<PAGE>
As filed with the Securities and Exchange Commission on February 25, 2000
Registration No. 333-xxxxx
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIRST PENN-PACIFIC VARIABLE LIFE INSURANCE SEPARATE ACCOUNT
(Exact Name of Trust)
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
(Name of Depositor)
1801 South Meyers Road
Oakbrook Terrace, Illinois 60181-5214
(Complete Address of Depositor's Principal Executive Offices)
Marcia DuMond, Esq.
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
1801 South Meyers Road
Oakbrook Terrace, Illinois 60181-5214
(Name and Complete Address of Agent for Service)
Copies to:
Joan E. Boros, Esq.
Jorden Burt Boros Cicchetti
Berenson & Johnson
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007-5201
Securities being offered -- variable portion of flexible premium variable life
insurance policies.
-----------
Approximate date of proposed public offering: as soon as practicable after the
effective date of this registration statement.
The registrant is registering an indefinite amount of securities, by reason of
Section 24(f) of the Investment Company Act of 1940.
The registrant hereby amends this registration statement on such dates as may be
necessary to delay its effective date until the registrant shall file a further
amendment 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 Section 8(a), may determine.
-----------------------------------------------
<PAGE>
CROSS REFERENCE SHEET TO PROSPECTUS
Cross reference sheet pursuant to Rule 404(c) showing location in Prospectus of
information required by Items of Form N-8B-2.
<TABLE>
<CAPTION>
Item Number in Form N-8B-2 Caption in Prospectus
- -------------------------- ---------------------
<S> <C>
ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust..................................................... Cover, Definitions
(b) Title of each class of securities issued.......................... Cover, Purchase of Policy and
Allocation of Net Premiums
2. Name & address of each depositor........................................ Cover, First Penn-Pacific Life
Insurance Company
3. Name & address of custodian............................................. Variable Account
4. Name & address of principal underwriter................................. Distribution of Policies
5. State in which organized................................................ Variable Account
6. Date of organization.................................................... Variable Account
9. Material litigation..................................................... Legal Proceedings
GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
GENERAL INFORMATION CONCERNING SECURITIES AND RIGHTS OF HOLDERS
10. (a), (b)Type of Securities.............................................. Cover, Purchase of Policy and
Allocation of Net Premiums
(c) Rights of security holders........................................ Cover, Amount Payable on
re: withdrawal or redemption Surrender of the Policy, Policy
Loans, Cancellation
(d) Rights of security holders........................................ Cover, Cancellation, Amount
re: conversion, transfer or partial withdrawal Payable on Surrender of the
Policy, Partial Withdrawals,
Allocation of Net Premiums,
Transfer of Policy Account
Value
(e) Rights of security holders........................................ Termination and Grace Period,
re: lapses, default, & reinstatement Reinstatement
(f) Provisions re: voting rights...................................... Voting Rights
(g) Notice to security holders........................................ Statements to Policy Owners
(h) Consent of security holders....................................... Additions, Deletions, and
Substitutions of Securities,
Allocation of Net Premiums
(i) Other principal features.......................................... Deductions and Charges, Policy
Benefits and Rights, Policy
Account Value
</TABLE>
ii
<PAGE>
<TABLE>
INFORMATION CONCERNING SECURITIES UNDERLYING TRUST'S SECURITIES
<S> <C>
11. Unit of specified securities in which security holders have an interest Cover, Portfolios
12. (a)-(d) Name of company, name & address of its custodian................ Cover, Portfolios
INFORMATION CONCERNING LOADS, FEES, CHARGES & EXPENSES
13. (a) With respect to each load, fee, charge & expense.................. Deductions and Charges
(b) Deductions for sales charges...................................... Surrender Charge
(c) Sales load as percentage of amount invested....................... Surrender Charge
(d)-(g) Other loads, fees & expenses.................................... Deductions and Charges
INFORMATION CONCERNING OPERATION OF TRUST
14. Procedure for applications for & issuance of trust's securities......... Application for a Policy,
Allocation of Net Premiums,
Distribution of Policies
15. Procedure for receipt of payments from purchases of trust's securities.. Application for a Policy,
Allocation of Net Premiums,
Premiums, Transfer of Policy
Account Value
16. Acquisition and disposition of underlying securities.................... Cover, Portfolios
17. (a) Procedure for withdrawal.......................................... Cover, Amount Payable on
Surrender of the Policy,
Partial Withdrawals,
Cancellation
(b) Redemption or repurchase.......................................... Cover, Amount Payable on
Surrender of the Policy,
Partial Withdrawals,
Cancellation
(c) Cancellation or resale............................................ Not Applicable
18. (a) Income of the Trust............................................... Portfolios, Allocation of Net
Premiums
19. Procedure for keeping records & furnishing information to security Portfolios, Statements to
holders Policy Owners
21. (a) & (b) Loans to security holders..................................... Policy Loans
23. Bonding arrangements for depositor...................................... Safekeeping of the Variable
Account's Assets
24. Other material provisions............................................... General Policy Provisions
ORGANIZATION, PERSONNEL & AFFILIATED PERSONS OF DEPOSITOR
ORGANIZATION & OPERATIONS OF DEPOSITOR
25. Form, state & date of organization of depositor......................... First Penn-Pacific Life
Insurance Company
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
27. General character of business of depositor.............................. First Penn-Pacific Life
Insurance Company
28. (a) Officials and affiliates of the depositor......................... First Penn-Pacific Life
Insurance Company, Officers and
Directors of First Penn-Pacific
(b) Business experience of officers and directors of the depositor.... Officers and Directors of First
Penn-Pacific
COMPANIES OWNING SECURITIES OF DEPOSITOR
29. Each company owning 5% of voting securities of depositor................ First Penn-Pacific Life
Insurance Company
CONTROLLING PERSONS
30. Control of depositor.................................................... First Penn-Pacific Life
Insurance Company
DISTRIBUTION & REDEMPTIONS OF SECURITIES
DISTRIBUTION OF SECURITIES
35. Distribution............................................................ First Penn-Life Insurance
Company, Distribution of
Policies
38. (a) General description of method of distribution of securities....... Distribution of Policies
(b) Selling agreement between trust or depositor & underwriter........ Distribution of Policies
(c) Substance of current agreements................................... Distribution of Policies
PRINCIPAL UNDERWRITER
39. (a) & (b) Principal Underwriter......................................... Distribution of Policies
41. Character of Underwriter's business..................................... Distribution of Policies
OFFERING PRICE OR ACQUISITION VALUE OF SECURITIES OF TRUST
44. Information concerning offering price or acquisition valuation of Portfolios, Policy Account
securities of trust. (All underlying securities are shares in registered Value
investment companies.)..................................................
REDEMPTION VALUATION OF SECURITIES OF TRUST
46. Information concerning redemption valuation of securities of trust. (All Portfolios, Policy Account
underlying securities are shares in a registered investment company.)... Value
PURCHASE & SALE OF INTERESTS IN UNDERLYING SECURITIES
47. Maintenance of Position................................................. Cover, Variable Account,
Portfolios, Allocation of Net
Premiums
INFORMATION CONCERNING TRUSTEE OR CUSTODIAN
48. Custodian of trust...................................................... Variable Account
50. Lien on trust assets.................................................... Variable Account
</TABLE>
iv
<PAGE>
<TABLE>
INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
<S> <C>
51. (a) Name & address of insurer......................................... Cover, First Penn-Pacific Life
Insurance Company
(b) Types of Contracts................................................ Cover, Purchase of Policy and
Allocation of Net Premiums,
Federal Tax Considerations
(c) Risks insured & excluded.......................................... Death Benefit, Optional
Insurance Benefits,
Misstatement as to Age and Sex,
Suicide
(d) Coverage.......................................................... Cover, Purchase of Policy and
Allocation of Net Premiums
(e) Beneficiaries..................................................... Death Benefit, Beneficiary
(f) Terms of cancellations & reinstatement............................ Termination
(g) Method of determining amount of premium paid by holder............ Purchase of Policy and
Allocation of Net Premiums
POLICY OF REGISTRANT
52. (a) & (c) Selection of Portfolio securities............................. Additions, Deletions, and
Substitutions of Securities
REGULATED INVESTMENT COMPANY
53. (a) Taxable status of trust........................................... Taxation of First Penn-Pacific
and the Variable Account
FINANCIAL AND STATISTICAL INFORMATION
59. Financial Statements.................................................... Financial Statements
*Items not listed are not applicable to this Registration Statement.
</TABLE>
v
<PAGE>
PROSPECTUS
[SUBJECT TO COMPLETION]
FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
ISSUED BY
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
IN CONNECTION WITH ITS
FIRST PENN-PACIFIC VARIABLE LIFE INSURANCE SEPARATE ACCOUNT
1801 SOUTH MEYERS ROAD
OAKBROOK TERRACE, ILLINOIS 60181-5214
ADMINISTRATIVE OFFICE
[TO BE INSERTED]
[1-800-XXX-XXXX]
This prospectus describes Flexible Premium Variable Life Insurance Policies (the
"Policies") offered by First Penn-Pacific Life Insurance Company ("we", "us, or
"First Penn-Pacific") for prospective insured persons ages 30-80. We require you
to pay at least $10,000 in Initial Premium. Subject to certain restrictions,
however, you may pay additional Premiums and increase or decrease the level of
life insurance benefits under your Policy.
You may also choose our Long-Term/Convalescent Care Benefits Riders. These
Riders provide primarily for the reimbursement of certain care expenses during
the life of the Insured if he or she becomes Chronically Ill, as defined in the
Riders. The total benefits payable under our base Rider equals the Death Benefit
under your Policy, less any loans. You may also purchase extended coverage.
