receipt of the instructions. If you increase the policy's face amount, then
a change in the amount of planned premiums may be advisable, depending on the
policy value at that time and the amount of the increase requested. (See
"Changing the Face Amount.")
Premiums to Prevent Termination. If you do not pay planned premiums or if
the investment performance of the policy's variable subaccounts is not
sufficient, your policy may terminate without value. Policy termination depends
on (i) whether the net cash surrender value is sufficient to cover the monthly
deduction when due and (ii) whether the no-lapse guarantee or an optional death
benefit guarantee is in effect.
If the no-lapse guarantee or an optional death benefit guarantee is not in
effect on a monthly processing date and either
(a) the net cash surrender value is less than the monthly deduction, or
(b) the loan balance exceeds the cash surrender value,
9
<PAGE>
the policy will terminate without value unless additional premiums are paid.
(See "Monthly Deduction" and "No-Lapse Guarantee.") This can occur even if you
--------------------------
have paid all planned premiums in full and on time.
- --------------------------------------------------
You will have a 61-day grace period to pay a premium sufficient to cover
the monthly deduction. We will send notice of the amount required to be paid
during the grace period to your last known address (and to any assignee of
record). The grace period will begin when the notice is sent, and your policy
will remain in effect during the grace period. (See "Amount of Death Benefit
Payable" and "Effect of Policy Loan.") The payment required (called the "grace
period premium") will not exceed:
(a) the amount by which the loan balance exceeds the cash surrender value;
plus
(b) any accrued and unpaid monthly deductions as of the date of the
notice; plus
(c) an amount sufficient to cover the next two monthly deductions.
If the grace period premium has not been paid before the end of the 61-day
grace period, your policy will terminate. It will have no value, and no benefits
will be payable. (See "Other Policy Provisions" for a discussion of your
reinstatement rights.) If the insured should die during the grace period before
the grace period premium is paid, the death benefit will still be payable to the
beneficiary, although the amount paid will reflect a reduction for any monthly
deductions due on or before the date of the insured's death and for any loan
balance.
No-Lapse Guarantee. During the first three policy years, the policy will
continue in force so long as total premiums paid, less gross withdrawals and any
loan balance, are at least equal to the cumulative amount of no-lapse monthly
premiums for the number of policy months the policy has been in force. If this
requirement is met, the policy will remain in force regardless of the
sufficiency of net cash surrender value to cover monthly deductions. If the no-
lapse monthly premium changes after the policy's effective date, the total
premium amount required will be based on each no-lapse monthly premium amount
and the number of months for which each applies.
Optional Death Benefit Guarantee. An optional death benefit guarantee rider
is also available, that will extend the period during which the base face amount
will remain in effect even if your net cash surrender value is insufficient to
pay monthly deductions. The guarantee does not apply to any rider benefits,
including the adjustable term insurance rider, and these additional benefits may
lapse even though the base face amount remains in force. One of two guarantee
periods may be chosen when you apply for the policy:
(a) to the later of the insured's age 65 or 10 policy years, or
(b) for the lifetime of the insured, or to the maturity date.
Each guarantee requires the payment of premiums each month higher than the
no-lapse monthly premium. We include the higher required premium in your policy
for whichever guarantee period you choose, and will send revised policy pages if
the required premium changes due to a change in your benefits. At the end of the
first three years, and each monthly processing date thereafter, the guarantee
will not stay in effect unless total premiums paid, less gross withdrawals and
any loan balance, equals or exceeds the cumulative amount of required monthly
premiums for the number of policy months the policy has been in force. If the
death benefit guarantee rider terminates due to insufficient premium payments,
it may not be restored or reinstated by payment of additional premiums.
As long the death benefit guarantee rider is in force, we will deduct an
additional monthly charge for the guarantee from your policy value. This charge
is currently $0.005 per $1,000 of base face amount each month, and is guaranteed
not to exceed $0.01 per $1,000 of base face amount each month. This optional
benefit can only be added when we issue your policy, and is not available in all
states.
10
<PAGE>
Crediting Premiums to the Policy. On the policy's effective date, the
initial net premium will be credited to the policy. Any additional premium
received will be credited to the policy on the date we receive it, or the next
business day thereafter.
Net Premium Allocations. When you apply for a policy, you specify the
percentage (from 0% to 100%) of net premium payments to be allocated to each
variable subaccount and to the fixed account. You can change the allocation
percentages at any time by sending satisfactory written instructions to our
administrative office. The change will apply to all premiums received after we
receive your instructions, unless you instruct otherwise. Net premium payment
allocations must be in percentages totaling 100%, and each allocation percentage
must be a whole number.
Transfers
At any time after the end of the "free look" period, you may transfer all
or part of your variable account value to one or more of the other variable
subaccounts or to the fixed account. There is a $25 charge for each transfer
after twelve in a policy year. You may transfer amounts from the fixed account
to one or more variable subaccounts only once each policy year. We also reserve
the right to limit the maximum amount you can transfer out of the fixed account
to the greater of:
(a) 25% of the prior policy anniversary's unloaned fixed account value; or
(b) the amount of the prior policy year's transfer.
The minimum amount that may be transferred out of a variable subaccount or
the fixed account is $100 or, if less, the policy value in the variable
subaccount or in the fixed account. The amount remaining must be at least $100,
or we will transfer the total value.
Transfer requests may be made by satisfactory written or telephone request
(if we have your written authorization for telephone requests on file). A
transfer will take effect on the date we receive the request at our
administrative office if it is received by 4:00 p.m. Eastern time; otherwise it
will take effect on the following business day. We may, however, defer transfers
under the same conditions that we may delay paying proceeds. (See "Requesting
Payments.") We reserve the right to modify, restrict, suspend or eliminate the
transfer privileges, including telephone transfer privileges, at any time, for
any reason.
We have the authority to honor any telephone transfer request believed to
be authentic. We employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. For example, you may be required to use a
personal identification number to initiate a telephone transfer. We will not be
liable for the consequences of a fraudulent telephone transfer request we
believe to be authentic. As a result, you bear the risk of loss arising from
such a fraudulent request if you give us authorization for telephone transfers.
Dollar-Cost Averaging
The dollar-cost averaging program permits you to systematically transfer an
amount from the fixed account or any variable subaccount to the other variable
subaccounts on a periodic basis prior to the policy's maturity date. The amount
transferred may be a specified dollar amount from each account, a percentage of
the value in each subaccount, or an amount determined from an ending date you
select, by reducing the value in each subaccount to zero over the specified
period. Dollar-cost averaging may occur on the same day of the month either
monthly, quarterly, semi-annually, or annually. The minimum automatic transfer
amount is $100. If the transfer is to be made to more than one variable
subaccount, a minimum of $25 must be transferred to each variable subaccount
selected.
The dollar-cost averaging method of investment is designed to reduce the
risk of making purchases only when the price of units is high, but you should
carefully consider your financial ability to continue the program over a long
11
<PAGE>
enough period of time to purchase units when their value is low as well as when
it is high. Dollar-cost averaging does not assure a profit or protect against a
loss.
You may elect to participate in the dollar-cost averaging program at any
time by sending a written request to our administrative office. Once elected,
dollar-cost averaging remains in effect from the date we receive your request
until the value of the fixed account or subaccount you are transferring from is
depleted, or until you cancel your participation in the program by written
request or by telephone. There is no additional charge for dollar-cost
averaging. A transfer under this program is not counted as a transfer for
purposes of the 12 free transfers discussed above. We reserve the right to
modify or discontinue offering the dollar-cost averaging program at any time and
for any reason. A second method of dollar-cost averaging is for you to allocate
monthly premiums directly to the variable subaccounts you desire.
Automatic Asset Rebalancing
Automatic asset rebalancing allows you to set up transfers to occur at
selected intervals that will match your policy value allocation between
investment options to your pre-selected asset allocation percentages. After the
transfers, the ratio of the value in each investment option to the value for all
the investment options included in automatic rebalancing will equal the
percentages chosen by you for each investment option. You may change your
allocation percentages for automatic rebalancing at any time. Automatic
rebalancing may occur on the same day of the month either monthly, quarterly,
semi-annually, or annually. If you participate in both the dollar-cost averaging
program and automatic rebalancing at the same time, you cannot include any
investment options from which dollar-cost averaging transfers are being made in
the automatic rebalancing program.
Automatic asset rebalancing provides you with a method for maintaining a
consistent approach to investing your policy value over time, and simplifies
asset allocation among those investments that you and your advisor have
determined represent the appropriate mix at any particular time. You should
consider, however, that transfers will be made from investments which have
outperformed other investment options since the last reallocation of your policy
value to less successful investment options. Automatic rebalancing does not
assure a higher or lower investment return over short or long term horizons.
You may elect to participate in the automatic rebalancing program at any
time by sending a written request to our administrative office. Once elected,
automatic rebalancing remains in effect from the date we receive your request
until you cancel your participation in the program by written request or by
telephone. There is no additional charge for automatic rebalancing. A transfer
under this program is not counted as a transfer for purposes of the 12 free
transfers discussed above. We reserve the right to modify or discontinue
offering automatic rebalancing at any time and for any reason.
Surrender of the Policy
You may surrender your policy at any time for its net cash surrender value.
(See "Requesting Payments.") The net cash surrender value is the policy value
minus any surrender charge and minus any loan balance. A surrender charge may
apply. (See "Surrender Charge.") Your policy will terminate and cease to be in
force when it is surrendered. It cannot later be reinstated if it has been
surrendered for its net cash surrender value. Surrendering the policy may have
tax consequences. (See "Tax Considerations.")
Withdrawals
You may make withdrawals under your policy at any time during the insured's
life and before the policy has terminated. (See "Requesting Payments.") Requests
for withdrawals must be made in writing. The minimum withdrawal amount is $500.
The amount remaining after a withdrawal must be at least $500.
For each withdrawal after the first in a policy year, there is a
transaction charge equal to the lesser of $25 or 2% of the withdrawal amount. If
death benefit option A is in effect, a withdrawal may reduce the base face
amount of your policy. (See "Effect of Withdrawals on the Death Benefit.") A
portion of the surrender charge will be deducted
12
<PAGE>
based on the amount of the decrease in base face amount caused by the
withdrawal. (See "Surrender Charge.") The amount of the withdrawal plus any
applicable surrender charge and transaction charge is called the gross
withdrawal.
When you request a withdrawal, you should tell us what funding choices the
policy value should be deducted from. If you provide no directions, the gross
withdrawal will be deducted from your policy value in the variable subaccounts
and the fixed account on a pro rata basis. Withdrawals may have tax
consequences. (See "Tax Considerations.")
Loan Benefits
You may borrow up to 90% of your cash surrender value at any time by
submitting a written request to our administrative office. (This percentage may
vary in some states.) The cash surrender value is the policy value less any
applicable surrender charge. Outstanding loans, including accrued interest,
reduce the amount available for new loans. The minimum loan amount is $100. Your
policy may terminate if the loan balance becomes greater than the cash surrender
value. (See "Premiums to Prevent Termination.") Policy loans may have income tax
consequences. (See "Tax Considerations.")
When a loan is made, an amount equal to the requested loan and any loan
interest must remain in the fixed account or be transferred from variable
subaccounts to the fixed account. The amount to be transferred will be deducted
from each variable subaccount in the same proportion that the value of each
variable subaccount bears to your variable account value unless you specify one
or more variable subaccounts from which the loan is to be made.
Interest. We will charge interest daily on any outstanding loan at an
effective annual rate of 4.75%. Interest is due and payable at the end of each
policy year while a loan is outstanding. Interest paid on a policy loan
generally is not tax-deductible. If, on any policy anniversary, interest accrued
since the last policy anniversary has not been paid, the amount of the interest
is added to the loan and becomes part of the outstanding loan balance. Interest
will be deducted from the variable subaccounts in the same proportion that the
value of each variable subaccount bears to your variable account value. On each
monthly processing date, the loaned amount will be credited with interest at a
minimum guaranteed effective annual rate of 4.0%.
We may also credit additional interest (currently up to an effective annual
rate of 0.75%) on any preferred loan amount. Preferred loans are available each
policy year following the tenth policy anniversary. The amount available as a
preferred loan is 10% of the net policy value, which is the policy value minus
any existing loan balance. The policy value will be determined at the time of
the loan. If you do not borrow the maximum preferred loan amount in a policy
year, the unused amount is not available to increase the preferred loan amount
in any subsequent policy year.
Loan Repayment. You may repay all or part of your loan balance at any time
while the insured is living and the policy is in force. Loan repayments must be
at least $200 each (or the outstanding loan balance, if less). Upon repayment of
the loan balance, the portion of the repayment allocated to a variable
subaccount will be transferred from the fixed account to increase the value in
that variable subaccount. The repayment will be allocated among the variable
subaccounts and the fixed account based on the instructions for net premium
allocations then in effect unless you give us other instructions. Any payment
received when a loan is outstanding will be treated as a premium unless you tell
us it is a loan repayment.
Effect of Policy Loan. A policy loan will affect your policy in several
ways over time, whether or not it is repaid, because the investment results of
the variable subaccounts may be less than or greater than the net interest rate
credited on the amount transferred to the fixed account securing the loan.
First, by comparison to a policy under which no loan has been made, your policy
value will be less if this fixed account net interest rate is less than the
investment return of the applicable variable subaccounts and greater if the
fixed account net interest rate is higher than the investment return of the
applicable variable subaccounts.
13
<PAGE>
Second, if the death benefit becomes payable while a policy loan is
outstanding, the loan balance will be deducted in calculating the death benefit
proceeds.
Third, your policy will terminate if the loan balance exceeds the cash
surrender value on any monthly processing date and the no-lapse guarantee or an
optional death benefit guarantee is not in effect. We will send you, and any
assignee of record, notice of the termination. You will have a 61-day grace
period to pay a sufficient additional premium to avoid termination. If your
policy terminates, there may be tax consequences.
The tax treatment of the preferred loan amount is unclear, so consult your
tax advisor before taking a loan.
Requesting Payments
Written requests for payment must be sent to our administrative office or
given to an authorized United Investors agent for forwarding to this office. We
will ordinarily pay any death benefit, loan amount, withdrawal amounts or the
net cash surrender value within seven days after we receive at our
administrative office all the documents required for such a payment. Other than
the death benefit, which is determined as of the date of the insured's death,
the amount of any payment will be determined as of the date our administrative
office receives all required documents.
Telephone requests may be allowed by us in certain circumstances.
We may delay making a payment of any amount from the variable subaccounts
or processing a transfer request if:
(a) the disposal or valuation of the Variable Account's assets is not
reasonably practicable because
(i) the New York Stock Exchange is closed for other than a
regular holiday or weekend,
(ii) trading is restricted by the SEC, or
(iii) the SEC declares that an emergency exists; or
(b) the SEC by order permits postponement of payment to protect our policy
owners.
We may defer payment of proceeds from the fixed account for up to six months
from the date we receive the request. If we defer payment for more than 30 days,
we will pay interest on the amount deferred at an effective annual rate of at
least 3.5%. However, we will not defer payment of a withdrawal or policy loan
requested to pay a premium due on a United Investors policy. We also may defer
making payments attributable to a premium check that has not cleared your bank.
The policy offers a wide variety of optional ways of receiving proceeds
payable under the policy other than in a lump sum. An authorized United
Investors agent can explain these options to you. None of these options varies
with the investment performance of a variable subaccount because they are all
forms of fixed-benefit annuities.
Policy Changes
We may make changes in the policy at any time if we believe the changes are
necessary:
(a) to assure compliance at all times with the definition of life
insurance prescribed by the Internal Revenue Code;
(b) to make the policy, our operations, or the operation of the Variable
Account conform with any law or regulation issued by any government
agency to which they are subject; or
14
<PAGE>
(c) to reflect a change in the operation of the Variable Account, if
allowed by the policy.
Only an officer of United Investors has the right to change the policy. No agent
has the authority to change the policy or waive any of its terms. All
endorsements, amendments, or riders must be signed by one of our officers to be
valid.
Reports to Owners
At least once a year, you will be sent a report showing information about
your policy for the period covered by the report. You will also be sent an
annual and a semi-annual report for each portfolio underlying a variable
subaccount in which you have policy value, as required by the 1940 Act. In
addition you will receive a written confirmation of each transaction when you
pay premiums, make a withdrawal, make transfers, or take out a policy loan.
Other Policy Provisions
The policy contains provisions addressing the following matters:
Dividends. The policy is non-participating. This means that no dividends
will be paid on the policy. The policy will not share in our profits or surplus
earnings.
Incontestability. After the policy has been in force during the insured's
lifetime for a period of two years from the policy's effective date, the policy
limits our right to contest the policy as issued, except for material
misstatements contained in any application. This also applies to reinstatements
and increases in the face amount, for two years after the reinstatement date or
effective date of the increase.
Suicide Exclusion. The policy limits the death benefit if the insured dies
by suicide, generally within two years after the policy's effective date or
effective date of the increase. In this instance, our liability will be limited
to the total premiums paid less any withdrawals and any loan balance.
Reinstatement. The policy may be reinstated at any time within five years
after the policy has terminated at the end of the grace period. To reinstate the
policy, the policy owner must:
(a) submit an application for reinstatement;
(b) provide evidence of insurability satisfactory to us;
(c) agree to the reduction of the policy value by any loan balance; and
(d) pay the premium required to reinstate the policy.
The reinstatement date for the policy will be the monthly processing date on or
following the day we approve the application for reinstatement. (See the policy
form for additional information.) The policy cannot be reinstated if you have
surrendered it for the net cash surrender value.
Misstatement of Age or Sex. The death benefit will be adjusted if the
insured's age or sex has been misstated in the application. The benefits paid
will be those which the last monthly cost of insurance charge would have
provided at the correct age and sex.
Automatic Continuation of Benefits. If premium payments cease, insurance
under the policy and any supplemental benefits provided by rider will continue
as provided under the grace period provisions described under "Premiums to
Prevent Termination." The policy will not continue beyond its maturity date. Any
supplemental benefits added by a rider will not continue beyond the termination
date described in the rider.
15
<PAGE>
Entire Contract. The entire contract is made up of the policy, any riders,
and the written application. All statements made in the application, in the
absence of fraud, are considered representations and not warranties. We can use
only the statements made in the written application to defend a claim or void
the policy.
Assignment and Change of Owner
You may assign the policy subject to its terms. We will not be deemed to
know of an assignment unless we receive a written copy of it at our
administrative office. We assume no responsibility for the validity or effect of
any assignment. In certain circumstances, an assignment may be a taxable event.
(See "Tax Considerations".) You may change the policy owner by sending a written
request to us while the insured is alive and the policy is in force. The change
will take effect the date you sign the request, but the change will not affect
any action we have taken before we receive the request. A change of policy owner
may have tax consequences. (See "Tax Considerations.") A change of policy owner
does not change the beneficiary designation. (See "Beneficiary.") Any such
assignment or change must be in a written form acceptable to us.
Death Benefits
- --------------------------------------------------------------------------------
If the insured dies while the policy is in force and prior to the policy's
maturity date, we will pay the death benefit when we receive satisfactory proof
at our administrative office of the insured's death. (See "Requesting
Payments.") The death benefit will be paid to the beneficiary.
Amount of Death Benefit Payable
The amount of death benefit payable is:
(a) the base death benefit determined under the death benefit option in
effect on the date of the insured's death; plus
(b) any supplemental benefits provided by riders, including the adjustable
term insurance rider; minus
(c) any loan balance on that date; minus
(d) any past due monthly deductions (if death occurred during a grace
period).
Under certain circumstances, the amount of the death benefit may be further
adjusted. (See "Incontestability" and "Misstatement of Age or Sex.")
Death Benefit Options
The base death benefit depends on the base face amount, the policy value on
the date of death, and the death benefit option in effect on the date of death.
The base face amount is the amount of insurance chosen by you for the policy at
issue, or as subsequently increased or decreased by you.
Death Benefit Option A. The base death benefit under option A is the
greater of:
(1) the base face amount at the beginning of the policy month when the
death occurs; or
(2) the policy value on the date of death, multiplied by the applicable
factor from the table of death benefit factors below.
Under option A, the base death benefit ordinarily will not change.
Death Benefit Option B. The base death benefit under option B is the
greater of:
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<PAGE>
(1) the base face amount at the beginning of the policy month when the
death occurs, plus the policy value on the date of death; or
(2) the policy value on the date of death, multiplied by the applicable
factor from the table of death benefit factors below.
Under option B, the base death benefit will vary directly with your policy
value.
(To see how and when investment performance of the policy may begin to
affect the death benefit, please see the hypothetical illustrations.)
Death Benefit Factors. The death benefit factor is a multiple that ranges
between two-and-one-half times and one times the policy value. It is 2.50 up to
the insured's attained age 40 and declines thereafter as the insured's age
increases, as specified in the following table.
Table of Death Benefit Factors
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Attained Attained Attained Attained
Age Factor Age Factor Age Factor Age Factor
--- ------ --- ------ --- ------ --- ------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
41 2.43 51 1.78 61 1.28 71 1.13
- ---------------------------------------------------------------------------------------------------------------------
42 2.36 52 1.71 62 1.26 72 1.11
- ---------------------------------------------------------------------------------------------------------------------
43 2.29 53 1.64 63 1.24 73 1.09
- ---------------------------------------------------------------------------------------------------------------------
44 2.22 54 1.57 64 1.22 74 1.07
- ---------------------------------------------------------------------------------------------------------------------
45 2.15 55 1.50 65 1.20 75-90 1.05
- ---------------------------------------------------------------------------------------------------------------------
46 2.09 56 1.46 66 1.19 91 1.04
- ---------------------------------------------------------------------------------------------------------------------
47 2.03 57 1.42 67 1.18 92 1.03
- ---------------------------------------------------------------------------------------------------------------------
48 1.97 58 1.38 68 1.17 93 1.02
- ---------------------------------------------------------------------------------------------------------------------
49 1.91 59 1.34 69 1.16 94 1.01
- ---------------------------------------------------------------------------------------------------------------------
50 1.85 60 1.30 70 1.15 95+ 1.00
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The death benefit factors are based on current requirements under the
Internal Revenue Code. We reserve the right to change the table if the death
benefit factors currently in effect become inconsistent with any Federal income
tax laws and/or regulations.
Adjustable Term Insurance Rider and Target Face Amount
The target face amount is the sum of the base face amount and the initial
adjustable term insurance rider amount. The amount of the rider will decrease as
necessary to keep the sum of the rider amount and the base death benefit equal
to the target face amount, which is necessary when the base death benefit begins
increasing to maintain the required multiple of the policy value as described
above. The adjustable term insurance rider amount may also increase again if the
base death benefit decreases as the policy ages.
If the base death benefit becomes greater than or equal to the target face
amount, the amount of the adjustable term insurance rider will become zero. If
the rider amount reduces to zero, the rider will not terminate, but will remain
attached to the policy in the event that the base death benefit declines below
the target face amount again at a later date.
The relationship of the death benefit to the target face amount depends on
the death benefit option (in each case, the death benefit will still be reduced
by any loan balance or unpaid monthly deductions):
. Option A: The death benefit is the greater of the base death benefit or the
target face amount.
. Option B: The death benefit is the greater of the base death benefit or the
target face amount plus policy value.
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<PAGE>
It may be to your economic advantage to use the adjustable term insurance
rider as a part of your insurance coverage. Since target premiums, percentage of
premium sales loads, and surrender charges are only associated with the base
face amount, use of the adjustable term insurance rider can lower the charges
associated with the policy. Use of the adjustable term insurance rider may
reduce sales compensation. However, the optional death benefit guarantee will
not apply to any insurance amount provided by the adjustable term insurance
rider.
Calculation of Death Benefit Example. Assume your base face amount is
$150,000, the initial adjustable term insurance rider amount is $100,000, death
benefit option A is in effect, and there are no loans or unpaid monthly
deductions. The target face amount is therefore $250,000, and assuming the
policy value changes as shown below, the following amounts will result:
<TABLE>
<CAPTION>
Death Benefit Policy Base Death Adjustable Term Death
Age Factor Value Benefit Insurance Rider Amount Benefit
- --- ------ -------- --------- ---------------------- ----------
<S> <C> <C> <C> <C> <C>
55 1.50 $ 95,000 $150,000 $100,000 $250,000
56 1.46 105,000 153,300 96,700 250,000
57 1.42 107,000 151,940 98,060 250,000
</TABLE>
Changing the Death Benefit Option
You select the death benefit option when you apply for the policy. After
the policy has been in force at least one year, you may change the death benefit
option on your policy, subject to the following rules:
(a) each change must be submitted by written request received by our
administrative office;
(b) once you change the death benefit option, you cannot change it again
for one year;
(c) if you change the death benefit option from A to B, the total death
benefit will remain the same, and the policy's base face amount will
be decreased by an amount equal to the policy value on the date of the
change;
(d) if you change the death benefit option from B to A, the total death
benefit will remain the same, and the base face amount will be
increased by an amount equal to the policy value on the date of the
change. The risk class for the last face amount portion to go into
effect which is still in force will apply to the base face amount
increase.
