As filed with the Securities and Exchange Commission on April 18, 2000
Registration File Nos. 333-91851/811-09715
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
---------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
---------------------------------
TRANSAMERICA OCCIDENTAL LIFE SEPARATE ACCOUNT VUL-3
(Exact Name of Trust)
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(Name of Depositor)
1150 South Olive Street
Los Angeles, California 90015
(Complete Address of Depositor's Principal Executive Offices)
Thomas E. Pierpan, Esq.
Vice President
Transamerica Occidental Life Insurance Company
570 Carillon Parkway
St. Petersburg, Florida 33716
(Name and Complete Address of Agent for Service)
Copies to:
Stephen E. Roth, Esq.
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
---------------------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
Title of Securities Being Registered: Units of interest in the separate account
under flexible premium deferred variable life insurance policies.
--------------------------------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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P R O S P E C T U S
, 2000
TRANSAMERICA ELITE(SM)
issued through
Transamerica Occidental Life Separate Account VUL-3
by
Transamerica Occidental Life Insurance Company
ADMINISTRATIVE OFFICE:
570 Carillon Parkway
St. Petersburg, Florida 33716
1-800-322-7164
(727) 299-1800
PLEASE SEND ALL PREMIUM PAYMENTS, LOAN REPAYMENTS, CORRESPONDENCE
AND NOTICES TO THE ADMINISTRATIVE OFFICE ONLY.
HOME OFFICE:
1150 South Olive Street
Los Angeles, California 90015
AN INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
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CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE __ OF THIS PROSPECTUS.
If you already own a life insurance policy,
it may not be to your advantage to buy
additional insurance or to replace your
policy with the Policy described in this
prospectus.
An investment in this Policy is not a bank
deposit. The Policy is not insured or
guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED
OR DISAPPROVED THESE SECURITIES Prospectuses for the portfolios of:
OR PASSED UPON THE ADEQUACY [ ] WRL Series Fund, Inc.;
OF THIS PROSPECTUS. ANY [ ] Variable Insurance Products Fund (VIP);
REPRESENTATION TO THE CONTRARY [ ] Variable Insurance Products Fund II (VIP II);
IS A CRIMINAL OFFENSE. [ ] Variable Insurance Products Fund III (VIP III); and
[ ] Transamerica Variable Insurance Fund, Inc.
must accompany this prospectus. Certain portfolios
may not be available in all states. Please read these
documents before investing and save them for
future reference.
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TABLE OF CONTENTS
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Glossary ....................................................... 1
Policy Summary ................................................. 5
Risk Summary ................................................... 10
Portfolio Annual Expense Table ................................. 14
Transamerica and the Fixed Account ............................. 16
Transamerica ............................................... 16
The Fixed Account .......................................... 16
The Separate Account and the Portfolios ........................ 17
The Separate Account ....................................... 17
The Portfolios ............................................. 17
Addition, Deletion, or Substitution of Investments ......... 21
Your Right to Vote Portfolio Shares ........................ 22
The Policy ..................................................... 23
Purchasing a Policy ........................................ 23
Underwriting Standards ..................................... 23
When Insurance Coverage Takes Effect ....................... 24
Ownership Rights ........................................... 25
Canceling a Policy ......................................... 27
Premiums ....................................................... 28
Premium Flexibility ........................................ 28
Planned Periodic Payments .................................. 28
Minimum No Lapse Premium ................................... 28
No Lapse Period ............................................ 29
Premium Limitations ........................................ 29
Making Premium Payments .................................... 29
Allocating Premiums ........................................ 30
Policy Values .................................................. 32
Cash Value ................................................. 32
Net Surrender Value ........................................ 32
Subaccount Value ........................................... 32
Subaccount Unit Value ...................................... 33
Fixed Account Value ........................................ 34
Transfers ...................................................... 34
General .................................................... 34
Fixed Account Transfers .................................... 36
Conversion Rights .......................................... 36
Dollar Cost Averaging ...................................... 36
Asset Rebalancing Program .................................. 37
Third Party Asset Allocation Services ...................... 38
Charges and Deductions ......................................... 39
Premium Charges ............................................ 39
Monthly Deduction .......................................... 39
Mortality and Expense Risk Charge .......................... 41
Surrender Charge ........................................... 41
This Policy is not available in the State of New York.
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Pro Rata Decrease Charge ................................. 44
Transfer Charge .......................................... 44
Change in Premium Allocation Charge ...................... 45
Cash Withdrawal Charge ................................... 45
Taxes .................................................... 45
Portfolio Expenses ....................................... 45
Death Benefit ................................................ 45
Death Benefit Proceeds ................................... 45
Death Benefit ............................................ 46
Effects of Cash Withdrawals on the Death Benefit ......... 48
Choosing Death Benefit Options ........................... 48
Changing the Death Benefit Option ........................ 48
Decreasing the Specified Amount .......................... 48
No Increase in the Specified Amount ...................... 49
Payment Options .......................................... 49
Surrenders and Cash Withdrawals .............................. 49
Surrenders ............................................... 49
Cash Withdrawals ......................................... 50
Loans ........................................................ 51
General .................................................. 51
Interest Rate Charged .................................... 52
Loan Reserve Interest Rate Credited ...................... 52
Effect of Policy Loans ................................... 52
Policy Lapse and Reinstatement ............................... 53
Lapse .................................................... 53
No Lapse Period .......................................... 53
Reinstatement ............................................ 54
Federal Income Tax Considerations ............................ 54
Tax Status of the Policy ................................. 55
Tax Treatment of Policy Benefits ......................... 55
Special Rules for 403(b) Arrangements .................... 58
Other Policy Information ..................................... 58
Our Right to Contest the Policy .......................... 58
Suicide Exclusion ........................................ 59
Misstatement of Age or Gender ............................ 59
Modifying the Policy ..................................... 59
Benefits at Maturity ..................................... 59
Payments We Make ......................................... 60
Settlement Options ....................................... 60
Reports to Owners ........................................ 61
Records .................................................. 61
Policy Termination ....................................... 62
Supplemental Benefits (Riders) ............................... 62
Children's Insurance Rider ............................... 62
Accidental Death Benefit Rider ........................... 62
Other Insured Rider ...................................... 62
Disability Waiver Rider .................................. 63
Disability Waiver and Income Rider ....................... 63
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Primary Insured Rider ("PIR") and Primary Insured
Rider Plus ("PIR Plus") ................................................... 63
Living Benefit Rider (an Accelerated Death Benefit) .......................... 64
IMSA ............................................................................. 65
Performance Data ................................................................. 65
Rates of Return .............................................................. 65
Hypothetical Illustrations Based on Adjusted Historical Portfolio Performance 67
Other Performance Data in Advertising Sales Literature ....................... 77
Transamerica's Published Ratings ............................................. 78
Additional Information ........................................................... 78
Sale of the Policies ......................................................... 78
Legal Matters ................................................................ 79
Legal Proceedings ............................................................ 79
Variations in Policy Provisions .............................................. 79
Experts ...................................................................... 79
Financial Statements ......................................................... 80
Additional Information about Transamerica .................................... 80
Transamerica's Directors and Officers ........................................ 80
Additional Information about the Separate Account ............................ 83
Appendix A -- Illustrations ...................................................... 84
Appendix B -- Wealth Indices of Investments in the U.S. Capital Market ........... 88
Index to Financial Statements .................................................... 90
Transamerica Occidental Life Insurance Company ............................... 91
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GLOSSARY
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accounts The options to which you can allocate your money. The accounts include the
fixed account and the subaccounts in the separate account.
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administrative Our administrative office and mailing address is P.O. Box 5068, Clearwater,
office Florida 33758-5068. Our street address is 570 Carillon Parkway,
St. Petersburg, Florida 33716. Our phone number is 1-800-322-7164. ALL
PREMIUM PAYMENTS, LOAN REPAYMENTS, CORRESPONDENCE AND NOTICES SHOULD
BE SENT TO THIS ADDRESS.
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attained age The issue age of the insured, plus the number of completed years since the
Policy date.
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beneficiary(ies) The person or persons you select to receive the death benefit from this Policy.
You name the primary beneficiary and contingent beneficiaries.
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cash value The sum of your Policy's value in the subaccounts and the fixed account. If
there is a Policy loan outstanding, the cash value includes any amounts held
in our fixed account to secure the Policy loan.
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death benefit The amount we will pay to the beneficiary on the insured's death. We will
proceeds reduce the death benefit proceeds by the amount of any outstanding loan
amount (including any interest you owe on Policy loan(s)) plus any due and
unpaid monthly deductions.
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fixed account An option to which you may allocate premiums and cash value. We guarantee
that any amounts you allocate to the fixed account will earn interest at a
declared rate. The fixed account may not be available in all states.
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free-look period The limited period of time during which you may return the Policy and
receive a refund as described in this prospectus. The length of the free-look
period varies by state. The free-look period is listed in the Policy.
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funds Investment companies which are registered with the U.S. Securities and
Exchange Commission. The Policy allows you to invest in the portfolios of
the funds through our subaccounts. We reserve the right to add other
registered investment companies to the Policy in the future.
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home office Our home office address is 1150 South Olive Street, Los Angeles, California
90015. PLEASE DO NOT SEND ANY MONEY, CORRESPONDENCE OR NOTICES TO THIS
ADDRESS. SEND TO THE ADMINISTRATIVE OFFICE LISTED ABOVE.
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in force While coverage under the Policy is active and the insured's life remains
insured.
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initial premium The amount you must pay before insurance coverage begins under this Policy.
The initial premium is shown on the schedule page of your Policy.
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insured The person whose life is insured by this Policy.
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issue age The insured's age on his or her birthday nearest to the Policy date.
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lapse When life insurance coverage ends because you do not have enough cash
value in the Policy to pay the monthly deduction, the surrender charge and
any outstanding loan amount (including any interest you owe on Policy
loans(s)), and you have not made a sufficient payment by the end of a grace
period.
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loan amount The total amount of all outstanding Policy loans, including both principal and
interest due.
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loan reserve A part of the fixed account to which amounts are transferred as collateral for
Policy loans.
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maturity date The Policy anniversary nearest the insured's 100th birthday if the insured is
living and the Policy is still in force. It is the date when life insurance
coverage under this Policy ends. You may continue coverage, at your option,
under the Policy's extended maturity date provision.
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minimum The amount shown on your Policy schedule page that we use during the no
no lapse period to determine whether a grace period will begin. We will adjust
lapse the minimum no lapse premium if you change death benefit options, decrease
premium the specified amount, or add or increase a rider. We make this determination
whenever your net surrender value is not enough to meet monthly deductions.
When we use the term "minimum no lapse premium" in this prospectus, it
has the same meaning as "minimum monthly guarantee premium" in the
Policy.
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Monthiversary This is the day of each month when we determine Policy charges and deduct
them from cash value. It is the same date each month as the Policy date. If
there is no valuation date that coincides with the Policy date in a calendar
month, the Monthiversary is the next valuation date.
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monthly The monthly Policy charge, plus the monthly cost of insurance, plus the
deduction monthly charge for any riders added to your Policy, plus, if any, the pro rata
decrease charge incurred as a result of a decrease in your specified amount.
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net surrender The amount we will pay you if you surrender the Policy while it is in force.
value The net surrender value on the date you surrender is equal to: the cash value,
minus any surrender charge, minus any outstanding loan amount, minus any
interest you owe on Policy loan(s).
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no lapse date The last valuation date of your third Policy year. It is the date prior to which
your Policy will not lapse if certain conditions are met, even if the net
surrender value is not sufficient to pay the monthly deductions.
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planned periodic A premium payment you make in a level amount at a fixed interval over a
premium specified period of time.
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Policy date The date when our underwriting process is complete, full life insurance
coverage goes into effect and we begin to make the monthly deductions. The
Policy date is shown on the schedule page of your Policy. It is also the date
when, depending on the laws of the state governing your Policy (usually the
state where you live), we allocate your premium either to the reallocation
account or to the fixed account and the subaccounts you selected on your
application. We measure Policy months, years, and anniversaries from the
Policy date.
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portfolio One of the separate investment portfolios of a fund.
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premiums All payments you make under the Policy other than loan repayments.
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reallocation The fixed account.
account
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reallocation The date we reallocate all cash value held in the reallocation account to the
date fixed account and subaccounts you selected on your application. We place
your premium in the reallocation account only if your state requires us to
return the full premium in the event you exercise your free-look right. In
those states the reallocation date is the record date, plus the number of days
in your state's free-look period, plus five days. In all other states, the
reallocation date is the Policy date.
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record date The date we record your Policy on our books as an in force Policy.
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separate account The Transamerica Occidental Life Separate Account VUL-3. It is a separate
investment account that is divided into subaccounts. We established the
separate account to receive and invest premiums under the Policy and other
variable life insurance policies we issue.
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specified amount The minimum death benefit we will pay under the Policy provided the Policy
is in force. It is the amount shown on the Policy's schedule page, unless you
decrease the specified amount. In addition, we will reduce the specified
amount by the dollar amount of any cash withdrawal if you choose the
Option A (level) death benefit.
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subaccount A subdivision of the separate account that invests exclusively in shares of one
investment portfolio of a fund.
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surrender charge If during the first 15 Policy years you fully surrender the Policy, we will
deduct a surrender charge from the cash value.
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termination When the insured's life is no longer insured under the Policy.
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valuation date Each day the New York Stock Exchange is open for trading. Transamerica is
open for business whenever the New York Stock Exchange is open.
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valuation period The period of time over which we determine the change in the value of the
subaccounts. Each valuation period begins at the close of normal trading on
the New York Stock Exchange (currently 4:00 p.m. Eastern time on each
valuation date) and ends at the close of normal trading of the New York
Stock Exchange on the next valuation date.
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we, us, our Transamerica Occidental Life Insurance Company.
(Transamerica)
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written notice The written notice you must sign and send us to request or exercise your
rights as owner under the Policy. To be complete, it must: (1) be in a form
we accept, (2) contain the information and documentation that we determine
we need to take the action you request, and (3) be received at our
administrative office.
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you, your The person entitled to exercise all rights as owner under the Policy.
(owner or
policyowner)
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POLICY SUMMARY TRANSAMERICA ELITE(SM)
- --------------------------------------------------------------------------------
This summary provides only a brief overview of the more important features
of the Policy. More detailed information about the Policy appears later in this
prospectus. PLEASE READ THE REMAINDER OF THIS PROSPECTUS CAREFULLY.
THE POLICY IN GENERAL
The Transamerica EliteSM is an individual flexible premium variable life
insurance policy.
The Policy is designed to be long-term in nature in order to provide
significant life insurance benefits for you. However, purchasing this Policy
involves certain risks. (See Risk Summary p. .) You should consider the
Policy in conjunction with other insurance you own. THE POLICY IS NOT SUITABLE
AS A SHORT-TERM SAVINGS VEHICLE.
The minimum specified amount for this Policy when issued is $100,000 for
all issue ages.
A few of the Policy features listed below are not available in all states,
may vary depending upon when your Policy was issued and may not be suitable for
your particular situation. Certain states place restrictions on access to the
fixed account and on other Policy features. Please consult your agent and refer
to your Policy for details.
PREMIUMS
o You select a payment plan but are not required to pay premiums
according to the plan. You can vary the frequency and amount, within
limits, and can skip premium payments.
o Unplanned premiums may be made, within limits.
o Premium payments must be at least $50 if paid monthly and $600 if
paid annually.
o You increase your risk of lapse if you do not regularly pay premiums
at least as large as the current minimum no lapse premium.
o Until the no lapse date (that is, until the end of the third Policy
year), we guarantee that your Policy will not lapse, so long as you
have paid total premiums (MINUS any withdrawals, MINUS any
outstanding loans, and MINUS any pro rata decrease charge) that equal
or exceed the sum of the monthly minimum no lapse premiums in effect
each month from the Policy date up to and including the current
month. If you take a withdrawal, a loan, or if you decrease your
specified amount, you may need to pay additional premiums in order to
keep the no lapse guarantee in place.
o The minimum no lapse premium on the Policy date is shown on your
Policy schedule page. We will adjust the minimum no lapse premium
will change if you change death benefit options, decrease the
specified amount, or add or increase a rider.
o Under certain circumstances, extra premiums may be required to
prevent the Policy from lapsing.
o Once we deliver your Policy, the FREE-LOOK PERIOD begins. You may
return the Policy during this period and receive a refund. Depending
on the laws of the state governing your Policy (usually the state
where you live), we will either allocate your premium to
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the accounts you indicated on your application, or we will place your
premium in the reallocation account until the reallocation date as
shown on your Policy schedule page. See Reallocation Account p. .
DEDUCTIONS FROM PREMIUM BEFORE WE PLACE IT IN A SUBACCOUNT AND/OR THE FIXED
ACCOUNT
o From the initial premium: None
o From additional premiums: None
INVESTMENT OPTIONS
SUBACCOUNTS. You may direct the money in your Policy to a total of 12
subaccounts of the Transamerica Occidental Life Separate Account VUL-3, a
separate account. For administrative reasons, we currently limit the number of
subaccounts that you can invest in at any one time to 12 subaccounts. Each
subaccount invests exclusively in one investment portfolio of a fund. THE MONEY
YOU PLACE IN THE SUBACCOUNTS IS NOT GUARANTEED. THE VALUE OF EACH SUBACCOUNT
WILL INCREASE OR DECREASE, DEPENDING ON INVESTMENT PERFORMANCE OF THE
CORRESPONDING PORTFOLIO. YOU COULD LOSE SOME OR ALL OF YOUR MONEY.
The portfolios available to you are:
WRL SERIES FUND, INC.
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- WRL VKAM Emerging Growth - WRL Great Companies -- America(SM)
- WRL T. Rowe Price Small Cap - WRL Salomon All Cap
- WRL Goldman Sachs Small Cap - WRL C.A.S.E. Growth
- WRL Pilgrim Baxter Mid Cap Growth - WRL Dreyfus Mid Cap
- WRL Alger Aggressive Growth - WRL NWQ Value Equity
- WRL Third Avenue Value - WRL T. Rowe Price Dividend Growth
- WRL Value Line Aggressive Growth - WRL Dean Asset Allocation
- WRL GE International Equity (formerly, WRL - WRL LKCM Strategic Total Return
GE/Scottish Equitable International Equity) - WRL J.P. Morgan Real Estate Securities
- WRL Janus Global - WRL Federated Growth & Income
- WRL Great Companies -- TechnologySM - WRL AEGON Balanced
- WRL Janus Growth - WRL AEGON Bond
- WRL Goldman Sachs Growth - WRL J.P. Morgan Money Market
- WRL GE U.S. Equity
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VARIABLE INSURANCE PRODUCTS FUND (VIP)
Fidelity VIP Equity-Income Portfolio -- Service Class 2
VARIABLE INSURANCE PRODUCTS FUND II (VIP II)
Fidelity VIP II Contrafund/registered trademark/ Portfolio -- Service
Class 2
VARIABLE INSURANCE PRODUCTS FUND III (VIP III)
Fidelity VIP III Growth Opportunities Portfolio -- Service Class 2
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
Transamerica VIF Growth Portfolio
FIXED ACCOUNT. You may also direct the money in your Policy to the fixed
account. Unless otherwise required by state law, we will restrict your
allocations or transfers to the fixed account if the fixed account value
following the allocation or transfer would exceed
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$500,000. Money you place in the fixed account is guaranteed, and will earn
interest at a current interest rate declared from time to time. The annual
interest rate will equal at least 3.0%. The fixed account is NOT available to
residents of New Jersey.
CASH VALUE
o Cash value equals the sum of your Policy's value in the subaccounts
and the fixed account. If there is a loan outstanding, the cash value
includes any amounts held in our fixed account to secure the Policy
loan.
o Cash value varies from day to day, depending on the investment
experience of the subaccounts you choose, the interest credited to
the fixed account, the charges deducted and any other Policy
transactions (such as additional premium payments, transfers,
withdrawals, and Policy loans).
o Cash value is the starting point for calculating important values
under the Policy, such as net surrender value and the death benefit.
o There is no guaranteed minimum cash value. The Policy may lapse if
you do not have sufficient cash value in the Policy to pay the
monthly deductions, the surrender charge and/or any outstanding loan
amount (including interest you owe on any Policy loan(s)).
o The Policy will not lapse during the first three Policy years (that
is, during the no lapse period) so long as you have paid sufficient
minimum no lapse premiums. See Minimum No Lapse Premium p. .
TRANSFERS
o You can transfer cash value among the subaccounts and the fixed
account. We charge a $10 transfer processing fee for each transfer
after the first 12 transfers in a Policy year.
o You may make transfers in writing, by telephone or by fax.
o Policy loans reduce the amount of cash value available for transfers.
o Dollar cost averaging and asset rebalancing programs are available.
o You may make one transfer per Policy year from the fixed account, and
we must receive your request to transfer from the fixed account
within 30 days after a Policy anniversary unless you select dollar
cost averaging from the fixed account. The maximum amount you can
transfer is the greater of:
o 25% of your value in the fixed account; or
o the amount you transferred from the fixed account in the
preceding Policy year.
CHARGES AND DEDUCTIONS
o MONTHLY POLICY CHARGE: We deduct $5.00 from your cash value each
month.
o COST OF INSURANCE CHARGES: Deducted monthly from your cash value.
Your charges vary each month with the insured's attained age, the
specified amount, the death benefit option you choose, and the
investment results of the portfolios in which you invest. In most
cases, the current cost of insurance rates will be lower for Policies
with a specified amount of $250,000 or more.
o MORTALITY AND EXPENSE RISK CHARGE: Deducted daily from each
subaccount at an annual rate of 0.90% of your average daily net
assets of each subaccount. We
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guarantee to reduce this amount to 0.60% after the first 15 Policy
years. We intend to reduce this amount to 0.30% in the 16th Policy
year but we do not guarantee that we will do so.
o SURRENDER CHARGE: Deducted when a full surrender occurs during the
first 15 Policy years. One portion is an issue charge equal to $5.00
per $1,000 of initial specified amount. The other portion is
calculated by adding total premiums paid (up to the surrender charge
base premium) to any premium paid above the surrender charge base
premium multiplied by percentages that vary by issue age. THIS CHARGE
MAY BE SIGNIFICANT. We reduce the total surrender charge at the rate
of up to 20% per year, beginning in Policy year 11, until it reaches
zero at the end of the 15th Policy year. You may have no net
surrender value if you surrender your Policy in the first few Policy
years. See Charges and Deductions -- Surrender Charge p. .
o PRO RATA DECREASE CHARGE: If you decrease the specified amount during
the first 15 Policy years, we will deduct a decrease charge equal to
a pro rata portion of the surrender charge.
o TRANSFER FEE: We deduct $10 for each transfer in excess of 12 per
Policy year.
o RIDER CHARGES: We deduct charges each month for the optional
insurance benefits (riders) you select. Each rider will have its own
charge.
o CASH WITHDRAWAL FEE: We deduct a processing fee for cash withdrawals
equal to the lesser of $25 or 2% of the withdrawal.
o PORTFOLIO EXPENSES: The portfolios deduct management fees and
expenses from the amounts you have invested in the portfolios. Some
portfolios also deduct 12b-1 fees from portfolio assets. These fees
and expenses currently range from 0.44% to 1.20% annually, depending
on the portfolio. See Portfolio Annual Expense Table on
p.___. See also the fund prospectuses.
LOANS
o After the first Policy year (as long as your Policy is in force), you
may take a loan against the Policy up to 90% of the cash value, less
any surrender charge and any already outstanding loan amount.
o We may permit a loan prior to the first anniversary for Policies
issued pursuant to 1035 Exchanges.
o The minimum loan amount is generally $500.
o You may request a loan by calling us or by writing or faxing us
written instructions.
o We charge 5.5% interest annually, payable in arrears, on any
outstanding loan amount.
o To secure the loan, we transfer a portion of your cash value to a
loan reserve account. The loan reserve account is part of the fixed
account. You will earn at least 4.0% interest on amounts in the loan
reserve account.
o Prior to the 10th Policy year, we currently credit 4.75% interest
annually on all Policy loans.
o After the 10th Policy year, you may borrow at preferred loan rates an
amount equal to the cash value minus total premiums paid (reduced by
any cash withdrawals) and
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minus any outstanding loan amounts (including any interest you owe on
Policy loan(s)). We currently credit interest at a 5.5% preferred loan
rate. THIS RATE IS NOT GUARANTEED.
o Federal income taxes and a penalty tax may apply to loans you take
against the Policy.
o There are risks involved in taking a Policy loan. See Risk Summary p.
____.
DEATH BENEFIT
o You must choose one of two death benefit options. We offer the
following:
o Option A is the greater of:
o the current specified amount, or
o a specified percentage, multiplied by the Policy's cash value
on the date of the insured's death.
o Option B is the greater of:
o the current specified amount, plus the Policy's cash value on
the date of the insured's death, or
o a specified percentage, multiplied by the Policy's cash value
on the date of the insured's death.
o So long as the Policy does not lapse, the minimum death benefit we
pay under any option will be the current specified amount.
o The minimum specified amount for a Policy for all issue ages is
$100,000. We will state the minimum specified amount in your Policy.
You cannot decrease your specified amount below this minimum. If your
specified amount is $250,000 or more, then you may not decrease your
specified amount below $250,000.
o We will reduce the death benefit proceeds by the amount of any
outstanding Policy loan(s) (including any interest owed on Policy
loan(s)), and any due and unpaid charges.
o We will increase the death benefit proceeds by any additional
insurance benefits you add by rider.
o After the third Policy year, you may change the death benefit option
or decrease the specified amount (but not both) once each Policy
year. A decrease in specified amount is limited to 20% of the
specified amount prior to the decrease. The new specified amount
cannot be less than the minimum specified amount as shown in your
Policy. A change in death benefit option also cannot reduce your
specified amount below the minimum specified amount as shown in your
Policy.
o Under current tax law, death benefit should be income tax free to the
beneficiary.
o The death benefit is available in a lump sum or a variety of payout
options.
CASH WITHDRAWALS AND SURRENDERS
o You may take one withdrawal of cash value per Policy year after the
first Policy year.
o The amount of the withdrawal must be:
o At least $500; and
9
<PAGE>
o No more than 10% of the net surrender value. We currently
intend to limit the amount you can withdraw to 25% of the
net surrender value after the 10th Policy year.
o We will deduct a processing fee equal to $25 or 2% of the amount you
withdraw (whichever is less) from the withdrawal, and we will pay you
the balance.
o There is no surrender charge assessed when you take a cash
withdrawal.
o A cash withdrawal will reduce the death benefit by at least the
amount of the withdrawal.
o If you choose death benefit Option A, we will reduce the current
specified amount by the dollar amount of the withdrawal. We will not
impose a pro rata decrease charge when the specified amount is
decreased as a result of taking a cash withdrawal.
o Federal income taxes and a penalty tax may apply to cash withdrawals
and surrenders.
o You may fully surrender the Policy at any time before the insured's
death or the maturity date. You will receive the net surrender value
(cash value, MINUS any surrender charge, MINUS any Policy loans
outstanding, and MINUS any interest you owe on Policy loans). The
surrender charge will apply during the first 15 Policy years.
RISK SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT If you invest your cash value in one or more subaccounts, you
RISK will be subject to the risk that investment performance could
be unfavorable and that the cash value of your Policy would
decrease. YOU COULD LOSE EVERYTHING YOU INVEST, AND YOUR
POLICY COULD LAPSE. If you select the fixed account, your
cash value in the fixed account is credited with a declared
rate of interest, but you assume a risk that the rate may
decrease, although it will never be lower than a guaranteed
minimum annual effective rate of 3.0%.
RISK OF LAPSE If your Policy fails to meet certain conditions, we will
notify you that the Policy has entered a 61-day grace period
and will lapse unless you make a sufficient payment during
the grace period.
Your Policy contains a three-year no lapse period. Your
Policy will not lapse during the first three Policy years as
long as you pay sufficient minimum no lapse premiums. If you
do not pay these premiums, you will automatically lose the no
lapse guarantee and you will increase the risk that your
Policy will lapse. In addition, if you take a cash
withdrawal, or take a Policy loan, or if you decrease your
specified amount, you will increase the risk of losing the no
lapse guarantee. We deduct the total amount of your cash
withdrawals, any outstanding loans and any pro rata decrease
charge from your premiums paid when we determine whether your
minimum no lapse premiums are high enough to keep the no
lapse period in effect.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
If you change death benefit options, decrease the specified
amount, or add or increase a rider, we will adjust the amount
of the minimum no lapse premium.
You will lessen the risk of Policy lapse during the first
three Policy years if you keep the no lapse period in effect.
Before you take a cash withdrawal, loan, decrease the
specified amount or increase or add a rider, you should
consider carefully the effect it will have on the no lapse
guarantee.
After the no lapse period, your Policy may lapse if loans,
cash withdrawals, monthly deductions and insufficient
investment returns reduce the net surrender value to zero.
The Policy will enter a grace period if on any Monthiversary
the net surrender value (that is, the cash value, minus the
sur- render charge, and minus any outstanding loans and
interest owed on the loans) is not enough to pay the monthly
deduction due.
A Policy lapse may have adverse tax consequences. See Federal
Income Tax Considerations p. and Policy Lapse and
Reinstatement p. .
You may reinstate this Policy within five years after it has
lapsed (prior to the maturity date), if the insured meets the
insurability requirements and you pay the amount we require.
TAX RISKS We expect that the Policy will generally be deemed a life
(INCOME TAX insurance contract under federal tax law, so that the death
AND MEC) benefit paid to the beneficiary will not be subject to
federal income tax. However, due to lack of guidance, there
is less certainty in this regard with respect to Policies
issued on a substandard basis. Depending on the total amount
of premiums you pay, the Policy may be treated as a modified
endowment contract ("MEC") under federal tax laws. If a
Policy is treated as a MEC, partial withdrawals, surrenders
and loans will be taxable as ordinary income to the extent
there are earnings in the Policy. In addition, a 10% penalty
tax may be imposed on cash withdrawals, surrenders and loans
taken before you reach age 591/2. If a Policy is not treated
as a MEC, partial surrenders and withdrawals will not be
subject to tax to the extent of your investment in the
Policy. Amounts in excess of your investment in the Policy,
while subject to tax as ordinary income, will not be subject
to a 10% penalty tax. You should consult a qualified tax
advisor for assistance in all tax matters involving your
Policy.
LIMITS ON CASH The Policy permits you to take only one cash withdrawal per
WITHDRAWALS Policy year after the first Policy year has been completed.
The amount you may withdraw is limited to 10% of the net
surrender value. We currently intend to limit the amount you
can withdraw to 25% of the net surrender value after the 10th
Policy year.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
A cash withdrawal will reduce cash value, so it will increase
the risk that the Policy will lapse. A cash withdrawal may
also increase the risk that the no lapse period will end.
A cash withdrawal will reduce the death benefit. If you
select death benefit Option A, a cash withdrawal will
permanently reduce the specified amount by the amount of the
withdrawal. If death benefit Option B is in effect when you
make a cash withdrawal, the death benefit will be reduced by
the amount the cash value was reduced. In some circumstances,
a cash withdrawal may reduce the death benefit by more than
the dollar amount of the withdrawal.
Federal income taxes and a penalty tax may apply to cash
withdrawals and surrenders.
LOAN RISKS A Policy loan, whether or not repaid, will affect cash value
over time because we subtract the amount of the loan from the
subaccounts and the fixed account and place that amount in
the loan reserve as collateral. We then credit a fixed
interest rate of not less than 4.0% to the loan collateral.
We currently credit interest at 4.75% annually, but we are
not obligated to do so in the future. As a result, the loan
collateral does not participate in the investment results of
the subaccounts nor does it receive the current interest rate
credited to the fixed account. The longer the loan is
outstanding, the greater the effect is likely to be.
Depending on the investment results of the subaccounts and
the interest rates credited to the fixed account, the effect
could be favorable or unfavorable.
We also charge interest on Policy loans at a rate of 5.5%,
payable in arrears. Interest is added to the amount of the
loan to be repaid.
A Policy loan affects the death benefit because a loan
reduces the death benefit proceeds by the amount of the
outstanding loan, plus any interest you owe on Policy loans.
If a loan from a Policy is outstanding when the Policy is
canceled or lapses, then the amount of the outstanding
indebtedness will be taxable as if it were a distribution
from the Policy. See Federal Income Tax Considerations p. .
A Policy loan could make it more likely that a Policy would
lapse. A Policy loan will increase the risk that the no lapse
period will end. There is also a risk that if the loan,
insurance charges and unfavorable investment experience
reduce your net surrender value while the no lapse period is
no longer in effect, then the Policy will lapse. Adverse tax
consequences would result.
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
EFFECTS OF THE The surrender charge under this Policy is significant,
SURRENDER especially in the early Policy years. It is likely that you
CHARGE will receive no net surrender value if you surrender your
Policy in the first few Policy years. You should purchase
this Policy only if you have the financial ability to keep it
in force at the initial specified amount for a substantial
period of time.
Even if you do not ask to surrender your Policy, the
surrender charge plays a role in determining whether your
Policy will lapse. Each month we will use the cash value
(reduced by the surrender charge and reduced by outstanding
loans and interest owed) to measure whether your Policy will
remain in force or will enter a grace period.
COMPARISON Like fixed benefit life insurance, the Policy offers a death
WITH OTHER benefit and can provide a cash value, loan privileges and a
INSURANCE value on surrender. However, the Policy differs from a fixed
POLICIES benefit policy because it allows you to place your premiums
in investment subaccounts. The amount and duration of life
insurance protection and of the Policy's cash value will vary
with the investment performance of the amounts you place in
the subaccounts. In addition, the cash value and net
surrender value will always vary with the investment results
of your selected subaccounts.
As you consider purchasing this Policy, keep in mind that it
may not be to your advantage to replace existing insurance
with the Policy.
ILLUSTRATIONS The illustrations in this prospectus are based on
hypothetical rates of return that are not guaranteed. They
illustrate how the specified amount, Policy charges and
hypothetical rates of return affect death benefit levels,
cash value and net surrender value of the Policy. We may also
illustrate Policy values based on the adjusted historical
performance of the portfolios since the portfolios'
inception, reduced by Policy and subaccount charges. The
hypothetical and adjusted historic portfolio rates
illustrated should not be considered to represent past or
future performance. It is almost certain that actual rates of
return may be higher or lower than those illustrated, so that
the values under your Policy will be different from those in
the illustrations.
</TABLE>
13
<PAGE>
PORTFOLIO ANNUAL EXPENSE TABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This table shows the fees and expenses charged by each portfolio. More detail
concerning each portfolio's fees and expenses is contained in the fund
prospectuses.
ANNUAL PORTFOLIO OPERATING EXPENSES
(As a percentage of average portfolio assets after fee waivers and expense
reimbursements)
<TABLE>
<CAPTION>
TOTAL
MANAGEMENT OTHER RULE 12B-1 ANNUAL
PORTFOLIO(1) FEES EXPENSES FEES EXPENSES
------------ ---- -------- ---- --------
<S> <C> <C> <C> <C>
WRL SERIES FUND, INC.(2)(3)
WRL VKAM Emerging Growth 0.80% 0.07% N/A 0.87%
WRL T. Rowe Price Small Cap(4) 0.75% 0.25% N/A 1.00%
WRL Goldman Sachs Small Cap(4) 0.90% 0.10% N/A 1.00%
WRL Pilgrim Baxter Mid Cap Growth(4) 0.90% 0.10% N/A 1.00%
WRL Alger Aggressive Growth 0.80% 0.09% N/A 0.89%
WRL Third Avenue Value 0.80% 0.20% N/A 1.00%
WRL Value Line Aggressive Growth(5) 0.80% 0.20% N/A 1.00%
WRL GE International Equity(6) 1.00% 0.20% N/A 1.20%
WRL Janus Global(7) 0.80% 0.12% N/A 0.92%
WRL Great Companies -- TechnologySM(5) 0.80% 0.20% N/A 1.00%
WRL Janus Growth(8) 0.80% 0.05% N/A 0.85%
WRL Goldman Sachs Growth(4) 0.90% 0.10% N/A 1.00%
WRL GE U.S. Equity 0.80% 0.13% N/A 0.93%
WRL Great Companies -- AmericaSM(5) 0.80% 0.20% N/A 1.00%
WRL Salomon All Cap(4) 0.90% 0.10% N/A 1.00%
WRL C.A.S.E. Growth 0.80% 0.20% N/A 1.00%
WRL Dreyfus Mid Cap(4) 0.85% 0.15% N/A 1.00%
WRL NWQ Value Equity 0.80% 0.10% N/A 0.90%
WRL T. Rowe Price Dividend Growth(4) 0.90% 0.10% N/A 1.00%
WRL Dean Asset Allocation 0.80% 0.07% N/A 0.87%
WRL LKCM Strategic Total Return 0.80% 0.06% N/A 0.86%
WRL J.P. Morgan Real Estate Securities 0.80% 0.20% N/A 1.00%
WRL Federated Growth & Income 0.75% 0.14% N/A 0.89%
WRL AEGON Balanced 0.80% 0.09% N/A 0.89%
WRL AEGON Bond 0.45% 0.08% N/A 0.53%
WRL J.P. Morgan Money Market 0.40% 0.04% N/A 0.44%
VARIABLE INSURANCE PRODUCTS FUND
(VIP) (9)
Fidelity VIP Equity-Income Portfolio -- Service Class 2 (10) 0.48% 0.10% 0.25% 0.83%
VARIABLE INSURANCE PRODUCTS FUND II
(VIP II) (9)
Fidelity VIP II Contrafund/registered trademark/ Portfolio Service Class 2 (10) 0.58% 0.12% 0.25% 0.95%
VARIABLE INSURANCE PRODUCTS FUND III
(VIP III) (9)
Fidelity VIP III Growth Opportunities Portfolio Service
Class 2 (10) 0.58% 0.13% 0.25% 0.96%
TRANSAMERICA VARIABLE INSURANCE FUND, INC.(11)
Transamerica VIF Growth Portfolio 0.75% 0.15% N/A 0.90%
</TABLE>
(1) The fee table information relating to the portfolios was provided to
Transamerica by each fund and Transamerica has not independently verified
such information.
(2) Effective January 1, 1997, the Board of the WRL Series Fund, Inc. (the
"WRL Fund") authorized the WRL Fund to charge each portfolio of the WRL
Fund an annual 12b-1 fee of up to 0.15% of each portfolio's average daily
net assets. However, the WRL Fund will not deduct the fee from any
portfolio before April 30, 2001. You will receive advance written notice
if a Rule 12b-1 fee is to be deducted. See the WRL Fund prospectus for
more details.
(3) WRL Investment Management, Inc. ("WRL Management"), the investment adviser
of the WRL Fund, has undertaken, until at least April 30, 2001, to pay
expenses on behalf of the portfolios of the WRL Fund, to the extent normal
total operating expenses of a portfolio exceed a stated percentage of the
WRL portfolio's average daily net assets. The
14
<PAGE>
expense limit, the amount reimbursed by WRL Management during 1999, and the
expense ratio without the reimbursement are listed below for each
portfolio:
<TABLE>
<CAPTION>
Expense Reimbursement Expense Ratio
Limit Amount Without Reimbursement
----- ------ ---------------------
<S> <C> <C> <C>
WRL VKAM Emerging Growth ....................... 1.00% N/A N/A
WRL T. Rowe Price Small Cap .................... 1.00% 63,542 2.46%
WRL Goldman Sachs Small Cap .................... 1.00% 60,555 5.57%
WRL Pilgrim Baxter Mid Cap Growth .............. 1.00% 34,986 1.40%
WRL Alger Aggressive Growth .................... 1.00% N/A N/A
WRL Third Avenue Value ......................... 1.00% 10,734 1.06%
WRL Value Line Aggressive Growth ............... 1.00% N/A N/A
WRL GE International Equity .................... 1.20% 112,088 1.84%
WRL Janus Global ............................... 1.00% N/A N/A
WRL Great Companies -- TechnologySM ............ 1.00% N/A N/A
WRL Janus Growth ............................... 1.00% N/A N/A
WRL Goldman Sachs Growth ....................... 1.00% 49,677 2.68%
WRL GE U.S. Equity ............................. 1.00% N/A N/A
WRL Great Companies -- AmericaSM ............... 1.00% N/A N/A
WRL Salomon All Cap ............................ 1.00% 53,174 2.87%
WRL C.A.S.E. Growth ............................ 1.00% N/A N/A
WRL Dreyfus Mid Cap ............................ 1.00% 34,541 4.89%
WRL NWQ Value Equity ........................... 1.00% N/A N/A
WRL T. Rowe Price Dividend Growth .............. 1.00% 46,989 2.35%
WRL Dean Asset Allocation ...................... 1.00% N/A N/A
WRL LKCM Strategic Total Return ................ 1.00% N/A N/A
WRL J.P. Morgan Real Estate Securities ......... 1.00% 51,924 2.69%
WRL Federated Growth & Income .................. 1.00% N/A N/A
WRL AEGON Balanced ............................. 1.00% N/A N/A
WRL AEGON Bond ................................. 0.70% N/A N/A
WRL J.P. Morgan Money Market ................... 0.70% N/A N/A
</TABLE>
(4) Because these portfolios commenced operations on May 3, 1999, the
percentages set forth as "Other Expenses" and "Total Annual Expenses" are
annualized.
(5) Because these portfolios commenced operations on May 1, 2000, the
percentages set forth as "Other Expenses" and "Total Portfolio Annual
Expenses" are estimates.
(6) The fee table reflects estimated 2000 expenses because the expense limit
for this portfolio will be reduced from 1.50% to 1.20% effective May 1,
2000.
(7) WRL Management currently waives 0.025% of its advisory fee on portfolio
average daily net assets over $2 billion (net fee -- 0.775%.) This waiver
will be terminated on June 25, 2000.
(8) WRL Management currently waives 0.025% of its advisory fee for the first
$3 billion of the portfolio's average daily net assets (net fee --
0.775%); and 0.05% for the portfolio's aerage daily net assets above $3
billion (net fee -- 0.75%). The fee table reflects estimated 2000 expenses
because of the termination of the fee waiver. This waiver will be
terminated on June 25, 2000.
(9) The 12b-1 fee deducted for the Variable Insurance Products Fund (VIP) --
Service Class 2, Variable Insurance Products Fund II (VIP II) -- Service
Class 2, and Variable Insurance Products Fund III (VIP III) -- Service
Class 2 (the "Fidelity VIP Funds") covers certain shareholder support
services provided by companies selling variable contracts investing in the
Fidelity VIP Funds. The 12b-1 fees assessed against the Fidelity VIP Funds
shares held for the Policies will be remitted to AFSG Securities
Corporation ("AFSG"), the principal underwriter for the Policies.
(10) Service Class 2 expenses are based on estimated expenses for the first
year.
(11) Transamerica Investment Management, LLC ("Transamerica Investment
Management"), the investment adviser of Transamerica Variable Insurance
Fund, Inc. (the "Transamerica Variable Fund"), waived a portion of its
advisory fee and was paid 0.70% of the portfolio's average daily net
assets. It is anticipated that this waiver will continue for calendar year
2000. This waiver is voluntary and may be terminated at any time. Taking
the waiver into account, total annual expenses for this portfolio during
1999 were 0.85%.
The purpose of the preceding table is to help you understand the various
costs and expenses that you will bear directly and indirectly. The table
reflects charges and expenses of the portfolios of the funds for the fiscal
year ended December 31, 1999 except as noted in the footnotes. Expenses of the
funds may be higher or lower in the future. For more information on the charges
described in this table, see the fund prospectuses which accompany this
prospectus.
15
<PAGE>
TRANSAMERICA AND THE FIXED ACCOUNT
- --------------------------------------------------------------------------------
TRANSAMERICA
Transamerica Occidental Life Insurance Company ("Transamerica") is the
insurance company issuing the Policy. Transamerica was incorporated under
California law on June 30, 1906. We established the separate account to support
the investment options under this Policy and under other variable life
insurance policies we issue. Our general account supports the fixed account
under the Policy. Transamerica intends to sell this Policy in all states
(except New York), Puerto Rico, Guam and the District of Columbia.
THE FIXED ACCOUNT
The fixed account is part of Transamerica's general account. We use
general account assets to support our insurance and annuity obligations other
than those funded by separate accounts. Subject to applicable law, Transamerica
has sole discretion over investment of the fixed account's assets. Transamerica
bears the full investment risk for all amounts contributed to the fixed
account. Transamerica guarantees that the amounts allocated to the fixed
account will be credited interest daily at a net effective interest rate of at
least 3.0%. We will determine any interest rate credited in excess of the
guaranteed rate at our sole discretion. We have no specific formula for
determining interest rates.
Money you place in the fixed account will earn interest compounded daily
at a current interest rate in effect at the time of your allocation. Unless
otherwise required by state law, we will restrict your allocations and
transfers to the fixed account if the fixed account value following the
allocation or transfer would exceed $500,000. We may declare current interest
rates from time to time. We may declare more than one interest rate for
different money based upon the date of allocation or transfer to the fixed
account. When we declare a higher current interest rate on amounts allocated to
the fixed account, we guarantee the higher rate on those amounts for at least
one year (the "guarantee period") unless those amounts are transferred to the
loan reserve. At the end of the guarantee period we may declare a new current
interest rate on those amounts and any accrued interest thereon. We will
guarantee this new current interest rate for another guarantee period. We
credit interest greater than 3.0% during any guarantee period at our sole
discretion. You bear the risk that interest we credit will not exceed 3.0%.
We allocate amounts from the fixed account for cash withdrawals, transfers
to the subaccounts, or monthly deduction charges on a last-in, first-out basis
("LIFO") for the purpose of crediting interest.
The fixed account may not be available in all states. This means that
residents of some states may not direct or transfer any premiums or cash value
to the fixed account.
THE FIXED ACCOUNT HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.
16
<PAGE>
THE SEPARATE ACCOUNT AND THE PORTFOLIOS
- --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT
The separate account is divided into subaccounts, each of which invests in
shares of a specific portfolio of a fund. You may direct the money in your
Policy to a total of 12 active subaccounts of the separate account. These
subaccounts buy and sell portfolio shares at net asset value without any sales
charge. Any dividends and distributions from a portfolio are reinvested at net
asset value in shares of that portfolio.
Income, gains, and losses credited to, or charged against, a subaccount of
the separate account reflect the subaccount's own investment experience and not
the investment experience of our other assets. The separate account's assets
may not be used to pay any of our liabilities other than those arising from the
Policies. If the separate account's assets exceed the required reserves and
other liabilities, we may transfer the excess to our general account.
The separate account may include other subaccounts that are not available
under the Policies and are not discussed in this prospectus. We may substitute
another subaccount, portfolio or insurance company separate account under the
Policies if, in our judgment, investment in a subaccount or portfolio would no
longer be possible or becomes inappropriate to the purposes of the Policies, or
if investment in another subaccount or insurance company separate account is in
the best interest of owners. No substitution shall take place without notice to
owners and prior approval of the Securities and Exchange Commission ("SEC") and
insurance company regulators, to the extent required by the Investment Company
Act of 1940, as amended (the "1940 Act") and applicable law.
THE PORTFOLIOS
The separate account invests in shares of the portfolios. Each portfolio
is an investment division of a fund, which is an open-end management investment
company registered with the SEC. Such registration does not involve supervision
of the management or investment practices or policies of the portfolios by the
SEC.
Each portfolio's assets are held separate from the assets of the other
portfolios, and each portfolio has investment objectives and policies that are
different from those of the other portfolios. Thus, each portfolio operates as
a separate investment fund, and the income or losses of one portfolio has no
effect on the investment performance of any other portfolio. Pending any prior
approval by a state insurance regulatory authority, certain subaccounts and
corresponding portfolios may not be available to residents of some states.
Each portfolio's investment objective(s) and policies are summarized
below. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS STATED
OBJECTIVE(S). Certain portfolios may have investment objectives and policies
similar to other portfolios that are managed by the same investment adviser or
sub-adviser. The investment results of the portfolios, however, may be higher
or lower than those of such other portfolios. We do not
17
<PAGE>
guarantee or make any representation that the investment results of the
portfolios will be comparable to any other portfolio, even those with the same
investment adviser or sub-adviser. YOU CAN FIND MORE DETAILED INFORMATION ABOUT
THE PORTFOLIOS, INCLUDING A DESCRIPTION OF RISKS, IN THE FUND PROSPECTUSES. YOU
SHOULD READ THE FUND PROSPECTUSES CAREFULLY.
<TABLE>
<CAPTION>
PORTFOLIO ADVISER OR SUB-ADVISER INVESTMENT OBJECTIVE
- ------------------- ------------------------------ -------------------------------------
<S> <C> <C>
WRL VKAM Van Kampen Seeks capital appreciation by
Emerging Asset Management Inc. investing primarily in common stocks
Growth of small and medium-sized
companies.
WRL T. Rowe T. Rowe Price Seeks long-term growth of capital by
Price Small Cap Associates, Inc. investing primarily in common stocks
of small growth companies.
WRL Goldman Goldman Sachs Asset Seeks long-term growth of capital.
Sachs Small Cap Management
WRL Pilgrim Pilgrim Baxter & Associates, Seeks capital appreciation.
Baxter Mid Cap Ltd.
Growth
WRL Alger Fred Alger Seeks long-term capital
Aggressive Growth Management, Inc. appreciation.
WRL Third EQSF Advisers, Inc. Seeks long-term capital
Avenue Value appreciation.
WRL Value Value Line, Inc. Seeks long-term growth of capital.
Line Aggressive
Growth
WRL GE GE Asset Management Seeks long-term growth of capital.
International Incorporated*
Equity
WRL Janus Global Janus Capital Seeks long-term growth of capital in
Corporation a manner consistent with the
preservation of capital.
WRL Great Great Companies, L.L.C. Seeks long-term growth of capital.
Companies --
Technology(SM)
WRL Janus Janus Capital Seeks growth of capital.
Growth Corporation
WRL Goldman Goldman Sachs Asset Seeks long-term growth of capital.
Sachs Growth Management
* Effective May 1, 2000, GE Asset Management Incorporated is the sole sub-adviser.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO ADVISER OR SUB-ADVISER INVESTMENT OBJECTIVE
- ------------------- ---------------------------- ---------------------------------------
<S> <C> <C>
WRL GE U.S. GE Asset Management Seeks long-term growth of capital.
Equity Incorporated
WRL Great Great Companies, L.L.C. Seeks long-term growth of capital.
Companies --
America(SM)
WRL Salomon Salomon Brothers Asset Seeks capital appreciation.
All Cap Management Inc
WRL C.A.S.E. C.A.S.E. Seeks annual growth of capital
Growth Management, Inc. through investment in companies
whose management, financial
resources and fundamentals appear
attractive on a scale measured against
each company's present value.
WRL Dreyfus Mid The Dreyfus Seeks total investment returns
Cap Corporation (including capital appreciation and
income), which consistently
outperform the S&P 400 Mid Cap
Index.
WRL NWQ Value NWQ Investment Manage- Seeks to achieve maximum, consistent
Equity ment Company, Inc. total return with minimum risk to
principal.
WRL T. Rowe T. Rowe Price Seeks to provide an increasing level
Price Dividend Associates, Inc. of dividend income, long-term capital
Growth appreciation, and reasonable current
income, through investments primarily
in dividend paying stocks.
WRL Dean Asset Dean Investment Associates Seeks preservation of capital and
Allocation competitive investment returns.
WRL LKCM Luther King Capital Seeks to provide current income,
Strategic Management long-term growth of income and
Total Return Corporation capital appreciation.
WRL J.P. Morgan J.P. Morgan Investment Seeks long-term total return from
Real Estate Management Inc. investments primarily in equity
Securities securities of real estate companies.
Total return will consist of realized
and unrealized capital gains and
losses plus income.
WRL Federated Federated Investment Seeks total return by investing in
Growth & Income Counseling securities that have defensive
characteristics.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO ADVISER OR SUB-ADVISER INVESTMENT OBJECTIVE
- ------------------------------------ ------------------------ --------------------------------------
<S> <C> <C>
WRL AEGON AEGON USA Seeks preservation of capital,
Balanced Investment reduced volatility, and superior
Management, Inc. long-term risk-adjusted returns.
WRL AEGON AEGON USA Seeks the highest possible current
Bond Investment income within the confines of the
Management, Inc. primary goal of insuring the
protection of capital.
WRL J.P. Morgan J.P. Morgan Investment Seeks to obtain maximum current
Money Market Management Inc. income consistent with preservation
of principal and maintenance of
liquidity.
Fidelity VIP Fidelity Management & Seeks reasonable income.
Equity-Income Research Company
Portfolio --
Service Class 2
Fidelity VIP II Fidelity Management & Seeks long-term capital appreciation.
Contrafund(R) Research Company
Portfolio --
Service Class 2
Fidelity VIP III Fidelity Management & Seeks to provide capital growth.
Growth Research Company
Opportunities
Portfolio --
Service Class 2
Transamerica VIF Transamerica Seeks to maximize long-term
Growth Portfolio Investment growth.
Management, LLC
</TABLE>
WRL Management, located at 570 Carillon Parkway, St. Petersburg, Florida
33716, a wholly-owned subsidiary of Western Reserve Life Assurance Co. of Ohio
("Western Reserve"), an affiliate of Transamerica, serves as investment adviser
to the WRL Fund and manages the WRL Fund in accordance with policies and
guidelines established by the fund's Board of Directors. For certain
portfolios, WRL Management has engaged investment sub-advisers to provide
portfolio management services. WRL Management and each investment sub-adviser
are registered investment advisers under the Investment Advisers Act of 1940,
as amended. See the WRL Fund prospectus for more information regarding WRL
Management and the investment sub-advisers.
Fidelity Management & Research Company ("FMR"), located at 82 Devonshire
Street, Boston, Massachusetts 02109, serves as investment adviser to the
Fidelity VIP Funds and manages the Fidelity VIP Funds in accordance with
policies and guidelines established by
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each fund's Board of Trustees. For certain portfolios, FMR has engaged
investment sub-advisers to provide portfolio management services. FMR and each
sub-adviser are registered investment advisers under the Investment Advisers
Act of 1940, as amended. See the Fidelity Fund prospectuses for more
information regarding FMR and the investment sub-advisers.
Transamerica Investment Management, located at 1150 South Olive Street,
Los Angeles, California 90015, an affiliate of Western Reserve, serves as
investment adviser to the Transamerica Variable Fund and manages the
Transamerica Variable Fund in accordance with policies and guidelines
established by Transamerica Variable Fund's Board of Directors.
In addition to the separate account, shares of the portfolios are also
sold to other separate accounts that insurance companies, including
Transamerica or its affiliates, establish to support variable annuity contracts
and variable life insurance policies. It is possible that, in the future, it
may become disadvantageous for variable life insurance separate accounts and
variable annuity separate accounts to invest in the portfolios simultaneously.
Neither we nor the funds currently foresee any such disadvantages, either to
variable life insurance policyowners or to variable annuity contract owners.
However, each fund's Board of Directors will monitor events in order to
identify any material conflicts between the interests of such variable life
insurance policyowners and variable annuity contract owners, and will determine
what action, if any, it should take. Such action could include the sale of
portfolio shares by one or more of the separate accounts, which could have
adverse consequences. Material conflicts could result from, for example, (1)
changes in state insurance laws, (2) changes in federal income tax laws, or (3)
differences in voting instructions between those given by variable life
insurance policyowners and those given by variable annuity contract owners.
If a fund's Board of Directors/Trustees were to conclude that separate
funds should be established for variable life insurance and variable annuity
separate accounts, Transamerica will bear the attendant expenses, but variable
life insurance policyowners and variable annuity contract owners would no
longer have the economies of scale resulting from a larger combined fund.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We reserve the right to transfer separate account assets to another
separate account that we determine to be associated with the class of contracts
to which the Policy belongs. We also reserve the right, subject to compliance
with applicable law, to add to, delete from, or substitute the investments that
are held by any subaccount, or that any subaccount may purchase. We will only
add, delete or substitute shares of another portfolio of a fund (or of another
open-end, registered investment company) if the shares of a portfolio are no
longer available for investment, or if in our judgment further investment in
any portfolio would become inappropriate in view of the purposes of the
separate account. We will not add, delete or substitute any shares attributable
to your interest in a subaccount without notice to you and prior approval of
the SEC, to the extent required by the 1940 Act or other applicable law. We may
also decide to purchase for the separate account securities from other
portfolios.
We also reserve the right to establish additional subaccounts of the
separate account, each of which would invest in a new portfolio of a fund, or
in shares of another investment
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<PAGE>
company, with specified investment objectives. We may establish new subaccounts
when, in our sole discretion, marketing, tax or investment conditions warrant.
We will make any new subaccounts available to existing owners on a basis we
determine. We may also eliminate one or more subaccounts for the same reasons
as stated above.
In the event of any such substitution or change, we may 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, and when permitted by law, the
separate account may be (1) operated as a management company under the 1940
Act, (2) deregistered under the 1940 Act in the event such registration is no
longer required, (3) managed under the direction of a committee, or (4)
combined with one or more other separate accounts, or subaccounts.
YOUR RIGHT TO VOTE PORTFOLIO SHARES
Even though we are the legal owner of the portfolio shares held in the
subaccounts, and have the right to vote on all matters submitted to
shareholders of the portfolios, we will vote our shares only as policyowners
instruct, so long as such action is required by law. See Tax Status of the
Policy p. .
Before a vote of a portfolio's shareholders occurs, you will receive
voting materials from us. We will ask you to instruct us on how to vote and to
return your proxy to us in a timely manner. You will have the right to instruct
us on the number of portfolio shares that corresponds to the amount of cash
value you have in that portfolio (as of a date set by the portfolio).
If we do not receive voting instructions on time from some policyowners,
we will vote those shares in the same proportion as the timely voting
instructions we receive. Should federal securities laws, regulations and
interpretations change, we may elect to vote portfolio shares in our own right.
If required by state insurance officials, or if permitted under federal
regulation, we may disregard certain owner voting instructions. If we ever
disregard voting instructions, we will send you a summary in the next annual
report to policyowners advising you of the action and the reasons we took such
action.
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<PAGE>
THE POLICY
- --------------------------------------------------------------------------------
PURCHASING A POLICY
To purchase a Policy, you must submit a completed application and an
initial premium to us. You may also send the application and initial premium to
us through any licensed life insurance agent who is also a registered
representative of a broker-dealer having a selling agreement with AFSG
Securities Corporation, the principal underwriter for the Policy.
Please submit your applications and premiums to:
Transamerica Occidental Life
Insurance Company P.O. Box 3183
Cedar Rapids, Iowa 52406-3183
You select the specified amount for your Policy within the following
limits. Our current minimum specified amount for a Policy for all issue ages is
generally $100,000. We will state the minimum specified amount in your Policy.
You may not decrease your specified amount below this minimum. If your
specified amount is $250,000 or more, then you may not decrease your specified
amount below $250,000. We will generally only issue a Policy to you if you
provide sufficient evidence that the insured meets our insurability standards.
Your application is subject to our underwriting rules, and we may reject any
application for any reason permitted by law. We will not issue a Policy to you
if the insured is over age 85. The insured must be insurable and acceptable to
us under our underwriting rules on the later of:
o the date of your application; or
o the date the insured completes all of the medical tests and
examinations that we require.
UNDERWRITING STANDARDS
This Policy uses mortality tables that distinguish between men and women.
As a result, the Policy pays different benefits to men and women of the same
age. Montana prohibits our use of actuarial tables that distinguish between men
and women to determine premiums and policy benefits for policies issued on the
lives of its residents. Therefore, we will base the premiums and benefits in
Policies that we issue in Montana, to insure residents of that state, on
actuarial tables that do not differentiate on the basis of gender.
Your cost of insurance charge will depend on the insured's gender and
attained age, the Policy duration, specified amount, net amount at risk and
rate class. We currently place insureds into the following standard rate
classes:
o ultimate select, non-tobacco use;
o select, non-tobacco use;
o ultimate standard, tobacco use;
o standard, tobacco use; and
o juvenile (under age 18).
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<PAGE>
We also place insureds in various sub-standard rate classes, which involve
a higher mortality risk and higher charges. We generally charge higher rates
for insureds who use tobacco. We charge lower cost of insurance rates for
insureds who are in an "ultimate" class. For Policies with a specified amount
of $250,000 or more, we generally charge a lower rate. An ultimate class is
only available if, because of the specified amount you have chosen, our
underwriting guidelines require you to take a blood test.
WHEN INSURANCE COVERAGE TAKES EFFECT
Insurance coverage under the Policy will take effect only if the
insured(s) is alive and in the same condition of health as described in the
application when the Policy is delivered to the owner, and if the initial
premium required under the Policy as issued is paid.
CONDITIONAL INSURANCE COVERAGE. If you pay the full initial premium listed
in the conditional receipt attached to the application, and we deliver the
conditional receipt to you, the insured will have conditional insurance
coverage under the terms of the conditional receipt. Conditional insurance
coverage is void if the check or draft you gave us to pay the initial premium
is not honored when we first present it for payment.
<TABLE>
<S> <C>
THE AMOUNT OF o the specified amount applied for; or
CONDITIONAL INSURANCE o $300,000
COVERAGE IS THE LESSER OF: reduced by all amounts payable under all life insurance
applications that the insured has pending with us.
</TABLE>
<TABLE>
<S> <C>
CONDITIONAL LIFE INSURANCE o the date of your application; or
COVERAGE BEGINS ON THE o the date the insured completes all of the medical tests and
LATER OF: examinations that we require; or
o the date of issue, if any, requested in the application.
</TABLE>
<TABLE>
<S> <C>
CONDITIONAL LIFE INSURANCE o the date we determine the insured has satisfied our underwriting
COVERAGE TERMINATES requirements and the insurance applied for takes effect (the
AUTOMATICALLY ON THE Policy date); or
EARLIEST OF: o 60 days from the date the application was completed; or
o the date we determine that any person proposed for insurance in the
application is not insurable according to our rules, limits and
standards for the plan, amount and rate class shown in the
application; or
o the date we modify the plan, amount, riders and/or the premium rate
class shown in the application, or any supplemental agreements; or
o the date we mail notice of the ending of coverage and we refund the
first premium to the applicant at the address shown on the
application.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SPECIAL LIMITATIONS OF THE o the conditional receipt will be void:
CONDITIONAL RECEIPT: o if not signed by an authorized agent of Transamerica;
or
o in the event the application contains any fraud or
material misrepresentation; or
o if, on the date of the conditional receipt, a proposed
insured is under 15 days of age or over 80 years of age.
o the conditional receipt does not provide benefits for disability and
accidental death benefits.
o the conditional receipt does not provide benefits if a proposed
insured commits suicide. In this case, Transamerica's liability will
be limited to return of the first premium paid with the application.
</TABLE>
FULL INSURANCE COVERAGE AND ALLOCATION OF INITIAL PREMIUM. Once we
determine that the insured meets our underwriting requirements and you have
paid the initial premium, full insurance coverage will begin. This date is the
Policy date. On the Policy date, we will allocate your initial premium, minus
monthly deductions, to the fixed account and the subaccounts you selected on
your application, provided you live in a state that does not require a refund
of full premium during the free-look period. If your state requires us to
return the full premium in the event you exercise your free-look right, we will
place your full premium in the reallocation account until the reallocation
date. While held in the reallocation account, premium(s) will be credited with
interest at the current fixed account rate. See Reallocation Account p. .
On any day we credit premiums or transfer cash value to a subaccount, we
will convert the dollar amount of the premium (or transfer) into subaccount
units at the unit value for that subaccount, determined at the end of the day
on which we receive the premium or transaction request at our administrative
office. We will credit amounts to the subaccounts only on a valuation date,
that is, on a date the New York Stock Exchange ("NYSE") is open for trading.
See Policy Values p. .
OWNERSHIP RIGHTS
The Policy belongs to the owner named in the application. The owner may
exercise all of the rights and options described in the Policy. The owner is
the insured unless the application specifies a different person as the insured.
If the owner dies before the insured and no contingent owner is named, then
ownership of the Policy will pass to the owner's estate. The owner may exercise
certain rights described below.