Payment of benefits under the base Rider reduces the Death Benefit payable by an
equal amount. The Long-Term/Convalescent Care Benefits Riders are described at
pages [29-31] of this Prospectus.
You also may choose our Guarantee Enhancement Rider. While this Rider is in
effect, your Policy will remain in force at a reduced level of coverage if the
Surrender Value no longer is sufficient to pay the monthly charges.
(CONTINUED ON NEXT PAGE)
- ------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY ANY
OFFER TO BUY BE ACCEPTED BEFORE THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SOLICITING AN OFFER TO BUY
THESE SECURITIES NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH STATE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
THE DATE OF THIS PROSPECTUS IS FEBRUARY 25, 2000.
2
<PAGE>
The Policy is a modified endowment contract for Federal income tax purposes,
except in certain cases described in "Federal Tax Considerations" beginning on
page [42]. A loan, distribution or other amount received from a modified
endowment contract during the life of the Insured will be taxed to the extent of
any accumulated income in the Policy. Any taxable withdrawal will also be
subject to an additional ten percent penalty tax, with certain exceptions.
The Policy currently offers six investment options, each of which is a
Sub-Account of the First Penn-Pacific Variable Life Insurance Separate Account
(the "Variable Account"). Each Sub-Account invests exclusively in shares of one
of the following Portfolios:
[INSERT ADDITIONAL PORTFOLIOS]
DELAWARE GROUP PREMIUM FUND
- Trend Series
- Growth and Income Series (formerly Decatur Total Return Series)
- Select Growth Series
- International Equity Series
LINCOLN NATIONAL FUNDS
- Lincoln National Bond Fund, Inc.
- Lincoln National Money Market Fund, Inc.
Not all of the Sub-Accounts may be available under your Policy. You should
contact your representative for further information as to the availability of
the Sub-Accounts. We may make other investment options available in the future.
You also may allocate all or part of your Net Premiums to our Fixed Account.
Your Policy does not have a guaranteed minimum Policy Account Value. Your Policy
Account Value will rise and fall, depending on the investment performance of the
Portfolios underlying the Sub-Accounts to which you allocate your Net Premiums.
You bear the entire investment risk on amounts allocated to the Sub-Accounts.
The investment policies and risks of each Portfolio are described in the
accompanying prospectuses for the Portfolios. The Policy Account Value will also
reflect Net Premiums, amounts withdrawn, and cost of insurance and any other
charges.
When the Insured dies, we will pay a Death Benefit to a Beneficiary specified by
you. We will subtract from the Death Benefit the Loan Account Value, any unpaid
loan interest, any unpaid Policy charge, and any benefits previously paid under
our Long Term/Convalescent Care Benefits Riders. The Death Benefit generally
will equal the Specified Amount of your Policy. In certain circumstances,
however, the Death Benefit may be greater than the Specified Amount of your
Policy. In those circumstances, the Death Benefit may increase or decrease based
on the investment experience of the Portfolios underlying the Sub-Accounts to
which you have allocated your Net Premiums.
3
<PAGE>
Your Policy will remain in force as long as your Surrender Value is sufficient
to pay the monthly charges or you have an in force Guarantee Enhancement Rider.
You generally may cancel your Policy by returning it to us within thirty days
after you receive it. We will refund your Premium.
In the future, in certain states the Policies may be offered as group contracts
with individual ownership represented by Certificates. The discussion of
Policies in this Prospectus applies equally to Certificates under group
contracts, unless the context specifies otherwise.
IT MAY NOT BE ADVANTAGEOUS FOR YOU TO PURCHASE VARIABLE LIFE INSURANCE TO
REPLACE YOUR EXISTING INSURANCE COVERAGE OR IF YOU ALREADY OWN A VARIABLE LIFE
INSURANCE POLICY.
YOUR POLICY AND THE INVESTMENTS IN THE PORTFOLIOS ARE NOT DEPOSITS, OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK. YOUR POLICY IS SUBJECT TO
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
YOUR POLICY IS NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE
PORTFOLIOS LISTED ABOVE. IF ANY OF THOSE PROSPECTUSES ARE MISSING OR OUTDATED,
PLEASE CONTACT US AND WE WILL SEND YOU THE PROSPECTUS YOU NEED.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR YOUR FUTURE REFERENCE.
The Policy may not be available in all states.
4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
DEFINITIONS....................................................................7
FEES AND EXPENSES..............................................................9
QUESTIONS AND ANSWERS ABOUT YOUR POLICY.......................................11
PURCHASE OF POLICY AND ALLOCATION OF NET PREMIUMS.............................18
Application for a Policy...................................................18
Premiums...................................................................19
Allocation of Net Premiums.................................................19
Policy Account Value.......................................................20
Accumulation Unit Value....................................................20
Transfer of Policy Account Value...........................................21
Transfers Authorized by Telephone..........................................21
Dollar Cost Averaging......................................................22
Asset Rebalancing..........................................................22
THE INVESTMENT AND FIXED ACCOUNT OPTIONS......................................23
Variable Account Investments...............................................23
Portfolios..............................................................23
Voting Rights...........................................................25
Additions, Deletions, and Substitutions of Securities...................26
The Fixed Account..........................................................27
POLICY BENEFITS AND RIGHTS....................................................27
Death Benefit..............................................................27
Change in the Specified Amount.............................................28
Optional Insurance Benefits................................................29
Long Term/Convalescent Care Benefits Riders.............................29
Guarantee Enhancement Rider.............................................31
Policy Loans...............................................................32
Amount Payable on Surrender of the Policy..................................33
Partial Withdrawals........................................................33
Proceeds Options...........................................................34
Policy after Age 100.......................................................35
Termination and Grace Period...............................................35
Reinstatement .............................................................36
Cancellation ..............................................................36
Postponement of Payments ..................................................36
DEDUCTIONS AND CHARGES........................................................36
Premium Expense Charge.....................................................36
Mortality and Expense Risk Charge .........................................37
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Other Variable Account Charge .............................................37
Monthly Deduction..........................................................37
Cost of Insurance Charge................................................37
Monthly Expense Charge..................................................38
Rider Charges...........................................................38
Portfolio Expenses.........................................................38
Surrender Charge...........................................................38
Partial Withdrawal Charge..................................................39
Transfer Fee...............................................................39
Special Provisions for Group or Sponsored Arrangements ....................39
GENERAL POLICY PROVISIONS.....................................................40
Statements to Policy Owners................................................40
Limit on Right to Contest..................................................40
Suicide....................................................................41
Misstatement as to Age and Sex.............................................41
Beneficiary................................................................41
Assignment.................................................................41
Dividends..................................................................41
Notice and Elections.......................................................42
Modification...............................................................42
FEDERAL TAX CONSIDERATIONS....................................................42
Taxation of First Penn-Pacific and the Variable Account....................42
Tax Status of the Policy ..................................................42
Diversification Requirements.............................................43
Owner Control............................................................43
Tax Treatment of Life Insurance Death Benefit Proceeds.....................44
Tax Deferral During Accumulation Period....................................44
Policies Which Are MECs..................................................45
Policies Which Are Not MECs..............................................45
Long Term/Convalescent Care Benefits Riders................................46
Status of Policy after Age 100.............................................46
Actions to Ensure Compliance with the Tax Law..............................46
Federal Income Tax Withholding.............................................46
Tax Advice.................................................................47
DESCRIPTION OF FIRST PENN-PACIFIC AND THE VARIABLE ACCOUNT....................47
First Penn-Pacific Life Insurance Company..................................47
Officers and Directors of First Penn-Pacific...............................47
Variable Account...........................................................49
Safekeeping of the Variable Account's Assets...............................49
State Regulation of First Penn-Pacific.....................................49
DISTRIBUTION OF POLICIES......................................................49
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
LEGAL PROCEEDINGS.............................................................50
LEGAL MATTERS.................................................................51
REGISTRATION STATEMENT........................................................51
EXPERTS.......................................................................51
FINANCIAL STATEMENTS..........................................................51
ILLUSTRATIONS................................................................I-1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. FIRST PENN-PACIFIC DOES NOT AUTHORIZE
ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS BASED IN THIS PROSPECTUS.
7
<PAGE>
DEFINITIONS
Please refer to this list for the meaning of the following terms:
ACCUMULATION UNIT - An accounting unit of measurement that we use to calculate
the value of a Sub-Account.
AGE - An Insured's age at his or her last birthday.
BENEFICIARY(IES) - The person(s) named by you to receive the Death Benefit under
the Policy.
DEATH BENEFIT - The amount payable to the Beneficiary under your Policy upon the
death of the Insured, before we subtract any permitted deductions under your
Policy.
DOLLAR COST AVERAGING - Our program under which we periodically transfer Policy
Account Value to the Sub-Accounts of your choice, until the source you designate
is exhausted or you instruct us to stop.
FIXED ACCOUNT - The portion of the Policy Account Value allocated to our general
account.
GRACE PERIOD - A 61-day period during which your Policy will remain in force so
as to permit you to pay a sufficient amount to keep your Policy from lapsing.
INSURED - The person whose life is insured under your Policy.
ISSUE DATE - The Issue Date in your Policy Schedule. It is the date the
requirements for coverage have been received, and your Policy is approved. It is
used to determine Policy Anniversaries, Policy Years and the Monthly Anniversary
Day.
LOAN ACCOUNT - An account established for amounts transferred from the
Sub-Accounts or the Fixed Account as security for outstanding Policy Loans.
LOAN ACCOUNT VALUE - An amount equal to the sum of all amounts transferred to
the Loan Account plus credited interest.