The effective date of the change will be the monthly processing date on or
following the date when we approve the request for the change. We will send you
revised policy data pages reflecting the new death benefit option and the
effective date of the change. We do not impose a surrender charge for any
decrease in the base face amount occurring as a result of the change, and there
is no change to the target premium. Changing the death benefit option may have
tax consequences. (See "Tax Considerations.")
Changing the Face Amount
You select the policy's base face amount and adjustable term insurance
rider amount, if any, when you apply for the policy. After the policy has been
in force at least one year, you may change the base face amount or the
adjustable term insurance rider amount on any monthly processing date subject to
the following requirements. Any change in amount must be at least $10,000, and
the minimum base face amount after the first policy year is $50,000. Once you
change the base face amount or the adjustable term insurance rider amount, you
cannot change either amount again for one year. No change will be permitted that
may disqualify your policy as a life insurance contract under the Internal
Revenue Code. Changing the face amount of the policy may have tax consequences.
(See "Tax Considerations" below.)
Increasing the Face Amount. To increase the policy's base face amount or
adjustable term insurance rider amount, you must:
18
<PAGE>
(a) submit an application for the increase;
(b) submit proof satisfactory to us that the insured is an insurable risk;
and
(c) pay any additional premium that is required.
No increases can be made after the insured reaches attained age 75. An
increase will take effect on the monthly processing date on or following the day
we approve the application for the increase.
The risk class that applies for any increase may be different from the risk
class that applies for the policy's initial base face amount or any other
increase. An increase in the base face amount or the adjustable term insurance
rider amount will result in an increase in the no-lapse monthly premium. An
increase in the base face amount will also increase the target premium and
result in additional administrative and sales surrender charges. (See "Impact of
Changes in Base Face Amount on Surrender Charge".) If the face amount is
increased, the cost of insurance will also increase due to the increased death
benefit.
Decreasing the Face Amount. You may decrease the policy's base face amount
or adjustable term insurance rider amount by submitting a written request. The
base face amount may not be decreased below the policy's minimum base face
amount. The no-lapse monthly premium for your policy will be reduced to reflect
the decrease. Any decrease will take effect on the later of:
(a) the monthly processing date on or following the day we receive the
request; or
(b) the monthly processing date one year after the date of the last change
in face amount.
A face amount decrease will be used to reduce the face amount in the
following order:
(a) the amount of any adjustable term insurance rider will be reduced
until it is equal to zero;
(b) any previous base face amount increases then in effect will be
reduced, starting with the latest increase and continuing in the
reverse order in which the increases were made;
(c) the policy's initial base face amount will be reduced.
We will deduct a charge from the policy value each time the policy's base
face amount is decreased. (See "Impact of Changes in Base Face Amount on
Surrender Charge".)
Effect of Withdrawals on the Death Benefit
A withdrawal will affect your policy's death benefit in the following
respects:
(a) If death benefit option A is in effect, the policy's base face amount
will be reduced by the gross withdrawal amount. If the base face
amount reflects increases in the policy's initial base face amount,
any withdrawal will reduce first the most recent increase, and then
the next most recent increase, if any, in reverse order, and finally
the policy's initial base face amount.
(b) If death benefit option B is in effect, the total death benefit is
also reduced by the gross withdrawal amount, but the policy's base
face amount is not affected.
Beneficiary
You designate the beneficiary (or beneficiaries) when you apply for the
policy. You may change the designated beneficiary (or beneficiaries) by
submitting a satisfactory written request to us. The change will take effect on
the
19
<PAGE>
date the request was signed, but it will not apply to payments we make before we
accept the written request. If no beneficiary is living at the insured's death,
we will pay the death benefit proceeds to you, if living, or to your estate.
Supplemental Benefits
Your policy may have supplemental benefits which are attached to the policy
by rider. A charge will be deducted monthly from your policy value for certain
supplemental benefits. Each supplemental benefit is subject to its own
requirements as to eligibility and cost. You may cancel supplemental benefits at
any time. More details will be included in your policy if you choose any of
these benefits. Some of the supplemental benefits listed below may not be
available in all states, and from time to time, we may make available
supplemental benefits other than those listed below. Contact your agent or our
administrative office for a complete list of the supplemental benefits available
in your state.
Terms and conditions for each supplemental benefit are specified in the
applicable rider; the following are only brief descriptions.
Accelerated Death Benefit Rider. This benefit allows accelerated payment of
up to 75% of the death benefit (in a lump sum only) while the insured is still
alive, if the insured is diagnosed as having a terminal illness expected to
cause death within 12 months (unless a shorter period is required by state law).
There is no charge for this rider prior to the time the accelerated benefits are
paid.
Accidental Death Benefit Rider. This benefit will be paid if the insured
dies as a result of an accident before age 70.
Additional Insured Term Insurance Rider. This benefit allows you to provide
for death benefits on up to five family members (spouse and/or children).
Adjustable Term Insurance Rider. This rider is available to add death
benefit coverage on the primary insured to your policy. The initial amount of
coverage is chosen by you within certain limits, and will reduce to keep the
target face amount level if the base death benefit increases due to Internal
Revenue Code requirements. (See "Death Benefits".)
Change of Person Insured Rider. This benefit allows you to change the
person insured under the policy. Satisfactory evidence of insurability must be
provided for the proposed new insured. Future charges under the policy will
change, but the policy value will remain the same as of the date of the change.
Changing the person insured under the policy may have tax consequences. There is
no additional charge for this rider.
Children's Term Insurance Rider. This benefit allows you to add death
benefit coverage for your children.
Death Benefit Guarantee Rider. This rider provides that your base face
amount will remain in force regardless of the sufficiency of the net cash
surrender value for the guarantee period you selected at the time of
application, provided certain conditions are met. Both available guarantee
periods require the payment of higher premiums, and the guarantee does not apply
to any rider benefits. As long as the guarantee is inforce, we will deduct a
monthly charge from your policy value. This charge is currently $0.005 per
$1,000 of base face amount, and is guaranteed never to exceed $0.01 per $1,000
of base face amount. (See "Optional Death Benefit Guarantee".)
Disability Waiver of Monthly Deduction Rider. The benefit provides for
waiver of monthly deductions after the insured has been totally disabled for six
months. The disability must commence after the policy's effective date and prior
to age 60. The waiver continues as long as total disability continues. If you
add this rider to your policy, you may not add the disability waiver of
specified premium rider.
Disability Waiver of Specified Premium Rider. This benefit provides that we
credit a specified premium amount monthly to your policy after the insured has
been totally disabled for six months. At the time of application, you select the
amount of premium to be credited, subject to our limits. The disability must
commence after the
20
<PAGE>
policy's effective date and prior to age 60. The waiver continues as long as
total disability continues. If you add this rider to your policy, you may not
add the disability waiver of monthly deduction rider.
Option to Purchase Additional Insurance Rider. This rider will allow you
increase your base face amount without providing evidence of insurability.
Increases are limited in amount and timing.
Charges and Deductions
- --------------------------------------------------------------------------------
We deduct the charges described below from your policy. Certain of the
charges depend on a number of variables, and are illustrated in the hypothetical
illustrations depicted in this prospectus. The charges are for the services and
benefits provided, costs and expenses incurred and risks assumed by us under or
in connection with the policy. We intend to make a profit from these charges.
Services and benefits we provide include:
(a) the death benefits, cash and loan benefits provided by the policy;
(b) funding choices, including net premium allocations, dollar-cost
averaging programs, and automatic asset rebalancing programs;
(c) administration of various elective options under the policy; and
(d) the distribution of various reports to policy owners.
Costs and expenses we incur include:
(a) those associated with underwriting applications and changes in face
amount and riders;
(b) various overhead and other expenses associated with providing the
services and benefits provided by the policy;
(c) sales and marketing expenses; and
(d) other costs of doing business, such as Federal, state and local
premium and other taxes and fees.
Risks we assume include the risks that:
(a) insureds may live for a shorter period of time than estimated,
resulting in the payment of greater death benefits than expected; and
(b) the costs of providing the services and benefits under the policy will
exceed the charges deducted.
Premium Expense Charges
We deduct premium expense charges from each premium before allocating the
resulting net premium to the policy value. These charges consist of three types:
(a) 2.5% of each premium is deducted for state premium taxes;
(b) 1.5% of each premium is deducted for our estimate of the cost of the
Federal income tax treatment of deferred acquisition costs;
21
<PAGE>
(c) 4% of each premium is deducted as a sales load, until premiums paid
equal 10 times the target premium for the policy.
An addition to the target premium will be made when the base face amount is
increased, and a new sales load will be deducted in determining the net premium.
The new sales load will equal 4% of the premiums paid after the effective date
of the increase which are allocated to the increase, until the premiums
allocated to the increase equal 10 times the increase in the target premium.
Premiums paid after the effective date of the increase will be allocated in
proportion to the target premium for each portion of the base face amount.
Mortality and Expense Risk Charge
We deduct a daily charge from assets in the variable subaccounts for
certain mortality and expense risks we bear. This charge is at an effective
annual rate of 0.75% of the Variable Account assets during the first ten policy
years, 0.50% during the second ten years, and 0.25% thereafter. We guarantee not
to increase the mortality and expense risk charge above these annual rates. The
mortality and expense risk charge does not apply to fixed account assets. Our
profit, if any, from this charge may be used for any purpose, including
distribution expenses.
Monthly Deduction
We deduct a monthly deduction from your policy value on the policy's
effective date and on each monthly processing date. This charge is deducted from
the Variable Account and the fixed account on a pro rata basis. The monthly
deduction for each policy consists of:
(a) the cost of insurance charge discussed below;
(b) an issue expense charge of $20.00 per month payable during the first
policy year only;
(c) a monthly policy charge (currently this is $6.00 per month; it may
increase to a maximum charge of $10.00 per month); and
(d) charges for any supplemental benefits added by riders to the policy.
(See "Supplemental Benefits.")
Surrender Charge
If you surrender the policy before the beginning of the 15th policy year,
we will deduct a surrender charge based on its base face amount at issue. We
also deduct the surrender charge if you surrender the policy before the
beginning of the 15th year following an increase in its base face amount (based
on the amount of the increase). The surrender charge will be deducted before any
surrender proceeds are paid. A portion of the surrender charge will also be
deducted for any base face amount decreases you request, or if the base face
amount decreases due to a withdrawal from your policy value. (See "Impact of
Changes in Base Face Amount on Surrender Charge.")
The surrender charge consists of two types of charges, an administrative
surrender charge and a sales surrender charge. The administrative surrender
charge is $4.00 per $1,000 of base face amount for the first nine policy years
(or the first nine years after a base face amount increase) and declines each
year thereafter until it reaches zero:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Policy Year: 1-9 10 11 12 13 14 15 & up
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Charge per $1,000 of Base Face Amount: $4.00 $3.33 $2.67 $2.00 $1.33 $0.67 $0.00
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The sales surrender charge is a percentage of actual premiums paid up to a
maximum based on target premiums. The percentages of premium are:
Policy Years 1 - 2: 26% of premium paid up to one target premium, plus
6% of premium paid above one target up to two target
premiums, plus
5% of premium paid above two target premiums.
22
<PAGE>
Policy Years 3 - 9: 46% of premium paid up to one target premium, plus
44% of premium paid above one target up to two target
premiums.
The sales surrender charge at the end of the 9th policy year will be
reduced to zero at the beginning of the 15th policy year by reducing the charge
each year by one-sixth of the amount of the charge in effect at the end of the
9th policy year.
Impact of Changes in Base Face Amount on Surrender Charge. If you request a
decrease to the base face amount while surrender charges are in effect, or take
a withdrawal that decreases the base face amount, we will deduct a portion of
the surrender charge. Decreases in the base face amount as a result of a death
benefit option change do not cause a surrender charge deduction. Similarly,
increases in the base face amount as a result of death benefit option changes do
not result in an increase in the maximum surrender charge. All other increases
in the base face amount will increase the maximum surrender charge.
For decreases that cause a portion of the surrender charge to be deducted,
the calculation of the charge varies for each type of surrender charge. The
administrative surrender charge deduction will be in proportion to the amount of
the base face amount decrease, and the future administrative surrender charge
will be reduced by the amount of the deduction.
The amount of the sales surrender charge deduction will depend of the
relationship of the premiums paid to the target premium for each portion of the
base face amount. When the decrease is made, the target premium for each portion
of the base face amount will be reduced in proportion to the amount of the base
face amount decrease. If the new target premium for each portion of the base
face amount is greater than or equal to the premiums paid which have been
allocated to that portion, there will be no deduction, although the future
maximum sales surrender charge will be lower than before the decrease occurred.
If the new target premium for each portion of the base face amount is less than
the premiums paid which have been allocated to that portion, the deduction will
be the difference between the sales surrender charge before the decrease and the
sales surrender charge after the decrease. The sales surrender charge after the
decrease will be recalculated as if the new target premium for each portion of
the base face amount had always been in effect for that portion.
Calculation of Surrender Charge Example. Assume the base face amount on
your policy is $100,000 and the insured is age 50 when the policy was issued.
The target premium for the policy is $2,000. Assuming that you pay a $2,500
premium at the beginning of each policy year, the resulting surrender charge for
each policy year is:
<TABLE>
<CAPTION>
Administrative Sales Total
Policy Year Surrender Charge Surrender Charge Surrender Charge
----------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
1 $400 $ 550 $ 950
2 400 690 1,090
3 400 1,800 2,200
4 400 1,800 2,200
5 400 1,800 2,200
6 400 1,800 2,200
7 400 1,800 2,200
8 400 1,800 2,200
9 400 1,800 2,200
10 333 1,500 1,833
11 267 1,200 1,467
12 200 900 1,100
13 133 600 733
14 67 300 367
15 0 0 0
</TABLE>
Transaction Charges
23
<PAGE>
Certain policyholder transactions that exceed a maximum number in a policy
year may incur a charge.
Withdrawals. A deduction from the policy value equal to the lesser of $25
or 2% of the withdrawal amount will occur for each withdrawal after the first in
a policy year.
Transfers between Subaccounts and/or the Fixed Account. A deduction of $25
for each transfer after the 12th in a policy year will be made. Transfers under
the dollar cost averaging and the automatic asset rebalancing program are not
counted against the limit of 12 free transfers.
Policy Illustrations. The first illustration of policy values you request
each policy year will be free. For subsequent illustration requests each policy
year, a $25 deduction will be made from your policy value.
Other Charges
For a description of the investment advisory fees and other expenses
incurred by the Portfolios, see the "Summary" on page 2 of this prospectus and
the accompanying prospectuses for the underlying mutual funds.
Cost of Insurance
The cost of insurance is the primary charge for the death benefit provided
by your policy. The cost of insurance charge depends on a number of variables
that cause the charge to vary from policy to policy and from monthly processing
date to monthly processing date. The cost of insurance charge is equal to (a)
multiplied by the result of (b) minus (c) where:
(a) is the cost of insurance rate divided by 1,000;
(b) is the death benefit at the beginning of the policy month; and
(c) is the policy value at the beginning of the policy month.
The policy value used in this calculation is the policy value before
deduction of the monthly cost of insurance charge (for both the base face amount
and the adjustable term insurance rider) and the cost of insurance for any
disability waiver of monthly deductions rider, but after monthly deductions for
any other riders and charges.
The cost of insurance rate is the rate applied to the insurance under the
policy to determine the monthly cost of insurance charge. The cost of insurance
rate is based on the insured's attained age, sex, and applicable risk class as
well as the size of the base face amount and the duration of the policy. We
currently place insureds in the following risk classes (available for male or
female) when we issue the policy, based on our underwriting:
. Preferred;
. Standard Non-Tobacco;
. Standard Tobacco;
. Substandard Non-Tobacco; and
. Substandard Tobacco.
The original risk class applies to the policy's initial face amount. If an
increase in face amount is approved, a different risk class may apply to the
increase, based on the insured's circumstances at the time of the increase. If
you have selected death benefit option A, and if there have been any increases
in the base face amount, the policy value will be considered a part of the
initial base face amount when the charge is calculated. If the policy value
exceeds the initial base face amount, the excess will be considered part of the
increases in base face amount in the order of the increases.
24
<PAGE>
We guarantee that the cost of insurance rates used to calculate the monthly
cost of insurance charge will not exceed the maximum cost of insurance rates set
forth in the policy. The maximum cost of insurance rates are based on the 1980
Commissioners Standard Ordinary Mortality Tables, Male or Female, Smoker or Non-
Smoker, or for substandard classes, a multiple of the tables and/or a flat
addition to the tables. (See "Hypothetical Illustrations" for examples showing
the effects of the cost of insurance charge.)
Reduction in Charges for Certain Groups
We may waive or reduce the administrative charges, the premium expense
charges, the transaction charges and the surrender charges on policies that have
been sold to:
(a) our employees and sales representatives, or those of our affiliates or
distributors of the policy; or
(b) individuals or groups of individuals where the sale of the policy
results in savings of administrative or commission expenses.
Policy Values
- --------------------------------------------------------------------------------
Policy Value
The policy value serves as a starting point for calculating values under a
policy. The policy value is the sum of the variable account value and the fixed
account value credited to the policy. The policy value is determined first on
the policy's effective date and thereafter on each business day. On the maturity
date, the proceeds payable under a policy are equal to the policy value less any
loan balance. The policy value will vary to reflect:
(a) the performance of the variable subaccounts to which amounts have been
allocated;
(b) interest credited on amounts allocated to the fixed account and loan
balance;
(c) charges;
(d) transfers;
(e) withdrawals; and
(f) policy loans (including loan repayments).
The policy value may be more or less than premiums paid.
The cash surrender value is the policy value reduced by any surrender
charge.
The net cash surrender value is the cash surrender value reduced by any
loan balance. You will receive only the net cash surrender value if you
surrender your policy.
Variable Account Value
The variable account value is the sum of the values of the variable
subaccounts under the policy. On the policy's effective date, the value of each
variable subaccount is equal to:
(a) the initial net premium allocated to that variable subaccount; minus
25
<PAGE>
(b) the portion of the first month's monthly deduction allocated to that
variable subaccount.
On any business day thereafter, the value of each variable subaccount is equal
to:
(a) the value of the variable subaccount on the preceding business day,
multiplied by the appropriate net investment factor (described below)
for the current business day; plus
(b) the sum of all net premiums allocated to the variable subaccount since
the previous business day; plus
(c) the sum of all loan repayments allocated to the variable subaccount
since the previous business day; plus
(d) the amount of any transfers from other variable subaccounts or the
fixed account to the variable subaccount since the previous business
day; minus
(e) the amount of any transfers to other variable subaccounts or to the
fixed account, including amounts transferred to secure a policy loan,
from the variable subaccount since the previous business day; minus
(f) the portion of any gross withdrawals, policyholder transaction
charges, or charges for any face amount decreases allocated to the
variable subaccount since the previous business day; minus
(g) the portion of the monthly deduction allocated to the variable
subaccount since the previous business day.
Unit Values. When you allocate an amount to a variable subaccount, either
by net premium allocation, transfer of policy value or repayment of a policy
loan, your policy is credited with units in that variable subaccount. The number
of units is determined by dividing (i) the amount allocated, transferred or
repaid to the variable subaccount by (ii) the variable subaccount's unit value
for the business day when the allocation, transfer or repayment is effected. The
number of units credited to a policy will decrease when:
(a) the allocated portion of the monthly deduction or other charges is
taken from the variable subaccount;
(b) a policy loan is taken from the variable subaccount;
(c) an amount is transferred from the variable subaccount; or
(d) a withdrawal is taken from the variable subaccount.
The number of the variable subaccount's units may also decrease if the policy's
face amount is decreased.
A variable subaccount's unit value is an index we use to measure investment
performance. Each variable subaccount's unit value varies to reflect the
investment experience of its underlying portfolio, and may increase or decrease
from one business day to the next. Each variable subaccount's unit value was
arbitrarily set at $10.00 when the variable subaccount was established. The unit
value is determined on each business day by multiplying the unit value for the
variable subaccount on the prior business day by the variable subaccount's net
investment factor for the current business day.
Net Investment Factor. The net investment factor is an index used to
measure the investment performance of a variable subaccount from one business
day to the next. The net investment factor for any variable subaccount for any
business day is determined by dividing (a) by (b) and subtracting (c) from the
result, where:
(a) is:
(1) the net asset value per share of the portfolio shares held in the
variable subaccount determined at the end of the current business
day; plus
26
<PAGE>
(2) the per share amount of any dividend or capital gain
distributions on the portfolio shares held in the variable
subaccount, if the "ex-dividend" date occurs during the current
business day; plus or minus
(3) a per share charge or credit for any taxes reserved for the
current business day which we determine to have resulted from the
investment operations of the variable subaccount;
(b) is:
(1) the net asset value per share of the portfolio shares held in the
variable subaccount, determined at the end of the last prior
business day; plus or minus
(2) the charge or credit for any taxes reserved for the last prior
business day; and
(c) is a deduction for the current mortality and expense risk charge for
the number of days since the last prior business day.
Fixed Account Value
On the policy's effective date, the fixed account value is equal to:
(a) the initial net premium allocated to the fixed account; minus
(b) the portion of the first month's monthly deduction allocated to the
fixed account.
On any monthly processing date thereafter, the fixed account value is equal
to:
(a) the fixed account value on the preceding monthly processing date; plus
(b) the sum of all net premiums allocated to the fixed account since the
previous monthly processing date; plus
(c) the sum of all policy loan repayments allocated to the fixed account
since the previous monthly processing date; plus
(d) total interest credited to the fixed account since the previous
monthly processing date; plus
(e) the amount of any transfers from the variable subaccounts to the fixed
account, including amounts transferred to secure policy loans, since
the previous monthly processing date; minus
(f) the amount of any transfers from the fixed account to the variable
subaccounts since the previous monthly processing date; minus
(g) the portion of any gross withdrawals, policyholder transaction
charges, or charges for any face amount decreases allocated to the
fixed account since the previous monthly processing date; minus
(h) the portion of the monthly deduction allocated to the fixed account
since the previous monthly processing date.
27
<PAGE>
Tax Considerations
- --------------------------------------------------------------------------------
The following discussion is general and is not intended as tax advice.
Introduction
The following summary provides a general description of the Federal income
tax considerations relating to the policy. This summary is based upon our
understanding of the present Federal income tax laws as they are currently
interpreted by the Internal Revenue Service ("IRS"). Because of the complexity
of such laws and the fact that tax results will vary according to the factual
status of the specific policy involved, tax advice from a qualified tax advisor
may be needed by a person contemplating the purchase of a policy or the exercise
of certain elections under the policy. These comments concerning Federal income
tax consequences are not an exhaustive discussion of all tax questions that
might arise under the policy. Further, these comments do not take into account
any Federal estate tax and gift, state, or local tax considerations which may be
involved in the purchase of a policy or the exercise of certain elections under
the policy. For complete information on such Federal and state tax
considerations, a qualified tax advisor should be consulted. We do not make any
guarantee regarding the tax status of any policy, and the following summary is
not intended as tax advice.
Tax Status of the Policy
In order to qualify as a life insurance contract for Federal income tax
purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law, a policy must satisfy certain requirements
which are set forth in the Internal Revenue Code. Guidance as to how these
requirements are to be applied is limited. Nevertheless, we believe that the
policies should satisfy the applicable requirements. There is less guidance,
however, with respect to policies issued on a substandard basis and it is not
clear whether such policies will in all cases satisfy the applicable
requirements. If it is subsequently determined that a policy does not satisfy
the applicable requirements, we may take appropriate steps to bring the policy
into compliance with such requirements and we reserve the right to restrict
policy transactions in order to do so.
In certain circumstances, owners of variable life insurance contracts have
been considered for Federal income tax purposes to be the owners of the assets
of the variable account supporting their contracts due to their ability to
exercise investment control over those assets. Where this is the case, the
contract owners have been currently taxed on income and gains attributable to
variable account assets. There is little guidance in this area, and some
features of the policies, such as the flexibility of a policy owner to allocate
premium payments and policy values, have not been explicitly addressed in
published rulings. While we believe that the policies do not give policy owners
investment control over Variable Account assets, we reserve the right to modify
the policies as necessary to prevent a policy owner from being treated as the
owner of the Variable Account assets supporting the policy.