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<PAGE>
<TABLE>
<S> <C>
CHANGING THE o Change the owner by providing written notice to us at our administrative office at
OWNER any time while the insured is alive and the Policy is in force.
o Change is effective as of the date that the written notice is signed.
o Changing the owner does not automatically change the beneficiary.
o Signature of the owner's spouse is required if the owner is a resident of Arizona,
California, Idaho, Nevada, New Mexico, Washington or Wisconsin.
o Changing the owner may have tax consequences. You should consult a tax advisor
before changing the owner.
o We are not liable for payments we made before we received the written notice at
our administrative office.
</TABLE>
<TABLE>
<S> <C>
CHOOSING THE o The owner designates the beneficiary (the person to receive the death benefit when
BENEFICIARY the insured dies) in the application.
o If the owner designates more than one beneficiary, then each beneficiary shares
equally in any death benefit proceeds unless the beneficiary designation states
otherwise.
o If the beneficiary dies before the insured, then any contingent beneficiary
becomes the beneficiary.
o If both the beneficiary and contingent beneficiary die before the insured, then
the death benefit will be paid to the owner or the owner's estate upon the
insured's death.
</TABLE>
<TABLE>
<S> <C>
CHANGING THE o The owner changes the beneficiary by providing written notice to us at our
BENEFICIARY administrative office.
o Change is effective as of the date the owner signs the written notice.
o Signature of the owner's spouse is required if the owner is a resident of Arizona,
California, Idaho, Nevada, New Mexico, Washington or Wisconsin.
o We are not liable for any payments we made before we received the written notice
at our administrative office.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
ASSIGNING THE o The owner may assign Policy rights while the insured is alive.
POLICY o Signature of the owner's spouse is required if the owner is a resident of Arizona,
California, Idaho, Nevada, New Mexico, Washington or Wisconsin.
o The owner retains any ownership rights that are not assigned.
o Assignee may not change the owner or the beneficiary, and may not elect or change
an optional method of payment. Any amount payable to the assignee will be paid in
a lump sum.
o Claims under any assignment are subject to proof of interest and the extent of the
assignment.
o We are not:
o bound by any assignment unless we receive a written notice of the
assignment;
o responsible for the validity of any assignment;
o liable for any payment we made before we received written notice of the
assignment; or
o bound by any assignment which results in adverse tax consequences to the
owner, insured(s) or beneficiary(ies).
o Assigning the Policy may have tax consequences. You should consult a tax advisor
before assigning the Policy.
</TABLE>
CANCELING A POLICY
You may cancel a Policy for a refund during the "free-look period" by
returning it to our administrative office, to one of our branch offices or to
the agent who sold you the Policy. The free-look period expires 10 days after
you receive the Policy. In some states you may have more than 10 days. If you
decide to cancel the Policy during the free-look period, we will treat the
Policy as if it had never been issued. We will pay the refund within seven days
after we receive the returned Policy. The amount of the refund will be:
o any monthly deductions or other charges we deducted from amounts
you allocated to the subaccounts and the fixed account; PLUS
o your cash value in the subaccounts and the fixed account on the
date we (or our agent) receive the returned Policy at our
administrative office.
Some states may require us to refund all of the premiums you paid for the
Policy. See Reallocation Account p. .
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<PAGE>
PREMIUMS
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PREMIUM FLEXIBILITY
You generally have flexibility to determine the frequency and the amount
of the premiums you pay. Unlike conventional insurance policies, you do not
have to pay your premiums according to a rigid and inflexible premium schedule.
Before we issue the Policy to you, we may require you to pay a premium at least
equal to the a minimum no lapse premium set forth in your Policy. Thereafter
(subject to the limitations described below), you may make unscheduled premium
payments at any time and in any amount over $50. Under some circumstances, you
may be required to pay extra premiums to prevent a lapse. Your minimum no lapse
premium may change if you request a change in your Policy. If this happens, we
will notify you of the new minimum no lapse premium. See Minimum No Lapse
Premium p. .
PLANNED PERIODIC PAYMENTS
You will determine a planned periodic payment schedule which allows you to
pay level premiums at fixed intervals over a specified period of time. You are
not required to pay premiums according to this schedule. You may change the
amount, frequency, and the time period over which you make your planned
periodic payments. Please be sure to notify your agent/registered
representative of record or us of any address changes so that we are able to
keep your current address on record.
Even if you make your planned periodic payments on schedule, your Policy
may still lapse. The duration of your Policy depends on the Policy's net
surrender value. If the net surrender value is not high enough to pay the
monthly deduction when due (and your no lapse period has expired) then your
Policy will lapse (unless you make the payment we specify during the 61-day
grace period). See Policy Lapse and Reinstatement p. .
MINIMUM NO LAPSE PREMIUM
The full initial premium is the only premium you are required to pay under
the Policy. However, you greatly increase your risk of lapse if you do not
regularly pay premiums at least as large as the current minimum no lapse
premium.
Until the no lapse date (that is, until the end of the third Policy year),
we guarantee that your Policy will not lapse, so long as you have paid total
premiums (MINUS any withdrawals, MINUS any outstanding loans and MINUS any pro
rata decrease charge) that equal or exceed the sum of the monthly minimum no
lapse premiums in effect each month from the Policy date, up to and including
the current month. If you take a withdrawal, or take out a loan, or if you
decrease your specified amount, you may need to pay additional premiums in
order to keep the no lapse guarantee in place.
The initial minimum no lapse premium is shown on your Policy's schedule
page, and depends on a number of factors, including the age, gender, and rate
class of the proposed
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<PAGE>
insured, and the specified amount requested. We will adjust the minimum no
lapse premium if you change death benefit options, decrease the specified
amount, or add or increase a rider. If the minimum no lapse premium changes, we
will notify you of the change and its effective date.
AFTER THE THIRD POLICY YEAR (THAT IS, AFTER THE NO LAPSE PERIOD), PAYING
THE CURRENT MINIMUM NO LAPSE PREMIUM EACH MONTH WILL NOT NECESSARILY KEEP YOUR
POLICY IN FORCE. You may need to pay additional premiums to keep the Policy in
force.
NO LAPSE PERIOD
Until the no lapse date that is provided in your Policy (that is, until
the end of the third Policy year), your Policy will remain in force and no
grace period will begin, even if your net surrender value is too low to pay the
monthly deduction, so long as the total amount of the premiums you paid (minus
any withdrawals, outstanding loans, and any pro rata decrease charge) is equal
to or exceeds the sum of the monthly minimum no lapse premium in effect each
month from the Policy date up to and including the current month.
See Minimum No Lapse Premium above.
PREMIUM LIMITATIONS
Premium payments must be at least $50 if paid monthly and $600 if paid
annually ($1,000 if by wire). We may return premiums less than $50. We will not
allow you to make any premium payments that would cause the total amount of the
premiums you pay to exceed the current maximum premium limitations which
qualify the Policy as life insurance according to federal tax laws. This
maximum is set forth in your Policy. If you make a payment that would cause
your total premiums to be greater than the maximum premium limitations, we will
return the excess portion of the premium payment. We will not permit you to
make additional premium payments until they are allowed by the maximum premium
limitations. In addition, we reserve the right to refund a premium if the
premium would increase the death benefit by more than the amount of the
premium.
MAKING PREMIUM PAYMENTS
We will consider any payments you make to be premium payments, unless you
clearly mark them as loan repayments. We will accept premium payments by wire
transfer. If you wish to make premium payments by wire transfer, please
instruct your bank to wire federal funds as follows:
All First Bank of Baltimore
ABA #: 052000113
For credit to: Transamerica Occidental Life Insurance
Company
Account #: 895-7317-1
Owner's Name:
Contract Number:
Attention: Life Accounting
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TAX-FREE EXCHANGES ("1035 Exchanges"). We will accept your initial premium
money from one or more contracts insuring the same insured that qualify for
tax-free exchanges under Section 1035 of the Internal Revenue Code. If you
contemplate such an exchange, you should consult a competent tax advisor to
learn the potential tax effects of such a transaction.
ALLOCATING PREMIUMS
You must instruct us on how to allocate your premium among the fixed
account and the subaccounts. You may allocate your premium to a total of 12
active subaccounts at any one time. (The fixed account may not be available to
residents of all states.) You must follow these guidelines:
o allocation percentages must be in whole numbers;
o if you select dollar cost averaging, you must have at least
$5,000 in each subaccount from which we will make transfers and you
must transfer a total of at least $100 monthly;
o if you select asset rebalancing, the cash value of your Policy
must be at least $5,000; and
o unless otherwise required by state law, we will restrict your
allocations to the fixed account if the fixed account value following
the allocation would exceed $500,000.
You may change the allocation instructions for additional premium payments
at any time by writing us or calling us at 1-800-322-7164. The change will be
effective at the end of the valuation date on which we receive the change. Upon
instructions from you, the registered representative/agent of record for your
Policy may also change your allocation instructions for you. We reserve the
right to limit the minimum amount you can allocate to a particular subaccount
to 1.0% of a premium payment. We also reserve the right to charge $25 for each
change in excess of one per Policy year quarter.
Whenever you direct money into a subaccount, we will credit your Policy
with the number of units for that subaccount that can be bought for the dollar
payment. We price each subaccount unit using the unit value determined at the
end of the day after the closing of the regular business session of the NYSE
(usually at 4:00 p.m. Eastern time). We will credit amounts to the subaccounts
only on a valuation date, that is, on a date the NYSE is open for trading. See
Policy Values p. . Your cash value will vary with the investment experience
of the subaccounts in which you invest. YOU BEAR THE INVESTMENT RISK FOR
AMOUNTS YOU ALLOCATE TO THE SUBACCOUNTS.
You should periodically review how your cash value is allocated among the
subaccounts and the fixed account because market conditions and your overall
financial objectives may change.
REALLOCATION ACCOUNT. If your state requires us to return your initial
premium in the event you exercise your free-look right, we will allocate the
initial premium on the Policy
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date to the reallocation account as shown on your Policy schedule page. While
held in the fixed account, premium(s) will be credited with interest at the
current fixed account rate. The premium will remain in the reallocation account
until the reallocation date. The reallocation date is the record date, plus the
number of days in your state's free-look period, plus five days. Please contact
your agent for details concerning the free-look period for your state.
On the first valuation date on or after the reallocation date, we will
reallocate all cash value from the reallocation account to the fixed account
and the subaccounts you selected on the application. If you requested dollar
cost averaging, on the reallocation date we will reallocate the cash value
either to the fixed account, the WRL J.P. Money Market subaccount or the WRL
AEGON Bond subaccount (depending on which account you selected on your
application).
For states which do not require a full refund of the initial premium, the
reallocation date is the same as the Policy date. On the Policy date, we will
allocate your initial premium, minus monthly deductions, on the Policy date to
the fixed account and the subaccounts in accordance with the instructions you
gave us on your application.
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POLICY VALUES
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<TABLE>
<S> <C>
CASH VALUE o varies from day to day, depending on the investment experience of the subaccounts
you choose, the interest credited to the fixed account, the charges deducted and
any other Policy transactions (such as additional premium payments, transfers,
withdrawals, and Policy loans).
o serves as the starting point for calculating values under a Policy.
o equals the sum of all values in each subaccount and the fixed account.
o is determined on the Policy date and on each valuation date.
o has no guaranteed minimum amount and may be more or less than premiums paid.
o includes any amounts held in our fixed account to secure the Policy loan, if
there is a Policy loan outstanding.
</TABLE>
NET SURRENDER VALUE
The net surrender value is the amount we pay when you surrender your
Policy. We determine the net surrender value at the end of the valuation period
when we receive your written surrender request at our administrative office.
<TABLE>
<S> <C>
NET SURRENDER o the cash value as of such date; MINUS
VALUE ON ANY o any surrender charge as of such date; MINUS
VALUATION DATE o any outstanding Policy loan(s); MINUS
EQUALS: o any interest you owe on any Policy loan(s).
</TABLE>
SUBACCOUNT VALUE
Each subaccount's value is the cash value in that subaccount. At the end
of any valuation period, the subaccount's value is equal to the number of units
that the Policy has in the subaccount, multiplied by the unit value of that
subaccount.
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<TABLE>
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THE NUMBER OF o the initial units purchased at unit value on the reallocation
UNITS IN ANY date; PLUS
SUBACCOUNT ON o units purchased with additional premium(s); PLUS
ANY VALUATION o units purchased via transfers from another subaccount or
DATE EQUALS: the fixed account; MINUS
o units redeemed to pay for monthly deductions; MINUS
o units redeemed to pay for cash withdrawals; MINUS
o units redeemed as part of a transfer to another subaccount
or the fixed account; MINUS
o units redeemed to pay any pro rata decrease charge.
</TABLE>
Every time you allocate, transfer or withdraw money to or from a
subaccount, we convert that dollar amount into units. We determine the number
of units we credit to, or subtract from, your Policy by dividing the dollar
amount of the allocation, transfer or cash withdrawal by the unit value for
that subaccount next determined at the end of the valuation period, on which
the premium payment, transfer request or cash withdrawal request is received at
the administrative office.
SUBACCOUNT UNIT VALUE
The value (or price) of each subaccount unit will reflect the investment
performance of the portfolio in which the subaccount invests. Unit values will
vary among subaccounts. The unit value of each subaccount was originally
established at $10 per unit. The unit value will increase or decrease from one
valuation period to the next.
<TABLE>
<S> <C>
THE UNIT VALUE o the total value of the portfolio shares held in the
OF ANY subaccount, determined by multiplying the number of
SUBACCOUNT AT portfolio shares owned by the subaccount times the
THE END OF A portfolio's net asset value per share determined at the end
VALUATION of the valuation period; MINUS
PERIOD o a deduction for the mortality and expense risk charge;
IS CALCULATED AS: MINUS
o the accrued amount of reserve for any taxes or other
economic burden resulting from applying tax laws that we
determine to be properly attributable to the subaccount;
and the result divided by
o the number of outstanding units in the subaccount.
</TABLE>
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The portfolio in which any subaccount invests will determine its net asset
value per share once daily, as of the close of the regular business session of
the NYSE (usually 4:00 p.m. Eastern time), which coincides with the end of each
valuation period.
FIXED ACCOUNT VALUE
On the reallocation date, the fixed account value is equal to the cash
value allocated to the fixed account.
<TABLE>
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THE FIXED ACCOUNT o the sum of premium(s) allocated to the fixed account; PLUS
VALUE AT THE END OF o any amounts transferred from a subaccount to the fixed
ANY VALUATION account; PLUS
PERIOD IS EQUAL TO: o total interest credited to the fixed account; MINUS
o amounts charged to pay for monthly deductions; MINUS
o amounts withdrawn from the fixed account; MINUS
o amounts transferred from the fixed account to a
subaccount; MINUS
o amounts withdrawn from the fixed account to pay any pro
rata decrease charge incurred due to a decrease in specified
amount.
</TABLE>
The fixed account may not be available to residents of all states.
TRANSFERS
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GENERAL
You or your agent/registered representative of record may make transfers
among a total of 12 active subaccounts or from the subaccounts to the fixed
account. We determine the amount you have available for transfer at the end of
the valuation period when we receive your transfer request at our
administrative office. The following features apply to transfers under the
Policy:
[o] You may make an unlimited number of "non-substantive" transfers in a
Policy year among the subaccounts, although we will limit
"substantive" transfers, as discussed below.
[o] We may, at any time, discontinue transfer privileges, modify our
procedures, or limit the number of tranfers we permit.
[o] You may make one transfer from the fixed account per Policy year
(unless you choose dollar cost averaging from the fixed account).
[o] Unless otherwise required by state law, we will restrict transfers to
the fixed account, if the fixed account value following the transfer
would exceed $500,000.
[o] You may request transfers in writing (in a form we accept), by fax or
by telephone.
34
<PAGE>
[o] There is no minimum amount that must be transferred.
[o] There is no minimum amount that must remain in a subaccount after a
transfer.
[o] We deduct a $10 charge from the amount transferred for the 13th and
each additional transfer in a Policy year.
[o] We consider all transfers made in any one day to be a single
transfer.
[o] Transfers resulting from loans, conversion rights, reallocation of
cash value immediately after the reallocation date, and transfers
from the fixed account are NOT treated as transfers for the purpose
of the transfer charge.
[o] Transfers under dollar cost averaging and asset rebalancing are
treated as transfers for purposes of the transfer charge.
The Policy's transfer privilege is not intended to afford policyowners a
way to speculate on short-term movements in the market. Excessive use of the
transfer privilege can disrupt the management of the portfolios and increase
transaction costs. Accordingly, we have established a policy of limiting
excessive transfer activity. We will limit transfer activity to two substantive
transfers (at least 30 days apart) from each portfolio, except from the WRL
J.P. Morgan Money Market, during any 12-month period. We interpret
"substantive" to mean either a dollar amount large enough to have a negative
impact on a portfolio's operations or a series of movements between portfolios.
We will not limit non-substantive transfers.
Your Policy, as applied for and issued, will automatically receive
telephone transfer privileges unless you provide other instructions. The
telephone transfer privileges allow you to give authority to the registered
representative or agent of record for your Policy to make telephone transfers
and to change the allocation of future payments among the subaccounts and the
fixed account on your behalf according to your instructions. To make a
telephone transfer, you may call 1-800-322-7164 or fax your instructions to
727-299-1648.
Please note the following regarding telephone or fax transfers:
o We are not liable for any loss, damage, cost or expense from
complying with telephone instructions we reasonably believe to be
authentic. You bear the risk of any such loss.
o We will employ reasonable procedures to confirm that telephone
instructions are genuine.
o If we do not employ reasonable confirmation procedures, we may be
liable for losses due to unauthorized or fraudulent instructions.
o Such procedures may include requiring forms of personal
identification prior to acting upon telephone instructions,
providing written confirmation of transactions to owners, and/or
tape recording telephone instructions received from owners.
o We may also require written confirmation of your request.
o If you do not want the ability to make telephone transfers, you
should notify us in writing.
o Telephone or fax requests must be received at our administrative
office before 4:00 p.m. Eastern time to assure same-day pricing of
the transaction.
o We will not be responsible for any transmittal problems when you fax
us your request unless you report it to us within five business days
and send us proof of your fax transmittal.
35
<PAGE>
o WE WILL NOT BE RESPONSIBLE FOR SAME-DAY PROCESSING OF TRANSFERS IF
YOU FAX YOUR REQUEST TO A NUMBER OTHER THAN 727-299-1648.
o We may discontinue this option at any time.
We will process any transfer request we receive at our administrative
office before the NYSE closes (usually 4:00 p.m. Eastern time) using the
subaccount unit value determined at the end of that session of the NYSE. If we
receive the transfer request after the NYSE closes, we will process the request
using the subaccount unit value determined at the close of the next regular
business session of the NYSE.
FIXED ACCOUNT TRANSFERS
You may make one transfer per Policy year from the fixed account unless
you select dollar cost averaging from the fixed account. We reserve the right
to require that you make the transfer request in writing. We must receive the
transfer request no later than 30 days after a Policy anniversary. We will make
the transfer at the end of the valuation date on which we receive the written
request. The maximum amount you may transfer is limited to the greater of:
o 25% of the amount in the fixed account; or
o the amount you transferred from the fixed account in the immediately
prior Policy year.
The fixed account may not be available to residents of all states. This
means that residents of some states may not direct or transfer any money to the
fixed account.
CONVERSION RIGHTS
If, within 24 months of your Policy date, you transfer all of your
subaccount values to the fixed account, then we will not charge you a transfer
fee, even if applicable. You must make your request in writing.
DOLLAR COST AVERAGING
Dollar cost averaging is an investment strategy designed to reduce the
average purchase price per unit. The strategy spreads the allocation of your
premium into the subaccounts over a period of time. This potentially allows you
to reduce the risk of investing most of your premium into the subaccounts at a
time when prices are high. The success of this strategy is not assured and
depends on market trends. You should consider carefully your financial ability
to continue the program over a long enough period of time to purchase units
when their value is low as well as when it is high. We make no guarantee that
dollar cost averaging will result in a profit or protect you against loss.
Under dollar cost averaging, we automatically transfer a set dollar amount
from either the WRL J.P. Morgan Money Market subaccount, the WRL AEGON Bond
subaccount or the fixed account to a subaccount that you choose. We will make
the transfers monthly as of the end of the valuation date starting on the first
Monthiversary after the reallocation date. We
36
<PAGE>
will make the first transfer in the month after we receive your request at our
administrative office, provided that we receive the form by the 25th day of the
month.
<TABLE>
<S> <C>
TO START DOLLAR COST o you must submit a completed form to us at our
AVERAGING: administrative office requesting dollar cost averaging;
o you must have at least $5,000 in the account from which
we will make transfers; and
o your total transfers each month under dollar cost
averaging must be at least $100.
</TABLE>
You may request dollar cost averaging at any time. There is no charge for
dollar cost averaging. However, each transfer under dollar cost averaging
counts towards your 12 free transfers each year.
<TABLE>
<S> <C>
DOLLAR o we receive your request to cancel your participation;
COST AVERAGING o the value in the accounts from which we make the
WILL TERMINATE IF: transfers is depleted;
o you elect to participate in the asset rebalancing program;
OR
o you elect to participate in any asset allocation service
provided by a third party.
</TABLE>
We may modify, suspend, or discontinue dollar cost averaging at any time.
ASSET REBALANCING PROGRAM
We also offer an asset rebalancing program under which you may transfer
amounts periodically to maintain a particular percentage allocation among the
subaccounts you have selected. You cannot have more than 12 active subaccounts.
Cash value allocated to each subaccount will grow or decline in value at
different rates. The asset rebalancing program automatically reallocates the
cash value in the subaccounts at the end of each period to match your Policy's
currently effective premium allocation schedule. Cash value in the fixed
account and the dollar cost averaging program is not available for this
program. This program does not guarantee gains. A subaccount may still have
losses.
You may elect asset rebalancing to occur on each quarterly, semi-annual or
annual anniversary of the Policy date. You may modify your allocations
quarterly. Once we receive the asset rebalancing request form, we will effect
the initial rebalancing of cash value on the next such anniversary, in
accordance with the Policy's current premium allocation schedule. We will
credit the amounts transferred at the unit value next determined on the dates
the transfers are made. If a day on which rebalancing would ordinarily occur
falls on a day on which the NYSE is closed, rebalancing will occur on the next
day the NYSE is open.
37
<PAGE>
<TABLE>
<S> <C>
TO START o you must submit a completed asset rebalancing request
ASSET REBALANCING: form to us at our administrative office before the maturity
date; and
o you must have a minimum cash value of $5,000 or make
a $5,000 initial premium payment.
</TABLE>
There is no charge for the asset rebalancing program. However, each
reallocation we make under the program counts towards your 12 free transfers
each year.
<TABLE>
<S> <C>
ASSET REBALANCING o you elect to participate in the dollar cost averaging
WILL CEASE IF: program;
o we receive your request to discontinue participation;
o you make ANY transfer to or from any subaccount other
than under a scheduled rebalancing; or
o you elect to participate in any asset allocation service
provided by a third party.
</TABLE>
You may start and stop participation in the asset rebalancing program at
any time; but we restrict your right to re-enter the program to once each
Policy year. If you wish to resume the asset rebalancing program, you must
complete a new request form. We may modify, suspend, or discontinue the asset
rebalancing program at any time.
THIRD PARTY ASSET ALLOCATION SERVICES
We may provide administrative or other support services to independent
third parties you authorize to conduct transfers on your behalf, or who provide
recommendations as to how your subaccount values should be allocated. This
includes, but is not limited to, transferring subaccount values among
subaccounts in accordance with various investment allocation strategies that
these third parties employ. These independent third parties may or may not be
appointed Transamerica agents for the sale of Policies. TRANSAMERICA DOES NOT
ENGAGE ANY THIRD PARTIES TO OFFER INVESTMENT ALLOCATION SERVICES OF ANY TYPE,
SO THAT PERSONS OR FIRMS OFFERING SUCH SERVICES DO SO INDEPENDENT FROM ANY
AGENCY RELATIONSHIP THEY MAY HAVE WITH TRANSAMERICA FOR THE SALE OF POLICIES.
TRANSAMERICA THEREFORE TAKES NO RESPONSIBILITY FOR THE INVESTMENT ALLOCATIONS
AND TRANSFERS TRANSACTED ON YOUR BEHALF BY SUCH THIRD PARTIES OR ANY INVESTMENT
ALLOCATION RECOMMENDATIONS MADE BY SUCH PARTIES. Transamerica does not
currently charge you any additional fees for providing these support services.
Transamerica reserves the right to discontinue providing administrative and
support services to owners utilizing independent third parties who provide
investment allocation and transfer recommendations.
38
<PAGE>
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This section describes the charges and deductions that we make under the
Policy to compensate for: (1) the services and benefits we provide; (2) the
costs and expenses we incur; and (3) the risks we assume.
<TABLE>
<S> <C>
SERVICES AND BENEFITS WE o the death benefit, cash withdrawals and loan benefits;
PROVIDE UNDER THE POLICY: o investment options, including premium allocations;
o administration of elective options; and
o the distribution of reports to owners.
</TABLE>
<TABLE>
<S> <C>
COSTS AND EXPENSES o costs associated with processing and underwriting
WE INCUR: applications;
o expenses of issuing and administering the Policy (includ-
ing any Policy riders);
o overhead and other expenses for providing services and
benefits, sales commissions and marketing expenses; and
o other costs of doing business, such as collecting premiums,
maintaining records, processing claims, effecting transac-
tions, and paying federal, state and local premium and
other taxes and fees.
</TABLE>
<TABLE>
<S> <C>
RISKS WE ASSUME: o that the charges we may deduct may be insufficient to
meet our actual claims because insureds die sooner than
we estimate; and
o that the costs of providing the services and benefits under
the Policies may exceed the charges we are allowed to
deduct.
</TABLE>
PREMIUM CHARGES
We deduct no charges from premiums before allocating the premiums to the
separate account and the fixed account according to your instructions.
MONTHLY DEDUCTION
We take a monthly deduction from the cash value on the Policy date and on
each Monthiversary. We deduct this charge on a pro rata basis from all accounts
(i.e., in the same proportion that the value in each subaccount and the fixed
account bears to the total cash value on the Monthiversary). Because portions
of the monthly deduction (such as cost of insurance) can vary monthly, the
monthly deduction will also vary.
39
<PAGE>
<TABLE>
<S> <C>
THE MONTHLY DEDUCTION o the monthly Policy charge; PLUS
IS EQUAL TO: o the monthly cost of insurance charge for the Policy; PLUS
o the monthly charge for any benefits provided by riders
attached to the Policy; PLUS
o the pro rata decrease charge (see p. ) incurred as a result
of a decrease in the specified amount.
MONTHLY POLICY CHARGE:
o This charge equals $5.00 each Policy month.
o We will not increase this charge.
o We may waive this charge at issue on additional
policies (not on the original Policy) purchased
naming the same owner and insured.
o This charge compensates us for administrative
expenses such as recordkeeping, processing death
benefit claims and Policy changes, and overhead
costs.
COST OF INSURANCE CHARGE:
o We deduct this charge each month. It varies each
month and is equal to:
o the death benefit on the Monthiversary;
DIVIDED BY
o 1.0024663 (this factor reduces the net amount
at risk, for purposes of computing the cost of
insurance, by taking into account assumed
monthly earnings at an annual rate of 3.0%);
MINUS
o the cash value on the Monthiversary;
MULTIPLIED BY
o the monthly cost of insurance rate for the
Policy.
OPTIONAL INSURANCE RIDERS:
o The monthly deduction will include charges for any
optional insurance benefits you add to your Policy
by rider (see Supplemental Benefits (Riders) p. ).
</TABLE>
We base the cost of insurance rates on the insured's attained age, gender,
rate class, specified amount, and the length of time that the Policy has been
in force. For Policies with a specified amount of $250,000 or more, we
generally charge a lower rate. The actual monthly cost of insurance rates are
based on our expectations as to future mortality experience. The rates will
never be greater than the guaranteed amount stated in your Policy. These
guaranteed rates are based on the 1980 Commissioners Standard Ordinary (C.S.O.)
40
<PAGE>
Mortality Tables and the insured's attained age, gender and rate class. For
standard rate classes, these guaranteed rates will never be greater than the
rates in the C.S.O. tables. We may also guarantee a rate for a specific period
of time (E.G., one year). For a listing of rate classes, see Underwriting
Standards p. .
We may issue certain Policies on a simplified or expedited basis. The cost
of insurance rates for Policies we issue on this basis will be no higher than
the guaranteed rates for select, non-tobacco use or standard, tobacco use
categories. However, these rates may be higher or lower than current rates
charged under otherwise identical Policies that are using standard underwriting
criteria.
<TABLE>
<S> <C>
MORTALITY AND EXPENSE We deduct a daily charge from your cash value in each
RISK CHARGE subaccount to compensate us for certain mortality and expense
risks we assume. This charge is equal to:
o your Policy's cash value in each subaccount MULTIPLIED BY
o the daily pro rata portion of the annual mortality and
expense risk charge rate of 0.90%.
</TABLE>
The annual rate is equal to 0.90% of the average daily net assets of each
subaccount. We guarantee to reduce this charge to 0.60% after the first 15
Policy years. We intend to reduce this charge to 0.30% in the 16th Policy year
but we do not guarantee that we will do so, and we reserve the right to
maintain this charge at the 0.60% level after the 15th Policy year.
The mortality risk is that an insured will live for a shorter time than we
project. The expense risk is that the expenses that we incur will exceed the
administrative charge limits we set in the Policy.
If this charge does not cover our actual costs, we absorb the loss.
Conversely, if the charge more than covers actual costs, the excess is added to
our surplus. We expect to profit from this charge. We may use any profits to
cover distribution costs.
SURRENDER CHARGE
If you surrender your Policy completely during the first 15 years, we
deduct a surrender charge from your cash value and pay the remaining cash value
(less any outstanding loan amounts) to you. The payment you receive is called
the net surrender value. The formula we use reduces the surrender charge at
older ages in compliance with state laws.
THE SURRENDER CHARGE MAY BE SIGNIFICANT. YOU SHOULD CALCULATE THIS CHARGE
CAREFULLY BEFORE YOU CONSIDER A SURRENDER. Under some circumstances the level
of surrender charge might result in no net surrender value available if you
surrender your Policy in the first few Policy years. This will depend on a
number of factors, but is more likely if:
o you pay premiums equal to or not much higher than the minimum no
lapse guarantee premium shown in your Policy; and/or
o investment performance is too low.
41
<PAGE>
<TABLE>
<S> <C>
THE SURRENDER CHARGE IS o the ISSUE CHARGE plus the SURRENDER CHARGE BASE;
EQUAL TO: multiplied by
o the SURRENDER CHARGE FACTOR.
</TABLE>
The ISSUE CHARGE is $5.00 MULTIPLIED BY each $1,000 of the initial
specified amount stated in your Policy. This charge helps us recover the
underwriting, processing and start-up expenses that we incur in connection with
the Policy and the separate account.
The SURRENDER CHARGE BASE equals:
o the total premiums paid up to the surrender charge base premium
shown in your Policy; PLUS
o the total premiums paid in excess of the surrender charge base
premium, MULTIPLIED BY the following percentage (which varies by
the insured's issue age):
<TABLE>
<CAPTION>
ISSUE AGE PERCENTAGE
- --------------- ---------------
<S> <C>
0-55 8.00%
56-60 6.00%
61-65 4.00%
66-70 3.00%
71-75 2.00%
76-80 1.50%
81-85 1.00%
</TABLE>
To determine the SURRENDER CHARGE, we apply the SURRENDER CHARGE FACTOR to
the sum of the ISSUE CHARGE plus the SURRENDER CHARGE BASE. The SURRENDER
CHARGE FACTOR varies with the insured's issue age and the number of years the
Policy has been in force. For male insureds ages 0-65, and for female insureds
ages 0-70, the surrender charge factor is equal to 1.00 during Policy years
1-10. It then decreases by 0.20 each year until the 15th Policy year when it is
zero. For insureds with older issue ages, the factor is less than 1.00 at the
end of the 10th Policy year and decreases to zero at the end of the 15th Policy
year.
SURRENDER CHARGE FACTORS
MALES ISSUE AGES 0 - 65
FEMALES ISSUE AGES 0 - 70
<TABLE>
<CAPTION>
END OF POLICY YEAR* FACTOR
- ---------------------- -------
<S> <C>
At Issue 1.00
1-10 1.00
11 .80
12 .60
13 .40
14 .20
15 0
</TABLE>
* The factor on any date other than a Policy anniversary will be
determined proportionately using the factor at the end of the Policy
year prior to surrender and the factor at the end of the Policy year
of surrender.
Applying the surrender charge factor to the total of the issue charge and
the surrender charge base for any surrender during the 11th through the 15th
Policy years will often result
42
<PAGE>
in a reduced surrender charge. If you surrender your Policy after the 15th
Policy year, there are no issue or sales charges due. We always determine the
surrender charge factor from the Policy date to the surrender date, regardless
of whether there were any prior lapses and reinstatements.
o SURRENDER CHARGE EXAMPLE 1: Assume a male insured purchases the
Policy at issue age 35 for $250,000 of specified amount, paying
$3,000 per year for four years ($12,000), and then surrenders the
Policy. The surrender charge base premium is $667.50 (250 units at
$2.67). The surrender charge would then be calculated as follows:
<TABLE>
<S> <C> <C> <C>
(a) ISSUE CHARGE: (250 x $5.00)
(units per thousand of specified amount x $5.00) = $1,250.00
(b) SURRENDER CHARGE BASE PREMIUM: = $ 667.50
(c) EXCESS OVER SURRENDER CHARGE BASE PREMIUM:
8.0% of premiums paid in excess of surrender charge
base premium ($12,000 - $667.50) x 8.0% = $ 906.60
(d) APPLICABLE SURRENDER CHARGE FACTOR:
(a + b + c) x 1.00
($1,250.00 + $667.50 + $906.60) x 1.00 = $2,824.10
=========
</TABLE>
o SURRENDER CHARGE EXAMPLE 2: Assume the same facts as in Example 1,
including continued premium payments of $3,000 per year, EXCEPT the
owner surrenders the Policy on the 14th Policy anniversary. The
surrender charge would then be calculated as follows:
<TABLE>
<S> <C> <C> <C>
(a) ISSUE CHARGE: (250 x $5.00)
(units per thousand of specified amount x $5.00) = $1,250.00
(b) SURRENDER CHARGE BASE PREMIUM: = $ 667.50
(c) EXCESS OVER SURRENDER CHARGE BASE PREMIUM:
8.0% of premiums paid in excess of surrender charge
base premium ($42,000 - $667.50) x 8.0% = $3,306.60
(d) APPLICABLE SURRENDER CHARGE FACTOR:
(a + b + c) x .20
($1,250.00 + $667.50 + $3,306.60) x .20 = $1,044.82
=========
</TABLE>
There will be no surrender charge if the owner waits until the 15th Policy
anniversary to surrender the Policy.
The surrender charge helps us recover distribution expenses that we incur
in connection with the Policy, including agent sales commissions and printing
and advertising costs.
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<PAGE>
PRO RATA DECREASE CHARGE
If you decrease the specified amount during the first 15 Policy years, we
will deduct a pro rata decrease charge from the cash value. We will determine
the pro rata decrease charge by:
o calculating the surrender charge that would apply if the Policy
was being surrendered; then MULTIPLY it by
o the ratio of the specified amount decrease you requested to the
initial specified amount of your Policy.
<TABLE>
<S> <C>
THE PRO RATA DECREASE o the specified amount decrease that you request; DIVIDED BY
CHARGE IS EQUAL TO: o the full specified amount on the Policy date; MULTIPLIED BY
o the surrender charge as of the date of the decrease based
on the specified amount on the Policy date.
</TABLE>
We will not deduct the pro rata decrease charge from the cash value when a
specified amount decrease results from:
o a change in the death benefit option; or
o a cash withdrawal (when you select death benefit Option A).
We will determine the pro rata decrease charge from the Policy date to the
date of the decrease using the above formula, regardless of whether your Policy
has lapsed and been reinstated, or you have previously decreased your specified
amount.
If we deduct a pro rata decrease charge due to a decrease in specified
amount, we will reduce proportionately any future surrender charge incurred
during the first 15 Policy years. This means that when we calculate the
surrender charge, we will reduce the charge by an amount equal to the surrender
charge multiplied by the ratio of any prior decreases in the specified amount
to the full initial specified amount. A decrease in specified amount will
generally decrease the insurance protection of the Policy.
<TABLE>
<S> <C>
TRANSFER CHARGE o We currently allow you to make 12 transfers each year
free from charge.
o We charge $10 for each additional transfer.
o For purposes of assessing the transfer charge, all transfers
made in one day, regardless of the number of subaccounts
affected by the transfer, is considered a single transfer.
</TABLE>
o We deduct the transfer charge from the amount being transferred.
o Transfers due to loans, exercise of conversion rights, or from the
fixed account do not count as transfers for the purpose of assessing this
charge.
o Transfers under dollar cost averaging and asset rebalancing are
transfers for purposes of this charge.
o We will not increase this charge.
44
<PAGE>
<TABLE>
<S> <C>
CHANGE IN PREMIUM o We currently do not charge you if you change your
ALLOCATION CHARGE premium allocation. However, in the future we may decide
to charge you $25 if you make more than one change per
Policy year quarter. We will notify you if we decide to
impose this charge.
</TABLE>
<TABLE>
<S> <C>
CASH WITHDRAWAL CHARGE o After the first Policy year, you may take one cash
withdrawal each Policy year.
o When you make a cash withdrawal, we charge a process-
ing fee of $25 or 2% of the amount you withdraw,
whichever is less.
o We deduct this amount from the withdrawal, and we pay
you the balance.
o We will not increase this charge.
</TABLE>
TAXES
We currently do not make any deductions for taxes from the separate
account. We may do so in the future if such taxes are imposed by federal or
state agencies.
PORTFOLIO EXPENSES
The portfolios deduct management fees and expenses from the amounts you
have invested in the portfolios. Some portfolios also deduct 12b-1 fees from
portfolio assets. These fees and expenses currently range from 0.44% to 1.20%.
See the Portfolio Annual Expense Table in this prospectus, and the fund
prospectuses.
Our affiliate, AFSG, the principal underwriter for the Policies, will
receive the 12b-1 fees deducted from portfolio assets for providing shareholder
support services to the portfolios. We and our affiliates, including the
principal underwriter for the Policies, may receive compensation from the
investment advisers, administrators, and/or distributors (and an affiliate
thereof) of the portfolios in connection with administrators or other services
and cost savings experienced by the investment advisers, administrators or
distributors. It is anticipated that such compensation will be based on assets
of the particular portfolios attributable to the Policy and may be significant.
Some advisers, administrators, distributors or portfolios may pay us (and our
affiliates) more than others.
DEATH BENEFIT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEATH BENEFIT PROCEEDS
As long as the Policy is in force, we will pay the death benefit proceeds
on an individual Policy once we receive satisfactory proof of the insured's
death. We may require return of the Policy. We will pay the death benefit
proceeds to the primary beneficiary(ies), if living, or to a contingent
beneficiary. If each beneficiary dies before the insured and there is no
contingent beneficiary, we will pay the death benefit proceeds to the owner or
the
45
<PAGE>
owner's estate. We will pay the death benefit proceeds in a lump sum or under a
payment option. See Payment Options p. .
<TABLE>
<S> <C>
DEATH BENEFIT o the death benefit (described below); MINUS
PROCEEDS EQUAL: o any past due monthly deductions if the insured dies during
the grace period; PLUS
o any additional insurance in force provided by rider; MINUS
o any single-sum benefits paid under the living benefit rider;
MINUS
o any outstanding Policy loans; MINUS
o any interest you owe on Policy loan(s).
</TABLE>
If all or a part of the death benefit proceeds are paid in one sum, we
will pay interest on this sum as required by applicable state law from the date
we receive due proof of the insured's death to the date we make payment.
We may further adjust the amount of the death benefit proceeds if we
contest the Policy or if you misstate the insured's age or gender. See Our
Right to Contest the Policy p. and Misstatement of Age or Gender p. .
DEATH BENEFIT
The Policy provides a death benefit. The death benefit is determined at
the end of the valuation period in which the insured dies. You must select one
of the two death benefit options we offer in your application. No matter which
death benefit option you choose, we guarantee that, so long as the Policy does
not lapse, the death benefit will never be less than the specified amount on
the date of the insured's death.
<TABLE>
<S> <C>
DEATH BENEFIT o the current specified amount; OR
OPTION A EQUALS THE o a specified percentage, called the "limitation percentage,"
GREATER OF: MULTIPLIED BY
o the cash value on the insured's date of death.
</TABLE>
Under Option A, your death benefit remains level unless the limitation
percentage multiplied by the cash value is greater than the specified amount;
then the death benefit will vary as the cash value varies.
The limitation percentage is the minimum percentage of cash value we must
pay as the death benefit under federal tax requirements. It is based on the
attained age of the insured at the beginning of each Policy year. The following
table indicates the limitation percentages for different ages:
46
<PAGE>
<TABLE>
<CAPTION>
ATTAINED AGE LIMITATION PERCENTAGE
------------ ---------------------
<S> <C>
40 and under 250%
41 to 45 250% of cash value minus 7% for each age over age 40
46 to 50 215% of cash value minus 6% for each age over age 45
51 to 55 185% of cash value minus 7% for each age over age 50
56 to 60 150% of cash value minus 4% for each age over age 55
61 to 65 130% of cash value minus 2% for each age over age 60
66 to 70 120% of cash value minus 1% for each age over age 65
71 to 75 115% of cash value minus 2% for each age over age 70
76 to 90 105%
91 to 95 105% of cash value minus 1% for each age over age 90
96 and over 100%
</TABLE>
If the federal tax code requires us to determine the death benefit by
reference to these limitation percentages, the Policy is described as "in the
corridor." An increase in the cash value will increase our risk, and we will
increase the cost of insurance we deduct from the cash value.
OPTION A ILLUSTRATION. Assume that the insured's attained age is under 40,
there have been no withdrawals or decreases in specified amount, and that there
are no outstanding loans. Under Option A, a Policy with a $500,000 specified
amount will generally pay $500,000 in death benefits. However, because the
death benefit must be equal to or be greater than 250% of cash value, any time
the cash value of the Policy exceeds $200,000, the death benefit will exceed
the $500,000 specified amount. Each additional dollar added to the cash value
above $200,000 will increase the death benefit by $2.50.
Similarly, so long as the cash value exceeds $200,000, each dollar taken
out of the cash value will reduce the death benefit by $2.50. If at any time
the cash value multiplied by the limitation percentage is less than the
specified amount, the death benefit will equal the specified amount of the
Policy reduced by the dollar value of any cash withdrawals.
<TABLE>
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DEATH BENEFIT o the current specified amount; PLUS
OPTION B EQUALS THE o the cash value on the insured's date of death; OR
GREATER OF: o the limitation percentage, MULTIPLIED BY
o the cash value on the insured's date of death.
</TABLE>
Under Option B, the death benefit always varies as the cash value varies.
OPTION B ILLUSTRATION. Assume that the insured's attained age is under 40
and that there are no outstanding loans. Under Option B, a Policy with a
specified amount of $500,000 will generally pay a death benefit of $500,000
plus cash value. Thus, a Policy with a cash value of $100,000 will have a death
benefit of $600,000 ($500,000 + $100,000). The death benefit, however, must be
at least 250% of cash value. As a result, if the cash value of the Policy
exceeds $333,333, the death benefit will be greater than the specified amount
plus cash value. Each additional dollar of cash value above $333,333 will
increase the death benefit by $2.50.
Similarly, any time cash value exceeds $333,333, each dollar taken out of
cash value will reduce the death benefit by $2.50. If at any time, cash value
multiplied by the
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limitation percentage is less than the specified amount plus the cash value,
then the death benefit will be the specified amount plus the cash value of the
Policy.
EFFECTS OF CASH WITHDRAWALS ON THE DEATH BENEFIT
If you choose Option A, a cash withdrawal will reduce the specified amount
by an amount equal to the amount of the cash withdrawal. We will not impose a
decrease charge when the specified amount is decreased as a result of taking a
cash withdrawal. Regardless of the death benefit option you choose, a cash
withdrawal will reduce the death benefit by at least the amount of the
withdrawal.
CHOOSING DEATH BENEFIT OPTIONS
You must choose one death benefit option on your application. This is an
important decision. The death benefit option you choose will have an impact on
the dollar value of the death benefit, on your cash value and on the amount of
cost of insurance charges you pay.
You may find Option A more suitable for you if your goal is to increase
your cash value through positive investment experience. You may find Option B
more suitable if your goal is to increase your total death benefit.
CHANGING THE DEATH BENEFIT OPTION
After the third Policy year, you may change your death benefit option once
each Policy year if you have not decreased the specified amount that year.
o You must make your request in writing.
o The effective date of the change will be the Monthiversary on or
following the date when we receive your request for a change at our
administrative office.
o You may not make a change that would decrease the specified
amount below the minimum specified amount stated in your Policy.
o There may be adverse federal tax consequences. You should
consult a tax advisor before changing your Policy's death benefit
option.
If you change your death benefit option from Option B to Option A, we will
make the specified amount after the change equal to the specified amount prior
to the change, plus your Policy's cash value on the effective date of the
change. If you change your death benefit option from Option A to Option B, we
will make the specified amount after the change equal to the specified amount
prior to the change, minus the cash value on the effective date of the change.
We will notify you of the new specified amount.
DECREASING THE SPECIFIED AMOUNT
After the Policy has been in force for three years, you may decrease the
specified amount once each Policy year if you did not change your death benefit
option that year. A decrease in the specified amount may affect your cost of
insurance charge and may have adverse federal tax consequences. You should
consult a tax advisor before decreasing your Policy's specified amount.
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<TABLE>
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CONDITIONS FOR o you must make your request in writing;
DECREASING THE SPECIFIED o you may not change your death benefit option in the same
AMOUNT: Policy year that you decrease your specified amount;
o you may not decrease your specified amount lower than
the minimum specified amount stated in your Policy
(generally $100,000). However, if your initial specified
amount is $250,000 or more, you may not reduce the
specified amount below $250,000;
o you may not decrease your specified amount if it would
disqualify your Policy as life insurance under the Internal
Revenue Code;
o we may limit the amount of the decrease to no more than
20% of the specified amount;
o a decrease in specified amount will take effect on the first
Monthiversary on or after we receive your written request
at our administrative office; and
o we will assess a pro rata decrease charge against the cash
value if you decrease your specified amount within the
first 15 Policy years.
</TABLE>
NO INCREASE IN THE SPECIFIED AMOUNT
We do not allow increases in the specified amount. If you want additional
insurance, you may purchase a term rider (PIR) or purchase an additional
policy(ies). We may waive the monthly Policy charge at issue on additional
policies naming the same insured and owner.
PAYMENT OPTIONS
There are several ways of receiving proceeds under the death benefit and
surrender provisions of the Policy, other than in a lump sum. See Settlement
Options p. for information concerning these settlement options.
SURRENDERS AND CASH WITHDRAWALS
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SURRENDERS
You may make a written request to surrender your Policy for its net
surrender value as calculated at the end of the valuation date on which we
receive your request at our administrative office. The insured must be alive,
the Policy must be in force when you make your written request and it must be
before the maturity date. A surrender is effective as of the date when we
receive your written request. Signature of the owner's spouse is required if
the owner is a resident of Arizona, California, Idaho, Nevada, New Mexico,
Washington or Wisconsin. You will incur a surrender charge if you surrender the
Policy during the first 15 Policy years. See Charges and Deductions --
Surrender Charge p. . Once you
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surrender your Policy, all coverage and other benefits under it cease and
cannot be reinstated. We will normally pay you the net surrender value (cash
value, minus any surrender charge, minus any Policy loans outstanding and minus
any interest you owe on Policy loans) in a lump sum within seven days or under
a settlement option. A surrender may have tax consequences. See Federal Income
Tax Considerations p. .
CASH WITHDRAWALS
After the first Policy year, you may request a cash withdrawal of a
portion of your cash value subject to certain conditions.
<TABLE>
<S> <C>
CASH o You must make your cash withdrawal request to us in
WITHDRAWAL writing.
CONDITIONS: o Signature of the owner's spouse is required if the owner is
a resident of Arizona, California, Idaho, Nevada, New
Mexico, Washington or Wisconsin.
o We only allow one cash withdrawal per Policy year.
o We may limit the amount you can withdraw to at least
$500, and to no more than 10% of the net surrender value.
We currently intend to limit the amount you can withdraw
to 25% of the net surrender value after the 10th Policy
year.
o You may not take a cash withdrawal if it will reduce the
specified amount below the minimum specified amount set
forth in the Policy.
o You may specify the subaccount(s) and the fixed account
from which to make the withdrawal. If you do not specify
an account, we will take the withdrawal from each account
in accordance with your current premium allocation
instructions.
o We generally will pay a cash withdrawal request within
seven days following the valuation date we receive the
request.
o We will deduct a processing fee equal to $25 or 2% of the
amount you withdraw, whichever is less. We deduct this
amount from the withdrawal, and we pay you the balance.
o We do not assess a surrender charge when you take a cash
withdrawal.
o You may not take a cash withdrawal if it would disqualify
your Policy as life insurance under the Internal Revenue
Code.
o A cash withdrawal may have tax consequences. See
Federal Income Tax Considerations p. .
</TABLE>
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A cash withdrawal will reduce the cash value by the amount of the cash
withdrawal, and will reduce the death benefit by at least the amount of the
cash withdrawal. When death benefit Option A is in effect, a cash withdrawal
will reduce the specified amount by an amount equal to the amount of the cash
withdrawal. We will not impose a pro rata decrease charge when the specified
amount is decreased as a result of taking a cash withdrawal.
LOANS
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GENERAL
After the first Policy year (as long as the Policy is in force) you may
borrow money from us using the Policy as the only security for the loan. We may
permit a loan prior to the first anniversary for Policies issued pursuant to
1035 Exchanges. A loan that is taken from, or secured by, a Policy may have tax
consequences. See Federal Income Tax Considerations p. .
<TABLE>
<S> <C>
POLICY LOANS ARE o we may require you to borrow at least $500;
SUBJECT TO CERTAIN o the maximum amount you may borrow is 90% of the cash
CONDITIONS: value, less any surrender charge and any outstanding loan
amount; and
o signature of the owner's spouse is required if the owner is
a resident of Arizona, California, Idaho, Nevada, New
Mexico, Washington or Wisconsin.
</TABLE>
When you take a loan, we will withdraw an amount equal to the requested
loan from each of the subaccounts and the fixed account based on your current
premium allocation instructions (unless you specify otherwise). We will
transfer that amount to the loan reserve. The loan reserve is the portion of
the fixed account used as collateral for a Policy loan.
We normally pay the amount of the loan within seven days after we receive
a proper loan request. We may postpone payment of loans under certain
conditions. See Payments We Make p. .
You may request a loan by telephone by calling us at 1-800-322-7164. If
the loan amount you request exceeds $50,000 or if the address of record has
been changed within the past 10 days, we may reject your request. If you do not
want the ability to request a loan by telephone, you should notify us in
writing. You will be required to provide certain information for identification
purposes when you request a loan by telephone. We may ask you to provide us
with written confirmation of your request. We will not be liable for processing
a loan request if we believe the request is genuine.
You may also fax your loan request to us at 727-299-1667. We will not be
responsible for any transmittal problems when you fax your request unless you
report it to us within five business days and send us proof of your fax
transmittal.
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You can repay a loan at any time while the Policy is in force. WE WILL
CONSIDER ANY PAYMENTS YOU MAKE ON THE POLICY TO BE PREMIUM PAYMENTS UNLESS THE
PAYMENTS ARE CLEARLY SPECIFIED AS LOAN REPAYMENTS.
At each Policy anniversary, we will compare the amount of the outstanding
loan to the amount in the loan reserve. At such time, if the amount of the
outstanding loan exceeds the amount in the loan reserve, we will withdraw the
difference from the subaccounts and the fixed account and transfer it to the
loan reserve, in the same manner as when a loan is made. If the amount in the
loan reserve exceeds the amount of the outstanding loan, we will withdraw the
difference from the loan reserve and transfer it to the subaccounts and the
fixed account in the same manner as current premiums are allocated. No charge
will be imposed for these transfers, and these transfers are not treated as
transfers in calculating the transfer charge. We reserve the right to require a
transfer to the fixed account if the loans were originally transferred from the
fixed account.
INTEREST RATE CHARGED
We will charge you an annual interest rate on a Policy loan that is equal
to 5.5% and is payable in arrears on each Policy anniversary. Loan interest
that is unpaid when due will be added to the amount of the loan on each Policy
anniversary and will bear interest at the same rate.
LOAN RESERVE INTEREST RATE CREDITED
We will credit the amount in the loan reserve with interest at an
effective annual rate of at least 4.0%. We may credit a higher rate, but we are
not obligated to do so.
o We currently credit interest at an effective annual rate of
4.75% on amounts you borrow during the first 10 Policy years.
o After the 10th Policy year, you may borrow at preferred loan
rates an amount equal to the cash value minus total premiums paid
(reduced by any cash withdrawals) and minus any outstanding loan
amounts (including any interest you owe on Policy loan(s)). We
currently credit interest at a 5.5% preferred loan rate. THIS RATE IS
NOT GUARANTEED.
EFFECT OF POLICY LOANS
A Policy loan reduces the death benefit proceeds and net surrender value
by the amount of any outstanding loan plus interest you owe on the loan.
Repaying the loan causes the death benefit proceeds and net surrender value to
increase by the amount of the repayment. As long as a loan is outstanding, we
hold an amount equal to the loan as of the last Policy anniversary plus any
accrued interest net of any loan payments. This amount is not affected by the
separate account's investment performance and may not be credited with the
interest rates accruing on the fixed account. Amounts transferred from the
separate account to the loan reserve will affect the value in the separate
account because we credit such amounts with an interest rate declared by us
rather than a rate of return reflecting the investment results of the separate
account.
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There are risks involved in taking a Policy loan, a few of which include
the potential for a Policy to lapse if projected earnings, taking into account
outstanding loans, are not achieved. A Policy loan may also have possible
adverse tax consequences that could occur if a Policy lapses with loans
outstanding. You should consult a tax advisor before taking out a Policy loan.
See Federal Income Tax Considerations p. .
We will notify you (and any assignee of record) if the sum of your loans
plus any interest you owe on the loans is more than the net surrender value. If
you do not submit a sufficient payment within 61 days from the date of the
notice, your Policy may lapse.
POLICY LAPSE AND REINSTATEMENT
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LAPSE
Your Policy may not necessarily lapse (terminate without value) if you
fail to make a planned periodic payment. However, even if you make all your
planned periodic payments, there is no guarantee that your Policy will not
lapse. This Policy provides a no lapse period. See below. Once your no lapse
period ends, your Policy may lapse if the net surrender value on any
Monthiversary is less than the monthly deductions due on that day. Such lapse
might occur if investment experience is unfavorable or loans and cash
withdrawals cause a decrease in the net surrender value, or you have not paid
sufficient premiums (as described below) to offset the monthly deductions.
If the net surrender value is not enough to pay the monthly deductions, we
will mail a notice to your last known address and any assignee of record. The
notice will specify the minimum payment you must pay and the final date by
which we must receive the payment to prevent a lapse. We generally require that
you make the payment within 61 days after the date of the notice. This 61-day
period is called the GRACE PERIOD. If we do not receive the specified minimum
payment by the end of the grace period, all coverage under the Policy will
terminate without value.
NO LAPSE PERIOD
This Policy provides a no lapse period for the first three Policy years.
As long as you keep the no lapse period in effect, your Policy will not lapse
and no grace period will begin, even if your net surrender value is not enough
to pay your monthly deduction. The no lapse period will not extend beyond the
first three years as stated in your Policy. Each month we determine whether the
no lapse period is still in effect.
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<TABLE>
<S> <C>
EARLY TERMINATION OF THE o The no lapse period will end immediately if you do not
NO LAPSE PERIOD pay sufficient minimum no lapse premiums.
o You must pay total premiums (minus withdrawals,
outstanding loans, and any pro rata decrease charge) that
equal at least the sum of the monthly minimum no lapse
premium in effect each month from the Policy date up to
and including the current month.
</TABLE>
You will lessen the risk of Policy lapse if you keep the no lapse period
in effect. Before you take a cash withdrawal, a loan, or decrease the specified
amount, you should consider carefully the effect it will have on the no lapse
period guarantee.
In addition, if you change death benefit options, decrease the specified
amount, or add or increase a rider, we will adjust the minimum no lapse
premium. See Minimum No Lapse Premium p. for a discussion of how the minimum
no lapse premium is calculated and can change.
REINSTATEMENT
We will reinstate a lapsed Policy if within five years after the lapse
(and prior to the maturity date). To reinstate the Policy you must:
o submit a written application for reinstatement;
o provide evidence of insurability satisfactory to us;
o make a minimum premium payment sufficient to provide a premium
that is large enough to cover:
o three monthly deductions; and
o any surrender charge calculated from the Policy date to the date
of reinstatement. (Although we do not currently assess the
surrender charge upon reinstatement, we reserve the right to do
so in the future.)
We will not reinstate any indebtedness. The cash value of the loan reserve on
the reinstatement date will be zero. Your net surrender value on the
reinstatement date will equal the premiums you pay at reinstatement, MINUS one
monthly deduction and any surrender charge. The reinstatement date for your
Policy will be the Monthiversary on or following the day we approve your
application for reinstatement. We may decline a request for reinstatement.
FEDERAL INCOME TAX CONSIDERATIONS
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The following summarizes some of the basic federal income tax
considerations associated with a Policy and does not purport to be complete or
to cover all situations. THIS DISCUSSION IS NOT INTENDED AS TAX ADVICE. Please
consult counsel or other qualified tax advisors for more complete information.
We base this discussion on our understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue Service (the
"IRS"). Federal income tax laws and the current interpretations by the IRS may
change.
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TAX STATUS OF THE POLICY
A Policy must satisfy certain requirements set forth in the Internal
Revenue Code (the "Code") in order to qualify as a life insurance policy for
federal income tax purposes and to receive the tax treatment normally accorded
life insurance policies under federal tax law. Guidance as to how these
requirements are to be applied is limited. Nevertheless, we believe that a
Policy issued on the basis of a standard rate class should generally satisfy
the applicable Code requirements. Because of the absence of pertinent
interpretations of the Code requirements, there is, however, less certainty
about the application of such requirements to a Policy issued on a substandard
basis. If it is subsequently determined that a Policy does not satisfy the
applicable requirements, we may take appropriate steps to bring the Policy into
compliance with such requirements and we reserve the right to restrict Policy
transactions in order to do so.
In certain circumstances, owners of variable life insurance policies have
been considered for federal income tax purposes to be the owners of the assets
of the separate account supporting their policies due to their ability to
exercise investment control over those assets. Where this is the case, the
policyowners have been currently taxed on income and gains attributable to the
separate account assets. There is little guidance in this area, and some
features of the Policies, such as flexibility to allocate premiums and cash
values, have not been explicitly addressed in published rulings. While we
believe that the Policy does not give you investment control over separate
account assets, we reserve the right to modify the Policy as necessary to
prevent you from being treated as the owner of the separate account assets
supporting the Policy.
In addition, the Code requires that the investments of the separate
account be "adequately diversified" in order to treat the Policy as a life
insurance policy for federal income tax purposes. We intend that the separate
account, through the portfolios, will satisfy these diversification
requirements.
The following discussion assumes that the Policy will qualify as a life
insurance policy 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 beneficiary's gross income. Federal, state and local
transfer, and other tax consequences of ownership or receipt of Policy proceeds
depend on your circumstances and the beneficiary's circumstances. A tax advisor
should be consulted on these consequences.
Generally, you will not be deemed to be in constructive receipt of the
cash value until there is a distribution. When distributions from a Policy
occur, or when loans are taken out from or secured by a Policy (e.g., by
assignment), the tax consequences depend on whether the Policy is classified as
a "Modified Endowment Contract" ("MEC").
MODIFIED ENDOWMENT CONTRACTS. Under the Code, certain life insurance
policies are classified as MECs and receive less favorable tax treatment than
other life insurance policies.
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The rules are too complex to summarize here, but generally depend on the amount
of premiums paid during the first seven Policy years. Certain changes in the
Policy after it is issued could also cause the Policy to be classified as a
MEC. Due to the Policy's flexibility, each Policy's circumstances will
determine whether the Policy is classified as a MEC. If you do not want your
Policy to be classified as a MEC, you should consult a tax advisor to determine
the circumstances, if any, under which your Policy would or would not be
classified as a MEC.
Upon issue of your Policy, we will notify you as to whether or not your
Policy is classified as a MEC based on the initial premium we receive. If your
Policy is not a MEC at issue, then you will also be notified of the maximum
amount of additional premiums you can pay without causing your Policy to be
classified as a MEC. If a payment would cause your Policy to become a MEC, you
and your agent will be notified. At that time, you will need to notify us if
you want to continue your Policy as a MEC.
Distributions (other than death benefits) from Modified Endowment
Contracts. Policies classified as MECs are subject to the following tax rules:
o All distributions other than death benefits from a MEC,
including distributions upon surrender and cash withdrawals, will be
treated first as distributions of gain taxable as ordinary income.
They will be treated as tax-free recovery of the owner's investment
in the Policy only after all gain has been distributed. Your
investment in the Policy is generally your total premium payments.
When a distribution is taken from the Policy, your investment in the
Policy is reduced by the amount of the distribution that is tax-free.
o Loans taken from or secured by (e.g., by assignment) such a
Policy are treated as distributions and taxed accordingly.
o A 10% additional federal income tax is imposed on the amount
included in income except where the distribution or loan is made when
you have attained age 59 1/2 or are disabled, or where the
distribution is part of a series of substantially equal periodic
payments for your life (or life expectancy) or the joint lives (or
joint life expectancies) of you and the beneficiary.
o If a Policy becomes a MEC, distributions that occur during the
Policy year will be taxed as distributions from a MEC. In addition,
distributions from a Policy within two years before it becomes a MEC
will be taxed in this manner. This means that a distribution from a
Policy that is not a MEC at the time when the distribution is made
could later become taxable as a distribution from a MEC.
Distributions (other than death benefits) from Policies that are not
Modified Endowment Contracts. Distributions other than death benefits from a
Policy that is not a MEC are generally treated first as a recovery of your
investment in the Policy, and as taxable income after the recovery of all
investment in the Policy. However, certain distributions which must be made in
order to enable the Policy to continue to qualify as a
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life insurance policy for federal income tax purposes if Policy benefits are
reduced during the first 15 Policy years may be treated in whole or in part as
ordinary income subject to tax.
Loans from or secured by a Policy that is not a MEC are generally not
treated as distributions. Instead, such loans are treated as indebtedness.
However, there is some uncertainty as to the tax treatment of a loan at
preferred loan rates under a Policy that is not a MEC and you should consult a
tax advisor on this point.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a MEC are subject to the 10% additional tax.
Multiple Policies. All MECs that we issue (or that our affiliates issue)
to the same owner during any calendar year are treated as one MEC for purposes
of determining the amount includable in the owner's income when a taxable
distribution occurs.
INVESTMENT IN THE POLICY. Your investment in the Policy is generally the
sum of the premium payments you made. When a distribution from the Policy
occurs, your investment in the Policy is reduced by the amount of the
distribution that is tax-free.
POLICY LOANS. If a loan from a Policy is outstanding when the Policy is
canceled or lapses, then the amount of the outstanding indebtedness will be
taxed as if it were a distribution.
DEDUCTIBILITY OF POLICY LOAN INTEREST. In general, interest you pay on a
loan from a Policy will not be deductible. Before taking out a Policy loan, you
should consult a tax advisor as to the tax consequences.
BUSINESS USES OF THE POLICY. The Policy may be used in various
arrangements, including nonqualified deferred compensation or salary
continuance plans, split dollar insurance plans, executive bonus plans, retiree
medical benefit plans and others. The tax consequences of such plans and
business uses of the Policy may vary depending on the particular facts and
circumstances of each individual arrangement and business uses of the Policy.
Therefore, if you are contemplating using the Policy in any arrangement the
value of which depends in part on its tax consequences, you should be sure to
consult a tax advisor as to tax attributes of the arrangement. 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.
LIVING BENEFIT RIDER (AN ACCELERATED DEATH BENEFIT). We believe that the
single-sum payment we make under this rider should be fully excludable from the
gross income of the beneficiary, as long as the beneficiary is an insured under
the Policy. You should, however, consult a tax advisor about the consequences
of adding this rider to your Policy, or requesting a single-sum payment.
POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes
is uncertain, there is always a possibility that the tax treatment of the
Policies could change by legislation or otherwise. You should consult a tax
advisor with respect to legal developments and their effect on the Policy.
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SPECIAL RULES FOR 403(B) ARRANGEMENTS
If this Policy is purchased by public school systems and certain
tax-exempt organizations for their employees, then the federal, state and
estate tax consequences could differ from those stated in this prospectus. A
competent tax advisor should be consulted in connection with such purchase.
Certain restrictions apply. The Policy must be purchased in connection
with a tax-sheltered annuity described in Section 403(b) of the Code. Premiums,
distributions, and other transactions in connection with the Policy must be
administered in coordination with the Section 403(b) annuity.
The amount of life insurance that may be purchased on behalf of a
participant in a 403(b) plan is limited. The current cost of insurance for the
net amount at risk is treated under the Code as a "current fringe benefit" and
must be included annually in the plan participant's gross income. This cost
(generally referred to as the "P.S. 58" cost) is reported to the participant
annually.
If the plan participant dies while covered by the 403(b) plan and the
Policy proceeds are paid to the participant's beneficiary, then the excess of
the death benefit over the cash value will generally not be taxable. However,
the cash value will generally be taxable to the extent it exceeds the
participant's cost basis in the Policy.
Policies owned under these types of plans may be subject to the Employee
Retirement Income Security Act of 1974 ("ERISA"), which may impose additional
requirements on Policy loans and other Policy provisions. Plan loans must also
satisfy tax requirements in order to be treated as non-taxable. Plan loan
requirements and provisions may differ from the Policy loan provisions stated
in the prospectus. You should consult a qualified advisor regarding ERISA.
OTHER POLICY INFORMATION
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OUR RIGHT TO CONTEST THE POLICY
In issuing this Policy, we rely on all statements made by or for the
insured in the application or in a supplemental application. Therefore, if you
make any material misrepresentation of a fact in the application (or any
supplemental application), then we may contest the Policy's validity or may
resist a claim under the Policy.
In the absence of fraud, we cannot bring any legal action to contest the
validity of the Policy after the Policy has been in force during the insured's
lifetime for two years from the Policy date, or if reinstated, for two years
from the date of reinstatement.
SUICIDE EXCLUSION
If the insured commits suicide, while sane or insane, within two years of
the Policy date (or two years from the reinstatement date, if the Policy lapses
and is reinstated), then
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the Policy will terminate and our liability is limited to an amount equal to
the total premiums paid, less any outstanding loans, and less any cash
withdrawals. We will pay this amount to the beneficiary in one sum.
MISSTATEMENT OF AGE OR GENDER
If the age or gender of the insured was stated incorrectly in the
application or any supplemental application, then the death benefit will be
adjusted based on what the cost of insurance charge for the most recent monthly
deduction would have purchased based on the insured's correct age and gender.
MODIFYING THE POLICY
Only our President or Secretary may modify this Policy or waive any of our
rights or requirements under this Policy. Any modification or waiver must be in
writing. No agent may bind us by making any promise not contained in this
Policy.
If we modify the Policy, we will provide you notice and we will make
appropriate endorsements to the Policy.
BENEFITS AT MATURITY
If the insured is living and the Policy is in force, the Policy will
mature on the Policy anniversary nearest the insured's 100th birthday. This is
the maturity date. On the maturity date we will pay you the net surrender value
of your Policy. If requested, we will extend the maturity date if your Policy
is still in force on the maturity date. Any riders in force on the scheduled
maturity date will terminate on that date and will not be extended. Interest on
any outstanding Policy loans will continue to accrue during the period for
which the maturity date is extended. You must submit a written request for the
extension between 90 and 180 days prior to the maturity date and elect one of
the following:
1. If you had previously selected death benefit Option B, we will change
the death benefit to Option A. On each valuation date, we will adjust
the specified amount to equal the cash value, and the limitation
percentage will be 100%. We will not permit you to make additional
premium payments. We will waive all future monthly deductions; or
2. We will automatically extend the maturity date until the next Policy
anniversary. You must submit a written request, between 90 and 180 days
before each subsequent Policy anniversary, stating that you wish to
extend the maturity date for another Policy year. All benefits and
charges will continue as set forth in your Policy. We will adjust the
annual cost of insurance rates using the then current cost of insurance
rates.
If you choose 2 above, you may change your election to 1 above at any
time. However, if you choose 1 above, then you may not change your election to
2 above.
The tax consequences of extending the maturity date beyond the 100th
birthday of the insured are uncertain. You should consult a tax advisor as to
those consequences.
59
<PAGE>
PAYMENTS WE MAKE
We usually pay the amounts of any surrender, cash withdrawal, death
benefit proceeds, or settlement options within seven business days after we
receive all applicable written notices and/or due proofs of death at our
administrative office. However, we can postpone such payments if:
o the NYSE is closed, other than customary weekend and holiday closing,
or trading on the NYSE is restricted as determined by the SEC; OR
o the SEC permits, by an order, the postponement for the protection of
policyowners; OR
o the SEC determines that an emergency exists that would make the
disposal of securities held in the separate account or the
determination of their value not reasonably practicable.
If you have submitted a recent check or draft, we have the right to defer
payment of surrenders, cash withdrawals, death benefit proceeds, or payments
under a settlement option until such check or draft has been honored. We also
reserve the right to defer payment of transfers, cash withdrawals, death
benefit proceeds or surrenders from the fixed account for up to six months.
SETTLEMENT OPTIONS
If you surrender the Policy, you may elect to receive the net surrender
value in either a lump sum or as a series of regular income payments under one
of the three settlement options described below. In either event, life
insurance coverage ends. Also, when the insured dies, the beneficiary may apply
the lump sum death benefit proceeds to one of the same settlement options. If
the regular payment under a settlement option would be less than $20, we will
instead pay the proceeds in one lump sum. We may make other settlement options
available in the future.
Once we begin making payments under a settlement option, you or the
beneficiary will no longer have any value in the subaccounts or the fixed
account. Instead, the only entitlement will be the amount of the regular
payment for the period selected under the terms of the settlement option
chosen. Depending upon the circumstances, the effective date of a settlement
option is the surrender date or the insured's date of death.
Under any settlement option, the dollar amount of each payment will depend
on four things:
o the amount of the surrender or death benefit proceeds on the surrender
date or insured's date of death;
o the interest rate we credit on those amounts (we guarantee a minimum
annual interest rate of 3.0%);
o the mortality tables we use; and
o the specific payment option(s) you choose.
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<PAGE>
<TABLE>
<S> <C>
OPTION 1 - EQUAL o We will pay the proceeds, plus interest, in equal monthly
MONTHLY INSTALLMENTS installments for a fixed period of your choice, but not
FOR A FIXED PERIOD longer than 240 months.
o We will stop making payments once we have made all the
payments for the period selected.
</TABLE>
<TABLE>
<S> <C>
OPTION 2 - EQUAL At your or the beneficiary's direction, we will make equal
MONTHLY INSTALLMENTS monthly installments:
FOR LIFE (LIFE INCOME) o only for the life of the payee, at the end of which
payments will end; or
o for the longer of the payee's life, or for 10 years if
the payee dies before the end of the first 10 years of
payments; or
o until the total amount of all payments we have made
equals the proceeds that were applied to the
settlement option.
</TABLE>
<TABLE>
<S> <C>
OPTION 3 - EQUAL o We will make equal monthly payments during the joint
MONTHLY INSTALLMENTS FOR lifetime of two persons, first to a chosen payee, and then
THE LIFE OF THE PAYEE AND to a co-payee, if living, upon the death of the payee.
THEN TO A DESIGNATED o Payments to the co-payee, if living, upon the payee's death
SURVIVOR (JOINT AND will equal either:
SURVIVOR) o the full amount made to the payee before the
payee's death; or
o two-thirds of the amount paid to the payee before
the payee's death. All payments will cease upon the
death of the co-payee.
</TABLE>
REPORTS TO OWNERS
At least once each year, or more often as required by law, we will mail to
policyowners at their last known address a report showing the following
information as of the end of the report period:
<TABLE>
<S> <C> <C> <C>
o the current cash value o any activity since the last report
o the current net surrender value o projected values
o the current death benefit o investment experience of each subaccount
o any outstanding loans o any other information required by law
</TABLE>
You may request additional copies of reports, but we may charge a fee for
such additional copies. In addition, we will send written confirmations of any
premium payments and other financial transactions you request. We also will
send copies of the annual and semi-annual report to shareholders for each
portfolio in which you are indirectly invested.
RECORDS
We will maintain all records relating to the separate account and the
fixed account.
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<PAGE>
POLICY TERMINATION
Your Policy will terminate on the earliest of:
<TABLE>
<S> <C> <C> <C>
o the maturity date; o the end of the grace period; or
o the date the insured dies; o the date the Policy is
surrendered.
</TABLE>
SUPPLEMENTAL BENEFITS (RIDERS)
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The following supplemental benefits (riders) are available and may be
added to a Policy. Monthly charges for these riders are deducted from cash
value as part of the monthly deduction. The riders available with the Policy
provide fixed benefits that do not vary with the investment experience of the
separate account. For purposes of the riders, the primary insured is the person
insured under the Policy, and the face amount is the level term insurance
amount we pay at death. These riders may not be available in all states.
CHILDREN'S INSURANCE RIDER
This rider provides a face amount on the primary insured's children. Our
current minimum face amount for this rider for issue ages 0-18 is $5,000. The
maximum face amount is $25,000. At the age of 25 or upon the death of the
primary insured, whichever happens first, this rider may be converted to a new
policy with a maximum face amount of up to five times the face amount of the
rider. We will pay a death benefit once we receive proof that the insured child
died while both the rider and coverage were in force for that child. If the
primary insured dies while the rider is in force, we will terminate the rider
31 days after the death, and we will offer a separate life insurance policy to
each insured child.
ACCIDENTAL DEATH BENEFIT RIDER
Our current minimum face amount for this rider for issue ages 15-59 is
$10,000. The maximum face amount available for this rider is $150,000 (up to
150% of specified amount).
Subject to certain limitations, we will pay a face amount if the primary
insured's death results solely from accidental bodily injury where:
o the death is caused by external, violent, and accidental means;
o the death occurs within 90 days of the accident; and
o the death occurs while the rider is in force.
The rider will terminate on the earliest of:
o the Policy anniversary nearest the primary insured's 70th
birthday;
o the date the Policy terminates; or
o the Monthiversary when the rider terminates at your request.
OTHER INSURED RIDER
This rider insures the spouse or life partner and/or dependent children of
the primary insured. We will pay the rider's face amount when we receive proof
of the other insured's
62
<PAGE>
death. On any Monthiversary while the rider is in force, you may replace it
with a new policy on the other insured's life (without evidence of
insurability).
<TABLE>
<S> <C>
CONDITIONS TO o your request must be in writing;
REPLACE THE o the rider has not reached the anniversary nearest to the
RIDER: other insured's 70th birthday;
o the new policy is any permanent insurance policy that we
currently offer;
o subject to the minimum face amount required for the new
policy, the amount of the insurance under the new policy
will equal the face amount then in force under the rider as
long as it meets the minimum specified amount require-
ments of the original Policy; and
o we will base your premium on the other insured's rate
class under the rider.
</TABLE>
DISABILITY WAIVER RIDER
Subject to certain conditions, we will waive the Policy's monthly
deductions while you are disabled. This rider may be purchased if your issue
age is 15-55 years of age. We must receive proof that:
o you are totally disabled;
o the rider was in force when you became disabled;
o you became disabled before the anniversary nearest your 60th
birthday; and
o you are continuously disabled for at least six months.
We will not waive any deduction which becomes due more than one year before we
receive written notice of your claim.
DISABILITY WAIVER AND INCOME RIDER
This rider has the same benefits as the Disability Waiver Rider, but adds
a monthly income benefit for up to 120 months. This rider may be purchased if
your issue age is 15-55 years of age. The minimum income amount for this rider
is $10. The maximum income amount is the lesser of 0.2% of your specified
amount or $300 per month.
PRIMARY INSURED RIDER ("PIR") AND PRIMARY INSURED RIDER PLUS ("PIR PLUS")
Under the PIR and the PIR Plus, we provide term insurance coverage on a
different basis from the coverage in your Policy.
63
<PAGE>
<TABLE>
<S> <C>
FEATURES OF o the rider increases the Policy's death benefit by the rider's
PIR AND PIR face amount;
PLUS: o the PIR may be purchased from isssue ages 0-85;
o the PIR Plus may be purchased from issue ages 0-85;
o the PIR terminates when the insured turns 95, and the PIR
Plus terminates when the insured turns 90;
o the minimum purchase amount for the PIR and PIR Plus is
$50,000. There is no maximum purchase amount;
o we do not assess any additional surrender charge for PIR
and PIR Plus;
o generally PIR and PIR Plus coverage costs less than the
insurance coverage under the Policy, but has no cash
value;
o you may cancel or reduce your rider coverage without
decreasing your Policy's specified amount; and
o you may generally decrease your Policy's specified amount
without reducing your rider coverage.
</TABLE>
It may cost you less to reduce your PIR or PIR Plus coverage than to
decrease your Policy's specified amount, because we do not deduct a surrender
charge in connection with your PIR or PIR Plus. It may cost you more to keep a
higher specified amount, because the specified amount may have a cost of
insurance that is higher than the cost of the same amount of coverage under
your PIR or PIR Plus.
You should consult your registered representative to determine if you
would benefit from PIR or PIR Plus. We may discontinue offering PIR or PIR Plus
at any time. We may also modify the terms of these riders for new policies.
LIVING BENEFIT RIDER (AN ACCELERATED DEATH BENEFIT)
This rider allows us to pay all or a portion of the death benefit once we
receive satisfactory proof that the insured is ill and has a life expectancy of
one year or less. A doctor must certify the insured's life expectancy.
We will pay a "single-sum benefit" equal to:
o the death benefit on the date we pay the single-sum benefit;
MULTIPLIED BY
o the election percentage of the death benefit you elect to
receive; DIVIDED BY
o 1 + i ("i" equals the current yield on 90-day Treasury bills or
the Policy loan interest rate, whichever is greater); MINUS
o any indebtedness at the time we pay the single-sum benefit,
multiplied by the election percentage.
The maximum terminal illness death benefit we will pay is equal to:
o the death benefit available under the Policy at the insured's
death; PLUS
64
<PAGE>
o the benefit available under any PIR or PIR Plus in force.
o a single-sum benefit may not be greater than $500,000.
The election percentage is a percentage that you select. It may not be
greater than 100% of your Policy's death benefit under the rider.
We will not pay a benefit under the rider if the insured's terminal
condition results from self-inflicted injuries which occur during the period
specified in your Policy's suicide provision.
The rider terminates at the earliest of:
o the date the Policy terminates;
o the date a settlement option takes effect;
o the date we pay a single-sum benefit; or
o the date you terminate the rider.
We do not charge for this rider. This rider may not be available in all
states, or its terms may vary depending on a state's insurance law
requirements.
IMSA
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In recent years, the insurance industry has recognized the need to develop
specific principles and practices to help maintain the highest standards of
marketplace behavior and enhance credibility with consumers. As a result, the
industry established the Insurance Marketplace Standards Association ("IMSA").
As an IMSA member, we agree to follow a set of standards in our
advertising, sales and service for individual life insurance and annuity
products. The IMSA logo, which you will see on our advertising and promotional
materials, demonstrates that we take our commitment to ethical conduct
seriously.
PERFORMANCE DATA
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RATES OF RETURN
This section shows the historical investment experience of the portfolios
based on the portfolios' historical investment experience. This information
does not represent or project future investment performance.
We base the rates of return that we show below on each portfolio's actual
investment performance. We deduct investment management fees and direct fund
expenses. The rates are actual average annual compounded rates of return for
the periods ended on December 31, 1999.
These rates of return do not reflect any charges that are deducted under
the Policy or from the separate account (such as the annual mortality and
expense risk charge, the monthly deduction, or the surrender charge). IF THESE
CHARGES WERE DEDUCTED, PERFORMANCE WOULD BE LOWER. These rates of return are
not estimates, projections or guarantees of future performance.
65
<PAGE>
We also show below comparable figures for the unmanaged Standard & Poor's
Index of 500 Common Stocks ("S&P 500"), a widely used measure of stock market
performance. The S&P 500 does not reflect any deduction for the expenses of
operating and managing an investment portfolio.
AVERAGE ANNUAL COMPOUNDED RATES OF RETURN
FOR THE PERIODS ENDED ON DECEMBER 31, 1999
<TABLE>
<CAPTION>
INCEPTION
PORTFOLIO INCEPTION 10 YEARS 5 YEARS 3 YEARS 1 YEAR DATE
- ------------------------------------------------ ------------- ---------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
WRL J.P. Morgan Money Market ................... 5.00% 4.67% 5.11% 5.04% 4.63% 10/02/1986
WRL AEGON Bond ................................. 7.03% 7.33% 7.36% 5.02% (2.94)% 10/02/1986
WRL Janus Global ............................... 27.91% N/A 32.94% 38.24% 71.10% 12/03/1992
WRL Janus Growth ............................... 23.47% 23.62% 39.89% 45.60% 59.67% 10/02/1986
WRL LKCM Strategic Total Return ................ 13.82% N/A 16.50% 14.40% 12.07% 03/01/1993
WRL VKAM Emerging Growth ....................... 32.64% N/A 42.96% 50.69% 105.16% 03/01/1993
WRL Alger Aggressive Growth .................... 30.35% N/A 36.62% 46.16% 69.02% 03/01/1994
WRL AEGON Balanced ............................. 8.53% N/A 11.34% 8.86% 3.03% 03/01/1994
WRL Federated Growth & Income .................. 8.82% N/A 11.41% 7.07% (4.45)% 03/01/1994
WRL Dean Asset Allocation ...................... 10.38% N/A N/A 6.02% (5.64)% 01/03/1995
WRL C.A.S.E. Growth ............................ 18.80% N/A N/A 16.41% 33.84% 05/01/1995
WRL NWQ Value Equity ........................... 10.76% N/A N/A 8.73% 7.95% 05/01/1996
WRL GE International Equity .................... 14.90% N/A N/A N/A 24.95% 01/02/1997
WRL GE U.S. Equity ............................. 22.76% N/A N/A N/A 18.41% 01/02/1997
WRL Third Avenue Value ......................... 3.84% N/A N/A N/A 15.72% 01/02/1998
WRL J.P. Morgan Real Estate Securities ......... (11.31)% N/A N/A N/A (3.77)% 05/01/1998
WRL Goldman Sachs Growth ....................... 17.50% N/A N/A N/A N/A 05/03/1999
WRL Goldman Sachs Small Cap .................... 17.82% N/A N/A N/A N/A 05/03/1999
WRL T. Rowe Price Dividend Growth .............. (7.40)% N/A N/A N/A N/A 05/03/1999
WRL T. Rowe Price Small Cap .................... 38.49% N/A N/A N/A N/A 05/03/1999
WRL Salomon All Cap ............................ 15.57% N/A N/A N/A N/A 05/03/1999
WRL Pilgrim Baxter Mid Cap Growth .............. 78.00% N/A N/A N/A N/A 05/03/1999
WRL Dreyfus Mid Cap ............................ 7.20% N/A N/A N/A N/A 05/03/1999
S&P 500 ........................................ 18.11% 18.20% 28.54% 27.56% 21.04% 10/02/1986
Transamerica VIF Growth Portfolio* ............. N/A 26.81% 41.50% ** 37.79% 02/26/1969
</TABLE>
* This portfolio is the successor to Transamerica's Separate Account Fund C, a
registered management investment company, through a reorganization on
November 1, 1996. Performance prior to this date is Transamerica's Separate
Account Fund C performance.
** Information not available.
The annualized yield for the WRL J.P. Morgan Money Market portfolio for
the seven days ended December 31, 1999 was 5.15%.
Because the WRL Value Line Aggressive Growth, WRL Great Companies --
AmericaSM and WRL Great Companies -- TechnologySM portfolios and the Fidelity
VIP Equity-Income Portfolio -- Service Class 2, Fidelity VIP II
Contrafund/registered trademark/ Portfolio -- Service Class 2 and Fidelity VIP
III Growth Opportunities Portfolio -- Service Class 2 and had not commenced
operations as of December 31, 1999, the above chart does not reflect rates of
return for these portfolios.
66
<PAGE>
Additional information regarding the investment performance of the
portfolios appears in the fund prospectuses.
HYPOTHETICAL ILLUSTRATIONS BASED ON ADJUSTED HISTORICAL PORTFOLIO PERFORMANCE
This section contains hypothetical illustrations of Policy values based on
the adjusted historical experience of the portfolios. We started selling the
Policies in 2000. The separate account was established by resolution of the
Board of Directors of Transamerica in June 1996 and will commence operations in
May 2000. The portfolios commenced operations before the separate account. The
rates of return below show the adjusted actual investment experience of each
portfolio for the periods shown. The illustrations of cash values and net
surrender values below depict these Policy values as if you had purchased the
Policy on the last valuation date prior to January 1 of the year after the
portfolio began operations and had selected death benefit Option A. The
illustrations are based on the historical investment experience of the
portfolio indicated as of the last valuation date prior to January 1 of the
year after the portfolio began operations. WE ASSUMED THE RATE OF RETURN FOR
EACH PORTFOLIO IN EACH CALENDAR YEAR TO BE UNIFORMLY EARNED THROUGHOUT THE
YEAR; HOWEVER, THE PORTFOLIO'S ACTUAL PERFORMANCE DID AND WILL VARY THROUGHOUT
THE YEAR.
In order to demonstrate how the actual investment experience of the
portfolios could have affected the Option A death benefit, cash value and net
surrender value of the Policy, we provide hypothetical illustrations for a
hypothetical insured. THESE HYPOTHETICAL ILLUSTRATIONS ARE DESIGNED TO SHOW THE
PERFORMANCE THAT COULD HAVE RESULTED IF THE POLICY HAD BEEN IN EXISTENCE AND
THE HYPOTHETICAL INSURED HAD HELD THE POLICY DURING THE PERIOD ILLUSTRATED.
These illustrations do not represent what may happen in the future.
The amounts we show for death benefits, cash values, and net surrender
values take into account all charges and deductions from the Policy, the
separate account, and the portfolios. For each portfolio, we base one
illustration on the guaranteed cost of insurance rates and one on the current
cost of insurance rates for a hypothetical male insured age 35. The insured's
age, gender and rate class, amount and timing of premium payments, cash
withdrawals, and loans would affect individual Policy benefits.
For each portfolio, the illustrations below assume death benefit Option A
was selected based on annual premiums of $5,500 and a specified amount of
$500,000 for a male age 35, and an ultimate select, non-tobacco use rate class.
67
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
J.P. Morgan Money Market portfolio would have affected benefits for a Policy
dated on the last valuation date prior to January 1, 1987. This example assumes
that premiums and cash values were invested under the Policy in the portfolio
for the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL J.P. MORGAN MONEY MARKET
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1988 ..................................... 4,858 4,858 690 690
1989 ..................................... 9,999 9,908 5,391 5,300
1990 ..................................... 15,712 15,500 10,664 10,452
1991 ..................................... 21,612 21,238 16,124 15,750
1992 ..................................... 27,339 26,793 21,410 20,865
1993 ..................................... 32,548 31,830 26,180 25,462
1994 ..................................... 37,594 36,691 30,786 29,883
1995 ..................................... 43,076 41,962 35,828 34,714
1996 ..................................... 49,502 48,192 41,813 40,504
1997 ..................................... 55,920 54,426 47,792 46,298
1998 ..................................... 62,590 60,947 55,736 54,092
1999 ..................................... 69,476 67,663 64,072 62,258
2000 ..................................... 76,119 74,119 72,340 70,340
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
68
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
AEGON Bond portfolio would have affected benefits for a Policy dated on the
last valuation date prior to January 1, 1987. This example assumes that the
premium and cash values were invested under the Policy in the portfolio for the
entire period and that the values were determined on each Policy anniversary
thereafter.
WRL AEGON BOND
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1988 ..................................... 4,346 4,346 178 178
1989 ..................................... 9,644 9,552 5,035 4,944
1990 ..................................... 16,287 16,064 11,239 11,016
1991 ..................................... 22,036 21,653 16,547 16,165
1992 ..................................... 31,431 30,815 25,503 24,887
1993 ..................................... 38,094 37,279 31,726 30,911
1994 ..................................... 47,904 46,807 41,096 39,999
1995 ..................................... 48,227 47,041 40,979 39,793
1996 ..................................... 64,163 62,561 56,475 54,873
1997 ..................................... 67,880 66,164 59,751 58,036
1998 ..................................... 77,932 75,990 71,077 69,136
1999 ..................................... 88,869 86,668 83,464 81,263
2000 ..................................... 89,273 87,044 85,494 83,264
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
69
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
Janus Growth portfolio would have affected benefits for a Policy dated on the
last valuation date prior to January 1, 1987. This example assumes that the
premiums and cash values were invested under the Policy in the portfolio for
the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL JANUS GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1988 .................................... 5,176 5,176 1,008 1,008
1989 .................................... 11,637 11,541 7,029 6,933
1990 .................................... 23,923 23,647 18,875 18,599
1991 .................................... 28,240 27,826 22,752 22,338
1992 .................................... 52,271 51,425 46,343 45,496
1993 .................................... 57,670 56,658 51,302 50,290
1994 .................................... 64,095 62,886 57,286 56,077
1995 .................................... 62,252 60,986 55,004 53,738
1996 .................................... 97,389 95,378 89,701 87,690
1997 .................................... 119,030 116,553 110,902 108,424
1998 .................................... 143,739 140,771 136,884 133,917
1999 .................................... 241,766 236,825 236,361 231,420
2000 .................................... 389,723 381,828 385,944 378,048
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the adjusted hypothetical net return of the WRL
Janus Global portfolio would have affected benefits for a Policy dated on the
last valuation date prior to January 1, 1993. This example assumes that the
premiums and cash values invested under the Policy were in the portfolio for
the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL JANUS GLOBAL
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1994 ..................................... 6,392 6,392 2,224 2,224
1995 ..................................... 10,983 10,896 6,375 6,288
1996 ..................................... 19,149 18,918 14,101 13,870
1997 ..................................... 30,221 29,768 24,733 24,280
1998 ..................................... 41,054 40,358 35,126 34,430
1999 ..................................... 58,909 57,835 52,541 51,467
2000 ..................................... 107,949 105,914 101,140 99,106
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
70
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
LKCM Strategic Total Return portfolio would have affected benefits for a Policy
dated on the last valuation date prior to January 1, 1994. This example assumes
that premiums and cash values were invested under the Policy in the portfolio
for the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL LKCM STRATEGIC TOTAL RETURN
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1995 ..................................... 4,603 4,603 434 434
1996 ..................................... 11,542 11,443 6,933 6,835
1997 ..................................... 18,505 18,273 13,457 13,225
1998 ..................................... 28,028 27,590 22,539 22,101
1999 ..................................... 35,481 34,848 29,553 28,920
2000 ..................................... 44,508 43,639 38,139 37,271
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the adjusted hypothetical net return of the WRL
VKAM Emerging Growth portfolio would have affected benefits for a Policy dated
on the last valuation date prior to January 1, 1994. This example assumes that
the premiums and cash values were invested under the Policy in the portfolio
for the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL VKAM EMERGING GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1995 ..................................... 4,261 4,261 93 93
1996 ..................................... 13,170 13,062 8,562 8,454
1997 ..................................... 21,065 20,816 16,017 15,768
1998 ..................................... 31,022 30,566 25,534 25,078
1999 ..................................... 48,644 47,848 42,716 41,920
2000 ..................................... 108,745 106,907 102,377 100,538
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
71
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
Alger Aggressive Growth portfolio would have affected benefits for a Policy
dated on the last valuation date prior to January 1, 1995. This example assumes
that premiums and cash values were invested under the Policy in the portfolio
for the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL ALGER AGGRESSIVE GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1996 ..................................... 6,543 6,543 2,374 2,374
1997 ..................................... 12,306 12,214 7,698 7,606
1998 ..................................... 20,970 20,733 15,922 15,684
1999 ..................................... 37,942 37,417 32,454 31,929
2000 ..................................... 71,603 70,531 65,674 64,603
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the adjusted hypothetical net return of the WRL
AEGON Balanced portfolio would have affected benefits for a Policy dated on the
last valuation date prior to January 1, 1995. This example assumes that
premiums and cash values were invested under the Policy in the portfolio for
the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL AEGON BALANCED
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1996 ..................................... 5,624 5,624 1,455 1,455
1997 ..................................... 11,326 11,234 6,718 6,626
1998 ..................................... 18,600 18,373 13,552 13,325
1999 ..................................... 24,645 24,256 19,157 18,768
2000 ..................................... 29,854 29,305 23,926 23,377
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
72
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
Federated Growth & Income portfolio would have affected benefits for a Policy
dated on the last valuation date prior to January 1, 1995. This example assumes
that premiums and cash values were invested under the Policy in the portfolio
for the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL FEDERATED GROWTH & INCOME
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1996 ..................................... 5,898 5,898 1,730 1,730
1997 ..................................... 11,729 11,636 7,121 7,028
1998 ..................................... 20,325 20,086 15,277 15,038
1999 ..................................... 25,499 25,110 20,010 19,622
2000 ..................................... 28,466 27,951 22,537 22,023
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the adjusted hypothetical net return of the WRL
Dean Asset Allocation portfolio would have affected benefits for a Policy dated
on the last valuation date prior to January 1, 1995. This example assumes that
the premium and cash values were invested under the Policy in the portfolio for
the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL DEAN ASSET ALLOCATION
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1996 ..................................... 5,638 5,638 1,470 1,470
1997 ..................................... 11,736 11,641 7,127 7,033
1998 ..................................... 18,990 18,762 13,942 13,714
1999 ..................................... 25,393 24,999 19,905 19,511
2000 ..................................... 28,007 27,493 22,078 21,564
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
73
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
C.A.S.E. Growth portfolio would have affected benefits for a Policy dated on
the last valuation date prior to January 1, 1996. This example assumes that
premiums and cash values were invested under the Policy in the portfolio for
the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL C.A.S.E. GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1997 ..................................... 5,508 5,508 1,340 1,340
1998 ..................................... 11,651 11,556 7,043 6,948
1999 ..................................... 16,554 16,346 11,506 11,298
2000 ..................................... 28,240 27,797 22,752 22,309
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the adjusted hypothetical net return of the WRL
NWQ Value Equity portfolio would have affected benefits for a Policy dated on
the last valuation date prior to January 1, 1997. This example assumes that
premiums and cash values were invested under the Policy in the portfolio for
the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL NWQ VALUE EQUITY
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1998 ..................................... 5,887 5,887 1,719 1,719
1999 ..................................... 9,935 9,850 5,327 5,242
2000 ..................................... 15,623 15,416 10,575 10,368
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
74
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
GE International Equity portfolio would have affected benefits for a Policy
dated on the last valuation date prior to January 1, 1997. This example assumes
that premiums and cash values were invested under the Policy in the portfolio
for the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL GE INTERNATIONAL EQUITY
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1998 ..................................... 5,005 5,005 837 837
1999 ..................................... 10,859 10,766 6,251 6,158
2000 ..................................... 19,297 19,057 14,249 14,008
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the adjusted hypothetical net return of the WRL
GE U.S. Equity portfolio would have affected benefits for a Policy dated on the
last valuation date prior to January 1, 1997. This example assumes that the
premiums and cash values were invested under the Policy in the portfolio for
the entire period and that the values were determined on each Policy
anniversary thereafter.
WRL GE U.S. EQUITY
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1998 ..................................... 5,987 5,987 1,819 1,819
1999 ..................................... 13,058 12,960 8,449 8,352
2000 ..................................... 20,847 20,612 15,799 15,563
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
75
<PAGE>
The following example shows how the adjusted hypothetical net return of the WRL
Third Avenue Value portfolio would have affected benefits for a Policy dated on
the last valuation date prior to January 1, 1998. This example assumes that the
premium and cash values were invested under the Policy in the portfolio for the
entire period and that the values were determined on each Policy anniversary
thereafter.
WRL THIRD AVENUE VALUE
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1999 ..................................... 4,287 4,287 119 119
2000 ..................................... 10,321 10,226 5,713 5,618
</TABLE>
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the adjusted hypothetical net return of the WRL
J.P. Morgan Real Estate Securities portfolio would have affected benefits for a
Policy dated on the last valuation date prior to January 1, 1999. This example
assumes that the premium and cash values were invested under the Policy in the
portfolio for the entire period and that the values were determined on each
Policy anniversary thereafter.
WRL J.P. MORGAN REAL ESTATE SECURITIES
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
- ------------------------------------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
2000 ..................................... 4,440 4,440 272 272
</TABLE>
76
<PAGE>
The following example shows how the adjusted hypothetical net return of the
Transamerica VIF Growth Portfolio would have affected benefits for a Policy
dated on the last valuation date prior to January 1, 1989. This example assumes
that premiums and cash values were invested under the Policy in the portfolio
for the entire period and that the values were determined on each Policy
anniversary thereafter.
TRANSAMERICA VIF GROWTH PORTFOLIO*
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Ultimate Select, Non-Tobacco Use Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Current Guaranteed Current Guaranteed
Last valuation date prior to January 1**: --------- ------------ --------- -----------
<S> <C> <C> <C> <C>
1990 ...................................... 6,317 6,317 2,149 2,149
1991 ...................................... 9,626 9,544 5,017 4,935
1992 ...................................... 20,063 19,815 15,105 14,767
1993 ...................................... 27,788 27,358 22,300 21,870
1994 ...................................... 39,309 38,622 33,381 32,694
1995 ...................................... 46,626 45,735 40,257 39,367
1996 ...................................... 77,717 76,161 70,909 69,353
1997 ...................................... 103,920 101,765 96,672 94,517
1998 ...................................... 157,620 154,341 149,932 146,653
1999 ...................................... 230,494 225,719 222,366 217,591
2000 ...................................... 321,023 314,460 314,168 307,605
</TABLE>
* This portfolio is the successor to Transamerica's Separate Account Fund C, a
registered management investment company, through a reorganization on
November 1, 1996. Performance prior to this date is Transamerica's Separate
Account Fund C performance.
** For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
Because the WRL Goldman Sachs Small Cap, WRL Goldman Sachs Growth, WRL T.
Rowe Price Dividend Growth, WRL T. Rowe Price Small Cap, WRL Salomon All Cap,
WRL Pilgrim Baxter Mid Cap Growth and WRL Dreyfus Mid Cap portfolios did not
commence operations until May 3, 1999, because the Fidelity VIP Equity-Income
Portfolio - Service Class 2, Fidelity VIP II Contrafund(R) Portfolio - Service
Class 2 and Fidelity VIP III Growth Opportunities Portfolio - Service Class 2
did not commence operations until January 12, 2000 and because the WRL Value
Line Aggressive Growth, WRL Great Companies -- America(SM) and WRL Great
Companies -- Technology(SM) portfolios did not commence operations until May 1,
2000, there are no hypothetical illustrations for these portfolios.
OTHER PERFORMANCE DATA IN ADVERTISING SALES LITERATURE
We may compare each subaccount's performance to the performance of:
o other variable life issuers in general;
o variable life insurance policies which invest in mutual funds with
similar investment objectives and policies, as reported by Lipper
Analytical Services, Inc. ("Lipper") and Morningstar, Inc.
("Morningstar"); and other services, companies, individuals, or
industry or financial publications (E.G., FORBES,
77
<PAGE>
MONEY, THE WALL STREET JOURNAL, BUSINESS WEEK, BARRON'S, KIPLINGER'S
PERSONAL FINANCE, and FORTUNE);
o Lipper and Morningstar rank variable annuity contracts
and variable life policies. Their performance analysis
ranks such policies and contracts on the basis of total
return, and assumes reinvestment of distributions; but
it does not show sales charges, redemption fees or
certain expense deductions at the separate account
level.
o the Standard & Poor's Index of 500 Common Stocks, or other widely
recognized indices;
o unmanaged indices may assume the reinvestment of
dividends, but usually do not reflect deductions for the
expenses of operating or managing an investment
portfolio; or
o other types of investments, such as:
o certificates of deposit;
o savings accounts and U.S. Treasuries;
o certain interest rate and inflation indices (E.G., the
Consumer Price Index); or
o indices measuring the performance of a defined group of
securities recognized by investors as representing a
particular segment of the securities markets (E.G.,
Donoghue Money Market Institutional Average, Lehman
Brothers Corporate Bond Index, or Lehman Brothers
Government Bond Index).
TRANSAMERICA'S PUBLISHED RATINGS
We may publish in advertisements, sales literature, or reports we send to
you the ratings and other information that an independent ratings organization
assigns to us. These organizations include: A.M. Best Company, Moody's
Investors Service, Inc., Standard & Poor's Insurance Rating Services, and Duff
& Phelps Credit Rating Co. These ratings are opinions regarding an operating
insurance company's financial capacity to meet the obligations of its insurance
policies in accordance with their terms. These ratings do not apply to the
separate account, the subaccounts, the funds or their portfolios, or to their
performance.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SALE OF THE POLICIES
The Policy will be sold by individuals who are licensed as our life
insurance agents and who are also registered representatives of broker-dealers
having written sales agreements for the Policy with AFSG, the principal
underwriter of the Policy. AFSG is located at 4333 Edgewood Road, N.E., Cedar
Rapids, Iowa 52499. AFSG is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer, and is a member of the National
78
<PAGE>
Association of Securities Dealers, Inc. The sales commission payable to agents
or other registered representatives may vary with the sales agreement, but it is
not expected to be greater than:
o 65% of all premiums you make during the first Policy year, PLUS
o 2% of all premiums you make during Policy years 2 through 10.
We will pay an additional sales commission of up to 0.15% of the Policy's cash
value on the fifth Policy anniversary and each anniversary thereafter where the
cash value (minus amounts attributable to loans) equals at least $10,000.
Certain production, persistency and managerial bonuses may also be paid.
AFSG will receive the 12b-1 fees assessed against the Fidelity VIP Fund
shares held for the Policies as compensation for providing certain shareholder
support services. AFSG will also receive a fee based on the value of shares of
the Fidelity VIP Funds held for the Policies as compensation for providing
certain recordkeeping services.
LEGAL MATTERS
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain matters relating to the federal securities laws. The organization of
Transamerica, its authority to issue the Policy and the validity of the Policy
form have been passed upon by Thomas E. Plerpan, counsel to and Vice President
of Transamerica.
LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the separate
account. Transamerica is involved in various kinds of routine litigation which,
in management's judgment, are not of material importance to Transamerica's
financial position, AFSG or the separate account.
VARIATIONS IN POLICY PROVISIONS
Certain provisions of the Policy may vary from the descriptions in this
prospectus depending on when and where the Policy was issued, in order to
comply with different state laws. These variations may include restrictions on
use of the fixed account and different interest rates charged and credited on
Policy loans. Please refer to your Policy, since any variations will be
included in your Policy or in riders or endorsements attached to your Policy.
EXPERTS
The consolidated financial statements of Transamerica at December 31, 1999
and 1998 and for each of the three years in the period ended December 31, 1999,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report appearing in this prospectus. The financial statements audited by
Ernst & Young LLP have been included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined by Lorne
Schinbein as stated in the opinion filed as an exhibit to the registration
statement.
79
<PAGE>
FINANCIAL STATEMENTS
Transamerica's consolidated financial statements appear on the following
pages. Transamerica's financial statements should be distinguished from the
separate account's financial statements and you should consider our financial
statements only as bearing upon Transamerica's ability to meet our obligations
under the Policies.
Transamerica's consolidated financial statements as of December 31, 1999
and 1998 and for each of the three years in the period ended December 31, 1999,
have been prepared on the basis of statutory accounting principles rather than
generally accepted accounting principles.
ADDITIONAL INFORMATION ABOUT TRANSAMERICA
Transamerica is a stock life insurance company that is wholly-owned by
Transamerica Insurance Corporation of California, which, in turn, is a
subsidiary of Transamerica Corporation, which, in turn, is wholly-owned by
AEGON, N.V. Transamerica's administrative office is located at 570 Carillon
Parkway, St. Petersburg, Florida 33716-1202, and the mailing address is P.O.
Box 5068, Clearwater, Florida 33758-5068. Transamerica's home office is located
at 1150 South Olive Street, Los Angeles, California 90015.
Transamerica was incorporated in 1906 under the laws of California and is
subject to regulation by the Insurance Department of the State of California,
as well as by the insurance departments of all other states and jurisdictions
in which it does business. Transamerica is licensed to sell insurance in all
states (except New York), Puerto Rico, Guam, District of Columbia, American
Samoa, Virgin Islands, Hong Kong and Taiwan. Transamerica submits annual
statements on its operations and finances to insurance officials in all states
and jurisdictions in which it does business. The Policy described in this
prospectus has been filed with, and where required, approved by, insurance
officials in those jurisdictions in which it is sold.
TRANSAMERICA'S DIRECTORS AND OFFICERS
We are governed by a board of directors. The following table sets forth
the name, address and principal occupation during the past five years of each
of our directors.
80
<PAGE>
BOARD OF DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS TRANSAMERICA DURING PAST 5 YEARS
<S> <C> <C>
Patrick S. Baird(1) Director Director (1999 - present); Director (1991 -
present), Senior Vice President (1998 -
present) and Chief Operating Officer (1996
- present) of PFL Life Insurance Company;
Executive Vice President (1995 - present),
Chief Operating Officer (1996 - present),
Chief Financial Officer (1992 - 1995); Vice
President and Chief Tax Officer (1984 -
1995) of AEGON USA., Inc.
Brenda K. Clancy(1) Director Director (1999 - present); Senior Vice
President, Corporate (1991 - present);
Treasurer (1996 - present) and Chief
Financial Officer (1996 - present) of PFL
Life Insurance Company.
James W. Dederer, CLU(2) Director, Executive Director, Executive Vice President, General
Vice President, Counsel and Corporate Secretary (1988 -
General Counsel and present).
Corporate Secretary
George A. Foegele(3) Director and Director and Senior Vice President
Senior Vice President ( ); and President and Chief
Executive Officer of Transamerica Life
Insurance Company of Canada
( ).
Douglas C. Kolsrud(1) Director Director (1999 - present); Director, Senior
Vice President, Chief Investment Officer
and Corporate Actuary, Investment
Division of PFL Life Insurance Company
( - ).
Richard N. Latzer(4) Director Director, Senior Vice President and Chief
Investment Officer of Transamerica
Corporation (1989 - present); Director,
President and Chief Executive Officer of
Transamerica Investment Services, Inc.
(1988 - present).
Karen O. MacDonald(2) Director, Senior Vice Director, Senior Vice President and
President and Corporate Actuary (1995 - present); and
Corporate Actuary Senior Vice President and Corporate
Actuary (1992 - 1995).
Gary U. Rolle'(2) Director Director, Executive Vice President and
Chief Investment Officer of Transamerica
Investment Services, Inc. (1981 - present).
Paul E. Rutledge III(5) Director Director and President of Reinsurance
Division (1998 - present); and President of
Life Insurance Company of Virginia (1991
- 1997).
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS TRANSAMERICA DURING PAST 5 YEARS
<S> <C> <C>
Nooruddin S. Veerjee, FSA(2) Director and President President of Insurance Products Division
- Insurance Products (1997 - present); Director and President of
Division Group Pension Division (1993 - present);
Senior Vice President (1992 - 1993); and
Vice President (1990 - 1992).
Craig D. Vermie(1) Director Director (1999 - present); Director (1995 -
present), Vice President (1990 - present)
and General Counsel, Corporate (1996 -
present) of PFL Life Insurance Company.
</TABLE>
The following table gives the name, address and principal occupation during the
past five years of the principal officers of Transamerica (other than officers
listed above as directors).
PRINCIPAL OFFICERS
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS TRANSAMERICA DURING PAST 5 YEARS
<S> <C> <C>
Nicki Bair(1) Senior Vice President Senior Vice President (1996 - present); Vice
President (1991 - 1996).
Roy Chong-Kit(2) Senior Vice President Senior Vice President and Actuary (1997 -
and Actuary present); Vice President and Actuary (1995 -
1997); and Actuary (1998 - 1999).
William R. Gernet(1) Executive Vice President Executive Vice President, Diversified Financial
Products Division (1999 - present).
Daniel E. Jund, FLMI(1) Senior Vice President Senior Vice President (1988 - present).
Larry N. Norman(1) Executive Vice President Executive Vice President, Financial Markets
Division (1999 - present).
William N. Scott, CLU, Senior Vice President Senior Vice President (1993 - present); Vice
FLMI(2) President (1988 - 1993).
Ron F. Wagley, CLU(1) Senior Vice President and Senior Vice President and Chief Agency
Chief Agency Officer Officer (1993 - present); Vice President (1989
- 1993).
William R. Wellnitz, FSA(5) Senior Vice President Senior Vice President and Actuary (1996 -
and Actuary present); and Vice President and Reinsurance
Actuary (1988 - 1996).
Sally Yamada(1) Vice President and Vice President and Treasurer (1999 - present).
Treasurer
</TABLE>
Located at:
(1) 4333 Edgewood Road, N.W., Cedar Rapids, Iowa 52449.
(2) 1150 South Olive Street, Los Angeles, California 90015.
(3) 300 Consilium Place, Scarborough, Ontario, Canada M1H3G2.
(4) 600 Montgomery Street, San Francisco, California 94111.
(5) 401 North Tryon Street, Charlotte, North Carolina 28202.
82
<PAGE>
Transamerica holds the assets of the separate account physically
segregated and apart from the general account. Transamerica maintains records
of all purchases and sales of portfolio shares by each of the subaccounts.
Transamerica is insured under a broad manuscript fidelity bond program with
coverage limits of $80,000,000. The lead underwriter is Capital CNA.
ADDITIONAL INFORMATION ABOUT THE SEPARATE ACCOUNT
Transamerica Occidental Life Separate Account VUL-3, the separate account,
was established by us as a separate account under the laws of the State of
California, pursuant to resolutions adopted by our Board of Directors on June
11, 1996. The separate account is registered with the SEC under the 1940 Act as
a unit investment trust. It meets the definition of a separate account under
the federal securities laws. However, the SEC does not supervise the management
of the investment practices or policies of the separate account.
83
<PAGE>
APPENDIX A
ILLUSTRATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following illustrations show how certain values under a sample Policy
would change with different rates of fictional investment performance over an
extended period of time. In particular, the illustrations show how the death
benefit, cash value, and net surrender value under a Policy issued to an
insured of a given age would change over time if the premiums indicated were
paid and the return on the assets in the subaccounts were a uniform gross
annual rate (before any expenses) of 0%, 6% or 12%. The tables illustrate
Policy values that would result based on assumptions that you pay the premiums
indicated, you do not change your specified amount, and you do not take any
cash withdrawals or Policy loans. The values under the Policy will be different
from those shown even if the returns averaged 0%, 6% or 12%, but fluctuated
over and under those averages throughout the years shown.
We based the illustration on page on a Policy for an insured who is a
35 year old male in the ultimate select, non-tobacco use class, annual premiums
of $5,500, a $500,000 specified amount and death benefit Option A. The
illustration on that page also assumes cost of insurance charges based on our
CURRENT cost of insurance rates.
The illustration on page is based on the same factors as those on page
, except that cost of insurance rates are based on the GUARANTEED cost of
insurance rates (based on the 1980 Commissioners Standard Ordinary Mortality
Table).
The amounts we show for the death benefits, cash values and net surrender
values take into account (1) the daily charge for assuming mortality and
expense risks assessed against each subaccount. This charge is equivalent to an
annual charge of 0.90% of the average net assets of the subaccounts during the
first 15 Policy years (we guarantee to reduce this charge to 0.60% after the
first 15 Policy years); (2) estimated daily expenses equivalent to an effective
average annual expense level of 0.92% of the portfolios' average daily net
assets; and (3) all applicable cash value charges. The 0.92% average portfolio
expense level assumes an equal allocation of amounts among the 30 subaccounts.
We used annualized actual audited expenses incurred during 1999 as shown on the
Portfolio Annual Expense Table on page , for the portfolios to calculate the
average annual expense level.
During 1999, WRL Management undertook to pay normal operating expenses of
certain WRL portfolios that exceeded a certain stated percentage of those
portfolios' average daily net assets. WRL Management has undertaken until at
least April 30, 2001 to pay expenses to the extent normal operating expenses of
certain portfolios of the WRL fund exceed a stated percentage of the
portfolio's average daily net assets. For details on these waivers and
arrangements, see the Portfolio Annual Expense Table on page .
In 1999, Transamerica waived a portion of the advisory fee and was paid
0.70% of the portfolio's average daily net assets. Without such waiver, the
total fund expenses during 1999 for this period would have been 0.90%. See the
Transamerica Variable Fund prospectus for a description of the expense
limitation applicable to this portfolio.
84
<PAGE>
Without these waivers and reimbursements, total annual expenses for the
portfolios would have been greater, and the illustrations would have assumed
that the assets in the portfolios were subject to an average annual expense
level of 1.51%.
Taking into account the assumed charges of 1.82%, the gross annual
investment return rates of 0%, 6% and 12% are equivalent to net annual
investment return rates of -1.82%, 4.18% and 10.18% during the first 15 Policy
years and -1.22%, 4.78% and 10.78% thereafter.
THE HYPOTHETICAL RETURNS SHOWN IN THE TABLES ARE PROVIDED ONLY TO
ILLUSTRATE THE MECHANICS OF A HYPOTHETICAL POLICY AND DO NOT REPRESENT PAST OR
FUTURE INVESTMENT RATES OF RETURNS. Tax charges that may be attributable to the
separate account are not reflected, because we are not currently making such
charges. In order to produce after tax returns of 0%, 6% or 12% if such charges
are made in the future, the separate account would have to earn a sufficient
amount in excess of 0%, 6% or 12% to cover any tax charges.
The "Premium Accumulated at 5%" column of each table shows the amount
which would accumulate if you invested an amount equal to the premium to earn
interest at 5% per year, compounded annually.
We will furnish, upon request, a comparable illustration reflecting the
proposed insured's age, gender, risk classification and desired Policy
features.
85
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 35
<TABLE>
<S> <C>
Specified Amount $500,000 Ultimate Select, Non-Tobacco Use Class
Annual Premium $5,500 Death Benefit Option A
Using Current Cost of Insurance Rates
</TABLE>
<TABLE>
<CAPTION>
END OF PREMIUMS DEATH BENEFIT
POLICY ACCUMULATED ASSUMING HYPOTHETICAL GROSS AND NET
YEAR AT 5% ANNUAL INVESTMENT RETURN OF
0% (GROSS) 6% (GROSS) 12% (GROSS)
-1.82% (NET) YEARS 1-15 4.18% (NET) YEARS 1-15 10.18% (NET) YEARS 1-15
-1.22 (NET) YEARS 16+ 4.78% (NET) YEARS 16+ 10.78% (NET) YEARS 16+
<S> <C> <C> <C> <C>
1 5,775 500,000 500,000 500,000
----------- --------- ------- --------- ----------
2 11,839 500,000 500,000 500,000
----------- --------- ------- --------- ----------
3 18,206 500,000 500,000 500,000
----------- --------- ------- --------- ----------
4 24,891 500,000 500,000 500,000
----------- --------- ------- --------- ----------
5 31,911 500,000 500,000 500,000
----------- --------- ------- --------- ----------
6 39,281 500,000 500,000 500,000
----------- --------- ------- --------- ----------
7 47,020 500,000 500,000 500,000
----------- --------- ------- --------- ----------
8 55,146 500,000 500,000 500,000
----------- --------- ------- --------- ----------
9 63,678 500,000 500,000 500,000
----------- --------- ------- --------- ----------
10 72,637 500,000 500,000 500,000
----------- --------- ------- --------- ----------
15 124,616 500,000 500,000 500,000
----------- --------- ------- --------- ----------
20 190,956 500,000 500,000 500,000
----------- --------- ------- --------- ----------
30 (AGE 65) 383,684 500,000 500,000 1,102,332
----------- --------- ------- --------- ----------
40 (AGE 75) 697,619 500,000 505,823 2,749,991
----------- --------- ------- --------- ----------
50 (AGE 85) 1,208,985 * 855,420 7,518,670
----------- --------- ------- --------- ----------
60 (AGE 95) 2,041,946 * 1,357,112 19,828,299
----------- --------- ------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
END OF CASH VALUE NET SURRENDER VALUE
POLICY ASSUMING HYPOTHETICAL GROSS AND NET ASSUMING HYPOTHETICAL GROSS AND NET
YEAR ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
0% (GROSS) 6% (GROSS) 12% (GROSS) 0% (GROSS) 6% (GROSS) 12% (GROSS)
-1.82% (NET) 4.18% (NET) 10.18% (NET) -1.82% (NET) 4.18% (NET) 10.18% (NET)
YEARS 1-15 YEARS 1-15 YEARS 1-15 YEARS 1-15 YEARS 1-15 YEARS 1-15
-1.22% (NET) 4.78% (NET) 10.78% (NET) -1.22% (NET) 4.78% (NET) 10.78% (NET)
YEARS 16+ YEARS 16+ YEARS 16+ YEARS 16+ YEARS 16+ YEARS 16+
<S> <C> <C> <C> <C> <C> <C>
1 4,583 4,886 5,190 415 718 1,022
- ----------- ------ --------- ---------- ------ --------- ----------
2 9,070 9,965 10,897 4,462 5,357 6,289
- ----------- ------ --------- ---------- ------ --------- ----------
3 13,453 15,234 17,165 8,405 10,186 12,116
- ----------- ------ --------- ---------- ------ --------- ----------
4 17,740 20,709 24,056 12,252 15,221 18,568
- ----------- ------ --------- ---------- ------ --------- ----------
5 21,900 26,364 31,603 15,972 20,435 25,675
- ----------- ------ --------- ---------- ------ --------- ----------
6 25,930 32,203 39,871 19,562 25,835 33,502
- ----------- ------ --------- ---------- ------ --------- ----------
7 29,826 38,229 48,926 23,018 31,420 42,117
- ----------- ------ --------- ---------- ------ --------- ----------
8 33,589 44,449 58,853 26,341 37,201 51,605
- ----------- ------ --------- ---------- ------ --------- ----------
9 37,156 50,806 69,680 29,467 43,118 61,992
- ----------- ------ --------- ---------- ------ --------- ----------
10 40,557 57,338 81,532 32,429 49,209 73,404
- ----------- ------ --------- ---------- ------ --------- ----------
15 54,936 92,693 160,312 54,936 92,693 160,312
- ----------- ------ --------- ---------- ------ --------- ----------
20 66,883 137,267 295,502 66,883 137,267 295,502
- ----------- ------ --------- ---------- ------ --------- ----------
30 (AGE 65) 83,871 265,524 903,551 83,871 265,524 903,551
- ----------- ------ --------- ---------- ------ --------- ----------
40 (AGE 75) 73,807 472,732 2,570,085 73,807 472,732 2,570,085
- ----------- ------ --------- ---------- ------ --------- ----------
50 (AGE 85) * 814,685 7,160,638 * 814,685 7,160,638
- ----------- ------ --------- ---------- ------ --------- ----------
60 (AGE 95) * 1,343,675 19,631,979 * 1,343,675 19,631,979
- ----------- ------ --------- ---------- ------ --------- ----------
</TABLE>
* In the absence of an additional payment, the Policy would lapse.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future rates of return. Actual investment rates of return may be more
or less than those shown and will depend on a number of factors, including the
investment allocations by an owner and the different investment rates of return
for the funds. The death benefit, cash value and net surrender value for a
Policy would be different from those shown if the actual investment rates of
return averaged 0%, 6% and 12% over a period of years, but fluctuated above or
below that average for individual Policy years. No representation can be made
by Transamerica or the funds that these hypothetical investment rates of return
can be achieved for any one year or sustained over any period of time. This
illustration must be preceded or accompanied by current fund prospectuses.
86
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 35
<TABLE>
<S> <C>
Specified Amount $500,000 Ultimate Select, Non-Tobacco Use Class
Annual Premium $5,500 Death Benefit Option A
Using Guaranteed Cost of Insurance Rates
</TABLE>
<TABLE>
<CAPTION>
END OF PREMIUMS DEATH BENEFIT
POLICY ACCUMULATED ASSUMING HYPOTHETICAL GROSS AND NET
YEAR AT 5% ANNUAL INVESTMENT RETURN OF
0% (GROSS) 6% (GROSS) 12% (GROSS)
-1.82% (NET) YEARS 1-15 4.18% (NET) YEARS 1-15 10.18% (NET) YEARS 1-15
-1.22% (NET) YEARS 16+ 4.78% (NET) YEARS 16+ 10.78% (NET) YEARS 16+
<S> <C> <C> <C> <C>
1 5,775 500,000 500,000 500,000
----------- --------- ------- ------- ----------
2 11,839 500,000 500,000 500,000
----------- --------- ------- ------- ----------
3 18,206 500,000 500,000 500,000
----------- --------- ------- ------- ----------
4 24,891 500,000 500,000 500,000
----------- --------- ------- ------- ----------
5 31,911 500,000 500,000 500,000
----------- --------- ------- ------- ----------
6 39,281 500,000 500,000 500,000
----------- --------- ------- ------- ----------
7 47,020 500,000 500,000 500,000
----------- --------- ------- ------- ----------
8 55,146 500,000 500,000 500,000
----------- --------- ------- ------- ----------
9 63,678 500,000 500,000 500,000
----------- --------- ------- ------- ----------
10 72,637 500,000 500,000 500,000
----------- --------- ------- ------- ----------
15 124,616 500,000 500,000 500,000
----------- --------- ------- ------- ----------
20 190,956 500,000 500,000 500,000
----------- --------- ------- ------- ----------
30 (AGE 65) 383,684 500,000 500,000 1,056,902
----------- --------- ------- ------- ----------
40 (AGE 75) 697,619 * 500,000 2,570,181
----------- --------- ------- ------- ----------
50 (AGE 85) 1,208,985 * 612,373 6,819,919
----------- --------- ------- ------- ----------
60 (AGE 95) 2,041,946 * 940,357 17,034,952
----------- --------- ------- ------- ----------
</TABLE>
<TABLE>
<CAPTION>
END OF CASH VALUE NET SURRENDER VALUE
POLICY ASSUMING HYPOTHETICAL GROSS AND NET ASSUMING HYPOTHETICAL GROSS AND NET
YEAR ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
0% (GROSS) 6% (GROSS) 12% (GROSS) 0% (GROSS) 6% (GROSS) 12% (GROSS)
-1.82% (NET) 4.18% (NET) 10.18% (NET) -1.82% (NET) 4.18% (NET) 10.18% (NET)
YEARS 1-15 YEARS 1-15 YEARS 1-15 YEARS 1-15 YEARS 1-15 YEARS 1-15
-1.22% (NET) 4.78% (NET) 10.78% (NET) -1.22% (NET) 4.78% (NET) 10.78% (NET)
YEARS 16+ YEARS 16+ YEARS 16+ YEARS 16+ YEARS 16+ YEARS 16+
<S> <C> <C> <C> <C> <C> <C>
1 4,583 4,886 5,190 415 718 1,022
- ----------- ------ ------- ---------- ------- ------- ----------
2 8,983 9,875 10,805 4,374 5,267 6,196
- ----------- ------ ------- ---------- ------- ------- ----------
3 13,257 15,027 16,945 8,209 9,978 11,897
- ----------- ------ ------- ---------- ------- ------- ----------
4 17,404 20,345 23,664 11,916 14,857 18,176
- ----------- ------ ------- ---------- ------- ------- ----------
5 21,419 25,829 31,012 15,490 19,901 25,083
- ----------- ------ ------- ---------- ------- ------- ----------
6 25,298 31,483 39,052 18,929 25,115 32,684
- ----------- ------ ------- ---------- ------- ------- ----------
7 29,031 37,302 47,845 22,223 30,494 41,037
- ----------- ------ ------- ---------- ------- ------- ----------
8 32,623 43,295 57,473 25,375 36,046 50,225
- ----------- ------ ------- ---------- ------- ------- ----------
9 36,063 49,458 68,013 28,375 41,770 60,325
- ----------- ------ ------- ---------- ------- ------- ----------
10 39,354 55,802 79,565 31,226 47,674 71,437
- ----------- ------ ------- ---------- ------- ------- ----------
15 53,263 90,175 156,445 53,263 90,175 156,445
- ----------- ------ ------- ---------- ------- ------- ----------
20 63,742 132,501 287,680 63,742 132,501 287,680
- ----------- ------ ------- ---------- ------- ------- ----------
30 (AGE 65) 55,512 234,244 866,313 55,512 234,244 866,313
- ----------- ------ ------- ---------- ------- ------- ----------
40 (AGE 75) * 361,217 2,402,039 * 361,217 2,402,039
- ----------- ------ ------- ---------- ------- ------- ----------
50 (AGE 85) * 583,212 6,495,161 * 583,212 6,495,161
- ----------- ------ ------- ---------- ------- ------- ----------
60 (AGE 95) * 931,046 16,866,289 * 931,046 16,866,289
- ----------- ------ ------- ---------- ------- ------- ----------
</TABLE>
* In the absence of an additional payment, the Policy would lapse.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return
may be more or less than those shown and will depend on a number of factors,
including the investment allocations by an owner and the different investment
rates for the funds. The death benefit, cash value and net surrender value for
a Policy would be different from those shown if the actual investment rates of
return averaged 0%, 6% and 12% over a period of years, but fluctuated above or
below that average for individual Policy years. No representation can be made
by Transamerica or the funds that these hypothetical investment rates of return
can be achieved for any one year or sustained over any period of time. This
illustration must be preceded or accompanied by current fund prospectuses.
87
<PAGE>
APPENDIX B
WEALTH INDICES OF INVESTMENTS IN THE U.S. CAPITAL MARKET
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The information below graphically depicts the growth of $1.00 invested in
large company stocks, small company stocks, long-term government bonds,
Treasury bills, and hypothetical assets returning the inflation rate over the
period from the end of 1925 to the end of 1999. All results assume reinvestment
of dividends on stocks or coupons on bonds and no taxes. Transaction costs are
not included, except in the small stock index starting in 1982.
Each of the cumulative index values is initialized at $1.00 at year-end
1925. The graph illustrates that large company stocks and small company stocks
have the best performance over the entire 74-year period: investments of $1.00
in these assets would have grown to $2,845.63 and $6,640.79, respectively, by
year-end 1999. This higher growth was earned by investments involving
substantial risk. In contrast, long-term government bonds (with an approximate
20-year maturity), which exposed the holder to much less risk, grew to only
$40.22.
The lowest-risk strategy over the past 74 years (for those with short-term
time horizons) was to buy U.S. Treasury bills. Since U.S. Treasury bills tended
to track inflation, the resulting real (inflation-adjusted) returns were near
zero for the entire 1926 - 1999 period.
88
<PAGE>
[COMPARISON GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
COMPOUND ANNUAL RATES OF RETURN BY DECADE
<TABLE>
<CAPTION>
1920s* 1930s 1940s 1950s 1960s 1970s 1980s 1990s
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Large Company ............ 19.2% -0.1% 9.2% 19.4% 7.8% 5.9% 17.5% 18.2%
Small Company ............ -4.5 1.4 20.7 16.9 15.5 11.5 15.8 15.1
Long-Term Corp. .......... 5.2 6.9 2.7 1.0 1.7 6.2 13.0 8.3
Long-Term Govt. .......... 5.0 4.9 3.2 -0.1 1.4 5.5 12.6 9.0
Inter-Term Govt. ......... 4.2 4.6 1.8 1.3 3.5 7.0 11.9 7.2
Treasury Bills ........... 3.7 0.6 0.4 1.9 3.9 6.3 8.9 4.9
Inflation ................ -1.1 -2.0 5.4 2.2 2.5 7.4 5.1 2.9
</TABLE>
- ----------------
* Based on the period 1926-1929.
Used with permission. (C)2000 Ibbotson Associates, Inc. All rights reserved.
[Certain portions of this work were derived from copyrighted works of Roger G.
Ibbotson and Rex Sinquefield.]