MONTHLY ANNIVERSARY DAY - The same day in each month as the Issue Date or the
next Valuation Day, if that day is not a Valuation Day or is non-existent for
that month. The day of the month on which the Monthly Deduction is taken from
your Policy Account Value.
MONTHLY DEDUCTION - The amount deducted from your Policy Account Value on each
Monthly Anniversary Day for the cost of insurance charge, the Monthly Expense
Charge and the cost of any benefit Rider.
NET POLICY ACCOUNT VALUE - The Policy Account Value less the Loan Account Value.
NET PREMIUM - A Premium less any Premium Expense Charge.
8
<PAGE>
POLICY ACCOUNT VALUE - The sum of the values of your interests in the
Sub-Accounts, the Fixed Account and the Loan Account.
POLICY ANNIVERSARY - The same day and month as the Issue Date for each
subsequent year the Policy remains in force.
POLICY OWNER ("YOU") - The person(s) having the privileges of ownership defined
in your Policy. The Policy Owner may or may not be the same person as the
Insured.
POLICY YEAR - Each twelve-month period beginning on the Issue Date and each
Policy Anniversary.
PORTFOLIO(S) - The underlying mutual funds in which the Sub-Accounts invest.
Each Portfolio is an investment company registered with the SEC or a separate
investment series of a registered investment company.
PREMIUM - An amount paid to us as payment for your Policy by you or on your
behalf.
SEC - The United States Securities and Exchange Commission.
SPECIFIED AMOUNT - The amount designated as such on the Policy Schedule of your
Policy or as subsequently changed in accordance with the terms of your Policy.
It is used to determine the amount of Death Benefit.
SUB-ACCOUNT - A division of the Variable Account, which invests wholly in shares
of one of the Portfolios.
SUB-ACCOUNT VALUE - The value of the assets held in a Sub-Account.
SURRENDER VALUE - The Net Policy Account Value less any Surrender Charge.
TAX CODE - The Internal Revenue Code of 1986, as amended.
VALUATION DAY - Each day the New York Stock Exchange is open for business and we
are open, except any day on which we can delay payment of an amount attributable
to the Variable Account as provided in "Postponement of Payments" on page [36]
below.
VALUATION PERIOD - The period of time over which we determine the change in the
value of the Sub-Accounts. Each Valuation Period begins at the close of normal
trading on the New York Stock Exchange ("NYSE"), currently 4:00 p.m. Eastern
time, on each Valuation Day and ends at the close of the NYSE on the next
Valuation Day.
VARIABLE ACCOUNT - First Penn-Pacific Variable Life Insurance Separate Account,
which is a segregated investment account of First Penn-Pacific.
9
<PAGE>
FEES AND EXPENSES
The following tables are designed to help you understand the fees and expenses
that you bear, directly or indirectly, as a Policy Owner. The first table
labeled "Policy Charges and Deductions" describes the Policy charges and
deductions you directly bear under the Policy. The second table labeled
"Portfolio Expenses" describes the fees and expenses of the Portfolios that you
bear indirectly when you purchase a Policy. (See "Deductions and Charges",
beginning on page [36]).
POLICY CHARGES AND DEDUCTIONS
CHARGES DEDUCTED FROM POLICY ACCOUNT VALUE(6)
Monthly Cost of Insurance Charge:(1)
Current Guaranteed
Ranges from $.xx per $1,000 of net Ranges from $.xx per $1,000 of net
amount at risk to $xx.xx per $1,000 amount at risk to $xx.xx per $1,000
of net amount at risk. of net amount at risk.
Monthly Expense Charge:
Current: $6.00 per month
Guaranteed Maximum: $8.00 per month
TRANSACTION CHARGES
Transfer Fee: $25 per transfer after the first
twelve transfers in each Policy Year(2)
DEFERRED SALES CHARGE
Maximum Surrender Charge: As a percentage of your Initial Premium
<TABLE>
<CAPTION>
Issue Age 30-50 51-65 66-80
<S> <C> <C> <C>
Policy Years 1-10 12% 8% 6%
11 9.6% 6.4% 4.8%
12 7.2% 4.8% 3.6%
13 4.8% 3.27% 2.4%
14 2.4% 1.6% 1.2%
15 0% 0% 0%
</TABLE>
Partial Withdrawal Charge: $25 per partial withdrawal after the first
in each Policy Year(4)
10
<PAGE>
CHARGES DEDUCTED FROM THE SUB-ACCOUNTS
Annual Variable Account Charges:
Mortality and Expense Risk Charge: An annual effective rate of 1.00% of
average daily net assets in the Variable
Account
Federal Income Tax Charge: Currently none. (5)
PREMIUM EXPENSE CHARGE: 3.5% of each Premium.
(1) The basis of the cost of insurance charges and the calculation of the net
amount at risk are described in "Monthly Deduction - Cost of Insurance
Charge," on pages [37-38].
(2) Transfers under our Dollar Cost Averaging and Asset Rebalancing programs do
not count against the twelve free transfer limit. See "Transfer Fee" on
page [39].
(3) The Surrender Charge is a percentage of the Initial Premium only. Payment
of additional premiums does not affect the Surrender Charge. The Surrender
Charge declines to 0% after the fourteenth Policy Year. The Surrender
Charge is imposed to cover a portion of the sales expense we incur in
distributing the Policies. Payment of a Partial Withdrawal Charge will
reduce the remaining Surrender Charge. See "Surrender Charge," on pages
[38-39].
(4) See "Partial Withdrawal Charge" on page [39].
(5) We currently do not assess a charge for federal income taxes that may be
attributable to the operations of the Variable Account. We reserve the
right to do so in the future. See "Other Variable Account Charge", page
[37].
(6) If you select our Long Term/Convalescent Care Riders or Guarantee
Enhancement Rider, we will deduct an additional charge for each Rider each
month as part of your monthly deduction. The monthly charge will depend
upon the type of Rider(s) you select and the factors described in "Monthly
Deduction - Rider Charges" on page [38].
11
<PAGE>
PORTFOLIO EXPENSES(1)
(As a percentage of average daily net assets after fee waivers and expense
reimbursements)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL TOTAL
PORTFOLIO PORTFOLIO
MANAGEMENT 12b-1 OTHER ANNUAL
PORTFOLIO FEES FEES EXPENSES EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Premium Trend Series (2) 0.71% 0 0.12% 0.83%
- -------------------------------------------------------------------------------------------------------------------------------
Delaware Group Premium Growth and Income Series (2) 0.60% 0 0.11% 0.71%
- -------------------------------------------------------------------------------------------------------------------------------
Delaware Group Premium Select Growth Series (1)(2) 0.75% 0 0.10% 0.85%
- -------------------------------------------------------------------------------------------------------------------------------
Delaware Group Premium International Equity Series (2) 0.74% 0 0.15% 0.89%
- -------------------------------------------------------------------------------------------------------------------------------
Lincoln National Bond Fund 0.44% 0 0.13% 0.57%
- -------------------------------------------------------------------------------------------------------------------------------
Lincoln National Money Market Fund 0.48% 0 0.11% 0.59%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All Portfolio Expenses are based on 1998 expenses, except for the Delaware
Portfolios. Since Delaware Group Premium Select Growth Series commenced
operations on May 3, 1999, its expenses are estimated. The expenses of
other Delaware Portfolios are annualized based on expenses as of June 30,
1999.
(2) Beginning [May 1, 1998], Delaware Management elected voluntarily to waive
its fees and pay the expenses of the Delaware Trend Series and Delaware
Select Growth Series to the extent necessary to ensure that such
Portfolios' annual operating expenses, exclusive of taxes, interest,
brokerage commissions, and extraordinary expenses, do not exceed 0.85% of
average daily net assets through [October 31, 1999]. Beginning [May 1,
1999], Delaware International elected voluntarily to waive its fee and pay
the expenses of the Delaware International Equity Series to the extent
necessary to ensure that such Portfolio's annual operating expenses,
exclusive of taxes, interest, brokerage commissions, and extraordinary
expenses, do not exceed 0.95% of average daily net assets through [October
31, 1999]. Delaware Management has voluntarily agreed to waive its
management fee for Delaware Growth and Income Fund in excess of 0.60% of
average daily net assets. Delaware Management may end this waiver at any
time. Absent such waivers and/or reimbursements, as of June 30, 1999 the
Management Fees, Other Expenses, and total Annual Expenses for those
Portfolios would have been: [0.72%,] 0.12%, and 0.84%, respectively, for
Delaware Trend Series; 0.62%, 0.10%, and 0.72%, respectively, for Delaware
Growth and Income Series; 0.75%, 0.25% and 1.00%, respectively, for
Delaware Select Growth Series; and 0.75%, 0.15%, and 0.90%, respectively,
for Delaware International Equity Series. The figures shown above do not
reflect the reduction of certain expenses during the period.
QUESTIONS AND ANSWERS ABOUT YOUR POLICY
These are answers to questions that you may have about some of the more
important features of the Policy. The Policy is described more fully in the
remainder of this Prospectus. Please read this Prospectus carefully. Unless
otherwise indicated, the description of the Policy contained in this Prospectus
assumes that the Policy is in force, that there is no Loan Account Value and
that current federal tax laws apply.
1. WHAT IS A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY?
The Policy has a Death Benefit, Policy Account Value, and other features similar
to life insurance policies providing fixed benefits. It is a "flexible premium"
policy because it provides some flexibility in determining when and how much
Premium to pay. You should be aware, however, that unlike many flexible premium
policies, the Policy requires you to pay a significant
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Initial Premium and your ability to pay additional Premium without submitting
evidence of insurability is limited. It is a "variable" Policy because the
Policy Account Value and, in some circumstances, the Death Benefit vary
according to the investment performance of the Sub-Accounts to which you have
allocated your Net Premiums. The Policy Account Value is not guaranteed. The
Policy provides you with the opportunity to take advantage of any increase in
your Policy Account Value, but you also bear the risk of any decrease.