In addition, the Code requires that the investments of the Variable Account
be "adequately diversified" in order for the policies to be treated as life
insurance contracts for Federal income tax purposes. It is intended that the
Variable Account, through the underlying mutual funds will satisfy these
diversification requirements.
The following discussion assumes that the policy will qualify as a life
insurance contract for Federal income tax purposes.
Tax Treatment of Policy Benefits
In General. We believe that the death benefit under a policy should be
excludable from the gross income of the beneficiary. Federal, state and local
transfer, and other tax consequences of ownership or receipt of policy proceeds
depend on the circumstances of each policy owner or beneficiary. A tax advisor
should be consulted on these consequences.
28
<PAGE>
Generally, the policy owner will not be deemed to be in constructive
receipt of the policy value until there is a distribution. When distributions
from a policy occur, or when loans are taken out from or secured by a policy,
the tax consequences depend on whether the policy is classified as a "Modified
Endowment Contract."
Modified Endowment Contracts. A policy may be treated as a modified
endowment contract depending upon the amount of premiums paid in relation to the
death benefit provided under such policy. The premium limitation rules for
determining whether such a policy is a modified endowment contract are extremely
complex. In general, however, a policy will be a modified endowment contract if
the accumulated premiums paid at any time during the first seven policy years
exceed the sum of the net level premiums which would have been paid on or before
such time if the policy provided for paid-up future benefits after the payment
of seven level annual premiums.
In addition, if a policy is "materially changed," it may cause such policy
to be treated as a modified endowment contract. The material change rules for
determining whether a policy is a modified endowment contract are also extremely
complex. In general, however, the determination whether a policy will be a
modified endowment contract after a material change depends upon the
relationship of the death benefit at the time of change to the policy or cash
value at the time of such change and the additional premiums paid in the seven
policy years starting with the date on which the material change occurs.
The manner in which the premium limitation and material change rules should
be applied to certain features of the policy and its riders is unclear.
Nonetheless, under our current procedures, the policy owner will be notified at
the time a policy is issued whether, according to our calculations, the policy
is or is not classified as a modified endowment contract based on the premium
then received.
Due to the policy's flexibility, classification of a policy as a modified
endowment contract will depend upon the circumstances of each policy.
Accordingly, a prospective policy owner should contact a qualified tax advisor
before purchasing a policy to determine the circumstances under which the policy
would be a modified endowment contract. In addition, a policy owner should
contact a competent tax advisor before making any change to, including an
exchange of or reduction in benefits of, a policy to determine whether such
change would cause the policy (or the new policy in the case of an exchange) to
be treated as a modified endowment contract.
If a policy becomes a modified endowment contract, distributions such as
withdrawals and policy loans that occur during the policy year it becomes a
modified endowment contract and any subsequent policy year will be taxed as
distributions from a modified endowment contract. In addition, distributions
from a policy within two years before it becomes a modified endowment contract
will be taxed in this manner. This means that a distribution made from a policy
that is not a modified endowment contract could later become taxable as a
distribution from a modified endowment contract.
Whether a policy is or is not a modified endowment contract, upon a
complete surrender or a lapse or termination of a policy or when benefits are
paid at its maturity date, if the amount received plus the amount of any
indebtedness exceeds the total investment in the policy, the excess will
generally be treated as ordinary income subject to tax.
Distributions Other than Death Benefits from Policies Classified as
Modified Endowment Contracts. Policies classified as modified endowment
contracts will be subject to the following tax rules:
(1) First, all distributions, including distributions upon surrender and
benefits paid at maturity, from such a policy are treated as ordinary
income subject to tax up to the amount equal to the excess (if any) of
the policy value immediately before the distribution over the
"investment in the policy" (described below) at such time.
(2) Second, loans taken from, or secured by, such a policy (including
unpaid loan interest that is added to the principal of a loan) are
treated as distributions from such a policy and taxed accordingly.
29
<PAGE>
(3) Third, a 10 percent additional tax is imposed on the portion of any
distribution from, or loan taken from or secured by, such a policy
that is included in income except where the distribution or loan:
(a) is made on or after the policy owner reaches actual age
59 1/2,
(b) is attributable to the policy owner's becoming disabled, or
(c) is part of a series of substantially equal periodic payments
for the life (or life expectancy) of the policy owner or the
joint lives (or joint life expectancies) of the policy owner
and the policy owner's beneficiary.
Distributions Other than Death Benefits from Policies that Are Not Modified
Endowment Contracts. Distributions other than death benefits from a policy that
is not classified as a modified endowment contract are generally treated first
as a recovery of the policy owner's investment in the policy and only after the
recovery of all investment in the policy as taxable income. However, certain
distributions which must be made in order to enable the policy to continue to
qualify as a life insurance contract for Federal income tax purposes if policy
benefits are reduced during the first 15 policy years may be treated in whole or
in part as ordinary income subject to tax.
Loans from or secured by a policy that is not a modified endowment contract
are generally not treated as distributions. However, the tax consequences
associated with policy loans that are outstanding after the first 15 policy
years are less clear and a tax advisor should be consulted about such loans.
Finally, neither distributions from nor loans from or secured by a policy
that is not a modified endowment contract are subject to the 10 percent
additional income tax.
Policy Loan Interest. Interest paid on a policy loan generally is not tax-
deductible. The policy owner should consult a competent tax advisor if the
deductibility of interest paid on a policy loan is an important issue.
Investment in the Policy. "Investment in the policy" means:
(a) the aggregate amount of any premiums or other consideration paid for a
policy; minus
(b) the aggregate amount received under the policy which is excluded from
the gross income of the policy owner (except that the amount of any
loan from, or secured by, a policy that is a modified endowment
contract, to the extent such amount is excluded from gross income,
will be disregarded); plus
(c) the amount of any loan from, or secured by, a policy that is a
modified endowment contract to the extent that such amount is included
in the gross income of the policy owner.
Multiple Policies. All modified endowment contracts that are issued by us
(or our affiliates) to the same policy owner during any calendar year are
treated as one modified endowment contract for purposes of determining the
amount includable in gross income.
Accelerated Death Benefit Rider. We believe that payments received under
the accelerated death benefit rider should be fully excludable from the gross
income of the beneficiary if the beneficiary is the insured under the policy.
(See "Accelerated Death Benefit Rider" for more information regarding the
rider.) However, you should consult a qualified tax advisor about the
consequences of adding this rider to a policy or requesting payment under this
rider.
Other Policy Owner Tax Matters. The tax consequences of continuing the
policy beyond the insured's 100th year are unclear. You should consult a tax
advisor if you intend to keep the policy in force beyond the insured's 100th
year.
Businesses can use the policies in various arrangements, including
nonqualified deferred compensation or salary continuance plans, split dollar
insurance plans, executive bonus plans, tax exempt and nonexempt welfare
30
<PAGE>
benefit plans, retiree medical benefit plans and others. The tax consequences of
such plans may vary depending on the particular facts and circumstances. If you
are purchasing the policy for any arrangement the value of which depends in part
on its tax consequences, you should consult a qualified tax advisor. In recent
years, moreover, Congress has adopted new rules relating to life insurance owned
by businesses. Any business contemplating the purchase of a new policy or a
change in an existing policy should consult a tax advisor.
Possible Tax Law Changes. Although the likelihood of legislative changes is
uncertain, there is always the possibility that the tax treatment of the policy
could change by legislation or otherwise. Consult a tax advisor with respect to
legislative developments and their effect on the policy.
Taxation of United Investors
We incur state and local premium taxes, and Federal income taxes resulting
from the treatment of deferred acquisition costs. The amount of the charge we
deduct for such taxes is discussed above under "Charges and Deductions." At the
present time, we make no charge to the Variable Account for any other Federal,
state or local taxes that it incurs which may be attributable to the Variable
Account or to the policies. Nevertheless, we reserve the right in the future to
make a charge for any such tax or other economic burden resulting from the
application of the tax laws that we determine to be properly attributable to the
Variable Account or to the policies.
Employment-Related Benefit Plans
On July 6, 1983, the Supreme Court held 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 on the basis of sex. The policies described in this
prospectus contain guaranteed purchase rates for certain payment options that
generally distinguish between men and women. Accordingly, employers and employee
organizations should consider, in consultation with their legal counsel, the
impact of Norris, and Title VII generally, on any employment-related insurance
or benefit program for which a policy may be purchased.
Other Information
- --------------------------------------------------------------------------------
United Investors Life Insurance Company
We were incorporated in the State of Missouri on August 17, 1981, as the
successor to a company of the same name established in Missouri on September 27,
1961. We are a stock life insurance company, indirectly owned by Torchmark
Corporation. Our principal business is selling life insurance and annuity
contracts. We are admitted to do business in the District of Columbia and all
states except New York.
Published Ratings. We may publish (in advertisements, sales literature, and
reports to policy owners) the ratings and other information assigned to us by
one or more independent insurance industry analysts or rating organizations such
as A. M. Best Company, Standard & Poor's Corporation, and Weiss Research, Inc.
These ratings reflect the organization's current opinion of an insurance
company's financial strength and operating performance in comparison to the
norms for the insurance industry; they do not reflect the strength, performance,
risk, or safety (or lack thereof) of the variable subaccounts. The claims-paying
ability rating as measured by Standard & Poor's is an opinion of an operating
insurance company's financial capacity to meet its obligations under its
outstanding insurance and annuity policies.
Preparing for Year 2000. The new millennium poses a significant concern to
all businesses which use computer systems or electronic data in their
operations. This concern arises because these organizations have existing
computer systems and programs that cannot always identify a proper date. For
many years, programs were written using a two digit code to represent a year. At
the beginning of the year 2000, more digits are needed to accurately determine
the date in these programs. Without addressing this issue, many computer
programs could fail or produce erroneous results. Additionally, companies which
communicate electronically with other businesses or
31
<PAGE>
which rely on other businesses for services are exposed to risk of failure by
the electronic devices and computer systems of those other entities to the
extent they are not Year 2000 compliant. The potential failure of these systems
creates considerable uncertainty and could potentially adversely affect the
ongoing operations and stability of a business.
We are exposed to these risks should our computer systems fail due to date-
related problems. We also rely on a number of third party businesses and
governmental agencies that we either communicate electronically with or depend
on for services in conducting our business. These institutions include but are
not limited to banks, financial institutions, telecommunication companies,
utilities, mail delivery organizations, and a variety of governmental agencies.
If our computer systems or the systems of our third-party business partners are
not compliant, we may be exposed to considerable risks, including business
interruption, loss of revenue, increased expense, loss of policyholders, and
litigation.
To reduce our business risk to an acceptable level, we have established a
project plan to insure that our business-critical computer systems will be Year
2000 compliant. This plan also addresses third-party compliance issues. Under
the direction of executive management, objectives and timetables have been set
forth to achieve compliance. Progress toward achieving those objectives is
constantly monitored. We expect the entire project, including all Year 2000
testing activities, to be completed during 1999.
We remain on schedule to meet all of our Year 2000 compliance requirements.
All known required software changes were completed in 1998, and the related
testing is in process with plans for completion in 1999. With regard to third
party concerns, we are:
1. confirming with our software vendors the Year 2000 readiness of
purchased software packages;
2. verifying the Year 2000 compliance status of our financial business
partners' computer and data communications systems to insure
readiness, including data interface testing with third parties; and
3. evaluating all of our electronic operational systems (telephones,
security, utility, environmental) for Year 2000 compliance.
While we are making every effort to verify the compliance of third parties, no
assurances as to the compliance of their computer systems can be given.
We have primarily used our internal staff to complete our Year 2000
project. Other than completion of software testing, all significant Year 2000
project milestones for internal computer systems have been completed.
Confirmation of third party compliance and electronic data interface testing
with third parties is continuing with completion expected during 1999. We have
spent $130,000 on our Year 2000 project activities to date, including internal
programming costs, outside contractors, and replacement costs. These costs have
been expensed as incurred. Total project cost is expected to be approximately
$150,000.
Year 2000 contingency plans are being developed for critical risk areas.
Management is establishing and documenting contingency plans for most critical
systems and interfaces with business partners within each individual's
responsibility. Such contingency plans include possible manual operation
efforts, staff adjustments, outside services, and alternative procedures. These
contingency plans will be maintained well into 2000.
Sale of the Policies
Insigne Securities, Inc. of ___________________ is the principal
underwriter of the policies. Insigne Securities, Inc. is a corporation organized
under the laws of the state of _______ in 19__, is registered as a broker-dealer
under the Securities Exchange Act of 1934, and is a member of the National
Association of Securities Dealers, Inc. The Policies may not be available in all
states. Insigne Securities, Inc. may enter into written sales agreements with
various broker-dealers to aid in the sale of the policies. A commission plus
bonus compensation may be paid to broker-dealers or agents in connection with
sales of the policies.
32
<PAGE>
Changing the Variable Account
We have the right to make changes to, and to modify how we operate, the
Variable Account. Specifically, we have the right to:
(a) add subaccounts to, or remove subaccounts from, the Variable Account;
(b) combine the Variable Account with other separate accounts;
(c) replace the shares of a portfolio by substituting shares of another
portfolio of Target/United Funds, Inc. or another investment company
(1) if shares of the portfolio are no longer available for
investment, or
(2) if, in our judgment, continued investment in the portfolio is
inappropriate in view of the purposes of the Variable Account;
(d) end the registration of the Variable Account under the 1940 Act;
(e) disregard instructions from policy owners (only if required by state
insurance regulatory authorities or otherwise pursuant to insurance
law or regulation) regarding a change in the investment objectives of
a portfolio or the approval or disapproval of an investment advisory
agreement; and
(f) operate the Variable Account or one or more of its subaccounts in any
other form allowed by law, including a form that permits direct
investments in individual securities (rather than solely investments
in a mutual fund shares).
Voting of Portfolio Shares
We are the legal owner of portfolio shares held in the subaccounts of the
Variable Account and therefore have the right to vote on all matters submitted
to shareholders of the portfolios. However, to the extent required by law, we
will vote shares held in the variable subaccounts at meetings of the
shareholders of the portfolios in accordance with instructions received from
policy owners. The mutual funds generally do not hold regular annual shareholder
meetings. To obtain voting instructions from policy owners before a meeting of
shareholders of a particular portfolio, we may send voting instruction material,
a voting instruction form and any other related material to policy owners with
policy value in the variable subaccount corresponding to that portfolio. We will
vote shares held in a variable subaccount for which no timely instructions are
received in the same proportion as those shares for which voting instructions
are received. If the applicable Federal securities laws, regulations or
interpretations thereof change to permit us to vote shares of the portfolios in
our own right, then we may elect to do so. We may, if required by state
insurance officials, disregard policy owners' voting instructions if such
instructions would require us to vote the shares so as to cause a change in sub-
classification or investment objectives of one or more of the portfolios, or to
approve or disapprove an investment advisory agreement. In addition, we may
under certain circumstances disregard voting instructions that would require
changes in the investment policy or investment adviser of a portfolio, provided
that we reasonably disapprove of such changes in accordance with applicable
Federal regulations. If we ever disregard voting instructions, policy owners
will be advised of that action and of our reasons for doing so in our next
report to policy owners.
Addition, Deletion, or Substitution of Investments
We reserve the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares of the underlying
mutual funds that are held by the Variable Account (or any of its subaccounts)
or that the Variable Account (or any of its subaccounts) may purchase. We
reserve the right to eliminate the shares of any of the portfolios of the
underlying mutual funds and to substitute shares of another
33
<PAGE>
portfolio of the underlying mutual funds or any other investment vehicle or of
another open-end, registered investment company if:
(a) laws or regulations are changed;
(b) the shares of the underlying mutual funds or one of its portfolios are
no longer available for investment, or;
(c) in our judgment, further investment in any portfolio becomes
inappropriate in view of the purposes of the Subaccount.
We will not substitute any shares attributable to your interest in a subaccount
of the Variable Account without notice and prior approval of the U.S. Securities
and Exchange Commission and the insurance regulator of the state where the
policy was delivered, if required. Nevertheless, the representations in this
prospectus will not prevent the Variable Account from purchasing other
securities for other series or classes of policies, or from permitting a
conversion between series or classes of policies on the basis of requests made
by policy owners.
We also reserve the right to establish additional subaccounts of the
Variable Account, each of which would invest in a new portfolio of the mutual
funds, or in shares of another investment company or suitable investment, with a
specified investment objective. We may establish new variable subaccounts when,
in our sole discretion, marketing needs or investment conditions warrant. We may
make available any new variable subaccounts to existing policy owners, and will
do so on a basis that we will determine. We may also eliminate one or more
variable subaccounts if, in our sole discretion, marketing, tax, or investment
conditions warrant.
In the event of any such substitution or change, we may, by appropriate
endorsement, make such changes in this and other policies as may be necessary or
appropriate to reflect such substitution or change. If we deem it to be in the
best interests of persons having voting rights under the policies, the Variable
Account may be:
(a) operated as a management company under the Investment Company Act of
1940;
(b) deregistered under that Act in the event such registration is no
longer required; or
(c) combined with other United Investors separate accounts.
Other Information
A registration statement under the Securities Act of 1933 has been filed
with the SEC relating to the offering described in this prospectus. This
prospectus does not include all the information set forth in the registration
statement. That information may be obtained at the SEC's principal office in
Washington, D.C. by paying the SEC's prescribed fees.
Litigation
No legal or administrative proceeding is pending that would have a material
effect upon the Variable Account.
Legal Matters
Legal advice regarding certain matters relating to Federal securities laws
applicable to the issuance of the policy described in this prospectus has been
provided by Sutherland Asbill & Brennan LLP of Washington, D.C.
34
<PAGE>
Experts
The balance sheets of United Investors Life Insurance Company as of
December 31, 1998 and 1997, and the related statements of operations,
comprehensive income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1998 have been included herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined by W.
Thomas Aycock, Vice President and Chief Actuary of United Investors, whose
opinion is filed as an exhibit to the registration statement.
Financial Statements
The financial statements of United Investors, which are included in
Appendix D to this prospectus, should be considered only as bearing on our
ability to meet our obligations under the policies. They should not be
considered as bearing on the investment performance of the assets held in the
Variable Account. No financial statements are presented for the Variable Account
because it has yet to commence operations.
35
<PAGE>
Appendix A:
Hypothetical Illustrations
- --------------------------------------------------------------------------------
The following illustrations show how certain values under a sample policy
change with assumed investment performance over an extended period of time. In
particular, they illustrate how policy values, net cash surrender values and
death benefits under a policy, covering an insured of a given age on the
policy's effective date, would vary over time if planned premiums were paid
annually and the return on the assets in the variable subaccounts were a uniform
gross annual rate of 0%, 6% or 12%, before deduction of any fees and charges,
including portfolio expenses. The tables also show planned premiums accumulated
at 5% interest. The values under a policy would be different from those shown if
the returns averaged 0%, 6% or 12% but fluctuated over and under those averages
throughout the years shown. The hypothetical investment rates of return are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return for a particular policy may
be more or less than the hypothetical investment rates of return used in the
illustrations.
The illustrations assume an average annual expense ratio of x.xx% of the
daily net assets of the portfolios available under the policies, based on the
expense ratios of each of the portfolios for the last fiscal year of operations.
For information on portfolio expenses, see the mutual funds prospectuses
accompanying this prospectus.
The illustrations also reflect the 0.75% mortality and expense risk charge
to the Variable Account during the first ten policy years, 0.50% during the
second ten years, and 0.25% thereafter. After deduction of estimated portfolio
expenses and the mortality and expense risk charge, the illustrated gross annual
investment rates of return would correspond to the following approximate net
annual rates of return for the variable subaccounts:
<TABLE>
<S> <C> <C> <C>
Hypothetical gross rate of return: 0% 6% 12%
---- ---- -----
Net return, policy years 1 - 10: ____% ____% _____%
Net return, policy years 11 - 20: ____% ____% _____%
Net return, policy years 21 & up: ____% ____% _____%
</TABLE>
The current illustrations reflect the $6.00 monthly policy charge for all
policy years, while the guaranteed illustrations reflect the $10.00 maximum
monthly policy charge for all policy years. The illustrations also reflect the
deduction of premium expense charges and the monthly deduction for the
hypothetical insured. Our current charges and the higher guaranteed charges we
have the contractual right to deduct from your policy value are reflected in
separate illustrations on each of the following pages. All the illustrations
reflect the fact that no charges for Federal or state income taxes are currently
made against the Variable Account and assume no loan balance or charges for
supplemental benefits.
Upon request, we will furnish a comparable illustration based upon the
proposed insured's individual circumstances. Such illustrations may assume
different hypothetical rates of return than those illustrated in the following
tables.
36
<PAGE>
MALE ISSUE AGE 35, STANDARD NON-TOBACCO
$1,000 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
CURRENT CHARGES
<TABLE>
<CAPTION>
NET CASH
DEATH BENEFITS POLICY VALUES SURRENDER VALUES
------------------------- -------------------------- --------------------------
Assuming Hypothetical Gross Annual Rate of Return of:
End of PREMIUMS
Policy + Interest at
Year 5% Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
- --------- ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,050
2 2,153
3 3,310
4 4,526
5 5,802
6 7,142
7 8,549
8 10,027
9 11,578
10 13,207
11 14,917
12 16,713
13 18,599
14 20,579
15 22,657
16 24,840
17 27,132
18 29,539
19 32,066
20 34,719
21 37,505
22 40,430
23 43,502
24 46,727
25 50,113
26 53,669
27 57,403
28 61,323
29 65,439
30 69,761
</TABLE>
The hypothetical investment rates of return shown above are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rate of return may be more or less than those shown and
will depend on a number of factors, including the allocations made by a policy
owner to one or more variable subaccounts and the investment experience of the
portfolios underlying those variable subaccounts. The death benefit, policy
value and net cash surrender value for a policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but fluctuated above or below those averages for individual
policy years. They would also be different if any policy loans or withdrawals
were made. No representations can be made by us, the Variable Account or the
portfolios that these hypothetical rates of return can be achieved for any one
year or sustained over a period of time.
37
<PAGE>
MALE ISSUE AGE 50, STANDARD NON-TOBACCO
$2,500 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
CURRENT CHARGES
<TABLE>
<CAPTION>
NET CASH
DEATH BENEFITS POLICY VALUES SURRENDER VALUES
------------------------- -------------------------- --------------------------
Assuming Hypothetical Gross Annual Rate of Return of:
End of PREMIUMS
Policy + Interest at
Year 5% Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
- --------- ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,625
2 5,381
3 8,275
4 11,314
5 14,505
6 17,855
7 21,373
8 25,066
9 28,945
10 33,017
11 37,293
12 41,782
13 46,497
14 51,446
15 56,644
16 62,101
17 67,831
18 73,848
19 80,165
20 86,798
21 93,763
22 101,076
23 108,755
24 116,818
25 125,284
26 134,173
27 143,506
28 153,307
29 163,597
30 174,402
</TABLE>
The hypothetical investment rates of return shown above are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rate of return may be more or less than those shown and
will depend on a number of factors, including the allocations made by a policy
owner to one or more variable subaccounts and the investment experience of the
portfolios underlying those variable subaccounts. The death benefit, policy
value and net cash surrender value for a policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but fluctuated above or below those averages for individual
policy years. They would also be different if any policy loans or withdrawals
were made. No representations can be made by us, the Variable Account or the
portfolios that these hypothetical rates of return can be achieved for any one
year or sustained over a period of time.
38
<PAGE>
MALE ISSUE AGE 35, STANDARD NON-TOBACCO
$1,000 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
GUARANTEED CHARGES
<TABLE>
<CAPTION>
NET CASH
DEATH BENEFITS POLICY VALUES SURRENDER VALUES
------------------------- -------------------------- --------------------------
Assuming Hypothetical Gross Annual Rate of Return of:
End of PREMIUMS
Policy + Interest at
Year 5% Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
- --------- ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,050
2 2,153
3 3,310
4 4,526
5 5,802
6 7,142
7 8,549
8 10,027
9 11,578
10 13,207
11 14,917
12 16,713
13 18,599
14 20,579
15 22,657
16 24,840
17 27,132
18 29,539
19 32,066
20 34,719
21 37,505
22 40,430
23 43,502
24 46,727
25 50,113
26 53,669
27 57,403
28 61,323
29 65,439
30 69,761
</TABLE>
The hypothetical investment rates of return shown above are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rate of return may be more or less than those shown and
will depend on a number of factors, including the allocations made by a policy
owner to one or more variable subaccounts and the investment experience of the
portfolios underlying those variable subaccounts. The death benefit, policy
value and net cash surrender value for a policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but fluctuated above or below those averages for individual
policy years. They would also be different if any policy loans or withdrawals
were made. No representations can be made by us, the Variable Account or the
portfolios that these hypothetical rates of return can be achieved for any one
year or sustained over a period of time.