89
<PAGE>
Index to Financial Statements
- --------------------------------------------------------------------------------
TRANSAMERICA OCCIDENTAL LIFE SEPARATE ACCOUNT VUL-3:
There are no financial statements for the separate account because the
subaccounts have not commenced operations as of the date of this prospectus.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY:
Report of Independent Auditors dated March 31, 2000
Statutory Basis Balance Sheet at December 31, 1999 and 1998
Statutory Basis Statement of Operations for the years ended December 31, 1999,
1998 and 1997
Statutory Basis Statement of Changes in Capital and Surplus for the years ended
December 31, 1999, 1998 and 1997
Statutory Basis Statement of Cash Flow for the years ended December 31, 1999,
1998 and 1997
Notes to Statutory Basis Financial Statements
Statutory Basis Financial Statement Schedules
TA00001-05/2000
90
<PAGE>
Report Of Independent Auditors
Board of Directors
Transamerica Occidental Life Insurance Company
We have audited the accompanying statutory-basis balance sheets of Transamerica
Occidental Life Insurance Company as of December 31, 1999 and 1998, and the
related statutory-basis statements of operations, changes in capital and
surplus, and cash flow for each of the three years in the period ended December
31, 1999. Our audits also included the accompanying statutory-basis financial
statement schedules required by Article 7 of Regulation S-X. These financial
statements and schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the California Department of Insurance, which practices differ from
accounting principles generally accepted in the United States. The variances
between such practices and accounting principles generally accepted in the
United States also are described in Note 1. The effects on the financial
statements of these variances are not reasonably determinable but are presumed
to be material.
In our opinion, because of the effects of the matters described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with accounting principles generally accepted in the United States,
the financial position of Transamerica Occidental Life Insurance Company at
December 31, 1999 and 1998, or the results of its operations or its cash flows
for each of the three years in the period December 31, 1999.
However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Transamerica
Occidental Life Insurance Company at December 31, 1999 and 1998, and the results
of its operations and its cash flow for each of the three years in the period
ended December 31, 1999, in conformity with accounting practices prescribed or
permitted by the California Department of Insurance. Also, in our opinion, the
related financial statement schedules, when considered in relation to the basic
statutory-basis financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
1
March 31, 2000
<PAGE>
2
Transamerica Occidental Life Insurance Company
Balance Sheets - Statutory Basis
(Dollars in thousands, except per share amounts)
DECEMBER 31
1999 1998
---------------------------------
ADMITTED ASSETS
Cash and invested assets:
Bonds $ 12,820,804 $ 12,135,178
Preferred stocks - unaffiliated 77,231 40,941
Preferred stocks - subsidiaries 58,219 56,860
Common stocks - unaffiliated 1,270,039 773,490
Common stocks - subsidiaries 984,400 965,485
Mortgage loans on real estate 385,590 387,038
Real estate 101,195 102,748
Policy loans 409,534 410,628
Cash and short-term investments 132,454 513,557
Other investments 218,997 194,264
---------------------------------
Total cash and invested assets 16,458,463 15,580,189
Federal income tax receivable 160,075 -
Accrued investment income 226,823 210,932
Deferred and uncollected premiums 227,722 (807,951)
Reinsurance receivable 249,225 1,201,639
Other admitted assets 245,696 255,744
Separate account assets 4,229,395 3,443,277
---------------------------------
Total admitted assets $ 21,797,399 $ 19,883,830
=================================
3
<PAGE>
DECEMBER 31
1999 1998
--------------------------
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Reserves for future policy benefits $ 9,695,196 $ 9,428,282
Policy and contract claims payable 296,789 156,147
Supplementary contracts without life contingencies 208,349 215,548
Funding agreements 2,228,261 1,927,054
Other policy liabilities 114,442 115,361
Funds held under coinsurance 2,274,229 2,123,810
Asset valuation reserve 578,958 400,616
Interest maintenance reserve 58,721 61,514
Other liabilities 310,404 285,030
Separate account liabilities 4,068,126 3,326,306
-------------------------
Total liabilities 19,833,475 18,039,668
Capital and surplus:
Common Stock ($12.50 par value):
Authorized - 4,000,000 shares
Issued and outstanding - 2,206,933 shares 27,587 27,587
Contributed surplus 509,600 372,538
Unassigned surplus 1,426,737 1,444,037
-------------------------
Total capital and surplus 1,963,924 1,844,162
-------------------------
Total liabilities and capital and surplus $ 21,797,399 $19,883,830
=========================
SEE ACCOMPANYING NOTES.
4
<PAGE>
Transamerica Occidental Life Insurance Company
Statements of Operations - Statutory Basis
(Dollars in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
<S> <C> <C> <C>
-------------------------------------------------
Revenues:
Premiums and annuity considerations $ 1,368,016 $ 1,608,525 $ 1,715,745
Fund deposits 351,170 363,889 395,162
Considerations for supplementary contracts without life
contingencies 212,513 259,660 240,065
Net investment income 1,125,042 1,078,543 1,028,054
Commissions and expense allowances on reinsurance ceded
469,910 471,943 283,794
Other 550,544 900,281 228,649
-------------------------------------------------
4,077,195 4,682,841 3,891,469
Benefits and expenses:
Benefits paid or provided for:
Death benefits 392,276 595,585 432,019
Annuity benefits 582,542 570,424 754,609
Disability benefits 10,199 36,590 139,278
Surrender benefits and other fund withdrawals 694,766 616,224 429,449
Increase (decrease) in reserves 266,814 (447,419) (631,054)
Payments on supplementary contracts 231,717 243,383 235,594
Endowments 2,397 2,504 2,000
Other 112,059 102,093 96,546
-------------------------------------------------
2,292,770 1,719,384 1,458,441
Expenses:
Commissions and expense allowances 691,802 728,533 554,979
Reinsurance reserve transfer - 671,651 792,425
Other operating expenses 857,912 1,300,821 758,855
Net transfers to separate accounts 50,572 200,243 152,998
-------------------------------------------------
1,600,286 2,901,248 2,259,257
-------------------------------------------------
3,893,056 4,620,632 3,717,698
-------------------------------------------------
Gain from operations before dividends to policyholders,
federal income tax expense (benefit) and net realized
capital gains (losses) 184,139 62,209 173,771
Dividends to policyholders 9,294 8,206 9,453
-------------------------------------------------
Gain from operations before federal income tax expense
(benefit) and net realized capital gains (losses) 174,845 54,003 164,318
Federal income tax expense (benefit) 30,330 (70,408) 58,514
-------------------------------------------------
Gain from operations before net realized capital gains
(losses) 144,515 124,411 105,804
Net realized capital gains (losses) 17,515 76,071 (9,332)
-------------------------------------------------
Net income $ 162,030 $ 200,482 $ 96,472
=================================================
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
Transamerica Occidental Life Insurance Company
Statements of Changes in Capital and Surplus - Statutory Basis
(Dollars in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Capital and surplus at beginning of year $ 1,844,162 $ 1,556,228 $ 1,249,045
Net income 162,030 200,482 96,472
Increase in net unrealized capital gains 119,420 261,540 246,829
Increase in non-admitted assets and
related items (2,824) (45,392) (41,778)
(Decrease) increase in liability for reinsurance in
unauthorized companies (4,646) (3,137) 1,038
Increase in asset valuation reserve (178,342) (39,153) (66,577)
Increase in surplus in separate account statement 16,637 32,572 29,459
Contributed capital 137,062 3,800 127,194
Prior year adjustments (14,710) (21,276) (47,998)
Dividends paid to parent (79,000) (80,000) (61,311)
Change in benefit reserve valuation basis - - (7,782)
Increase (decrease) as a result of
reinsurance (35,865) (21,502) 31,637
------------------------------------------------------
Capital and surplus at end of year $ 1,963,924 $ 1,844,162 $ 1,556,228
======================================================
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
Transamerica Occidental Life Insurance Company
Statements of Cash Flow - Statutory Basis
(Dollars in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums and annuity considerations $ 319,552 $ 2,642,142 $ 1,612,975
Fund deposits 351,170 363,889 395,162
Other policy proceeds and considerations 212,546 259,627 240,280
Allowances and reserve adjustments received on
reinsurance ceded 1,861,584 93,368 249,623
Investment income received 1,088,846 1,068,856 996,628
Other income received 141,247 194,037 274,793
Life and accident and health claims paid (266,727) (661,006) (487,861)
Surrender benefits and other fund withdrawals paid (695,777) (618,854) (442,793)
Annuity and other benefits paid (962,151) (948,840) (1,046,532)
Commissions, other expenses and taxes paid (1,027,317) (950,827) (777,851)
Dividends paid to policyholders (9,136) (8,102) (10,101)
Federal income taxes received (paid) (146,945) 15,764 (12,411)
Reinsurance reserve transfers and other (618,898) (1,891,421) (1,552,528)
------------------------------------------------------
Net cash provided by (used in) operating activities 247,994 (441,367) (560,616)
INVESTING ACTIVITIES
Proceeds from investments sold, matured
or repaid:
Bonds 2,993,985 3,938,693 3,525,839
Stocks 220,666 488,559 138,284
Mortgage loans 11,248 37,335 34,216
Real estate 3,050 20,300 3,660
Other invested assets 200 3,984 8,580
Miscellaneous proceeds 407 (25,830) 7,140
------------------------------------------------------
Total investment proceeds 3,229,556 4,463,041 3,717,719
Taxes paid on capital gains - - (7,481)
------------------------------------------------------
Net proceeds from sales, maturities, or repayments
of investments 3,229,556 4,463,041 3,710,238
</TABLE>
7
<PAGE>
Transamerica Occidental Life Insurance Company
Statements of Cash Flow - Statutory Basis (continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Cost of investments acquired:
Bonds $ (3,656,035) $ (4,225,623) $ (4,103,637)
Stocks (611,404) (331,131) (311,708)
Mortgage loans (9,800) (121,139) (40,000)
Real estate (5,064) (7,030) (2,765)
Other invested assets (35,204) (36,752) (2,031)
Miscellaneous applications (93,194) - -
------------------------------------------------------
Total cost of investments acquired (4,410,701) (4,721,675) (4,460,141)
Net decrease (increase) in policy loans 1,094 (3,174) (7,996)
------------------------------------------------------
Net cost of investments acquired (4,409,607) (4,724,849) (4,468,137)
------------------------------------------------------
Net cash used in investing activities (1,180,051) (261,808) (757,899)
Financing and miscellaneous activities:
Other cash provided:
Capital and surplus paid-in 137,062 3,800 127,194
Other sources 562,978 1,485,965 1,558,615
------------------------------------------------------
Total other cash provided 700,040 1,489,765 1,685,809
Other cash provided (applied):
Dividends paid to shareholders (79,000) (80,000) (61,311)
Other applications, net (70,086) (347,482) (162,103)
------------------------------------------------------
Total other cash provided (applied) (149,086) (427,482) (223,414)
------------------------------------------------------
Net cash provided by financing and miscellaneous
activities 550,954 1,062,283 1,462,395
------------------------------------------------------
Net (decrease) increase in cash and short-term
investments (381,103) 359,108 143,880
Cash and short-term investments:
Beginning of year 513,557 154,449 10,569
------------------------------------------------------
End of year $ 132,454 $ 513,557 $ 154,449
======================================================
</TABLE>
SEE ACCOMPANYING NOTES.
8
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis
December 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Transamerica Occidental Life Insurance Company (the Company) is domiciled in
California. The Company is a wholly owned subsidiary of Transamerica Insurance
Corporation of California, which is a wholly owned subsidiary of Transamerica
Corporation. The Company has three wholly owned insurance subsidiaries:
Transamerica Life Insurance and Annuity Company (TALIAC), Transamerica Life
Insurance Company of Canada and Transamerica Life Insurance Company of New York.
TALIAC has one wholly owned insurance subsidiary, Transamerica Assurance
Company. During 1999, Transamerica Corporation was merged with an indirect
wholly owned subsidiary of AEGON N.V., a holding company organized under the
laws of the Netherlands.
NATURE OF BUSINESS
The Company engages in providing life insurance, pension and annuity products,
reinsurance, structured settlements and investment products which are
distributed through a network of independent and company-affiliated agents and
independent brokers. The Company's customers are primarily in the United States
and are distributed in 50 states (reinsurance is the only product distributed in
New York).
BASIS OF PRESENTATION
Certain amounts reported in the accompanying financial statements are based on
management's best estimates and judgment, subject to the minimum requirements
imposed by regulatory authorities. Actual results could differ from those
estimates.
The accompanying financial statements have been prepared in conformity with
statutory accounting practices (SAP) prescribed or permitted by the California
Department of Insurance (the California Department), which vary in some respects
from accounting principles generally accepted in the United States (GAAP). The
more significant variances from GAAP are as follows:
The accounts and operations of the Company's subsidiaries are not
consolidated but are included in investments in common stocks at the
statutory net carrying value. Changes in the subsidiaries' net carrying
values are charged or credited directly to unassigned surplus.
9
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION (CONTINUED)
Bonds, where permitted, are carried at amortized cost, rather than
segregating the portfolio into held-to-maturity (reported at amortized
cost), available-for-sale (reported at fair value) and trading (reported at
fair value) classifications.
The costs of acquiring new and renewal business, such as commissions and
underwriting and policy issue costs, are expensed when incurred rather than
deferred and amortized over the terms of the related policies.
Certain assets recognized under GAAP, principally agents' debit balances
and computer software, are "non-admitted" and excluded from the
accompanying financial statements under SAP and are charged directly to
unassigned surplus.
Reserves for future policy benefits generally are calculated based on
mortality and interest assumptions that are statutorily required rather
than using estimated expected experience or actual account balances. The
policy liabilities are reported net, rather than gross, of ceded amounts.
Revenues for interest-sensitive life policies and investment-type contracts
consist of the entire premium received and benefits represent the benefits
paid and the change in policy reserves. Under GAAP, premiums received in
excess of policy charges are not recognized as revenue and benefits
represent the excess of benefits paid over the policy account value and
interest credited to the account value.
An Interest Maintenance Reserve (IMR) is provided which defers certain
realized capital gains and losses attributable to changes in the general
level of interest rates. Such deferred gains or losses are amortized into
investment income over the remaining period to maturity based on groupings
of individual securities sold in five-year bands.
An Asset Valuation Reserve (AVR) is provided which reclassifies a portion
of surplus to liabilities. The AVR is calculated according to a specified
formula as prescribed by the National Association of Insurance
Commissioners (NAIC) and is intended to stabilize the Company's surplus
against possible fluctuations in the market values of bonds, equity
securities, mortgage loans, real estate, and other invested assets. Changes
in the required AVR balance are charged or credited directly to unassigned
surplus.
10
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION (CONTINUED)
Deferred federal income taxes are not provided for differences between the
financial statement amounts and tax bases of assets and liabilities.
Policyholder dividends are recognized when declared rather than over the
term of the related policies.
A liability for reinsurance balances has been provided for unsecured policy
reserves ceded to reinsurers unauthorized by license to assume such
business. Changes to those amounts are credited or charged directly to
unassigned surplus. Under GAAP, an allowance for amounts deemed
uncollectible would be established through a charge to earnings.
Other significant accounting policies are as follows:
INVESTMENTS
Investments are shown on the following bases:
Bonds - where permitted, at amortized cost; all others are carried at
values prescribed by the Securities Valuation Office of the NAIC (SVO);
premiums and discounts are amortized using the interest method. For
loan-backed bonds, the interest method including anticipated prepayments at
the date of purchase is used. Prepayment assumptions for loan-backed bonds
are estimated using broker dealer survey values and are based on the
current interest rate and economic environment. The retrospective
adjustment method is used to value all securities, except for interest-only
securities which are valued using the prospective method.
Preferred stocks - where permitted at cost, all others are carried at fair
value based on NAIC values.
11
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS (CONTINUED)
Common stocks - at fair value based on NAIC market values, except for
investments in subsidiaries which are at statutory net carrying values.
Mortgage loans on real estate - at the aggregate unpaid balances.
Real estate - at depreciated cost less encumbrances, except for properties
acquired in satisfaction of debt, which are carried at the lower of fair
value or cost, less encumbrances.
Policy loans - at the aggregate unpaid principal balances.
Other investments - primarily at the lower of cost or fair value.
Derivative instruments, included in other investments in the accompanying
balance sheet, are valued in accordance with the NAIC Accounting Practices
and Procedures manual and Purposes and Procedures manual of the SVO. All
derivative instruments are used for hedging purposes and valued on a basis
consistent with the hedged item.
The Company uses interest rate swaps, caps and floors, options and certain other
derivatives as part of its overall interest rate risk management strategy for
certain life insurance and annuity products. As the Company only uses
derivatives for hedging purposes, the Company values all derivative instruments
on a consistent basis as the hedged item. Upon termination, gains and losses on
those instruments are included in the carrying values of the underlying hedged
items and are amortized over the remaining lives of the hedged items as
adjustments to investment income or benefits from the hedged items. Any
unamortized gains or losses are recognized when the underlying hedged items are
sold.
Interest rate swap contracts are used to convert the interest rate
characteristics (fixed or variable) of certain investments to match those of the
related insurance liabilities that the investments are supporting. The net
interest effect of such swap transactions is reported as an adjustment of
interest income from the hedged items as incurred.
12
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS (CONTINUED)
Interest rate caps and floors are used to limit the effects of changing interest
rates on yields of variable rate or short-term assets or liabilities. The
initial cost of any such agreements is amortized to net investment income over
the life of the agreement. Periodic payments that are receivable as a result of
the agreements are accrued as an adjustment of interest income or benefits from
the hedged item.
Gains and losses on disposal of investments are recognized on the
specific-identification basis. Changes in the statutory fair values of stocks
and those bonds carried at values prescribed by the SVO, rather than amortized
cost, are reported as unrealized gains or losses directly in unassigned surplus
and, accordingly, have no effect on net income.
Short-term investments include investments with maturities of less than one year
at date of acquisition.
SEPARATE ACCOUNTS
The Company administers segregated asset accounts for pension and other clients.
The assets of the separate accounts are not subject to liabilities arising out
of any business the Company may conduct and are reported at fair value.
Investment risks associated with fair value changes are primarily borne by the
clients. The liabilities of the separate accounts represent reserves established
to meet withdrawal and future benefit payment provisions of the contracts.
POLICY RESERVES AND CONTRACT CLAIMS
Life, annuity, and accident and health benefit reserves are calculated based
upon published tables using such interest rate assumptions and valuation methods
that will provide, in the aggregate, reserves that meet the amounts required by
the California Department. The Company waives deduction of deferred fractional
premiums upon death of the insureds and returns any portion of the final premium
beyond the date of death. Additional reserves are established where the gross
premiums on any insurance in force are less than the net premiums according to
the standard valuation set by the California Department.
13
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY RESERVES AND CONTRACT CLAIMS (CONTINUED)
Contract claim liabilities include provisions for reported claims and claims
incurred but not reported, net of reinsurance ceded.
PREMIUM REVENUES
Premiums from life insurance policies are recognized as revenue when due, and
premiums from annuity contracts are recognized when received. Accident and
health premiums are earned pro rata over the terms of the policies.
OTHER REVENUES
Other revenues consist primarily of profit sharing on reinsurance ceded and
reserve adjustments on ceded modified coinsurance transactions.
REINSURANCE
Coinsurance premiums, commissions, expense reimbursements, and reserves related
to reinsured business are accounted for on bases consistent with those used in
accounting for the original policies and the terms of the reinsurance contracts.
Gains associated with reinsurance of inforce blocks of business are included in
surplus rather than gain from operations. Premiums ceded and recoverable losses
have been reported as a reduction of premium income and benefits, respectively.
PRIOR YEAR ADJUSTMENTS
Prior year adjustments charged directly to surplus in 1999 related primarily to
expenses incurred for sales practices litigation of $7 million (after tax) and a
suspense asset adjustment of $7 million (after tax).
Prior year adjustments in 1998 relate primarily to expenses incurred for sales
practices litigation of $8 million (after-tax) and a reserve valuation
adjustment of $13 million (after-tax) on single premium immediate annuities.
Prior year adjustments in 1997 relate primarily to expenses incurred for sales
practices litigation of $15 million (after-tax) and a reserve valuation
adjustment of $30 million (after-tax) on single premium immediate annuities.
14
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS
Certain reclassifications of 1997 and 1998 amounts have been made to conform
with the 1999 presentation.
2. FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair values for bonds are based on market values prescribed by the SVO (NAIC
market values) rather than on actual or estimated market values. For bonds
without available NAIC market values, amortized costs are used as estimated fair
values. As of December 31, 1999 and 1998, the fair value of investments in bonds
includes $5,366 million and $5,215 million, respectively, of bonds that were
valued at amortized cost.
Fair values for preferred and common stocks are based on NAIC market values,
except for investment in subsidiaries which are at statutory net carrying
values.
Fair values for mortgage loans on real estate and policy loans are estimated
using discounted cash flow calculations, based on interest rates currently being
offered for similar loans to borrowers with similar credit ratings. Loans with
similar characteristics are aggregated for calculation purposes.
Fair values for derivative instruments are estimated using values obtained from
independent pricing services.
The carrying amounts of cash and short-term investments and accrued investment
income approximate their fair value.
Fair values for liabilities under investment-type contracts, included in
reserves for future policy benefits and other policy liabilities, are estimated
using discounted cash flow calculations, based on interest rates currently being
offered by similar contracts with maturities consistent with those remaining for
the contracts being valued.
15
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
The carrying values and fair values of financial instruments are as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
-----------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Bonds $ 12,820,804 $ 12,681,458 $ 12,135,178 $ 12,834,818
Preferred stocks 135,450 93,071 97,801 100,909
Common stocks 2,254,439 2,254,439 1,738,975 1,738,975
Mortgage loans on real estate 385,590 363,650 387,038 409,714
Policy loans 409,534 396,956 410,628 388,076
Floors, caps and swaptions 56,964 60,129 57,311 149,447
Cash on hand and on deposit 132,454 132,454 513,557 513,557
Accrued investment income 226,823 226,823 210,932 210,932
DECEMBER 31
1999 1998
-----------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-----------------------------------------------------------------------
Financial liabilities (liabilities for
investment-type contracts):
Single and flexible premium
deferred annuities $ 2,074,622 $ 1,881,238 $ 2,112,347 $ 1,927,980
Single premium immediate annuities 4,035,133 4,217,004 3,924,227 4,820,607
Other deposit contracts 2,219,143 2,222,305 1,917,574 1,915,954
Off-balance sheet assets (liabilities):
Exchange derivatives designated
as hedges that are in a:
Receivable position - 30,253 - 88,062
Payable position - (96,206) - (17,025)
</TABLE>
The Company enters into various interest-rate agreements in the normal course of
business primarily as a means of managing its interest rate exposure.
16
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
Interest rate swap agreements generally involve the periodic exchange of fixed
rate interest and floating rate interest payments by applying a specified market
index to the underlying contract or notional amount, without exchanging the
underlying notional amounts. Interest rate swap agreements are intended
primarily for asset and liability management. The differential to be paid or
received on those interest rate swap agreements that are designated as hedges of
financial assets is recorded on an accrual basis as a component of net
investment income. The differential to be paid or received on those interest
rate swap agreements that are designated as hedges of financial liabilities is
recorded on an accrual basis as a component of benefits paid or provided. While
the Company is not exposed to credit risk with respect to the notional amounts
of the interest rate swap agreements, the Company is subject to credit risk from
potential nonperformance of counterparties throughout the contract periods. The
amounts potentially subject to such credit risk are much smaller than the
notional amounts. The Company controls this credit risk by entering into
transactions with only a selected number of high quality institutions,
establishing credit limits and maintaining collateral when appropriate.
Generally, the Company is subject to basis risk when an interest rate swap
agreement is not funded. As of December 31, 1999, there were no unfunded
interest rate swap agreements.
Interest rate floor agreements generally provide for the receipt of payments in
the event the average interest rates during a settlement period fall below
specified levels under interest rate floor agreements. These agreements enable
the Company to transfer, modify, or reduce its interest rate risk and generally
require up front premium payments. The costs of interest rate floor agreements
are amortized over the contractual periods and resulting amortization expenses
are included in net investment income. The conditional receipts under these
agreements are recorded on an accrual basis as a component of net investment
income if designated as hedges of financial assets or as a component of benefits
paid or provided if designated as hedges of financial liabilities.
17
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
The information on derivative instruments is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
AGGREGATE WEIGHTED
NOTIONAL AVERAGE
AMOUNT FIXED RATE FAIR VALUE
------------------------------------------
<S> <C> <C> <C>
DECEMBER 31, 1999
Interest rate swap agreements designated as
hedges of financial assets, where the
Company pays:
Fixed rate interest $ 296,133 6.46% $ 28,092
Floating rate interest 1,516,308 5.95 (90,055)
Floating rate interest based on one index and
receives floating rate interest on another
index 4,525 6.05 20
Interest rate swap agreements designated as hedges
of financial liabilities, where the Company pays:
Floating rate interest 710,981 6.40 (4,394)
Floating rate interest based on one index and
receives floating rate interest on another
index 237,500 6.13 (260)
Interest rate floor agreements 400,000 - 3,065
Swaptions 6,500,000 6.64 25,211
Call options 31,999 - 31,853
</TABLE>
18
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
<TABLE>
<CAPTION>
AGGREGATE WEIGHTED
NOTIONAL AVERAGE
AMOUNT FIXED RATE FAIR VALUE
------------------------------------------------------
<S> <C> <C> <C>
DECEMBER 31, 1998
Interest rate swap agreements designated as
hedges of financial assets, where the
Company pays:
Fixed rate interest $ 44,950 5.95% $ 280
Fixed rate interest 212,488 5.01 (13,525)
Floating rate interest (1,495,000) 5.40 80,717
Floating rate interest based on one index and
receives floating rate interest on another
index 15,833 5.06 110
Interest rate swap agreements designated as hedges
of financial liabilities, where the Company pays:
Floating rate interest 1,204,456 5.42 3,781
Floating rate interest based on one index and
receives floating rate interest on another
index 37,500 4.84 (339)
Interest rate floor agreements 400,000 - 21,705
Swaptions 6,500,000 5.19 101,754
Call options 30,710 - 25,988
</TABLE>
Generally, notional amounts indicate the volume of transactions and estimated
fair values indicate the amounts subject to credit risk.
Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of temporary cash investments, fixed maturities,
derivatives, mortgage loans on real estate and reinsurance receivables. The
Company places its temporary cash investments with high credit quality financial
institutions. Concentration of credit risk with respect to investments in fixed
maturities and mortgage loans on real
19
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
estate is limited due to the large number of such investments and their
dispersion across many different industries and geographic areas. The Company
places reinsurance with only highly rated insurance companies. At December 31,
1999, the Company had no significant concentration of credit risk.
3. INVESTMENTS
The carrying value and fair value of investments in debt securities are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
U.S. Treasury securities and
obligations of U.S. government
corporations
and agencies $ 189,325 $ 11,396 $ 1,968 $ 198,753
Obligations of states and political
subdivisions 106,484 3,673 1,482 108,675
Foreign governments 50,820 353 3,328 47,845
Corporate securities 9,345,228 103,079 230,148 9,218,159
Public utilities 1,718,582 20,020 38,842 1,699,760
Mortgage and other asset- backed
securities 1,410,365 - 2,099 1,408,266
-----------------------------------------------------------------------
$ 12,820,804 $ 138,521 $ 277,867 $ 12,681,458
=======================================================================
</TABLE>
20
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
GROSS GROSS
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
U.S. Treasury securities and
obligations of U.S. government
corporations
and agencies $ 148,427 $ 57,226 $ - $ 205,653
Obligations of states and political
subdivisions 123,255 11,752 - 135,007
Foreign governments 39,940 2,115 1,486 40,569
Corporate securities 8,430,358 476,428 22,687 8,884,099
Public utilities 2,206,740 176,863 571 2,383,032
Mortgage and other asset-backed
securities 1,186,458 - - 1,186,458
-----------------------------------------------------------------------
$ 12,135,178 $ 724,384 $ 24,744 $ 12,834,818
=======================================================================
</TABLE>
Included in bonds is a $150 million note due from Transamerica Corporation at
December 31, 1998.
The carrying value and fair value of bonds at December 31, 1999, by contractual
maturity, are as follows (in thousands):
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
------------------------------------
<S> <C> <C>
Due in one year or less $ 137,778 $ 138,280
Due after one year through five years 2,021,208 2,019,633
Due after five years through ten years 2,769,210 2,708,056
Due after ten years 6,482,243 6,407,223
Mortgage and other asset-backed securities 1,410,365 1,408,266
------------------------------------
$ 12,820,804 $ 12,681,458
====================================
</TABLE>
Expected maturities may differ from contractual maturities because certain
borrowers have the right to call or prepay obligations with or without call or
prepayment penalties.
21
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
3. INVESTMENTS (CONTINUED)
The costs and fair values of preferred stocks and common stocks (unaffiliated
companies) are as follows (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
Preferred stocks $ 77,231 $ 6,399 $ 41,182 $ 42,448
Common stocks 662,215 640,014 32,190 1,270,039
DECEMBER 31, 1998
Preferred stocks $ 40,941 $ 3,506 $ 18 $ 44,429
Common stocks 299,048 483,421 8,979 773,490
</TABLE>
The components of investment in real estate are as follows (in thousands):
<TABLE>
<CAPTION>
ACCUMULATED CARRYING
COST DEPRECIATION VALUE
----------------------------------------------
<S> <C> <C> <C>
DECEMBER 31, 1999
Properties occupied by the Company $ 207,709 $ 111,331 $ 96,378
Other 7,450 2,633 4,817
----------------------------------------------
$ 215,159 $ 113,964 $ 101,195
==============================================
DECEMBER 31, 1998
Properties occupied by the Company $ 202,933 $ 105,330 $ 97,603
Other 8,514 3,369 5,145
----------------------------------------------
$ 211,447 $ 108,699 $ 102,748
==============================================
</TABLE>
22
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
3. INVESTMENTS (CONTINUED)
The maximum and minimum lending rates for mortgage loans during 1999 were 8.48%
and 7.13%, respectively. The maximum percentage of any one loan to the value of
security at the time of the loan, exclusive of any purchase money or insured or
guaranteed mortgages, was 80%. Fire insurance is carried in every case at least
equal to the excess of the loan over the maximum loan which would be permitted
by law on the land without the buildings.
Net investment income (expense) by major category of investments is summarized
as follows (in thousands):
YEAR ENDED DECEMBER 31
1999 1998 1997
-----------------------------------------
Bonds $ 989,340 $ 950,923 $ 934,229
Preferred stocks 5,078 1,312 790
Common stocks 53,192 53,000 43,938
Mortgage loans on real estate 28,314 28,713 25,031
Real estate 28,008 27,288 29,447
Policy loans 27,086 24,780 26,061
Cash and short-term investments 10,526 10,939 4,094
Other investments 16,343 17,198 (533)
-----------------------------------------
1,157,887 1,114,153 1,063,057
Investment expense (32,845) (35,610) (35,003)
-----------------------------------------
$1,125,042 $1,078,543 $1,028,054
=========================================
23
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
3. INVESTMENTS (CONTINUED)
The realized gains and losses and other information related to investments are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------
<S> <C> <C> <C>
Net gains (losses) on disposition of investments in:
Bonds $ 2,993 $ 16,522 $ (27,875)
Preferred stocks (6,085) (2,405) (579)
Common stocks 41,011 164,984 9,792
Other (90,400) (7,021) (1,308)
------------------------------------
(52,481) 172,080 (19,970)
Related income (taxes) recovery 71,941 (84,425) (7,480)
Transfer to the IMR (1,945) (11,584) 18,118
------------------------------------
Net realized capital gains (losses) $ 17,515 $ 76,071 $ (9,332)
====================================
</TABLE>
The other loss of $90.4 million in 1999 primarily results from the net pretax
loss incurred on an ineffective equity collar hedge (see Note 12).
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
--------------------------------------------
<S> <C> <C> <C>
Proceeds from disposition of investment in bonds $ 2,993,985 $ 3,938,693 $ 3,525,839
Gross gains on disposition of investment
in bonds 46,135 44,290 24,157
Gross losses on disposition of investment
in bonds (43,142) (27,768) (52,032)
Change in net unrealized gains (losses):
Bonds (5,756) (871) -
Preferred stocks 2,271 (2,741) 518
Common stocks 125,177 257,582 242,773
Real estate - - 3,727
Other (2,272) 7,570 (189)
---------------------------------------------
$ 119,420 $ 261,540 $ 246,829
=============================================
</TABLE>
24
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
3. INVESTMENTS (CONTINUED)
Change in net unrealized gains on common stocks in 1999, 1998 and 1997, includes
$(34) million, $156 million and $107 million, respectively, related to the
increase (decrease) in TALIAC's statutory capital and surplus for those years.
4. REINSURANCE
The Company is involved in both the cession and assumption of reinsurance with
other companies, including affiliated companies. Risks are reinsured with other
companies to permit the recovery of a portion of the direct losses. These
reinsured risks are treated as though, to the extent of the reinsurance, they
are risks for which the Company is not liable.
Policy liabilities and accruals are reported in the accompanying financial
statements net of reinsurance ceded. The Company remains liable to the extent
the reinsuring companies do not meet their obligations under these reinsurance
treaties.
The following summarizes the effect of reinsurance transactions (in thousands):
<TABLE>
<CAPTION>
CEDED/RETROCEDED TO ASSUMED FROM
-------------------------------------------------------------
DIRECT AFFILIATED UNAFFILIATED AFFILIATED UNAFFILIATED NET
AMOUNT COMPANIES COMPANIES COMPANIES COMPANIES AMOUNT
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended
December 31, 1999:
Premium revenue $ 1,409,419 $ 112,947 $ 1,965,697 $ 157,197 $ 1,880,044 $ 1,368,016
==============================================================================================
At December 31, 1999:
Life insurance in force $ 547,304,907 $ 4,881,384 $ 365,336,549 $ 17,212,668 $ 465,086 $194,764,728
==============================================================================================
Reserves for future policy
benefits $ 14,241,446 $ 4,124,327 $ 3,056,908 $ 233,126 $ 2,401,859 $ 9,695,196
Policy and contract claims
payable 127,030 40,341 137,047 1,824 345,323 296,789
----------------------------------------------------------------------------------------------
$ 14,368,476 $ 4,164,668 $ 3,193,955 $ 234,950 $ 2,747,182 $ 9,991,985
==============================================================================================
</TABLE>
25
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
4. REINSURANCE (CONTINUED)
<TABLE>
<CAPTION>
CEDED/RETROCEDED TO ASSUMED FROM
--------------------------------------------------------------
DIRECT AFFILIATED UNAFFILIATED AFFILIATED UNAFFILIATED NET
AMOUNT COMPANIES COMPANIES COMPANIES COMPANIES AMOUNT
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended
December 31, 1998:
Premium revenue $ 1,401,733 $ 298,339 $ 2,193,006 $ 198,460 $ 2,499,677 $ 1,608,525
==============================================================================================
At December 31, 1998:
Life insurance in force $ 190,331,317 $ 950,789 $ 307,374,066 $ 25,093,946 $ 282,821,689 $ 189,922,097
==============================================================================================
Reserves for future policy
benefits $ 14,778,562 $ 4,978,700 $ 2,931,865 $ 136,208 $ 2,424,077 $ 9,428,282
Policy and contract claims
payable 121,330 45,187 316,533 11,018 385,519 156,147
----------------------------------------------------------------------------------------------
$ 14,899,892 $ 5,023,887 $ 3,248,398 $ 147,226 $ 2,809,596 $ 9,584,429
==============================================================================================
Year ended
December 31, 1997:
Premium reserve $ 1,434,511 $ 245,606 $ 1,296,529 $ 75,853 $ 1,747,516 $ 1,715,745
==============================================================================================
At December 31, 1997:
Life insurance in force $ 175,258,666 $ - $ 272,918,826 $ 26,199,512 $ 223,688,654 $ 152,228,006
==============================================================================================
Reserves for future policy
benefits $ 15,117,147 $ 5,457,334 $ 2,731,647 $ 15,306 $ 2,922,166 $ 9,865,638
Policy and contract claims
payable 94,040 42,804 197,351 20,854 357,125 231,864
----------------------------------------------------------------------------------------------
$ 15,211,187 $ 5,500,138 $ 2,928,998 $ 36,160 $ 3,279,291 $ 10,097,502
==============================================================================================
</TABLE>
26
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
4. REINSURANCE (CONTINUED)
<TABLE>
<CAPTION>
CEDED TO ASSUMED
DIRECT OTHER FROM OTHER NET
AMOUNT COMPANIES COMPANIES AMOUNT
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1999:
Benefits paid or provided $ 1,632,298 $ 1,499,809 $ 1,086,642 $ 1,219,131
=======================================================================
Year ended December 31, 1998:
Benefits paid or provided $ 1,576,300 $ 1,147,899 $ 1,020,085 $ 1,448,486
=======================================================================
Year ended December 31, 1997:
Benefits paid or provided $ 1,631,249 $ 955,287 $ 887,538 $ 1,563,500
=======================================================================
</TABLE>
5. INCOME TAXES
The Company's taxable income or loss is included in the consolidated return of
Transamerica Corporation for the period ended July 21, 1999. The method of
allocation between the companies for the period ended July 21, 1999, is subject
to written agreement approved by the Board of Directors. Tax payments are made
to, or refunds received from, Transamerica Corporation in amounts which would
result from filing separate tax returns with federal taxing authorities, except
that tax benefits attributable to operating losses and other carryovers are
recognized currently since utilization of these benefits is assured by
Transamerica Corporation. The provision does not purport to represent a
proportionate share of the consolidated tax.
For the period beginning July 22, 1999, the Company will join in a consolidated
tax return with certain life affiliates: TALIAC, Transamerica Assurance Company
and Transamerica Life Insurance Company of New York. The method of allocation
between the companies for the period beginning July 22, 1999, will be subject to
written agreement to be approved by the Board of Directors. It is anticipated
that this agreement will require that tax payments are made to, or refunds are
received from, TOLIC, in amounts which would results from filing separate tax
returns with federal taxing authorities.
27
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
5. INCOME TAXES (CONTINUED)
Amounts due from Transamerica Corporation for federal income taxes are $160
million at December 31, 1999. Amounts due to Transamerica Corporation for
federal income taxes were $28.5 million at December 31, 1998, and are included
in accounts payable and other liabilities in the accompanying balance sheet.
Following is a reconciliation of federal income taxes computed at the statutory
rate with the income tax provision, excluding income taxes related to net
realized gains on investment transactions (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
----------------------------------
<S> <C> <C> <C>
Federal income taxes at statutory rate $ 61,196 $ 18,901 $ 57,511
Difference between statutory and tax reserves (1,153) (3,463) 10,045
Deferred acquisition costs capitalized,
net of amortization 13,326 4,677 10,652
Reinsurance adjustments (14,442) (7,525) 12,900
Difference in statutory and tax bases
of investments (2,399) (10,990) (4,149)
Adjustment to prior year tax provision 24,640 (13,055) 4,689
Tax credits (16,000) (17,698) (11,127)
Nontaxable affiliate dividends (17,500) (17,500) (14,000)
Other (17,338) (23,755) (8,007)
----------------------------------
Provision (benefit) for income taxes $ 30,330 $(70,408) $ 58,514
==================================
</TABLE>
Under the Life Insurance Company Income Tax Act of 1959, a portion of "gain from
operations" was not subject to current income taxation but was accumulated, for
tax purposes, in a memorandum account designated as "policyholders' surplus
account." The balance in this account was frozen at December 31, 1983, pursuant
to the Deficit Reduction Act of 1984. This amount would become subject to tax
when it exceeds a certain maximum or when cash dividends are paid therefrom. The
policyholders' surplus account balance at December 31, 1999, was $118 million.
Should the entire amount in the policyholders' surplus account become taxable,
the tax thereon computed at current rates would amount to approximately $41.3
million. No income taxes have been provided on the policyholders' surplus
account since the conditions that would cause such taxes are remote.
28
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
6. INVESTMENTS IN SUBSIDIARIES
The Company's investment in common stocks of its wholly owned subsidiaries with
carrying values, based on the statutory capital and surplus of the subsidiaries,
is summarized as follows (in thousands):
CARRYING
COST VALUE
--------------------------
At December 31, 1999:
TALIAC $ 238,418 $ 797,109
Other 206,041 187,291
---------------------------
$ 444,459 $ 984,400
===========================
At December 31, 1998:
TALIAC $ 237,448 $ 830,829
Others 179,891 134,656
---------------------------
$ 417,339 $ 965,485
===========================
The Company received a $50 million dividend in 1999 and 1998 from its wholly
owned subsidiary, TALIAC.
The Company's investment in preferred stocks of subsidiaries is substantially
all represented by an investment in Transamerica Life Insurance Company of
Canada.
Certain financial information with respect to TALIAC, the Company's principal
subsidiary, is as follows (in thousands):
DECEMBER 31
1999 1998
--------------------------------------
Cash and investments $ 14,046,255 $ 13,582,175
Other assets 6,339,057 4,783,063
--------------------------------------
Total assets 20,385,312 18,365,238
Aggregate reserves 9,221,606 8,084,356
Other liabilities 10,366,597 9,450,053
--------------------------------------
Total liabilities 19,588,203 17,534,409
--------------------------------------
Total capital and surplus $ 797,109 $ 830,829
======================================
29
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
7. DEFERRED AND UNCOLLECTED PREMIUMS
Components of deferred and uncollected premiums are as follows:
GROSS LOADING NET
-----------------------------------
DECEMBER 31, 1999
Life and annuity:
Ordinary first-year business $ 8,630 $ - $ 8,630
Ordinary renewal business 183,107 36,000 147,107
Group life direct business 2,095 - 2,095
-----------------------------------
193,832 36,000 157,832
Accident and health 69,890 - 69,890
-----------------------------------
$ 263,722 $ 36,000 $ 227,722
===================================
DECEMBER 31, 1998
Life and annuity:
Ordinary first-year business $ (828,090) $ 14,537 $(842,627)
Ordinary renewal business 9,900 8,929 971
Group life direct business 5,637 - 5,637
-----------------------------------
(812,553) 23,466 (836,019)
Accident and health 28,068 - 28,068
-----------------------------------
$ (784,485) $ 23,466 $(807,951)
===================================
The gross deferred and uncollected premiums balance at December 31, 1999, of
$263,722,000 is composed of $431,756,000 direct deferred and uncollected
premiums less reinsurance premiums payable of $168,034,000.
The gross deferred and uncollected premiums balance at December 31, 1998, of
$(784,485,000) is composed of $379,199,000 direct deferred and uncollected
premiums less reinsurance premiums payable of $(1,163,684,000).
30
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
8. ANNUITY RESERVES AND DEPOSIT LIABILITIES
A portion of the Company's policy reserves and other policyholders' funds
(including separate account liabilities) relates to liabilities established on a
variety of the Company's products that are not subject to significant mortality
or morbidity risk; however, there may be certain restrictions placed upon the
amount of funds that can be withdrawn without penalty. The amount of reserves on
these products, by withdrawal characteristics, are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
----------------------------------------------------------------
AMOUNT PERCENT AMOUNT PERCENT
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal
- with adjustment:
With market value adjustment $ 9,134 -% $ 2,955,445 21%
At book value less surrender charge 435,717 3 565,977 4
At market value 7,385,279 53 2,319,944 16
----------------------------------------------------------------
7,830,130 56 5,841,366 41
Subject to discretionary withdrawal -
without adjustment 1,748,102 13 1,839,270 13
Not subject to discretionary withdrawal
provision 4,417,004 31 6,710,422 46
----------------------------------------------------------------
Total annuity reserves and deposit
liabilities 13,995,236 100% 14,391,058 100%
==== ====
Less reinsurance (5,820,180) (6,736,704)
----------------- ------------------
Net annuity reserves and deposit liabilities $ 8,175,056* $ 7,654,354*
================= ==================
</TABLE>
* Includes $3,364 million and $2,622 million of annuity reserves and deposit
liabilities reported in the separate account liability at December 31, 1999
and 1998, respectively. Funding agreement liabilities that are a part of the
separate account liabilities are excluded from the above amounts.
Included in other liabilities is $2,228 million and $1,927 million at December
31, 1999 and 1998, respectively, held pursuant to funding agreements. Funding
agreements are obligations that contain no mortality or morbidity risks.
31
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
9. CAPITAL AND SURPLUS
The Company is subject to the requirements of the NAIC approved Risk Based
Capital (RBC) rules and at December 31, 1999 and 1998, the Company met the RBC
requirement.
The amount of dividends which can be paid by the Company without prior approval
of the California Department is subject to restrictions related to statutory
surplus and gains from operations. The Company could pay $184 million in
dividends in 2000 without prior approval.
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees are covered by noncontributory defined benefit plans
sponsored by the Company and the Retirement Plan for Salaried Employees of
Transamerica Corporation and Affiliates in which the Company also participates.
Pension benefits are based on the employee's compensation during the highest
paid 60 consecutive months during the 120 months before retirement. The general
policy is to fund current service costs currently and prior service costs over
periods ranging from 10 to 30 years. Assets of those plans are invested
principally in publicly traded stocks and bonds.
The Company's total pension costs were $0.8 million, $0.6 million and $0 million
for the years ended December 31, 1999, 1998 and 1997, respectively.
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. The Company accounts for the costs of such
benefit programs under the accrual method and amortizes its transition
obligation for retirees and fully eligible or vested employees over 20 years.
Postretirement benefit costs charged to income was $3 million for each of the
years ended December 31, 1999, 1998 and 1997.
11. ASSETS ON DEPOSIT
At December 31, 1999 and 1998, $4 million and $4 million of the Company's assets
were on deposit with public officials in compliance with regulatory
requirements.
32
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
12. RELATED PARTY TRANSACTIONS
The Company has various transactions with Transamerica Corporation and its
affiliated companies in the normal course of operations. These transactions
include the assumption and cession of reinsurance and the performance of certain
administrative and support services for affiliated companies. Such
reimbursements are recorded as a reduction of operating expenses.
Transactions with Transamerica Corporation and its affiliates also include
transactions related to pension plans, investments in a money market fund
managed by an affiliated company, and rental of computer services. Pension funds
administered by a subsidiary for affiliated companies amounted to $1.8 billion,
$1.6 billion and $1.3 billion at December 31, 1999, 1998 and 1997, respectively.
The investment in an affiliated money market fund was not material.
The Company had amounts due from affiliates of $41 million as of December 31,
1999, and $16 million as of December 31, 1998.
In March 1999, the Company entered into an equity collar (which expired December
17, 1999), with an unrelated party to hedge the price fluctuations of their
unaffiliated equity securities portfolio. In addition, Transamerica Corporation
agreed to protect the Company from any ineffectiveness in the hedge that would
expose the Company to loss net of tax benefit. As a result of the
ineffectiveness of the collar with the unrelated party and the payment that the
Company was required to make upon settlement, Transamerica Corporation made a
payment of $172 million to the Company in December 1999.
33
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
13. LEASES
Rental expense for equipment and properties occupied by the Company was $17
million in 1999, $14 million in 1998, and $19 million in 1997. The following is
a schedule by years of future minimum rental payments required under operating
leases that have initial or remaining noncancelable lease terms in excess of one
year as of December 31, 1999 (in thousands):
Year ending December 31:
2000 $ 12,203
2001 9,998
2002 7,745
2003 6,728
2004 6,624
Later years 41,701
------------
$ 84,999
============
14. LITIGATION
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company and plaintiff's counsel entered into a settlement which was approved on
June 26, 1997. The settlement required prompt notification to affected
policyholders. Administrative and policy benefit costs associated with the
settlement of $7 million, $8 million and $15 million after-tax have been
incurred in 1999, 1998 and 1997, respectively, and reflected in these statements
as prior period adjustments. Additional costs related to the settlement are not
expected to be material and will be incurred over a period of years. In the
opinion of the Company, any ultimate liability which might result from other
litigation would not have a materially adverse effect on the combined financial
position of the Company or the results of its operations.
15. SEPARATE ACCOUNTS
Separate accounts held by the Company represent primarily funds which are
administered for pension plans. The assets consist primarily of fixed maturities
and equity securities and are carried at estimated fair value. The Company
provides a minimum guaranteed return to policyholders of certain separate
accounts. Certain other separate accounts do not have any minimum guarantees and
the investment risks associated with market value changes are borne entirely by
the policyholder.
34
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
15. SEPARATE ACCOUNTS (CONTINUED)
Information regarding the separate accounts of the Company as of and for the
year ended December 31, 1999, is as follows (in thousands):
<TABLE>
<CAPTION>
SEPARATE ACCOUNTS WITH GUARANTEES
-------------------------------------------------
NONINDEXED NONINDEXED
GUARANTEE GUARANTEE NONGUARANTEED
LESS THAN OR GREATER THAN SEPARATE
INDEXED EQUAL TO 4% 4% ACCOUNTS TOTAL
--------------- ---------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Premiums, deposits and other
considerations $ - $ - $ - $ 254,076 $ 254,076
=============== ================ ================ ================= ==================
Reserves for separate accounts
with assets at:
Fair value $ - $ - $ - $ 3,364,426 $ 3,364,426
Amortized cost - - - - -
Other - - - 703,700 703,700
--------------- ---------------- ---------------- ----------------- ------------------
Total $ - $ - $ - $ 4,068,126 $ 4,068,126
=============== ================ ================ ================= ==================
Reserves for separate accounts
by withdrawal characteristics:
Subject to discretionary
withdrawal (with
adjustment):
With market value
adjustment $ - $ - $ - $ - $ -
At book value less
current surrender
charge of 5% or more
- - - - -
At market value 3,364,426 3,364,426
At book value without
adjustment and with
current surrender
charges less than 5% - - - - -
--------------- ---------------- ---------------- ----------------- ------------------
Subtotal - - - 3,364,426 3,364,426
Not subject to
discretionary withdrawal - - - - -
Other - - - 703,700 703,700
--------------- ---------------- ---------------- ----------------- ------------------
Total separate account
liabilities $ - $ - $ - $ 4,068,126 $ 4,068,126
=============== ================ ================ ================= ==================
</TABLE>
35
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
15. SEPARATE ACCOUNTS (CONTINUED)
A reconciliation of the amounts transferred to and from the separate accounts is
presented below (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
-----------------------------------------
<S> <C> <C> <C>
Transfer as reported in the summary of
operations of the separate accounts
statement:
Transfers to separate accounts $ 255,210 $ 352,298 $ 454,749
Transfers from separate accounts 217,729 173,152 240,381
-----------------------------------------
Net transfers to separate accounts 37,481 179,146 214,368
Reconciling adjustments:
Deposits (withdrawals) from separate
accounts 13,091 21,097 (61,370)
-----------------------------------------
Transfers as reported in the statements of income
$ 50,572 $ 200,243 $ 152,998
=========================================
</TABLE>
16. DIRECT PREMIUM WRITTEN BY MANAGING GENERAL AGENTS/THIRD-PARTY
ADMINISTRATORS
The Company has the following direct premiums written through managing general
agents (in thousands):
<TABLE>
<CAPTION>
TYPES OF DIRECT
EXCLUSIVE BUSINESS AUTHORITY WRITTEN
CONTRACT WRITTEN GRANTED PREMIUMS
-------------------------------------------------------------
<S> <C> <C> <C> <C>
National Benefit Resources No Specific and * $ 38
Aggregate
Excess of Loss
Insurance
R. E. Moulton Insurance Agency, Inc. No Specific and * 6,698
Aggregate
Excess of Loss
Insurance
</TABLE>
36
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
16. DIRECT PREMIUM WRITTEN BY MANAGING GENERAL AGENTS/THIRD-PARTY
ADMINISTRATORS (CONTINUED)
<TABLE>
<CAPTION>
TYPES OF DIRECT
EXCLUSIVE BUSINESS AUTHORITY WRITTEN
CONTRACT WRITTEN GRANTED PREMIUMS
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Intermediary Insurance Services, Inc. No Specific and * 2,969
Aggregate
Excess of Loss
Insurance
Excess Reinsurance Underwriters No Specific and * 12,536
Agency, Inc. Aggregate
Excess of Loss
Insurance
Risk Assessment Strategies No Specific and * 576
Aggregate
Excess of Loss
Insurance
North American Insurance Management Yes Occupational * 1,453
Accident -
Excess of Loss
Insurance
Health Reinsurance Management Partnership No Provider Excess * 25,173
Self Funding Systems No Specific and * 119
Aggregate
Excess of Loss
Insurance
</TABLE>
*Premium collection, underwriting and commission/claim payments authority
granted.
37
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
17. NAIC CODIFICATION
In 1998, the NAIC adopted codified statutory accounting principles
(Codification) effective January 1, 2001. Codification will likely change, to
some extent, prescribed statutory accounting practices and may result in changes
to the accounting practices that the Company uses to prepare its statutory-basis
financial statements. Codification will require adoption by the various states
before it becomes the prescribed statutory basis of accounting for insurance
companies domesticated within those states. Accordingly, before Codification
becomes effective for the Company, the state of California must adopt
Codification as the prescribed basis of accounting on which domestic insurers
must report their statutory-basis results to the Insurance Department. The state
of California has stated affirmatively that it will adopt Codification effective
January 1, 2001. Management believes that the impact of Codification will not be
material to the Company's statutory-basis financial statements
18. YEAR 2000 (UNAUDITED)
In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In 1999, the Company completed its remediation and
testing of systems. As a result of those planning and implementation efforts,
the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from Year 2000 issues, either with its
products, its internal systems, or the products and services of third parties.
The Company will continue to monitor its mission critical computer applications
and those of its suppliers and vendors throughout the year 2000 to ensure that
any latent Year 2000 matters that may arise are addressed promptly.
38
<PAGE>
Statutory Basis
Financial Statement Schedules
<PAGE>
Transamerica Occidental Life Insurance Company
Summary of Investments - Other Than Investments in Related Parties -
Statutory Basis
(Dollars in thousands)
December 31, 1999
SCHEDULE I
<TABLE>
<CAPTION>
AMOUNT AT
WHICH SHOWN
MARKET IN THE
TYPE OF INVESTMENT COST (1) VALUE BALANCE SHEET
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds:
United States government and government
agencies and authorities $ 189,325 $ 198,753 $ 189,325
States, municipalities and political
subdivisions 106,484 108,675 106,484
Foreign governments 50,820 47,845 50,820
Public utilities 1,718,582 1,699,760 1,718,582
All other corporate bonds 9,345,228 9,218,159 9,345,228
Mortgage and other asset-backed securities 1,410,365 1,408,266 1,410,365
Redeemable preferred stock 66,841 30,448 66,371
---------------------------------------------
Total fixed maturities 12,887,645 12,711,906 12,887,175
EQUITY SECURITIES
Common stocks:
Affiliated entities 444,459 984,400 984,400
Banks, trust and insurance 36,481 38,892 38,892
Industrial, miscellaneous and all other 625,734 1,231,147 1,231,147
Nonredeemable preferred stock 69,079 62,623 69,079
---------------------------------------------
Total equity securities 1,175,753 2,317,062 2,323,518
Mortgage loans on real estate 385,590 363,650 385,590
Real estate 101,195 50,000 101,195
Policy loans 409,534 396,956 409,534
Other long-term investments 218,997 155,562 218,997
Cash and short-term investments 132,454 132,454 132,454
---------------------------------------------
Total investments $15,311,168 $16,127,590 $16,458,463
=============================================
</TABLE>
(1) Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accrual discounts.
39
<PAGE>
Transamerica Occidental Life Insurance Company
Supplementary Insurance Information - Statutory Basis
(Dollars in thousands)
December 31, 1999
SCHEDULE III
FUTURE POLICY POLICY AND
BENEFITS AND UNEARNED CONTRACT
EXPENSES PREMIUMS LIABILITIES
- --------------------------------------------------------------------------------
Year ended December 31, 1999
Individual life $ 4,988,602 $ - $ 240,452
Individual health 42,065 28,046 33,481
Group life and health 31,586 2,616 32,963
Annuity 4,602,281 - (10,107)
-------------------------------------------
9,664,534 30,662 296,789
Year ended December 31, 1998
Individual life 4,595,349 - 121,089
Individual health 26,439 41,669 (9,445)
Group life and health 12,953 3,675 47,840
Annuity 4,748,197 - (3,337)
-------------------------------------------
9,382,938 45,344 156,147
Year ended December 31, 1997
Individual life 4,207,937 - 155,424
Individual health 27,254 31,297 2,606
Group life and health 16,964 2,124 51,052
Annuity 5,580,062 - 22,781
-------------------------------------------
$ 9,832,217 $ 33,421 $ 231,863
===========================================
40
<PAGE>
BENEFITS,
CLAIMS
NET LOSSES AND OTHER
PREMIUM INVESTMENT SETTLEMENT OPERATING PREMIUMS
REVENUE INCOME* EXPENSES EXPENSES* WRITTEN
- -------------------------------------------------------------------------------
$ 891,749 $ 405,705 $ 909,143 $ 703,605 $ 1,178,607
(10,184) 2,770 (33,811) 35,665 80,328
158,775 10,967 134,414 124,689 65,217
327,676 705,600 1,283,024 736,327 85,267
- -------------------------------------------------------------------------------
1,368,016 1,125,042 2,292,770 1,600,286 1,409,419
905,725 400,313 1,242,592 492,976 1,087,850
51,827 4,483 3,265 100,839 63,828
195,431 4,003 160,581 89,231 50,433
455,542 669,744 312,946 2,218,202 199,622
- -------------------------------------------------------------------------------
1,608,525 1,078,543 1,719,384 2,901,248 1,401,733
761,853 370,027 933,474 383,255 1,042,734
23,988 6,216 19,252 49,460 56,861
236,688 5,074 200,224 123,772 111,314
693,216 646,737 305,491 1,702,770 223,602
- -------------------------------------------------------------------------------
$ 1,715,745 $ 1,028,054 $ 1,458,441 $ 2,259,257 $ 1,434,511
===============================================================================
*Allocations of net investment income and other operating expenses are based on
a number of assumptions of estimates, and the results would change if
different methods were applied.
41
<PAGE>
Transamerica Occidental Life Insurance Company
Reinsurance - Statutory Basis
(Dollars in thousands)
December 31, 1999
SCHEDULE IV
<TABLE>
<CAPTION>
ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1999
Life insurance in force $ 547,304,907 $ 370,217,933 $ 17,677,754 $ 194,764,728 9%
Premiums:
Individual life $ 1,178,607 $ 1,220,329 $ 933,471 $ 891,749 105%
Individual health 80,328 97,296 6,784 (10,184) -%
Group life and health 65,217 247,870 341,428 158,775 215%
Annuity 85,267 513,149 755,558 327,676 231%
-----------------------------------------------------------------------------------------
$ 1,409,419 $ 2,078,644 $ 2,037,241 $ 1,368,016 149%
=========================================================================================
Year ended December 31,
1998
Life insurance in force $ 190,331,317 $ 308,297,855 $ 307,915,635 $ 189,922,097 162%
Premiums:
Individual life $ 1,087,850 $ 958,929 $ 776,803 $ 905,725 86%
Individual health 63,828 134,991 122,991 51,827 237%
Group life and health 50,433 268,973 413,971 195,431 212%
Annuity 199,622 1,128,452 1,384,372 455,542 304%
-----------------------------------------------------------------------------------------
$ 1,401,733 $ 2,491,345 $ 2,698,137 $ 1,608,525 168%
=========================================================================================
Year ended December 31,
1997
Life insurance in force $ 175,258,666 $ 272,918,826 $ 249,888,166 $ 152,228,006 164%
Premiums:
Individual life $ 1,042,734 $ 967,543 $ 686,662 $ 761,853 90%
Individual health 56,861 47,651 14,778 23,988 61%
Group life and health 111,314 274,270 399,644 236,688 169%
Annuity 223,602 252,671 722,285 693,216 104%
-----------------------------------------------------------------------------------------
$ 1,434,511 $ 1,542,135 $ 1,823,369 $ 1,715,745 106%
=========================================================================================
</TABLE>
42
<PAGE>
PART II.
OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
---------------------------
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
REPRESENTATION PURSUANT TO SECTION 26(e) (2) (A)
------------------------------------------------
Transamerica Occidental Life Insurance Company ("Transamerica") hereby
represents that the fees and charges deducted under the Policies, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by Transamerica.
STATEMENT WITH RESPECT TO INDEMNIFICATION
-----------------------------------------
Provisions exist under the California Corporations Code, the Restated
Articles of Incorporation and Restated Bylaws of Transamerica whereby
Transamerica may indemnify certain persons against certain payments incurred by
such persons. The following excerpts contain the substance of these provisions.
California Corporations Code
----------------------------
Section 317. Indemnification of agent of corporation in proceedings or actions.
(a) For the purposes of this section, "agent" means any person who is or
was a director, officer, employee or other agent of the corporation, or
is or was serving at the request of the corporation as a director,
officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor corporation of the corporation or
of another enterprise at the request of the predecessor corporation;
"proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes without limitation attorneys' fees and any
expenses of establishing a right to indemnification under subdivision
(d) or paragraph (4) of subdivision (e).
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the corporation to procure a judgment
in its favor) by reason of the fact that the person is or was an agent
of the corporation, against expenses, judgments, fines, settlements,
and other amounts actually and reasonably incurred in connection with
the proceeding if that person acted in good faith and in a manner the
person reasonably believed to be in the best interests of the
corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of the person was unlawful. The
termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in
good faith and in a manner which the person reasonably believed to be
in the best interests of the corporation or that the person had
reasonable cause to believe that the person's conduct was unlawful.
(c) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending,
or completed action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was
an agent of the corporation, against expenses actually and reasonably
incurred by that person in connection with the defense or settlement of
the action if the person acted in good faith, in a manner the person
believed to be in the best interests of the corporation and its
shareholders.
II-1
<PAGE>
No indemnification shall be made under this subdivision for any of the
following:
(1) In respect of any claim, issue or matter as to which the
person shall have been adjudged to be liable to the
corporation in the performance of that person's duty to the
corporation and its shareholders, unless and only to the
extent that the court in which the proceeding is or was
pending shall determine upon application that, in view of all
the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for expenses and then only to
the extent that the court shall determine.
(2) Of amounts paid in settling or otherwise disposing of a
pending action without court approval.
(3) Of expenses incurred in defending a pending action which is
settled or otherwise disposed of without court approval.
(d) To the extent that an agent of a corporation has been successful on the
merits in defense of any proceeding referred to in subdivision (b) or
(c) or in defense of any claim, issue, or matter therein, the agent
shall be indemnified against expenses actually and reasonably incurred
by the agent in connection therewith.
(e) Except as provided in subdivision (d), any indemnification under this
section shall be made by the corporation only if authorized in the
specific case, upon a determination that indemnification of the agent
is proper in the circumstances because the agent has met the applicable
standard of conduct set forth in subdivision (b) or (c), by any of the
following:
(1) A majority vote of a quorum consisting of directors who are
not parties to such proceeding.
(2) If such a quorum of directors is not obtainable, by
independent legal counsel in a written opinion.
(3) Approval of the shareholders (Section 153), with the shares
owned by the person to be indemnified not being entitled to
vote thereon.
(4) The court in which the proceeding is or was pending upon
application made by the corporation or the agent or the
attorney or other person rendering services in connection with
the defense, whether or not the application by the agent,
attorney or other person is opposed by the corporation.
(f) Expenses incurred in defending any proceeding may be advanced by the
corporation prior to the final disposition of the proceeding upon
receipt of an undertaking by or on behalf of the agent to repay that
amount if it shall be determined ultimately that the agent is not
entitled to be indemnified as authorized in this section. The
provisions of subdivision (a) of Section 315 do not apply to advances
made pursuant to this subdivision.
(g) The indemnification authorized by this section shall not be deemed
exclusive of any additional rights to indemnification for breach of
duty to the corporation and its shareholders while acting in the
capacity of a director or officer of the corporation to the extent the
additional rights to indemnification are authorized in an article
provision adopted pursuant to paragraph (11) of subdivision (a) of
Section 204. The indemnification provided by this section for acts,
omissions, or transactions while acting in the capacity of, or while
serving as, a director or officer of the corporation but not involving
breach of duty to the corporation and its shareholders shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, to the extent
the additional rights to indemnification are authorized in the articles
of the corporation. An article provision authorizing indemnification
"in excess of that otherwise permitted by Section 317" or "to the
fullest extent permissible under California law" or the substantial
equivalent thereof shall be construed to be both a provision for
additional indemnification for breach of duty to the corporation and
its shareholders as referred to in, and with the limitations required
by, paragraph (11) of
II-2
<PAGE>
subdivision (a) of Section 204 and a provision for additional
indemnification as referred to in the second sentence of this
subdivision. The rights to indemnity hereunder shall continue as to a
person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators
of the person. Nothing contained in this section shall affect any right
to indemnification to which persons other than the directors and
officers may be entitled by contract or otherwise.