2. WHO MAY PURCHASE A POLICY?
We will issue a Policy on the life of a prospective Insured age 30-80 who meets
our underwriting standards. We may apply a lower maximum age limit if you apply
for certain Long Term/Convalescent Care Benefits Riders.
3. WHAT IS THE DEATH BENEFIT?
While the Policy is in force, we will pay a Death Benefit to the Beneficiary
upon the death of the Insured. The Death Benefit will be the greater of the
Specified Amount or a percentage of the Policy Account Value. Before we pay the
Death Benefit to the Beneficiary, however, we will subtract the Loan Account
Value, any additional accrued loan interest, any due and unpaid charges, and an
amount equal to the benefits paid under our Long Term/Convalescent Care Benefits
Riders, if you have received any. In addition, if you withdraw part of your
Policy Account Value, we will reduce the Specified Amount by an equal amount.
See "Partial Withdrawals" on pages [33-34].
4. WHAT ARE THE LONG-TERM/CONVALESCENT CARE BENEFIT RIDERS?
These Riders provide primarily for reimbursement of certain care expenses during
the life of the Insured if he or she becomes Chronically Ill, as defined in the
Rider. You may select our base Rider and add additional Riders providing
additional benefits. The base Rider provides for a maximum benefit equal to the
Death Benefit under your Policy, less any loans, determined as of the date we
approve your claim for benefits under the Rider. The payment of benefits under
the base Rider in effect is a prepayment of the Death Benefit, since each
benefit payment reduces the Death Benefit payable by an equal amount. You may
also purchase an Extension of Benefits Rider, to provide either a fixed or
gradually increasing extension of your coverage, after you have used up the
coverage provided by the base Rider. There is also a daily reimbursement limit.
If your Policy lapses before the Insured qualifies for benefits under these
Riders, the Riders also lapse. However, if the Policy lapses while the Insured
is eligible for benefits under these Riders, we will pay or continue to pay
benefits under the Riders as long as the Insured continues to be eligible for
benefits, up to the maximum benefit limit.
We deduct the cost of these Riders as part of the Monthly Deduction from your
Policy Account Value. For more information, see "Long-Term/Convalescent Care
Benefits Riders" at pages [29-31] of this Prospectus. Amounts deducted to pay
for these Riders may be taxable to you as ordinary income. For more information,
see "Federal Tax Considerations: Long Term/Convalescent Care Benefits Rider" at
page [46] below.
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5. HOW WILL THE POLICY ACCOUNT VALUE OF MY POLICY BE DETERMINED?
Your Net Premiums are invested in one or more of the Sub-Accounts or allocated
to the Fixed Account, as you instruct us. Your Policy Account Value is the sum
of the values of your interests in the Sub-Accounts, plus the values in the
Fixed Account and the Loan Account. Your Policy Account Value will depend on the
investment performance of the Sub-Accounts and the amount of interest we credit
to the Fixed Account and the Loan Account, as well as the Net Premiums paid,
partial withdrawals, and charges assessed. We do not guarantee a minimum Policy
Account Value on the portion of your Net Premiums allocated to the Variable
Account.
6. WHAT ARE THE PREMIUMS FOR THIS POLICY?
Your Initial Premium must equal at least $10,000. If you choose, you may pay
additional Premiums of at least $100 each, subject to the restrictions described
in this Prospectus. You may pay additional Premium up to the lesser of $5,000 or
10% of your Initial Premium without providing evidence of insurability. Before
we accept additional Premium in excess of that amount, however, we may require
you to provide evidence of insurability, if an increase in the Death Benefit
would result. We may refuse any additional Premium in our discretion; however,
you may always pay any additional Premium necessary to keep your Policy in
force.
7. CAN I INCREASE OR DECREASE MY POLICY'S SPECIFIED AMOUNT?
Yes, you have considerable flexibility to increase or decrease your Policy's
Specified Amount. You may request an increase and/or decrease by sending us a
written request. If you request an increase in Specified Amount, we may require
that you provide us with evidence of insurability that meets our underwriting
standards. We may grant or deny your request in our discretion. An increase in
the Specified Amount of your Policy will increase the charges deducted from your
Policy Account Value. However, it will not affect the Surrender Charge. We will
not permit you to decrease the Specified Amount of your Policy below the Minimum
Specified Amount shown in your Policy Schedule. For more detail, see "Change in
Specified Amount", on pages [28-29].
8. WHEN IS THE POLICY EFFECTIVE?
In general, if we approve your application, your Policy will be effective and
your life insurance coverage under the Policy will begin as of the date that we
receive your Initial Premium after satisfaction of the applicable underwriting
requirements. While your application is in underwriting and you have paid your
Initial Premium, we may provide you with temporary life insurance coverage in
accordance with the terms of our conditional receipt.
If we approve your application, you will earn interest on your initial Net
Premiums from the date we received them. We will begin to deduct the Policy
charges as of the Issue Date. We will temporarily allocate your initial Net
Premium to our Money Market Sub-Account until we allocate it to the other
Sub-Accounts and/or the Fixed Account in accordance with the procedures
described in the Answer to Question 9.
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If we reject your application, we will not issue you a Policy. We will return
any Premium you have paid. We will not subtract any Policy charges from the
amount we refund to you.
9. HOW ARE MY NET PREMIUMS ALLOCATED?
Before your Premiums are allocated to the Policy Account Value, we deduct a
Premium Expense Charge of 3.5% of each Premium. This charge covers a portion of
our distribution expenses, state premium tax expenses and certain federal tax
liabilities associated with the receipt of Premiums. For more detail, see
"Premium Expense Charge" on page [36]. The remaining amount is called the Net
Premium.
When you apply for the Policy, you specify in your application how to allocate
your Net Premiums among the Sub-Accounts and the Fixed Account. You must
allocate at least five percent of your Net Premiums to each option that you
choose, and the total allocations must equal 100%. We allocate any subsequent
Net Premiums in those percentages until you give us new written instructions. In
the future, we may change these limits.
If we approve your application and you paid all or a portion of your Premium
prior to the Issue Date, we will credit interest to your Initial Premium at our
then current rate for the period from our receipt of your Initial Premium to the
Issue Date. On the Issue Date, your initial Net Premium (plus any interest) will
be allocated to the Money Market Sub-Account. Forty days after the Issue Date,
we will allocate your Policy Account Value to the Sub-Accounts and the Fixed
Account in accordance with your instructions.
Additional Premiums generally will be allocated as of the date we receive your
Premium in our Administrative Office. We may delay allocating a subsequent
premium if evidence of insurability is required.
You may transfer Policy Account Value among the Sub-Accounts and the Fixed
Account while the Policy is in force, by writing to us or calling us at
1-800-xxx-xxxx. We may charge a fee of $25 per transfer on each transfer after
the first twelve transfers in any Policy Year, not counting Dollar Cost
Averaging and Asset Rebalancing transfers. We may change the number of free
transfers at any time, subject to the contractual limit described above, but the
transfer fee will never exceed $25 per transfer. While you may also transfer
amounts from the Fixed Account, certain restrictions apply. For more detail, see
"Transfer of Policy Account Value" and "Transfers Authorized by Telephone", on
page [22].
You may also use our automatic Dollar Cost Averaging program or our Asset
Rebalancing program. Under the Dollar Cost Averaging program, periodically
amounts are automatically transferred to the Sub-Accounts at regular intervals
from the account of your choice. For more detail, see "Dollar Cost Averaging",
on page [22].
Under the Asset Rebalancing program, you periodically can readjust the
percentage of your Policy Account Value allocated to each Sub-Account to
maintain a pre-set level. Investment results will shift the balance of your
Policy Account Value allocations. If you elect Asset Rebalancing, we
periodically transfer your Policy Account Value back to the specified
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percentages at the frequency that you specify. For more detail, see "Asset
Rebalancing", on page [23].
10. WHAT ARE MY INVESTMENT CHOICES UNDER THE POLICY?
You can allocate and reallocate your Policy Account Value among the
Sub-Accounts, each of which in turn invests in a single Portfolio. Under the
Policy, the Variable Account currently invests in the following Portfolios:
[INSERT ADDITIONAL PORTFOLIOS]
DELAWARE GROUP PREMIUM FUND
- Trend Series
- Growth and Income Series (formerly Decatur Total Return Series)
- Select Growth Series
- International Equity Series
LINCOLN NATIONAL FUNDS
- Lincoln National Bond Fund, Inc.
- Lincoln National Money Market Fund, Inc.
Each Portfolio holds its assets separately from the assets of the other
Portfolios. Each Portfolio has distinct investment objectives and policies,
which are described in the accompanying Prospectuses for the Portfolios.
In addition, the Fixed Account is available.
11. MAY I TAKE OUT A POLICY LOAN?
Yes, you may borrow money from us using your Policy as security for the loan.
Because Policies usually are treated as "modified endowment contracts" ("MECs")
for tax purposes, in most instances Policy Loans are treated as distributions
for Federal tax purposes. Therefore, you may incur tax liabilities if you borrow
a Policy Loan. For more detail, see "Policy Loans", on pages [32-33], and
"Policies Which Are MECs", on page [45].
12. WHAT ARE THE CHARGES DEDUCTED FROM MY PREMIUMS AND MY POLICY ACCOUNT
VALUE?
PREMIUM EXPENSE CHARGE. As noted above, we deduct a 3.5% Premium Expense Charge
from each Premium before it is allocated to the Policy Account Value. This
charge covers a portion of our state premium tax expenses, certain federal
expenses associated with the receipt of premium, and our distribution expenses.