39
<PAGE>
MALE ISSUE AGE 50, STANDARD NON-TOBACCO
$2,500 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
CURRENT CHARGES
<TABLE>
<CAPTION>
NET CASH
DEATH BENEFITS POLICY VALUES SURRENDER VALUES
------------------------- -------------------------- --------------------------
Assuming Hypothetical Gross Annual Rate of Return of:
End of PREMIUMS
Policy + Interest at
Year 5% Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
- --------- ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,625
2 5,381
3 8,275
4 11,314
5 14,505
6 17,855
7 21,373
8 25,066
9 28,945
10 33,017
11 37,293
12 41,782
13 46,497
14 51,446
15 56,644
16 62,101
17 67,831
18 73,848
19 80,165
20 86,798
21 93,763
22 101,076
23 108,755
24 116,818
25 125,284
26 134,173
27 143,506
28 153,307
29 163,597
30 174,402
</TABLE>
The hypothetical investment rates of return shown above are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rate of return may be more or less than those shown and
will depend on a number of factors, including the allocations made by a policy
owner to one or more variable subaccounts and the investment experience of the
portfolios underlying those variable subaccounts. The death benefit, policy
value and net cash surrender value for a policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but fluctuated above or below those averages for individual
policy years. They would also be different if any policy loans or withdrawals
were made. No representations can be made by us, the Variable Account or the
portfolios that these hypothetical rates of return can be achieved for any one
year or sustained over a period of time.
40
<PAGE>
MALE ISSUE AGE 35, STANDARD NON-TOBACCO
$1,000 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
GUARANTEED CHARGES
<TABLE>
<CAPTION>
NET CASH
DEATH BENEFITS POLICY VALUES SURRENDER VALUES
------------------------- -------------------------- --------------------------
Assuming Hypothetical Gross Annual Rate of Return of:
End of PREMIUMS
Policy + Interest at
Year 5% Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
- --------- ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,050
2 2,153
3 3,310
4 4,526
5 5,802
6 7,142
7 8,549
8 10,027
9 11,578
10 13,207
11 14,917
12 16,713
13 18,599
14 20,579
15 22,657
16 24,840
17 27,132
18 29,539
19 32,066
20 34,719
21 37,505
22 40,430
23 43,502
24 46,727
25 50,113
26 53,669
27 57,403
28 61,323
29 65,439
30 69,761
</TABLE>
The hypothetical investment rates of return shown above are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rate of return may be more or less than those shown and
will depend on a number of factors, including the allocations made by a policy
owner to one or more variable subaccounts and the investment experience of the
portfolios underlying those variable subaccounts. The death benefit, policy
value and net cash surrender value for a policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but fluctuated above or below those averages for individual
policy years. They would also be different if any policy loans or withdrawals
were made. No representations can be made by us, the Variable Account or the
portfolios that these hypothetical rates of return can be achieved for any one
year or sustained over a period of time.
41
<PAGE>
MALE ISSUE AGE 50, STANDARD NON-TOBACCO
$2,500 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
GUARANTEED CHARGES
<TABLE>
<CAPTION>
NET CASH
DEATH BENEFITS POLICY VALUES SURRENDER VALUES
------------------------- -------------------------- --------------------------
Assuming Hypothetical Gross Annual Rate of Return of:
End of PREMIUMS
Policy + Interest at
Year 5% Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
- --------- ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,625
2 5,381
3 8,275
4 11,314
5 14,505
6 17,855
7 21,373
8 25,066
9 28,945
10 33,017
11 37,293
12 41,782
13 46,497
14 51,446
15 56,644
16 62,101
17 67,831
18 73,848
19 80,165
20 86,798
21 93,763
22 101,076
23 108,755
24 116,818
25 125,284
26 134,173
27 143,506
28 153,307
29 163,597
30 174,402
</TABLE>
The hypothetical investment rates of return shown above are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rate of return may be more or less than those shown and
will depend on a number of factors, including the allocations made by a policy
owner to one or more variable subaccounts and the investment experience of the
portfolios underlying those variable subaccounts. The death benefit, policy
value and net cash surrender value for a policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but fluctuated above or below those averages for individual
policy years. They would also be different if any policy loans or withdrawals
were made. No representations can be made by us, the Variable Account or the
portfolios that these hypothetical rates of return can be achieved for any one
year or sustained over a period of time.
42
<PAGE>
MALE ISSUE AGE 35, STANDARD NON-TOBACCO
$1,000 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION B
CURRENT CHARGES
<TABLE>
<CAPTION>
NET CASH
DEATH BENEFITS POLICY VALUES SURRENDER VALUES
------------------------- -------------------------- --------------------------
Assuming Hypothetical Gross Annual Rate of Return of:
End of PREMIUMS
Policy + Interest at
Year 5% Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
- --------- ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,050
2 2,153
3 3,310
4 4,526
5 5,802
6 7,142
7 8,549
8 10,027
9 11,578
10 13,207
11 14,917
12 16,713
13 18,599
14 20,579
15 22,657
16 24,840
17 27,132
18 29,539
19 32,066
20 34,719
21 37,505
22 40,430
23 43,502
24 46,727
25 50,113
26 53,669
27 57,403
28 61,323
29 65,439
30 69,761
</TABLE>
The hypothetical investment rates of return shown above are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rate of return may be more or less than those shown and
will depend on a number of factors, including the allocations made by a policy
owner to one or more variable subaccounts and the investment experience of the
portfolios underlying those variable subaccounts. The death benefit, policy
value and net cash surrender value for a policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but fluctuated above or below those averages for individual
policy years. They would also be different if any policy loans or withdrawals
were made. No representations can be made by us, the Variable Account or the
portfolios that these hypothetical rates of return can be achieved for any one
year or sustained over a period of time.
43
<PAGE>
MALE ISSUE AGE 50, STANDARD NON-TOBACCO
$2,500 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION B
CURRENT CHARGES
<TABLE>
<CAPTION>
NET CASH
DEATH BENEFITS POLICY VALUES SURRENDER VALUES
------------------------- -------------------------- --------------------------
Assuming Hypothetical Gross Annual Rate of Return of:
End of PREMIUMS
Policy + Interest at
Year 5% Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
- --------- ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,625
2 5,381
3 8,275
4 11,314
5 14,505
6 17,855
7 21,373
8 25,066
9 28,945
10 33,017
11 37,293
12 41,782
13 46,497
14 51,446
15 56,644
16 62,101
17 67,831
18 73,848
19 80,165
20 86,798
21 93,763
22 101,076
23 108,755
24 116,818
25 125,284
26 134,173
27 143,506
28 153,307
29 163,597
30 174,402
</TABLE>
The hypothetical investment rates of return shown above are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rate of return may be more or less than those shown and
will depend on a number of factors, including the allocations made by a policy
owner to one or more variable subaccounts and the investment experience of the
portfolios underlying those variable subaccounts. The death benefit, policy
value and net cash surrender value for a policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but fluctuated above or below those averages for individual
policy years. They would also be different if any policy loans or withdrawals
were made. No representations can be made by us, the Variable Account or the
portfolios that these hypothetical rates of return can be achieved for any one
year or sustained over a period of time.
44
<PAGE>
Appendix B:
Directors and Officers of United Investors
- --------------------------------------------------------------------------------
We are managed by a board of directors. The following table sets forth the
name and principal occupations during the past five years of each of our
directors and senior officers. Unless otherwise noted, the address for each
person is United Investors Life Insurance Company, 2001 Third Avenue South,
Birmingham, Alabama 35233.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Name and Position Principal Occupation
with United Investors During the Past Five Years
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
W. Thomas Aycock Vice President and Chief Actuary of United Investors since November 1992.
Director, Vice President and
Chief Actuary
- -----------------------------------------------------------------------------------------------------------------
Tony G. Brill* Executive Vice President and Chief Administrative Officer of Torchmark
Director and Executive Corporation since September 1999. Executive Vice President-Administration
Vice President- of United Investors since September 1998. Senior Vice President of United
Administration Investors, March 1998-September 1998. Senior Vice President of Torchmark
Corporation, January 1997-September 1999. Managing Partner of KPMG Peat Marwick
LLP, Birmingham, Alabama Office, 1984-December 1996.
- ------------------------------------------------------------------------------------------------------------------
Terry W. Davis Vice President-Administration of United Investors since January 1999 and
Director and Vice Liberty National Life Insurance Company since December 1996. Second Vice
President-Administration President-Administration of Liberty National Life Insurance Company since March
1988.
- ------------------------------------------------------------------------------------------------------------------
C.B. Hudson* Chairman of the Board of Directors and Chief Executive Officer of Torchmark
Director Corporation since March 1998 and United Investors, March 1998-September 1999.
Director of Liberty National Life Insurance Company, United American Insurance
Company, and Globe Life and Accident Insurance Company since September 1999.
Chairman of Insurance Operations of Torchmark Corporation, January 1993-March
1998. Chairman of Liberty National Life Insurance Company, United American
Insurance Company, and Globe Life and Accident Insurance Company, 1991-
September 1999.
- ------------------------------------------------------------------------------------------------------------------
Larry M. Hutchison* Executive Vice President and General Counsel of Torchmark Corporation since
Director September 1999. Vice President and General Counsel of Torchmark, February 1997-
September 1999. Vice President, Secretary and General Counsel of United
American Insurance Company since 1992.
- ------------------------------------------------------------------------------------------------------------------
Michael J. Klyce Vice President of Torchmark Corporation since January 1984.
Vice President and Treasurer
- ------------------------------------------------------------------------------------------------------------------
John H. Livingston Secretary and Counsel of United Investors since May 1995. Secretary and
Director, Secretary Associate Counsel of United Investors, December 1994-May 1995. Associate
and Counsel Counsel of United Investors, July 1990-December 1994. Associate Counsel of
Liberty National Life Insurance Company since October, 1986.
- ------------------------------------------------------------------------------------------------------------------
James L. Mayton, Jr. Vice President & Controller of Liberty National Life Insurance Company since
Vice President and Controller January 1985.
- ------------------------------------------------------------------------------------------------------------------
Mark S. McAndrew* Executive Vice President of Torchmark Corporation and Chairman of the Board and
Senior Vice Chief Executive Officer of United American Insurance Company and Globe Life and
President-Marketing Accident Insurance Company since September 1999. Senior Vice President-
Marketing of United Investors since March 1998. Director of Torchmark
Corporation since April 1998. President of United American Insurance Company
and Globe Life and Accident Insurance Company since 1991.
- ------------------------------------------------------------------------------------------------------------------
Carol A. McCoy Secretary of Torchmark Corporation since February 1994. Associate Counsel of
Director and Assistant Torchmark Corporation since January 1985.
Secretary
- ------------------------------------------------------------------------------------------------------------------
Anthony L. McWhorter Chairman of the Board of Directors and Chief Executive Officer of United
Chairman of the Investors and Liberty National Life Insurance Company, and Executive Vice
Board of Directors, President of Torchmark Corporation since September 1999. President of United
President and Chief Investors since September 1998. President of Liberty National Life Insurance
Executive Officer Company since December 1994. Executive Vice President and Chief Actuary of
Liberty National, November 1993-December 1994. Senior Vice President and Chief
Actuary of Liberty National, September 1991-November 1993.
- ------------------------------------------------------------------------------------------------------------------
Ross W. Stagner Vice President of United Investors since January 1992.
Director and Vice President
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Principal business address: Torchmark Corporation, 3700 South Stonebridge,
McKinney, Texas 75070.
45
<PAGE>
Appendix C:
Glossary
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
Administrative Office P. O. Box 10287, Birmingham, Alabama 35202-0287,
(800) 340-3787.
- ------------------------------------------------------------------------------------------------------------------
Attained Age The age of the insured on his or her birthday nearest the policy effective
date, increased by the number of policy years elapsed since the policy date.
- ------------------------------------------------------------------------------------------------------------------
Base Face Amount The amount of insurance chosen by you for the policy at issue, or as
subsequently increased or decreased by you. This amount does not include any
benefit provided by riders, and is prior to any death benefit changes required
by the Internal Revenue Code to continue to qualify as life insurance.
- ------------------------------------------------------------------------------------------------------------------
Business Day Each day that the New York Stock Exchange and our administrative office are
open. Currently, the Friday after Thanksgiving and, in most years, December 24
(Christmas Eve day) and December 31 (New Year's Eve day) are not Business Days.
- ------------------------------------------------------------------------------------------------------------------
Cash Surrender Value Policy value less any applicable surrender charge.
- ------------------------------------------------------------------------------------------------------------------
Death Benefit The amount of insurance payable to the beneficiary on the death of the insured.
- ------------------------------------------------------------------------------------------------------------------
Death Benefit Option One of two options under the policy that is used to determine the amount of the
death benefit.
- ------------------------------------------------------------------------------------------------------------------
Fixed Account A part of our general account. The general account consists of all of our
assets other than those in any separate account.
- ------------------------------------------------------------------------------------------------------------------
Fixed Account Value The policy value in the fixed account.
- ------------------------------------------------------------------------------------------------------------------
Gross Withdrawal A withdrawal plus any applicable transaction charge and any surrender charge.
- ------------------------------------------------------------------------------------------------------------------
Loan Balance The sum of all outstanding loans including principal and interest.
- ------------------------------------------------------------------------------------------------------------------
Maturity Date Policy anniversary nearest the insured's 100th birthday.
- ------------------------------------------------------------------------------------------------------------------
Monthly Processing The same day each month as the policy's effective date. If the monthly
Date processing date falls on a date other than a business day, the next following
business day will be deemed the monthly processing date.
- ------------------------------------------------------------------------------------------------------------------
Net Cash Surrender Cash surrender value less any loan balance.
Value
- ------------------------------------------------------------------------------------------------------------------
Net Premium The premium received less the premium expense charge.
- ------------------------------------------------------------------------------------------------------------------
No-lapse Monthly The minimum amount of premium required to keep the policy in force during the
Premium first three policy years regardless of the sufficiency of the cash surrender
value to pay monthly deductions.
- ------------------------------------------------------------------------------------------------------------------
Policy Anniversary The same day and month as the policy's effective date each year that the policy
remains in force. If the policy anniversary falls on a date other than a
business day, the next following business day will be deemed the policy
anniversary.
- ------------------------------------------------------------------------------------------------------------------
Policy's Effective Date The date from which policy anniversaries and policy years are determined. Your
policy's effective date is shown in your policy.
- ------------------------------------------------------------------------------------------------------------------
Policy Loan A request to borrow a portion of the net cash surrender value.
- ------------------------------------------------------------------------------------------------------------------
Policy Month The first policy month starts on the policy's effective date. Subsequent policy
months start on each monthly processing date.
- ------------------------------------------------------------------------------------------------------------------
Policy Value The sum of the variable account value and the fixed account value.
- ------------------------------------------------------------------------------------------------------------------
Target Face Amount The sum of the base face amount and the initial adjustable term insurance rider
amount. The amount of the rider will vary as necessary to keep the sum of the
rider amount and the base death benefit equal to the target face amount, when
the base death benefit varies due to Internal Revenue Code requirements.
- ------------------------------------------------------------------------------------------------------------------
Target Premium The premium amount we use to calculate the maximum sales load charge and the
sales surrender charge. A target premium is determined for the initial base
face amount at issue, and an additional target premium is determined for each
increase in base face amount
- ------------------------------------------------------------------------------------------------------------------
Variable Account The sum of the values of the variable subaccounts under your policy.
Value
- ------------------------------------------------------------------------------------------------------------------
We, Us, or United United Investors Life Insurance Company.
Investors
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
Withdrawal A request to withdraw a portion of the net cash surrender value. A withdrawal
may be subject to a transaction charge and a surrender charge.
- ------------------------------------------------------------------------------------------------------------------
You and Your The policy owner.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
Part II
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Article XII of United Investors' By-Laws provides as follows:
Each Director or officer, or former Director or officer, of this
Corporation, and his legal representatives, shall be indemnified by the
Corporation against liabilities, expenses, counsel fees and costs,
reasonably incurred by him or his estate in connection with, or arising out
of, any action, suit, proceeding or claim in which he is made a party by
reason of his being, or having been, such Director or officer; and any
person who, at the request of this Corporation, serves as Director or
officer of another corporation in which this Corporation owns corporate
stock, and his legal representatives, shall in like manner be indemnified
by this Corporation; provided that, in either case shall the Corporation
indemnify such Director or officer with respect to any matters as to which
he shall be finally adjudged in any such action, suit or proceeding to have
been liable for misconduct in the performance of his duties as such
Director or officer. The indemnification herein provided for shall apply
also in respect of any amount paid in compromise of any such action, suit,
proceeding or claim asserted against such Director or officer (including
expenses, counsel fees, and costs reasonably incurred in connection
therewith), provided that the Board of Directors shall have first approved
such proposed compromise settlement and determined that the officer or
Director involved is not guilty of misconduct, but in taking such action
any Director involved shall not be qualified to vote thereof, and if for
this reason a quorum of the Board cannot be obtained to vote on such
matters, it shall be determined by a committee of three (3) persons
appointed by the shareholders at a duly called
<PAGE>
special meeting or at a regular meeting. In determining whether or not a
Director or officer is guilty of misconduct in relation to any such matter,
the Board of Directors or committee appointed by the shareholders, as the
case shall be, may rely conclusively upon an opinion of independent legal
counsel selected by such Board or committee. The rights to indemnification
herein provided shall not be exclusive of any other rights to which such
Director or officer may be lawfully entitled.
REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A)
United Investors Life Insurance Company hereby represents that the
fees and charges deducted under the Policy, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by United Investors Life Insurance Company.
2
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of ___ pages.
Undertaking to file reports.
Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written consents of the following persons:________________________________.
The following exhibits, corresponding to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
1. A.
(1) Resolution of the Board of Directors of United Investors Life
Insurance Company establishing Titanium Universal Life Variable
Account*
(2) Not Applicable
(3) (a) Form of Underwriting Agreement**
(b) Form of Distribution Agreement**
(c) Schedule of Sales Commissions**
(4) Not applicable
(5) (a) Specimen Flexible Premium Variable Life Insurance Policy,
Form TL99 *
(b) Accelerated Death Benefit Rider, Form _____**
(c) Disability Waiver of Monthly Deduction Rider, Form _____**
(d) Additional Insured Term Insurance Rider, Form _____**
(e) Children's Term Insurance Rider, Form _____**
(f) Accidental Death Benefit Rider, Form _____**
(6) (a) Articles of Incorporation of United Investors Life
Insurance Company \1\
(b) By-laws of United Investors Life Insurance Company \1\
(7) Not applicable
(8) Form of Participation Agreement**
(9) Not applicable
(10) Application form*
(11) Description of issuance, transfer and redemption procedures**
B. Not applicable
C. Not applicable
2. Opinion and consent of John H. Livingston, Esquire as to the legality
of the securities being registered**
3
<PAGE>
3. Not applicable
4. Not applicable
5. Not applicable
6. Opinion and consent of W. Thomas Aycock as to actuarial matters
pertaining to the securities being registered**
7. (a) Consent of independent accountants**
(b) Consent of Sutherland Asbill & Brennan LLP**
8. Powers of Attorney**
- ------------------
* Filed herewith
** To be filed by amendment
\1\ Incorporated herein by reference to the Exhibit filed electronically with
Post-Effective Amendment No. 12 to the registration statement on Form S-6
(File No. 33-11465), filed on behalf of United Investors Life Variable
Account on April 29, 1998 (previously filed on January 22, 1987 as an
Exhibit to the Form S-6 registration statement, File No. 33- 11465).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Titanium Universal Life Variable Account, has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City of
Birmingham and the State of Alabama, on the 26th day of October, 1999.
TITANIUM UNIVERSAL LIFE VARIABLE ACCOUNT
(SEAL) (Registrant)
By: UNITED INVESTORS LIFE INSURANCE COMPANY
(Depositor)
Attest: /s/ John H. Livingston By: /s/ Anthony L. McWhorter
---------------------------- ----------------------------
John H. Livingston Anthony L. McWhorter
Secretary and Counsel President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, United
Investors Life Insurance Company has duly caused this registration statement to
be signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Birmingham and the
State of Alabama, on the 26th day of October, 1999.
(SEAL) UNITED INVESTORS LIFE INSURANCE COMPANY
Attest: /s/ John H. Livingston By: /s/ Anthony L. McWhorter
---------------------------- ----------------------------
John H. Livingston Anthony L. McWhorter
Secretary and Counsel President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on the date(s) set forth below.
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
- ------------------------ Director ______ ___, 1999
C.B. Hudson
/s/ Anthony L. McWhorter
- ------------------------ Chairman of the Board of Directors, October 26, 1999
Anthony L. McWhorter President and Chief Executive Officer
/s/ W. Thomas Aycock
- ------------------------ Director, Vice President and October 26, 1999
W. Thomas Aycock Chief Actuary
/s/ Tony G. Brill Director and Executive Vice October 26, 1999
- ------------------------ President--Marketing
Tony G. Brill
- ------------------------ Senior Vice President--Marketing ______ ___, 1999
Mark S. McAndrew
- ------------------------ Director ______ ___, 1999
Larry M. Hutchison
/s/ Michael J. Klyce
- ------------------------ Vice President and Treasurer October 26, 1999
Michael J. Klyce
/s/ John H. Livingston
- ------------------------ Director, Secretary and Counsel October 26, 1999
John H. Livingston
/s/ James L. Mayton, Jr.
- ------------------------ Vice President and Controller October 26, 1999
James L. Mayton, Jr.