(h) No indemnification or advance shall be made under this section, except
as provided in subdivision (d) or paragraph (4) of subdivision (e), in
any circumstance where it appears:
(1) That it would be inconsistent with a provision of the articles,
bylaws, a resolution of the shareholders, or an agreement in
effect at the time of the accrual of the alleged cause of action
asserted in the proceeding in which the expenses were incurred
or other amounts were paid, which prohibits or otherwise limits
indemnification.
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
(i) A corporation shall have power to purchase and maintain insurance on
behalf of any agent of the corporation against any liability asserted
against or incurred by the agent in that capacity or arising out of the
agent's status as such whether or not the corporation would have the
power to indemnify the agent against that liability under this section.
The fact that a corporation owns all or a portion of the shares of the
company issuing a policy of insurance shall not render this subdivision
inapplicable if either of the following conditions are satisfied: (1)
if the articles authorize indemnification in excess of that authorized
in this section and the insurance provided by this subdivision is
limited as indemnification is required to be limited by paragraph (11)
of subdivision (a) of Section 204; or (2)(A) the company issuing the
insurance policy is organized, licensed, and operated in a manner that
complies with the insurance laws and regulations applicable to its
jurisdiction of organization, (B) the company issuing the policy
provides procedures for processing claims that do not permit that
company to be subject to the direct control of the corporation that
purchased that policy, and (C) the policy issued provides for some
manner of risk sharing between the issuer and purchaser of the policy,
on one hand, and some unaffiliated person or persons, on the other,
such as by providing for more than one unaffiliated owner of the
company issuing the policy or by providing that a portion of the
coverage furnished will be obtained from some unaffiliated insurer or
reinsurer.
(j) This section does not apply to any proceeding against any trustee,
investment manager, or other fiduciary of an employee benefit plan in
that person's capacity as such, even though the person may also be an
agent as defined in subdivision (a) of the employer corporation. A
corporation shall have power to indemnify such a trustee, investment
manager, or other fiduciary to the extent permitted by subdivision (f)
of Section 207.
Restated Articles of Incorporation of Transamerica
--------------------------------------------------
FIFTH
The liability of the directors of the corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law.
SIXTH
The corporation is authorized to provide indemnification of agents (as defined
in Section 317 of the California Corporations Code) through by-law provisions,
agreements with the agents, vote of shareholders or disinterested directors, or
otherwise, in excess of the indemnification otherwise permitted by Section 317
of the California Corporations Code subject only to the limits on excess
indemnification set forth in Section 204 of the California Corporations Code.
The corporation is further authorized to provide insurance for agents as set
forth in Section 317 of the California Corporations Code, provided that, in
cases where the corporation owns all or a portion of the
II-3
<PAGE>
shares of the company issuing the insurance policy, the company and/or the
policy must meet one of the two sets of conditions set forth in Section 317, as
amended.
Restated Bylaws of Transamerica
-------------------------------
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
Section 1. Right to Indemnification.
Each person who was or is a party or is threatened to be made a party to or is
involved, even as a witness, in any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(hereafter a "Proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another foreign or domestic
corporation partnership, joint venture, trust, or other enterprise, or was a
director, officer, employee, or agent of a foreign or domestic corporation that
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged action in
an official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent (hereafter an
"Agent"), shall be indemnified and held harmless by the corporation to the
fullest extent authorized by statutory and decisional law, as the same exists or
may hereafter be interpreted or amended (but, in the case of any such amendment
or interpretation, only to the extent that such amendment or interpretation
permits the corporation to provide broader indemnification rights than were
permitted prior thereto) against all expenses, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts
paid or to be paid in settlement, any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed on any
Agent as a result of the actual or deemed receipt of any payments under this
Article) incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing, in any Proceeding (hereafter "Expenses");
provided, however, that except as to actions to enforce indemnification rights
pursuant to Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right. (It is the Corporation's
intent that these bylaws provide indemnification in excess of that expressly
permitted by Section 317 of the California General Corporation Law, as
authorized by the Corporation's Articles of Incorporation.)
Section 2. Authority to Advance Expenses.
Expenses incurred by an officer or director (acting in his capacity as such) in
defending a Proceeding shall be paid by the corporation in advance of the final
disposition of such Proceeding, provided, however, that if required by
California General Corporation Law, as amended, such Expenses shall be advanced
only upon delivery to the corporation of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this Article or otherwise. Expenses incurred by other Agents of the corporation
(or by the directors or officers not acting in their capacity as such, including
service with respect to employee benefit plants) may be advanced upon the
receipt of a similar undertaking, if required by law, and upon such other terms
and conditions as the Board of Directors deems appropriate. Any obligation to
reimburse the corporation for Expense advances shall be unsecured and no
interest shall be charged thereon.
II-4
<PAGE>
Section 3. Right of Claimant to Bring Suit.
If a claim under Section 1 or 2 of this Article is not paid in full by the
corporation within 30 days after a written claim has been received by the
corporation the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense
(including attorneys' fees) of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant has
not met the standards of conduct that make it permissible under the California
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. The burden of proving such a defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances because he has met the applicable
standard of conduct set forth in the California General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
The directors and officers of Transamerica are covered under a
Directors and Officers liability program which includes direct coverage to
directors and officers (Coverage A) and corporate reimbursement (Coverage B) to
reimburse the Company for indemnification of its directors and officers. Such
directors and officers are indemnified for loss arising from any covered claim
by reason of any Wrongful Act in their capacities as directors or officers. In
general, the term "loss" means any amount which the insureds are legally
obligated to pay for a claim for Wrongful Acts. In general, the term "Wrongful
Acts" means any breach of duty, neglect, error, misstatement, misleading
statement or omission caused, committed or attempted by a director or officer
while acting individually or collectively in their capacity as such, claimed
against them solely by reason of their being directors and officers. The limit
of liability under the program is $95,000,000 for Coverage A and $80,000,000 for
Coverage B for the period 11/15/98 to 11/15/2000. Coverage B is subject to a
self insured retention of $15,000,000. The primary policy under the program is
with CNA Lloyds, Gulf, Chubb and Travelers.
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.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet
The prospectus, consisting of 136 pages
The undertaking to file reports
Representation pursuant to Section 26(e)(2)(A)
The statement with respect to indemnification
The Rule 484 undertaking
The signatures
II-5
<PAGE>
Written consent of the following persons:
(a) Alan M. Yaeger
(b) Thomas E. Pierpan, Esq.
(c) Sutherland Asbill & Brennan LLP
(d) Ernst & Young LLP
The following exhibits:
1. The following exhibits correspond to those required by paragraph A to
the instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of the Board of Directors of Transamerica
Establishing the Separate Account (1)
(2) Not Applicable
(3) Distribution of Policies:
(a) Form of Variable Insurance Products Sales Agreement
(b) Principal Underwriting Agreement (1)
(4) Not Applicable
(5) (a) Specimen Flexible Premium Variable Life Insurance
Policy (1)
(b) Living Benefit Rider (an Accelerated Death Benefit)
(c) Primary Insured Rider
(d) Primary Insured Rider Plus
(e) Children's Insurance Rider
(f) Other Insured Rider
(g) Disability Waiver Rider
(h) Disability Waiver and Income Rider
(i) Accidental Death Benefit Rider
(j) Dollar Cost Averaging Endorsement
(k) Asset Rebalancing Program Endorsement
(6) (a) Restated Articles of Incorporation of Transamerica
(2)
(b) Restated Bylaws of Transamerica (2)
(7) Not Applicable
(8) Form of Participation Agreements
(a) Among Variable Insurance Products Fund, Fidelity
Distributors Corporation and Transamerica
(b) Among Variable Insurance Products Fund II, Fidelity
Distributors Corporation and Transamerica
(c) Among Variable Insurance Products Fund III, Fidelity
Distributors Corporation and Transamerica
(d) Transamerica Variable Insurance Fund, Inc.,
Transamerica Investment Management, LLC and
Transamerica
(9) Not Applicable
(10) Application for Flexible Premium Variable Life Insurance
Policy
(11) Memorandum describing issuance, transfer and redemption
procedures
2. See Exhibit 1.A.
3. Opinion and consent of counsel as to the legality of the securities
being registered
4. No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I
5. Not Applicable
6. Opinion and consent of Alan M. Yaeger as to actuarial matters
pertaining to the securities being registered
II-6
<PAGE>
7. See Exhibit 3
8. Consent of Sutherland Asbill & Brennan LLP
9. Consent of Ernst & Young LLP
10. Powers of Attorney
- ----------------------------------------
(1) This exhibit was previously filed on Initial Registration Statement on
Form S-6 dated November 30, 1999 (File No. 333-91851) and is
incorporated herein by reference.
(2) This exhibit was previously filed on Initial Registration Statement on
Form S-6 dated October 14, 1997 (File No. 333-37883) and is
incorporated herein by reference.
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
1.A.(3)(a) Form of Variable Insurance Products Sales Agreement
1.A.(5)(b) Living Benefit Rider (an Accelerated Death Benefit)
1.A.(5)(c) Primary Insured Rider
1.A.(5)(d) Primary Insured Rider Plus
1.A.(5)(e) Children's Insurance Rider
1.A.(5)(f) Other Insured Rider
1.A.(5)(g) Disability Waiver Rider
1.A.(5)(h) Disability Waiver and Income Rider
1.A.(5)(i) Accidental Death Benefit Rider
1.A.(5)(j) Dollar Cost Averaging Endorsement
1.A.(5)(k) Asset Rebalancing Program Endorsement
1.A.(8)(a) Form of Participation Agreement Among Variable
Insurance Products Fund, Fidelity Distributors
Corporation and Transamerica
1.A.(8)(b) Form of Participation Agreement Among Variable
Insurance Products Fund II, Fidelity Distributors
Corporation and Transamerica
1.A.(8)(c) Form of Participation Agreement Among Variable
Insurance Products Fund III, Fidelity Distributors
Corporation and Transamerica
1.A.(8)(d) Form of Participation Agreement Among Transamerica
Variable Insurance Fund, Inc., Transamerica
Investment Management, LLC and Transamerica
1.A.(10) Application for Flexible Premium Variable Life
Insurance Policy
1.A.(11) Memorandum describing issuance, transfer and
redemption procedures
3. Opinion and consent of counsel as to the legality of
the securities being registered
6. Opinion and consent of Alan M. Yaeger as to actuarial
matters pertaining to the securities being registered
8. Consent of Sutherland Asbill & Brennan LLP
9. Consent of Ernst & Young LLP
10. Powers of Attorney
Exhibit 1.A.(3)(a)
Form of Variable Insurance Products Sales Agreement
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
[ ] Transamerica Occidental Life Insurance Company [ ] Transamerica Life Insurance Company of New York
1150 South Olive Street 100 Manhattanville Road
Los Angeles, CA 90015 Purchase, NY 10577
[ ] Transamerica Life Insurance and Annuity Company [ ] Transamerica Assurance Company
401 North Tryon Street 1150 South Olive Street
Charlotte, NC 28202 Los Angeles, CA 90015
</TABLE>
VARIABLE INSURANCE PRODUCTS SALES AGREEMENT
The parties to this agreement are: (i) the INSURANCE COMPANY which has executed
this agreement on the signature page (referred to as "the Insurance Company");
(ii) the Insurance Company's underwriter, AFSG SECURITIES CORPORATION (referred
to as "the Underwriter"); and (iii) the BROKER-DEALER named below and any and
all insurance agency affiliates of the Broker-Dealer named in the Appendix of
this agreement (referred to as "you" or "the Broker"). The Insurance Company and
the Underwriter are collectively referred to as "we," "us" or "the Company." IF
MORE THAN ONE INSURANCE COMPANY HAS EXECUTED THIS AGREEMENT, EACH SUCH EXECUTION
SHALL BE DEEMED TO CREATE A NEW AND SEPARATE AGREEMENT BETWEEN THE INSURANCE
COMPANY, THE UNDERWRITER AND THE BROKER. IN THAT CASE, THE TERMS OF THIS
AGREEMENT SHALL APPLY SEPARATELY WITH REGARD TO EACH SUCH AGREEMENT AND NO
INSURANCE COMPANY SHALL BE LIABLE FOR THE OBLIGATIONS OR ACTIONS OF ANY OTHER
INSURANCE COMPANY.
This agreement is effective on the date set forth below.
The terms of this agreement are as follows:
1. APPOINTMENT
-----------
You are appointed by the Company for the purpose of soliciting
applications for and servicing variable insurance products
("Contracts") and otherwise transacting the business of this agreement.
You accept such appointment and agree to comply with all applicable
laws and regulations, and to diligently devote yourself to the business
of this appointment in order to sell new Contracts and prevent the
termination of existing Contracts.
1.1 TERRITORY; NON-EXCLUSIVITY
--------------------------
Unless otherwise specified by us, you are authorized to solicit
applications in any jurisdiction in which we are authorized to offer
such Contracts and in which you are licensed and authorized to
represent us. We reserve the right to limit your territory at any time.
You are not obligated to represent us exclusively, and you do not have
an exclusive right to solicit Contracts for us in any area.
1.2 INDEPENDENT CONTRACTOR
----------------------
You are an independent contractor. Nothing contained in this agreement
is to be construed to create the relation of employer and employee
between the Company and you. You may exercise your own judgment as to
the time and manner in which you may perform the services required to
be performed by you under this agreement. We may, from time to time,
prescribe rules and regulations concerning the conduct of the business
covered by this agreement which do not interfere with such freedom of
action.
<PAGE>
2. SOLICITATION OF APPLICATIONS
----------------------------
We will inform you from time to time which products you are authorized
to sell. Solicitation of Contracts authorized under this agreement will
be performed by you or by solicitors in accordance with the terms set
forth below.
A solicitor is a properly licensed registered representative who is
employed by or associated with you and is appointed by us to solicit
Contracts in your name. You are responsible for assuring that all
solicitors are persons of good character.
You agree not to allow any solicitor to engage in the services
authorized under this agreement, except in accordance with this
Section.
At our option, we may refuse to contract with or appoint any proposed
solicitor and may terminate any agreement with or appointment of a
solicitor. You will be solely responsible for the payment of any
compensation to solicitors, and you agree to hold us harmless from all
claims for commissions or other compensation by any solicitor.
2.1 LICENSING
---------
Neither you nor any solicitor may engage in any activities under this
agreement unless and until you and they are properly licensed and/or
registered, as required, to perform such services in the particular
state or jurisdiction involved in accordance with all applicable laws
and regulations, including, but not limited to, any certification or
continuing education requirements and any applicable rules or other
requirements of the National Association of Securities Dealers
("NASD").
You agree to undertake and pay for all actions necessary to acquire and
maintain any necessary licenses and registrations for yourself and/or
the solicitors. We will take the necessary actions, including the
payment of applicable fees, to appoint you and the solicitors to
represent us in the states in which you and they reside and conduct an
insurance business.
2.2 SUPERVISION
-----------
You are responsible for the performance of solicitors and your
employees and associated persons. You agree to take all necessary steps
to communicate the Company's rules and regulations to such persons, and
to assure that they comply with such rules and regulations, as well as
all other applicable laws and regulations. You will supervise and train
registered representatives and other associated persons to ensure
compliance with Company policies and applicable laws.
3. RESPONSIBILITIES OF THE BROKER
------------------------------
You will abide by the following in the conduct of your activities under
this agreement:
3.1 COMPANY REGULATIONS
-------------------
To the extent they do not conflict with the terms of this agreement,
you will conform to the rules and regulations of the Company now or
hereafter in force. Such rules and regulations will constitute a part
of this agreement. This provision shall not be construed to alter the
relationship of the parties as provided in Section 1.2 above.
<PAGE>
3.2 LIMITATION OF AUTHORITY
-----------------------
You have no authority to alter, modify, waive or change any of the
terms, rates or conditions of our contracts or policies whether or not
covered by this agreement. You have no authority to obligate us in any
manner whatsoever nor to receive monies due to us, except as otherwise
provided in this agreement or as may be authorized in writing by us.
3.3 COMPANY RECORDS
---------------
All documents, records, software and other data and information, in
whatever form they may be, which pertain to the Company's policyholders
or any other business of the Company, are and will remain the property
of the Company. Any such property in your possession shall be at any
time and all times open to inspection by the Company or its authorized
representative, and upon termination of this agreement you will
promptly turn all such property over to the Company or its authorized
representatives.
You acknowledge that all documents, records, software and other data,
information and supplies referred to in this Section 3.3 are
confidential and proprietary to the Company, and you agree to preserve
the confidentiality and privacy of the Company in all of the same; and
you further agree that you will not, without the Company's prior
written consent, release or disclose any of the same or their contents
to any person, or otherwise use any of the same or their contents in
any manner, except in furtherance of the business of this agreement or
as required by legal process.
Nothing contained in this Section 3.3 is intended to restrict your
right to retain possession of your records and other materials relating
solely to your producers and solicitors.
3.4 ACCOUNTS AND RECORDS
--------------------
You agree that you will keep customary and accurate accounts of
receipts and disbursements and will, at our request and in accordance
with our instructions, account for all Contracts, receipts, premiums
and other monies or securities received and all property and supplies
received from the Company. We may, at any time, make copies of the
records of such accounts, records and documents, and all such records,
documents, supplies and other property relating to the business
transacted under this agreement will be the property of the Company,
open to inspection at all times by our authorized representatives, and
at the termination of this agreement will be delivered to us upon
demand. We will furnish you a current statement of your commission
account within a reasonable time after receipt of a written request
from you.
3.5 COLLECTION AND REMITTANCE OF COMPANY MONEY
------------------------------------------
Where authorized by us, you may accept premiums or purchase payments in
accordance with our rules and regulations in force at the time of
payment. We have the right at any time to revoke such authority in
whole or in part and to limit it in any way. ALL MONIES OR OTHER
CONSIDERATIONS RECEIVED BY YOU AS FULL OR PARTIAL PAYMENT OF PREMIUMS
OR FOR ANY OTHER ITEM, WITHOUT EXCEPTION, SHALL BE HELD BY YOU IN TRUST
SEPARATE FROM YOUR OWN OR OTHER FUNDS AND WILL BE IMMEDIATELY DELIVERED
AND PAID TO THE COMPANY. Such remittances must be applied to the
relevant item. You are not authorized to deposit any such monies or
checks in your own account or any trust account, nor to accept any
check made payable to you for any premium or other item.
3.6 ADVERTISING
-----------
(i) You agree that you will not place into use, or distribute to
any person, any advertising, sales material or other document
(including, without limitation, illustrations, telephone
scripts and training materials) referring directly or
indirectly to the Company or to any Company Contract,
<PAGE>
or cause, authorize or permit any person to do so, without our
prior written consent. You agree that you will not use the
name of the Company on any business card, letterhead or
marquee or in any directory listing, or in any other manner,
or cause, authorize or permit any producer or other person to
do so, without our prior written consent.
(ii) In making offers of the contracts, you agree to deliver the
applicable currently effective prospectuses, as required by
law.
(iii) You agree that you and your solicitors will not misrepresent
the Contracts and will make no oral or written representation
which is inconsistent with the terms of the Contracts,
prospectuses or sales literature or is misleading in any way.
(iv) The Company will use reasonable efforts to provide you with
information and marketing assistance, including providing,
without charge, reasonable quantities of advertising
materials, sales literature, reports and current prospectuses.
(v) The Company will deliver to you, and you agree to use, only
sales literature and advertising material which conforms to
all applicable legal requirements and which has been
authorized by us.
3.7 ERRORS AND OMISSIONS
--------------------
You are encouraged to maintain errors and omissions insurance covering
your activities under this agreement. If you carry such insurance at
any time, you agree to provide us with copies of the current binders
evidencing the issuance of the errors and omissions, and within ten
business days of each date such insurance is discontinued, suspended,
reduced or terminated for any reason.
3.8 COMPLIANCE WITH ADDITIONAL RULES
--------------------------------
You agree to abide by all laws, rules and regulations, including,
without limitation, the rules of the NASD, insurance laws and state and
federal securities and banking laws and including, without limitation,
the maintenance of licenses and books and records required by
applicable laws and regulations.
4. COMPANY RIGHT OF ACTION
-----------------------
We are not obligated to accept any business produced by you or by a
solicitor. We may reject applications for insurance without specifying
the reason therefor, as well as settlements tendered or made
thereunder, or take up and cancel any Contract for any reason and
return the premium thereon or any part thereof.
We, in our sole discretion, may at any time and from time to time do
the following:
(i) modify or amend any Contract form;
(ii) fix or change maximum and minimum limits on the amount for
which any Contract form may be issued;
(iii) modify or alter the conditions or terms under which any
Contract form may be sold or regulate its sale in any way;
(iv) discontinue or withdraw any Contract form from any geographic
area or market segment, without prejudice to continuation of
such form in any other area or market segment;
(v) cease doing business in any area.
<PAGE>
5. COMPENSATION
------------
For each Contract sold under this agreement, we will pay you
commissions as set forth in the applicable Commission Rate Schedule.
You may also be eligible for compensation under other programs
established by us from time to time. Payment of commissions and any
other compensation will be subject to the terms and conditions of this
agreement and to our rules and regulations in effect from time to time.
Such rules and regulations may be changed by us at any time without
notice. In any states in which the Broker-Dealer may not receive
commissions pursuant to state insurance law, we will pay such
commissions to the insurance agency or agencies with which you have
associated yourself, as specified in the Appendix of this agreement.
The commissions and any other compensation payable by us to you will be
payment in full for all services performed by you. Except as we may
otherwise agree, you are not entitled to reimbursement for any expenses
incurred by you.
5.1 COMMISSIONS
-----------
GENERAL - The "applicable Commission Rate Schedule" means the
Commission Rate Schedule published by us from time to time for the type
of Contract involved. Commission Rate Schedules are subject to change
without notice. Copies may be obtained at any time.
REPAYMENT OF COMMISSIONS - If any commission or other compensation to
which you are not entitled under the terms of this agreement is paid to
or retained by you, you will pay the same to the Company upon demand.
You will pay to us upon demand all commissions received by or credited
to you, or premiums collected, or evidence of indebtedness representing
the same, taken on applications on which Contracts are not issued by
us, or on Contracts declined by the applicant, or on Contracts canceled
by us, and all commissions received or credited on premiums or any part
thereof which for any reason we may return. In case of any provision
requiring a refund of commissions or other compensation, we may, at our
election, debit your account for the amount of the refund without
demand or notice, or may demand the refund, or both, but debiting your
account in such manner will not relieve you of your obligation to make
the refund.
CHANGES IN COMPENSATION - We reserve the right to change the rate of
commissions and/or any other compensation payable under this agreement.
Any such change will apply only to Contracts issued or other triggering
events occurring after the effective date of the change.
WHEN DUE - Commissions will be paid in accordance with our normal
commission processing schedule. Commissions will be payable only on
premiums paid in cash to and accepted by us on Contracts which were
produced hereunder by you or by solicitors or producers while operating
under your supervision. No premium will be considered paid in cash to
the Company until it has been actually collected and transmitted to us
and recorded on our records. Commissions and other compensation will
accrue only as such premiums otherwise would become due.
COMMISSIONS PAID IN ADVANCE - If we pay you a commission or other
compensation on a premium which is or becomes due but which has not yet
actually been paid to the Company, and if such premium is not paid in
cash to the Company, you will refund any commission or other
compensation which you have received on such premium.
CONDITIONS - Upon termination of this Agreement, all compensation to
you hereunder shall cease; however, (i) you shall continue to be liable
for chargebacks pursuant to the provisions of Commission Rate Schedule
or for any other amounts advanced by or otherwise due Company
hereunder, and (ii) you shall receive any commissions due under such
Schedule (continuing or otherwise) arising out of a Contract sold by
you prior to termination of this Agreement, provided that the
obligation to pay such commissions shall cease after the tenth
<PAGE>
year following the date of issue of the Contract. You shall have no
interest in any surrender charges, deductions or other fees payable to
Company.
ACCOUNTING YEAR - We reserve the right at any time and from time to
time, without notice to you, to change the period comprising our
accounting year or subdivisions thereof.
6. INDEBTEDNESS
------------
6.1 LIEN AND OFFSETS
-----------------
You grant us a first lien on all commissions and any other compensation
payable to you under this agreement or under any other existing or
future agreement with Transamerica Occidental Life Insurance Company,
Transamerica Life Insurance and Annuity Company, Transamerica Assurance
Company, Transamerica Life Insurance Company of New York, or any other
company which is a subsidiary or affiliate of Transamerica Occidental
Life Insurance Company, Transamerica Corporation or Transamerica
Insurance Corporation of California (referred to individually and
collectively as "Transamerica entity" or "Transamerica entities"), as
security for the payment of any existing or future debit balance or
other indebtedness of yours to us. We may at any time and from time to
time, with or without notice or judicial action, exercise our lien by
offsetting such indebtedness against any commissions and other
compensation otherwise due to you. These liens shall not be
extinguished by the termination of this agreement or any other
agreement.
All debit balances and other indebtedness of yours to us will be
debited to your account, but debiting your account will not relieve you
of your obligation to repay the indebtedness. You may not offset
against any such indebtedness any compensation accrued or to accrue
under this agreement or under any other agreement with us.
We will be under no obligation to pay any commissions or other
compensation to you, your executors, administrators or assigns, under
this agreement or under any other existing or future agreement with us
now or hereafter existing as long as your account with any Transamerica
entity has a debit balance.
Any debit balance of your account shall be payable to us upon demand
and shall bear interest, payable monthly, at the rate declared by us
from time to time. Any future change in interest rate may, at our
option, be applied to the then remaining balance of any debit balance
theretofore created as well as to debit balances thereafter created.
6.2 MULTI-COMPANY ASSIGNMENT OF COMMISSIONS
---------------------------------------
In order to effectuate the rights of offset set forth in Section 6.1,
you hereby assign to each of the Transamerica entities, their
successors and assigns, all of your right, title and interest in and to
any and all commissions or other compensation now due and payable, or
which becomes due in the future, under the terms of any and all agency
contracts between you and any Transamerica entity. Each Transamerica
entity shall receive and retain such commissions or other compensation
only to the extent necessary to secure repayment of any of your present
or future indebtedness to such Transamerica entity.
You authorize us to make payment of all sums due to you under this
agreement to any Transamerica entity which may be entitled to such
payment under this Section 6.
7. DISPUTES AND LITIGATION
-----------------------
Each party agrees to cooperate fully with each other in the resolution
of all matters arising out of the business of this agreement. Any
disputes between you and us will be settled through binding
arbitration.
<PAGE>
7.1 COMPLAINTS AND CLAIMS
---------------------
You agree to notify us promptly of any complaint, claim or dispute
involving an applicant, Contract or contractholder.
You will not litigate any dispute with an applicant or policyholder, on
any matter relating to the business of this agreement, without our
prior written consent. We may settle any claim against us or you
arising out of the business of this agreement. If you disagree with our
settlement, you may seek arbitration pursuant to Section 7.2.
7.2 DISPUTE RESOLUTION
------------------
The parties agree that this agreement involves "commerce" within the
meaning of the Federal Arbitration Act, and that any dispute between
the parties arising out of or related to this agreement will be
resolved by binding arbitration in accordance with this Section and the
procedural and discovery rules of the Federal Arbitration Act. The
arbitration will take place in Los Angeles, California, unless we
mutually agree to another location. The arbitration will be determined
by one neutral arbitrator as agreed upon by the Company and you. If the
parties fail to appoint an arbitrator on a timely basis or are unable
to agree on the choice of an arbitrator on a timely basis, the
arbitrator will be appointed by the office of the Judicial Arbitration
and Mediation Service in the city where the arbitration takes place, or
by another mutually agreeable arbitration service. The arbitrator's
decision will be binding on the parties and the decision will be final
with no right of appeal. The award of the arbitrator may be entered as
a final judgment in any court which has jurisdiction thereof. The cost
of arbitration, including the fees of the arbitrator, will be borne by
the party or parties as the arbitrator decides.
EACH PARTY HERETO HEREBY WAIVES THE RIGHT TO A TRIAL BY EITHER A JURY
OR A COURT, INCLUDING BUT NOT LIMITED TO A TRIAL OF ANY ISSUE
CONCERNING THE VALIDITY OF THIS SECTION 7.2 OR ANY PORTION THEREOF, AND
THE RIGHT OF APPEAL FROM THE ARBITRATOR'S AWARD. EACH PARTY HERETO
WAIVES ANY CLAIM TO RECOVER PUNITIVE DAMAGES AND NON-COMPENSATORY
DAMAGES AGAINST THE OTHER PARTY.
8. TERMINATION
-----------
Any party may terminate this agreement with or without cause by giving
written notice to the other parties, specifying the effective date of
termination.
9. MISCELLANEOUS PROVISIONS
------------------------
Certain provisions of this agreement are emphasized for the convenience
of the reader. Nevertheless, all provisions apply equally.
9.1 PREVIOUS AGREEMENTS
-------------------
Any and all prior agreements between the parties hereto authorizing the
solicitation of the SEC registered products identified on the
Commission Rate Schedules attached hereto, are hereby terminated and
are superseded by this agreement.
9.2 AMENDMENTS
----------
Neither party will not be bound by any promise, agreement,
understanding or representation heretofore or hereafter made unless the
same is made by an instrument in writing, signed by one of its
officers, which expresses by its terms an intention to modify this
agreement.
<PAGE>
9.3 FORBEARANCE
-----------
Forbearance or neglect on the part of either party to insist upon
compliance with the terms of this agreement or the rules and
regulations of the Company shall not be construed as or constitute a
waiver thereof.
9.4 AGREEMENT NON-ASSIGNABLE
------------------------
You may not assign this agreement or any of the rights, authorities and
benefits provided hereunder without our prior written consent. We agree
not to withhold our consent unreasonably. Any attempted assignment as
collateral security or assignment for the benefit of creditors will be
subject to our rules and policies then in effect.
9.5 SEVERABILITY
------------
This is a severable agreement. If any provision of this agreement would
require a party to take action prohibited by applicable federal or
state law or prohibit a party from taking action required by applicable
federal or state law, then it is the intention of the parties hereto
that such provision shall be enforced to the extent permitted under the
law, and, in any event, that all other provisions of this agreement
shall remain valid and duly enforceable as if the provision at issue
had never been a part of this agreement.
9.6 INDEPENDENT AGREEMENT
---------------------
The compensation provided by this agreement is separate from any
compensation or consideration provided under any other agreement you
may have with us or with one of our affiliates. Except as set forth in
our applicable rules and regulations, your activities under this
agreement will not be taken into account for purposes of any
compensation or benefits under any such agreement.
9.7 APPLICABLE LAW
--------------
This Agreement shall be construed in accordance with the laws of the
state of domicile of the contracting Insurance Company without giving
effect to principles of conflict of laws. For Transamerica Occidental
Life Insurance Company that state is California; for Transamerica Life
Insurance and Annuity Company that state is North Carolina; for
Transamerica Life Insurance Company of New York that state is New York;
and for Transamerica Assurance Company that state is Missouri.
9.8 TRADEMARKS
----------
The provision of Contracts and prospectuses and sales literature for
the Contracts and underlying funding vehicles to the Broker shall not
provide the Broker with any license to use any tradenames, trademarks,
service marks or logos or proprietary information of the Company or any
underlying funding vehicle or any affiliates thereof, except to the
extent necessary for Broker to distribute the Contracts in accordance
with the terms of this agreement.
9.9 CONFIDENTIALITY
---------------
Each party shall keep confidential any confidential information it may
acquire as a result of this Agreement.
9.10 SURVIVAL
--------
The following provisions will survive the termination of this
agreement: Sections 3, 5, 6, 7, 9.4, 9.5, 9.6, 9.7.
<PAGE>
10. CORPORATIONS; PARTNERSHIPS
--------------------------
The additional provisions set forth below apply to this agreement.
10.1 OFFICIAL ACTIONS
----------------
You may designate one or more individuals to deal with us on your
behalf. Such designation must be made by your board of directors if you
are a corporation or by any general partner if you are a partnership.
In the absence of a designation, we may (but are not obligated to) deal
with your president or any vice president (if you are a corporation) or
any general partner (if you are a partnership).
10.2 CHANGES
-------
You agree to inform us of any changes in your legal structure, and of
any changes in your officers or partners. You also agree to inform us
of any transfer of your stock or partnership interests. Upon receipt of
such information, we may elect to terminate this agreement upon five
days' written notice to you.
10.3 STATUS
------
We may, from time to time, require you to provide us with evidence of
your continued existence and good standing.
11. REPRESENTATIONS AND WARRANTIES; COMPLIANCE
------------------------------------------
You represent, warrant and covenants that:
(i) You are, and will remain during the term of this Agreement, a
properly licensed and registered broker-dealer under
applicable state and federal securities law and a member in
good standing of the NASD.
(ii) You will solicit applications for Contracts only through
properly licensed insurance agents ("Insurance Agent"), duly
appointed by the appropriate Insurance Company. For purposes
of this Agreement, all acts and omissions of any Insurance
Agent within the scope of this Agreement shall be deemed to be
acts or omissions of Broker.
(iii) You are in compliance, and will remain in compliance, with all
applicable laws, rules and regulations, including, without
limitation, those of the NASD and state and federal
securities, banking and insurance laws.
(iv) You have taken and will continue to take the actions
appropriate to supervise your representatives and other
associated persons to ensure compliance with all applicable
laws and regulations.
(v) You will comply, and will cause each Insurance Agent to
comply, with any applicable Company policies and procedures,
including, without limitation, those regarding replacements of
Contracts, as amended from time to time.
(vi) You will not solicit or sell any Contracts in connection with
any "market timing" or "asset allocation" program or service,
and if the Company determines in its sole discretion that you
are soliciting or have solicited Contracts subject to any such
program, the Company may take such action it deems necessary
to halt such solicitations or sales, and in addition to any
indemnification provided in Section 12 of this Agreement and
any other liability that you may have, you will be
<PAGE>
liable to the Company and each underlying funding vehicle
affected by any such program, for any damages or losses,
actual or consequential, sustained by them as a result of such
program.
12. INDEMNIFICATION
----------------
12.1 Broker shall indemnify and hold harmless the Company, and each
employee, director, officer and shareholder of the Company, against any
losses, claims, damages or liabilities, including but not limited to
reasonable attorney fees and court costs, to which the Company or any
employee, officer, director or shareholder may be subject, which arise
out of or are based on any violation of the terms of this Agreement,
any Company policies or procedures or any applicable law by Broker, its
representatives, the Insurance Agent, its agents and any employee,
officer, director, shareholder, principal, partner and affiliate of the
Broker or Insurance Agent. In the event the Company suffers a loss
resulting from Broker or Insurance Agent activities, Broker hereby
assigns any proceeds received under its fidelity bond to the Company to
the extent of such losses. If there is any deficiency amount, whether
due to a deductible or otherwise, Broker-Dealer shall promptly pay the
Company such amount on demand and Broker-Dealer shall indemnify and
hold harmless the Company from any such deficiency and from the costs
of collection thereof (including reasonable attorney fees).
12.2 The Company shall indemnify and hold harmless Broker and each employee,
officer, director or shareholder of Broker, against any losses, claims,
damages or liabilities, including but not limited to reasonable
attorney fees and court costs, to which Broker or any employee,
officer, director or shareholder becomes subject which arises out of or
is based on any violation of the terms of this Agreement or any
applicable law by the Company and any employee or officer.
This Agreement is effective as of ___________________, 20___.
<PAGE>
BROKER-DEALER:
TAX ID#:
CRD#:
ADDRESS:
CITY, STATE, ZIP:
PHONE:
FAX:
OFFICER'S SIGNATURE:
NAME:
TITLE:
:
<TABLE>
<CAPTION>
<S> <C>
Transamerica Occidental Life Insurance Company AFSG Securities Corporation
1150 South Olive Street 4333 Edgewood Road NE
Los Angeles, CA 90015 Cedar Rapids, IA 52499
SIGNATURE: SIGNATURE:
NAME: NAME:
TITLE: TITLE:
Transamerica Life Insurance and Annuity Company Transamerica Life Insurance Company of New York
401 North Tryon Street 100 Manhattanville Road
Charlotte, NC 28202 Purchase, NY 10577
SIGNATURE: SIGNATURE:
NAME: NAME:
TITLE: TITLE:
Transamerica Assurance Company
1150 South Olive Street
Los Angeles, CA 90015
SIGNATURE:
NAME:
TITLE:
</TABLE>
<PAGE>
APPENDIX TO VARIABLE INSURANCE PRODUCTS SALES AGREEMENT
The Broker-Dealer named in this agreement has adopted the use of the following
assumed names and is doing business under such names in the states listed or is
affiliated with the following agencies in the states listed:
APPENDIX TO VARIABLE INSURANCE PRODUCTS SALES AGREEMENT
The Agencies herein are affiliates of the Broker-Dealer named in Paragraph 1 of
this Agreement. PLEASE INCLUDE COPIES OF ALL CURRENT INSURANCE LICENSES.
BROKER-DEALER:__________________________________________________________________
AFFILIATE NAME: ________________________________________________________________
Federal Tax ID: _______________________________
State(s) in which this Affiliate is insurance licensed:
_______________________________________________
Officers:
Name: ____________________________ Title: __________________________
Signature:________________________
Name: ____________________________ Title: __________________________
Signature: _______________________
AFFILIATE NAME: ________________________________________________________________
Federal Tax ID: _______________________________
State(s) in which this Affiliate is insurance licensed:
_______________________________________________
Officers:
Name: _____________________________ Title: ___________________________
Signature: ________________________
Name: _____________________________ Title:____________________________
Signature: ________________________
AFFILIATE NAME: ________________________________________________________________
Federal Tax ID: _______________________________
State(s) in which this Affiliate is insurance licensed:____________________
_________________________________________________________
Officers:
Name: _____________________________ Title: ___________________________
Signature: ________________________
Name: _____________________________ Title: ___________________________
Signature: ________________________
The Broker-Dealer named in this Agreement has adopted the use of the following
assumed names and is doing business under such names in the states listed as
required by State Departments of Insurance for the purpose of
<PAGE>
obtaining insurance licenses in those states. These are not and cannot be
considered to be "Agencies" as defined in Paragraph 1 of this Agreement.
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Assumed Name ("DBA"): ___________________________ STATE: ____________________
Exhibit 1.A.(5)(b)
Living Benefit Rider (an Accelerated Death Benefit)
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
LIVING BENEFIT RIDER
(An Accelerated Death Benefit)
DEATH BENEFITS, CASH VALUES AND LOAN VALUES WILL BE REDUCED
IF AN ACCELERATED DEATH BENEFIT IS PAID.
AN ACCELERATED DEATH BENEFIT MAY BE TAXABLE.
AS WITH ALL TAX MATTERS, A PERSONAL TAX ADVISOR SHOULD BE CONSULTED.
The Owner may elect to receive a portion of this Policy's Death Benefit, in a
Single Sum, when the Insured has incurred a Terminal Condition, subject to the
terms and conditions defined below.
DEFINITIONS
================================================================================
In addition to the definitions contained in this Policy, the following
definitions apply to this Rider:
DEATH BENEFIT For purposes of this Rider, Death Benefit means
the amount payable upon the death of the
Insured under the base Policy, plus:
(a) in the case of a single life policy,
the benefit payable under a
Primary Insured Rider, if any; or
(b) in the case of a joint last survivor
policy, the benefit payable under a
Joint Insured Term Rider, if any.
Death Benefit does not include amounts payable
under any other Riders not expressly named
above, including, but not limited to, any
Individual Insured Rider, Accidental Death
Benefit Rider, Other Insured Rider or
Disability Waiver Rider.
ELECTION PERCENTAGE A percentage, selected by the Owner, not to
exceed 100% of this Policy's Death Benefit.
In no event will the Election Percentage result
in a Single Sum Benefit greater than $500,000.
IMMEDIATE FAMILY A spouse, child, brother, sister,
parent, grandparent or grandchild of the
Insured or Owner.
INSURED The Insured for a single life policy will be
the Insured as shown on the Policy Schedule
page of the Policy. The Insured for a joint
last survivor policy will be the Surviving
Insured of the two Insureds shown on the Policy
Schedule page of the Policy.
<PAGE>
PHYSICIAN A Doctor of Medicine or a Doctor of Osteopathy
licensed to practice medicine and treat injury
or illness in the state in which treatment is
received and who is acting within the scope of
that license. A Physician must be someone other
than:
(a) the Insured;
(b) the Owner;
(c) a person who lives with the Insured or
Owner; or
(d) a person who is part of the Insured's
or Owner's Immediate Family.
PHYSICIAN'S STATEMENT A written statement acceptable to Us and signed
by a Physician which:
(a) provides the Physician's diagnosis and
prognosis of the Insured's
noncorrectable medical condition; and
(b) states with reasonable medical
certainty that the noncorrectable
medical condition will result in the
death of the Insured within 12 months
from the date of the Physician's
Statement. This statement must take
into consideration the ordinary and
reasonable medical care, advice and
treatment available in the same or
similar communities.
TERMINAL CONDITION A condition resulting from injury or
illness which, as determined by a Physician,
has reduced life expectancy to not more than 12
months from the date of the Physician's
statement.
BENEFITS
================================================================================
SINGLE SUM BENEFIT We will pay the Single Sum Benefit
to the Owner when We receive proof satisfactory
to Us that the Insured has incurred a Terminal
Condition while this Policy and Rider are In
Force. We will make payment when all of the
terms and conditions have been met, subject to
the conditions and limitations contained in
this Rider.
The Single Sum Benefit provided by this Rider
may only be elected once.
The Single Sum Benefit is equal to:
(a) the Death Benefit in effect on the
date the Single Sum Benefit is paid;
multiplied by
(b) the Election Percentage; divided by
(c) (1+i) where i equals the greater of:
(1) the current yield on 90 day
Treasury Bills; or
(2) the policy loan interest rate;
<PAGE>
minus
d) Indebtedness, if any, at the time the
Single Sum Benefit is paid, multiplied
by the Election Percentage.
BENEFIT AND VALUE
REDUCTION This Policy's benefits and values, as those
amounts exist on the date the Single Sum
Benefit is paid, will be reduced by the
Election Percentage. If the Election Percentage
is 100%, this Policy will terminate without
further value.
At the time of payment, We will provide the
Owner with revised Policy Specification pages
and any other pertinent information which
reflect the reduction of all values applicable
to this Policy and all benefits it provides.
RIDER CLAIMS PROVISIONS
================================================================================
NOTICE OF CLAIM The Owner may give Us written notice of a claim
for this Benefit any time after the Insured
incurs a Terminal Condition as defined in this
Rider. Notice of Claim must be signed by the
Owner, identify the Insured, the Policy and the
Election Percentage and be sent to Us at Our
Administrative Office.
CLAIM FORMS We will send You claim forms within 15 days of
the date We receive written notice of claim. If
We do not do so, the Owner will be considered
to have complied with the Proof of Terminal
Condition requirements by giving Us a
Physician's Statement acceptable to Us and a
written statement of the nature and extent of
the Terminal Condition.
PROOF OF TERMINAL
CONDITION Written proof of the Insured's Terminal
Condition must be received by Us at Our
Administrative Office before We will make a
Single Sum Benefit payment. This proof must
include a properly completed claim form and a
Physician's Statement acceptable to Us. We may
request additional medical information from the
Physician submitting the statement.
PHYSICAL EXAMINATION At Our expense, We reserve the right to have a
Physician of Our choosing examine the Insured
prior to making a Single Sum Benefit payment.
In the event the Physician We choose provides a
different prognosis of the Insured's medical
condition, We reserve the right to rely on the
statement from the Physician of Our choosing
for claim purposes.
TIME PAYMENT OF CLAIMS All benefits described in this Rider will be
available as soon as We receive satisfactory
Proof of Terminal Condition.
CONSENT FOR BENEFIT
PAYMENT We must obtain consent of any irrevocable
beneficiary and any assignee of record before
the Single Sum Benefit is paid. An assignee's
consent is required only to the extent that
benefits paid would reduce this Policy's values
and benefits below the amounts assigned.
<PAGE>
RIDER GENERAL PROVISIONS
================================================================================
ANNUAL STATEMENT The Annual Statement for this Policy will
reflect payment of the Single Sum Benefit, if
paid during the prior year, as well as
resulting reductions and remaining benefits and
values.
CONTESTABILITY This Rider will be contestable, on the same
basis as the Policy, during the lifetime of the
Insured, for two years from the Rider Effective
Date.
CHARGES No charges are payable for this Rider.
SELF-INFLICTED INJURY If the Insured suffers a Terminal Condition
which results from a bodily injury which was
intentionally self-inflicted, within the period
specified in the Suicide Provision of this
Policy, no benefits will be payable under this
Rider.
TERMINATION This Rider will terminate at the earliest of:
(a) the date the Policy terminates;
(b) the effective date of a settlement
option elected under the Policy;
(c) the date the Single Sum Benefit is
paid; or
(d) the date the Owner elects to terminate
this Rider.
RIDER EFFECTIVE DATE Rider months, years and anniversaries are
measured from the Rider Effective Date. The
Rider Effective Date is the Policy effective
date unless a different Rider Effective Date is
shown here.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
/s/ JAMES W. DEDERER
SECRETARY
Exhibit 1.A.(5)(c)
Primary Insured Rider
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
PRIMARY INSURED RIDER
================================================================================
IN THIS RIDER, the Primary Insured is named on Page 3 of the Policy. The Primary
Insured will be referred to as YOU or YOUR. Transamerica Occidental Life
Insurance Company will be referred to as WE, OUR, or US.
================================================================================
BENEFIT We will pay the Face Amount of this Rider as
shown on Page 4 of the Policy when We receive
due proof that Your death occurred while this
Rider was In Force.
CONSIDERATION This Rider is issued in consideration of:
1. the application for this Rider; and
2. the payment of the Initial Premium.
INCONTESTABILITY This Rider shall be incontestable after it has
been In Force while You are still alive, for
two years after the effective date of this
Rider.
SUICIDE If this Rider is issued on the same date as the
Policy, the Suicide Provision of the Policy is
applicable to this Rider. If this Rider is
issued after the Policy and if You die by
suicide, while sane or insane, within two years
after the effective date of this Rider, Our
liability for this Rider shall be limited to an
amount equal to the excess of the total monthly
deductions for this Rider less any premiums
being refunded under the Suicide Provision of
the Policy to which this Rider is attached.
CONVERSION PRIVILEGE On any Monthiversary while this Rider
is In Force, the Owner may exchange this Rider,
without evidence of insurability, for a new
policy on Your life. Such new policy will be
issued upon written request subject to the
following:
1. The Rider has not reached the
Anniversary nearest Your 70th
birthday; and
2. The new policy is on any permanent
plan of insurance then offered by Us;
and
3. The amount of insurance upon
conversion will equal the Face Amount
then In Force under this Rider; and
4. The payment of the premium based on
Your rate class under this Rider.
TERMINATION This Rider will terminate on the earliest of:
1. The Anniversary nearest Your 95th
birthday;
2. The date this Policy terminates;
3. The date of conversion of this Rider;
4. The Monthiversary on which this Rider
is terminated on written request by
the Owner.
<PAGE>
GENERAL This Rider is part of the Policy. It is subject
to all the terms of this Rider and the policy.
This Rider has no cash value.
The monthly deduction for this Rider, for each
of the first 12 policy months, is shown on Page
4 of the Policy. Monthly deductions after the
first policy year will be calculated consistent
with the monthly cost of insurance and monthly
cost of insurance rates provisions of the
Policy to which this Rider is attached.
EFFECTIVE DATE This Rider becomes effective on the same date
as the Policy unless a later date is shown
here.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
/S/ JAMES W. DEDERER
Secretary
Exhibit 1.A.(5)(d)
Primary Insured Rider Plus
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
PRIMARY INSURED RIDER PLUS
================================================================================
IN THIS RIDER, the Primary Insured is named on Page 3 of the Policy. The Primary
Insured will be referred to as YOU or YOUR. Transamerica Occidental Life
Insurance Company will be referred to as WE, OUR, or US.
================================================================================
BENEFIT We will pay the Face Amount of this Rider as
shown on Page 4 of the Policy when We receive
due proof that Your death occurred while this
Rider was In Force.
CONSIDERATION This Rider is issued in consideration of:
1. the application for this Rider; and
2. the payment of the Initial Premium.
INCONTESTABILITY This Rider shall be incontestable after it has
been In Force while You are still alive, for
two years after the effective date of this
Rider.
SUICIDE If this Rider is issued on the same date as the
Policy, the Suicide Provision of the Policy is
applicable to this Rider. If this Rider is
issued after the Policy and if You die by
suicide, while sane or insane, within two years
after the effective date of this Rider, Our
liability for this Rider shall be limited to an
amount equal to the excess of the total monthly
deductions for this Rider less any premiums
being refunded under the Suicide Provision of
the Policy to which this Rider is attached.
CONVERSION PRIVILEGE On any Monthiversary while this Rider
is In Force, the Owner may exchange this Rider,
without evidence of insurability, for a new
policy on Your life. Such new policy will be
issued upon written request subject to the
following:
1. The Rider has not reached the
Anniversary nearest Your 70th
birthday; and
2. The new policy is on any permanent
plan of insurance then offered by Us;
and
3. The amount of insurance upon
conversion will equal the Face Amount
then
In Force under this Rider; and
4. The payment of the premium based on
Your rate class under this Rider.
TERMINATION This Rider will terminate on the earliest of:
1. The Anniversary nearest Your 90th
birthday;
2. The date this Policy terminates;
3. The date of conversion of this Rider;
4. The Monthiversary on which this Rider
is terminated on written request by
the Owner.
<PAGE>
GENERAL This Rider is part of the Policy. It is subject
to all the terms of this Rider and the policy.
This Rider has no cash value.
The monthly deduction for this Rider, for each
of the first 12 policy months, is shown on Page
4 of the Policy. Monthly deductions after the
first policy year will be calculated consistent
with the monthly cost of insurance and monthly
cost of insurance rates provisions of the
Policy to which this Rider is attached.
EFFECTIVE DATE This Rider becomes effective on the same date
as the Policy unless a later date is shown
here.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
/s/ JAMES W. DEDERER
Secretary
Exhibit 1.A.(5)(e)
Children's Insurance Rider
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
CHILDREN'S INSURANCE RIDER
================================================================================
IN THIS RIDER, Transamerica Occidental Life Insurance Company will be referred
to as WE, OUR or US.
================================================================================
BENEFIT We will pay the Face Amount of this Rider as
shown on Page 4 of the Policy to the Primary
Insured when We receive due proof that the
death of an Insured Child occurred while this
Rider and coverage on such child was in force.
INSURED CHILD An Insured Child is a child, step-child or
legally adopted child of the Primary Insured
who is:
1. at least 15 days old and no older than
18 years of age on the effective date
of this Rider; and
2. named in the application for this
benefit and approved by Us.
An Insured Child shall also refer to any child
born to or legally adopted by the Primary
Insured after the effective date of this Rider
after such child is 15 days old.
CONSIDERATION This Rider is issued In consideration of:
1. the application for this Rider; and
2. the payment of the Initial Premium.
INCONTESTABILITY This Rider shall be incontestable after it has
been In Force while the Insured Child is still
alive, for two years after the effective date
of this Rider.
SUICIDE If this Rider is issued on the same date as the
Policy, the Suicide Provision of the Policy is
applicable to this Rider. If this Rider is
issued after the Policy and if an Insured Child
dies by suicide, while sane or insane, within
two years after the effective date of this
Rider, Our liability for this Rider shall be
limited to an amount equal to the total monthly
deductions for that child's coverage under this
Rider.
ISSUE AGE AND SEX If an Insured Child's date of birth or sex is
not correctly stated, We will adjust the death
benefit to the amount payable had the date of
birth and sex been correctly stated.
<PAGE>
CONVERSION PRIVILEGE On the Monthiversary following an
Insured Child's 25th birthday, such child may
exchange their coverage for a new policy on
their life. Such new policy will be issued
subject to the following:
1. written request is received prior to
such child's 25th birthday; and
2. the new policy is on any permanent plan
of insurance then offered by Us; and
3. the amount of insurance upon conversion
will equal five times the Face Amount
of this Rider;and
4. the payment of the Initial Premium for
the plan selected.
Upon the death of the Primary Insured, this
Rider will terminate 31 days after such death
and a separate policy will be offered to each
Insured Child. Each policy offered will be for
an amount equal to the Face Amount of this
Rider.
TERMINATION Coverage for any Insured Child will terminate
on the Monthiversary following such child's
25th birthday.
This Rider will terminate on the earliest of:
1. the Maturity Date of the Policy;
2. the date this Policy terminates for any
reason except for death of the Primary
Insured;
3. 31 days after the death of the Primary
Insured;
4. the Monthiversary on which this Rider
is terminated on written request by the
Owner;
5. the Monthiversary following the
youngest Insured Child's 25th birthday
or the last remaining Insured Child's
death.
The Owner must notify Us when to terminate this
Rider due to the youngest Insured Child's 25th
birthday or the last remaining Insured Child's
death.
If We make any monthly deductions for this
Rider after it terminates, We will recompute
the policy values as though such deductions had
not occurred. Such deductions will not provide
coverage beyond the intended date of
termination.
GENERAL This Rider is part of the Policy. It is subject
to all the terms of this Rider and the Policy.
This Rider has no cash value.
The monthly deduction for this Rider, for each
of the first 12 policy months, is shown on Page
4 of the Policy. Each monthly deduction after
the first policy year will not exceed the
monthly deduction during the first policy year.
EFFECTIVE DATE This Rider becomes effective on the same date
as the Policy unless a later date is shown
here.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
/s/ JAMES W. DEDERER
Secretary
Exhibit 1.A.(5)(f)
Other Insured Rider
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
( A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
OTHER INSURED RIDER
================================================================================
IN THIS RIDER, the Insured is named on Page 4 of the Policy. The Insured will be
referred to as YOU or YOUR. Transamerica Occidental Life Insurance Company will
be referred to as WE, OUR or US.
================================================================================
BENEFIT We will pay the Face Amount of this Rider as
shown on Page 4 of the Policy to the Primary
Insured when We receive due proof that Your
death occurred while this Rider was In Force.
CONSIDERATION This Rider is issued in consideration of:
1. the application for this Rider; and
2. the payment of the Initial Premium.
INCONTESTABILITY This Rider shall be incontestable after it has
been In Force while You are still alive, for
two years after the effective date of this
Rider.
SUICIDE If this Rider is issued on the same date as the
Policy, the Suicide Provision of the Policy is
applicable to this Rider. If this Rider is
issued after the Policy and if You die by
suicide, while sane or insane, within two years
after the effective date of this Rider, Our
liability for this Rider shall be limited to an
amount equal to the total monthly deductions
for coverage under this Rider.
CONVERSION PRIVILEGE On any Monthiversary while this Rider
is In Force, the Owner may exchange this Rider
without evidence of insurability for a new
policy on Your life. Such new policy will be
issued upon written request subject to the
following:
1. the Rider has not reached the
Anniversary nearest Your 70th birthday;
and
2. the new policy is on any permanent plan
of insurance then offered by Us; and
3. the amount of insurance upon conversion
will equal the Face Amount then In
Force under this Rider; and
4. the payment of the Premium based on
Your rate class under this Rider.
TERMINATION This Rider will terminate on the earliest of:
1. the Maturity Date of the Policy;
2. the Anniversary nearest Your 100th
birthday;
3. the date this Policy terminates for any
reason except for death of the Primary
Insured;
4. 31 days after the death of the Primary
Insured;
5. the date of conversion of this Rider;
6. the Monthiversary on which this Rider
is terminated on written request by the
Owner.
<PAGE>
GENERAL This Rider is part of the Policy. It is subject
to all the terms of this Rider and the Policy.
This Rider has no cash value.
The monthly deduction for this Rider, for each
of the first 12 policy months, is shown on Page
4 of the Policy. Monthly deductions after the
first policy year will be calculated consistent
with the Monthly Cost of Insurance and Monthly
Cost of Insurance Rates provisions of the
Policy to which this Rider is attached.
EFFECTIVE DATE This Rider becomes effective on the same date
as the Policy unless a later date is shown
here.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
/s/ JAMES W. DEDERER
Secretary
Exhibit 1.A.(5)(g)
Disability Waiver Rider
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
DISABILITY WAIVER RIDER
================================================================================
IN THIS RIDER, the Insured is named on Page 4 of the Policy. The Insured will be
referred to as YOU or YOUR. Transamerica Occidental Life Insurance Company will
be referred to as WE, OUR or US.
================================================================================
BENEFIT We will waive the monthly deductions for this
Policy when We receive due proof that Your
total disability has existed continuously for
at least six months, as provided in this Rider.
No monthly deduction will be waived which falls
due more than one year prior to receipt at Our
Office of written notice of claim.
TOTAL DISABILITY Total disability means Your complete
inability, because of bodily injury or disease,
to engage in any gainful occupation for which
You are qualified by education, training or
experience. Such bodily injury must occur or
disease must first manifest itself after the
date this Rider is signed by Us.
We will also recognize as total disability Your
complete and irrecoverable loss of any one of
the following:
1. sight of both eyes;
2. use of both hands or both feet; or
3. use of one hand and one foot.
RISKS NOT COVERED We will not waive premiums if Your total
disability results from:
1. intentionally self-inflicted bodily
injury; or
2. service in the military or naval forces
of any country when such country is
engaged in war, whether declared or
not; or
3. bodily injury sustained while in or on,
or in consequence of having been in or
on any device for aerial navigation, or
in descending from or with, or while
adjusting, operating or handling any
such device. This restriction does not
apply while actually riding as a
fare-paying passenger in an aircraft
operated on regular schedule by an
incorporated passenger carrier over its
established air route.
CONSIDERATION This Rider is issued in consideration of:
1. the application for this Rider; and
2. the payment of the Initial Premium.
NOTICE OF CLAIM Before We waive any monthly deductions, We must
receive written notice of claim at Our Office.
Notice must be received by Us while total
disability continues and while You are still
alive, or as soon as reasonably possible.
<PAGE>
PROOF OF DISABILITY Before We waive any monthly deductions, We must
receive proof that Your total disability has
existed continuously for at least six months.
We may require proof at reasonable intervals
that total disability continues. After total
disability has continued for two consecutive
years We will not require such proof more than
once a year. We may require Your physical
examination at Our expense by a physician of
Our choice as part of any proof of total
disability. We will not waive any further
monthly deductions if proof is not furnished as
required.
RECOVERY FROM DISABILITY If and when You recover from total disability,
no further monthly deductions will be waived
for that period of disability.
TERMINATION This Rider will terminate on the earliest of:
1. the Anniversary nearest Your 60th
birthday, except in respect to benefits
accruing during the continuance of any
then existing total disability of which
We received due proof of as set forth
above; or
2. the date this Policy terminates; or
3. the Monthiversary on which this Rider
is terminated on written request by the
Owner.
GENERAL This Rider is part of the Policy. It is subject
to all the terms of this Rider and the Policy.
This Rider has no cash value.
The monthly deduction for this Rider, for the
first policy month, is shown on Page 4 of the
Policy. Monthly deductions after the first
policy month will equal the Waiver Factor per
unit at risk shown on Page 4 times the number
of units at risk at the beginning of each month
for each coverage In Force.
EFFECTIVE DATE This Rider becomes effective on the same date
as the Policy unless a later date is shown
here.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
/s/ JAMES W. DEDERER
Secretary
Exhibit 1.A.(5)(h)
Disability Waiver and Income Rider
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
( A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
DISABILITY WAIVER AND INCOME RIDER
================================================================================
IN THIS RIDER, the Insured is named on Page 4 of the Policy. The Insured will be
referred to as YOU or YOUR. Transamerica Occidental Life Insurance Company will
be referred to as WE, OUR or US.
================================================================================
BENEFIT We will waive the monthly deductions for this
Policy and pay the Monthly Income shown on Page
4 of the Policy to the Owner when we receive
due proof that Your total disability has
existed continuously for at least six months,
as provided in this Rider. No benefit will be
provided which falls due:
1. more than one year prior to receipt at
our Office of written notice of claim;
or
2. after recovery from disability; or
3. after the termination of this Rider.
In no event will any Monthly Income continue
after a total of 120 income payments have been
made. Such payments need not be made
consecutively and may result from more than one
period of disability.
TOTAL DISABILITY Total disability means Your inability, because
of bodily injury or disease, to engage in any
gainful occupation for which You are qualified
by education, training or experience. Such
bodily injury must occur or disease must first
manifest itself after the effective date of
this Rider.
We will also recognize as total disability Your
complete and irrecoverable loss of any one of
the following:
1. sight of both eyes; or
2. use of both hands or both feet; or
3. use of one hand and one foot.
RISKS NOT COVERED We will not provide any benefits if Your total
disability results from:
1. intentionally self-inflicted bodily
injury; or
2. service in the military or naval forces
of any country when such country is
engaged in war, whether declared or not;
or
3. bodily injury sustained while in or on,
or in consequence of having been in or
on any device for aerial navigation.
This restriction does not apply while
actually riding as a fare-paying
passenger in an aircraft operated on
regular schedule by an incorporated
passenger carrier over its established
air route.
<PAGE>
CONSIDERATION This Rider Is issued in consideration of:
1. the application for this Rider; and
2. the payment of the Initial Premium.
INCONTESTABILITY This Rider is contestable during the entire
period of time that the Rider remains In Force.
NOTICE OF CLAIM Before we provide any benefits, we
must receive written notice of claim at our
Office. Notice must be received by Us while
total disability continues and while You are
still alive, or as soon as reasonably possible.
PROOF OF DISABILITY Before we provide any benefits, we must receive
proof that Your total disability has existed
continuously for at least six months.
We may require proof at reasonable intervals
that total disability continues. After total
disability has continued for two consecutive
years we will not require such proof more than
once a year. We may require Your physical
examination at our expense by a physician of
our choice as part of any proof of total
disability. We will not provide any further
benefits if proof is not furnished as required.
RECOVERY FROM DISABILITY If and when You recover from total disability,
no further benefits will be provided for that
period of disability.
TERMINATION This Rider will terminate on the earliest of:
1. the Anniversary nearest Your 60th
birthday, except in respect to
benefits accruing during the
continuance of any then existing total
disability of which we received due
proof of as set forth above; or
2. In respect to benefits accruing during
the continuance of an existing total
disability after the Anniversary
nearest Your 60th birthday, the date
of Your recovery from disability; or
3. the date this Policy terminates; or
4. the Monthiversary on which this Rider
is terminated on written request by
the Owner.
GENERAL This Rider is part of the Policy. It is subject
to all the terms of this Rider and the Policy.
This Rider has no cash value. The monthly
deductions for this Rider, for the first policy
month, are shown on Page 4 of the Policy.
Monthly deductions after the first policy
month, for the benefit providing the waiver of
monthly deductions for this Policy, will equal
the Waiver Factor shown on Page 4 times the
number of units at risk at the beginning of
each month for each coverage in force. The
number of units at risk for the Policy is equal
to the death benefit minus the cash value, in
thousands. The number of units at risk for each
Rider is equal to the Face Amount, in
thousands, for each Rider.
<PAGE>
Monthly deductions after the first policy
month, for the benefit providing the Monthly
Income for this Policy, will be equal to the
deduction in the first month. Monthly
deductions for the Monthly Income will cease
after a total of 120 income payments have been
made.
EFFECTIVE DATE This Rider becomes effective on the same date
as the Policy unless a later date is shown
here.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
/s/ JAMES W. DEDERER
Secretary
Exhibit 1.A.(5)(i)
Accidental Death Benefit Rider
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
( A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
ACCIDENTAL DEATH BENEFIT RIDER
================================================================================
IN THIS RIDER, the Insured is named on Page 4 of the Policy. The Insured will be
referred to as YOU or YOUR. Transamerica Occidental Life Insurance Company will
be referred to as WE, OUR or US.
================================================================================
BENEFIT We will pay the ADB Amount of this Rider as
shown on Page 4 of the Policy when We receive
due proof that Your death:
1. resulted from bodily injuries effected
directly and independently of all
other causes through external, violent
and accidental means; and
2. occurred within 90 days from the date
of accident causing such injuries; and
3. occurred while this Rider was In
Force.