MORTALITY AND EXPENSE RISK. On each Valuation Day we deduct the Mortality and
Expense Risk Charge from the Sub-Accounts to compensate First Penn-Pacific for
certain mortality and
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expense risks assumed under the Policies. The Mortality and Expense Risk Charge
is calculated at an annual effective rate equal to 1.00% of average daily net
assets.
MONTHLY DEDUCTION. We also deduct a monthly deduction from your Policy Account
Value for the cost of insurance charge, the Monthly Expense Charge, and the cost
of any Rider. The cost of insurance charge covers our anticipated mortality
costs. The Monthly Expense Charge covers certain administrative expenses in
connection with the Policies. We allocate the Monthly Deduction pro rata among
your Policy Account Value in the Sub-Accounts and the Fixed Account.
TRANSFER FEE. We charge a fee of $25 per transfer on each transfer, excluding
Asset Rebalancing and Dollar Cost Averaging transfers, after the 12th transfer
in any Policy Year. We may change the number of free transfers and the transfer
fee at any time, but you will always be able to make at least 12 free transfers
per year and the transfer fee will never exceed $25.
SURRENDER CHARGE. We impose a Surrender Charge to cover a portion of the sales
expenses we incur in distributing the Policies. These sales expenses include
agents' commissions, advertising, and the printing of Prospectuses. The
Surrender Charge is described in the answer to Question 13 below and in
"Surrender Charge", on pages [38-39].
PARTIAL WITHDRAWAL CHARGE. We impose a Partial Withdrawal Charge of $25 on each
partial withdrawal after the first in each Policy Year. The Partial Withdrawal
Charge is used to cover a portion of our distribution and administrative
expenses. Payment of a Partial Withdrawal Charge will reduce the Surrender
Charge on a subsequent surrender, as described in "Partial Withdrawal Charge" on
page [39] below.
OTHER. In addition to our charges under the Policy, each Portfolio deducts
amounts from its assets to pay its investment advisory fee and other expenses.
The Prospectuses for the Portfolios describe their respective charges and
expenses in more detail. We may receive compensation from the investment
advisers or administrators of the Portfolios. Such compensation will be
consistent with the services we provide or the cost savings resulting from the
arrangement and therefore may differ between Portfolios.
FOR MORE INFORMATION. The charges assessed under the Policy are summarized in
the table entitled "Policy Charges and Deductions" on pages [9-11] and described
in more detail in "Deductions and Charges", beginning on page [36].
13. DO I HAVE ACCESS TO THE VALUE OF MY POLICY?
While your Policy is in force, you may surrender your Policy for the Surrender
Value, which is the Policy Account Value, less any Loan Account Value and any
Surrender Charge. Upon surrender, life insurance coverage under your Policy will
end. You may also withdraw part of your Policy Account Value through a partial
withdrawal. You may not withdraw less than $500 at one time. A partial
withdrawal will reduce your Policy's Specified Amount by an equal amount. You
may not make a partial withdrawal that would reduce your Policy's specified
amount below the Minimum Specified Amount. We may waive or change these limits.
For
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more detail, see "Amount Payable on Surrender of the Policy" and "Partial
Withdrawals", on pages [33-34].
We may deduct a Surrender Charge on a surrender and a Partial Withdrawal Charge
on a partial withdrawal.
SURRENDER CHARGE. If you surrender your Policy, we may deduct a Surrender
Charge. The Surrender Charge equals the amount shown in the Surrender Charge
table in your Policy, adjusted to reflect any partial withdrawals. The amount of
the Surrender Charge decreases over time. If you surrender your Policy after
fourteen Policy Years have elapsed, we will not charge a Surrender Charge.
Generally, the Surrender Charge is equal to your Initial Premium multiplied by
the applicable percentage shown in the table on page [9] of this Prospectus. The
applicable rate depends on the Insured's issue age, and the number of years
elapsed since issuance.
PARTIAL WITHDRAWAL CHARGE. We charge a $25 Partial Withdrawal Charge on each
partial withdrawal after the first in each Policy Year. Payment of a Partial
Withdrawal Charge reduces the Surrender Charge payable on a subsequent
surrender. In the Policy Year in which the partial withdrawal is taken, we will
reduce the then applicable Surrender Charge by the amount of the Partial
Withdrawal Charge. In subsequent years, we will reduce the applicable Surrender
Charge proportionately.
We do not charge the Partial Withdrawal Charge for payments made under the
Long-Term/Convalescent Care Riders.
For more detail, see "Surrender Charge", on pages [38-39].
14. WHAT ARE THE TAX CONSEQUENCES OF BUYING THIS POLICY?
Your Policy is structured to meet the definition of life insurance contract
under the Tax Code. In most circumstances, your Policy will be considered a
"modified endowment contract", which is a form of life insurance contract under
the Tax Code. Special rules govern the tax treatment of modified endowment
contracts. Under current tax law, death benefit payments under modified
endowment contracts, like death benefit payments under other life insurance
contracts, generally are excluded from the gross income of the beneficiary.
Withdrawals and Policy Loans, however, are treated differently. Amounts
withdrawn and Policy Loans are treated first as income, to the extent of any
gain, and then as a return of Premium. The income portion of the distribution is
includable in your taxable income. Also, an additional ten percent penalty tax
is generally imposed on the taxable portion of amounts received before age 59
1/2. For more information on the tax treatment of the Policy, see "Federal Tax
Considerations", beginning on page [42], and consult your tax adviser.
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15. CAN I RETURN THIS POLICY AFTER IT HAS BEEN DELIVERED?
You may cancel your Policy by returning it to us within thirty days after you
receive it. If you return your Policy, it terminates and we will pay you an
amount equal to your Premium.
16. WHEN DOES COVERAGE UNDER THE POLICY END?
Your Policy will terminate if you voluntarily surrender your Policy. Your Policy
also may terminate if on a Monthly Anniversary Day the Surrender Value is
insufficient to pay the Monthly Deduction and you do not pay an amount
sufficient to keep the Policy in force by the end of the 61-day Grace Period. In
that circumstance, your Policy will terminate unless your Policy includes our
Guarantee Enhancement Rider and you meet the conditions for keeping that Rider
in effect. However, if that Rider is in effect, your coverage will continue at a
reduced level. See "Guarantee Enhancement Rider" at page [31] below for more
information.
17. CAN I GET AN ILLUSTRATION TO HELP ME UNDERSTAND HOW POLICY VALUES
CHANGE WITH INVESTMENT EXPERIENCE?
At your request we will furnish you with a free, personalized illustration of
Policy Account Values, Surrender Values and Death Benefits. The illustration
will be personalized to reflect the proposed Insured's age, sex, underwriting
classification, proposed Initial Premium, and any available Riders requested.
The illustrated Policy Account Values, Surrender Values and Death Benefits will
be based on certain hypothetical assumed rates of return for the Variable
Account. Your actual investment experience probably will differ, and as a result
the actual values under your Policy at any time may be higher or lower than
those illustrated. The personalized illustrations will follow the methodology
and format of the hypothetical illustrations attached to this prospectus.
PURCHASE OF POLICY AND ALLOCATION OF NET PREMIUMS
APPLICATION FOR A POLICY. You may apply to purchase a Policy by submitting a
written application to us through one of our authorized sales representatives.
We will not issue a Policy to insure someone who is younger than age 30 or older
than age 80. If you select certain Long Term/Convalescent Care Benefit Riders,
different age limits may apply. Before we issue a Policy to you, we will require
you to submit evidence of insurability satisfactory to us. Acceptance of your
application is subject to our underwriting rules. We reserve the right to reject
your application for any reason. If we do not issue a Policy to you, we will
return your Premium to you. We reserve the right to change the terms or
conditions of your Policy to comply with differences in applicable state law.
Variations from the information appearing in this Prospectus due to individual
state requirements are described in supplements that are attached to this
Prospectus or in endorsements to the Policy, as appropriate.
In general, we will issue your Policy when (1) we have received your Initial
Premium and (2) we have determined that your application meets our underwriting
requirements. If you are paying Initial Premium from more than one source, we
will not issue your Policy until all Premiums
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have been received. The Issue Date will be the effective date of your Policy. We
use the Issue Date to determine Policy Anniversaries, Policy Years, and Monthly
Anniversary Days.
We will not accept your Initial Premium with your application if the requested
Specified Amount of your Policy exceeds our then-current limit. In other cases,
you may choose to pay the Initial Premium with your application. If you did not
submit your Initial Premium with your application, we will require you to pay
sufficient Premium before we place your insurance in force.
While your application is in underwriting, if you have paid your Initial Premium
we may provide you with temporary conditional life insurance coverage in
accordance with the terms of our conditional receipt. [The temporary conditional
coverage provides coverage during the underwriting of your application, but only
if you are ultimately approved for coverage on the same basis as the risk
classification and Specified Amount for which you applied. This temporary
conditional coverage starts when you complete your application, pay your Initial
Premium, and complete any medical examination or lab test we require.] We may
decline for any reason to accept your Initial Premium until the Issue Date.
If you pay all or a portion of your Initial Premium prior to the Issue Date, we
will initially hold your Initial Premium in our general account. If we approve
your application, you will earn interest on your Initial Net Premium from the
date of our receipt to the Issue Date. On the Issue Date, we will allocate your
Initial Premium to our Money Market Sub-Account. Subsequently, as described in
"Allocation of Net Premiums" on pages [19-20] below, we will allocate your
Policy Account Value to the Sub-Accounts or the Fixed Account as you have
chosen. We will begin to deduct the Policy charges as of the Issue Date.