/s/ Carol A. McCoy
- ------------------------ Director and Assistant Secretary October 26, 1999
Carol A. McCoy
/s/ Ross W. Stagner
- ------------------------ Director and Vice President October 26, 1999
Ross W. Stagner
/s Terry W. Davis
- ------------------------ Director and Vice President-- October 26, 1999
Terry W. Davis Administration
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No. Name of Exhibit
- ----------- ---------------
1.A.(1) Resolution of the Board of Directors of United Investors Life
Insurance Company establishing Titanium Universal Life Variable
Account
1.A.(5)(a) Specimen Flexible Premium Variable Life Insurance Policy, Form
TL99
1.A.(10) Application form
<PAGE>
Exhibit 1.A.(1)
BE IT RESOLVED by the Board of Directors of United Investors Life
Insurance Company (the "Company") that the Company, pursuant to the
provisions of Section 376.309 of the Missouri Insurance Statutes, hereby
establishes a separate account designated, "Titanium Universal Life
Variable Account" (hereinafter "Variable Account") for the following use
and purposes, and subject to such conditions as hereinafter set forth:
FURTHER RESOLVED, that Variable Account shall be established for the
purpose of providing for the issuance by the Company of such variable life
insurance or such other contracts ("Contracts") as the Board of Directors
may designate for such purpose and shall constitute a separate account into
which are allocated amounts paid to or held by the Company under such
Contracts; and
FURTHER RESOLVED, that the income, gains and losses, whether or not
realized, from assets allocated to Variable Account shall, in accordance
with the Contracts, be credited to or charged against such account without
regard to other income, gains, or losses of the Company; and
FURTHER RESOLVED, that the fundamental investment policy of Variable
Account shall be to invest or reinvest the assets of Variable Account in
securities issued by investment companies registered under the Investment
Company Act of 1940 as may be specified in the respective Contracts; and
FURTHER RESOLVED, that twenty-nine (29) investment divisions be, and
hereby are established within Variable Account, to which net payments under
the Contracts will be allocated in accordance with instructions received
from contract-holders, and that the Board of Directors be, and hereby is,
authorized to increase or decrease the number of investment divisions in
Variable Account as it deems necessary or appropriate; and
FURTHER RESOLVED, that each such investment division shall invest only
in the shares of a single mutual fund or a single mutual fund portfolio of
an investment company organized as a series fund pursuant to the Investment
Company Act of 1940; and
FURTHER RESOLVED, that each investment division may
<PAGE>
Page 2
be comprised of two subdivisions, one to hold the amounts contributed under
Contracts issued to retirement plans qualifying for favorable tax treatment
under the provisions of the Internal Revenue Code, as amended, and the
other to hold amounts contributed under Contracts not issued to such
qualified plans; and
FURTHER RESOLVED, that the President and the Treasurer be, and they
hereby are, authorized to deposit such amount in Variable Account or in
each investment division thereof as may be necessary or appropriate to
facilitate the commencement of the Account's operation; and
FURTHER RESOLVED, that the President and the Treasurer be, and they
hereby are, authorized to transfer funds from time to time between United
Investors' general account and Variable Account as deemed necessary or
appropriate and consistent with the terms of the Contracts; and
FURTHER RESOLVED, that the appropriate officers of the Company, with
such assistance from the Company's auditors, legal counsel and independent
consultants or others as they may require, be, and they hereby are,
authorized and directed to take all action necessary to: (a) Register
Variable Account as a unit investment trust under the Investment Company
Act of 1940, as amended; (b) Register the Contracts in such amounts, which
may be an indefinite amount, as the Officers of the Company shall from time
to time deem appropriate under the Securities Act of 1933; and (c) Take all
other actions which are necessary in connection with the offering of said
Contracts for sale and the operation of Variable Account in order to comply
with the Investment Company Act of 1940, the Securities Exchange Act of
1934, the Securities Act of 1933, and other applicable federal laws,
including the filing of any amendments to registration statement, any
undertakings, and any applications for exemptions from the Investment
Company Act of 1940 or other applicable federal laws as the Officers of the
Company shall deem necessary or appropriate; and
FURTHER RESOLVED, that the President, the Treasurer and the Vice
President and Chief Actuary, and each of them with full power to act
without the others, hereby are severally authorized and empowered to
prepare, execute and cause to be filed with the Securities and
<PAGE>
Page 3
Exchange Commission on behalf of Variable Account, and by the Company as
sponsor and depositor a Form of Notification of Registration Statement
under the Securities Act of 1933 registering the Contracts, and any and all
amendments to the foregoing on behalf of Variable Account and the Company
and on behalf of and as attorneys for the principal executive officer
and/or the principal financial officer and/or the principal accounting
officer and/or any other officer of the Company; and
FURTHER RESOLVED, that John H. Livingston and Frederick R. Bellamy are
hereby jointly and severally appointed as agents for service under any such
registration statement duly authorized to receive communications and
notices from the Securities and Exchange Commission with respect thereto;
and
FURTHER RESOLVED, that the appropriate Officers of the Company be, and
they hereby are, authorized on behalf of Variable Account and on behalf of
the Company to take any and all action that they may deem necessary or
advisable in order to sell the Contracts, including any registrations,
filings and qualifications of the Company, its officers, agents and
employees, and the Contracts under the insurance and securities laws of any
of the states of the United States of America or other jurisdictions, and
in connection therewith to prepare, execute, deliver and file all such
applications, reports, covenants, resolutions, applications for exemptions,
consents to service of process and other papers and instruments as may be
required under such laws, and to take any and all further action which said
officers or counsel of the Company may deem necessary or desirable
(including entering into whatever agreements and contracts as may be
necessary) in order to maintain such registrations or qualifications for as
long as said officers or counsel deem it to be in the best interests of
Variable Account and the Company; and
FURTHER RESOLVED, that the President and the Vice President and Chief
Actuary of the Company be, and they hereby are authorized in the names and
on behalf of Variable Account and the Company to execute and file
irrevocable written consents on the part of Variable Account and of the
Company to be used in such states wherein such consents to service of
process may be requisite under the insurance or securities laws therein in
connection with said registration or qualification of Contracts and to
appoint the appropriate state official,
<PAGE>
Page 4
or such other person as may be allowed by said insurance or securities
laws, agent of Variable Account and of the Company for the purpose of
receiving and accepting process; and
FURTHER RESOLVED, that the President of the Company be, and hereby is,
authorized to establish procedures under which the Company will institute
procedures for providing voting rights for owners of such Contracts with
respect to securities owned by Variable Account; and
FURTHER RESOLVED, that the President of the Company is hereby
authorized to execute such agreement or agreements as deemed necessary and
appropriate (i) with any qualified entity under which such entity will be
appointed principal underwriter and distributor for the Contracts and (ii)
with one or more qualified banks or other qualified entities to provide
administrative and/or custodial services in connection with the
establishment and maintenance of Variable Account and the design, issuance,
and administration of the Contracts.
FURTHER RESOLVED, that, since it is expected that Variable Account
will invest in the securities issued by one or more investment companies,
the appropriate officers of the Company are hereby authorized to execute
whatever agreement or agreements as may be necessary or appropriate to
enable such investments to be made.
FURTHER RESOLVED, that the appropriate officers of the Company, and
each of them, are hereby authorized to execute and deliver all such
documents and papers and to do or cause to be done all such acts and things
as they may deem necessary or desirable to carry out the foregoing
resolutions and the intent and purposes thereof.
DATED as of this 15/th/ day of September, 1999.
<PAGE>
Exhibit 1.A.(5)(a)
UNITED INVESTORS LIFE INSURANCE COMPANY
A Missouri Stock Company
________________________________________________________________________________
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Adjustable Death Benefit
Death Benefit payable at Insured's death prior to the Maturity Date.
Premium payments are flexible, subject to the limits described herein.
Policy Value, less Loan Balance, payable on the Maturity Date.
This Policy is Nonparticipating. Dividends are not payable.
________________________________________________________________________________
WE WILL PAY the proceeds of this Policy to:
1. you if the Insured is living on the Maturity Date; or
2. the Beneficiary when we receive due proof satisfactory to us that the Insured
died while this Policy was in force; and
WE WILL PROVIDE the other rights and benefits of this Policy.
Payment of any benefits and all other rights are subject to the terms of this
Policy. This Policy is issued in consideration of the application and payment of
the Initial Premium.
"FREE LOOK" PERIOD - You may cancel this Policy by returning it by the later of:
(a) the 20th day after you receive it; or (b) the 45th day after the application
is signed. You may return it to us or to the agent who sold it to you. When we
receive the Policy, we will cancel it and refund any premiums that were paid. It
will then be void from the beginning.
DEATH BENEFIT - THE AMOUNT AND THE DURATION OF THE DEATH BENEFIT MAY VARY AS
DESCRIBED IN SECTIONS 6 AND 7 OF THE POLICY. ADDITIONAL PREMIUM PAYMENTS MAY BE
REQUIRED TO KEEP THIS POLICY IN FORCE.
POLICY VALUE - The Policy Value of this Policy prior to maturity is equal to the
Variable Account Value plus the Fixed Account Value. THE VARIABLE ACCOUNT VALUE
OF THIS POLICY MAY INCREASE OR DECREASE DAILY DEPENDING ON THE INVESTMENT
EXPERIENCE OF THE SUBACCOUNTS SELECTED AS DESCRIBED IN SECTIONS 12 AND 13 OF THE
POLICY. THE VARIABLE ACCOUNT VALUE IS NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS.
Signed for United Investors Life Insurance Company at Birmingham, Alabama.
Secretary President
- --------------------------------------------------------------------------------
THIS POLICY IS A LEGAL CONTRACT
BETWEEN YOU AND UNITED INVESTORS LIFE INSURANCE COMPANY
READ YOUR POLICY CAREFULLY
INSURED: JOHN DOE POLICY NUMBER: U000001
POLICY DATE: JAN 01, 2000 ISSUE AGE AND SEX: 35 MALE
MATURITY DATE: JAN 01, 2065 INITIAL BASE FACE
AMOUNT: $100,000
<PAGE>
GUIDE TO POLICY PROVISIONS
- --------------------------------------------------------------------------------
PROVISIONS SECTION
Additional Premiums............................................... 7
Age and Sex....................................................... 2
Amount of Insurance............................................... 2
Amount of Proceeds................................................ 5
Assignment........................................................ 3
Automatic Continuation of Benefits................................ 19
Beneficiary....................................................... 3
Cash Surrender Value.............................................. 15
Change of Beneficiary............................................. 3
Charges and Deductions............................................ 8
Death Benefit..................................................... 6
Definitions....................................................... 1
Delay or Suspension of Payments................................... 18
Errors in Age or Sex.............................................. 4
Fixed Account..................................................... 10
Fixed Account Value............................................... 11
Incontestability.................................................. 4
Initial Premium................................................... 2
Loans............................................................. 17
Payment of Proceeds............................................... 21
Policy Date....................................................... 2
Policy Exchange Option............................................ 20
Policy Value...................................................... 9
Premium Provisions................................................ 7
Subaccounts....................................................... 13
Suicide........................................................... 4
Transfers......................................................... 14
Variable Account Value............................................ 12
Withdrawals....................................................... 16
<PAGE>
1. DEFINITIONS
________________________________________________________________________________
Adjustable Term Insurance Rider - This rider is available to add death benefit
coverage to your Policy. The initial amount of this rider, if any, is shown
under Policy Data. The amount of the rider will vary as necessary to keep the
sum of the rider amount and the Base Death Benefit equal to the Target Face
Amount, when the Base Death Benefit varies due to Internal Revenue Code
requirements.
Age - The Insured's age on the birthday nearest the Policy Date, increased by
the number of Policy Years elapsed since the Policy Date.
Base Death Benefit - The Base Face Amount shown in the Policy Data, adjusted for
the Death Benefit Option chosen, Internal Revenue Code requirements and any
subsequent increases or decreases we approve.
Beneficiary - The person to whom the Death Benefit is paid.
Cash Surrender Value - The Policy Value less any Surrender Charges.
Death Benefit - The amount to be paid to the Beneficiary upon death of the
Insured. The Death Benefit equals the Base Death Benefit plus any additional
life insurance proceeds provided by the Adjustable Term Insurance Rider and any
other riders payable upon the death of the Insured.
Fixed Account - Part of the General Account of United Investors Life Insurance
Company to which you may allocate all or a portion of your Premiums or Policy
Values, and which provides guarantees of principal and interest.
General Account - The General Account consists of all assets of United Investors
Life Insurance Company other than those in any separate account.
Gross Withdrawal - A Withdrawal plus any applicable Withdrawal Transaction
Charge and any applicable Surrender Charge.
In Force - The Insured's life remains insured under the terms of this Policy.
Insured - The person whose life is insured by this Policy.
Loan Balance - All existing loans on this Policy plus Policy loan interest which
has been either accrued or been added to the Policy loan.
Maturity Date - The date on which proceeds, as defined herein, are payable if
the Insured is living. The Maturity Date is shown under Policy Data. This date
is the Policy Anniversary nearest the Insured's 100/th/ birthday.
Monthly Processing Date - The same day in each month as the Policy Date. If the
Monthly Processing Date falls on a date other than a Valuation Date, the Monthly
Processing Date will occur on the next Valuation Date.
Net Premium - The Premium received less the sales and tax charges shown in the
Policy Data.
Net Amount at Risk - The excess of the Death Benefit over the Policy Value on
the Monthly Processing Date before the cost of insurance is deducted.
Net Cash Surrender Value - The Cash Surrender Value minus any Loan Balance.
No-Lapse Guarantee - Our guarantee to keep the Policy in force during the first
three Policy Years, regardless of the sufficiency of the Net Cash Surrender
Value, as long as the total premiums paid, less Gross Withdrawals and any Loan
<PAGE>
Balance, is at least equal to the cumulative amount of No-Lapse Monthly Premiums
for the number of Policy Months the Policy has been in force.
No-Lapse Monthly Premium - The minimum premium shown under Policy Data, which is
required to maintain the No-Lapse Guarantee. It is calculated at issue based on
the Age, sex and risk class of the Insured, the initial Base Face Amount, and
any additional benefits provided by riders. The No-Lapse Monthly Premium will
change if the Base Face Amount or riders benefits change.
Policy Anniversary - The same day and month as the Policy Date each year the
Policy remains in force. If the Policy Anniversary falls on a date other than a
Valuation Date, the Policy Anniversary will occur on the next Valuation Date.
Policy Date - The date from which Policy Anniversaries and Policy Years are
determined. Your Policy Date is shown under Policy Data.
Policy Month - The first Policy Month starts on the Policy Date. Subsequent
Policy Months start on the Monthly Processing Date.
Policy Value -The Policy Value is equal to the Fixed Account Value plus the
Variable Account Value.
Portfolio - A division of an underlying mutual fund in which assets of a
corresponding Subaccount are invested.
Subaccounts - The Subaccounts named under Policy Data. Each is a subdivision of
the Variable Account, the assets of which are invested in a corresponding
Portfolio.
Target Premium - The premium amount we use to calculate the sales load charge
and the sales surrender charge. A Target Premium is determined for the initial
Base Face Amount on the Policy Date, and an additional Target Premium is
determined for each increase in Base Face Amount based on the Insured's Age, sex
and risk class. The Target Premium is not based on the amount you plan to pay.
It may be more or less than the No-Lapse Monthly Premium depending on any
additional benefits that have been added to the Policy.
Target Face Amount - The sum of the Base Face Amount and the initial amount of
the Adjustable Term Insurance Rider, which are shown under Policy Data. The
Target Face Amount will change when we approve a request for any change to the
Base Face Amount or the Adjustable Term Insurance Rider amount.
Valuation Date - Each day that the New York Stock Exchange is open for trading,
except for local or regional holidays declared by United Investors Life
Insurance Company.
Valuation Period - The interval of time between a Valuation Date and the next
Valuation Date. It is measured from the closing of the New York Stock Exchange.
Variable Account - A separate account maintained by us. The Variable Account
available as of the Policy Date is shown in the Policy Data.
We, our, us, United Investors and the Company - United Investors Life Insurance
Company.
Written Request - A request in writing in a form satisfactory to us signed by
you and received at our Customer Service Center.
You, your - The Owner of this Policy. The Owner may be someone other than the
Insured. The Owner is shown in the application unless the Owner has been changed
as provided in this Policy.
<PAGE>
2. POLICY DATA
________________________________________________________________________________
POLICY NUMBER: V000010001 POLICY DATE: JAN 01, 2000
INSURED: JOHN DOE ISSUE AGE AND SEX: 35 MALE
OWNER: JOHN DOE RISK CLASS: STD. NONTOBACCO
MATURITY DATE: JAN 01, 2065 RISK FACTOR: 1.00
Due to the variable nature of this Flexible Premium Variable Life Policy, it is
possible that this Policy will terminate before the Maturity Date (See
Termination and Grace Period in Section 7).
- --------------------------------------------------------------------------------
INITIAL PREMIUM: $ 100.00
NO-LAPSE MONTHLY PREMIUM: $ 50.00
TARGET PREMIUM: $ 1,200.00
PLANNED PERIODIC PREMIUM: $ 100.00 MODE: MONTHLY BANK DRAFT
- --------------------------------------------------------------------------------
INITIAL BASE FACE AMOUNT: $ 100,000
INITIAL ADJUSTABLE TERM
INSURANCE RIDER AMOUNT: $ 50,000
- ----------------------- --------------
TARGET FACE AMOUNT: $ 150,000
MINIMUM BASE FACE AMOUNT: $ 50,000
MINIMUM FACE AMOUNT CHANGE: $ 10,000
DEATH BENEFIT OPTION: A (LEVEL FACE AMOUNT)
[B (FACE AMOUNT PLUS POLICY VALUE)]
- --------------------------------------------------------------------------------
POLICY LOANS
MAXIMUM LOAN AMOUNT: 90% OF CASH SURRENDER VALUE LESS CURRENT
LOAN BALANCE
LOAN INTEREST RATE CHARGED: 4.75%
MINIMUM INTEREST RATE CREDITED
ON LOANED AMOUNTS: 4.00%
CURRENT ADDITIONAL INTEREST RATE
CREDITED ON PREFERRED LOAN AMOUNTS: 0.75%
<PAGE>
2. POLICY DATA (CONTINUED)
________________________________________________________________________________
VARIABLE ACCOUNT: TITANIUM UNIVERSAL LIFE VARIABLE ACCOUNT
________________________________________________________________________________
SUBACCOUNTS
EACH MUTUAL FUND PORTFOLIO REPRESENTS A SEPARATE SUBACCOUNT OF THE VARIABLE
ACCOUNT. ASSETS OF EACH SUBACCOUNT ARE INVESTED IN A CORRESPONDING MUTUAL FUND
PORTFOLIO.
INITIAL
PREMIUM
PORTFOLIO ALLOCATION
Aim VI Capital Appreciation 0%
Aim VI Growth 10%
Aim VI Growth and Income 0%
Aim VI International Equity 0%
Aim VI Value 0%
Alger American Growth 0%
Alger American Income and Growth 0%
Alger American Leveraged All Cap 0%
Alger American Mid-Cap Growth 0%
Alger American Small Capitalization 10%
BT Funds Trust EAFE Equity 10%
BT Funds Trust Small Cap 0%
Fidelity VIP II Balanced 0%
Fidelity VIP II Contrafund 0%
Fidelity VIP Equity Income 0%
Fidelity VIP II Fund 10%
Fidelity VIP Growth 0%
Fidelity VIP Growth and Income 0%
Fidelity VIP Growth Opportunities 0%
Fidelity VIP High Income 0%
Fidelity VIP II Index 500 0%
Fidelity VIP Money Market 10%
Fidelity VIP Overseas 0%
Invesco VIF Equity Income 0%
Invesco VIF Technology Fund 10%
Invesco VIF Utilities 0%
Strong VIF Discovery Fund II 10%
Strong VIF Mid Cap Growth 0%
Strong VIF Opportunity Fund II 0%
FIXED ACCOUNT 30%
FIXED ACCOUNT GUARANTEED INTEREST RATE: 3.50% for all Policy Years
<PAGE>
2. POLICY DATA (CONTINUED)
EXPENSE CHARGES
<TABLE>
PERCENTAGE OF PREMIUM EXPENSE CHARGES
<S> <C>
PREMIUM TAX 2.5% of each Premium
FEDERAL TAX ON DEFERRED ACQUISITION COSTS 1.5% of each Premium
GUARANTEED MAXIMUM SALES LOAD 4.0% of each Premium, until
Premiums paid equal 10 Target
Premiums
MONTHLY ADMINISTRATIVE EXPENSE CHARGES
MAXIMUM:
ISSUE EXPENSE CHARGE (1/ST/ POLICY YEAR ONLY) $20 per month for 1/st/ 12 months
MONTHLY POLICY CHARGE (ALL POLICY YEARS) $10 per month in every month
CURRENT:
ISSUE EXPENSE CHARGE (1/ST/ POLICY YEAR ONLY) $20 per month for 1/st/ 12 months
MONTHLY POLICY CHARGE(ALL POLICY YEARS) $ 6 per month in every month
CHARGE TO VARIABLE ACCOUNTS
MORTALITY AND EXPENSE RISK CHARGE (charged daily on the net assets of each
subaccount)
POLICY YEARS 1-10 .002055% daily (equivalent to .75% per year)
POLICY YEARS 11-20 .001370% daily (equivalent to .50% per year)
POLICY YEARS 21 & LATER .000685% daily (equivalent to .25% per year)
GUARANTEED MAXIMUM POLICYHOLDER TRANSACTION CHARGES
WITHDRAWALS Lesser of $25 or 2% of Withdrawal
Amount for each withdrawal after
1st in a Policy Year
TRANSFERS BETWEEN SUBACCOUNTS
AND/OR FIXED ACCOUNT $25 each after 12/th/ in a Policy Year
POLICY ILLUSTRATIONS $25 each after 1/st/ in a Policy Year
</TABLE>
<PAGE>
2. POLICY DATA (CONTINUED)
EXPENSE CHARGES (CONTINUED)
GUARANTEED MAXIMUM SURRENDER CHARGES
ADMINISTRATIVE SURRENDER CHARGE PER $1,000 OF BASE FACE AMOUNT
POLICY YEAR AMOUNT OF CHARGE
1-9 $4.00
10 $3.33
11 $2.67
12 $2.00
13 $1.33
14 $0.67
15 and later $0.00
PERCENTAGE OF PREMIUM SALES SURRENDER CHARGES
POLICY YEAR AMOUNT OF CHARGE
1-2 26% of Premium Paid up to one Target Premium, plus
6% of Premium Paid above one Target up to two Target
Premiums, plus
5% of Premium Paid above two Target Premiums
3-9 46% of Premium Paid up to one Target Premium, plus
44% of Premium Paid above one Target up to two Target
Premiums
The Sales Surrender Charge at the end of Policy Year 9 (SC9) will be
reduced to 0 by applying the following percentages in Policy Years 10 to
15:
10 SC9 x 83 1/3%
11 SC9 x 66 2/3%
12 SC9 x 50%
13 SC9 x 33 1/3%
14 SC9 x 16 2/3%
15 and later 0
Increases in the Base Face Amount will increase the Maximum Administrative and
Sales Surrender Charges during the fourteen years following the effective date
of the increase. We will produce additional data pages showing the Target
Premium for the increase. Premiums paid after the effective date of the
increase will be allocated in proportion to the Target Premium for each
portion of the Base Face Amount.
<PAGE>
2. POLICY DATA (CONTINUED)
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000
MALE FEMALE
ATTAINED PREFERRED & MALE PREFERRED & FEMALE
AGE NON-TOBACCO TOBACCO NON-TOBACCO TOBACCO
0 0.34900 0.24115
1 0.08921 0.07253
2 0.08254 0.06753
3 0.08170 0.06586
4 0.07920 0.06419
5 0.07503 0.06336
6 0.07169 0.06085
7 0.06669 0.06002
8 0.06336 0.05835
9 0.06169 0.05752
10 0.06085 0.05668
11 0.06419 0.05752
12 0.07086 0.06002
13 0.08254 0.06252
14 0.09588 0.06669
15 0.10756 0.13760 0.07003 0.07837
16 0.11924 0.15597 0.07336 0.08254
17 0.12842 0.17099 0.07670 0.08671
18 0.13343 0.18018 0.07920 0.09088
19 0.13844 0.18853 0.08170 0.09422
20 0.14011 0.19270 0.08421 0.09672
21 0.13927 0.19437 0.08504 0.09839
22 0.13677 0.19187 0.08671 0.10089
23 0.13427 0.18853 0.08754 0.10256
24 0.13093 0.18435 0.09004 0.10589
25 0.12675 0.17851 0.09088 0.10756
26 0.12342 0.17350 0.09338 0.11174
27 0.12175 0.17183 0.09505 0.11507
28 0.12008 0.17016 0.09755 0.11841
29 0.12008 0.17183 0.10006 0.12342
30 0.12008 0.17517 0.10339 0.12926
31 0.12258 0.18101 0.10589 0.13427
32 0.12509 0.18686 0.10923 0.14011
33 0.12926 0.19604 0.11257 0.14595
34 0.13427 0.20690 0.11841 0.15513
35 0.14094 0.21943 0.12258 0.16181
36 0.14762 0.23447 0.13309 0.17433
37 0.15680 0.25369 0.13927 0.19020
38 0.16682 0.27542 0.14929 0.20774
39 0.17851 0.30050 0.16098 0.22779
40 0.19103 0.32893 0.17350 0.25034
41 0.20607 0.36239 0.18853 0.27792
42 0.22110 0.39670 0.20356 0.30384
43 0.23865 0.43604 0.21860 0.33060
44 0.25619 0.47708 0.23363 0.35737
45 0.27709 0.52401 0.24951 0.38498
46 0.29966 0.57096 0.26622 0.41344
47 0.32391 0.62212 0.28461 0.44358
48 0.34984 0.67584 0.30468 0.47457
49 0.37912 0.73631 0.32558 0.50808
50 0.41009 0.80018 0.34984 0.54664
WE GUARANTEE THAT THE COST OF INSURANCE RATES WE CHARGE WILL NOT EXCEED THE
ABOVE RATES, EXCEPT THAT FOR A RATED RISK CLASS, THE RATES WILL NOT EXCEED THE
RISK FACTOR TIMES THE ABOVE RATES AND/OR A FLAT ADDITION TO THE ABOVE RATES. THE
MONTHLY COST OF INSURANCE CHARGE AND COST OF INSURANCE RATES ARE DESCRIBED IN
SECTION 8 OF THE POLICY.