RISKS NOT COVERED The benefit provided by this Rider is not
payable if Your death results from any of the
following:
1. Bodily injuries of which there is no
visible contusion or wound on the
exterior of the body, except in case
of drowning or internal injuries
revealed by autopsy;
2. Suicide or self-destruction while sane
or insane;
3. Disease or bodily or mental infirmity;
4. Bodily injury sustained as a result of
war, whether declared or not, riot or
insurrection;
5. Bodily injury sustained while
operating, riding in, or descending
from any kind of aircraft if You are:
a) a pilot, officer, or member
of a crew; or
b) being flown for the purpose
of descent from such aircraft
while in flight; or
c) giving or receiving any kind
of training or instruction;
or
d) having any duties aboard such
aircraft.
6. Bodily injuries sustained while
participating in or attempting to
commit an assault or felony;
7. Any poison, gas or fumes voluntarily
administered, absorbed or inhaled.
CONSIDERATION This Rider is issued in consideration of:
1. the application for this Rider; and
2. the payment of the initial premium.
<PAGE>
TERMINATION This Rider will terminate on the earliest of:
1. the Anniversary nearest Your 70th
birthday;
2. the date this Policy terminates;
3. the Monthiversary on which this Rider
is terminated on written request by
the Owner.
GENERAL This Rider is part of the Policy. It is subject
to all the terms of this Rider and the Policy.
This Rider has no cash value.
We reserve the right and opportunity to:
1. investigate the circumstances of Your
death; and
2. examine Your body upon death; and
3. have an autopsy performed, unless
prohibited by law.
The monthly deduction for this Rider, for each
of the first 12 policy months, is shown on Page
4 of the Policy. Monthly deductions after the
first policy year will not exceed the rates
shown below adjusted by the rating factor for
this coverage.
Issue Monthly Rate
Age per $1,000 ADB Amount
--- ---------------------
15-40 $ .10
41-45 .11
46-50 .12
51-55 .13
56-59 .15
EFFECTIVE DATE This Rider becomes effective on the same date
as the Policy unless a later date is shown
here.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
/s/ JAMES W. DEDERER
Secretary
Exhibit 1.A.(5)(j)
Dollar Cost Averaging Endorsement
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
( A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
================================================================================
ENDORSEMENT
This Endorsement is made a part of the Policy to which it is attached.
DOLLAR COST AVERAGING We will automatically transfer pre-determined
amounts from the designated Account to any
other Subaccount in accordance with the Owner's
current premium allocation instructions. The
transfers will be made on a monthly basis
subject to the following:
1. We must receive proper written
election of this option on a form
provided
by Us;
2. The entire Initial Premium must be
allocated to the designated Dollar
Cost Averaging Account;
3. The amount transferred each month may
not be less than the amount
transferred when the Dollar Cost
Averaging begins.
The first transfer will occur on the
Monthiversary following the Policy Date. Each
transfer which occurs under the Dollar Cost
Averaging option will be without charge but
will be counted toward the number of transfers
allowed without charge under the Policy.
Dollar Cost Averaging will terminate if We
receive:
1. Written instruction from the Owner for
cancellation;
2. Election to participate in any Asset
Rebalancing Program; or
3. Notification of election to
participate in any asset allocation
service provided by a third party.
We reserve the right to discontinue, modify or
suspend Dollar Cost Averaging at any time
following prior written notification to all
Policy owners.
Except as otherwise set forth above, this Endorsement is subject to the
exclusions, definitions and provisions of the Policy.
Signed for Us at Our Office in Clearwater, Florida.
/s/ JAMES W. DEDERER /s/
Secretary President
Exhibit 1.A.(5)(k)
Asset Rebalancing Program Endorsement
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
( A STOCK COMPANY)
Home Office: Los Angeles, California
Administrative Office: Clearwater, Florida
================================================================================
ENDORSEMENT
The following provision is added to this Policy, effective as of the date We
receive written request to participate in the Asset Rebalancing Program.
ASSET REBALANCING PROGRAM The Owner may instruct Us to automatically
transfer Cash Values in the Subaccounts at the
end of the selected period for purposes of
maintaining a particular asset allocation
percentage among the Subaccounts, subject to
the following:
1. We must receive written election of
this option on a form provided by Us;
2. Asset Rebalancing is only available
prior to the Maturity Date;
3. Values in the Fixed Account are not
eligible for Asset Rebalancing.
The Owner may elect for rebalancing to occur at
the end of each Policy quarter, semi-annually
or annually. Following receipt of written
request, the initial rebalancing will occur on
the next such Anniversary, and will occur in
accordance with the current Premium allocation.
Asset Rebalancing is not available, and will
terminate, if:
1. Dollar Cost Averaging is elected;
2. The Owner participates in any asset
allocation service provided by a third
party;
3. We receive a request to discontinue
participation; or
4. A transfer is made to, or from, any
Subaccount other than under a
scheduled rebalancing.
Each reallocation which occurs under Asset
Rebalancing will be counted towards the number
of transfers allowed without charge.
We reserve the right to limit re-entry into the
Asset Rebalancing Program following termination
to once per Policy Year.
We reserve the right to discontinue, modify or suspend the Asset Rebalancing
Program at any time, following proper written notification to all Policy
holders.
Signed for Us at Our Office in Clearwater, Florida.
/s/ JAMES W. DEDERER /s/
Secretary President
Exhibit 1.A.(8)(a)
Form of Participation Agreement Among Variable Insurance Products Fund,
Fidelity Distributors Corporation and Transamerica
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND,
--------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
----------------------------------------------
THIS AGREEMENT, made and entered into as of the 1st day of May,
2000 by and among TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, (hereinafter
the "Company"), a California corporation, on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter referred to as
the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser")
is duly registered as an investment adviser under the federal Investment
Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and variable annuity contracts under the 1933 Act; and
<PAGE>
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares
of the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. Beginning within three months of the effective
date of this Amendment, the Company agrees that all order for the purchase and
redemption of Fund shares on behalf of the Accounts will be placed by the
Company with the Funds or their transfer agent by electronic transmission.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
<PAGE>
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto, (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the parties hereto, or in the
Company's general account, provided that such amounts may also be invested in an
investment company other than the Fund if (a) such other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Portfolios of
the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement (a list of such funds appearing on Schedule C to this
Agreement); or (d) the Fund or Underwriter consents to the use of such other
investment company.
1.7. The Company shall pay for Fund shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are
or will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under the California Insurance Code and has registered or, prior
to any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
California and all applicable federal and state securities laws and that the
Fund is and shall remain registered under
<PAGE>
the 1940 Act. The Fund shall amend the Registration Statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund shall register and
qualify the shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as endowment or annuity insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. (a) With respect to Initial Class shares, the Fund
currently does not intend to make any payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make
such payments in the future. The Fund has adopted a "no fee" or "defensive" Rule
12b-1 Plan under which it makes no payments for distribution expenses. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
the Fund undertakes to have a board of trustees, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
(b) With respect to Service Class and Service Class 2
shares, the Fund has adopted Rule 12b-1 Plans under which it makes payments to
finance distribution expenses. The Fund represents and warrants that it has a
board of trustees, a majority of whom are not interested persons of the Fund,
which has formulated and approved the Fund's Rule 12b-1 Plan to finance
distribution expenses of the Fund and that any changes to the Fund's Rule 12b-1
Plan will be approved by a similarly constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance with
the laws of the State of California and the Fund and the Underwriter represent
that their respective operations are and shall at all times remain in material
compliance with the laws of the State of California to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of California and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Massachusetts and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
<PAGE>
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, and that said bond is issued by a reputable bonding company, includes
coverage for larceny and embezzlement, and is in an amount not less than $5
million. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many
printed copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure annually as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with
instructions received from Contract owners; and
(iii) vote Fund shares for which no instructions have
been received in a particular separate account in
the same proportion as Fund shares of such
portfolio for which instructions have been received
in that separate account,
<PAGE>
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
-------------------------------
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
<PAGE>
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
------------------
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus and reports to owners of Contracts issued by the Company. The
Fund shall bear the costs of soliciting Fund proxies from Contract owners,
including the costs of mailing proxy materials and tabulating proxy voting
instructions, not to exceed the costs charged by any service provider engaged by
the Fund for this purpose. The Fund and the Underwriter shall not be responsible
for the costs of any proxy solicitations other than proxies sponsored by the
Fund.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
--------------------
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public
<PAGE>
ruling, private letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Portfolio are being managed; (e) a difference in
voting instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing
<PAGE>
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
----------------
8.1. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the
Fund and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration Statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement; or
<PAGE>
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company;
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against
an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of
the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in
the defense of such action. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Fund
Shares or the Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
-----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
<PAGE>
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
8.3. Indemnification By the Fund
----------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages,
<PAGE>
liabilities (including amounts paid in settlement with the written consent of
the Fund) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
<PAGE>
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect
until the first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under
any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
or
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio fails to meet the
diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of
the Fund or the Underwriter respectively, shall determine,
in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund or the Underwriter or an affiliate of either has
suffered a material adverse change in its business,
operations, financial condition or prospects since the
date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written
notice to the Company, if the Company gives the Fund and
the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there
was no notice of termination outstanding under any other
provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective
forty five (45) days after the notice specified in Section
1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
<PAGE>
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Transamerica Occidental Life Insurance Company
570 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Thomas E. Pierpan, Vice President
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
--------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
<PAGE>
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report
(prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical
and in any event within 90 days after the end of
each fiscal year;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any), as soon as practical and in
any event within 45 days after the end of each
quarterly period:
(c) any financial statement, proxy statement, notice
or report of the Company sent to stockholders
and/or policyholders, as soon as practical after
the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after
the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of
the books of the Company, as soon as practical
after the receipt thereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
By: _________________________
Name: _______________
Title: _______________
VARIABLE INSURANCE PRODUCTS FUND
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
Vice President
<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account
- -------------------------------------- --------------------------
Transamerica Occidental Life Separate Account VUL-3 Transamerica Elite
(est. November 30, 1999) Policy Form Number--TA90
</TABLE>
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed by the
Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed
to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
<PAGE>
e. cover letter - optional, supplied by Company and
reviewed and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
- --Growth Portfolio of Transamerica Variable Insurance Fund, Inc.
- --All portfolios (now existing or hereafter created) of the WRL Series
Fund, Inc.
Exhibit 1.A.(8)(b)
Form of Participation Agreement Among Variable Insurance Products Fund II,
Fidelity Distributors Corporation and Transamerica
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND II,
-----------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
----------------------------------------------
THIS AGREEMENT, made and entered into as of the 1st day of May,
2000 by and among TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, (hereinafter
the "Company"), a California corporation, on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter referred to as
the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser")
is duly registered as an investment adviser under the federal Investment
Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and variable annuity contracts under the 1933 Act; and
<PAGE>
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares
of the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. Beginning within three months of the effective
date of this Amendment, the Company agrees that all order for the purchase and
redemption of Fund shares on behalf of the Accounts will be placed by the
Company with the Funds or their transfer agent by electronic transmission.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
<PAGE>
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto, (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the parties hereto, or in the
Company's general account, provided that such amounts may also be invested in an
investment company other than the Fund if (a) such other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Portfolios of
the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement (a list of such funds appearing on Schedule C to this
Agreement); or (d) the Fund or Underwriter consents to the use of such other
investment company.
1.7. The Company shall pay for Fund shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are
or will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under the California Insurance Code and has registered or, prior
to any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
California and all applicable federal and state securities laws and that the
Fund is and shall remain registered under
<PAGE>
the 1940 Act. The Fund shall amend the Registration Statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund shall register and
qualify the shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as endowment or annuity insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. (a) With respect to Initial Class shares, the Fund
currently does not intend to make any payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make
such payments in the future. The Fund has adopted a "no fee" or "defensive" Rule
12b-1 Plan under which it makes no payments for distribution expenses. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
the Fund undertakes to have a board of trustees, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
(b) With respect to Service Class and Service Class 2
shares, the Fund has adopted Rule 12b-1 Plans under which it makes payments to
finance distribution expenses. The Fund represents and warrants that it has a
board of trustees, a majority of whom are not interested persons of the Fund,
which has formulated and approved the Fund's Rule 12b-1 Plan to finance
distribution expenses of the Fund and that any changes to the Fund's Rule 12b-1
Plan will be approved by a similarly constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance with
the laws of the State of California and the Fund and the Underwriter represent
that their respective operations are and shall at all times remain in material
compliance with the laws of the State of California to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of California and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Massachusetts and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
<PAGE>
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, and that said bond is issued by a reputable bonding company, includes
coverage for larceny and embezzlement, and is in an amount not less than $5
million. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many
printed copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure annually as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with
instructions received from Contract owners; and
(iii) vote Fund shares for which no instructions have
been received in a particular separate account in
the same proportion as Fund shares of such
portfolio for which instructions have been received
in that separate account,
<PAGE>
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
<PAGE>
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus and reports to owners of Contracts issued by the Company. The
Fund shall bear the costs of soliciting Fund proxies from Contract owners,
including the costs of mailing proxy materials and tabulating proxy voting
instructions, not to exceed the costs charged by any service provider engaged by
the Fund for this purpose. The Fund and the Underwriter shall not be responsible
for the costs of any proxy solicitations other than proxies sponsored by the
Fund.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
--------------------
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public
<PAGE>
ruling, private letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Portfolio are being managed; (e) a difference in
voting instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing
<PAGE>
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
--------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the
Fund and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration Statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement; or
<PAGE>
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company;
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against
an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of
the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in
the defense of such action. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Fund
Shares or the Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
<PAGE>
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
8.3. Indemnification By the Fund
----------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages,
<PAGE>
liabilities (including amounts paid in settlement with the written consent of
the Fund) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
<PAGE>
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect
until the first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under
any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
or
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio fails to meet the
diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of
the Fund or the Underwriter respectively, shall determine,
in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund or the Underwriter or an affiliate of either has
suffered a material adverse change in its business,
operations, financial condition or prospects since the
date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written
notice to the Company, if the Company gives the Fund and
the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there
was no notice of termination outstanding under any other
provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective
forty five (45) days after the notice specified in Section
1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
<PAGE>
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Transamerica Occidental Life Insurance Company
570 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Thomas E. Pierpan, Vice President
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
--------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
<PAGE>
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report
(prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical
and in any event within 90 days after the end of
each fiscal year;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any), as soon as practical and in
any event within 45 days after the end of each
quarterly period:
(c) any financial statement, proxy statement, notice
or report of the Company sent to stockholders
and/or policyholders, as soon as practical after
the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after
the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of
the books of the Company, as soon as practical
after the receipt thereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
By: _________________________
Name: _______________
Title: _______________
VARIABLE INSURANCE PRODUCTS FUND II
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
Vice President
<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account
- -------------------------------------- --------------------------
Transamerica Occidental Life Separate Account VUL-3 Transamerica Elite
(est. November 30, 1999) Policy Form Number--TA90
</TABLE>
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed by the
Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed
to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
<PAGE>
e. cover letter - optional, supplied by Company and
reviewed and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
- --Growth Portfolio of Transamerica Variable Insurance Fund, Inc.
- --All portfolios (now existing or hereafter created) of the WRL Series
Fund, Inc.
Exhibit 1.A.(8)(c)
Form of Participation Agreement Among Variable Insurance Products Fund III,
Fidelity Distributors Corporation and Transamerica
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND III,
------------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
----------------------------------------------
THIS AGREEMENT, made and entered into as of the 1st day of May,
2000 by and among TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, (hereinafter
the "Company"), a California corporation, on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter referred to as
the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND III, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser")
is duly registered as an investment adviser under the federal Investment
Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and variable annuity contracts under the 1933 Act; and
<PAGE>
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares
of the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. Beginning within three months of the effective
date of this Amendment, the Company agrees that all order for the purchase and
redemption of Fund shares on behalf of the Accounts will be placed by the
Company with the Funds or their transfer agent by electronic transmission.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
<PAGE>
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto, (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the parties hereto, or in the
Company's general account, provided that such amounts may also be invested in an
investment company other than the Fund if (a) such other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Portfolios of
the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement (a list of such funds appearing on Schedule C to this
Agreement); or (d) the Fund or Underwriter consents to the use of such other
investment company.
1.7. The Company shall pay for Fund shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are
or will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under the California Insurance Code and has registered or, prior
to any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
California and all applicable federal and state securities laws and that the
Fund is and shall remain registered under
<PAGE>
the 1940 Act. The Fund shall amend the Registration Statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund shall register and
qualify the shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as endowment or annuity insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. (a) With respect to Initial Class shares, the Fund
currently does not intend to make any payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make
such payments in the future. The Fund has adopted a "no fee" or "defensive" Rule
12b-1 Plan under which it makes no payments for distribution expenses. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
the Fund undertakes to have a board of trustees, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
(b) With respect to Service Class and Service Class 2
shares, the Fund has adopted Rule 12b-1 Plans under which it makes payments to
finance distribution expenses. The Fund represents and warrants that it has a
board of trustees, a majority of whom are not interested persons of the Fund,
which has formulated and approved the Fund's Rule 12b-1 Plan to finance
distribution expenses of the Fund and that any changes to the Fund's Rule 12b-1
Plan will be approved by a similarly constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance with
the laws of the State of California and the Fund and the Underwriter represent
that their respective operations are and shall at all times remain in material
compliance with the laws of the State of California to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of California and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Massachusetts and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
<PAGE>
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, and that said bond is issued by a reputable bonding company, includes
coverage for larceny and embezzlement, and is in an amount not less than $5
million. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many
printed copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure annually as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with
instructions received from Contract owners; and
(iii) vote Fund shares for which no instructions have
been received in a particular separate account in
the same proportion as Fund shares of such
portfolio for which instructions have been received
in that separate account,
<PAGE>
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
<PAGE>
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus and reports to owners of Contracts issued by the Company. The
Fund shall bear the costs of soliciting Fund proxies from Contract owners,
including the costs of mailing proxy materials and tabulating proxy voting
instructions, not to exceed the costs charged by any service provider engaged by
the Fund for this purpose. The Fund and the Underwriter shall not be responsible
for the costs of any proxy solicitations other than proxies sponsored by the
Fund.
ARTICLE VI. Diversification
----------------
6.1. The Fund will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public
<PAGE>
ruling, private letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Portfolio are being managed; (e) a difference in
voting instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing
<PAGE>
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the
Fund and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration Statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement; or
<PAGE>
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company;
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against
an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of
the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in
the defense of such action. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Fund
Shares or the Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
<PAGE>
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages,
<PAGE>
liabilities (including amounts paid in settlement with the written consent of
the Fund) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
<PAGE>
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect
until the first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under
any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
or
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio fails to meet the
diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of
the Fund or the Underwriter respectively, shall determine,
in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund or the Underwriter or an affiliate of either has
suffered a material adverse change in its business,
operations, financial condition or prospects since the
date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written
notice to the Company, if the Company gives the Fund and
the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there
was no notice of termination outstanding under any other
provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective
forty five (45) days after the notice specified in Section
1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
<PAGE>
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
--------
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Transamerica Occidental Life Insurance Company
570 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Thomas E. Pierpan, Vice President
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
<PAGE>
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report
(prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical
and in any event within 90 days after the end of
each fiscal year;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any), as soon as practical and in
any event within 45 days after the end of each
quarterly period:
(c) any financial statement, proxy statement, notice
or report of the Company sent to stockholders
and/or policyholders, as soon as practical after
the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after
the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of
the books of the Company, as soon as practical
after the receipt thereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
By: _________________________
Name: _______________
Title: _______________
VARIABLE INSURANCE PRODUCTS FUND III
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
Vice President
<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account
- -------------------------------------- --------------------------
Transamerica Occidental Life Separate Account VUL-3 Transamerica Elite
(est. November 30, 1999) Policy Form Number--TA90
</TABLE>
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed by the
Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed
to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
<PAGE>
e. cover letter - optional, supplied by Company and
reviewed and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
- --Growth Portfolio of Transamerica Variable Insurance Fund, Inc.
- --All portfolios (now existing or hereafter created) of the WRL Series
Fund, Inc.
Exhibit 1.A.(8)(d)
Form of Participation Agreement Among Transamerica Variable Insurance Fund,Inc.,
Transamerica Investment Management, LLC and Transamerica
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
AMONG
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
------------------------------------------
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
---------------------------------------
AND
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
----------------------------------------------
THIS AGREEMENT, effective of this 1st day of May 2000, by and among
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (hereinafter "Insurance
Company"), a California life insurance company, on its own behalf and on behalf
of its SEPARATE ACCOUNT(S) (the "Account"); TRANSAMERICA VARIABLE INSURANCE
FUND, INC., a corporation organized under the laws of Maryland (hereinafter the
"Fund"); and TRANSAMERICA INVESTMENT MANAGEMENT, LLC, (hereinafter the
"Adviser"), a Delaware limited liability company.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies which have entered into participation
agreements similar to this Agreement (hereinafter "Participating Insurance
Companies"), as well as qualified pension and retirement plans; and
WHEREAS, the beneficial interests in the Fund are divided into several
series of shares, each designated a "Portfolio" and representing interests in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940 as amended, and
WHEREAS, Insurance Company has registered the Account as a unit
investment trust under the 1940 Act, and certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under the 1933
Act, and said Account(s) are listed on Schedule A hereto, as it may be amended
from time to time by mutual written agreement; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of Insurance
Company to set aside and invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Insurance Company intends to purchase shares in the Portfolios
listed in Schedule B hereto, as it may be amended from time to time by mutual
written agreement (the "Designated Portfolios"), on behalf of the Account to
fund the aforesaid Contracts, and the Fund intends to sell such shares to the
Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, Insurance
Company, the Fund and the Adviser agree as follows:
<PAGE>
ARTICLE I. Sale of Fund Shares
--------------------
1.1. The Fund agrees to sell to Insurance Company those shares of the
Designated Portfolios which Insurance Company orders, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund, or
its designee, of the order for the shares of the Designated Portfolios. For
purposes of this Section 1.1, Insurance Company shall be the agent of the Fund
for receipt of such orders and receipt by Insurance Company shall constitute
receipt by the Fund; provided that the Fund receives notice of such order by
9:30 a.m. New York time on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value.
1.2. The Fund agrees to make shares of the Designated Portfolios
available for purchase at the applicable net asset value per share by Insurance
Company on those days on which the Fund calculates its net asset value, and the
Fund shall use reasonable efforts to calculate such net asset value on each day
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Directors of the Fund (hereinafter the "Board") may
refuse to sell shares of any Portfolio to any person, or suspend or terminate
the offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or if , in the sole discretion of the
Board acting in good faith and in light of their fiduciary duties under federal
and any applicable state laws, necessary in the best interests of the
shareholders of such Portfolio.
1.3 The Fund agrees that shares of the Designated Portfolios will be
sold only to Participating Insurance Companies and their separate accounts and
to qualified pension and retirement plans. No shares of any Designated Portfolio
will be sold to the general public.
1.4. The Fund agrees to redeem for cash, on Insurance Companies
request, any full or fractional shares of the Fund held by Insurance Companies,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption, except
that the Fund reserves the right to suspend the right of redemption or postpone
the date of payment or satisfaction upon redemption consistent with Section
22(e) of the 1940 Act. For purposes of this Section 1.5, Insurance Companies
shall be the agent of the Fund for receipt of requests for redemption and
receipt by Insurance Company shall constitute receipt by the Fund; provided that
the Fund receives notice of such request for redemption by 9:30 a.m. New York
time on the next following Business Day.
1.5. The Parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies and to qualified pension and retirement plans and the cash
value of the Contracts may be invested in other investment companies.
1.6. Insurance Company shall pay for Fund shares by 12:00 noon New York
Time the next Business Day after an order to purchase Fund shares is made in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire and/or by a credit for any shares redeemed the
same day as the purchase. Upon receipt by the Fund of the federal funds so
wired, such funds shall cease to be the responsibility of Insurance Company and
shall become the responsibility of the Fund.
1.7. The Fund shall pay and transmit the proceeds of redemptions of
Fund shares by 3:00 p.m. New York time the next Business Day after a redemption
order is received, subject to Section 1.5 hereof. Payment shall be in federal
funds transmitted by wire and/or a credit for any shares purchased the same day
as the redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to Insurance Company or the Account.
Shares ordered from the Fund will be recorded in an appropriate title for the
Account or the appropriate sub-account of the Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to Insurance Company of any income, dividends,
or capital gain distributions payable on the Designated Portfolios' shares.
Insurance Company hereby elects to receive all such income dividends and capital
gain distributions in additional shares of that Portfolio. Insurance Company
reserves the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash. The Fund shall notify
Insurance Company by the end of the next following Business Day of the number of
shares so issued as payment of such dividends and distributions.
-2-
<PAGE>
1.10. The Fund shall make the net asset value per share for each
Designated Portfolio available to Insurance Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by 6:30
p.m. New York time. If the Fund provides incorrect per share net asset value
information, Insurance Company shall be entitled to an adjustment to the number
of shares purchased or redeemed to reflect the correct net asset value per
share. Any material error in the calculation or reporting of net asset value per
share, dividend or capital gains information shall be reported immediately upon
discovery to Insurance Company. Any error of a lesser amount shall be corrected
in the next Business Day's net asset value per share.
In the event adjustments are required to correct any error in the
computation of a Designated Portfolio's net asset value per share, or dividend
or capital gain distribution, the Fund shall notify Insurance Company as soon as
possible after discovering the need for such adjustments. Notification can be
made orally, but must be confirmed in writing. If an adjustment is necessary to
correct an error which caused Contract owners to receive less than the amount to
which they are entitled, the Fund shall make all necessary adjustments to the
number of shares owned by the Account and distribute to the Account the amount
of the underpayment. In no event shall Insurance Company be liable to the Fund
for any such adjustments or overpayment amounts.
ARTICLE II. Representations and Warranties
------------------------------
2.1. Insurance Company represents and warrants that the Contracts are
or will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws. Insurance Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established the Account as a segregated asset
account under insurance law and has registered the Account as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund and Adviser represent and warrants that Designated
Portfolio shares sold pursuant to this Agreement shall be registered under the
1933 Act, duly authorized for issuance and sold in compliance with all
applicable federal and state securities laws including without limitation the
1933 Act, the 1934 Act, and the 1940 Act and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend the Registration Statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states if and to the extent required by applicable law.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1
under the 1940 Act or impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. To the
extent that the Fund decides to finance distribution expenses pursuant to Rule
12b-1, the Fund undertakes to have a Board, a majority of whom are not
interested persons of the Fund, formulate and approve any plan pursuant to Rule
12b-1 under the 1940 Act to finance distribution expenses.
2.4. The Fund and Adviser represent and warrant that the Fund is
lawfully organized and validly existing under the laws of the State of Maryland
and that it does and shall comply in all material respects with the 1940 Act.
2.5 The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the fund in compliance with all applicable
state and federal securities laws.
2.6. The Fund and Adviser each represent and warrant that all of its
directors, officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimal
coverage required by Section 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding company.
2.7. The Fund will provide Insurance Company with as much advance
notice as is reasonably practicable of any material change affecting the
Designated Portfolios (including, but not limited to, any material change in its
registration statement or prospectus affecting the Designated Portfolios and any
proxy solicitation
-3-
<PAGE>
affecting the Designated Portfolios) and consult with Insurance Company in order
to implement any such change in an orderly manner, recognizing the expenses of
changes and attempting to minimize such expenses by implementing them in
conjunction with regular annual updates of the prospectuses for the Contracts.
2.8. Insurance Company represents and warrants, that, if the Fund
complies with Sections 2.9 and 2.10 of this Agreement, the Contracts are
currently treated as annuity contracts under applicable provisions of the
Internal Revenue Code of 1986, as amended, and that it shall make every effort
necessary to maintain such treatment and that it will notify the Underwriter
immediately upon having a reasonable basis for believing that the Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.9. The Fund and the Adviser represent and warrant that: (a) each
Designated Portfolio currently has elected to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code ("Code"); (b) the Fund
and Adviser shall make every effort necessary that each Portfolio shall maintain
such qualification (under Subchapter M or any successor or similar provision);
(c) the fund or the Adviser will notify Insurance Company immediately upon
having a reasonable basis for believing that a Portfolio has ceased to so
qualify or that it might not so qualify in the future; and (d) the Fund and the
Adviser will seek to minimize any damages and to rectify any Portfolio's failure
to so qualify promptly. The Fund and the Adviser acknowledge that any failure by
a Portfolio to qualify as a regulated investment company will eliminate the
ability of the Account to avail itself of the "look through" provisions of
Section 817(h) of the Code and that, as a result, the Contracts will almost
certainly fail to qualify as life insurance contracts under Section 817(h) of
the Code.
2.10. The Fund and the Adviser further represent and warrant that the
assets of each Designated Portfolio will at all times be invested in such a
manner to assure that the Contracts will be treated as life insurance contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund and the Adviser represent that the each Designated
Portfolio will at all times comply with Section 817(h) of the Code and Treasury
Regulation 1.817.5, as amended from time to time, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulation. In the event of a breach of this Section 2.10, the Fund and the
Adviser warrant that they will take all reasonable steps: (a) to immediately
notify the Insurance Company of such breach; and (b) to adequately diversify the
Fund's assets so as to achieve compliance within the grace period afforded by
Regulation 1.817-5.
2.11. The Fund and Underwriter acknowledge that full compliance with
the requirements referred to in Sections 2.9 and 2.10 hereof is absolutely
essential because any failure to meet those requirements would result in the
Contracts not being treated as annuity contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners and
could also adversely affect the Insurance Company corporate tax liability.
ARTICLE III. Prospectuses, Reports, Proxy Statements and Voting
---------------------------------------------------
3.1. The Fund or Adviser, at their expense, shall provide Insurance
Company or its designee with current a prospectus, Statement of Additional
Information, and supplements thereto, and annual and semi-annual reports for the
Designated Portfolios in final "camera ready" copy form or on a diskette or such
other form as is required by a financial printer. The Fund and Adviser agrees
that the prospectuses, and supplements thereto, and the annual and semi-annual
reports for the Designated Portfolios will describe only the Designated
Portfolios and will not describe other Portfolios of the Fund. The Statement of
Additional Information may include information on other Portfolios of the Fund.
It is anticipated that the prospectuses and annual and semi-annual reports for
the Contracts (if applicable), for the Designated Portfolio(s) and for other
portfolios available under the Contracts will be printed together in one
booklet. The Fund or Adviser shall pay a portion of the printing expenses for
prospectus and fund reports booklets distributed to current Contract Owners.
Such portion shall be the percentage, which is the number of pages of the Fund
prospectus or report as compared to the total number of pages of the booklet.
The Fund shall not pay any expenses for printing or distribution of prospectuses
or fund reports to prospective Contract Owners.
3.2. It is understood and agreed that, except with respect to
information regarding Insurance Company provided in writing by Insurance
Company, Insurance Company shall not be responsible for the content of the
prospectus, SAI or annual and semi-annual reports for the Designated Portfolios.
It is also understood and agreed
-4-
<PAGE>
that, except with respect to information regarding the Fund and provided in
writing by the Fund, the Fund shall not be responsible for the content of the
prospectus or SAI for the Contracts.
3.3. The Fund or Adviser at their expense shall provide Insurance
Company with as many copies of its Fund proxy material as Insurance Company
shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law, Insurance Company shall,
at its expense:
(i) solicit voting instructions from Contract owners;
(ii) vote the Designated Portfolio shares in accordance
with instructions received from Contract owners: and
(iii) vote Designated Portfolio shares for which no
instructions have been received in the same
proportion as Designated Portfolio shares for which
instructions have been received from Contract owners
in the same Account.
So long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting privileges for variable
contract owners. Insurance Company reserves the right to vote Fund shares held
in any segregated asset account in its own right, to the extent permitted by
law.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. Insurance Company shall furnish, or shall cause to be furnished,
to the Fund, or its designee, each prospectus, Statement of Additional
Information and each piece of sales literature and other promotional material
that Insurance Company develops or uses and in which the Fund (or a Portfolio
thereof), its investment adviser or one of its sub-advisers is named in
connection with the Contracts, at least 10 (ten) Business Days prior to its use.
No such material shall be used if the Fund, or its designee, objects to such use
within 10 (ten) Business Days after receipt of such material.
4.2. Insurance Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts inconsistent with the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.
4.3. The Fund shall furnish, or shall cause to be furnished, to
Insurance Company, each piece of sales literature and other promotional material
developed by the Fund or its designee in which Insurance Company and/or the
Account is named at least 10 (ten) Business Days prior to its use. No such
material shall be used if Insurance Company objects to such use within 10 (ten)
Business Days after receipt of such material. Notwithstanding the fact that
Insurance Company or its designee may not initially object to a piece of sales
literature or other promotional material, Insurance Company reserves the right
to object at a later date to the continued use of any such sales literature or
promotional material in which Insurance Company is named, and no such material
shall be used thereafter if Insurance Company or its designee so objects.
4.4. The Fund and Adviser shall not give any information or make any
representations on behalf of Insurance Company or concerning Insurance Company,
the Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports for the Account, or in sales literature or other
promotional material approved by Insurance Company or its designee, except with
the permission of Insurance Company.
4.5. For purposes of this Article IV, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, telephone directories (other than routine
listings), electronic or other public media), sales literature (i.e., any
written or electronic communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, performance reports or summaries, form letters, telemarketing
scripts, seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published
-5-
<PAGE>
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, and registration
statements, prospectuses, Statements of Additional Information, supplements
thereto, shareholder reports, and proxy materials.
4.6. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested in connection
with compliance and regulatory requirements related to this Agreement or any
party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund shall pay no fee or other compensation to Insurance
Company under this Agreement, except that if the Fund or any Designated
Portfolio adopts and implements a plan pursuant to Rule 12b-1 of the 1940 Act to
finance distribution and shareholder servicing expenses, then the Fund's
underwriter may make payments to Insurance Company or to the distributor of the
Contracts if and in amounts agreed to by the Fund's underwriter in writing and
such payments will be made out of existing fees otherwise payable to the Fund's
underwriter, past profits of the underwriter or other resources available to the
underwriter. No such payments shall be made directly by the Fund. Nothing herein
shall prevent the parties hereto from otherwise agreeing to perform, and arrange
for appropriate compensation for, other services relating to the Fund and/or the
Account. Insurance Company shall pay no fee or other compensation to the Fund
under this Agreement, although the parties hereto will bear certain expenses.
5.2. All expenses incident to performance by the Fund or the Adviser
under this Agreement shall be paid by the Fund or Adviser. The Fund shall see to
it that all shares of the Designated Portfolios are registered and authorized
for issuance in accordance with applicable federal law and, if and to the extent
required, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and registration
statement, supplements thereto and its proxy materials and reports. The Fund or
Adviser will bear the expenses of fulfilling their obligations under ss. 3.1.
5.3. Insurance Company shall bear the expenses of routine annual
distribution of the Fund's prospectus to owners of Contracts issued by Insurance
Company and of distributing the Fund's proxy materials and reports to such
Contract owners; Insurance Company shall bear all expenses associated with the
registration, qualification, and filing of the Contracts under applicable
federal securities and state insurance laws; the cost of preparing, printing,
and distributing the Contract prospectus and SAI; and the cost of preparing,
printing and distributing annual individual account statement to Contract owners
as required by state insurance laws.
5.4. The Fund acknowledges that a principal feature of the Contracts is
the Contract owner's ability to choose from a number of unaffiliated mutual
funds (and portfolios or series thereof), including the Designated Portfolios
("Unaffiliated Funds"), and to transfer the Contract's cash value between funds
and portfolios. The Fund and Underwriter agree to cooperate with Insurance
Company in facilitating the operation of the Account and the Contracts as
intended, including but not limited to cooperation in facilitating transfers
between Unaffiliated Funds.
ARTICLE VI. Potential Conflicts and Compliance With
Shared Funding Exemptive Order
------------------------------
6.1 In the event that Fund determines that it is appropriate for the
Fund to seek an order from the SEC granting insurance companies and their
separate accounts exemptions which purchase Fund shares from the provisions of
Sections 9(a), 13(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies and
certain qualified pension and retirement plans (the "Shared Funding Exemptive"),
this article shall apply.
-6-
<PAGE>
6.2. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by a participating insurance company to disregard the voting
instructions of contract owners. The Board shall promptly inform Insurance
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
6.3. Insurance Company will report any potential or existing conflicts
of which it is aware to the Board. Insurance Company will assist the Board in
carrying out its responsibilities under the Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by Insurance Company to inform the Board whenever contract owner voting
instructions are disregarded. Such responsibilities shall be carried out by
Insurance Company with a view only to the interests of its Contract Owners.
6.4. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund, its adviser or any
sub-adviser to any of the Portfolios (the "Independent Directors"), that a
material irreconcilable conflict exists, Insurance Company and other
participating insurance companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of the Independent
Directors), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented to a vote of all
affected contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more participating insurance
companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. Insurance
Company shall not be required by this Section 6.4 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict.
6.5. If a material irreconcilable conflict arises because of a decision
by Insurance Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
Insurance Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement; provided, however
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the Independent Directors. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision is
being implemented, and until the end of that six month period the Fund shall
continue to accept and implement orders by Insurance Company for the purchase
(and redemption) of shares of the Fund.
6.6. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Insurance Company conflicts
with the majority of other state regulators, then Insurance Company will
withdraw the Account's investment in the Fund and terminate this Agreement
within six months after the Board informs Insurance Company in writing that it
has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Until the
end of the foregoing six month period, the Underwriter and the Fund shall
continue to accept and implement orders by Insurance Company for the purchase
(and redemption) of shares of the Fund.
6.7. For purposes of Sections 6.4 through 6.6 of this Agreement, a
majority of the Independent Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
-7-
<PAGE>
6.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable:
and (b) Sections 6.2, 6.3, 6.4, 6.5 and 6.6 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VII. Indemnification
---------------
7.1. Indemnification By Insurance Company
------------------------------------
8.1(a). Insurance Company agrees to indemnify and hold
harmless the Fund and the Adviser and their officers, directors, employees, and
agents and each person who controls the Fund within meaning of ss. 15 of the
1933 Act. (collectively, the "Indemnified Parties" for purposes of this Section
7.1) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of Insurance Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the registration statement or prospectus or SAI for the
Contracts or contained in the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished in writing to Insurance Company by
or on behalf of the Underwriter or Fund for use in the
registration statement or prospectus for the Contracts or
in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or
sales literature of the Fund not supplied by Insurance
Company or persons under its control) or wrongful conduct
of Insurance Company or persons under its control, with
respect to the sale or distribution of the Contracts or
Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Fund or
any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement
or omission was made in reliance upon information
furnished in writing to the Fund by or on behalf of
Insurance Company; or
-8-
<PAGE>
(iv) arise as a result of any failure by Insurance Company to
provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Insurance Company
in this Agreement or arise out of or result from any other
material breach of this Agreement by Insurance Company, as
limited by and in accordance with the provisions of
Sections 7.1(b) and 7.1(c) hereof.
7.1(b). Insurance Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject if caused by such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
7.1(c). Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified Insurance Company in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Insurance Company
of any such claim shall not relieve Insurance Company from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, Insurance Company shall be
entitled to participate, at its own expense, in the defense of such action.
Insurance Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from
Insurance Company to such party of Insurance Company's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and Insurance Company will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
7.1(d). The Indemnified Parties will promptly notify Insurance
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
7.2. Indemnification by the Adviser
------------------------------
7.2(a). The Adviser agrees to indemnify and hold harmless
Insurance Company and each of its directors, officers, employees, agents and
each person, if any, who controls Insurance Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 7.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Adviser)
or litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus or SAI or sales
literature of the Fund (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading, provided
that this Agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to
the Adviser or Fund by or on behalf of Insurance Company
for use in the registration statement or prospectus for
the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or
sales literature for the Contracts not supplied by the
Adviser or persons under its control) or wrongful conduct
of the
-9-
<PAGE>
Fund or Adviser or persons under their control, with
respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus or sales literature covering the
Contracts, or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished in writing to
Insurance Company by or on behalf of the Adviser or Fund;
or
(iv) arise as a result of any failure by the Fund or Adviser to
provide the services and furnish the materials under the
terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the diversification and other qualification
requirements specified ss. 2.9 and 2.10 in of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or Adviser
in this Agreement or arise out of or result from any other
material breach of this Agreement by the Fund or Adviser;
as limited by and in accordance with the provisions of
Sections 7.2(b) and 7.2(c) hereof.
7.2(b). The Adviser shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance or such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties under this
Agreement.
7.2(c). The Adviser shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Adviser in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.2(d). Insurance Company agrees promptly to notify the
Adviser of the commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
ARTICLE VIII. Applicable Law
--------------
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of California,
without regard to that state's principles of conflicts of law, except that any
terms shall be defined and interpreted in accordance with, and the Agreement
subject to, the federal securities laws.
8.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
-10-
<PAGE>
ARTICLE IX. Termination
-----------
9.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Portfolios, upon one (1) year advance
written notice delivered to the other parties; provided,
however, that such notice shall not be given earlier than one
year following the date of this Agreement; or (b) at the
option of Insurance Company by written notice to the other
parties with respect to any Portfolio based upon Insurance
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the
Contracts; or (c) at the option of Insurance Company by
written notice to the other parties with respect to any
Portfolio in the event any of the Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/ or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts
issued or to be issued by Insurance Company; or (d) at the
option of the Fund in the event that formal administrative
proceedings are instituted against Insurance Company by the
National Association of Securities Dealers, Inc. ("NASD"), the
Securities and Exchange Commission, the Insurance Commissioner
or like official of any state or any other regulatory body
regarding Insurance Company's duties under this Agreement or
related to the sale of the Contracts, the operation of any
Account, or the purchase of the Fund shares, provided,
however, that the Fund determines in its sole judgment
exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of Insurance Company to perform its obligations under
this Agreement; or (e) at the option of Insurance Company in
the event that formal administrative proceedings are
instituted against the Fund or Adviser by the NASD, the
Securities and Exchange Commission, or any state securities or
insurance department or any other regulatory body, provided,
however, that Insurance Company determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Fund or Adviser to perform its obligations
under this Agreement; or (f) at the option of Insurance
Company by written notice to the Fund and the Adviser with
respect to any Portfolio if Insurance Company reasonably
believes that the Portfolio may fail to meet the Section
817(h) diversification requirements or Subchapter M
qualifications specified in Section 2.9 and 2.10 of this
Agreement; or (g) at the option of either the Fund or the
Adviser, if (i) the Fund or Adviser, respectively, shall
determine, in their sole judgement reasonably exercised in
good faith, that Insurance Company has suffered a material
adverse change in its business or financial condition or is
the subject of material adverse publicity and that material
adverse change or publicity will have a material adverse
impact on Insurance Company's ability to perform its
obligations under this Agreement, (ii) the Fund or Adviser
notifies Insurance Company of that determination and its
intent to terminate this Agreement, and (iii) after
considering the actions taken by Insurance Company and any
other changes in circumstances since the giving of such a
notice, the determination of the Fund or Adviser shall
continue on the sixtieth (60th) day following the giving of
that notice, which sixtieth day shall be the effective date of
termination; or (h) at the option of Insurance Company, if (i)
Insurance Company shall determine, in its sole judgement
reasonably exercised in good faith, that either the Fund or
the Adviser have suffered a material adverse change in their
business or financial condition or is the subject of material
adverse publicity and that material adverse change or
publicity will have a material adverse impact on the Fund's or
Adviser's ability to perform its obligations under this
Agreement, (ii) Insurance Company notifies the Fund or
Adviser, as appropriate, of that determination and its intent
to terminate this Agreement, and (iii) after considering the
actions taken by the Fund or Adviser and any other changes in
circumstances since the giving of such a notice, the
determina-
-11-
<PAGE>
tion of Insurance Company shall continue on the sixtieth
(60th) day following the giving of that notice, which sixtieth
day shall be the effective date of termination; or (i) at the
option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or (j)
upon assignment of this Agreement, unless made with the
written consent of the parties hereto, except that the Adviser
may assign this Agreement, or any of its rights or obligations
hereunder, to any affiliate of, or company under common
control with, the Adviser (but in such event the Adviser shall
continue to be liable for any indemnification due to Insurance
Company and the assignee shall also be liable), if such
assignee is duly licensed and registered to perform the
obligations of the Adviser under this Agreement; or (k) at the
option of Insurance Company or the Fund by written notice to
the other party upon a determination by the Fund's Board that
a material irreconcilable conflict exists among the interests
of (i) all contract owners of all separate accounts investing
in the Fund or (ii) the interests of the Participating
Insurance Companies; or (l) at the option of Insurance Company
by written notice to the Fund or the Adviser upon the sale,
acquisition or change of control of the Adviser.
9.2. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to terminate, which notice
shall set forth the basis for the termination.
9.3. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Adviser shall, at the option of Insurance Company,
continue to make available additional shares of the Fund for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts") pursuant to the terms and conditions of
this Agreement. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 9.3 shall not apply to any terminations under Article VI and the effect
of such Article VI terminations shall be governed by Article VI of this
Agreement.
9.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
ARTICLE X. Notices
--------
Any notice shall be sufficiently given when sent by registered or
certified mail or by overnight mail sent through a nationally-recognized
delivery service to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to Insurance Company:
Transamerica Occidental Life Insurance Company
570 Carillon Parkway
St. Petersburg, Florida 33716-1202
Attention: General Counsel, AEGON Equity Group Division
If to the Fund:
Transamerica Variable Insurance Fund, Inc.
1150 South Olive Street
Los Angeles, CA 90015
Attention: Secretary
-12-
<PAGE>
If to the Adviser:
Transamerica Investment Management, LLC
1150 South Olive Street
Los Angeles, CA 90015
Attention: General Counsel
ARTICLE XI. Miscellaneous
-------------
10.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party reasonably considers to be proprietary.
10.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
10.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
10.6. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
10.7. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
10.8. The Schedules attached hereto, as modified from time to time, are
incorporated herein by reference and are part of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY:
By its authorized officer
By: ____________________
Title: ____________________
-13-
<PAGE>
TRANSAMERICA VARIABLE INSURANCE FUND, INC.:
By its authorized officer,
By: ______________________
Title: ______________________
TRANSAMERICA INVESTMENT MANAGEMENT, LLC:
By its authorized officer,
By: ______________________
Title: ______________________
-14-
<PAGE>
Effective May 1, 2000
SCHEDULE A
----------
Elite Variable Universal Life Insurance
-15-
<PAGE>
SCHEDULE B
----------
Designated Portfolios
- ---------------------
Growth Portfolio of Transamerica Variable Insurance Fund, Inc.
Exhibit 1.A.(10)
Application for Flexible Premium Variable Life Insurance Policy
<PAGE>
PRIORITY:
P.O. Box 3183
Cedar Rapids, Iowa 52406-3183
STREET ADDRESS-USE FOR CARRIER
OTHER THAN POST OFFICE:
4333 EDGEWOOD RD., N.E.
CEDAR RAPIDS, IA 52499
1-800-553-5957
[GRAPHIC] TRANSAMERICA
OCCIDENTAL LIFE
INSURANCE COMPANY
APPLICATION FOR LIFE INSURANCE
CONTACT INFORMATION
Proposed Primary Insured's Home Telephone Number:________________________
Business Telephone Number:_______________________________________________
Preferred Place to Call: [ ] Home [ ] Business
Best time to Call: [ ]a.m. [ ] p.m.
Special Comments:________________________________________________________
BROKER DEALER INFORMATION
Broker Dealer Name:______________________________________________________
Agent Name:______________________________ Agent Number:_________________
<TABLE>
<CAPTION>
DO: DON'T:
--- ------
<S> <C> <C> <C>
[ ] Complete the entire application (front and back). [ ] Do not use pencil or whiteout.
[ ] Print application in black ink. [ ] Do not accept or send money on applications that total
[ ] Have applicant initial all changes. more than $1,000,000.00
[ ] Obtain all required signatures. [ ] Do not submit an agent check as the initial premium.
[ ] Complete and sign the Agents Report. [ ] Do not accept or send money on applications on
[ ] Include certification if a trust is owner of the policy. proposed insureds under 15 days of age or over 80
[ ] Section 7, Page 2: Enter the proposed plan of years of age.
insurance in #1. [ ] Do not accept money on proposed insureds with a
history of heart disease, cancer or stroke.
</TABLE>
U000288
<PAGE>
CMC____________ AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS
- --------------------------------------------------------------------------------
ATTACH VOIDED SAMPLE
OF YOUR PERSONAL
CHECK HERE
- --------------------------------------------------------------------------------
So that you may comply with your depositor's authorization and direction as set
forth on the reverse side hereof, this Company agrees:
1. To indemnify you and hold you harmless from any loss you may suffer as a
consequence of your actions resulting from or in connection with the
execution and issuance of any check or draft, whether or not genuine, or
payment of any preauthorized ACH electronic fund transfer debit received
by you in the regular course of business for the purpose of payment to
this Company, including any cost or expenses reasonably incurred in
connection therewith.
2. In the event that any such check, draft or debit shall be dishonored
whether with or without cause, and whether intentionally or
inadvertently, to indemnify you for any loss even though dishonor
results in a forfeiture of the insurance.
3. To defend at our own cost and expense any action which might be brought
by any depositor or any other persons because of your actions taken
pursuant to the foregoing request, or in any manner arising by reason of
your participation in the foregoing plan of premium collections.
TO: TRANSAMERICAL OCCIDENTAL LIFE INSURANCE COMPANY
As a convenience to me, I hereby request and authorize you to obtain payment of
amounts becoming due you by initiating charges in the form of check, drafts or
debits via ACH electronic fund transfers on my account maintained at the
<TABLE>
<CAPTION>
______________________________________ __________________________________
(Name of Bank) (Address of Bank)
<S> <C> <C>
for the payment of each monthly premium under Policy No.____________________ LIST ANY OTHER POLICIES TO BE PAID
on the life of ___________________________ BY SAME CHECK, DRAFT OR DEBIT
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 _________________________________
drawing any such check or draft or initiating such debit. I understand that if _________________________________
any such check, draft or debit be dishonored by my Bank and any monthly amount _________________________________
due the TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY is not paid within the
time stipulated in the policy, said policy shall become null and void except as
otherwise provided therein.
AUTHORIZATION FOR PREAUTHORIZED
PAYMENTS TO:
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
"I elect _______ day (select 1 to 27) of P.O.BOX 3183, CEDAR RAPIDS, IOWA 52406-3183
each month to have the payment of
$ ________ taken from my account. If no As a convenience to me, I hereby request and authorize you to pay and charge to
date is indicated the draft date will be the my bank checking account checks or drafts drawn by and payable to the order of
policy issue date." TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY or to debit my account identified
below via ACH electronic fund transfers provided there are sufficient collected
funds in said account to pay the same upon presentation. 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
check, draft or debit. I further agree that if any such check, draft or debit be
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.
_______________ 1 (X)______________________________________
_______________ 2 (X)______________________________________
Both Authorized Signatures Required on Joint Accts.
PLEASE NOTE: There is an Indemnification
Agreement stated above.
</TABLE>
U000288
<PAGE>
<TABLE>
<CAPTION>
LIFE APPLICATION-PART 1 Transamerica Occidental Life Insurance Company APPLICATION # -----------
=========================================================================================================================
SECTION 1. PROPOSED PRIMARY INSURED -----------
<S> <C> <C>
1. Last Name First Name M.I.
- ------------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
( ) -
- ------------------------------------------------------------------------------------------------------------------------------------
6. Sex 7.Date of Birth 8. Insurable Age 9. Place of Birth - State/Country 10. Social Security Number
[ ] Male
[ ] Female
- ------------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Employer Years
- ------------------------------------------------------------------------------------------------------------------------------------
15. Employer's Address 16. Business Phone Number
- ------------------------------------------------------------------------------------------------------------------------------------
17. Occupation & Duties
- ------------------------------------------------------------------------------------------------------------------------------------
18. HAVE YOU USED TOBACCO OR ANY OTHER PRODUCT CONTAINING NICOTINE IN THE LAST 12 MONTHS? [ ] YES [ ] NO
19. RATE CLASS QUOTED: [ ] ULT SELECT [ ] SELECT [ ] ULT STANDARD [ ] STANDARD [ ] JUVENILE
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 2. PROPOSED OTHER/JOINT INSURED RIDER - IF MORE THAN ONE PLEASE USE A SUPPLEMENTAL APPLICATION
1. Last Name First Name M.I.
- ------------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
- ------------------------------------------------------------------------------------------------------------------------------------
6. Sex 7. Date of Birth 8. Insurable Age 9. Place of Birth - State/Country 10. Social Security Number
[ ] Male
[ ] Female
- ------------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
- ------------------------------------------------------------------------------------------------------------------------------------
16. Employer's Address
- ------------------------------------------------------------------------------------------------------------------------------------
17. Business Phone Number 18. Occupation & Duties
( ) -
- ------------------------------------------------------------------------------------------------------------------------------------
19. HAVE YOU USED TOBACCO OR ANY OTHER PRODUCT CONTAINING NICOTINE IN THE LAST 12 MONTHS? [ ] YES [ ] NO
20. RATE CLASS QUOTED: [ ] ULT SELECT [ ] SELECT [ ] ULT STANDARD [ ] STANDARD [ ] JUVENILE
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 3. APPLICANT/OWNER IF OTHER THAN THE PROPOSED PRIMARY INSURED
1. Last Name First Name M.I.
- ------------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Home Phone 4. Social Security Number / Tax ID #
- ------------------------------------------------------------------------------------------------------------------------------------
5. Date of Birth/Trust Date 6. Relationship to the Proposed Primary Insured:
(if employer, please complete Section 11 of Agent's Report)
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION 4. CHILDREN'S INSURANCE RIDER
COVERAGE AMOUNT ($5,000 MINIMUM TO $25,000 MAXIMUM COVERAGE FOR CHILDREN 18 AND UNDER)
- ------------------------------------------------------------------------------------------------------------------------------------
Name Relationship Date of Birth Height Weight
- ------------------------------------------------------------------------------------------------------------------------------------
- - ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
- - ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
- - ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
Are all children listed? [ ] Yes [ ] No If not, explain why:_____________________________________________________________
Are children living with Proposed Primary Insured? [ ] Yes [ ] No If not, explain why:__________________________________
====================================================================================================================================
</TABLE>
U000288
1
<PAGE>
LIFE APPLICATION
<TABLE>
<CAPTION>
====================================================================================================================================
SECTION 5. PRIMARY BENEFICIARY - IF PERCENTAGE SHARES ARE NOT GIVEN THEY WILL BE EQUAL, OR TO THE SURVIVOR
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name Percent Relationship Social Security Number/Tax ID#
- ------------------------------------------------------------------------------------------------------------------------------------
- -
- ------------------------------------------------------------------------------------------------------------------------------------
- -
- ------------------------------------------------------------------------------------------------------------------------------------
- -
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION 6. CONTINGENT BENEFICIARY - IF PERCENTAGE SHARES ARE NOT GIVEN THEY WILL BE EQUAL, OR TO THE SURVIVOR
- ------------------------------------------------------------------------------------------------------------------------------------
Name Percent Relationship Social Security Number/Tax ID#
- ------------------------------------------------------------------------------------------------------------------------------------
- -
- ------------------------------------------------------------------------------------------------------------------------------------
- -
- ------------------------------------------------------------------------------------------------------------------------------------
- -
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 7. PROPOSED PLAN OF INSURANCE: SECTION 9. ADDITIONAL BENEFITS-
PROPOSED PRIMARY INSURED ONLY
1. Plan of Insurance: _____________________________________
2. Specified Amount: $_____________________ [ ] Disability Waiver Rider
3. Primary Insured Rider $_____________________ [ ] Disability Waiver And Income Rider $_________
4. Primary Insured Rider Plus $_____________________ ($300 per month maximum)
5. Other Insured Rider $_____________________ [ ] Accidental Death Benefit $_________
($150,000 maximum)
_____________________________________ $_____________________ ============================================================
_____________________________________ $_____________________ SECTION 10. PREMIUMS PAYABLE
_____________________________________ $_____________________
_____________________________________ $_____________________ Planned Premium $________ _________ ____________
[ ] Bank Draft ______ Draft Date (1ST thru 27TH)
- --------------------------------------------------------------- [ ] Direct Bill
SECTION 8. DEATH BENEFIT OPTION [ ] Single Premium [ ] Quarterly
[ ] Annual [ ] Monthly
[ ] a) Level benefit [ ] Semi-annual [ ] Other _____________
[ ] b) Increasing benefit
====================================================================================================================================
SECTION 11. SUB-ACCOUNT ALLOCATIONS - MUST EQUAL 100% AND A WHOLE NUMBER. 12. INVESTMENT OBJECTIVE
WRL JANUS GROWTH _____ % WRL C.A.S.E. GROWTH _____ % [ ] Safety of Principal
WRL JANUS GLOBAL _____ % WRL GE U.S. EQUITY _____ %
WRL ALGER AGG GROWTH _____ % WRL DREYFUS MID CAP _____ % [ ] Income
WRL VKAM EMER GROWTH _____ % WRL NWQ VALUE EQUITY _____ %
WRL AEGON BOND _____ % WRL TRP DIVIDEND GRO _____ % [ ] Long-Term Growth
WRL AEGON BALANCED _____ % WRL DEAN ASSET ALL _____ %
WRL LKCM STRA TOT RET _____ % WRL JPM REAL EST. SEC. _____ % [ ] Trading Profits
WRL TRP SMALL CAP _____ % WRL FEDERATED GRO INC _____ %
WRL GS SMALL CAP _____ % WRL JPM MONEY MARKET _____ % [ ] Other ________________
WRL PB MID CAP GROWTH _____ % TRANSAMERICA VIF GROWTH _____ %
WRL THIRD AVE. VALUE _____ % FIXED ACCOUNT _____ %
WRL GE SE INTL EQUITY _____ % OTHER _____ %
WRL SALOMON ALL CAP _____ % OTHER _____ %
WRL GS GROWTH _____ % OTHER _____ %
====================================================================================================================================
SECTION 13. OTHER INSURANCE IN FORCE FOR ALL PROPOSED INSUREDS L NONE
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Name Company Amount of Insurance Year Issued Replacement?
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
IS THIS INTENDED TO BE A 1035 EXCHANGE? [ ]Yes [ ]No Anticipated Cash Value Transfer $_______ _______ _______
1) Has any Proposed Insured ever had life, disability or health insurance
declined, rated, modified, issued with an exclusion rider, canceled, or not
renewed? If yes please explain in REMARKS. [ ] Yes [ ] No
2) Will the insurance applied for on any Proposed Insured replace or change any
existing life or annuity policy? [ ] Yes [ ] No
If yes, complete replacement forms, if appropriate.
3) Is there an application for life, accident or sickness insurance now pending
or contemplated on any Proposed Insured in this or any other company? If yes,
give details in Agent's Report, Question 3. [ ] Yes [ ] No
====================================================================================================================================
</TABLE>
U000288
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LIFE APPLICATION-PART 2
<TABLE>
<CAPTION>
====================================================================================================================================
SECTION 14. PERSONAL FINANCIAL STATEMENT 15. COMPLETE FOR CORPORATION, PARTNERSHIP, PENSION OR TRUST
<S> <C> <C> <C> <C> <C> <C>
A) Gross Income Current Yr $_______________
B) Gross Income Previous Yr $_______________ A) Current Estimated Market Value $_______________
C) Additional Income $_______________ B) Assets Liquid $_______________
D) Net Worth $_______________ Nonliquid $_______________
C) Liabilities $_______________
For over $1 million applied coverage complete D) Net Worth $_______________
a separate financial questionnaire
====================================================================================================================================
SECTION 16. MEDICAL QUESTIONS - EACH QUESTION MUST BE INDIVIDUALLY ASKED AND ANSWERED.
Give the details of "Yes" answers below. Identify question number; state signs,
symptoms and diagnosis of each illness or injury. List the details and results
of any treatment; List the name, full address and dates of each health care
provider consulted. To the best of your knowledge, has any Proposed Insured
within the last 10 yrs had or been told by a member of the medical profession
that he or she had, or has been treated for:
1) Heart murmur, high blood pressure, chest pain, heart attack, stroke, or
other disorder of the heart or circulatory system? [ ] Yes [ ] No
2) Asthma, Emphysema, Chronic Bronchitis, Tuberculosis, or any other
Respiratory disorder; colitis, ulcer or any other gastrointestinal
disorder; jaundice, hepatitis, liver or kidney disorder? [ ] Yes [ ] No
3) Cancer, tumor, polyp, breast, prostate or any other reproductive disorder;
or any thyroid or endocrine disorder? [ ] Yes [ ] No
4) Brain, mental, anxiety, depression, suicide attempt, or seizure disorder;
or any paralysis? [ ] Yes [ ] No
5) Diabetes, anemia, or any disorder of the blood; sugar, protein, or blood in
the urine? [ ] Yes [ ] No
6) Used amphetamines, heroin, cocaine, marijuana, or any other illegal or
controlled substance except as prescribed by a physician? [ ] Yes [ ] No
7) Sought or been advised to seek treatment, limit or discontinue use of
alcohol? [ ] Yes [ ] No
8) Been on or are now on prescribed medication or diet? [ ] Yes [ ] No
9) Has any Proposed Insured been told by a member of the medical profession
that he or she had a diagnosis of AIDS, ARC or the HIV infection? [ ] Yes [ ] No
10) Had or been advised to have any hospitalization, surgery, or any diagnostic
test including, but not limited to, electrocardiograms, blood studies,
scans, MRI's or other test? [ ] Yes [ ] No
11) An examination, treatment or consultation with a doctor or health care
provider other than above? [ ] Yes [ ] No
12) Have or have had a parent, brother or sister who has/had coronary artery
death or disease prior to age 60? [ ] Yes [ ] No
====================================================================================================================================
SECTION 17. DETAILS TO "YES" ANSWERS FOR MEDICAL QUESTIONS SECTION
- ------------------------------------------------------------------------------------------------------------------------------------
Name, Address and Phone # of
Question # Proposed Insured's Name Date, Diagnosis, Treatment, Results, and Duration Attending Doctor and Hospital
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION 18. NAME AND ADDRESS OF PERSONAL PHYSICIAN (IF NONE, SO STATE)
Proposed Primary Insured Joint or Other Insured Children
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Date and reason last consulted a physician Date and reason last consulted a physician Date and reason last consulted a physician
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
U000288
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<PAGE>
LIFE APPLICATION
================================================================================
SECTION 19. RESIDENCY
Proposed Primary Insured
- ------------------------
A) Proposed Primary Insured is a citizen of [ ] USA [ ] Other Country
____________________ Type of VISA (Ex. Category 2A) _________
B) How many years has the Proposed Primary Insured resided in the
USA?______________
C) Does any Proposed Primary Insured travel outside the USA? [ ] Yes [ ] No
If yes, provide details: include destination, number of trips, duration of each
trip, purpose of trip, plans for the next year.
________________________________________________________________________________
Other Insured
- -------------
A) Proposed Insured is a citizen of [ ] USA [ ] Other Country
____________________ Type of VISA (Ex. Category 2A) _________
B) How many years has the Proposed Insured resided in the USA?______________
C) Does any Proposed Insured travel outside the USA? [ ] Yes [ ] No
If yes, provide details: include destination, number of trips, duration of each
trip, purpose of trip, plans for the next year.
________________________________________________________________________________
================================================================================
SECTION 20. DRIVING RECORD/BACKGROUND INFORMATION
A) Has any Proposed Insured had their driver's license suspended, restricted,
revoked, or been cited for a moving violation in the last 5 years?
[ ] Yes [ ] No If yes, give reason & identify Proposed Insured's name:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
B) Has any Proposed Insured in the last ten years been convicted of a
misdemeanor (other than a minor traffic violation) or felony?
[ ] Yes [ ] No If yes, give reason & identify Proposed Insured's name:
________________________________________________________________________________
________________________________________________________________________________
================================================================================
SECTION 21. SPECIAL ACTIVITIES
A) Except as a passenger on a regularly scheduled flight, has any Proposed
Insured flown within the past 3 years, or does any Proposed Insured have
plans to fly in the future?