If we reject your application, we will not issue you a Policy. We will return
any Premium you have paid. We will not subtract any Policy charges from the
amount we refund to you.
PREMIUMS. You must pay an Initial Premium to purchase a Policy. The minimum
Initial Premium is $10,000. You may pay additional Premiums during the Insured's
lifetime from the Issue Date until the Policy Anniversary following the
Insured's 100th birthday. You may pay additional Premiums, provided the amount
is at least $100. You may pay additional Premium up to the lesser of $5,000 or
10% of your Initial Premium without providing evidence of insurability. Before
we accept additional Premium in excess of that amount, if that Premium increases
the Death Benefit, we may require evidence of insurability satisfactory to us.
We may reject additional Premiums in our discretion. We may refuse any
additional Premium in our discretion; however, you may always pay any additional
Premium necessary to keep your Policy in force. We will not accept any
additional Premium after the Insured reaches age 100.
If you owe any Policy Loan, we will treat any additional payment as a repayment
of the Policy Loan and not as additional Premium unless you instruct us
otherwise in writing. You may pay any Premium at our Administrative Office. Our
agents are authorized to accept Initial Premiums only.
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ALLOCATION OF NET PREMIUMS. We initially allocate your Net Initial Premium (and
any interest) to the Money Market Sub-Account on the Issue Date. Forty days
after the Issue Date, we will allocate your Policy Account Value among the
Sub-Accounts and the Fixed Account in accordance with your instructions. If
there are outstanding requirements when we issue your Policy that prevent us
from placing it in force, your Premiums will not be allocated until all
requirements are satisfied.
You must specify your allocation percentages in your Policy application.
Percentages must be in whole numbers and the total allocation must equal 100%.
You may not allocate less than five percent of your Policy Account Value to any
one option, and you may not allocate all of your Net Premium to the Fixed
Account, except as part of a Dollar Cost Averaging Program. We will allocate
your Net Premiums in those percentages, until you give us new allocation
instructions.
We generally will allocate your subsequent Net Premiums to the Sub-Accounts and
the Fixed Account as of the date we receive your Premium in our Administrative
Office. If a Premium requires underwriting, however, we may delay allocation
until after we have completed underwriting. We will follow the allocation
instructions in our file, unless you send us new allocation instructions with
your Premium. When the Insured reaches age 100, we will transfer all of your
Variable Account Value to the Fixed Account and you no longer may transfer
Policy Account Value to the Sub-Accounts.
We will make all valuations in connection with the Policy, other than the
Initial Premium and other Premiums requiring underwriting, on the date we
receive your Premium or request for other action at our Administrative Office,
if that date is a Valuation Day. Otherwise we will make that determination on
the next succeeding day that is a Valuation Day.
POLICY ACCOUNT VALUE. Your Policy Account Value is the sum of the value of your
interest in the Sub-Accounts you have chosen, plus your Fixed Account Value,
plus your Loan Account Value. Your Policy Account Value may increase or decrease
daily to reflect the performance of the Sub-Accounts you have chosen, the
addition of interest credited to the Fixed Account and the Loan Account, the
addition of Net Premium, and the subtraction of partial withdrawals and charges
assessed. There is no minimum guaranteed Policy Account Value.
On the Issue Date, your Policy Account Value will equal the initial Net Premium
(plus any interest credited prior to the Issue Date), less the Monthly Deduction
for the first Policy Month.
On each Valuation Day, the value of your interest in each Sub-Account will
equal:
1. The total value of your Accumulation Units in the Sub-Account;
plus
2. Any Net Premium received from you and allocated to the
Sub-Account during the current Valuation Period; plus
3. Any Policy Account Value transferred to the Sub-Account during
the current Valuation Period; minus
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4. Any Policy Account Value transferred from the Sub-Account during
the current Valuation Period; minus
5. Any amounts withdrawn by you (plus the applicable Partial
Withdrawal Charge) from the Sub-Account during the current
Valuation Period; minus
6. The portion of any Monthly Deduction allocated to the Sub-Account.
All values under the Policy equal or exceed those required by law. Detailed
explanations of methods of calculation are on file with the appropriate
regulatory authorities.
ACCUMULATION UNIT VALUE. The Accumulation Unit Value for each Sub-Account will
vary to reflect the investment experience of the corresponding Portfolio and the
deduction of certain expenses. We will determine the Accumulation Unit Value for
each Sub-Account on each Valuation Day. A Sub-Account's Accumulation Unit Value
for a particular Valuation Day will equal: (a) the total value of the Portfolio
shares in the Sub-Account plus any dividend or distribution paid during the
Valuation Period; minus (b) the daily equivalent of the mortality and expense
risk charge and any charge or credit imposed with respect to taxes that we paid
or reserved regarding the operation of the Variable Account; divided by (c) the
number of units for that Sub-Account at the beginning of the Valuation Period.
You should refer to the Prospectuses for the Portfolios, which accompany this
Prospectus, for a description of how the assets of each Portfolio are valued,
since that determination directly affects the investment experience of the
corresponding Sub-Account and, therefore, your Policy Account Value.
TRANSFER OF POLICY ACCOUNT VALUE. While your Policy is in force, you may
transfer Policy Account Value among the Fixed Account and Sub-Accounts in
writing or by telephone. You may not request a transfer of less than $100 from a
single Sub-Account, unless the amount requested is your entire balance in the
Sub-Account. If less than $100 would remain in a Sub-Account after a transfer,
we may decline to effect the transfer. We reserve the right to change these
minimums.
We charge a transfer fee of $25 on each transfer after the first twelve
transfers in any Policy Year, excluding Dollar Cost Averaging and Asset
Rebalancing Transfers. We may change the number of free transfers and the
transfer fee at any time, but you will always be able to make at least twelve
free transfers per year and the transfer fee will never exceed $25.
As a general rule, we only make transfers on days when the NYSE is open for
business. If we receive your request on one of those days, we will make the
transfer that day. Otherwise, we will make the transfer on the first subsequent
day on which the NYSE is open. Transfers pursuant to a Dollar Cost Averaging or
Asset Rebalancing program will be made at the intervals you have selected in
accordance with the procedures and requirements we establish.
You may make transfers from the Fixed Account to the Sub-Accounts at any time
subject to the limitations described above. In addition, the total amount
transferred from the Fixed Account in
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any one Policy Year may not exceed 25% of the Fixed Account Value on the most
recent Policy Anniversary, unless the transfers are made as part of a Dollar
Cost Averaging program. Your Policy permits us to defer transfers from the Fixed
Account for up to six months from the date you ask us.
We reserve the right at any time to terminate, suspend or modify the transfer
privileges under your Policy, if they are exercised by a market timing firm or
other third party authorized to effect transfers on behalf of multiple Policy
owners. We will not take any of these steps unless transfers initiated by market
timers or other third parties could potentially disadvantage or impair the
rights of other Policy owners.
TRANSFERS AUTHORIZED BY TELEPHONE. You may make transfers by telephone, unless
you advise us in writing not to accept telephonic transfer instructions. The cut
off time for telephone transfer requests is 4:00 p.m. Eastern time. Timely
requests will be processed on that day at that day's price.
We use procedures that we believe provide reasonable assurance that telephone
authorized transfers are genuine. For example, we tape telephone conversations
with persons purporting to authorize transfers and request identifying
information. Accordingly, we disclaim any liability for losses resulting from
allegedly unauthorized telephone transfers. However, if we do not take
reasonable steps to help ensure that a telephone authorization is valid, we may
be liable for such losses. We may suspend, modify or terminate the telephone
transfer privilege at any time without notice.
DOLLAR COST AVERAGING. Under our Dollar Cost Averaging Program, while your
Policy is in force you may authorize us periodically to transfer an amount from
the Fixed Account or the Money Market Sub-Account to the Sub-Accounts of your
choice in accordance with the procedures and requirements that we establish. You
must allocate at least $6,000 of Policy Account Value to your source account to
start a Dollar Cost Averaging Program. The transfers will continue no longer
than twelve months. They may end sooner if you instruct us to stop, your chosen
source of transfer payments is exhausted, or you make a transfer from your
source account outside of the Dollar Cost Averaging Program. From time to time,
we may credit a higher interest rate to Fixed Account Value that is part of a
Dollar Cost Averaging program. Transfers under the Dollar Cost Averaging Program
currently do not count toward the limit on free transfers. See "Transfer Fee" on
page [39].
Your request to participate in this program will be effective when we receive
your completed application at our Administrative Office at the address given on
the first page of this Prospectus. Call or write us for a copy of the
application and additional information concerning the program. We may change,
terminate, limit or suspend Dollar Cost Averaging at any time.
The theory of dollar cost averaging is that by spreading your investment over
time, you may be able to reduce the effect of transitory market conditions on
your investment. In addition, because a given dollar amount will purchase more
units when the unit prices are relatively low rather than when the prices are
higher, in a fluctuating market, the average cost per unit may be less than the
average of the unit prices on the purchase dates. However, participation in this
program does not
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<PAGE>
assure you of a greater profit from your purchases under the program; nor will
it prevent or necessarily reduce losses in a declining market. Moreover, other
investment programs may not work in concert with Dollar Cost Averaging.
Therefore, you should monitor your use of these programs, as well as other
transfers or withdrawals, while Dollar Cost Averaging is being used. You may not
participate in both the Dollar Cost Averaging and Asset Rebalancing Programs at
the same time.