<PAGE>
2. POLICY DATA (CONTINUED)
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000 (CONTINUED)
MALE FEMALE
ATTAINED PREFERRED & MALE PREFERRED & FEMALE
AGE NON-TOBACCO TOBACCO NON-TOBACCO TOBACCO
51 0.44693 0.87419 0.37578 0.58521
52 0.48965 0.95668 0.40507 0.62884
53 0.53742 1.05105 0.43939 0.68004
54 0.59276 1.15734 0.47457 0.73211
55 0.65401 1.27051 0.51227 0.78673
56 0.72203 1.39312 0.55083 0.84138
57 0.79429 1.52015 0.58941 0.89354
58 0.87251 1.65583 0.62632 0.94237
59 0.96090 1.79682 0.66577 0.99290
60 1.05949 1.95335 0.71195 1.04853
61 1.16916 2.12977 0.76656 1.12021
62 1.29417 2.32876 0.83550 1.20715
63 1.43714 2.55476 0.92216 1.32461
64 1.59899 2.80452 1.02492 1.45577
65 1.77812 3.07567 1.13624 1.60323
66 1.97123 3.35886 1.25614 1.74923
67 2.18097 3.65683 1.37789 1.90143
68 2.40660 3.96448 1.50066 2.03939
69 2.65338 4.29327 1.63207 2.19463
70 2.93268 4.65747 1.78407 2.35955
71 3.30181 5.06279 1.96612 2.57362
72 3.61779 5.52571 2.19207 2.83977
73 4.04199 6.04980 2.46823 3.16536
74 4.52073 6.62444 2.79421 3.54671
75 5.03724 7.26414 3.16450 3.97231
76 5.59039 7.92842 3.57271 4.43318
77 6.17549 8.60587 4.01324 4.91927
78 6.78686 9.28569 4.48657 5.42834
79 7.44038 9.98835 5.00641 5.97677
80 8.16249 10.74534 5.59571 6.58859
81 8.97320 11.57692 6.27546 7.28491
82 9.89814 12.50906 7.06752 8.08683
83 10.95204 13.55162 7.98847 9.00541
84 12.11846 14.66820 9.02014 10.09637
85 13.37460 15.82369 10.16441 11.19977
86 14.69860 16.98122 11.40375 12.46983
87 16.08129 18.12337 12.74961 13.71056
88 17.49682 19.38671 14.19103 15.13413
89 18.96601 20.65144 15.75519 16.50860
90 20.51212 21.93652 17.44624 18.11827
91 22.16549 23.26852 19.30510 19.86655
92 23.98724 24.70635 21.39679 21.81429
93 26.06643 26.58833 23.84043 24.07436
94 28.78427 29.07200 26.92636 26.92636
95 32.81758 32.81758 31.31011 31.31011
96 39.64294 39.64294 38.50479 38.50479
97 53.06605 53.06605 52.27571 52.27571
98 83.33333 83.33333 83.33333 83.33333
99 83.33333 83.33333 83.33333 83.33333
WE GUARANTEE THAT THE COST OF INSURANCE RATES WE CHARGE WILL NOT EXCEED THE
ABOVE RATES, EXCEPT THAT FOR A RATED RISK CLASS, THE RATES WILL NOT EXCEED THE
RISK FACTOR TIMES THE ABOVE RATES AND/OR A FLAT ADDITION TO THE ABOVE RATES. THE
MONTHLY COST OF INSURANCE CHARGE AND COST OF INSURANCE RATES ARE DESCRIBED IN
SECTION 8 OF THE POLICY.
<PAGE>
3. OWNER AND BENEFICIARY
________________________________________________________________________________
OWNER - The Owner as of the Policy Date is shown in the Policy Data. The Owner
may receive all benefits and exercise all rights granted by this Policy during
the Insured's lifetime. If there is more than one Owner at a given time, all
must exercise the rights of ownership by joint action.
BENEFICIARY - The Beneficiary of this Policy is as stated in the application,
unless subsequently changed by the Owner. Unless otherwise provided, the
interest of any Beneficiary who dies before the Insured will be paid in equal
shares to any surviving Beneficiaries. If no Beneficiary is living at the death
of the Insured, the proceeds will be paid to you, if you are living, or to your
estate.
CHANGE IN POLICY OWNER AND BENEFICIARY - Unless you provide otherwise in writing
to us, you may change the Owner or Beneficiary during the lifetime of the
Insured. Changes must be made by Written Request filed with us. The change will
take effect on the date the request was signed, but it will not apply to
payments made by us before we accept the request in writing. A change of
ownership may result in adverse tax consequences. You should consult you tax
advisor prior to making any change.
ASSIGNMENT - You may assign this Policy. However, no assignment will bind us
until it is filed in writing at our Administrative Office in a form acceptable
to us. When it is filed, your rights and the rights of any Beneficiary will be
subject to it. We will not be responsible for the validity of any assignment.
Assignment of this policy may result in adverse tax consequences. You should
consult your tax advisor prior to making any assignment.
4. GENERAL PROVISIONS
________________________________________________________________________________
THE CONTRACT - This Policy, including the application, and any Riders,
Amendments or Endorsements attached hereto, is the entire contract between you
and us. Any change must be made in writing by one of our officers.
All statements in the application are representations and not warranties. No
statement of the applicant shall be used to void this Policy or to defend
against a claim unless contained in the application.
PAYMENT OF BENEFITS - All benefits are payable at our Administrative Office. We
may require you to submit this Policy before we approve changes or pay benefits.
ERRORS IN AGE AND SEX - If the Insured's age or sex is misstated on the
application, the benefits under this Policy will be those which the last Monthly
Cost of Insurance Charge would have provided at the correct age and sex.
SUICIDE EXCLUSION - If the Insured dies by suicide, while sane or insane, within
two years from the Policy Date, our liability will be limited to the total
premiums paid less any Gross Withdrawals and any Loan Balance. If the Insured
dies by suicide, while sane or insane, within two years from the effective date
of any Face Amount increase, the proceeds under this Policy shall be reduced by
the excess, if any, of the Net Amount At Risk on the date of death over the
corresponding amount in effect just prior to the date of increase, and increased
by the total Monthly Cost of Insurance Charges deducted for this excess.
INCONTESTABILITY - This Policy will be incontestable after it has been in force
during the lifetime of the Insured for two years from the Policy Date.
A new two year contestability period shall apply to each increase in insurance
amount that requires evidence of good health beginning on the effective date of
each increase, and will apply only to statements made in the application for the
increase.
<PAGE>
4. GENERAL PROVISIONS (CONTINUED)
________________________________________________________________________________
If this Policy is reinstated, a new two year contestability period (apart from
any remaining contestability period) shall apply from the date of the
application for reinstatement and will apply only to statements made in the
application for reinstatement.
ANNUAL REPORT - We will send you a report within 30 days following your Policy
Anniversary which shows the following information: the current Policy Value; any
payments since the last report; all charges since the last report; any
Withdrawals since the last report; any Loan Balance on this Policy; the current
Cash Surrender Value; the current Net Cash Surrender Value; and the current
Death Benefit.
STATE LAWS - This Policy is governed by the law of the state in which it is
delivered. The values and benefits of this Policy are at least equal to those
required by such state.
OPTIONAL EXTENSION OF MATURITY DATE - If the Insured survives to Age 100 and you
make a Written Request to continue this Policy, we will extend the Maturity Date
if in doing so this Policy still qualifies as life insurance according to the
Internal Revenue Service and your state. In order to continue this Policy beyond
the Maturity Date, the Death Benefit at any time will be the Policy Value less
any Loan Balance. No further Monthly Deductions will be made, and no further
premium payments will be accepted.
5. AMOUNT OF PROCEEDS
________________________________________________________________________________
The proceeds payable by this Policy are:
. Upon the death of the Insured prior to the Maturity Date, the Death Benefit
less any Loan Balance and any overdue Monthly Deductions.
. On the Maturity Date, unless the Maturity Date has been extended, the Policy
Value less any Loan Balance.
. On surrender of the Policy prior to the Maturity Date, the Net Cash Surrender
Value.
The proceeds may be taken in a lump sum or applied under one of the Payment
Options listed in the Payment of Proceeds Provision.
6. DEATH BENEFIT
________________________________________________________________________________
AMOUNT OF DEATH BENEFIT - The Death Benefit equals the Base Death Benefit plus
the Adjustable Term Rider Amount and the amounts of any other riders payable
upon the death of the Insured. The amount of the Base Death Benefit depends on
the Base Face Amount, the Policy Value on the date of the Insured's death, and
the Death Benefit Option in effect at that time. The Initial Base Face Amount
and the Death Benefit Option are shown in the Policy Data. The Base Face Amount
may be increased or decreased after issue as described under Change in Face
Amount.
Option A - The amount of the Base Death Benefit under Option A is the greater
of:
a. the Base Face Amount at the beginning of the Policy Month when the death
occurs; or
b. the Policy Value on the date of death multiplied by the applicable factor
from the Table of Death Benefit Factors below.
Option B - The amount of the Base Death Benefit under Option B is the greater
of:
<PAGE>
6. DEATH BENEFIT (CONTINUED)
________________________________________________________________________________
a. the Base Face Amount at the beginning of the Policy Month when the death
occurs plus the Policy Value on the date of death; or
b. the Policy Value on the date of death multiplied by the applicable factor
from the Table of Death Benefit Factors below.
Table of Death Benefit Factors
Age Factor Age Factor Age Factor
0-40 2.50 54 1.57 68 1.17
41 2.43 55 1.50 69 1.16
42 2.36 56 1.46 70 1.15
43 2.29 57 1.42 71 1.13
44 2.22 58 1.38 72 1.11
45 2.15 59 1.34 73 1.09
46 2.09 60 1.30 74 1.07
47 2.03 61 1.28 75-90 1.05
48 1.97 62 1.26 91 1.04
49 1.91 63 1.24 92 1.03
50 1.85 64 1.22 93 1.02
51 1.78 65 1.20 94 1.01
52 1.71 66 1.19 95-100 1.00
53 1.64 67 1.18
CHANGE IN DEATH BENEFIT OPTION - The Owner may change the Death Benefit Option
after this Policy has been in force for at least one year, subject to the
following requirements:
1. the Owner must request the change in writing;
2. once the Death Benefit Option has been changed, it cannot be changed again
for one year;
3. if Death Benefit Option A is changed to Option B, the total Death Benefit
will remain the same, and the Base Face Amount will be decreased by an amount
equal to the Policy Value on the date of the change;
4. if Death Benefit Option B is changed to Option A, the total Death Benefit
will remain the same, and the Base Face Amount will be increased by an amount
equal to the Policy Value on the date of the change. The Risk Class for the
last face amount portion to go into effect that is still in force will apply
to the Base Face Amount increase.
Any change in Death Benefit Option will take effect on the Monthly Processing
Date on or following the date we approve the request for the change. We will
provide you with revised Policy Data pages reflecting the change. We do not
impose a surrender charge for any decrease in your Base Face Amount due to a
change in Death Benefit Option, and there is no change to the Target Premium.
CHANGE IN FACE AMOUNT - You may change the Base Face Amount or the Adjustable
Term Insurance Rider Amount of this Policy on any Monthly Processing Date after
the Policy has been in force at least one year, subject to the following
requirements. Once either amount has been changed, no other face amount changes
may be made for the next twelve months.
Face Amount Increase - You may increase the Base Face Amount or the Adjustable
Term Insurance Rider Amount by making a Written Request for an increase. If you
do not tell us otherwise, we will treat the request as an increase to the Base
Face Amount. To increase either amount you must:
1. submit an application for the increase;
<PAGE>
6. DEATH BENEFIT (CONTINUED)
________________________________________________________________________________
2. submit proof satisfactory to us that the Insured is an insurable risk;
3. pay any additional premium which is required.
No increases can be made after the Insured exceeds Age 75. Each increase must be
at least as large as the Minimum Face Amount Change shown in the Policy Data. An
increase will take effect on the Monthly Processing Date on or following the day
we approve the application for the increase. The Risk Class that applies for any
increase may be different from the original Risk Class.
A Target Premium will be established for an increase in Base Face Amount, and
the portion of premiums paid thereafter allocated to the increase will be
subject to a new percentage of premium sales load charge.
We will furnish a supplement to the Policy Data that shows:
1. the Risk Class and the amount of the increase;
2. the new No-Lapse Monthly Premium, if applicable; and
3. the new Surrender Charges and the new Target Premium for any increase in the
Base Face Amount.
Face Amount Decrease - The Owner must make a Written Request for any decrease in
the Base Face Amount or Adjustable Term Insurance Rider amount. The decrease
will take effect on the later of:
1. the Monthly Processing Date on or following the day we receive the Owner's
request for the decrease; or
2. the Monthly Processing Date one year after the last change in face amount
was made.
A requested decrease will be used to reduce the face amount in the following
order:
1. the amount of any Adjustable Term Insurance Rider will be reduced until it
is equal to zero;
2. any previous Base Face Amount increases which are in effect will be reduced,
starting with the latest increase and continuing in the reverse order in
which the increases were made;
3. the Initial Base Face Amount will be reduced.
Each decrease must be at least as large as the Minimum Face Amount Change shown
in the Policy Data. We will not permit a decrease that would reduce the Base
Face Amount below the Minimum Base Face Amount shown in the Policy Data.
The No-Lapse Monthly Premium will be reduced to reflect the decrease. The new
No-Lapse Monthly Premium will be shown on a supplement to the Policy Data.
We may deduct a surrender charge from the Policy Value when the Base Face Amount
is decreased. The amount of the charge is described in Section 8, Charges and
Deductions.
<PAGE>
7. PREMIUM PROVISIONS
________________________________________________________________________________
PREMIUMS - Premiums are payable in advance at our Administrative Office or to an
authorized agent. The Policy will not take effect until the following both occur
while the Insured is alive and prior to any change in health as shown in the
application: (a) the Policy has been delivered, and (b) the first premium has
been paid.
ALLOCATION OF PREMIUMS - You may choose to allocate premiums to the Subaccounts
of the VariableAccount, the Fixed Account, or a combination thereof. You may
choose any whole percentage from 0% to 100%. You may change the allocation of
future premiums at any time by sending Written Notice.
INITIAL PREMIUM - The Initial Premium is shown in the Policy Data. On the Policy
Date the initial Net Premium will be allocated among the Subaccounts and the
Fixed Account according to the premium allocation percentages you specified in
your application.
PLANNED PERIODIC PREMIUMS - Planned Periodic Premiums may be paid annually,
semi-annually, quarterly or monthly by bank draft. The Planned Periodic Premium
and the payment interval in effect on the Policy Date are shown in the Policy
Data. The Owner may change the amount and frequency of premiums. We have the
right to limit the amount of any increase. Each premium after the Initial
Premium must be at least $25.00. We may increase this minimum limit 90 days
after we send the Owner written notice of such increase.
ADDITIONAL PREMIUMS - Additional unscheduled premium payments can be made at any
time while this Policy is in force. We reserve the right to refund or limit the
number and amount of any premiums paid so this Policy will continue to be
treated as a life insurance policy for federal income tax purposes. If we limit
premiums, future premium payments may still be required at a later date. No
Planned Periodic Premiums or additional premiums will be accepted after the
original Maturity Date.
On the date we receive an Additional Premium or a Planned Periodic Premium, or
the next Valuation Date thereafter, the Net Premium will be allocated according
to the allocation percentage you specified in your application; or, if
subsequently changed, according to your instructions currently in effect.
MINIMUM PAYMENTS TO AVOID POLICY TERMINATION - You may make additional premium
payments to maintain the Policy in force to avoid Policy termination, as
described in the Grace Period Provision. Such payments may not exceed the limit
established by law to qualify your Policy as a contract of life insurance for
federal income tax purposes.
TERMINATION - This Policy will terminate on the earliest of the following dates:
1. the date you surrender the Policy;
2. the date the Policy terminates because any Loan Balance exceeds the Cash
Surrender Value;
3. the date of the Insured's death;
4. the Maturity Date, unless the Maturity Date has been extended; or
5. the end of the Grace Period.
Payment of the amount required, as described in the Grace Period Provision, will
keep the Policy in force with respect to items 2 and 5 above.
NO-LAPSE GUARANTEE - The Policy will continue in force each month as long as the
Net Cash Surrender Value on the Monthly Processing Date at the beginning of that
month is large enough to cover the Monthly Deductions made for that month. If
the Net Cash Surrender Value at the beginning of a Policy Month during the first
three Policy Years is less than the Monthly Deduction for that month, this
Policy will still continue in force if:
<PAGE>
7. PREMIUM PROVISIONS (CONTINUED)
________________________________________________________________________________
a. the total premiums paid, less Gross Withdrawals and any Loan Balance, are
greater than or equal to
b. the cumulative amount of No-Lapse Monthly Premiums for the number of Policy
Months the Policy has been in force.
If the No-Lapse Monthly Premium has changed since the Policy Date, the total
premium amount required will be based on the various No-Lapse Monthly Premiums
required and the number of months for which each applied.
GRACE PERIOD - If: (1) the Loan Balance exceeds the Cash Surrender Value; or (2)
the Net Cash Surrender Value is less than the Monthly Deduction on a Monthly
Processing Date, a Grace Period of 61 days will be allowed for the payment of
additional premium so the Monthly Deduction can be made. During the first three
Policy Years, this Policy will not enter the Grace Period even though the Net
Cash Surrender Value is insufficient if the premiums paid meet the requirement
described in the No-Lapse Guarantee provision.
At least 30 days before this Policy ends without value we will mail to your last
known address a notice of the amount of premium needed. We will send a copy of
the notice to the last known address of any assignee of record. The additional
premium will be due on the Monthly Processing Date on which the Net Cash
Surrender Value was first insufficient.
The payment required will not exceed: (a) the amount by which the Loan Balance
exceeds the Cash Surrender Value; plus (b) any accrued and unpaid Monthly
Deductions as of the date of notice; plus (c) an amount sufficient to cover the
next two Monthly Deductions.
If such payment is not made by the end of the Grace Period, the Policy will
terminate without value. If the Insured dies during the Grace Period, any Loan
Balance or overdue Monthly Deductions will be deducted from the Death Benefit to
determine the proceeds payable.
REINSTATEMENT - This Policy may be reinstated (coverage restored) any time
within five years after it has terminated at the end of a Grace Period, provided
that, to reinstate this Policy, the Owner must:
1. submit an application for reinstatement;
2. provide evidence of insurability satisfactory to us;
3. agree to the reduction of the Policy Value by any Loan Balance; and
4. pay the premium required to reinstate the Policy, as described below.
The premium required to reinstate the Policy equals the total of the following
amounts:
1. the amounts that would have been required for this Policy to continue in
force without entering a Grace Period, and for each month during the Grace
Period at the end of which the Policy terminated; and
2. the amount that will be required for this Policy to continue in force
without entering a Grace Period for next two months after the Reinstatement
Date.
The Reinstatement Date will be the Monthly Processing Date on or following the
day we approve the application for reinstatement. The reinstated Policy will be
based on your Risk Class as of the Reinstatement Date, and may be different from
the Risk Class assigned to any portion of the Policy before termination. The
Policy Value on the Reinstatement Date will be equal to the Policy Value on the
Monthly Processing Date when the Grace Period ended plus the premium paid to
reinstate the Policy minus any outstanding Loan Balance. The Policy will have no
Loan Balance on the Reinstatement Date. The Surrender Charge on the
Reinstatement Date will be counted from the original Policy Date.
<PAGE>
7. PREMIUM PROVISIONS (CONTINUED)
________________________________________________________________________________
This Policy may not be reinstated after: (1) it has been surrendered for its Net
Cash Surrender Value; or (2) the Insured's death; or (3) the Maturity Date.
8. CHARGES AND DEDUCTIONS
________________________________________________________________________________
PERCENTAGE OF PREMIUM EXPENSE CHARGES - The Premium Expense Charges for taxes
and sales loads are deducted from each premium payment as it is received to
determine the Net Premium. The Premium Expense Charge percentages are shown in
the Policy Data.
MONTHLY DEDUCTION - At the beginning of each Policy Month we make a deduction
from the Policy Value. The Monthly Deduction will be deducted from the
Subaccounts of the Variable Account and the Fixed Account in the same proportion
that their values bear to the total Policy Value, excluding amounts transferred
to the Fixed Account to secure Policy loans. The Monthly Deduction is equal to:
a. the Monthly Cost of Insurance Charge described below; plus
b. the Monthly Administrative Charges described in the Policy Data; plus
c. the cost of any additional benefits added by Riders to the Policy.
MONTHLY COST OF INSURANCE CHARGE - The Monthly Cost of Insurance for a Policy
Month is calculated as (a) multiplied by the result of (b) minus (c) where:
a. is the Cost of Insurance Rate divided by 1,000;
b. is the Death Benefit at the beginning of the Policy Month; and
c. is the Policy Value at the beginning of the Policy Month.
The Policy Value used in this calculation is the Policy Value before deduction
of the Monthly Cost of Insurance Charge (for both the Base Face Amount and the
Adjustable Term Insurance Rider) and the cost of any Disability Waiver of
Monthly Deductions Rider, but after deductions for any other Riders and charges.
If there is any Adjustable Term Insurance Rider amount or if there have been any
increases in the Base Face Amount, separate charges will be calculated for each
portion of the Death Benefit. The Policy Value will be deducted from the Initial
Base Face Amount in determining the charges. If the Policy Value exceeds the
Initial Base Face Amount, the excess will be considered part of the increases in
Base Face Amount in the order of the increases.
COST OF INSURANCE RATE - The Cost of Insurance Rate is the rate applied to the
insurance under this Policy to determine the Monthly Cost of Insurance Charge.
It is based on the Age, sex and Risk Class of the Insured, the size of the Base
Face Amount, and the duration since issue or effective date of an increase. The
Risk Class on the Policy Date will apply for the Base Face Amount and any
Adjustable Term Insurance Rider amount at issue. For any subsequent Face Amount
increase, the Cost of Insurance Rate will be based on the Risk Class applicable
to that increase.
Our current scale of Cost of Insurance Rates is subject to change based on our
expectations as to future mortality, expenses, lapses and taxes. Any change will
be on a uniform basis for all Policies issued to Insureds of the same age, sex,
policy duration, face amount band and Risk Class. No change will occur as a
result of change in the health, occupation, or avocations of the Insured. The
rates will not exceed the Maximum Cost of Insurance Rates shown in the Policy
Data which are the 1980 Commissioners Standard Ordinary Mortality Tables, Male
or Female, Smoker or Non-Smoker. The guaranteed rates for substandard Risk
Classes are based on multiples of or additions to the tables.
<PAGE>
8. CHARGES AND DEDUCTIONS (CONTINUED)
________________________________________________________________________________
MORTALITY AND EXPENSE RISK CHARGE DEDUCTION - This is a deduction from each of
the Subaccounts of the Variable Account, computed on a daily basis starting on
the Policy Date. This charge compensates us for the mortality and expense risks
assumed by us under this Policy. The daily deduction rates are shown in the
Policy Data. The mortality and expense risk charge is not deducted from the
Fixed Account.
PORTFOLIO EXPENSES - There are fees and charges deducted from the Portfolios in
determining the net asset values per Portfolio share. The prospectus provided
prior to issuance of this Policy provides detail on these expenses.
POLICYHOLDER TRANSACTION CHARGES - Certain policyholder transactions that exceed
a maximum number in a Policy Year may incur a charge. These charges will not
exceed the maximums shown under Policy Data.
SURRENDER CHARGES - We assess a surrender charge against your Policy Value upon
surrender, reduction in Base Face Amount or lapse of your Policy during the
Surrender Charge Period. The Surrender Charge Period is the first fourteen
Policy Years after issue, or the first fourteen years following an increase in
the Base Face Amount. The surrender charge consists of two charges: an
administrative surrender charge and a sales surrender charge.
If you request a decrease to the Base Face Amount during the Surrender Charge
Period, or take a Withdrawal which decreases the Base Face Amount, we will
deduct a portion of the surrender charge from your Policy Value. The amount of
the surrender charge that will be deducted from your Policy Value is described
below for each type of charge.
Decreases in the Base Face Amount as a result of a change to your Death Benefit
Option do not cause a surrender charge deduction from your Policy Value and
future surrender charges will not be reduced. Increases in the Base Face Amount
as a result of changes in Death Benefit Option do not result in an increase in
the maximum surrender charges. All other increases in Base Face Amount will
increase the maximum surrender charges.
Administrative Surrender Charge - The administrative surrender charge is shown
under Policy Data. During the Surrender Charge Period, if you request a decrease
to the Base Face Amount or take a Withdrawal which causes the Base Face Amount
to decrease, your administrative surrender charge will decrease in the same
proportion that the Base Face Amount decreases. The amount of the surrender
charge that will be deducted from your Policy Value as a result of the decrease
will equal the surrender charge in effect before the reduction minus the
surrender charge in effect after the reduction.
Sales Surrender Charge - The sales surrender charge is a percentage of actual
premiums paid up to a maximum based on Target Premiums. The sales surrender
charge percentages and the Target Premium for your Policy are shown under Policy
Data. Upon a decrease in the Base Face Amount other than due to a Death Benefit
Option change, the Target Premium for each portion of the Base Face Amount will
be reduced in the same proportion that the Base Face Amount is reduced.
If the new Target Premium for each Base Face Amount portion is greater than or
equal to the premiums which are allocated to that portion, the maximum sales
surrender charge you may pay in the future will be reduced, but a sales
surrender charge will not be deducted from your Policy Value. If the new Target
Premium for each Base Face Amount portion is less than the premiums which are
allocated to that portion, the maximum sales surrender charge you may pay in the
future will be reduced and a sales surrender charge will be deducted from your
Policy Value. The new sales surrender charge will be recalculated as if the new
Target Premium was always in effect for that portion of the Base Face Amount. A
deduction equal to the difference between the sales surrender charge as
calculated before and after the decrease will be taken from your Policy Value.