IF YES, COMPLETE AVIATION QUESTIONNAIRE.
[ ]Yes [ ] No _____________________
Name of Proposed Insured
B) In the past 3 years has any Proposed Insured participated in racing
(automobile, motorcycle, or boat), underwater or sky diving, hang gliding,
mountain or rock climbing?
IF YES, COMPLETE AN AVOCATION QUESTIONNAIRE.
[ ]Yes [ ] No _____________________
Name of Proposed Insured
================================================================================
SECTION 22. SUITABILITY FOR VARIABLE LIFE INSURANCE POLICY--COMPLETE FOR ALL
VARIABLE PLANS
A) Have you, the Proposed Primary Insured, and Purchaser, if other than the
Proposed Primary Insured, received the current Prospectus for the policy?
[ ]Yes [ ] No
B) Do you understand that under the policy applied for (exclusive of any
optional benefits),the amount of death benefit and the entire amount of the
policy cash value may increase or decrease depending upon the investment
experience?
[ ]Yes [ ] No
C) With this in mind, is the policy in accord with your insurance objectives
and your anticipated financial needs?
[ ]Yes [ ] No
================================================================================
SECTION 23. TO BE COMPLETED BY APPLICANT/OWNER
Telephone Transfer Authorization: (See Prospectus for telephone transfer
procedures.) Your policy applied for, if issued, will automatically receive
telephone transfer privileges described in the applicable prospectus unless
instructions to the contrary are indicated below. These privileges allow you to
give the registered representative/agent of record for this policy authority to
make telephone transfers and to change the allocation of future payments among
the Sub-Accounts and the Fixed Account on your behalf according to your
instructions.
[ ] I do not want telephone transfer privileges.
Transamerica Occidental Life Insurance Company will not be liable for complying
with telephone instructions it reasonably believes to be authentic, nor for any
loss, damage, costs or expense in acting on such telephone instructions, and
Policyowners will bear the risk of any such loss. Transamerica Occidental Life
Insurance Company will employ reasonable procedures to confirm that telephone
instructions are genuine. If Transamerica Occidental Life Insurance Company does
not employ such procedures, it may be liable for losses due to unauthorized or
fraudulent instructions. Such requiring forms of personal identification prior
to acting upon such telephone instruction, providing written confirmation of
such transactions to Policyowners and/or tape recording of telephone transfer
request instructions received.
================================================================================
SECTION 24. CERTIFICATION
Under penalty of perjury, I (the owner) certify (1) that the number shown in
Section 1of page 1or the number shown in Section 3 on page 1 (if the owner is
other than the primary insured) is my correct Taxpayer Identification Number,
and (2) that I am not subject to backup withholding because (a) I have not been
notified by the IRS that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (b) if I ever was so notified,
the IRS has notified me that I am no longer subject to backup withholding. (If
the Internal Revenue Service has notified you that you are subject to backup
withholding and you have not received notice from the Service that backup
withholding has terminated, you should strike out the language in (2) above that
you are not subject to backup withholding due to notified payee underreporting.)
================================================================================
U000288
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LIFE APPLICATION
================================================================================
SECTION 25. AUTHORIZATION TO OBTAIN INFORMATION
I authorize any physician, medical professional, hospital, clinic, other medical
care institution, the Medical Information Bureau, Inc., insurance company,
consumer reporting agency, or employer having information available as to
employment, other insurance coverage, medical care, advice or treatment with
respect to any physical or mental condition regarding me or my children who are
to be insured, to give such information to Transamerica Occidental Life
Insurance Company, its reinsurers, or any consumer reporting agency except the
Medical Information Bureau acting on Transamerica Occidental Life Insurance
Company's behalf.
I authorize Transamerica Occidental Life Insurance Company to obtain an
investigative consumer report on me.
I understand that this information will be used by Transamerica Occidental Life
Insurance Company or its reinsurers, to determine eligibility for life
insurance.
I agree that this authorization is valid for two and one-half years from the
date signed. I know that I have the right to receive a copy of this
authorization upon request. I agree that a photographic copy of this
authorization is as valid as the original.
I have received a copy of this "Notice of Information Practices" attached to
this application.
I also hereby authorize Transamerica Occidental Life Insurance Company to
provide its affiliated companies any and all information provided herein and
obtained hereafter on me. This authorization shall be valid from the date signed
below until affirmatively withdrawn in writing by myself.
[ ] I elect not to have personal information disclosed to non-affiliates of
Transamerica Occidental Life Insurance Company for marketing purposes.
[ ] I elect to be interviewed if an investigative consumer report is prepared
in connection with this application.
================================================================================
SECTION 26. OTHER INSURANCE-TO BE COMPLETED BY THE REGISTERED REPRESENTATIVE
1. Will the policy applied for replace or change any existing life insurance
policy or annuity? [ ] Yes [ ] No
2. If replacement of existing insurance is involved, have you complied with all
state requirements, including any Disclosure and Comparison Statements?
[ ] Yes [ ] No [ ] N/A
If "No," explain _________________________________________________________
================================================================================
SECTION 27. REPRESENTATIONS
I represent that the statements and answers in this application are true and
complete to the best of my knowledge. I understand that I should consult my own
tax and/or legal counsel as to the consequences of using this product in
conjunction with my own particular tax or financial plan. It is agreed that:
(a) the statements and answers given in this application, and any
amendments or application supplements to it or statements made to the
medical examiner, will be the basis of any insurance issued;
(b) no agent or medical examiner has the authority to make or alter any
contract for the Company;
(c) if a premium deposit is given in exchange for the Conditional Receipt,
no insurance shall take effect unless all of the conditions set out in
that receipt are satisfied;
(d) if a premium deposit is not given, no insurance shall take effect
unless all of the following conditions are satisfied;
(1) a policy issued by the Company is delivered to and accepted
by the owner during the lifetime of each person to be covered by
such policy, (2) the full first premium is paid, and (3) the
health and insurability of each person proposed for insurance has
not changed since the date of this application
<TABLE>
<CAPTION>
<S> <C> <C>
Signed at _____________________________________ ____________ on _______ - _______ -_______
(city) (state) (date)
____________________________________________________________________ ___________________________________________________
Signature of Proposed Primary Insured (Child over age 15 must sign) Print Agent Name Agent #
____________________________________________________________________ ___________________________________________________
Signature of Applicant (owner) other than the Signature of Agent State License #
Proposed Primary Insured (If business insurance, show
title of officer and name of firm)
____________________________________________________________________ ___________________________________________________
Signature of Parent or Legal Guardian for Insured(s) 15 and under Split Agent Name Agent #
____________________________________________________________________ ___________________________________________________
Signature of Joint Insured or OIR Signature of Split Agent State License #
</TABLE>
U000288
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<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
P.O. BOX 3183
CEDAR RAPIDS, IOWA 52406-3183
FRAUD WARNING
The following states require that contract owners acknowledge a fraud warning
statement. Please refer to the fraud warning statement for your state as
indicated below.
For contract owners in ARKANSAS/LOUISIANA
Any person who knowingly presents a false or fraudulent claim for
payment of a loss or benefit or knowingly presents false information in
an application for insurance is guilty of a crime and may be subject to
fines and confinement in prison.
________________________________ ________________
Signature of Contract Owner Date
For contract owners in COLORADO
It is unlawful to knowingly provide false, incomplete, or misleading
facts or information to an insurance company for the purpose of
defrauding or attempting to defraud the company. Penalties may include
imprisonment, fines, denial of insurance, and civil damages. Any
insurance company or agent of an insurance company who knowingly
provides false, incomplete, or misleading facts or information to a
policyholder or claimant for the purpose of defrauding or attempting to
defraud the policyholder or claimant with regard to a settlement or
award payable from insurance proceeds shall be reported to the Colorado
Division of Insurance within the Department of Regulatory Agencies.
________________________________ ________________
Signature of Contract Owner Date
For contract owners in DISTRICT OF COLUMBIA
It is a crime to knowingly provide false, incomplete or misleading
information to an insurance company for the purpose of defrauding the
company. Penalties include imprisonment, fines and denial of insurance
benefits.
________________________________ ________________
Signature of Contract Owner Date
For contract owners in FLORIDA
Any person who knowingly and with intent to injure, defraud, or deceive
any insurer files a statement of claim or an application containing any
false, incomplete, or misleading information is guilty of a felony in
the third degree.
________________________________ ________________
Signature of Contract Owner Date
For contract owners in KENTUCKY, OHIO and pennsylvania
Any person who knowingly and with intent to defraud any insurance
company or other person files an application for insurance or a
statement of claim containing any materially false information or
conceals for the purpose of misleading, information concerning any fact
material thereto commits a fraudulent insurance act, which is a crime
and subjects such person to criminal and civil penalties.
________________________________ ________________
Signature of Contract Owner Date
For contract owners in NEW JERSEY
Any person who includes any false or misleading information on an
application for an insurance policy is subject to criminal and civil
penalties.
________________________________ ________________
Signature of Contract Owner Date
For contract owners in NEW MEXICO
Any person who knowingly presents a false or fraudulent claim for
payment of a loss or benefit or knowingly presents false information in
an application for insurance is guilty of a crime and may be subject to
fines and criminal penalties.
________________________________ ________________
Signature of Contract Owner Date
For contract owners in virginia/MAINE
It is a crime to knowingly provide false, incomplete or misleading
information to an insurance company for the purpose of defrauding the
company. Penalties include imprisonment, fines and denial of insurance
benefits.
________________________________ ________________
Signature of Contract Owner Date
U000288
7
<PAGE>
AGENT'S REPORT
1. a) How long have you known the Proposed Primary Insured?
b) Relationship to Proposed Primary Insured:
c) Are you financially responsible for the Proposed Primary Insured:
[ ] Yes [ ] No
2. Did you give the "Notice of Information Practices" to the Proposed
Insured(s)?
[ ] Yes [ ] No
3. Are you submitting or do you plan to submit an application on any Proposed
Insured on this application to any other company?
[ ] Yes [ ] No
Company Name________________________________________________
Face amount $_______________________________________________
Total face amount to be placed with all companies
$___________________________________________________________
4. Medical Examination Will you be arranging for the Medical Requirements?
[ ] Yes Paramedical Service used:_____________________________
[ ] No Request Transamerica Occidental Life Insurance Company order
medical reqs.
5. Was money taken with the application?
[ ] Yes [ ] No
If "yes" was the Conditional Receipt completed and given to the
applicant?
[ ] Yes [ ] No
6. Did you ask all questions in the presence of the Proposed Insured(s)?
[ ] Yes [ ] No
7. Are you aware of anything about the health, habits, avocation, environment
or mode of living, except as may be related directly or indirectly to sexual
orientation, which may affect the insurability of any person proposed for
insurance? [ ] Yes [ ] No
8. If Proposed Primary Insured is a juvenile (ages 0 through 15):
(a) Did you personally see child? [ ] Yes [ ] No
(b) Does child live with parents? [ ] Yes [ ] No
(If "No," explain)__________________________________________
__________________________________________
(c) Life insurance in force on parent's life?
__________________________________________
(d) Life insurance applied for or in force on brothers and sisters?
__________________________________________
Remarks:________________________________________
__________________________________________
__________________________________________
__________________________________________
9. Is Proposed Primary Insured or Owner related to any InterSecurities, Inc.
officer or employee? [ ] Yes [ ] No
10. Is Proposed Primary Insured or Owner a licensed Representative of any
Broker/Dealer?
[ ] Yes [ ] No
If "Yes" Name and Address of Broker/Dealer
____________________________________________
11. Type of Sale (check two)
[ ] Direct [ ] Pension or Profit Sharing
[ ] Personal Needs Analysis [ ] Salary Savings (EICS)
[ ] Estate Planning [ ] Gift
[ ] Business Insurance [ ] Salary Allotment
Purpose of Policy
[ ] Personal Insurance [ ] Business Insurance
[ ] Mortgage [ ] Retirement
[ ] Key Employee [ ] Education
[ ] Executive Bonus [ ] Estate Liquidity
[ ] Deferred Compensation [ ] Income to Family
[ ] Split Dollar [ ] Cash Accumulation
[ ] Reverse Split Dollar [ ] Wealth Replacement
[ ] Other Circle One
[ ] Buy/Sell - Is partner applying for similar amount? Yes No
Name of partner ________________________________________________________
12. Was this plan sold, presented or illustrated as a VEBA, welfare benefit
concept as defined under IRC Section 419, Charitable Legacy Plan, Charitable
Retirement Plan, Charitable Remainder Life Program, or other similar
arrangement?
[ ] Yes [ ] No
If "Yes", have you completed and attached the required Disclosure,
Acknowledgement and Release Form and the accompanying Attorney's Statement?
[ ] Yes [ ] No
13. Did you comply with all requirements relative to obtaining Informed Consent
for HIV and AIDS testing? [ ] Yes [ ] No
Writing Agent Name_________________________________________________
Agent No.__________________________________________________________
Agent's Telephone Number___________________________________________
Agent's Social Security Number_____________________________________
Agent's Fax Number_________________________________________________
Percent of Agent's Split___________________________________________
Split Agent Name___________________________________________________
Agent No.__________________Percent of Agent's Split_____________
Split Agent Name___________________________________________________
Agent No.__________________Percent of Agent's Split_____________
I submit this application assuming full responsibility for delivery of any
coverage issued and for immediate transmittal to the Company of the first
premium when collected. I know of no condition affecting the insurability of any
person proposed for insurance not fully set forth herein. I certify that a
Notice of Information Practices statement was given to the Applicant when this
application was taken. (If applicable)
$_______has been paid by the Applicant with this application
__________________________________
Signature of Writing Agent
U000288
8
<PAGE>
Transamerica Occidental Life Insurance Company APPLICATION #[ ]
CONDITIONAL RECEIPT
If, within the last 12 months, any person proposed for coverage has been treated
for or had heart trouble, stroke or cancer no payment may be accepted with the
application.
Received from____________________________ Totaling $__________________________
NO COVERAGE WILL BECOME EFFECTIVE PRIOR TO DELIVERY OF THE POLICY APPLIED FOR
UNLESS AND UNTIL ALL THE CONDITIONS OF THIS RECEIPT HAVE BEEN FULFILLED EXACTLY.
CONDITIONS:
(1) The amount of payment taken with the application must be at least the first
full premium for the mode of payment selected for the amount of insurance
stated on page 2 in the application. If the check or draft submitted as the
first mode premium is not honored by the bank, upon first presentation, this
Conditional receipt will be VOID.
(2) All medical examinations, tests, x-rays, electrocardiograms and reports
required by the company must be completed and received at its home office.
If the above requirements are not received within 60 days, from the date
this application was completed, this Conditional Receipt will be VOID.
(3) As of the effective date, as defined below, each person proposed for
insurance in this application must be a risk insurable in accordance with
the company's rules, limits and standards for the plan, amount and rate
class shown. If any modification is made by the Company to the plan, amount,
riders, and/or the premium rate class or supplemental agreements this
conditional receipt will be VOID.
(4) As of the effective date, the state of health and all factors affecting the
insurability of each person proposed for insurance must be as stated in the
application.
"EFFECTIVE DATE," AS USED IN THIS CONDITIONAL RECEIPT IS THE LATER OF:
A. the date of completion of the Part I of the application having the same
number and date as this Receipt, or;
B. the date of completion of all medical examinations, tests, x-rays,
electrocardiograms and reports required by the Company, or;
C. the date of issue if any, requested in the application.
COVERAGE--NOT TO EXCEED $300,000. MAXIMUM ALL APPLICATIONS OR RECEIPTS.
If the Company or its Authorized Agent accepts the first mode premium for this
application of life insurance and any person Proposed for insurance dies while
this Conditional Receipt is in effect, the Company will pay to the beneficiary
or the Applicant the LESSER of:
(a) the death benefit applied for on that Proposed Insured, as shown on page 2
of the Application, or:
(b) $300,000.
This total benefit limit is applicable to all insurance applied for under this
Application and any other application now pending with the Company, including
any other Conditional Receipts, for each person proposed for insurance.
DATE COVERAGE ENDS - 60 DAY MAXIMUM
Coverage under the Conditional Receipt ends automatically on the earliest of:
(a) the date the insurance applied for under this application takes effect, or
(b) the date the company mails notice of the ending of coverage and refunds the
first mode premium to the date the applicant at the address shown on Part 1
of the Application.
(c) 60 days from the date of this conditional receipt
(d) the date we determine any Proposed Insured is not insurable according to our
rules, limits and standards.
SPECIAL LIMITATIONS
This Conditional Receipt will be void if not signed by an authorized agent of
the company.
This Conditional Receipt will be VOID in the event of fraud or material
misrepresentation in the Application
This Conditional Receipt will be VOID if, on the date of this receipt, any
person proposed for insurance is under 15 days of age or over 80 years of age.
This Conditional Receipt does not provide benefits for Disability or Accidental
Death Benefits.
This Conditional Receipt does not provide benefits if any person proposed for
insurance dies by suicide. The liability of the Company will be limited to
return of the first mode premium paid with the application.
NO AGENT IS AUTHORIZED TO WAIVE OR MODIFY ANY OF THE PROVISIONS OF THE
CONDITIONAL RECEIPT. MAKE ALL CHECKS PAYABLE TO TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY.
I acknowledge possession of the receipt and I certify that I have read it and
the agreement in the application. The conditions and terms of this receipt have
been explained to me fully by the agent and I understand them.
Signed at_______________________this_____________day of_________ , (year)_______
Signature of Applicant (If other than Proposed Primary Insured)_________________
Signature of Agent______________________________________________________________
THIS RECEIPT IS TO BE DETACHED AND GIVEN TO THE APPLICANT AT THE TIME OF
APPLICATION ONLY IF ANY MONEY IS TAKEN
If all the conditions of this receipt are not fulfilled exactly, the insurance
will take effect only when the policy is delivered to the owner stated in the
application and there has been no change in insurability of any proposed insured
as represented in the application.
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9
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Transamerica Occidental Life Insurance Company
NOTICE OF INFORMATION PRACTICES
IMPORTANT: THIS NOTICE MUST BE GIVEN TO THE PROPOSED INSURED(S) WHENEVER AN
APPLICATION IS COMPLETED.
SOURCES OF INFORMATION
We value your privacy. Your application is our main source of information. As a
part of this application, we may, at our expense:
o ask you to have an examination, which may include special tests such as an
electrocardiogram, chest x-ray, blood studies, or urinalysis;
o ask physicians, medical practitioners, clinics, hospitals, or other health
care providers for information about you;
o obtain information from the Medical Information Bureau and/or a consumer
reporting agency. Please refer to the lower portion of this notice for further
details about this procedure;
o obtain information from other insurance companies you have applied to in the
past. We use this information only for evaluating your insurance application.
SAFEGUARDING YOUR PRIVACY
We treat all information about you confidentially. Ordinarily, it will be
provided to third parties only if you authorize us in writing to do so. In rare
instances, we may be required to provide some or all of the information without
your consent. We may send information to state insurance departments at their
request as part of their regulatory duties, or to law enforcement facilities in
response to a summons or subpoena. We may also release information in our files
to our reinsurers and to other life insurance companies to whom you have applied
for life and health insurance or to whom a claim for benefits may be submitted.
On your written request, we will send you a summary or copy of the relevant
information obtained in connection with your application.
Confidential or detailed medical information will only be disclosed through the
physician of your choice, with whom you may discuss it. Also, on your request, a
copy of any consumer report we obtain on you will be provided to you by the
responsible agency.
We will not send you information we might collect in expectation of or in
connection with any claim or civil or criminal proceeding such as information
relating to suspected fraud or material misrepresentation.
We may gather information from you which is used for statistical purposes or
marketing research, which will not identify you individually.
CORRECTING INFORMATION
If you feel any information in our file is incorrect or incomplete, you may ask
us to review it. If we agree, we will make any necessary corrections and inform
anyone who received such information within the past two years.
If we do not agree, you may file a statement of dispute with us. We will send
that statement to anyone receiving such information in the past two years. We
will also include it in any future disclosure of the disputed information.
FAIR CREDIT REPORTING ACT
A routine investigative consumer report may possibly be made regarding your
general reputation, character, mode of living and personal characteristics. This
information may be obtained through personal interviews with your friends,
neighbors and associates. Should you desire additional information on the nature
and scope of such a report, you may write the Underwriting Department,
Transamerica Occidental Life Insurance Company, PO Box 3183, Cedar Rapids, Iowa
52406-3183. You may also request information concerning the nature and scope of
the investigation to be performed. A summary of your rights is set forth on the
attached "Notice to Consumer".
THE MEDICAL INFORMATION BUREAU PRE-NOTICE
The Medical Information Bureau ("MIB") is a non-profit organization of life
insurance companies which operates as an information exchange for its members.
We may make reports to the MIB regarding factors affecting your insurability.
Underwriting decisions, however, are not reported to the MIB. If you apply to
another Bureau member company for life or health insurance or submit a claim for
benefits, the MlB will, upon request, provide that company with information in
its file.
Upon your written request, the MIB will arrange for disclosure to you of any
information it has in your file. If you feel the information in the MIB's file
is incorrect, you may contact the MIB and seek a correction in accordance with
procedures outlined in the Federal Fair Credit Reporting Act. The address of the
MIB's office is: MIB, Inc.; P.O. Box 105, Essex Station; Boston, MA 02112. MIB's
telephone number: (617) 426-3660
If you would like to know more about how we collect, evaluate and control
information about you as one of our applicants for insurance, our sales
representatives will be happy to assist you or you may contact us at our office:
Any Other Transamerica Occidental Life Insurance Company
Questions? P.O. Box 3183
Cedar Rapids, Iowa 52406-3183
1-800-553-5957
U000288
11
<PAGE>
NOTICE TO CONSUMER
A SUMMARY OF YOUR RIGHTS UNDER THE FAIR CREDIT REPORTING ACT:
The Fair Credit Reporting Act (FCRA) is designed to promote accuracy, fairness,
and privacy of information in the files of every consumer reporting agency. Most
consumer reporting agencies are credit bureaus that gather and sell information
about you-such as where you work and live, if you pay your bills on time, and
whether you've been sued, arrested, or filed for bankruptcy-to creditors,
employers, and other businesses. The FCRA gives you specific rights in dealing
with consumer reporting agencies, and requires them to provide you with a
summary of these rights as listed below. You can find the complete text of the
FCRA, 15 U.S.C. 1681 et. seq., at the Federal Trade Commission's web site
(http://www.ftc.gov). You may have additional rights under state law. You may
contact a state or local consumer protection agency or a state attorney general
to learn those rights.
o You must be told if information in your file has been used against you. Anyone
who uses information from consumer reporting agencies to take action against
you-such as denying an application for credit, insurance, or employment-must
give you the name, address, and phone number of the consumer reporting agency
that provided the report.
o You can find out what is in your file. A consumer reporting agency must give
you all the information in your file, and a list of everyone who has requested
it recently. However, you are not entitled to a "risk score" or "credit score"
that is based on information in your file. There is no charge for the report
if your application was denied because of information supplied by the consumer
reporting agency, and if you request the report within 60 days of receiving
the denial notice. You are also entitled to one free report a year if you
certify that (1) you are unemployed and plan to seek employment within 60
days, (2) you are on welfare, or (3) your report is inaccurate due to fraud.
Otherwise a consumer reporting agency may charge you a fee up to $8.00 for a
copy of your file.
o You can dispute inaccurate information with the credit reporting agency. If
you tell a credit reporting agency that your file contains inaccurate
information, the credit reporting agency must investigate the items (usually
within 30 days) by presenting to its information source all relevant evidence
you submit, unless your dispute is frivolous. The source must review your
evidence and report its findings to the credit reporting agency. (The source
must advise national credit reporting agencies-to which it provides data-of
any error.) The credit reporting agency must give you a written report of the
investigation and a copy of your report if the investigation results in any
change. If the credit reporting agency's investigation does not resolve the
dispute, you may add a brief statement to your file. The credit reporting
agency must normally include a summary of your statement in future reports. If
an item is deleted or a disputed statement is filed, you may ask that anyone
who has recently received your report be notified of the change.
o Inaccurate information must be corrected or deleted. A consumer reporting
agency must remove or correct inaccurate information from its files, usually
within 30 days after you dispute it. However, consumer reporting agencies are
not required to remove data from your file that is accurate unless it is
outdated or cannot be verified. If our dispute results in any change to your
report, the CRA cannot reinsert into your file a disputed item unless the
information source verifies its accuracy and completeness. In addition, the
CRA must give you a written notice telling you it has reinserted the item. The
notice must include the name, address, and phone number of the information
source.
o You can dispute inaccurate items with the source of the information. If you
tell anyone-such as a creditor who reports to a consumer reporting agency that
you dispute the item, they may not then report the information to a consumer
reporting agency without including a notice of your dispute. In addition, once
you've been notified the source of the error in writing, they may not continue
to report it if it is in fact an error. If you have questions or believe your
file contains errors, call the toll-free number of the consumer reporting
agency.
o Outdated information may not be reported. In most cases, consumer reporting
agencies may not report negative information that is more than seven years
old; ten for bankruptcies.
o Access to your file is limited. Consumer reporting agencies may provide
information about you only to those who have a need recognized by the
FCRA-usually to consider an application you have submitted to a creditor,
insurer, employer, landlord, or other business.
o Your consent is required for reports that are provided to employers or that
contain medical information. Consumer reporting agencies may not report to
your employer, or prospective employer, about you without your written
consent. Consumer reporting agencies may not divulge medical information about
you without your permission.
o You can stop a consumer reporting agency from including you on lists for
unsolicited credit and insurance offers. Creditors and insurers may use file
information as the basis for sending you unsolicited offers of credit or
insurance. Such offers must include a toll-free number for you to call and
tell the consumer reporting agency if you want your name and address excluded
from future lists or offers. If you notify the consumer reporting agency
through the toll-free number, it must keep you off the lists for two years. If
you request and complete the consumer reporting agency form provided for this
purpose, you can have your name and address removed indefinitely.
o You may have additional rights under state law. You may wish to contact a
state or local consumer protection agency or a state attorney general to learn
those rights.
U000288
12
<PAGE>
NOTICE TO CONSUMER
The FCRA gives several different federal agencies authority to enforce the FCRA.
The agencies listed below can assist you with questions and concerns concerning
the following types of businesses:
FOR QUESTIONS OR CONCERNS REGARDING THE FOLLOWING, PLEASE CONTACT:
CRAs, creditors and others not listed below, contact the Federal Trade
Commission Bureau of Consumer Protection - FCRA Washington, DC 20580.
202-326-3761.
National Banks, federal branches/agencies of foreign banks (word "National" or
initials "N.A." appear in or after bank's name), contact the Office of the
Comptroller of the Current Compliance Management, Mail Stop 6-6 Washington, DC
20219. 800-613-6743.
Federal Reserve System member banks (except national banks, and federal
branches/agencies of foreign banks), contact the Federal Reserve Board Division
of Consumer & Community Affairs Washington, DC 20551. 202-452-3693.
Savings associations and federally chartered savings banks (word "Federal" or
initials "F.S.B." appear in federal institution's name), contact the Office of
Thrift Supervision Consumer Programs Washington, DC 20552. 800-842-6929.
Federal credit unions (words "Federal Credit Union" appear in institution's
name), contact the National Credit Union Administration, 1775 Duke Street,
Alexandria, VA 22314. 703-518-6360.
Banks that are state-chartered, or are not Federal Reserve System members,
contact the Federal Deposit Insurance Corporation Division of Compliance &
Consumer Affairs, Washington, DC 20429 . 800-934-FDIC.
Air, surface, or rail common carriers regulated by former Civil Aeronautics
Board or Interstate Commerce Commission, contact the Department of
Transportation Office of Financial Management, Washington DC 20590.
202-366-1306.
Activities subject to the Packers and Stockyards Act 1921, contact the
Department of Agriculture, Office of Deputy Administrator-GIPSA, Washington, DC
20250. 202-720-7051.
U000288
13
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
ON THE LIFE OF________________________________ Supplement to Application Number
_____________________
This supplement amends the above captioned application for life insurance and
becomes part of it as follows.
ADDITION OF PROPOSED OTHER INSURED RIDERS Dated_____________________
<TABLE>
<CAPTION>
====================================================================================================================================
SECTION 1. PROPOSED PRIMARY INSURED
<S> <C> <C>
1. Last Name First Name M.I.
- ------------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
( ) -
- ------------------------------------------------------------------------------------------------------------------------------------
6. Sex 7.Date of Birth 8. Insurable Age 9. Place of Birth - State/Country 10. Social Security Number
[ ] Male
[ ] Female
- ------------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
- ------------------------------------------------------------------------------------------------------------------------------------
16. Occupation & Duties 18. Business Phone Number
- --------------------------------------------------------------------------------
17. Employer's Address
- ------------------------------------------------------------------------------------------------------------------------------------
19. HAVE YOU USED TOBACCO OR ANY OTHER PRODUCT CONTAINING NICOTINE IN THE LAST 12 MONTHS? [ ] YES [ ] NO
20. RATE CLASS QUOTED: [ ] ULT SELECT [ ] SELECT [ ] ULT STANDARD [ ] STANDARD [ ] JUVENILE
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 2. PROPOSED OTHER INSURED RIDER
1. Last Name First Name M.I.
- ------------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
- ------------------------------------------------------------------------------------------------------------------------------------
6. Sex 7. Date of Birth 8. Insurable Age 9. Place of Birth - State/Country 10. Social Security Number
[ ] Male
[ ] Female
- ------------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
- ------------------------------------------------------------------------------------------------------------------------------------
16. Occupation & Duties 18. Business Phone Number
- --------------------------------------------------------------------------------
17. Employer's Address
- ------------------------------------------------------------------------------------------------------------------------------------
19. HAVE YOU USED TOBACCO OR ANY OTHER PRODUCT CONTAINING NICOTINE IN THE LAST 12 MONTHS? [ ] YES [ ] NO
20. RATE CLASS QUOTED: [ ] ULT SELECT [ ] SELECT [ ] ULT STANDARD [ ] STANDARD [ ] JUVENILE
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 3. PROPOSED OTHER INSURED INSURED
1. Last Name First Name M.I.
- ------------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
- ------------------------------------------------------------------------------------------------------------------------------------
6. Sex 7. Date of Birth 8. Insurable Age 9. Place of Birth - State/Country 10. Social Security Number
[ ] Male
[ ] Female
- ------------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
- ------------------------------------------------------------------------------------------------------------------------------------
16. Occupation & Duties 18. Business Phone Number
- --------------------------------------------------------------------------------
17. Employer's Address
- ------------------------------------------------------------------------------------------------------------------------------------
19. HAVE YOU USED TOBACCO OR ANY OTHER PRODUCT CONTAINING NICOTINE IN THE LAST 12 MONTHS? [ ] YES [ ] NO
20. RATE CLASS QUOTED: [ ] ULT SELECT [ ] SELECT [ ] ULT STANDARD [ ] STANDARD [ ] JUVENILE
====================================================================================================================================
</TABLE>
U000288 - Supp
1
<PAGE>
SECTION 4. PROPOSED OTHER INSURED RIDER
<TABLE>
<CAPTION>
<S> <C> <C>
1. Last Name First Name M.I.
- ------------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
- ------------------------------------------------------------------------------------------------------------------------------------
6. Sex 7. Date of Birth 8. Insurable Age 9. Place of Birth - State/Country 10. Social Security Number
[ ] Male
[ ] Female
- ------------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
- ------------------------------------------------------------------------------------------------------------------------------------
16. Occupation & Duties 18. Business Phone Number
- --------------------------------------------------------------------------------
17. Employer's Address
- ------------------------------------------------------------------------------------------------------------------------------------
19. HAVE YOU USED TOBACCO OR ANY OTHER PRODUCT CONTAINING NICOTINE IN THE LAST 12 MONTHS? [ ] YES [ ] NO
20. RATE CLASS QUOTED: [ ] ULT SELECT [ ] SELECT [ ] ULT STANDARD [ ] STANDARD [ ] JUVENILE
====================================================================================================================================
SECTION 5. CONTINUATION OF CHILDREN COVERED UNDER THE CHILDREN'S INSURANCE RIDER
COVERAGE AMOUNT ($5,000 MINIMUM TO $25,000 MAXIMUM COVERAGE FOR CHILDREN 18 AND UNDER)
- ------------------------------------------------------------------------------------------------------------------------------------
Name Relationship Date of Birth Height Weight
- ------------------------------------------------------------------------------------------------------------------------------------
- - ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
- - ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
- - ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
Are all children listed? [ ] Yes [ ] No If not, explain why:_____________________________________________________________
Are children living with Proposed Primary Insured? [ ] Yes [ ] No If not, explain why:__________________________________
====================================================================================================================================
SECTION 6. CONTINUATION OF OTHER INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Name Company Amount of insurance Year issued Replacement?
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION 7. CONTINUATION OF MEDICAL EXPLANATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Name, Address and Phone # of
Question # Proposed Insured's Name Date, Diagnosis, Treatment, Results, and Duration Attending Doctor and Hospital
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION 8. CONTINUATION OF RESIDENCY
Are all Proposed Other Insureds citizens of the USA? [ ] Yes [ ] No. If not,
please provide names and details__________________________________
__________________________________________________________________
====================================================================================================================================
SECTION 9. DECLARATIONS
I (We) represent that all statements and answers made in this supplement are
full, complete and true to the best of my (our) knowledge and belief. It is
agreed that this statement shall be made part of the application, and is subject
to all terms and conditions contained in the application.
sec. 1 sec. 3
_____________________________________________________________ _____________________________________________________________
Signature of Proposed Other Insured (Child over 15 must sign) Signature of Proposed Other Insured (Child over 15 must sign)
sec. 2 sec. 4
_____________________________________________________________ _____________________________________________________________
Signature of Proposed Other Insured (Child over 15 must sign) Signature of Proposed Other Insured (Child over 15 must sign)
___________________________________ _____________________ _______________________________________________
Witness (Registered Representative) Name of Broker/Dealer Signed at (City/State)
___________________________________ _____________________ _______________________________________________
Witness (Registered Representative) Name of Broker/Dealer Signature of Applicant/Owner, if other than the
Proposed Primary Insured
</TABLE>
U000288 - Supp
2
<PAGE>
(LOGO) Transamerica ------------------------------
Occidental Life PRIORITY:
Insurance Company P.O. BOX 3183
CEDAR RAPIDS, IOWA 52406-3183
STREET ADDRESS USE FOR CARRIER
OTHER THAN POST OFFICE:
4333 EDGEWOOD RD., N.E.
CEDAR RAPIDS, IA 52499
1-800-553-5957
------------------------------
Application for Life Insurance
- --------------------------------------------------------------------------------
Contact Information
Proposed Primary Insureds Home Telephone Number: _______________________________
Business Telephone Number: _____________________________________________________
Preferred Place to Call: [ ] Home [ ] Business
Best time to Call: [ ] a.m. [ ] p.m.
Special Comments:_______________________________________________________________
________________________________________________________________________________
Broker Dealer Information
Broker Dealer Name:_____________________________________________________________
Agent Name: ___________________________________ Agent Number: __________________
DO:
---
[ ] Complete the entire application (front and back).
[ ] Print application in black ink.
[ ] Have applicant initial all changes.
[ ] Obtain all required signatures.
[ ] Complete and sign the Agents Report.
[ ] Include certification if a trust is owner of the policy.
[ ] Section 7, Page 2: Enter the proposed plan of insurance in #1.
[ ] Personal History Information obtained by agent-Contact Transamerica
Occidental Life Insurance Company at 1-800-553-5957 for state specific
Personal History Information supplemental.
DON'T:
------
[ ] Do not use pencil or whiteout.
[ ] Do not accept or send money on applications that total more than
$1,000,000.00
[ ] Do not submit an agent check as the initial premium.
[ ] Do not accept or send money on applications on proposed insureds under 15
days of age or over 80 years of age.
[ ] Do not accept money on proposed insureds with a history of heart disease,
cancer or stroke.
U000287
<PAGE>
CMC____________ AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS
- --------------------------------------------------------------------------------
ATTACH VOIDED SAMPLE
OF YOUR PERSONAL
CHECK HERE
- --------------------------------------------------------------------------------
So that you may comply with your depositor's authorization and direction as set
forth on the reverse side hereof, this Company agrees:
1. To indemnify you and hold you harmless from any loss you may suffer as
a consequence of your actions resulting from or in connection with the
execution and issuance of any check or draft, whether or not genuine,
or payment of any preauthorized ACH electronic fund transfer debit
received by you in the regular course of business for the purpose of
payment to this Company, including any cost or expenses reasonably
incurred in connection therewith.
2. In the event that any such check, draft or debit shall be dishonored
whether with or without cause, and whether intentionally or
inadvertently, to indemnify you for any loss even though dishonor
results in a forfeiture of the insurance.
3. To defend at our own cost and expense any action which might be brought
by any depositor or any other persons because of your actions taken
pursuant to the foregoing request, or in any manner arising by reason
of your participation in the foregoing plan of premium collections.
TO: Transamerical Occidental Life Insurance Company
As a convenience to me, I hereby request and authorize you to obtain payment of
amounts becoming due you by initiating charges in the form of check, drafts or
debits via ACH electronic fund transfers on my account maintained at the
______________________________________ ____________________________________
(Name of Bank) (Address of Bank)
for the payment of each monthly premium under Policy No.____________________
on the life of ___________________________
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
drawing any such check or draft or initiating such debit. I understand that if
any such check, draft or debit be dishonored by my Bank and any monthly amount
due the Transamerica Occidental Life Insurance Company is not paid within the
time stipulated in the policy, said policy shall become null and void except as
otherwise provided therein.
LIST ANY OTHER POLICIES TO BE PAID BY SAME CHECK, DRAFT OR DEBIT
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
I elect _______ day (select 1 to 27) of each month to have the payment of $
________ taken from my account. If no date is indicated the draft date will be
the policy issue date.
AUTHORIZATION FOR PREAUTHORIZED
PAYMENTS TO:
Transamerica Occidental Life Insurance Company
P.O.BOX 3183, CEDAR RAPIDS, IOWA 52406-3183
As a convenience to me, I hereby request and authorize you to pay and charge to
my bank checking account checks or drafts drawn by and payable to the order of
Transamerica Occidental Life Insurance Company or to debit my account identified
below via ACH electronic fund transfers provided there are sufficient collected
funds in said account to pay the same upon presentation. 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
check, draft or debit. I further agree that if any such check, draft or debit be
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.
_______________ 1 (X)______________________________________
_______________ 2 (X)______________________________________
Both Authorized Signatures Required on Joint Accts.
PLEASE NOTE: There is an Indemnification
Agreement stated above.
U000287
<PAGE>
Life Application-PART 1 Transamerica Occidental Life Insurance Company
Application #
<TABLE>
<CAPTION>
<S> <C> <C>
____________________________________________________________________________________________________________________________________
SECTION 1. PROPOSED PRIMARY INSURED
1. Last Name First Name M.I.
____________________________________________________________________________________________________________________________________
2. Address Apt# City State Zip Code
____________________________________________________________________________________________________________________________________
3. Years at Address 4. Home Phone 5. Driver License Number State 6. Sex 7.Date of Birth
[ ]Male [ ] Female
____________________________________________________________________________________________________________________________________
8. Insurable Age 9. Place of Birth-State/Country 10. Social Security Number 11. Height 12. Weight 13. Marital Status
____________________________________________________________________________________________________________________________________
14. Employer 15. Employers Address Years 16. Business Phone Number
____________________________________________________________________________________________________________________________________
17. Occupation & Duties
____________________________________________________________________________________________________________________________________
18. Have you used tobacco or any other product containing NICOTINE in the last 12 months? [ ] Yes [ ] No
19. Rate Class Quoted: [ ] Ult Select [ ] Select [ ] Ult Standard [ ] Standard [ ] Juvenile
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 2. PROPOSED OTHER/JOINT INSURED RIDER - If more than one please use a supplemental application
1. Last Name First Name M.I.
____________________________________________________________________________________________________________________________________
2. Address Apt# City State Zip Code
____________________________________________________________________________________________________________________________________
3. Years at Address 4. Home Phone 5. Driver License Number State 6. Sex 7.Date of Birth
[ ]Male [ ] Female
____________________________________________________________________________________________________________________________________
8. Insurable Age 9. Place of Birth State/Country 10. Social Security Number 11. Height 12. Weight 13. Marital Status
____________________________________________________________________________________________________________________________________
14. Relationship to Proposed Primary Insured 15. Employer 16. Employers Address Years
____________________________________________________________________________________________________________________________________
17. Business Phone Number 18. Occupation & Duties
____________________________________________________________________________________________________________________________________
19. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? [ ] Yes [ ] No
20. Rate Class Quoted: [ ] Ult Select [ ] Select [ ] Ult Standard [ ] Standard [ ] Juvenile
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 3. APPLICANT/OWNER IF OTHER THAN THE PROPOSED PRIMARY INSURED
1. Last Name First Name M.I.
____________________________________________________________________________________________________________________________________
2. Address Apt# City State Zip Code
____________________________________________________________________________________________________________________________________
3. Home Phone 4. Social Security Number / Tax ID # 5. Date of Birth/Trust Date 6. Relationship to the Proposed Primary Insured*
____________________________________________________________________________________________________________________________________
* If employer, please complete Section 11 - Agents Report
____________________________________________________________________________________________________________________________________
SECTION 4. CHILDRENS INSURANCE RIDER
COVERAGE AMOUNT ($5,000 MINIMUM TO $25,000 MAXIMUM COVERAGE FOR CHILDREN 18 AND UNDER)
____________________________________________________________________________________________________________________________________
Name Relationship Date of Birth Height Weight
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
Are all children listed? [ ] Yes [ ] No If not, explain why: _________________________________________________________
Are children living with Proposed Primary Insured? [ ] Yes [ ] No If not, explain why: ____________________________________
____________________________________________________________________________________________________________________________________
SECTION 5. PRIMARY BENEFICIARY - If percentage shares are not given they will be equal, or to the survivor
____________________________________________________________________________________________________________________________________
Name Percent Relationship Social Security Number/Tax ID#
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
SECTION 6. CONTINGENT BENEFICIARY - If percentage shares are not given they will be equal, or to the survivor
____________________________________________________________________________________________________________________________________
Name Percent Relationship Social Security Number/Tax ID#
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
</TABLE>
U000287
<PAGE>
LIFE APPLICATION
SECTION 7. PROPOSED PLAN OF INSURANCE:
1. Plan of Insurance: ________________________________________________________
2. Specified Amount: $ _____________________________________
3. Primary Insured Rider $ _____________________________________
4. Primary Insured Rider Plus $ _____________________________________
5. Other Insured Rider $ _____________________________________
_____________________________________ $ _____________________________________
_____________________________________ $ _____________________________________
_____________________________________ $ _____________________________________
_____________________________________ $ _____________________________________
- --------------------------------------------------------------------------------
SECTION 8. DEATH BENEFIT OPTION
[ ] A) Level benefit
[ ] B) Increasing benefit
- --------------------------------------------------------------------------------
SECTION 9. ADDITIONAL BENEFITS -
PROPOSED PRIMARY INSURED ONLY
[ ] Disability Waiver Rider
[ ] Disability Waiver And Income Rider $___________________
($300 per month maximum)
[ ] Accidental Death Benefit $___________________
($150,000 maximum)
- --------------------------------------------------------------------------------
SECTION 10. PREMIUMS PAYABLE
Planned Premium $________________ _____________ __________
[ ] Bank Draft __________ Draft Date (1ST thru 27TH)
[ ] Direct Bill
[ ] Single Premium [ ] Quarterly
[ ] Annual [ ] Monthly
[ ] Semi-annual [ ] Other _____________
- --------------------------------------------------------------------------------
SECTION 11. SUB-ACCOUNT ALLOCATIONS - Must equal 100% and a whole number.
WRL JANUS GROWTH ______ % WRL C.A.S.E. GROWTH _______ %
WRL JANUS GLOBAL ______ % WRL GE U.S. EQUITY _______ %
WRL ALGER AGG GROWTH ______ % WRL DREYFUS MID CAP _______ %
WRL VKAM EMER GROWTH ______ % WRL NWQ VALUE EQUITY _______ %
WRL AEGON BOND ______ % WRL TRP DIVIDEND GRO _______ %
WRL AEGON BALANCED ______ % WRL DEAN ASSET ALL _______ %
WRL LKCM STRA TOT RET ______ % WRL JPM REAL EST. SEC. _______ %
WRL TRP SMALL CAP ______ % WRL FEDERATED GRO INc _______ %
WRL GS SMALL CAP ______ % WRL JPM MONEY MARKET _______ %
WRL PB MID CAP GROWTH ______ % TRANSAMERICA VIF GROWTH _______ %
WRL THIRD AVE. VALUE ______ % FIXED ACCOUNT _______ %
WRL GE SE INTL EQUITY ______ % OTHER _______ %
WRL SALOMON ALL CAP ______ % OTHER _______ %
WRL GS GROWTH ______ % OTHER _______ %
12. INVESTMENT OBJECTIVE
[ ] Safety of Principal
[ ] Income
[ ] Long-Term Growth
[ ] Trading Profits
[ ] Other
_____________________
- --------------------------------------------------------------------------------
SECTION 13. OTHER INSURANCE IN FORCE FOR ALL PROPOSED INSUREDS [ ] NONE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Name Company Amount of Insurance Year Issued Replacement?
- --------------------------------------------------------------------------------------------------------------------------------
YES NO
- --------------------------------------------------------------------------------------------------------------------------------
YES NO
- --------------------------------------------------------------------------------------------------------------------------------
YES NO
- --------------------------------------------------------------------------------------------------------------------------------
YES NO
- --------------------------------------------------------------------------------------------------------------------------------
IS THIS INTENDED TO BE A 1035 EXCHANGE? [ ] Yes [ ] No Anticipated Cash Value Transfer $_________ _________ _________
1) Has any Proposed Insured ever had life, disability or health insurance declined, rated, modified, issued with
an exclusion rider, canceled, or not renewed? If yes please explain in REMARKS. [ ] Yes [ ] No
2) Will the insurance applied for on any Proposed Insured replace or change any existing life or annuity policy? [ ] Yes [ ] No
If yes, complete replacement forms, if appropriate.
3) Is there an application for life, accident or sickness insurance now pending or contemplated on any Proposed
Insured in this or any other company? If yes, give details in Agents Report, Question 3. [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 14. OTHER INSURANCE-TO BE COMPLETED BY THE REGISTERED REPRESENTATIVE
1. Will the policy applied for replace or change any existing life insurance policy or annuity? [ ] Yes [ ] No
2. If replacement of existing insurance is involved, have you complied with all state requirements, including any Disclosure and
Comparison Statements?
[ ] Yes [ ] No [ ] N/A
If No, explain _______________________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION 15. SUITABILITY FOR VARIABLE LIFE INSURANCE POLICY-COMPLETE FOR ALL VARIABLE PLANS
A) Have you, the Proposed Primary Insured, and Purchaser, if other than the
Proposed Primary Insured, received the current Prospectus for the policy? [ ] Yes [ ] No
B) DO YOU UNDERSTAND THAT UNDER THE POLICY APPLIED FOR (EXCLUSIVE OF ANY OPTIONAL
BENEFITS),THE AMOUNT OF DEATH BENEFIT AND THE ENTIRE AMOUNT OF THE POLICY CASH
VALUE MAY INCREASE OR DECREASE DEPENDING UPON THE INVESTMENT EXPERIENCE? [ ] Yes [ ] No
C) With this in mind, is the policy in accord with your insurance
objectives and your anticipated financial needs? [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
U000287 2
</TABLE>
<PAGE>
LIFE APPLICATION-PART 2
- --------------------------------------------------------------------------------
SECTION 16. TO BE COMPLETED BY APPLICANT/OWNER
Telephone Transfer Authorization: (See Prospectus for telephone transfer
procedures.)
Your policy applied for, if issued, will automatically receive telephone
transfer privileges described in the applicable prospectus unless instructions
to the contrary are indicated below. These privileges allow you to give the
registered representative/agent of record for this policy authority to make
telephone transfers and to change the allocation of future payments among the
Sub-Accounts and the Fixed Account on your behalf according to your
instructions.
[ ] I do not want telephone transfer privileges.
Transamerica Occidental Life Insurance Company will not be liable for complying
with telephone instructions it reasonably believes to be authentic, nor for any
loss, damage, costs or expense in acting on such telephone instructions, and
Policyowners will bear the risk of any such loss. Transamerica Occidental Life
Insurance Company will employ reasonable procedures to confirm that telephone
instructions are genuine. If Transamerica Occidental Life Insurance Company does
not employ such procedures, it may be liable for losses due to unauthorized or
fraudulent instructions. Such requiring forms of personal identification prior
to acting upon such telephone instruction, providing written confirmation of
such transactions to Policyowners and/or tape recording of telephone transfer
request instructions received.
- --------------------------------------------------------------------------------
SECTION 17. CERTIFICATION
Under penalty of perjury, I (the owner) certify (1) that the number shown in
Section 1of page 1or the number shown in Section 3 on page 1 (if the owner is
other than the Primary Insured) is my correct Taxpayer Identification Number,
and (2) that I am not subject to backup withholding because (a) I have not been
notified by the IRS that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (b) if I ever was so notified,
the IRS has notified me that I am no longer subject to backup withholding. (If
the Internal Revenue Service has notified you that you are subject to backup
withholding and you have not received notice from the Service that backup
withholding has terminated, you should strike out the language in (2) above that
you are not subject to backup withholding due to notified payee underreporting.)
- --------------------------------------------------------------------------------
SECTION 18. AUTHORIZATION TO OBTAIN INFORMATION
I authorize any physician, medical professional, hospital, clinic, other medical
care institution, the Medical Information Bureau, Inc., insurance company,
consumer reporting agency, or employer having information available as to
employment, other insurance coverage, medical care, advice or treatment with
respect to any physical or mental condition regarding me or my children who are
to be insured, to give such information to Transamerica Occidental Life
Insurance Company, its reinsurers, or any consumer reporting agency except the
Medical Information Bureau acting on Transamerica Occidental Life Insurance
Companys behalf.
I authorize Transamerica Occidental Life Insurance Company to obtain an
investigative consumer report on me.
I understand that this information will be used by Transamerica Occidental Life
Insurance Company or its reinsurers, to determine eligibility for life
insurance.
I agree that this authorization is valid for two and one-half years from the
date signed. I know that I have the right to receive a copy of this
authorization upon request. I agree that a photographic copy of this
authorization is as valid as the original.
I have received a copy of this "Notice of Information Practices" attached to
this application.
I also hereby authorize Transamerica Occidental Life Insurance Company to
provide its affiliated companies any and all information provided herein and
obtained hereafter on me. This authorization shall be valid from the date signed
below until affirmatively withdrawn in writing by myself.
[ ] I elect not to have personal information disclosed to non-affiliates of
Transamerica Occidental Life Insurance Company for marketing purposes.
[ ] I elect to be interviewed if an investigative consumer report is prepared in
connection with this application.
- --------------------------------------------------------------------------------
SECTION 19. REPRESENTATIONS
I represent that the statements and answers in this application are true and
complete to the best of my knowledge.
I understand that I should consult my own tax and/or legal counsel as to the
consequences of using this product in conjunction with my own particular tax or
financial plan. It is agreed that:
(a) the statements and answers given in this application, and any
amendments or application supplements to it or statements made
to the medical examiner, will be the basis of any insurance
issued;
(b) no agent or medical examiner has the authority to make or alter
any contract for the Company;
(c) if a premium deposit is given in exchange for the Conditional
Receipt, no insurance shall take effect unless all of the
conditions set out in that receipt are satisfied;
(d) if a premium deposit is not given, no insurance shall take
effect unless all of the following conditions are satisfied;
(1) a policy issued by the Company is delivered to and
accepted by the owner during the lifetime of each person
to be covered by such policy,
(2) the full first premium is paid, and (3) the health
and insurability of each person proposed for insurance
has not changed since the date of this application
Signed at _____________________________________ ____________
(city) (state)
on _______-_________-____________
(date)
___________________________________________ ___________________________________
Signature of Proposed Primary Insured Print Agent Name Agent #
(Child over age 15 must sign)
___________________________________________ ___________________________________
Signature of Applicant (owner) other than Signature of Agent State License #
the Proposed Primary Insured (If business
insurance, show title of officer and name
of firm)
___________________________________________ ___________________________________
Signature of Parent or Legal Guardian for Split Agent Name Agent #
Insured(s) 15 and under
___________________________________________ ___________________________________
Signature of Joint Insured or OIR Signature of Split Agent State
License #
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<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
P.O. BOX 3183
CEDAR RAPIDS, IOWA 52406-3183
FRAUD WARNING
The following states require that contract owners acknowledge a fraud warning
statement.
Please refer to the fraud warning statement for your state as indicated below.
For contract owners in ARKANSAS/LOUISIANA
Any person who knowingly presents a false or fraudulent claim for
payment of a loss or benefit or knowingly presents false information in
an application for insurance is guilty of a crime and may be subject to
fines and confinement in prison.
_____________________________ ________________________________
Signature of Contract Owner Date
For contract owners in COLORADO
It is unlawful to knowingly provide false, incomplete, or misleading
facts or information to an insurance company for the purpose of
defrauding or attempting to defraud the company. Penalties may include
imprisonment, fines, denial of insurance, and civil damages. Any
insurance company or agent of an insurance company who knowingly
provides false, incomplete, or misleading facts or information to a
policyholder or claimant for the purpose of defrauding or attempting to
defraud the policyholder or claimant with regard to a settlement or
award payable from insurance proceeds shall be reported to the Colorado
Division of Insurance within the Department of Regulatory Agencies.
_____________________________ ________________________________
Signature of Contract Owner Date
For contract owners in DISTRICT OF COLUMBIA
It is a crime to knowingly provide false, incomplete or misleading
information to an insurance company for the purpose of defrauding the
company. Penalties include imprisonment, fines and denial of insurance
benefits.
_____________________________ ________________________________
Signature of Contract Owner Date
For contract owners in FLORIDA
Any person who knowingly and with intent to injure, defraud, or deceive
any insurer files a statement of claim or an application containing any
false, incomplete, or misleading information is guilty of a felony in
the third degree.
_____________________________ ________________________________
Signature of Contract Owner Date
For contract owners in KENTUCKY, OHIO and PENNSYLVANIA
Any person who knowingly and with intent to defraud any insurance
company or other person files an application for insurance or a
statement of claim containing any materially false information or
conceals for the purpose of misleading, information concerning any fact
material thereto commits a fraudulent insurance act, which is a crime
and subjects such person to criminal and civil penalties.
_____________________________ ________________________________
Signature of Contract Owner Date
For contract owners in NEW JERSEY
Any person who includes any false or misleading information on an
application for an insurance policy is subject to criminal and civil
penalties.
_____________________________ ________________________________
Signature of Contract Owner Date
For contract owners in NEW MEXICO
Any person who knowingly presents a false or fraudulent claim for
payment of a loss or benefit or knowingly presents false information in
an application for insurance is guilty of a crime and may be subject to
fines and criminal penalties.
_____________________________ ________________________________
Signature of Contract Owner Date
For contract owners in VIRGINIA/MAINE
It is a crime to knowingly provide false, incomplete or misleading
information to an insurance company for the purpose of defrauding the
company. Penalties include imprisonment, fines and denial of insurance
benefits.
_____________________________ ________________________________
Signature of Contract Owner Date
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4
<PAGE>
AGENTS REPORT
1. a) How long have you known the Proposed Primary Insured?
________________________________________________________________________
b) Relationship to Proposed Primary Insured:
________________________________________________________________________
c) Are you financially responsible for the Proposed Primary Insured:
[ ] Yes [ ] No
2. Did you give the "Notice of Information Practices" to the Proposed
Insured(s)?
[ ] Yes [ ] No
3. Are you submitting or do you plan to submit an application on any
Proposed Insured on this application to any other company?
[ ] Yes [ ] No
Company Name____________________________________________________________
Face amount $___________________________________________________________
Total face amount to be placed with all companies
$_______________________________________________________________________
4. Medical Examination
Will you be arranging for the Medical Requirements?
[ ] Yes Paramedical Service used:____________________________________
[ ] No Request Transamerica Occidental Life Insurance Company order
medical reqs.
5. Was money taken with the application?
[ ] Yes [ ] No
If "yes" was the Conditional Receipt completed and given to the
applicant?
[ ] Yes [ ] No
6. Did you ask all questions in the presence of the Proposed Insured(s)?
[ ] Yes [ ] No
7. Are you aware of anything about the health, habits, avocation,
environment or mode of living, except as may be related directly or
indirectly to sexual orientation, which may affect the insurability of
any person proposed for insurance? [ ] Yes [ ] No
8. If Proposed Primary Insured is a juvenile (ages 0 through 15):
(a) Did you personally see child? [ ] Yes [ ] No
(b) Does child live with parents? [ ] Yes [ ] No
(If "No", explain)______________________________________________________
________________________________________________________________________
(c) Life insurance in force on parents life?
________________________________________________________________________
(d) Life insurance applied for or in force on brothers and sisters?
________________________________________________________________________
Remarks:________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
9. Is Proposed Primary Insured or Owner related to any InterSecurities,
Inc. officer or employee? [ ] Yes [ ] No
10. Is Proposed Primary Insured or Owner a licensed Representative of any
Broker/Dealer?
[ ] Yes [ ] No
If "Yes" Name and Address of Broker/Dealer
________________________________________________________________________
11. Type of Sale (check two)
[ ] Direct [ ] Pension or Profit Sharing
[ ] Personal Needs Analysis [ ] Salary Savings (EICS)
[ ] Estate Planning [ ] Gift
[ ] Business Insurance [ ] Salary Allotment
Purpose of Policy
[ ] Personal Insurance [ ] Business Insurance
[ ] Mortgage [ ] Retirement
[ ] Key Employee [ ] Education
[ ] Executive Bonus [ ] Estate Liquidity
[ ] Deferred Compensation [ ] Income to Family
[ ] Split Dollar [ ] Cash Accumulation
[ ] Reverse Split Dollar [ ] Wealth Replacement
[ ] Other Circle One
[ ] Buy/Sell - Is partner applying for similar amount? Yes No
Name of Partner_________________________________________________________
12. Was this plan sold, presented or illustrated as a VEBA, welfare benefit
concept as defined under IRC Section 419, Charitable Legacy Plan,
Charitable Retirement Plan, Charitable Remainder Life Program, or other
similar arrangement?
[ ] Yes [ ] No
If "Yes", have you completed and attached the required Disclosure,
Acknowledgement and Release Form and the accompanying Attorneys
Statement? [ ] Yes [ ] No
13. Did you comply with all requirements relative to obtaining Informed
Consent for HIV and AIDS testing? [ ] Yes [ ] No
Writing Agent Name _____________________________________________________________
Agent No. ______________________________________________________________________
Agent's Telephone Number _______________________________________________________
Agent's Social Security Number _________________________________________________
Agent's Fax Number _____________________________________________________________
Percent of Agent's Split _______________________________________________________
Split Agent Name _______________________________________________________________
Agent No.__________________Percent of Agent's Split _________________________
Split Agent Name________________________________________________________________
Agent No.__________________Percent of Agent's Split__________________________
I submit this application assuming full responsibility for delivery of any
coverage issued and for immediate transmittal to the Company of the first
premium when collected. I know of no condition affecting the insurability of any
person proposed for insurance not fully set forth herein. I certify that a
Notice of Information Practices statement was given to the Applicant when this
application was taken. (If applicable)
$ ___________ has been paid by the Applicant with
this application________________________________________________________________
Signature of Writing Agent
U000287
5
<PAGE>
-----------
Transamerica Occidental Life Insurance Company Application #
-----------
CONDITIONAL RECEIPT
If, within the last 12 months, any person proposed for coverage has been treated
for or had heart trouble, stroke or cancer no payment may be accepted with the
application.
Received from________________________________ Totaling $________________________
NO COVERAGE WILL BECOME EFFECTIVE PRIOR TO DELIVERY OF THE POLICY APPLIED FOR
UNLESS AND UNTIL ALL THE CONDITIONS OF THIS RECEIPT HAVE BEEN FULFILLED EXACTLY.
Conditions:
(1) The amount of payment taken with the application must be at least the first
full premium for the mode of payment selected for the amount of insurance
stated on page 2 in the application. If the check or draft submitted as the
first mode premium is not honored by the bank, upon first presentation,
this Conditional receipt will be VOID.
(2) All medical examinations, tests, x-rays, electrocardiograms and reports
required by the company must be completed and received at its home office.
If the above requirements are not received within 60 days, from the date
this application was completed, this Conditional Receipt will be VOID.
(3) As of the effective date, as defined below, each person proposed for
insurance in this application must be a risk insurable in accordance with
the companys rules, limits and standards for the plan, amount and rate
class shown. If any modification is made by the Company to the plan,
amount, riders, and/or the premium rate class or supplemental agreements
this conditional receipt will be VOID.
(4) As of the effective date, the state of health and all factors affecting the
insurability of each person proposed for insurance must be as stated in the
application.
"EFFECTIVE DATE", AS USED IN THIS CONDITIONAL RECEIPT IS THE LATER OF:
A. the date of completion of the Part I of the application having the same
number and date as this Receipt, or;
B. the date of completion of all medical examinations, tests, x-rays,
electrocardiograms and reports required by the Company, or;
C. the date of issue if any, requested in the application.
COVERAGE--NOT TO EXCEED $300,000. MAXIMUM ALL APPLICATIONS OR RECEIPTS.
If the Company or its Authorized Agent accepts the first mode premium for this
application of life insurance and any person Proposed for insurance dies while
this Conditional Receipt is in effect, the Company will pay to the beneficiary
or the Applicant the LESSER of:
(a) the death benefit applied for on that Proposed Insured, as shown on
page 2 of the Application, or:
(b) $300,000.
This total benefit limit is applicable to all insurance applied for under this
Application and any other application now pending with the Company, including
any other Conditional Receipts, for each person proposed for insurance.
DATE COVERAGE ENDS--60 DAY MAXIMUM
Coverage under the Conditional Receipt ends automatically on the earliest of:
(a) the date the insurance applied for under this application takes
effect, or
(b) the date the company mails notice of the ending of coverage and
refunds the first mode premium to the date the applicant at the
address shown on Part 1 of the Application.
(c) 60 days from the date of this conditional receipt
(d) the date we determine any Proposed Insured is not insurable
according to our rules, limits and standards.
SPECIAL LIMITATIONS
This CONDITIONAL RECEIPT WILL BE VOID IF NOT SIGNED BY AN AUTHORIZED AGENT OF
THE COMPANY.
This Conditional Receipt will be VOID in the event of fraud or material
misrepresentation in the Application
This Conditional Receipt will be VOID if, on the date of this receipt, any
person proposed for insurance is under 15 days of age or over 80 years of age.
This Conditional Receipt does not provide benefits for Disability or Accidental
Death Benefits.
This Conditional Receipt does not provide benefits if any person proposed for
insurance dies by suicide. The liability of the Company will be limited to
return of the first mode premium paid with the application.
NO AGENT IS AUTHORIZED TO WAIVE OR MODIFY ANY OF THE PROVISIONS OF THE
CONDITIONAL RECEIPT. MAKE ALL CHECKS PAYABLE TO TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY.
I acknowledge possession of the receipt and I certify that I have read it and
the agreement in the application. The conditions and terms of this receipt have
been explained to me fully by the agent and I understand them.
Signed at_______________________________this___________day of_______,(year)_____
Signature of Applicant (If other than Proposed Primary Insured)_________________
______________________
Signature of Agent______________________________________________________________
THIS RECEIPT IS TO BE DETACHED AND GIVEN TO THE APPLICANT AT THE TIME OF
APPLICATION ONLY IF ANY MONEY IS TAKEN
If all the conditions of this receipt are not fulfilled exactly, the insurance
will take effect only when the policy is delivered to the owner stated in the
application and there has been no change in insurability of any proposed insured
as represented in the application.
6
V000287
<PAGE>
This Page is
Intentionally Blank
7
<PAGE>
Transamerica Occidental Life Insurance Company
NOTICE OF INFORMATION PRACTICES
IMPORTANT: This notice must be given to the Proposed Insured(s) whenever
an application is completed.