ASSET REBALANCING. Asset Rebalancing allows you to readjust the percentage of
your Policy Account Value allocated to each Sub-Account to maintain a pre-set
level. Over time, the variations in each Sub-Account's investment results will
shift the balance of your Policy Account Value allocations. Under the Asset
Rebalancing feature, we periodically will transfer your Policy Account Value,
including new Net Premiums (unless you specify otherwise), back to the
percentages you specify in accordance with procedures and requirements that we
establish. All of your Policy Account Value allocated to the Sub-Accounts must
be included in an Asset Rebalancing program. You cannot include your Fixed
Account balance in an Asset Rebalancing program. Transfers under an Asset
Rebalancing program do not count toward the transfer limit. See "Transfer Fee"
at page [39].
You may request Asset Rebalancing when you apply for your Policy or by
submitting a completed written request to us at our Administrative Office.
Please call or write us for a copy of the request form and additional
information concerning Asset Rebalancing.
Asset Rebalancing is consistent with maintaining your allocation of investments
among market segments, although it is accomplished by reducing your Policy
Account Value allocated to the better performing segments. Other investment
programs may not work in concert with Asset Rebalancing. Therefore, you should
monitor your use of these programs, as well as other transfers or withdrawals,
while Asset Rebalancing is being used. We may change, terminate, limit, or
suspend Asset Rebalancing at any time. You may not participate in both the
Dollar Cost Averaging and Asset Rebalancing Program at the same time. In
addition, your Asset Rebalancing Program will terminate automatically if you
make a transfer outside the Asset Rebalancing Program.
THE INVESTMENT AND FIXED ACCOUNT OPTIONS
VARIABLE ACCOUNT INVESTMENTS
PORTFOLIOS. Each of the Sub-Accounts invests in the shares of one of the
Portfolios. Each Portfolio is an open-end management investment company
registered under the Investment Company Act of 1940 or a separate investment
series of a registered open-end management investment company. We briefly
describe the Portfolios below. You should read the current Prospectuses for the
Portfolios for more detailed and complete information concerning the Portfolios,
their investment objectives and strategies, and the investment risks associated
with the Portfolios. If you do not have a Prospectus for a Portfolio, contact us
and we will send you a copy.
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Each Portfolio holds its assets separate from the assets of the other
Portfolios, and each Portfolio has its own distinct investment objective and
policies. Each Portfolio operates as a separate investment fund, and the income,
gains, and losses of one Portfolio generally have no effect on the investment
performance of any other Portfolio.
The Portfolios that currently are the permissible investments of the Variable
Account under the Policy are Lincoln National Bond Fund, Inc., Lincoln National
Money Market Fund, Inc. and separate series of Delaware Group Premium Fund
("Delaware Fund"). The investment objectives of the Portfolios are briefly
described below.
[INSERT PORTFOLIO DESCRIPTIONS]
PORTFOLIOS OF DELAWARE FUND AND VARIABLE
ACCOUNT SUB-ACCOUNTS
TREND SERIES. Long-term capital appreciation, by investing primarily in
small-cap common stocks and convertible securities of emerging and other growth
oriented companies that the adviser believes are responsive to changes within
the marketplace and possess fundamental characteristics to support continued
growth.
GROWTH AND INCOME SERIES (FORMERLY DECATUR TOTAL RETURN SERIES). Highest
possible total rate of return by selecting issues that exhibit the potential for
capital appreciation while providing higher than average dividend income.
SELECT GROWTH SERIES. Long-term capital appreciation, by investing in common
stocks of companies that the adviser believes have the potential for high
earnings growth. The Portfolio invests, but not exclusively, in common stocks
and income producing securities convertible into common stocks, consistent with
the Portfolio's objective.
INTERNATIONAL EQUITY SERIES. Long-term growth without undue risk to principal,
by investing in equity securities that provide the potential for capital
appreciation and income. As an international fund, under normal circumstances
the Portfolio will invest at least 65% of its total assets in equity securities
of companies from at least three foreign countries.
PORTFOLIOS OF LINCOLN NATIONAL FUNDS
AND VARIABLE ACCOUNT SUB-ACCOUNTS
BOND FUND. Maximum current income consistent with prudent investment strategy.
The Portfolio invests primarily in medium and long-term corporate and government
bonds.
MONEY MARKET FUND. Maximum current income consistent with the preservation of
capital. The Portfolio invests in short-term obligations issued by U.S.
corporations, the U.S. Government, and federally chartered bankers and U.S.
branches of foreign banks.
Not all Sub-Accounts may be available under your Policy. You should contact your
representative for further information on the availability of the Sub-Accounts.
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DELAWARE MANAGEMENT COMPANY ("DELAWARE MANAGEMENT") is the investment manager to
each Portfolio of the Delaware Fund except the International Equity Series.
Delaware Management and its predecessors have been managing funds since 1938.
DELAWARE INTERNATIONAL ADVISERS LTD. ("DELAWARE INTERNATIONAL"), an affiliate of
Delaware Management, is the investment manager for the International Equity
Series. Delaware International began operating in 1990.
LINCOLN INVESTMENT MANAGEMENT, INC. ("LIM") is the investment adviser to the
Lincoln Funds. LIM has acted as an investment adviser to mutual funds for many
years. Delaware Management, Delaware International, and LIM are indirect
wholly-owned subsidiaries of Lincoln National Corp., which is also First
Penn-Pacific's ultimate parent.
We do not promise that the Portfolios will meet their investment objectives.
Amounts you have allocated to Sub-Accounts may grow in value, decline in value,
or grow less than you expect, depending on the investment performance of the
Portfolios in which those Sub-Accounts invest. You bear that risk. YOU SHOULD
CAREFULLY REVIEW THE PORTFOLIOS' PROSPECTUSES BEFORE ALLOCATING AMOUNTS TO THE
SUB-ACCOUNTS.
Each Portfolio is subject to certain investment restrictions and policies that
may not be changed without the approval of a majority of the shareholders of the
Portfolio. See the accompanying Prospectuses of the Portfolios for further
information.
We automatically reinvest all dividends and capital gains distributions from the
Portfolios in shares of the distributing Portfolio at their net asset value. The
income and realized and unrealized gains or losses on the assets of each
Sub-Account are separate and are credited to or charged against the particular
Sub-Account without regard to income, gains or losses from any other Sub-Account
or from any other part of our business. We will use the Net Premiums you
allocate to a Sub-Account to purchase shares in the corresponding Portfolio and
will redeem shares in the Portfolios to meet Policy obligations or make
adjustments in reserves. The Portfolios are required to redeem their shares at
net asset value and to make payment within seven days.
Certain of the Portfolios sell their shares to separate accounts underlying both
variable life insurance and variable annuity contracts. It is conceivable that
in the future it may be unfavorable for variable life insurance separate
accounts and variable annuity separate accounts to invest in the same Portfolio.
Although neither we nor any of the Portfolios currently foresees any such
disadvantages either to variable life insurance or variable annuity contract
owners, each Portfolio's Board of Directors intends to monitor events in order
to identify any material conflicts between variable life and variable annuity
contract owners and to determine what action, if any, should be taken in
response thereto. If a Board of Directors were to conclude that separate
investment funds should be established for variable life and variable annuity
separate accounts, Policy Owners will not bear the attendant expenses.
VOTING RIGHTS. As a general matter, you do not have a direct right to vote the
shares of the Portfolios held by the Sub-Account to which you have allocated
your Policy Account Value. Under current interpretations, however, you are
entitled to give us instructions on how to vote those shares on certain matters.
We will notify you when your instructions are needed and will
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<PAGE>
provide proxy materials or other information to assist you in understanding the
matter at issue. We will determine the number of votes for which you may give
voting instructions as of the record date set by the relevant Portfolio for the
shareholder meeting at which the vote will occur.
As a general rule, you are the person entitled to give voting instructions.
However, if you assign your Policy, the assignee may be entitled to give voting
instructions. Retirement plans determine the rules for voting by plan
participants.
If you send us written voting instructions, we will follow your instructions in
voting the Portfolio shares attributable to your Policy. If you do not send us
written instructions, we will vote the shares attributable to your Policy in the
same proportions as we vote the shares for which we have received instructions
from other Policy Owners. We will vote shares that we hold in the same
proportions as we vote the shares for which we have received instructions from
other Policy Owners.
We may, when required by state insurance regulatory authorities, disregard
Policy Owner voting instructions if the instructions require that the shares be
voted so as to cause a change in the sub-classification or investment objective
of one or more of the Portfolios or to approve or disapprove an investment
advisory contract for one or more of the Portfolios.
In addition, we may disregard voting instructions in favor of changes initiated
by Policy Owners in the investment objectives or the investment adviser of the
Portfolios if we reasonably disapprove of the proposed change. We would
disapprove a proposed change only if the proposed change is contrary to state
law or prohibited by state regulatory authorities or we reasonably conclude that
the proposed change would not be consistent with the investment objectives of
the Portfolio or would result in the purchase of securities for the Portfolio
which vary from the general quality and nature of investments and investment
techniques utilized by the Portfolio. If we disregard voting instructions, we
will include a summary of that action and our reasons for that action in the
next semi-annual financial report to you.
This description reflects our view of currently applicable law. If the law
changes or our interpretation of the law changes, we may decide that we are
permitted to vote the Portfolio shares without obtaining instructions from our
Policy Owners, and we may choose to do so.
ADDITIONS, DELETIONS, AND SUBSTITUTIONS OF SECURITIES. If the shares of any of
the Portfolios are no longer available for investment by the Variable Account or
if, in our judgment, further investment in the shares of a Portfolio is no
longer preferable, we may add or substitute shares of another Portfolio or
mutual fund for Portfolio shares already purchased or to be purchased in the
future by Premiums under the Policy. Any substitution will comply with the
requirements of the 1940 Act.