<PAGE>
9. POLICY VALUE
________________________________________________________________________________
BASIS USED FOR POLICY VALUES - The methods and factors used to calculate your
Policy Values and reserves are based on certain mortality tables and interest
rates required by state law. We use the 1980 Commissioners Standard Ordinary
Mortality Tables, Male or Female, Smoker or Non-Smoker. All values are equal to
or greater than those required by law. Where required, we have filed a statement
with the insurance officials of the state where this Policy was delivered. The
statement outlines the methods used to determine the Policy Values.
<PAGE>
10. FIXED ACCOUNT
________________________________________________________________________________
INTEREST RATES - The Guaranteed Interest Rate is shown in the Policy Data. This
interest rate is the minimum effective annual rate at which interest will be
credited to amounts allocated to the Fixed Account of your Policy.
The Company may credit interest to the Fixed Account of your Policy at a rate
greater than the Guaranteed Interest Rate. Any interest credited to the Fixed
Account of your Policy in excess of the Guaranteed Interest Rate will be
determined at the sole discretion of the Company. The rate of interest credited
may be different for unloaned values, Preferred Loan Values, and Non-Preferred
Loan Values. (See the Policy Loans Provision.) We will credit interest on
amounts in the Fixed Account as follows:
a. on amounts that remain in the Fixed Account for the entire Policy Month, from
the beginning to the end of the month;
b. on amounts allocated to the Fixed Account during the Policy Month that are
Net Premiums or loan repayments, from the date we receive them to the end of
the Policy Month;
c. on amounts transferred to the Fixed Account during the Policy Month, from the
date of the transfer to the end of the Policy Month; and
d. on amounts deducted, transferred, or surrendered from the Fixed Account
during the Policy Month, from the beginning of the Policy Month to the date
of the deduction or Surrender.
11. FIXED ACCOUNT VALUE
________________________________________________________________________________
On the Policy Date, the value of the Fixed Account is equal to the initial Net
Premium allocated to the Fixed Account minus the portion of the first month's
Monthly Deduction allocated to the Fixed Account.
On any Monthly Processing Date thereafter the Fixed Account is equal to:
a. the Fixed Account Value on the preceding Monthly Processing Date; plus
b. the sum of all Net Premiums allocated to the Fixed Account since the
previous Monthly Processing Date; plus
c. the sum of all loan repayments allocated to the Fixed Account since the
previous Monthly Processing Date; plus
d. total interest credited to the Fixed Account since the previous Monthly
Processing Date; plus
e. the amount of any transfers from the Variable Account to the Fixed Account,
including amounts transferred to secure a loan, since the previous Monthly
Processing Date; minus
f. the amount of any transfers from the Fixed Account to the Variable Account
since the previous Monthly Processing Date; minus
g. the portion of any Gross Withdrawals, policyholder transaction charges, or
surrender charges for any Face Amount decreases allocated to the Fixed
Account since the previous Monthly Processing Date; minus
h. the portion of the Monthly Deduction allocated to the Fixed Account since
the previous Monthly Processing Date.
<PAGE>
12. VARIABLE ACCOUNT VALUE
________________________________________________________________________________
The Variable Account Value is the sum of the values of the Subaccounts under
this Policy. On the Policy Date, the value of each Subaccount is equal to the
initial Net Premium allocated to the Subaccount minus the portion of the first
month's Monthly Deduction allocated to the Subaccount.
On any Valuation Date thereafter, the value of each Subaccount is equal to:
a. the value of the Subaccount on the preceding Valuation Date, multiplied by
the appropriate Net Investment Factor (described in the Subaccounts
Provision) since the previous Valuation Date; plus
b. the sum of all Net Premiums allocated to the Subaccount since the previous
Valuation Date; plus
c. the sum of all loan repayments allocated to the Subaccount since the previous
Valuation Date; plus
d. the amount of any transfers from other Subaccounts or from the Fixed Account
to the Subaccount since the previous Valuation Date; minus
e. the amount of any transfers to other Subaccounts or to the Fixed Account,
including amounts transferred to secure a loan, from the Subaccount since the
previous Valuation Date; minus
f. the portion of any Gross Withdrawals, policyholder transaction charges, or
surrender charges for any Face Amount decreases allocated to the Subaccount
since the previous Valuation Date; minus
g. the portion of the Monthly Deduction allocated to the Subaccount since the
previous Valuation Date.
13. SUBACCOUNTS
________________________________________________________________________________
THE SUBACCOUNTS - Each of the Subaccounts is part of a variable account of ours.
Those available as of the Policy Date are named under Policy Data. We have
allocated a part of our assets for this and certain other policies to the
Subaccounts. Such assets remain our property. They cannot be charged, however,
with liabilities from any other business in which we may take part.
ALLOCATIONS TO, AND INVESTMENTS OF THE SUBACCOUNTS - Premiums (excluding Grace
Period premiums) and transfers will be allocated as you specify. All other
additions to or deductions from the Subaccounts will be allocated as specified
under Charges and Deductions in Section 8 and Policy Loans in Section 17. Each
Subaccount will buy or liquidate shares or units of the Portfolio shown for that
Subaccount under the Policy Data or as later added or changed.
DETERMINING INVESTMENT RESULTS - The Policy Value will change due to the
investment results of the Subaccounts. We use an index to measure these changes
in investment results. The index is called a unit value. Each Subaccount has its
own unit value.
For each Subaccount the unit value was initially set at $10.00. Thereafter, the
unit value for a given Valuation Period is equal to the unit value for the prior
Valuation Period multiplied by the Net Investment Factor for the given Valuation
Period.
For any Subaccount, the number of units credited or deducted during a Valuation
Period is determined by dividing the dollar amount directed to or from the
Subaccount by the unit value for the Valuation Period. At the end of any
Valuation Period, the value of a Subaccount is equal to the number of units
multiplied by the unit value.
<PAGE>
13. SUBACCOUNTS (CONTINUED)
________________________________________________________________________________
NET INVESTMENT FACTOR/HOW IT IS DETERMINED - The Net Investment Factor is an
index applied to measure the investment performance of a Subaccount from one
Valuation Period to the next. The Net Investment Factor may be greater or less
than one; therefore, the value of a unit may increase or decrease.
The Net Investment Factor of a Subaccount for any Valuation Period is determined
by dividing (1) by (2) and subtracting (3) from the result, where:
1. is the result of:
a. the net asset value per share of the Portfolio shares held in the
Subaccount, determined at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions on the
Portfolio shares held in the Subaccount, if the "ex-dividend" date occurs
during the current Valuation Period; plus or minus
c. a per share charge or credit for any taxes reserved for the current
Valuation Period which we determine to have resulted from the investment
operations of the Subaccount;
2. is the result of:
a. the net asset value per share of the Portfolio shares held in the
Subaccount, determined at the end of the last prior Valuation Period; plus
or minus
b. the charge or credit for any taxes reserved for the last prior Valuation
Period; and
3. is a deduction for the current Mortality and Expense Risk Charge shown in the
Policy Data for the number of days in the Valuation Period.
CHANGES IN THE SUBACCOUNTS - Changes in the Subaccounts may occur if laws or
regulations changed, we added Subaccounts, the mutual fund became unavailable
or, in our judgment, the mutual fund was no longer suitable for investment. If
any of these situations occurred, we would have the right to add or substitute
Subaccounts other than those shown under Policy Data. We would first seek
approval of the Securities and Exchange Commission and, where required, the
insurance regulator of the state where this Policy is delivered.
OTHER CHANGES - To the extent permitted by applicable laws and regulations
(including any order of the SEC), we may make changes as follows:
1. The variable account may be operated as a management company under the
Investment Company Act of 1940, or in any other form permitted by law, if we
deem it to be in the best interest of the Policy Owners
2. The variable account may be deregistered under the Investment Company Act of
1940 in the event registration is no longer required.
3. The variable account may be combined with other separate investment accounts.
4. The provisions of this and other Policies may be modified to comply with any
other applicable federal or state laws; or to take advantage of any benefits
allowed by changes in applicable laws.
In the event of such changes, we may make appropriate endorsement on this and
other policies having an interest in the variable account and take other actions
as may be necessary to effect such a change.
<PAGE>
14. TRANSFERS
________________________________________________________________________________
TRANSFERS - By Written Request or other request acceptable to us, you may
transfer all or a part of the values held in a Subaccount to one or more
Subaccounts or to the Fixed Account up to twelve times in a Policy Year free of
charge. After twelve transfers in a Policy Year, we will deduct the charge shown
in the Policy Data from the Subaccounts and the Fixed Account in the same
proportion that their values bear to the total Policy Value.
Any transfers for Dollar Cost Averaging or Automatic Asset Rebalancing are not
counted against the twelve free transfers. Dollar Cost Averaging is a transfer
option that allows you to automatically transfer an amount periodically from
selected Subaccounts or the Fixed Account to other Subaccounts. Automatic Asset
Rebalancing allows you to set up transfers to occur at selected intervals that
will match your Policy Value allocation between Subaccounts to your allocation
percentage for new premiums. Both programs are subject to Company guidelines and
restrictions detailed in the prospectus you received prior to the issuance of
this Policy.
You may make transfers from the Fixed Account to one or more of the Subaccounts
of the Variable Account only once per Policy Year. We reserve the right to limit
the amount transferred from the Fixed Account to a Subaccount to the greater of:
(a) 25% of the prior Policy Anniversary's unloaned Fixed Account Value; or (b)
the amount of the prior Policy Year's transfer. These restrictions will not
apply to transfers for Dollar Cost Averaging or Automatic Rebalancing.
Each transfer must be for a minimum of $100. The value remaining in the
Subaccount or the Fixed Account after a transfer must not be less than $100. If
the value remaining would be less than $100, we will treat the transfer request
as a request for a transfer of the total value.
We may further suspend or modify this transfer privilege at any time with the
necessary approval of the Securities and Exchange Commission.
15. CASH SURRENDER VALUE
________________________________________________________________________________
CASH SURRENDER VALUE - The Cash Surrender Value of this Policy equals the Policy
Value minus the Surrender Charges described in Section 8, Charges and
Deductions.
When this Policy terminates, the Policy Value may be less than the Surrender
Charge. If so, the Owner will not have to pay the difference to us. If this
Policy is reinstated, the Surrender Charge will also be reinstated as described
in the Reinstatement Provision.
NET CASH SURRENDER VALUE - The Net Cash Surrender Value of this Policy is equal
to the Cash Surrender Value less any Loan Balance on this Policy. You may
surrender this Policy for its Net Cash Surrender Value at any time upon Written
Notice. Upon surrender this Policy will terminate.
16. WITHDRAWALS
________________________________________________________________________________
You may make a Withdrawal from the Net Cash Surrender Value at any time during
the Insured's lifetime and before the Policy has terminated. The Minimum
Withdrawal Amount is $500. The Withdrawal Amount may not exceed the Net Cash
Surrender Value minus $500.
We will deduct a Surrender Charge when a Withdrawal is made as described in
Section 8, Charges and Deductions. In addition, there is a transaction charge
for each Withdrawal after the first in each Policy Year as shown in the Policy
Data. The amount of the Withdrawal plus any applicable Surrender Charge and
transaction charge is called the Gross Withdrawal.
<PAGE>
The Gross Withdrawal will be made from the Subaccounts of the Variable Account
and from the unloaned value in the Fixed Account in the same proportion that
their values bear to the total unloaned Policy Value, unless you instruct us
otherwise.
The Base Face Amount will be reduced if Death Benefit Option A is in effect when
a Withdrawal is made. Such a reduction will be equal to the amount of the Gross
Withdrawal. Any Base Face Amount reduction will be used first to reduce any Base
Face Amount increases then in effect starting with the latest increase and
continuing in the reverse order in which the increases were made. If any of the
reduction is left after all Base Face Amount increases have been reduced to
zero, it will be used to reduce the Initial Base Face Amount.
We will not permit a Withdrawal that would reduce the Base Face Amount below the
Minimum Base Face Amount shown in the Policy Data. We may limit the number of
Withdrawals in a Policy Year; but this limit will not be less than one.
17. POLICY LOANS
________________________________________________________________________________
HOW LOANS MAY BE MADE - You may obtain a policy loan from us by submitting a
Written Request or other request acceptable to us. This Policy is the only
security required for the loan.
The amount of your loan and any loan interest must remain in the Fixed Account.
If there is insufficient value in the Fixed Account to equal the Loan Balance,
an amount will be transferred from the Subaccounts of the Variable Account to
the Fixed Account. We will allocate the amount transferred in the proportion
that the value of each Subaccount bears to the Variable Account Value unless you
specify one or more Subaccounts from which the loan is to be made.
Each Policy Year after the tenth Policy Anniversary, a Preferred Loan Amount is
available equal to 10% of the net Policy Value, which is the Policy Value minus
any existing Loan Balance. The Policy Value will be determined at the time of
the loan. If the Preferred Loan Amount borrowed during any Policy Year is less
than the maximum allowed, the balance may not be carried over to increase the
eligible Preferred Loan Amount of any subsequent Policy Year.
The Minimum Interest Rate Credited on Loaned Amounts is shown in the Policy
Data. This rate is the minimum effective annual rate at which interest will be
credited to loaned amounts. We may also credit additional interest on the
Preferred Loan Amount. The Additional Interest Rate we are currently crediting
on Preferred Loan Amounts is shown in the Policy Data. We will send you a new
Policy Data Page whenever this Additional Interest Rate changes.
LOAN INTEREST CHARGED - The Loan Interest Rate Charged is shown in the Policy
Data. We calculate the Policy Value as of the date of the loan.
Interest is charged daily, and payable at the end of the Policy Year. If
interest is not paid when it is due, it will be added to your Loan Balance and
charged interest at the Loan Interest Rate Charged shown in the Policy Data.
AMOUNT OF LOAN AVAILABLE - You may borrow up to the Maximum Loan Amount shown in
the Policy Data. Outstanding loans, including accrued interest, reduce the
amount available for new loans. The minimum amount you may borrow is $100.
LIMIT ON POLICY LOANS - This Policy will terminate without value, as described
in the Grace Period Provision, if the total Loan Balance is greater than the
Cash Surrender Value.
REPAYMENT - All or part of a loan may be repaid at any time while the Insured is
alive and this Policy is in force. Repayment must be in amount of at least $200
or the outstanding Loan Balance if less. Repayments will be allocated to the
Fixed Account and the Subaccounts of the Variable Account based on the premium
allocation instructions then in effect, unless you specify otherwise.
<PAGE>
18. DELAY OR SUSPENSION OF PAYMENTS
________________________________________________________________________________
We will normally pay any Withdrawal, Policy Loan amount, or the Net Cash
Surrender Value within 7 days after we receive your Written Request in our
Administrative Office. The Company may defer payment of any amounts from the
Fixed Account, except for a loan used to pay a premium to us, for up to six
months from the date of receipt of your Written Request to surrender. If the
Company defers payment for more than 30 days, the Company will pay interest on
the amount deferred. Interest will be paid at a rate not less than the
Guaranteed Interest Rate shown in the Policy Data. We may also defer payment of
any amounts derived from premiums paid by check until such time as the check has
cleared.
We have the right, to suspend or delay the payment of any amounts from any
Subaccount of the Variable Account for any period:
1. When the New York Stock Exchange is closed.
2. When trading on the New York Stock Exchange is restricted.
3. When an emergency exists, and as a result:
a. disposal of securities held in the Subaccounts is not reasonably
practicable; or
b. it is not reasonably practicable to fairly determine the value of the
Subaccounts; or
4. During any other period when the Securities and Exchange Commission by order,
so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in the above items 2 and 3 exist.
19. AUTOMATIC CONTINUATION OF BENEFITS
________________________________________________________________________________
If premium payments cease, insurance under this Policy and any benefits provided
by a Rider attached to this Policy will continue as provided in the Grace Period
Provision in Section 7. This Policy will not continue beyond the Maturity Date,
unless the Maturity Date has been extended. Any Riders attached to this Policy
will not continue beyond the termination date described in the Rider.
20. POLICY EXCHANGE OPTION
________________________________________________________________________________
For two years after the Policy is issued, you can exchange it for one that
provides benefits that do not vary with the investment return of the Subaccounts
of the Variable Account. Since the Policy itself offers a fixed return option,
all you need to do is transfer all of the Policy Value in the Subaccounts of the
Variable Account to the Fixed Account. Any restrictions on transfers to the
Fixed Account will be waived. We will automatically credit all future premium
payments to the Fixed Account. There will be no effect on the Policy's Death
Benefit, Face Amount, Net Amount at Risk, Risk Class, or Issue Age. Only the
method of funding the Policy Value will be affected.
<PAGE>
21. PAYMENT OF PROCEEDS
________________________________________________________________________________
PAYMENT - Any amount payable at the death of the Insured will be paid in one
sum, unless you provide otherwise. All or part of this sum may be applied under
any Payment Option, subject to the following conditions:
1. No option may be selected unless the proceeds are payable to a natural person
in that person's own right.
2. Payment may not be less than $25.00 each or less than $120.00 in a year.
3. If you have not elected an option when a Beneficiary becomes entitled to
proceeds, the Beneficiary may elect the option.
4. The election must be filed with us in writing.
5. We may require exchange of this Policy for a contract covering the election.
CLAIMS OF CREDITORS - So far as permitted by law, the proceeds will not be
subject to any claims of the Beneficiary's creditors.
PAYMENT OPTIONS -
Option 1 - Fixed Amount - Payment of a fixed amount, but not less than 7% of the
proceeds each year, until the proceeds are fully paid.
Option 2 - Fixed Period - Payment for a fixed period, not exceeding 30 years.
The payment amount for each $1,000 of Proceeds applied under Option 2 will be
based on our Payment Rates in effect on the settlement date. These rates are
guaranteed not to be less than the Guaranteed Minimum Monthly Payment For Each
$1,000 Proceeds Applied Under Option 2 shown in the tables on page 19.
Option 3 - Life Income - Payment for a fixed period and life thereafter. No
payment will become due after death, except payment for any remaining fixed
period. The payment amount for each $1,000 of Proceeds applied under Option 3
will be based on our Payment Rates in effect on the settlement date. These rates
are guaranteed not to be less than the Guaranteed Minimum Monthly Life Income
Payment For Each $1,000 Proceeds Applied Under Option 3 shown in the tables on
page 19. These payments are based on the Annuity 2000 Mortality Table with
interest at 3%.
Option 4 - Proceeds Left at Interest - Payment of interest on proceeds left with
us for any period agreed upon. The interest may be paid at selected intervals or
allowed to accumulate.
Other Payment Options - The proceeds may be paid in any other manner to which we
agree in writing.
More Favorable Payment Options - When proceeds become payable, we may be
offering payment contracts with higher guaranteed minimum payments. If so, these
more favorable contracts will be available subject to any conditions in effect
at that time.
INTEREST RATE - The interest rate on funds held under all options will be at
least 3% compounded annually.
WITHDRAWAL AND CHANGES - Except as to Option 3, if the payee selected the
option, this payee with our consent may modify the terms of the option or select
another option at any time.
DEATH OF PAYEE - If the payee dies, the value of any remaining guaranteed
payments will be paid to the payee's estate, unless otherwise provided in the
election of the option. The value will be based on the guaranteed interest rate
for the Payment Option Selected.
<PAGE>
GUARANTEED MINIMUM MONTHLY PAYMENT
FOR EACH $1,000 PROCEEDS APPLIED UNDER OPTION 2
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Years Payment Years Payment Years Payment Years Payment Years Payment Years Payment
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.47 6 15.14 11 8.86 16 6.53 21 5.32 26 4.59
2 42.86 7 13.16 12 8.24 17 6.23 22 5.15 27 4.47
3 28.99 8 11.68 13 7.71 18 5.96 23 4.99 28 4.37
4 22.06 9 10.53 14 7.26 19 5.73 24 4.84 29 4.27
5 17.91 10 9.61 15 6.87 20 5.51 25 4.71 30 4.18
- -------------------------------------------------------------------------------------------------
</TABLE>
To obtain the minimum payments for other intervals, multiply the monthly payment
by 11.839 for annual, by 5.963 for semi-annual or by 2.993 for quarterly
payments
GUARANTEED MINIMUM MONTHLY LIFE INCOME PAYMENT
FOR EACH $1,000 PROCEEDS APPLIED UNDER OPTION 3
<TABLE>
<CAPTION>
GUARANTEED PERIOD GUARANTEED PERIOD
----------------- ------------------
MALE 10 15 20 FEMALE 10 15 20
AGE YEARS YEARS YEARS AGE YEARS YEARS YEARS
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
20 2.98 2.98 2.98 20 2.91 2.91 2.91
25 3.08 3.08 3.07 25 2.99 2.99 2.99
30 3.20 3.19 3.19 30 3.09 3.09 3.09
35 3.34 3.34 3.33 35 3.22 3.21 3.21
40 3.53 3.52 3.50 40 3.37 3.36 3.35
45 3.76 3.74 3.70 45 3.57 3.55 3.54
50 4.05 4.01 3.95 50 3.81 3.79 3.76
55 4.41 4.34 4.24 55 4.13 4.09 4.03
60 4.88 4.75 4.56 60 4.54 4.46 4.35
61 4.99 4.84 4.62 61 4.63 4.55 4.42
62 5.10 4.93 4.69 62 4.73 4.64 4.49
63 5.23 5.03 4.75 63 4.84 4.73 4.57
64 5.35 5.13 4.82 64 4.95 4.83 4.64
65 5.48 5.22 4.88 65 5.07 4.93 4.71
66 5.62 5.33 4.94 66 5.20 5.03 4.78
67 5.77 5.43 5.00 67 5.33 5.14 4.85
68 5.92 5.53 5.06 68 5.47 5.25 4.92
69 6.07 5.63 5.11 69 5.62 5.36 4.99
70 6.23 5.73 5.16 70 5.78 5.47 5.05
71 6.39 5.83 5.21 71 5.94 5.58 5.11
72 6.56 5.93 5.25 72 6.11 5.70 5.17
73 6.73 6.02 5.29 73 6.29 5.81 5.22
74 6.90 6.11 5.33 74 6.48 5.92 5.27
75 7.08 6.20 5.36 75 6.67 6.03 5.31
76 7.25 6.28 5.39 76 6.86 6.13 5.35
77 7.43 6.35 5.41 77 7.06 6.22 5.38
78 7.61 6.42 5.43 78 7.26 6.31 5.40
79 7.78 6.49 5.45 79 7.46 6.39 5.43
80 7.95 6.55 5.46 80 7.66 6.47 5.45
81 8.11 6.60 5.47 81 7.86 6.53 5.46
82 8.27 6.65 5.48 82 8.05 6.59 5.48
83 8.42 6.69 5.49 83 8.23 6.64 5.49
84 8.56 6.72 5.50 84 8.40 6.69 5.49
85 8.69 6.75 5.50 85 8.55 6.73 5.50
------------------------------------------------------------------------------------------
</TABLE>
Rates for other ages will be furnished upon request.
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
ADMINISTRATIVE OFFICE
2001 Third Avenue South (35233)
Post Office Box 10287
Birmingham, Alabama 35202-0287
800-340-3787
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Adjustable Death Benefit
Death Benefit payable at Insured's death prior to the Maturity Date.
Premium Payments are flexible, subject to the limits described herein.
Policy Value, less Loan Balance, payable on the Maturity Date.
This Policy is Nonparticipating. Dividends are not payable.
<PAGE>
Exhibit 1.A.(10)
UNITED INVESTORS LIFE
Administrative Office
P. O. Box 10287
Birmingham, AL 25202-0287
1 800-340-3787
Titanium Investor
Variable Universal Life
Application
Complete the following forms in all cases:
All Parts of Application
Agent's Report
Complete the following when Needed:
HIV Consent Form, if required by state
Replacement Form
1035 Exchange Form
Pre-Authorized Bank Draft Agreement
For Additional Insured, complete Additional Insured Information
Directions
Y Give the Fair Credit / MIB Notice to the Applicant prior to completion of
the application
Y Complete and sign the Agent's Report
Y Print application using black ink
Y Get all required signatures
Y Have the applicant initial any changes
Y Don't accept or send money on applications totaling $1,000,000 or more
Y Don't use pencil or white-out
Y Complete and attach a signed copy of the Illustration
U-1300
United Investors Life Insurance Company
Federal Fair Credit Reporting Act Notice
We may request a consumer report which contains information about your
character, reputation, and mode of living, except as may be related directly or
indirectly to your sexual orientation. The information is obtained through
interviews with your friends, neighbors, and associates. It is part of our
underwriting procedure. We will furnish information about the nature of the
report if you write to us and ask.