SOURCES OF INFORMATION
We value your privacy. Your application is our main source of information. As a
part of this application, we may, at our expense:
o ask you to have an examination, which may include special tests such as an
electrocardiogram, chest x-ray, blood studies, or urinalysis;
o ask physicians, medical practitioners, clinics, hospitals, or other health
care providers for information about you;
o obtain information from the Medical Information Bureau and/or a consumer
reporting agency. Please refer to the lower portion of this notice for
further details about this procedure;
o obtain information from other insurance companies you have applied to in the
past. We use this information only for evaluating your insurance application.
SAFEGUARDING YOUR PRIVACY
We treat all information about you confidentially. Ordinarily, it will be
provided to third parties only if you authorize us in writing to do so. In rare
instances, we may be required to provide some or all of the information without
your consent. We may send information to state insurance departments at their
request as part of their regulatory duties, or to law enforcement facilities in
response to a summons or subpoena. We may also release information in our files
to our reinsurers and to other life insurance companies to whom you have applied
for life and health insurance or to whom a claim for benefits may be submitted.
On your written request, we will send you a summary or copy of the relevant
information obtained in connection with your application. Confidential or
detailed medical information will only be disclosed through the physician of
your choice, with whom you may discuss it. Also, on your request, a copy of any
consumer report we obtain on you will be provided to you by the responsible
agency.
We will not send you information we might collect in expectation of or in
connection with any claim or civil or criminal proceeding such as information
relating to suspected fraud or material misrepresentation.
We may gather information from you which is used for statistical purposes or
marketing research, which will not identify you individually.
CORRECTING INFORMATION
If you feel any information in our file is incorrect or incomplete, you may ask
us to review it. If we agree, we will make any necessary corrections and inform
anyone who received such information within the past two years.
If we do not agree, you may file a statement of dispute with us. We will send
that statement to anyone receiving such information in the past two years. We
will also include it in any future disclosure of the disputed information.
FAIR CREDIT REPORTING ACT
A routine investigative consumer report may possibly be made regarding your
general reputation, character, mode of living and personal characteristics. This
information may be obtained through personal interviews with your friends,
neighbors and associates. Should you desire additional information on the nature
and scope of such a report, you may write the Underwriting Department,
Transamerica Occidental Life Insurance Company, PO Box 3183, Cedar Rapids, Iowa
52406-3183. You may also request information concerning the nature and scope of
the investigation to be performed. A summary of your rights is set forth on the
attached "Notice to Consumer".
THE MEDICAL INFORMATION BUREAU PRE-NOTICE
The Medical Information Bureau (MIB) is a non-profit organization of life
insurance companies which operates as an information exchange for its members.
We may make reports to the MIB regarding factors affecting your insurability.
Underwriting decisions, however, are not reported to the MIB. If you apply to
another Bureau member company for life or health insurance or submit a claim for
benefits, the MlB will, upon request, provide that company with information in
its file.
Upon your written request, the MIB will arrange for disclosure to you of any
information it has in your file. If you feel the information in the MIB's file
is incorrect, you may contact the MIB and seek a correction in accordance with
procedures outlined in the Federal Fair Credit Reporting Act. The address of the
MIB's office is: MIB, Inc.; P.O. Box 105, Essex Station; Boston, MA 02112. MIB's
telephone number: (617) 426-3660
If you would like to know more about how we collect, evaluate and control
information about you as one of our applicants for insurance, our sales
representatives will be happy to assist you or you may contact us at our office:
Transamerica Occidental Life Insurance Company
P.O. Box 3183
Cedar Rapids, Iowa 52406-3183
1-800-553-5957
Any Other
Questions?
U000287
8
<PAGE>
NOTICE TO CONSUMER
A SUMMARY OF YOUR RIGHTS UNDER THE FAIR CREDIT REPORTING ACT:
The Fair Credit Reporting Act (FCRA) is designed to promote accuracy, fairness,
and privacy of information in the files of every consumer reporting agency. Most
consumer reporting agencies are credit bureaus that gather and sell information
about you such as where you work and live, if you pay your bills on time, and
whether you've been sued, arrested, or filed for bankruptcy-to creditors,
employers, and other businesses. The FCRA gives you specific rights in dealing
with consumer reporting agencies, and requires them to provide you with a
summary of these rights as listed below. You can find the complete text of the
FCRA, 15 U.S.C. 1681 et. seq., at the Federal Trade Commissions web site
(http://www.ftc.gov). You may have additional rights under state law. You may
contact a state or local consumer protection agency or a state attorney general
to learn those rights.
o You must be told if information in your file has been used against you.
Anyone who uses information from consumer reporting agencies to take action
against you such as denying an application for credit, insurance, or
employment must give you the name, address, and phone number of the consumer
reporting agency that provided the report.
o You can find out what is in your file. A consumer reporting agency must give
you all the information in your file, and a list of everyone who has
requested it recently. However, you are not entitled to a "risk score" or
"credit score" that is based on information in your file. There is no charge
for the report if your application was denied because of information supplied
by the consumer reporting agency, and if you request the report within 60
days of receiving the denial notice. You are also entitled to one free report
a year if you certify that (1) you are unemployed and plan to seek employment
within 60 days, (2) you are on welfare, or (3) your report is inaccurate due
to fraud. Otherwise a consumer reporting agency may charge you a fee up to
$8.00 for a copy of your file.
o You can dispute inaccurate information with the credit reporting agency. If
you tell a credit reporting agency that your file contains inaccurate
information, the credit reporting agency must investigate the items (usually
within 30 days) by presenting to its information source all relevant evidence
you submit, unless your dispute is frivolous. The source must review your
evidence and report its findings to the credit reporting agency. (The source
must advise national credit reporting agencies-to which it provides data-of
any error.) The credit reporting agency must give you a written report of the
investigation and a copy of your report if the investigation results in any
change. If the credit reporting agencys investigation does not resolve the
dispute, you may add a brief statement to your file. The credit reporting
agency must normally include a summary of your statement in future reports.
If an item is deleted or a disputed statement is filed, you may ask that
anyone who has recently received your report be notified of the change.
o Inaccurate information must be corrected or deleted. A consumer reporting
agency must remove or correct inaccurate information from its files, usually
within 30 days after you dispute it. However, consumer reporting agencies are
not required to remove data from your file that is accurate unless it is
outdated or cannot be verified. If our dispute results in any change to your
report, the CRA cannot reinsert into your file a disputed item unless the
information source verifies its accuracy and completeness. In addition, the
CRA must give you a written notice telling you it has reinserted the item.
The notice must include the name, address, and phone number of the
information source.
o You can dispute inaccurate items with the source of the information. If you
tell anyone-such as a creditor who reports to a consumer reporting agency
that you dispute the item, they may not then report the information to a
consumer reporting agency without including a notice of your dispute. In
addition, once youve been notified the source of the error in writing, they
may not continue to report it if it is in fact an error. If you have
questions or believe your file contains errors, call the toll-free number of
the consumer reporting agency.
o Outdated information may not be reported. In most cases, consumer reporting
agencies may not report negative information that is more than seven years
old; ten for bankruptcies.
o Access to your file is limited. Consumer reporting agencies may provide
information about you only to those who have a need recognized by the
FCRA-usually to consider an application you have submitted to a creditor,
insurer, employer, landlord, or other business.
o Your consent is required for reports that are provided to employers or that
contain medical information. Consumer reporting agencies may not report to
your employer, or prospective employer, about you without your written
consent. Consumer reporting agencies may not divulge medical information
about you without your permission.
o You can stop a consumer reporting agency from including you on lists for
unsolicited credit and insurance offers. Creditors and insurers may use file
information as the basis for sending you unsolicited offers of credit or
insurance. Such offers must include a toll-free number for you to call and
tell the consumer reporting agency if you want your name and address excluded
from future lists or offers. If you notify the consumer reporting agency
through the toll-free number, it must keep you off the lists for two years.
If you request and complete the consumer reporting agency form provided for
this purpose, you can have your name and address removed indefinitely.
o You may have additional rights under state law. You may wish to contact a
state or local consumer protection agency or a state attorney general to
learn those rights.
U000287
9
<PAGE>
NOTICE TO CONSUMER
The FCRA gives several different federal agencies authority to enforce the FCRA.
The agencies listed below can assist you with questions and concerns concerning
the following types of businesses:
FOR QUESTIONS OR CONCERNS REGARDING THE FOLLOWING, PLEASE CONTACT:
CRAs, creditors and others not listed below, contact the Federal Trade
Commission Bureau of Consumer Protection-FCRA Washington, DC 20580.
202-326-3761.
National Banks, federal branches/agencies of foreign banks (word "National" or
initials "N.A." appear in or after banks name), contact the Office of the
Comptroller of the Current Compliance Management, Mail Stop 6-6 Washington, DC
20219. 800-613-6743.
Federal Reserve System member banks (except national banks, and federal
branches/agencies of foreign banks), contact the Federal Reserve Board Division
of Consumer & Community Affairs Washington, DC 20551. 202-452-3693.
Savings associations and federally chartered savings banks (word "Federal" or
initials "F.S.B." appear in federal institutions name), contact the Office of
Thrift Supervision Consumer Programs Washington, DC 20552. 800-842-6929.
Federal credit unions (words "Federal Credit Union" appear in institutions
name), contact the National Credit Union Administration, 1775 Duke Street,
Alexandria, VA 22314. 703-518-6360.
Banks that are state-chartered, or are not Federal Reserve System members,
contact the Federal Deposit Insurance Corporation Division of Compliance &
Consumer Affairs, Washington, DC 20429 . 800-934-FDIC.
Air, surface, or rail common carriers regulated by former Civil Aeronautics
Board or Interstate Commerce Commission, contact the Department of
Transportation Office of Financial Management, Washington DC 20590.
202-366-1306.
Activities subject to the Packers and Stockyards Act 1921, contact the
Department of Agriculture, Office of Deputy Administrator-GIPSA, Washington, DC
20250. 202-720-7051.
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<PAGE>
<TABLE>
<CAPTION>
PERSONAL HISTORY INFORMATION (PAGE 1 OF 2)
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 1. PERSONAL FINANCIAL STATEMENT 2. COMPLETE FOR CORPORATION, PARTNERSHIP, PENSION OR TRUST
<S> <C> <C>
A) Gross Income Current Yr $___________
B) Gross Income Previous Yr $___________ A) Current Estimated Market Value $_______________
C) Additional Income $___________ B) Assets Liquid $_______________
D) Net Worth $___________ Nonliquid $_______________
For over $1 million applied coverage complete C) Liabilities $_______________
a separate financial questionnaire D) Net Worth $_______________
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 3. MEDICAL QUESTIONS Each question must be individually asked and
answered.
Give the details of "Yes" answers below. Identify question number; state signs, symptoms and diagnosis
of each illness or injury. List the details and results of any treatment; List the name, full
address and dates of each health care provider consulted.
To the best of your knowledge, has any Proposed Insured within the last 10 yrs had or been told by a
member of the medical profession that he or she had, or has been treated for:
1) Heart murmur, high blood pressure, chest pain, heart attack, stroke, or
other disorder of the heart or circulatory system? [ ] Yes [ ] No
2) Asthma, Emphysema, Chronic Bronchitis, Tuberculosis, or any other
Respiratory disorder; colitis, ulcer or any other gastrointestinal
disorder; jaundice, hepatitis, liver or kidney disorder? [ ] Yes [ ] No
3) Cancer, tumor, polyp, breast, prostate or any other reproductive
disorder; or any thyroid or endocrine disorder? [ ] Yes [ ] No
4) Brain, mental, anxiety, depression, suicide attempt, or seizure
disorder; or any paralysis? [ ] Yes [ ] No
5) Diabetes, anemia, or any disorder of the blood; sugar, protein, or blood
in the urine? [ ] Yes [ ] No
6) Used amphetamines, heroin, cocaine, marijuana, or any other illegal or
controlled substance except as prescribed by a physician? [ ] Yes [ ] No
7) Sought or been advised to seek treatment, limit or discontinue use of
alcohol? [ ] Yes [ ] No
8) Been on or are now on prescribed medication or diet? [ ] Yes [ ] No
9) Has any Proposed Insured been told by a member of the medical profession
that he or she had a diagnosis of AIDS, ARC or the HIV infection? [ ] Yes [ ] No
10) Had or been advised to have any hospitalization, surgery, or any
diagnostic test including, but not limited to, electrocardiograms, blood
studies, scans, MRIs or other test? [ ] Yes [ ] No
11) An examination, treatment or consultation with a doctor or health care
provider other than above? [ ] Yes [ ] No
12) Have or have had a parent, brother or sister who has/had coronary artery
death or disease prior to age 60? [ ] Yes [ ] No
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 4. DETAILS TO "YES" ANSWERS FOR MEDICAL QUESTIONS SECTION
- -----------------------------------------------------------------------------------------------------------------------------------
Name, Address and Phone # of
Question # Proposed Insureds Name Date, Diagnosis, Treatment, Results, and Duration Attending Doctor and Hospital
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 5. Name and address of personal physician (if none, so state)
- ------------------------------------------- ------------------------------------------ ------------------------------------------
Proposed Primary Insured Joint or Other Insured Children
- ------------------------------------------- ------------------------------------------ ------------------------------------------
- ------------------------------------------- ------------------------------------------ ------------------------------------------
- ------------------------------------------- ------------------------------------------ ------------------------------------------
- ------------------------------------------- ------------------------------------------ ------------------------------------------
Date and reason last consulted a physician Date and reason last consulted a physician Date and reason last consulted a physician
- ------------------------------------------- ------------------------------------------ ------------------------------------------
- ------------------------------------------- ------------------------------------------ ------------------------------------------
- ------------------------------------------- ------------------------------------------ ------------------------------------------
- ------------------------------------------- ------------------------------------------ ------------------------------------------
</TABLE>
U000287 PHI
1
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENTAL - PERSONAL HISTORY INFORMATION (PAGE 2 OF 2)
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 6. RESIDENCY
Proposed Primary Insured
- ------------------------
<S> <C> <C>
A) Proposed Primary Insured is a citizen of [ ] USA [ ] Other Country ____________________ Type of VISA (Ex. Category 2A) _______
B) How many years has the Proposed Primary Insured resided in the USA?______________
C) Does any Proposed Primary Insured travel outside the USA? [ ] Yes [ ] No
If yes, provide details: include destination, number of trips, duration of each trip, purpose of trip, plans for the next year.
-------------------------------------------------------------------------------------------------------------------------
Other Insured
- -------------
A) Proposed Insured is a citizen of [ ] USA [ ] Other Country ____________________ Type of VISA (Ex. Category 2A) _________
B) How many years has the Proposed Insured resided in the USA?______________
C) Does any Proposed Insured travel outside the USA? [ ] Yes [ ] No
If yes, provide details: include destination, number of trips, duration of each trip, purpose of trip, plans for the next year.
SECTION 7. DRIVING RECORD/BACKGROUND INFORMATION
A) Has any Proposed Insured had their drivers license suspended, restricted, revoked, or been cited for a moving violation in the
last 5 years?
[ ] Yes [ ] No If yes, give reason & identify Proposed Insureds name:
B) Has any Proposed Insured in the last ten years been convicted of a misdemeanor (other than a minor traffic violation) or felony?
[ ] Yes [ ] No If yes, give reason & identify Proposed Insureds name:
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SECTION 8. SPECIAL ACTIVITIES (PLEASE PROVIDE NAME OF PROPOSED INSURED TO YES ANSWERS)
A) Except as a passenger on a regularly scheduled flight, has any Proposed Insured flown
within the past 3 years, or does any Proposed Insured have plans to fly in the future?
If yes, complete Aviation Questionnaire. [ ] Yes [ ] No ________________________
B) In the past 3 years has any Proposed Insured participated in racing (automobile, Name of Proposed Insured
motorcycle, or boat), underwater or sky diving, hang gliding, mountain or rock climbing?
If yes, complete an Avocation Questionnaire. [ ] Yes [ ] No ________________________
Name of Proposed Insured
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 9. REPRESENTATIONS
I represent that the statements and answers in this application are true and complete to the best of my knowledge.
I understand that I should consult my own tax and/or legal counsel as to the consequences of using this product in conjunction with
my own particular tax or financial plan.
It is agreed that:
(a) the statements and answers given in this application, and any amendments or application supplements to it or
statements made to the medical examiner, will be the basis of any insurance issued;
(b) no agent or medical examiner has the authority to make or alter any contract for the Company;
(c) if a premium deposit is given in exchange for the Conditional Receipt, no insurance shall take effect unless all of
the conditions set out in that receipt are satisfied;
(d) if a premium deposit is not given, no insurance shall take effect unless all of the following conditions are
satisfied;
(1) a policy issued by the Company is delivered to and accepted by the owner during the lifetime of each person
to be covered by such policy, (2) the full first premium is paid, and (3) the health and insurability of each
person proposed for insurance has not changed since the date of this application
Signed at _____________________________________ ____________ on ___________________________________________
(city) (state) (date)
------------------------------------------------------------------- ------------------------------------------
Signature of Proposed Primary Insured (Child over age 15 must sign) Print Agent Name Agent #
------------------------------------------------------------------- ------------------------------------------
Signature of Applicant (owner) other than the Signature of Agent State License #
Proposed Primary Insured (If business insurance, show
title of officer and name of firm)
------------------------------------------------------------------- ------------------------------------------
Signature of Parent or Legal Guardian for insured(s) 15 and under Split Agent Name Agent #
------------------------------------------------------------------- ------------------------------------------
Signature of Joint Insured or OIR Signature of Split Agent State License #
</TABLE>
U000287 PHI
2
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
ON THE LIFE OF____________________________ Supplement to Application Number
This supplement amends the above captioned _______________
application for life insurance and becomes
part of it as follows.
ADDITION OF PROPOSED OTHER INSURED RIDERS Dated ____________________
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 1. PROPOSED OTHER INSURED RIDER
1. Last Name First Name M.I.
- -----------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- -----------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
( )- -
- -----------------------------------------------------------------------------------------------------------------------------------
6. Sex 7. Date of Birth 8. Insurable Age 9. Place of Birth State/Country 10. Social Security Number
[ ] Male
[ ] Female - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
ft in lbs
- -----------------------------------------------------------------------------------------------------------------------------------
16. Occupation & Duties 18. Business Phone Number
- -----------------------------------------------------------------------------------------------
17. Employers Address ( )- -
- -----------------------------------------------------------------------------------------------------------------------------------
19. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? [ ] Yes [ ] No
20. Rate Class Quoted: [ ] Ult Select [ ] Select [ ] Ult Standard [ ] Standard [ ] Juvenile
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 2. PROPOSED OTHER INSURED RIDER
1. Last Name First Name M.I.
- -----------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- -----------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
( )- -
- -----------------------------------------------------------------------------------------------------------------------------------
6. Sex 7. Date of Birth 8. Insurable Age 9. Place of Birth State/Country 10. Social Security Number
[ ] Male
[ ] Female - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
ft in lbs
- -----------------------------------------------------------------------------------------------------------------------------------
16. Occupation & Duties 18. Business Phone Number
- -----------------------------------------------------------------------------------------------
17. Employers Address ( )- -
- -----------------------------------------------------------------------------------------------------------------------------------
19. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? [ ] Yes [ ] No
20. Rate Class Quoted: [ ] Ult Select [ ] Select [ ] Ult Standard [ ] Standard [ ] Juvenile
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 3. PROPOSED OTHER INSURED RIDER
1. Last Name First Name M.I.
- -----------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- -----------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
( )- -
- -----------------------------------------------------------------------------------------------------------------------------------
6. Sex 7. Date of Birth 8. Insurable Age 9. Place of Birth State/Country 10. Social Security Number
[ ] Male
[ ] Female - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
ft in lbs
- -----------------------------------------------------------------------------------------------------------------------------------
16. Occupation & Duties 18. Business Phone Number
- --------------------------------------------------------------------------------
17. Employers Address ( )- -
- -----------------------------------------------------------------------------------------------------------------------------------
19. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? [ ] Yes [ ] No
- -----------------------------------------------------------------------------------------------------------------------------------
20. Rate Class Quoted: [ ] Ult Select [ ] Select [ ] Ult Standard [ ] Standard [ ] Juvenile
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
V000287-Supp
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 4. PROPOSED OTHER INSURED RIDER
1. Last Name First Name M.I.
- -----------------------------------------------------------------------------------------------------------------------------------
2. Address Apt# City
- -----------------------------------------------------------------------------------------------------------------------------------
State Zip Code 3. Years at Address 4. Home Phone 5. Driver License Number State
( )- -
- -----------------------------------------------------------------------------------------------------------------------------------
6. Sex 7. Date of Birth 8. Insurable Age 9. Place of Birth State/Country 10. Social Security Number
[ ] Male
[ ] Female - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
11. Height 12. Weight 13. Marital Status 14. Relationship to Proposed Primary Insured 15. Employer Years
ft in lbs
- -----------------------------------------------------------------------------------------------------------------------------------
16. Occupation & Duties 18. Business Phone Number
- -----------------------------------------------------------------------------------------------
17. Employers Address ( )- -
- -----------------------------------------------------------------------------------------------------------------------------------
19. Have you used TOBACCO or any other product containing NICOTINE in the last 12 months? [ ] Yes [ ] No
20. Rate Class Quoted: [ ] Ult Select [ ] Select [ ] Ult Standard [ ] Standard [ ] Juvenile
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SECTION 5. CONTINUATION OF CHILDREN COVERED UNDER THE CHILDRENS INSURANCE RIDER
<TABLE>
<CAPTION>
<S> <C> <C>
COVERAGE AMOUNT ($5,000 MINIMUM TO $25,000 MAXIMUM COVERAGE FOR CHILDREN 18 AND UNDER) $__________ ____________
- ------------------------------------------------------------------------------------------------------------------------------------
Name Relationship Date of Birth Height Weight
- ------------------------------------------------------------------------------------------------------------------------------------
MM-DD-Y Y ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
MM-DD-Y Y ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
MM-DD-Y Y ft in lbs
- ------------------------------------------------------------------------------------------------------------------------------------
Are all children listed? [ ] Yes [ ] No If not, explain why:
Are children living with Proposed Primary Insured? [ ] Yes [ ] No If not, explain why:___________________________________
====================================================================================================================================
SECTION 6. CONTINUATION OF OTHER INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Name Company Amount of Insurance Year Issued Replacement?
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION 7. CONTINUATION OF MEDICAL EXPLANATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Name, Address and Phone # of
Question # Proposed Insured's Name Date, Diagnosis, Treatment, Results, and Duration Attending Doctor and Hospital
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION 8. CONTINUATION OF RESIDENCY
Are all Proposed Other Insureds citizens of the USA? [ ] Yes [ ] No. If not, please provide names and details ___________________
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION 9. DECLARATIONS
I (We) represent that all statements and answers made in this supplement are
full, complete and true to the best of my (our) knowledge and belief. It is
agreed that this statement shall be made part of the application, and is subject
to all terms and conditions contained in the application.
sec. 1 sec. 3
_____________________________________________________________ _____________________________________________________________
Signature of Proposed Other Insured (Child over 15 must sign) Signature of Proposed Other Insured (Child over 15 must sign)
sec. 2 sec. 4
_____________________________________________________________ _____________________________________________________________
Signature of Proposed Other Insured (Child over 15 must sign) Signature of Proposed Other Insured (Child over 15 must sign)
___________________________________ _____________________ _______________________________________________
Witness (Registered Representative) Name of Broker/Dealer Signed at (City/State)
___________________________________ _____________________ _______________________________________________
Witness (Registered Representative) Name of Broker/Dealer Signature of Applicant/Owner, if other than the
Proposed Primary Insured
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
U000287 Supp
Exhibit 1.A.(11)
Memorandum describing issuance, transfer and redemption procedures
<PAGE>
DESCRIPTION OF ISSUANCE, TRANSFER AND REDEMPTION PROCEDURES
FOR INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
ISSUED BY
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
This document sets forth the administrative procedures, as required by
Rule 6e-3(T)(b)(12)(iii), that will be followed by Transamerica Occidental Life
Insurance Company (the "Company") in connection with the issuance of
Transamerica Elite, its individual flexible premium variable life insurance
policy ("Policy" or "Policies") and acceptance of payments thereunder, the
transfer of assets held thereunder, and the redemption by owners of the Policy
("owners") of their interests in those Policies. Terms used herein have the same
definitions as in the prospectus for the Policy that is included in the current
registration statement on Form S-6 for the Policy (File No. 333-91851/811-09715)
as filed with the Securities and Exchange Commission ("SEC").
I. PROCEDURES RELATING TO PURCHASE AND ISSUANCE OF THE POLICIES AND
ACCEPTANCE OF PREMIUMS
A. OFFER OF THE POLICIES, APPLICATION, INITIAL PREMIUM, AND
ISSUANCE
OFFER OF THE POLICIES. The Policies are offered and issued
pursuant to underwriting standards in accordance with state
insurance laws for an initial premium determined by the owner,
who also has the flexibility to determine the frequency and
the amount of premiums to be paid under the Policy. However,
before the Policy is issued, the Company may require the owner
to pay a premium at least equal to a minimum no lapse premium
set forth in the Policy. Insurance is based on the principle
of pooling and distribution of mortality risks, which assumes
that each owner pays an initial premium commensurate with the
insured's mortality risk as actuarially determined utilizing
factors such as age, gender, and rate class of the insured.
Uniform premiums for all insureds would discriminate unfairly
in favor of those insureds representing greater risk. Although
there is no uniform premium for all insureds, there is a
uniform premium for all insureds of the same rate class, age,
and gender and same specified amount.
APPLICATION. Persons wishing to purchase a Policy must
complete an application and submit it to the Company or
through any licensed life insurance agent who is also a
registered representative of a broker-dealer having a selling
agreement with the principal underwriter for the Policy. The
application must specify the name of the insured(s) and
provide certain required information about the insured. The
application generally is accompanied by an initial premium,
designate premium allocation percentages, and name the
beneficiary. The initial premium is determined by the owner,
although, before the Policy is issued, the Company may require
the owner to pay a premium at least equal to a minimum no
lapse premium set forth in the Policy. Additional premium
payments must be at least $50. The owner determines the
specified amount for a Policy based on the initial premium
paid and other characteristics of the proposed insured, such
as age, gender and rate class. The minimum specified amount
for a Policy when issued is $100,000 for all issue ages. The
specified amount cannot be decreased below $100,000. If the
specified amount is $250,000 or more, then the specified
amount cannot be decreased below $250,000.
RECEIPT OF APPLICATION AND UNDERWRITING. Upon receipt of the
initial premium and a completed application in good order from
an applicant, the Company will follow underwriting procedures
for life insurance designed to determine whether the proposed
insured is insurable. This process may involve such
verification procedures as medical examinations and may
require that further information be provided about the
proposed insured before a determination can be made.
The underwriting process determines the rate class to which
the insured is assigned if the application is accepted. The
Policy uses mortality tables that distinguish between men and
women; as a result, the Policy pays different benefits to men
and women of the same age. The Company currently places
insureds in the following standard rate classes:
1
<PAGE>
o ultimate select, non-tobacco use;
o select, non-tobacco use;
o ultimate standard, tobacco use;
o standard, tobacco use; and
o juvenile (under age 18).
The Company also places insureds in various substandard rate
classes, which involve a higher mortality risk and higher
charges. The Company charges lower cost of insurance rates to
insureds who are in an "ultimate" class. For Policies with a
specified amount of $250,000 or more, the Company generally
charges a lower rate. An ultimate class is only available if,
because of the specified amount the owner has chosen, the
Company's underwriting guidelines require the insured to take
a blood test.
The Company reserves the right to reject an application for
any reason permitted by law. [If an application is rejected,
any premium received will be returned, without interest.]
ISSUANCE OF POLICY. When the underwriting procedure has been
completed, the application has been approved, and an initial
premium of sufficient amount has been received, the Policy is
issued. This is the Policy date.
The Policy date is the date when the Company's underwriting
process is complete, full life insurance coverage goes into
effect and the Company begins to make the monthly deductions.
The Policy date is shown on the schedule page of the Policy.
It is also the date when, depending on the laws of the state
governing the Policy (usually the state where the insured
lives), the Company allocates the initial premium, minus
monthly deductions, either to the reallocation account
(currently the fixed account) or to the fixed account and the
subaccounts selected on the Policy application. If the
applicant's state requires the Company to return the initial
premium in the event the free-look period is exercised, then
the Company will allocate the initial premium on the Policy
date to the reallocation account until the reallocation date.
The reallocation date is the record date (the date the Company
records the Policy on the books as an in force Policy) plus
the number of days in that state's free look period, plus five
days. The Company measures Policy months, years, and
anniversaries from the Policy date.
INITIAL PREMIUM AND CONDITIONAL COVERAGE. An applicant must
generally pay an initial premium with the application.
Conditional coverage becomes effective on the later of
o the date of the application; or
o the date the insured completes all of the medical
tests and examinations; or
o the date of issue, if any, requested on the
application.
The amount of conditional coverage is the lesser of the
specified amount applied for or $300,000, reduced by all
amounts payable under all life insurance applications that the
insured has in force or pending with the Company. Conditional
coverage continues until the application is approved or other
conditions specified in the prospectus are met.
TAX-FREE EXCHANGES (1035 EXCHANGES). The Company will accept
initial premium money from one or more contracts insuring the
same insured that qualify for a tax-free exchange under
Section 1035 of the Internal Revenue Code.
B. ADDITIONAL PREMIUMS
ADDITIONAL PREMIUMS PERMITTED. The owner generally has
flexibility to determine the frequency and the amount of the
premiums to be paid under the Policy. Premium payments must be
at least $50 if paid monthly and $600 if paid annually. The
Company will not allow the owner to make additional premium
payments if it would cause the total premiums paid to exceed
the
2
<PAGE>
current maximum premium limitations which qualify the Policy
as life insurance according to federal tax laws and
regulations. If the owner makes a premium payment that would
cause the total premiums to be greater than the maximum
premium limitations, the Company will return any excess
portion of the premium payment. The Company will not permit
any additional premium payments until they are allowed by the
maximum premium limitations. The Company also reserves the
right to refund a premium if such premium would increase the
death benefit by more than the amount of the premium.
An owner may pay premiums by any method the Company deems
acceptable. The Company will also accept premium payments by
wire transfer. The Company will treat any payment made as a
premium repayment unless it is clearly marked as a loan
payment.
C. CREDITING PREMIUMS
INITIAL PREMIUM. On the Policy date, the initial premium will
be allocated either to the reallocation account or to the
fixed account and the subaccounts selected on the Policy
application. Once the Company determines that the insured
meets its underwriting requirements, full insurance coverage
begins and the Company begins to make monthly deductions from
the premium. If the applicant's state requires the Company to
return the initial premium in the event the free-look period
is exercised, then the Company will allocate the initial
premium on the Policy date to the reallocation account until
the reallocation date. While held in the fixed account,
premium(s) will be credited with interest at the current fixed
account rate The reallocation date is the record date (the
date the Company records the Policy on the books as an in
force Policy) plus the number of days in that state's free
look period, plus five days.
On any day that the Company credits premiums or transfers cash
value to a subaccount, the Company will convert the dollar
amount of the premium (or transfer) into subaccount units at
the unit value for that subaccount, determined at the end of
that valuation date. The Company will credit amounts to the
subaccounts only on a valuation date, that is, on a date the
New York Stock Exchange ("NYSE") is open for trading.
D. PLANNED PERIODIC PAYMENTS. The owner determines a planned
periodic payment schedule which allows the owner to pay level
premiums at fixed intervals over a specified period of time.
The owner is not required to pay premiums according to this
schedule. The owner may change the amount, frequency, and the
time period over which the owner makes planned periodic
payments.
Even if the owner makes planned periodic payments on schedule,
the Policy may still lapse. The duration of the Policy depends
on the Policy's net surrender value. If the net surrender
value is not high enough to the pay the monthly deduction when
due (and the no lapse period has expired) then the Policy will
lapse (unless the owner makes the payment the Company
specifies during the 61-day grace period).
E. NO LAPSE PERIOD; PREMIUMS DURING A GRACE PERIOD AND PREMIUMS
UPON REINSTATEMENT.
The full initial premium is the only premium the owner is
required to pay under the Policy. However, the owner greatly
increases the risk of lapse if the owner does not regularly
pay premiums at least as large as the current minimum no lapse
premium.
Until the no lapse date (that is, until the end of the third
Policy year), the Company guarantees that the Policy will not
lapse, so long as the owner has paid total premiums (MINUS any
withdrawals, MINUS any outstanding loans and MINUS any pro
rata decrease charge) that equal or exceed the sum of the
monthly minimum no lapse premium in effect for each specific
month from the Policy date up to and including the current
month. If the owner takes a withdrawal, or takes out a loan,
or if the owner decreases the specified amount, the owner may
need to pay additional premiums in order to keep the no lapse
guarantee in place.
3
<PAGE>
The initial minimum no lapse premium is shown on the Policy's
schedule page, and depends on a number of factors, including
the age, gender, and rate class of the proposed insured, and
the specified amount requested. The minimum no lapse premium
will change if the owner changes death benefit options,
decreases the specified amount or adds or increases a rider.
If the minimum no lapse premium changes, the Company will
notify the owner of the change and its effective date.
AFTER THE THIRD POLICY YEAR (THAT IS, AFTER THE NO LAPSE
PERIOD), PAYING THE CURRENT MINIMUM NO LAPSE PREMIUM EACH
MONTH WILL NOT NECESSARILY KEEP THE POLICY IN FORCe. The owner
may need to pay additional premiums to keep the Policy in
force.
As long as the no lapse period is in effect, the Policy will
not lapse and no grace period will begin, even if the net
surrender value is insufficient to pay the monthly deductions.
Each month the Company determines whether the no lapse period
is still in effect. The no lapse period will end immediately
if the owner does not pay sufficient minimum no lapse
premiums. The owner must pay total premiums (minus
withdrawals, loans, and any pro rata decrease charge) that
equals or exceeds the sum of the monthly minimum no lapse
premium from the Policy date up to and including the current
month.
If the net surrender value is less than the amount of the
monthly deduction due on any Monthiversary and the no lapse
period is no longer in effect, then the Policy will be in
default and a grace period will begin. The grace period will
end 61 days after the date on which the Company sends a grace
period notice stating the amount required to be paid and the
final date by which the Company must receive the payment. The
notice will be sent to the owner's last known address and to
any assignee of record. The Policy does not lapse, and the
insurance coverage continues, until the expiration of this
grace period.
If the grace period ends and the no lapse period is no longer
in effect, all coverage under the Policy will terminate
without value. The Company will reinstate the Policy for five
years after the lapse (and prior to the maturity date) if:
o the owner submits a reinstatement application;
o the insured meets the Company's insurability
requirements; and
o the owner makes a premium payment large enough to
cover
o three monthly deductions; and
o any surrender charge calculated from the
Policy date to the reinstatement date.
(Although the Company does not currently
assess this charge, it reserves the right to
do so in the future.)
F. ALLOCATIONS OF INITIAL PREMIUM AMONG THE FIXED ACCOUNT AND
THE SUBACCOUNTS
THE SEPARATE ACCOUNT. An owner may allocate premiums to up to
12 of the subaccounts of the Transamerica Occidental Life
Separate Account VUL-3 (the "separate account"). The separate
account currently consists of 30 subaccounts, the assets of
which are used to purchase shares of a designated
corresponding investment portfolio of a fund. Each fund is
registered under the Investment Company Act of 1940, as
amended, as an open-ended management investment company.
Additional subaccounts may be added from time to time to
invest in other portfolios of a fund or any other investment
company.
When an owner allocates an amount to a subaccount (either by
premium allocation, transfer of cash value or repayment of a
Policy loan), the Policy is credited with units in that
subaccount. The number of units is determined by dividing the
amount allocated, transferred or repaid to the subaccount by
the subaccount's unit value for the valuation date when the
allocation or transfer request or repayment is received at the
Company's administrative office. A subaccount's unit value is
determined for each valuation period by multiplying the value
of a unit for a subaccount for the prior valuation period by
the net investment factor for the subaccount for the current
4
<PAGE>
valuation period. The unit value for each subaccount was
arbitrarily set as $10 at the time the subaccount commenced
operations. The net investment factor is an index used to
measure the investment performance of a subaccount from one
valuation period to the next.
THE FIXED ACCOUNT. Owners also may allocate premiums to the
fixed account, which guarantees principal and a minimum fixed
rate of interest. Money allocated or transferred to the fixed
account will earn interest at a current interest rate in
effect at that time. The interest rate will equal at least 3%.
ALLOCATIONS OF PREMIUMS AMONG THE SEPARATE ACCOUNT AND THE
FIXED ACCOUNT. Premiums are allocated to the subaccounts and
the fixed account in accordance with the following procedures:
GENERAL. In the application for the Policy, the owner will
specify the percentage of each premium to be allocated to each
subaccount of the separate account and/or the fixed account.
The percentage of each premium that may be allocated to any
subaccount or the fixed account must be a whole number, and
the sum of the allocation percentages must be 100%. If the
owner selects standard dollar cost averaging, then the owner
must have at least $5,000 in each subaccount from which the
Company will make transfers and the owner must transfer a
total of $100 monthly. If the owner selects asset rebalancing,
the cash value of the Policy (or initial premium if a new
Policy) must be at least $5,000.
Allocation percentages may be changed at any time by the owner
submitting a written notice or telephone instructions to the
Company's administrative office. In the future, the Company
may decide that the minimum amount that can be allocated to a
particular subaccount is 1% of each premium payment.
G. LOAN REPAYMENTS AND INTEREST PAYMENTS
REPAYING LOAN AMOUNT. The owner may repay all or part of the
loan amount at any time while the Policy is in force and the
insured is living. The loan amount is equal to the sum of all
outstanding Policy loans including both principal plus any
accrued interest. Loan repayments must be sent to the
Company's administrative office and will be credited as of the
date received. If the death benefit becomes payable while a
Policy loan is outstanding, the loan amount will be deducted
in calculating the death benefit.
ALLOCATION FOR REPAYMENT OF POLICY LOANS. At each Policy
anniversary, the Company will compare the amount of the
outstanding loan to the amount in the loan reserve. At such
time, if the amount of the outstanding loan exceeds the amount
in the loan reserve, the Company will withdraw the difference
from the subaccounts and the fixed account and transfer it to
the loan reserve, in the same manner as when a loan is made.
If the amount in the loan reserve exceeds the amount of the
outstanding loan, the Company will withdraw the difference
from the loan reserve and transfer it to the subaccounts and
the fixed account in the same manner as current premiums are
allocated. No charge will be imposed for these transfers, and
these transfers are not treated as transfers in calculating
the transfer charge. The Company reserves the right to require
a transfer to the fixed account if the loans were originally
transferred from the fixed account.
INTEREST ON LOAN RESERVE. The amount in the loan reserve will
be credited with interest at a minimum guaranteed annual
effective rate of 4%. See "Policy Loans" below. Any interest
earned that is in excess of the amount of the outstanding loan
amount will be transferred on the Policy anniversary to the
subaccounts and the fixed account in accordance with the
instructions for premium allocations then in effect.
5
<PAGE>
II. TRANSFERS
A. TRANSFERS AMONG THE SUBACCOUNTS AND THE FIXED ACCOUNT
The owner may transfer cash value between and among the
subaccounts of the separate account and, subject to certain
special rules, to and from the fixed account.
In any Policy year, the owner may make an unlimited number of
transfers; however, the Company imposes a transfer charge of
$10 for the 13th and each additional transfer in a Policy
year. For purposes of the transfer charge, all transfer
requests made in one day are considered one transfer,
regardless of the number of subaccounts affected by the
transfer. Any unused "free" transfers do not carry over to the
next year.
There is no minimum amount that must be transferred from each
subaccount or the fixed account. There is no minimum amount
that must remain in a subaccount following a transfer.
Requests to transfer from the fixed account must be received
by the Company during the 30-day period following the end of
each Policy year, unless the owner has selected dollar cost
averaging, and transfers are limited to one per Policy year.
The maximum amount that may be transferred amount from the
fixed account to the subaccounts in any Policy year is limited
to the greater of: 25% of the cash value in the fixed account
on the date of the transfer; or the amount transferred from
the fixed account in the immediately prior Policy year.
The Policy, as applied for and issued, will automatically
receive telephone transfer privileges unless the owner
provides other instructions. The telephone transfer privileges
allow the owner to give authority to the registered
representative or agent of record for the Policy to make
telephone transfers and to change the allocation of future
payments among the subaccounts and the fixed account on the
owner's behalf according to the owner's instructions.
The Company reserves the right to modify, restrict, suspend,
or eliminate the transfer privileges (including telephone
transfer privileges) at any time and for any reason.
B. DOLLAR COST AVERAGING
The dollar cost averaging program permits an owner to transfer
systematically on a monthly basis a set dollar amount from the
fixed account or the portfolios investing in the money market
and the bond subaccounts to a subaccount chosen by the owner.
Transfers will be made monthly as of the end of the valuation
date starting on the first Monthiversary after the
reallocation date. An owner may elect to participate in the
dollar cost averaging program at any time by sending the
Company a written request. To participate in the dollar cost
averaging program, an owner must have at least $5,000 in each
account from which the Company will make transfers and total
monthly transfers must be at least $100. There is no charge
for using the dollar cost averaging program. However, each
transfer under this program counts towards the 12 free
transfers permitted each year. The Company reserves the right
to discontinue offering the dollar cost averaging program at
any time and for any reason. Dollar cost averaging is not
available while an owner is participating in the asset
rebalancing program.
C. ASSET REBALANCING
An owner may instruct the Company to rebalance automatically
(on a quarterly, semi-annual or annual basis) the Policy's
cash value to maintain the percentage allocation specified in
the owner's currently effective premium allocation schedule.
An owner may elect to participate in the asset rebalancing
program at any time by sending a completed allocation request
form to the Company's administrative office before the
maturity date. To participate in the asset rebalancing
program, the Policy must have a cash value of at least $5,000.
The allocation percentages must be in whole numbers.
Subsequent changes to the allocation percentages may be made
at any time by written or telephone instructions to the
Company's administrative office. Once elected, asset
rebalancing
6
<PAGE>
remains in effect until the owner instructs the Company to
discontinue asset rebalancing. There is no charge for using
the asset rebalancing program. However, each reallocation made
under this program counts towards the 12 free transfers
permitted each year. The Company reserves the right to
discontinue offering the asset rebalancing program at any time
and for any reason. Asset rebalancing is not available while
an owner is participating in the dollar cost averaging
program. Asset rebalancing will cease if the owner makes any
transfer to or from any subaccount other than under a
scheduled rebalancing.
D. TRANSFER ERRORS
In accordance with industry practice, the Company will
establish procedures to address and to correct errors in
amounts transferred among the subaccounts and the fixed
account, except for de minimus amounts. The Company will
correct non de minimus errors it makes and will assume any
risk associated with the error. Owners will not be penalized
in any way for errors made by the Company. The Company will
take any gain resulting from the error.
III. "REDEMPTION" PROCEDURES
A. "FREE-LOOK" RIGHT
The Policy provides for an initial free-look right during
which an owner may cancel the Policy by returning it to the
Company's administrative office, to one of the Company's
branch offices or to the agent who sold the Policy. The
free-look period expires 10 days after the owner receives the
Policy. The free-look period may be longer in some states.
Upon returning the Policy to the Company or to an authorized
agent for forwarding to the Company's administrative office,
the Policy will be deemed void from the beginning. Within
seven days after the Company's administrative office receives
the cancellation request and the Policy, the Company will pay
a refund. In most states, the refund will be:
o any monthly deductions or other charges deducted from
amounts allocated to the subaccounts and the fixed
account; PLUS
o the cash value in the subaccounts and the fixed account
on the date the Company (or its agent) receives the
returned Policy at the Company's administrative office.
Some states may require the Company to refund all of the
premiums paid for the Policy.
B. SURRENDERS
REQUESTS FOR NET SURRENDER VALUE. The owner may surrender the
Policy at any time for its net surrender value. The net
surrender value on any valuation date is the cash value, minus
any surrender charge, minus any outstanding loan amount minus
any interest owed on Policy loans. The net surrender value
will be determined by the Company on the valuation date the
Company's administrative office receives all required
documents, including a satisfactory written request signed by
the owner at the administrative office. The Company will
cancel the Policy as of the date the written request is
received at the Company's administrative office and the
Company will ordinarily pay the net surrender value in a lump
sum within seven days following receipt of the written request
and all other required documents. The Policy cannot be
reinstated after it is surrendered.
SURRENDER OF POLICY -- SURRENDER CHARGE. If the Policy is
surrendered during the first 15 Policy years, the Company will
deduct a surrender charge from the cash value and pay the
remaining cash value (less any outstanding Policy loan amounts
and unpaid interest) to the owner. One portion of the charge
is an issue charge equal to $5.00 per $1,000 of initial
specified amount. The other portion (the surrender charge
base) is calculated by adding total premiums paid (up to the
surrender charge base premium) to any premium paid above the
surrender charge base premium multiplied by percentages that
vary by issue age. The sum of the issue charge and the
surrender
7
<PAGE>
charge base is then multiplied by the surrender charge factor.
The surrender charge factor is reduced by 20% per year
beginning in Policy year 11, until it reaches zero at the end
of the 15th Policy year.
C. CASH WITHDRAWALS
WHEN WITHDRAWALS ARE PERMITTED. After the first Policy year,
the owner may withdraw a portion of the cash value, subject to
the following conditions:
o The owner must make cash withdrawal requests in
writing.
o Only one cash withdrawal is allowed during a Policy
year.
o The Company may limit the withdrawal amount to at least
$500 and to no more than 10% of the net surrender value
during the first 10 Policy years. The Company currently
intends the limit the withdrawal amount to 25% of the
net surrender value after the 10th Policy year.
o A cash withdrawal will not be permitted if it will
reduce the specified amount below the minimum specified
amount set forth in the Policy.
o The owner may specify the subaccount(s) and the fixed
account from which the withdrawal will be taken. If the
owner does not specify an account, the Company will
deduct the Policy's value in the subaccounts and the
fixed account in accordance with the owner's current
premium allocation instructions.
o The Company generally will pay a cash withdrawal
request within seven days following the valuation date
on which the withdrawal request is received.
o The Company will deduct a processing fee equal to $25
or 2% of the amount withdrawn and will pay the owner
the balance.
o The Company does not deduct a surrender charge when a
cash withdrawal is taken.
The Company may delay making a payment if: (1) the disposal or
valuation of the separate account's assets is not reasonably
practicable because the NYSE is closed for other than a
regular holiday or weekend, trading is restricted by the SEC,
or the SEC declares that an emergency exists; or (2) the SEC
by order permits postponement of payment to protect the Policy
owners. The Company also may defer making payments
attributable to a check that has not cleared, and may defer
payment of proceeds from the fixed account for a withdrawal,
surrender or Policy loan request for up to six months from the
date the request is received. The Company will not defer
payment of a withdrawal or Policy loan requested to pay a
premium due on a policy issued by the Company.
EFFECT OF WITHDRAWAL ON DEATH BENEFIT. A cash withdrawal will
reduce the cash value by the amount of the cash withdrawal and
will reduce the death benefit by at least the amount of the
cash withdrawal. If death benefit Option A is in effect, a
cash withdrawal will reduce the specified amount by an amount
equal to the amount of the cash withdrawal.
D. LAPSES
If the no lapse period is not in effect and if a sufficient
premium has not been received by the 61st day after a grace
period notice is sent, the Policy will lapse without value and
no amount will be payable to the owner unless the Policy is
reinstated within five years after the lapse and prior to the
maturity date.
8
<PAGE>
E. PREMIUM CHARGES, CASH VALUE CHARGES AND MORTALITY AND EXPENSE
RISK CHARGE
PREMIUM CHARGES. The Company does not deduct any charges from
premiums before allocating such premiums to the subaccounts
and fixed account selected by the owner.
CASH VALUE CHARGES. On each Monthiversary, redemptions will be
made from cash value for the monthly deduction, which is a
charge compensating the Company for the services and benefits
provided, costs and expenses incurred, and risks assumed by
the Company in connection with the Policy. The monthly
deduction consists of four components: (a) a monthly Policy
charge; (b) the cost of insurance charge; (c) any charges for
additional benefits added by riders to the Policy; and (d) any
pro rata decrease charge incurred as a result of a decrease in
specified amount.
MONTHLY DEDUCTION. A monthly deduction will be deducted pro
rata from the Policy's value in each subaccount and the fixed
account on the Policy date and on each Monthiversary (i.e.,
deductions will be withdrawn from each subaccount and the
fixed account in proportion to the value each bears to the
cash value).
The monthly deduction is equal to:
o the monthly Policy charge; PLUS
o the monthly cost of insurance charge for the Policy;
PLUS
o the monthly charge for any benefits provided by riders
attached to the Policy; PLUS
o any pro rata decrease charge incurred as a result of a
decrease in specified amount.
o MONTHLY POLICY CHARGE. The monthly Policy charge equals
$5.00 each Policy month. The Company may waive this
charge at issue on additional policies (not on the
original Policy) purchased naming the same owner and
insured.
o COST OF INSURANCE CHARGE. The cost of insurance charge
is calculated monthly, and the amount varies each month
depending on the attained age, gender and rate class of
the insured and the length of time the Policy has been
in force. For Policies with a specified amount of
$250,000 or more, the Company generally charges a lower
rate. The cost of insurance charge varies each month
and is equal to:
o the death benefit on the Monthiversary; DIVIDED
BY
o 1.0024663 (this factor reduces the net amount at
risk, for purposes of computing the cost of
insurance, by taking into account assumed
monthly earnings at an annual rate of 3.0%);
MINUS
o the cash value on the Monthiversary; MULTIPLIED
BY
o the monthly cost of insurance rate for the
Policy
These rates will never be greater than the guaranteed
amounts stated in the Policy which are based on the 1980
Commissioners Standard Ordinary (C.S.O.) Mortality Tables
and the insured's attained age, gender and rate class.
o OPTIONAL INSURANCE RIDERS. The monthly deduction will
include charges for any optional insurance benefits
added to the Policy by rider.
o PRO RATA DECREASE CHARGE. If the specified amount is
decreased during the first 15 Policy years, the Company
will deduct from the cash value a pro rata decrease
charge equal to:
o the specified amount decrease requested by the
owner; DIVIDED BY
o the full specified amount on the Policy date;
MULTIPLIED BY
o the surrender charge as of the date of the
decrease based on the specified amount on the
Policy date.
9
<PAGE>
A pro rata decrease charge will not be deducted from the cash
value if the specified amount decrease results from:
o a change in the death benefit option; or
o a cash withdrawal (when death benefit Option A
is selected).
MORTALITY AND EXPENSE RISK CHARGE. Each valuation date, the
Company deducts a daily charge from the cash value in each
subaccount in an amount equal to the Policy's cash value in
each subaccount multiplied by the daily pro rata portion of
the annual mortality and expense risk charge rate of 0.90%
(equal to 0.90% of the average daily net assets in each
subaccount). the Company guarantees to reduce this charge to
0.60% after the 15th Policy year.
F. DEATH BENEFITS
DEATH BENEFIT PROCEEDS. As long as the Policy is in force, the
Company will pay the death benefit proceeds to the beneficiary
upon receipt at the Company's administrative office of
satisfactory proof of the insured's death.
The death benefit proceeds equal:
o the death benefit (described below); MINUS
o any past due monthly deductions if the insured dies
during the grace period; PLUS
o any additional insurance in force provided by rider;
MINUS
o any single-sum benefits paid under the living benefit
rider; MINUS
o any outstanding Policy loans; MINUS
o any interest owed on Policy loan(s).
If all or part of the death benefit proceeds will be paid to
the beneficiary in one sum, the Company will pay interest on
this sum as required by applicable state law from the date the
Company receives due proof of the insured's death to the date
the Company makes payment. Generally payment will be made
within seven days after the valuation date on which the
Company has received at the Company's administrative office
all materials necessary to constitute due proof of death.
If a payment option is elected, the death benefit will be
applied to the option within seven days after the valuation
date by which the Company received due proof of death and
payments will begin under that option when provided by the
option.
DEATH BENEFIT. The death benefit is determined at the end of
the valuation period in which the insured dies. One of the two
death benefits options offered under the Policy must be
selected on the application. The two death benefits are:
OPTION A equals the greater of:
o the current specified amount; or
o a specified percentage, called the limitation
percentage, multiplied by the cash value on the
insured's date of death.
OPTION B equals the greater of:
o the current specified amount; PLUS
o the cash value on the insured's date of death;
OR
o the limitation percentage, MULTIPLIED BY
o the cash value on the insured's date of death.
10
<PAGE>
The Company guarantees that, regardless of the death benefit
option selected, so long as the Policy does not lapse, the
death benefit will never be less than the specified amount on
the insured's date of death.
SUPPLEMENTAL DEATH BENEFITS. Supplemental death and other
benefits may be added to the Policy by purchasing one or more
riders as described in the current prospectus for the Policy.
G. POLICY LOANS
POLICY LOANS. The owner may obtain a Policy loan from the
Company at any time by submitting a written, faxed, or
telephone request to the Company's administrative office. The
minimum loan amount may be $500 and the maximum loan amount is
90% of the Policy's cash value, less any surrender charge and
any already outstanding loan amount, at the time of the loan.
Policy loans will be processed as of the valuation date the
request is received and loan proceeds generally will be sent
to the owner within seven days thereafter.
COLLATERAL FOR POLICY LOANS. When a Policy loan is made, an
amount equal to the loan proceeds is transferred from the cash
value in the subaccounts or fixed account to the loan reserve.
This withdrawal is made based on the owner's current premium
allocation instructions, unless the owner specifies a
different allocation when requesting the loan.
INTEREST ON POLICY LOANS. The Company charges interest on any
outstanding Policy loan at an effective annual interest rate
of 5.5% payable in arrears on each Policy anniversary. Loan
interest that is unpaid when due will be added to the loan
amount on each Policy anniversary and will bear interest at
the same rate. The Company will credit the amount in the loan
reserve with interest at an effective annual rate of at least
4%. An amount equal to the unpaid amount of interest is
transferred to the loan reserve from each subaccount and the
fixed account based on the owner's current premium allocation
instructions, unless the owner directs otherwise.
After the 10th Policy year, you may borrow at preferred loan
rates an amount equal to the cash value minus total premiums
paid (reduced by any cash withdrawals) and minus any
outstanding loan amounts (including any interest you owe on
Policy loan(s)). We currently credit interest at a 5.5%
preferred loan rate. THIS RATE IS NOT GUARANTEED.
EFFECT ON DEATH BENEFIT. If the death benefit becomes payable
while a Policy loan is outstanding, the loan amount plus
interest owed will be deducted in calculating the death
benefit. If at any time the sum of outstanding loans, plus any
interest owed, is more than the net surrender value of the
Policy, the Company will send the owner, and any assignee of
record, notice of the default and the owner will have a 61-day
grace period to submit a sufficient payment to avoid lapse.
I. LUMP SUM PAYMENTS BY THE COMPANY
Lump sum payments of cash withdrawals, surrenders or death
benefits from the subaccounts ordinarily will be made within
seven days of the valuation date on which the Company receives
the request and all required documentation at the Company's
administrative office. The Company may postpone the processing
of any such transactions for any of the following reasons:
o if the disposal or valuation of the separate account's
assets is not reasonably practicable because the NYSE
is closed for trading other than for customary holiday
or the weekend closings, or trading on the NYSE is
otherwise restricted, or an emergency exists, as
determined by the SEC;
o when the SEC by order permits a delay for the
protection of owners; or
o if the payment is attributable to a check that has not
cleared.
11
<PAGE>
The Company may defer, for up to six months after the date the
Company receives the request, the payment of any proceeds from
the fixed account for a transfer, cash withdrawal, or
surrender request.
J. CONVERSION RIGHT
The owner has the right to transfer all of the subaccount
value to the fixed account. During the first 24 Policy months,
such a transfer is not counted for purposes of determining
whether a transfer charge applies.
K. REDEMPTION ERRORS
In accordance with industry practice, the Company will
establish procedures to address and to correct errors in
amounts redeemed from the subaccounts and the fixed account,
except for de minimus amounts. The Company will assume the
risk of any non de minimus errors caused by the Company.
L. MISSTATEMENT OF AGE OR SEX
If the insured's age or gender has been misstated in the
application or any other supplemental application, then the
death benefit under the Policy will be adjusted based on what
the initial premium would have purchased based on the
insured's correct age and gender.
M. INCONTESTABILITY
The Policy limits the Company's right to contest the Policy as
issued or as increased, for reasons of material misstatements
contained in the application, after it has been in force
during the insured's lifetime for a minimum period, generally
for two years from the Policy date or the effective date of a
reinstatement.
N. LIMITED DEATH BENEFIT
The Policy limits the death benefit if the insured dies by
suicide generally within two years after the Policy date or
the effective date of a reinstatement.
12
Exhibit 3.
Opinion and consent of counsel as to the legality of the securities being
registered
<PAGE>
[Transamerica Letterhead]
April 14, 2000
Board of Directors
Transamerica Occidental Life Insurance Company
Transamerica Occidental Separate Account VUL-3
570 Carillon Parkway
St. Petersburg, Florida 33716
Gentlemen:
In my capacity as Vice President of and counsel to Transamerica Occidental Life
Insurance Company ("TOLIC"), I have participated in the preparation and review
of this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6
(File No. 333-91851) filed with the Securities and Exchange Commission under the
Securities Act of 1933 for the registration of an individual flexible premium
variable life insurance policy (the "Policy") to be issued with respect to the
Transamerica Occidental Separate Account VUL-3 (the "Account"). The Account was
established pursuant to a resolution of the Board of Directors of TOLIC, as a
separate account for assets applicable to the Policy, pursuant to the provisions
of Section 10506 of the California Insurance Code.
I am of the following opinion:
1. TOLIC has been duly organized under the laws of California and is a
validly existing corporation.
2. The Account has been duly created and is validly existing as a separate
account pursuant to the aforesaid provision of California law.
3. Section 10506 of the California Insurance Code provides that the
portion of the assets of the Account equal to the reserves and other
liabilities for variable benefits under the Policy is not chargeable
with liabilities arising out of any other business TOLIC may conduct.
Assets allocated to the fixed account under the Policy, however, are
part of TOLIC's general account and are subject to TOLIC's general
liabilities from business operations.
4. The Policy, when issued as contemplated by the Registration Statement,
will be legal and binding obligations of TOLIC in accordance with their
terms.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as I judged to be necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Thomas E. Pierpan
Vice President
Exhibit 6.
Opinion and consent of Alan M. Yaeger as to actuarial matters pertaining to
the securities being registered
<PAGE>
[Transamerica Letterhead]
April 14, 2000
Transamerica Occidental Life Insurance Company
570 Carillon Parkway
St. Petersburg, Florida 33716
RE: Registration No. 333-91851
Gentlemen:
This opinion is furnished in connection with the Pre-Effective Amendment No. 1
registration by Transamerica Occidental Life Insurance Company of an individual
flexible premium variable life insurance policy (the "Policy") under the
Securities Act of 1933, as amended. The prospectus included in the Registration
Statement on Form S-6 describes the Policy. The form of the Policy was prepared
under my direction, and I am familiar with the Registration Statement and
exhibits thereof.
In my opinion, the illustrations of death benefits, cash values and net
surrender values included in the section entitled, Appendix A - Illustration, of
the prospectus, based on the assumptions stated in the illustrations, are
consistent with the provisions of the of the Policy form.
I hereby consent to use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
prospectus.
Very truly yours,
/s/ Alan M. Yaeger
Vice President and Actuary
Exhibit 8.
Consent of Sutherland Asbill & Brennan LLP
<PAGE>
[S.A.B. Letterhead]
April 14, 2000
Board of Directors
Transamerica Occidental Life Insurance Company
Transamerica Occidental Life Separate Account VUL-3
570 Carillon Parkway
St. Petersburg, Florida 33716
RE: Transamerica Occidental Life Separate Account VUL-3
File No. 333-91851
Gentlemen:
We hereby consent to the use of our name under the caption "Legal
Matters" in the prospectus for the Transamerica Elite contained in Pre-Effective
Amendment No. 1 to the Registration Statement on Form S-6 (File No. 333-91851)
of the Transamerica Occidental Life Separate Account VUL-3 filed by Transamerica
Occidental Life Insurance Company with the Securities and Exchange Commission.
In giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND ASBILL & BRENNAN LLP
By: /s/ Stephen E. Roth
Stephen E. Roth
Exhibit 9.
Consent of Ernst & Young LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 31, 2000 with respect to the statutory-basis
financial statements and schedules of Transamerica Occidental Life Insurance
Company included in Pre-Effective Amendment No. 1 to the Registration Statement
(Form S-6 No. 333-91851) and related Prospectus of Transamerica Occidental Life
Separate Account VUL-3.
ERNST & YOUNG LLP
April 14, 2000
Exhibit 10.
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), his true and lawful attorney-in-fact
and agent, with full power of substitution to each, for him and on his behalf
and in his name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 9th
day of December, 1999.
/s/ Patrick S. Baird
--------------------
Patrick S. Baird
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), her true and lawful attorney-in-fact
and agent, with full power of substitution to each, for her and on her behalf
and in her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand, this 9th
day of December, 1999.
/s/ Brenda K. Clancy
--------------------
Brenda K. Clancy
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), his true and lawful attorney-in-fact
and agent, with full power of substitution to each, for him and on his behalf
and in his name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 3rd
day of December, 1999.
/s/ James W. Dederer
--------------------
James W. Dederer
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), his true and lawful attorney-in-fact
and agent, with full power of substitution to each, for him and on his behalf
and in his name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 6th
day of December, 1999.
/s/ George A. Foegele
---------------------
George A. Foegele
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), his true and lawful attorney-in-fact
and agent, with full power of substitution to each, for him and on his behalf
and in his name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 7th
day of December, 1999.
/s/ Douglas C. Kolsrud
----------------------
Douglas C. Kolsrud
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), his true and lawful attorney-in-fact
and agent, with full power of substitution to each, for him and on his behalf
and in his name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 7th
day of December, 1999.
/s/ Richard N. Latzer
---------------------
Richard N. Latzer
<PAGE>
POWER OF ATTORNEY
The undersigned Director and Acting Chief Financial Officer of
Transamerica Occidental Life Insurance Company, a California corporation (the
"Company"), hereby constitutes and appoints Frank A. Camp, James W. Dederer,
David M. Goldstein, David E. Gooding, Priscilla I. Hechler, William M. Hurst,
Larry N. Norman, Thomas E. Pierpan, Stephen E. Price, Colleen Tobiason, Ronald
L. Ziegler and each of them (with full power to each of them to act alone), her
true and lawful attorney-in-fact and agent, with full power of substitution to
each, for her and on her behalf and in her name, place and stead, to execute and
file any of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance and annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand, this 3rd
day of December, 1999.
/s/ Karen O. MacDonald
----------------------
Karen O. MacDonald
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), his true and lawful attorney-in-fact
and agent, with full power of substitution to each, for him and on his behalf
and in his name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 2nd
day of December, 1999.
/s/ Gary U. Rolle'
------------------
Gary U. Rolle'
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), his true and lawful attorney-in-fact
and agent, with full power of substitution to each, for him and on his behalf
and in his name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 6th
day of December, 1999.
/s/ Paul E. Rutledge III
------------------------
Paul E. Rutledge III
<PAGE>
POWER OF ATTORNEY
The undersigned Director and President of the Insurance Products
Division of Transamerica Occidental Life Insurance Company, a California
corporation (the "Company"), hereby constitutes and appoints Frank A. Camp,
James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I. Hechler,
William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price, Colleen
Tobiason, Ronald L. Ziegler and each of them (with full power to each of them to
act alone), his true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him and on his behalf and in his name, place and
stead, to execute and file any of the documents referred to below relating to
registrations under the Securities Act of 1933 and under the Investment Company
Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 6th
day of December, 1999.
/s/ Nooruddin Veerjee
---------------------
Nooruddin Veerjee
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Frank A. Camp, James W. Dederer, David M. Goldstein, David E. Gooding,
Priscilla I. Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan,
Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler and each of them (with
full power to each of them to act alone), his true and lawful attorney-in-fact
and agent, with full power of substitution to each, for him and on his behalf
and in his name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any life insurance and
annuity policies: registration statements on any form or forms under the
Securities Act of 1933 and under the Investment Company Act of 1940, and any and
all amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 6th
day of December, 1999.
/s/ Craig D. Vernie
-------------------
Craig D. Vermie