This notification must be given to the Proposed Insured before the application
is completed.
U-1300
<PAGE>
Medical Information Bureau Notice
Information about your insurability will be treated as confidential. United
Investors Life Insurance Company, or its reinsurers may, however, make a brief
report of this to the Medical Information Bureau, a non-profit membership
organization of life insurance companies, which operates an information exchange
on behalf of its members. If you apply to another Bureau member company for life
or health insurance coverage, or a claim for benefits is submitted to such a
company, the Bureau, upon request, will supply such company with the information
in its file.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. If you question the accuracy of
information in the Bureau's file, you may contact the Bureau and seek a
correction in accordance with the procedures set forth in the Federal Fair
Credit Reporting Act. The address of the Bureau's information office is Post
Office Box 105, Essex Station, Boston, Massachusetts 02112, telephone number
(617) 426-3660.
United Investors Life Insurance Company, or its reinsurers, may also release
information in its file to other life insurance companies to whom you may apply
for life or health insurance, or to whom a claim for benefits may be submitted.
This notification must be given to the Proposed Insured before the application
is completed.
U-1300
Temporary Insurance Agreement
Accidental Death - $100,000 Maximum
Payment of the Insurance is subject to all the provisions of this Agreement.
DEFINITION OF TERMS: Insured, You, Your, Yours mean the Proposed Insured(s)
named in the application; or a child proposed to be insured under a Children's
Insurance Rider. We, Our, Ours, Us mean United Investors Life Insurance Company.
Insurance means the amount of temporary accidental death insurance provided by
this agreement. Application means the application to which this agreement is
attached. Policy means the policy applied for in the application. Beneficiary
means the beneficiary named in the application.
BENEFIT: We agree to pay the insurance to the beneficiary when we receive due
proof that the death of the insured: (1) resulted directly and independently of
all other causes, from accidental bodily injuries sustained while this agreement
was in force; (2) was not caused by suicide or any intentionally self-inflicted
injury (in Missouri, while sane); and (3) was not contributed to in any way by
bodily or mental infirmity or disease of any kind.
AMOUNT OF INSURANCE: The insurance provided under this Agreement and all other
such agreements issued by us to you will be the least of: (a) The death benefit
requested in the application less any death benefits we would pay on policies
intended to be replaced by the policy; or (b) $100,000 if you are the Proposed
Insured; or (c) $5,000 if you are a Proposed Insured Child.
STARTING DATE AND CONDITIONS: The limited insurance benefit provided by this
agreement will start when the application is signed by you, provided: (1) at
least one no-lapse monthly premium is received by us with the application; and
(2) any check or draft given for the above amount is honored when first
presented to the bank.
<PAGE>
ENDING DATE: The insurance will automatically end on the earliest of: (a) the
date the policy is effective or is rejected by the applicant; (b) the date that
the policy issued other than as applied for is accepted or rejected by the
applicant; (c) the date we decline to issue a policy; or (d) 90 days after the
starting date.
RECEIPT FOR PREMIUM
Amount Paid: $__________________________________
Agent's Signature ______________________________
Date ___________________________________________
All premium checks must be made payable to United Investors Life. Do not make
checks payable to the Agent. Do not leave the payee blank.
If at least one no-lapse monthly premium is paid with the application, this
agreement must be given to the applicant.
U-1300
Application for Titanium Investor
Variable Universal Life Insurance
A. Proposed Insured(s)
1. Name of Proposed Insured (First-Middle-Last)
2. Birthdate: (Mo/Day/Yr) 3. Birthplace (State)
4. Sex: F M 5. Marital Status
6. Social Security # 7. Driver's License #/State
8. Residence Address
City State Zip Years There
9. Other Residence addresses during past 2 years (Street, City, St, Zip)
10. Occupation/Duties
11. Employer's Name & Address
1a. Name of Additional Insured (First-Middle-Last)
2a. Birthdate: (Mo/Day/Yr) 3a. Birthplace (State)
4a. Sex: F M 5a. Marital Status
6a. Social Security # 7a. Driver's License #/State
8a. Residence Address
City State Zip Years There
9a. Other Residence addresses during past 2 years (Street, City, St, Zip)
<PAGE>
10a. Occupation/Duties
11a. Employer's Name & Address
B. Beneficiaries: Full Name and Relationship
Insured: Primary Beneficiary:_______________ Relationship to Insured:
Social Security#/TaxID#____________ ________________________
Contingent Beneficiary:_______________________ Relationship to Insured:
Social Security#/TaxID#____________ ________________________
Additional Insured: Primary Beneficiary:__________________________________
Social Security#/TaxID#____________ Relationship to Additional
Insured:________________
Contingent Beneficiary:_______________________ Relationship to Additional
Social Security#/TaxID#____________ Insured:________________
C. Owner - Complete if Owner is someone other than the Insured
Name of Owner if other than Insured:_______________________________________
Relationship:_________________ Social Security#/Tax ID#.:__________________
Birthdate: (mo/day/yr)________
Address:_________________________________ City:________________
State:______ Zip:____________
Name of Contingent Owner:_______________________________________
Relationship:_________________ Social Security#/Tax ID#.:__________________
Birthdate: (mo/day/yr)________
Address:_________________________________ City:________________
State:______ Zip:___________
D. Plan Information and Additional Benefits
1. Base Face Amount:$____________
Death Benefit Option: [ ] A (Level Death Benefit) [ ] B (Face Amount
plus Policy Value)
2. Additional Benefits:
[] Accidental Death Benefit Rider $________________
[] Additional Insured Term Rider $________________(Complete
Additional Insured Section for
each additional insured.)
[] Adjustable Term Insurance Rider $________________(Maximum 9 x Base
[] Change of Person Insured Rider Face Amount)
[] Children's Insurance Rider (CIR) ______Units (Maximum 10 Units). (The
following question must be answered if CIR is requested.) Has any
child proposed for the Children's Insurance Rider had or been treated
for a disorder or disease of the heart or brain, or diabetes, cancer
or AIDS? [] Yes [] No
(If "Yes," CIR is not available.)
[] Death Benefit Guarantee Rider: (Select One)
[] Later of 10 Years or 65 [] Lifetime
[] Option to Purchase Additional Insurance Rider
[] Waiver of Monthly Deductions Rider
[] Waiver of Specified Premium Rider: $________________
[] Other: (Specify Plan/Amount)____________________________________
<PAGE>
E. Premium Payments and Notices
1. Amount Paid with this Application:$_________________
2. Planned Periodic Premium:_____________________ (Write "none," if no
future billing is
desired.)
3. Premium Payment Method and Frequency
(Check one box only)
Method Annual Semi-Annual Quarterly Monthly
------ ------ ----------- --------- -------
Direct Bill [] [] [] N/A
Bank Draft [] [] [] []
4. Send all Premium Notices and Reports to: [] Insured's Residence
[] Owner's Address [] Other Address:__________________________________
5. Premium Payment Allocation (Whole percentages only):
FIXED ACCOUNT ________%
VARIABLE ACCOUNT SUBACCOUNTS
AIM V.I. Fidelity VIP & VIP II cont'd
Capital Appreciation _______% VIP Growth Opportunities _______%
Growth _______% VIP High Income _______%
Growth and Income _______% VIP Money Market _______%
International Equity _______% VIP Overseas _______%
Value _______%
Alger American VIP II Balanced _______%
Growth _______% VIP II Contrafund _______%
Income and Growth _______% VIP II Fund _______%
Leveraged AllCap _______% VIP II Index 500 _______%
MidCap Growth _______% INVESCO VIF
Small Capitalization _______% Equity Income Fund _______%
BT Insurance Funds Technology Fund _______%
EAFE Equity Index _______% Utilities Fund _______%
Small Cap Index _______% Strong VIF
Fidelity VIP & VIP II Discovery Fund II _______%
VIP Equity Income _______% Mid Cap Growth Fund II _______%
VIP Growth _______% Opportunity Fund II _______%
VIP Growth and Income _______%
Total 100%
<PAGE>
6. [] Dollar Cost Averaging
Automatic transfer each month of a preselected dollar amount from the Money
Market Subaccount or the Fixed Account.
Select day of the month on which you would like transfers to be made: ____
(1st through 28th). If the day of the month selected does not fall on a
Valuation Date, transfers will be made on the next following Valuation
Date. Transfers will be made at the unit values determined on the date of
each transfer.
Select Account from which transfers are to be made:
----
[] Fixed Account [] Money Market Subaccount
Enter total dollar amount to be transferred: $_________ ($100 minimum)
Select Accounts to which transfers are to be made and the dollar amount ($25
--
minimum) to be transferred to each Account.
<TABLE>
<CAPTION>
FROM TO
<S> <C> <C> <C>
AIM VI Capital Appreciation Fidelity VIP Growth Opportunities $_______
AIM VI Growth $_______ Fidelity VIP High Income $_______
AIM VI Growth and Income $_______
AIM VI International Equity $_______ Fidelity VIP Overseas $_______
AIM VI Value $_______ Fidelity VIP II Balanced $_______
Alger American Growth $_______ Fidelity VIP II Contrafund $_______
Alger American Income and Growth $_______ Fidelity VIP II Fund $_______
Alger American Leveraged AllCap $_______ Fidelity VIP II Index 500 $_______
Alger American MidCap Growth $_______ INVESCO VIF Equity Income Fund $_______
Alger American Small Capitalization $_______ INVESCO VIF Technology Fund $_______
BT Funds EAFE & Equity Index $_______ INVESCO VIF Utilities Fund $_______
BT Funds Small Cap Index $_______ Strong VF Discovery Fund II $_______
Fidelity VIP Equity Income $_______ Strong VF Mid Cap Growth Fund II $_______
Fidelity VIP Growth $_______ Strong VF Opportunity Fund II $_______
Fidelity VIP Growth and Income $_______
</TABLE>
7. [] Automatic Asset Rebalancing - Automatic rebalancing of the Subaccounts
and the Fixed Account in your variable policy according to current
premium allocation instructions.
Select Rebalancing Frequency: [] Annual [] Semi-Annual [] Quarterly
Select Day of Month for Rebalancing:__________(1st - 28th)
8. [] Telephone Authorization: If selected, Owner must initial agreement
below.
I agree to hold United Investors Life harmless from all claims when
action is taken pursuant to a telephone request for transfers,
reallocations or changes in premium allocations based on the
<PAGE>
Owner's correct name and policy number.________(Owner's initials)
9. Suitability:
a. Did you receive copies of the prospectuses for the variable life
policy and the Subaccounts selected? Yes No
b. Do you understand that the Policy Value and the amount and duration of
the Death Benefit may increase or decrease based on the Subaccounts
selected and that this policy may terminate without value depending on
the investment performance of such Subaccounts? Yes No
c. Do you believe that the insurance selected is suitable for
your financial objectives? Yes No
Page 3
U-1300
F. Other Insurance/Replacement
1. Life Insurance and/or annuities in force on the lives of all persons proposed
for insurance (If none, insert `NONE.'
Check one Insured/Additional Ins./Company and Policy No./Life Amount/
ADB Amount/Year
Issued
1. $
2. $
3. $
4. $
2. Is policy applied for intended to replace or change existing insurance or
annuities in force? (If `Yes,' identify by circling number preceding
Company Name.).................................... [] Yes [] No
If `Yes,' is this a 1035 Exchange................. [] Yes [] No
3. Do you have any other application for
life insurance pending? .......................... [] Yes [] No
Insured Additional
Insured
G. Underwriting Information
1. Has any person proposed for insurance:
(a) Used tobacco in any form in the past year?
(If `Yes,' describe type and amount.) [] Yes [] No
(b) Ever used tobacco? (If "yes," give date of
last use, frequency and amount used.) [] Yes [] No
(c) Flown as a pilot, student pilot, or crew
member? (If `Yes,' complete Aviation
Questionnaire) [] Yes [] No
(d) Participated in Auto Racing, Motorcycle
Racing, Parachuting, Ballooning, Hang
Gliding, Skin or Scuba Diving?
<PAGE>
(If 'Yes,' provide complete details on
Avocation Questionnaire) [] Yes [] No
(e) Had driver's license suspended or revoked in
the past 5 years, or had more than 2 moving
violations in the past 3 years?
(If `Yes,' explain.) [] Yes [] No
(f) Been convicted of or awaiting trial for a
felony? (If 'Yes,' give details
including parole/probation status.) [] Yes [] No
(g) Been arrested, treated, or counseled for
excessive use of alcohol or for drugs?
(If `Yes,' give details.) [] Yes [] No
(h) Had any new insurance or reinstatement
refused, postponed, limited, withdrawn,
cancelled, or offered or quoted on a
substandard or rated basis? (If
'Yes,' explain.) [] Yes [] No
2. Does any person proposed for insurance:
(a) Participate in a physical fitness program?
(If 'Yes,' describe.) [] Yes [] No
(b) Drink alcoholic beverages? (If 'Yes,' report
frequency, amount, type, and
circumstances.) [] Yes [] No
(c) Intend to travel or reside outside the
United States or Canada within the next
year? (If 'Yes,' give details.) [] Yes [] No
3. Details of Any 'Yes' answers to Sections F & G.
Check One
---------
Item No. Insured Additional Ins. Details
-------- ------- --------------- -------
U-1300
H. Medical Questionnaire
1. Insured Height _______ ft. ______ in. Weight______ lbs.
1a. Additional Insured Height_______ ft. ________in. Weight_______ lbs.
Name and Address of Personal Physician____________________________________
Name and Address of Personal Physician____________________________________
__________________________________________________________________________
__________________________________________________________________________
___________________________________________________________Date and reason
last consulted____________________________________________________________
<PAGE>
Date and reason last consulted____________________________________________
__________________________________________________________________________
__________________________________________________________________________
2. In the past 10 years, have you had or been treated for:
Insured Additional Ins.
------- ---------------
a. disorder of eyes, ears, nose or
throat? [] Yes [] No [] Yes [] No
b. dizziness, fainting, convulsions,
head injury, headaches, paralysis or
stroke, tremor, muscle weakness,
depression, other mental or nervous
disorder? [] Yes [] No [] Yes [] No
c. shortness of breath, persistent
hoarseness or cough, blood spitting,
bronchitis, asthma, pleurisy,
emphysema, tuberculosis or chronic
respiratory disorder? [] Yes [] No [] Yes [] No
d. chest pain, palpitations, high blood
pressure, rheumatic fever, heart
murmur, varicose veins, phlebitis, or
other heart or blood vessel
disorder? [] Yes [] No [] Yes [] No
e. hepatitis, cirrhosis, ulcer,
intestinal bleeding, colitis,
diverticulitis, appendicitis or other
disorder of the esophagus,
stomach, intestines, rectum, liver,
gall bladder, pancreas or spleen? [] Yes [] No [] Yes [] No
f. sugar, albumin, blood or pus in
urine, sexually transmitted or
venereal disease, stone, or other
disorder of the kidney, bladder,
prostate or reproductive organs? [] Yes [] No [] Yes [] No
g. diabetes, thyroid or other
endocrine disorders? [] Yes [] No [] Yes [] No
h. arthritis, neuritis, neuralgia,
rheumatism, gout, or disorder of the
muscles or bones, including
the spine, back and joints? [] Yes [] No [] Yes [] No
i. disorder of the skin, breast, or
lymph glands, cancer, tumor or
cyst? [] Yes [] No [] Yes [] No
j. allergies, anemia, bleeding
tendency or other disorder of the
blood? [] Yes [] No [] Yes [] No
k. persistent fever, night sweats,
chills and/or diarrhea? [] Yes [] No [] Yes [] No
<PAGE>
l. or been diagnosed with AIDS by a
member of the medical profession, or
had a positive test for the HIV
or HTLV-III (AIDS) virus? [] Yes [] No [] Yes [] No
3. Other than listed above, have you within
the past 5 years:
a. had or been treated for any mental or
physical disorder, illness or
injury; had or been advised to have any
checkup, consultation,
hospitalization, treatment or surgery
including an EKG,
X-ray or other diagnostic test? [] Yes [] No [] Yes [] No
b. received disability benefits or workers
compensation? [] Yes [] No [] Yes [] No
4. Are you now under observation or taking
treatment or medication? [] Yes [] No [] Yes [] No
5. Have you had any change in weight in the
past year? (If yes, give amount and reason) [] Yes [] No [] Yes [] No
6. In the past ten years have you used narcotics,
barbiturates, tranquilizers, hallucinogens,
heroin, morphine, cocaine,
amphetamines, LSD, marijuana or any other
habit-forming drugs or prescription drugs,
except as prescribed by a physician? [] Yes [] No [] Yes [] No
7. Have you had a father, mother, brother or
sister diagnosed before age 60 as having:
diabetes, cancer, high blood pressure, heart or
kidney disease, alcoholism, mental illness
or suicide? [] Yes [] No [] Yes [] No
8. IMPORTANT Details of `Yes' answers to questions
2 thru 7.
<TABLE>
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Item Check one Name and Address of Each Physician, Dates and Nature and Severity
No. Ins./Additional Practitioner and Health Facility Durations of Condition,
Frequency of Attacks
Specific Diagnosis And
Treatment
<S> <C> <C> <C> <C>
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</TABLE>
U-1300
Page 3
I. Additional Details and Remarks
J. Amendments and Corrections (For Home Office Use Only)
(Not to be used where prohibited by statute or Insurance Department
ruling.)
<PAGE>
Agreement
I have read this completed application, and represent that the statements and
answers given herein are true, complete, and correctly recorded to the best of
my knowledge and belief. I agree that: (1) the entire contract will consist of
this application and the policy issued in response to it; (2) no agent of the
company can make or modify contracts, waive any rights of the Company, or waive
any information requested by the Company; and (3) except as provided in the
Temporary Insurance Agreement, if issued, no insurance will take effect unless:
(a) the policy is delivered to the Owner; (b) the first modal premium is paid;
and (c) between the date of this application and the date of policy delivery,
there has been no change in the health or insurability of any person proposed
for insurance; (4) the acceptance of any policy issued on this application shall
constitute acceptance and ratification of any changes made by the Company under
"Amendments and Corrections". In those states where required, any change in age,
amount, classification, plan of insurance or benefits shall be subject to
written ratification by the applicant.
Authorization
I hereby authorize any licensed physician, medical practitioner; hospital,
clinic or other medical or medically related facility, insurance company;
reinsurer, the Medical Information Bureau or other organization, institution or
person, that has any records or knowledge of me or my health, to give to United
Investors Life Insurance Company, or its reinsurers, any such information. This
authorization is valid for twenty-six months from the date this form is signed.
A photographic copy of this authorization shall be as valid as the original. I
know that I may request to receive a copy of this authorization. I have received
the notification about the Federal Fair Credit Reporting Act and the Medical
Information Bureau.
Signed at on
--------------------------------- ----------------------------------
City State Month/Day/Year
____________________________ _____________________ X_________________________
Agent's Name (Please Print) Agent# Reg/Div # Signature of Proposed
Insured
X X
-------------------------------------------------- -------------------------
Signature of Agent Signature of Additional
Insured
X
-------------------------
Signature of Owner, if
other than Proposed
Insured
U-1300
<PAGE>
Agent's Report
1. How well do you know the Proposed Insured?
Know well Do not know well
Relative (state relationship)______________________
How long known?____________________________________
2. Did you personally see Proposed Insured? Yes No
(If No, explain in Remarks)
3. Who first suggested the purchase of this insurance?
Agent Owner/Applicant
Proposed Insured Other______________________
4. To the best of your knowledge, does the policy applied for involve the
replacement of existing insurance or annuities? Yes No
(If Yes, follow all applicable state requirements)
5. Purpose(s) which best describe the use of this Insurance:
Personal Business
Income Replacement Buy/Sell
Home Mortgage Key Person
Estate Conservation Stock Redemption
Debt Repayment Creditor
Other__________________ Other______________________
6. Financial Information of Proposed Insured
a. Annual Income $_________________
b. Est. Net Worth $_________________
c. Ever filed bankruptcy?: Yes No
Date Discharged/Explain in Remarks
7. Owner's Confidential Financial Information:
a. Age:_________________
b. Gross Family Income: $_______________________
c. TaxableIncome: $_____________________________
d. Number of Dependents:________________________
e. Occupation:__________________________________
f. Employers' Name:_____________________________
g. Employer Address:____________________________
h. Savings and Liquid Assets: $_________________
i. Other Assets (excluding home, furnishings, car): $__________________
j. Net Worth (Assets minus liabilities): $______________________
k. Are you associated with any NASD Member? Yes No
l. Investment Objectives (mark all that apply):
Retirement Savings Reserves
Children's College Income
Other Needs/Goods (specify in Special Remarks)
m. Special Remarks/Considerations:______________________________________
- --------------------------------------------------------------------------------
<PAGE>
8. If this is business insurance:
a. Are other principals being insured also? Yes No
(If No, explain reason; If Yes, give names, amounts, companies)
b. Business net worth $______________________
c. Business net income Year_______________ Amount $_______________
d. Percent of business owned by Proposed Insured __________%
9. If Proposed Insured is a Juvenile:
a. Did you see the child? Yes No
b. Does he/she live with parents? Yes No
c. Are all brothers and sisters insured
for like amounts? (If No, explain in Remarks) Yes No
d. How much insurance is in force on the life of the
person responsible for the child's support? $________________
10. Telephone Numbers Insured Additional Insured
Home:
Business:
Best Time a.m. Bus. a.m. Bus.
to Call:_______ p.m. Home p.m. Home
11. Is medical examination being completed Yes No
If Yes, appointment date________________________
Name of Para-Medical Service?___________________
12. Remarks:
I represent that: (1) I have personally seen the Proposed Insured(s); (2) I have
truly and accurately recorded on this application the information as supplied by
the Owner and the Proposed Insured(s); (3) to the best of my knowledge and
belief there is nothing adversely affecting the insurability of the Proposed
Insured(s) other than as indicated in this application; (4) the written
disclosure statement was given on or before the date the application was signed
in states where applicable; and (5) if I become aware of a change in the health
or habits of the Proposed Insured(s), occurring after the date of the
application but before I deliver the policy, I promise to inform the company of
the change and agree to withhold delivery of the policy until instructed by the
Company.
X_______________________________________________________________________________
Signature of Agent Date Phone No.
Pre-Authorized Bank Draft Agreement
As a convenience to me, I hereby request and authorize United Investors Life
Insurance Company, Birmingham, Alabama to initiate premium payments from my
checking account either by electronic funds transfer or by pre-authorized bank
draft order provided there are sufficient collected funds in said account to pay
the same upon presentation. I agree that your rights in respect to each such
transfer or draft shall be the same as if it were a check drawn on you and
signed personally by me. This authority is to remain in effect until revoked by
me in writing; and until you actually receive such notice, I agree that you
shall be fully protected in honoring any such transfer or draft.
I further agree that if any such transfer or draft is dishonored, whether with
or without cause and whether intentionally or inadvertently, you shall be under
no liability whatsoever, even though such dishonor results in the forfeiture of
insurance.
Name of Policyholder(s) Policy Number(s) Bank Draft Premium
<PAGE>
Depositor(s)
Financial Institution
Name of Depositor(s) listed on the account
Name of Financial Institution
(Please Print or Type)
Signature of Depositor (as checks are signed)
Date
Financial Institution Address
Signature of Joint Depositor (as checks are signed)
Date
City
State
Zip Code
Requested Draft Date (1st thru 28th only)
Account Number to be debited
Please attach a sample "void" check
(Deposit slip cannot be used)
Indemnification Agreement
To: The financial institution named above
In compliance with our mutual client's request, we will draw monthly drafts
which are MICR encoded with your transit number and the drawee's bank account
number. Please contact our Bank Draft Department if you have any questions.
In consideration of your compliance with the request and authorization of the
depositor named on the reverse side, United Investors Life Insurance Company
Agrees That:
1. It will indemnify and hold you harmless from any liability to any person
having an account with you arising out of the payment by you of any check
drawn by United Investors Life Insurance Company to its own order on the
account of such person, or from any liability to any such person or to any
owner or beneficiary of any policy issued by United Investors Life Insurance
Company in respect of which such a check is drawn arising out of the dishonor
by you whether with or without cause of any such check drawn by United
Investors Life Insurance Company, provided there are sufficient funds in such
account to pay the same upon presentation, whether or not such claim or
liability asserted against you be based upon the forfeiture, or alleged
forfeiture of a policy the premiums on which is sought to be collected by
United Investors Life Insurance Company by any such check.
2. It will refund to you any amount erroneously paid by you to United Investors
Life Insurance Company on any such check if claim for the amount of such
erroneous payment is made by you within twelve months from the date of the
check on which such erroneous payment was made.