We also reserve the right to make the following changes in the operation of the
Variable Account and the Sub-Accounts:
(a) to operate the Variable Account in any form permitted by law;
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<PAGE>
(b) to take any action necessary to comply with applicable law or
obtain and continue any exemption from applicable laws;
(c) to transfer assets from one Sub-Account to another, or from any
Sub-Account to our general account;
(d) to add, combine, or remove Sub-Accounts in the Variable Account;
(e) to assess a charge for taxes attributable to the operation of the
Variable Account or for other taxes, as described in "Deductions
and Charges - Other Variable Account Charge" on page [37] below;
and
(f) to change the way in which we assess other charges, as long as the
total other charges do not exceed the maximum guaranteed charges
under the Policies.
If we take any of these actions, we will comply with the then applicable legal
requirements.
THE FIXED ACCOUNT. THE PORTION OF THE POLICY RELATING TO THE FIXED ACCOUNT IS
NOT REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND THE FIXED
ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY
ACT OF 1940 (THE "1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY
INTERESTS IN THE FIXED ACCOUNT ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF
THE 1933 ACT OR THE 1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS
NOT BEEN REVIEWED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE
STATEMENTS ABOUT THE FIXED ACCOUNT IN THIS PROSPECTUS MAY BE SUBJECT TO
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING
ACCURACY AND COMPLETENESS.
You may allocate part of your Net Premiums to the Fixed Account. Under this
option, we credit interest to the Fixed Account, as described below. From time
to time we will set a current interest rate applicable to Net Premiums and
transfers allocated to the Fixed Account. We determine interest rates in
accordance with then-current market conditions and other factors. The rates of
interest that we set will never be less than an annual effective rate of 4%. We
may credit interest at a higher rate, but we are not obligated to do so.
Amounts allocated to the Fixed Account become part of the general account of
First Penn-Pacific. First Penn-Pacific invests the assets of the general account
in accordance with applicable laws governing the investments of insurance
company general accounts.
We may delay payment of partial or full withdrawals from the Fixed Account for
up to 6 months from the date we receive your written withdrawal request. If we
defer payment for more than 30 days, we will pay interest (if required) on the
deferred amount at such rate as may be required by the applicable state or
jurisdiction.
POLICY BENEFITS AND RIGHTS
DEATH BENEFIT. While your Policy is in force, we will pay the Death Benefit
proceeds to the Beneficiary upon the death of the Insured. As described below in
"Proceeds Options", on pages
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[34-35], we will pay the Death Benefit proceeds in a lump sum or apply them
under an optional payment plan.
The Death Benefit proceeds payable to the Beneficiary equal the Death Benefit,
less:
- any Loan Account Value as of the date of death,
- any unpaid loan interest through the end of the Policy Month of death;
- any unpaid and due charges; and
- the total benefits paid under our Long Term/Convalescent Care Benefit
Riders, if you have received any.
We will determine the amount of the Death Benefit proceeds as of the date of the
Insured's death. We will usually pay the Death Benefit proceeds within seven
days after we have received due proof of death and all other requirements we
deem necessary have been satisfied.
The Death Benefit will be the greater of: (a) the Specified Amount of your
Policy; or (b) the Policy Account Value multiplied by the applicable death
benefit factor as described below. The death benefit factors are intended to
enable your Policy to be meet the definition of "life insurance contract" under
the Tax Code, so that it will qualify for favorable federal income tax
treatment. The death benefit factors are stated in your Policy Schedule. They
vary according to the age of the Insured. Under this formula, an increase in
Policy Account Value due to favorable investment experience may increase the
Death Benefit above the Specified Amount, and a decrease in Policy Account Value
due to unfavorable investment experience may decrease the Death Benefit (but not
below the Specified Amount). As explained on pages [33-34], we will reduce the
Specified Amount if you take a partial withdrawal. If your Policy includes our
Convalescent Care Rider, a partial withdrawal also will reduce the Benefit Limit
under your Rider. See "Convalescent Care Benefits Rider on pages [30-31].
EXAMPLES:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Example A Example B
- -----------------------------------------------------------------------------
<S> <C> <C>
Specified Amount $50,000 $50,000
- -----------------------------------------------------------------------------
Insured's Age 60 60
- -----------------------------------------------------------------------------
Policy Account Value on Date of Death $40,000 $25,000
- -----------------------------------------------------------------------------
Applicable Death Benefit Factor 130% 130%
- -----------------------------------------------------------------------------
Death Benefit $52,000 $50,000
- -----------------------------------------------------------------------------
</TABLE>
In Example A, the Death Benefit equals $52,000, I.E., the greater of $50,000
(the Specified Amount) and $52,000 (the Policy Account Value at the date of
death of $40,000, multiplied by the Death Benefit Factor of 130%). This amount,
less any Loan Account Value and Long
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<PAGE>
Term/Convalescent Care benefits paid, constitutes the Death Benefit proceeds
that we would pay to the Beneficiary.
In Example B, the Death Benefit is $50,000, i.e., the greater of $50,000 (the
Specified Amount) or $32,500 (the Policy Account Value of $25,000 multiplied by
the Death Benefit Factor of 130%). This amount, less any Loan Account Value and
Long Term/Convalescent Care benefits paid, constitutes the Death Benefit
proceeds that we would pay to the Beneficiary.
CHANGE IN THE SPECIFIED AMOUNT. While the Policy is in force, you may change the
Specified Amount. Write or call our Administrative Office to obtain the
necessary form. The change will take effect on the first Monthly Anniversary Day
after we approve your request.
[If you request a decrease in Specified Amount, we will first apply it to
coverage provided by the most recent increase in Specified Amount, then to the
next most recent increase successively and finally to the Specified Amount under
the original application.] We will not permit a decrease in the Specified Amount
of your Policy if afterward the Specified Amount remaining in force would be
less than the Minimum Specified Amount shown in your Policy Schedule. The
Minimum Specified Amount will reflect the Insured's age at issue, sex, rating
class and history of tobacco use.
To apply for an increase in the Specified Amount, you must submit to us a
supplemental application, accompanied by a satisfactory evidence of
insurability. We will not permit any increase in Specified Amount after the
Insured's 80th birthday. You may not increase the Specified Amount of your
Policy more often than once every twelve months.
We may decline a request for a change in Specified Amount in our discretion. You
may not change the Specified Amount if the Insured is not living on the
effective date of the change or your policy is in the Grace Period.
You should be aware that an increase in the Specified Amount of your Policy will
affect the cost of insurance charges applicable to your Policy. We will deduct a
larger amount of cost of insurance charges, because an increase in the Specified
Amount also will increase the net amount at risk under your Policy. [We will not
approve a request for a Specified Amount increase if the Surrender Value is too
small to pay the Monthly Deduction for the Policy Month following the increase.]
OPTIONAL INSURANCE BENEFITS. You may ask to add one or more Riders to your
Policy to provide additional optional insurance benefits. We may require
evidence of insurability before we issue a Rider to you. We will deduct the
premiums for any Rider as part of the Monthly Deduction. For more information
concerning what options we may offer, please ask your sales representative or
contact us at 800-xxx-xxxx. In our discretion we may offer Riders or stop
offering any Rider at any time.
Not all of these Riders may be available in your state, and the terms of these
benefits may differ in some states. Contact us for more information.
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<PAGE>
LONG-TERM/CONVALESCENT CARE BENEFITS RIDERS.
Under these Riders, we will reimburse you for certain long-term care expenses if
the Insured becomes Chronically Ill, as defined in the Riders. Other conditions
apply. To obtain these benefits, you must purchase the Convalescent Care
Benefits Rider described below. You may add one of the two Extension of Benefits
Riders described below to tailor your coverage to your needs. THESE RIDERS MAY
NOT COVER ALL OF THE LONG-TERM CARE EXPENSES INCURRED BY THE INSURED DURING THE
PERIOD OF COVERAGE. ACCORDINGLY, WE STRONGLY ADVISE YOU TO REVIEW CAREFULLY ALL
POLICY AND RIDER LIMITATIONS. Amounts deducted to pay for these Riders may be
taxable to you as ordinary income. For more information, see "Federal Tax
Considerations: Long Term/Convalescent Care Benefits Rider" at page [46] below.
CONVALESCENT CARE BENEFITS RIDER. This Rider provides the basic long-term care
expenses coverage that we offer in connection with the Policy. The maximum total
benefit payable under the Rider (the "Benefit Limit") is equal to the Death
Benefit as of the date we approve your claim for benefits under the Rider, less
the Loan Account Value. The payment of benefits under this Rider in effect is a
prepayment of the Death Benefit, since each benefit payment reduces the Death
Benefit payable by an equal amount. Accordingly, if you receive total benefits
under this Rider equal to the Death Benefit under your Policy, the Policy will
lapse and no Death Benefit will be payable upon the Insured's death. Likewise,
if the Insured dies while collecting benefits under this Rider, the Death
Benefit will be reduced to reflect the total Benefits paid under this Rider.
Benefit payments also may not exceed the daily benefit limit (the "Daily
Maximum"). We offer two levels of Daily Maximum. One in effect provides for
payment of the maximum daily benefit over a two-year period. The other in effect
provides for payment of a lower maximum daily benefit over a three-year period.
We use the two and three year periods solely as a guide in setting the Daily
Maximum for your Rider. If your covered expenses are less than the applicable
Daily Maximum, we will continue to pay benefits until the total benefit payments
reach the Benefit Limit. However, if you wish to ensure the availability of
coverage for longer periods, you may purchase one of the Extension of Benefit
Riders described below.
If you take a Policy Loan or partial withdrawal while you are collecting
benefits under this Rider, we will reduce the Benefit Limit and the Daily
Maximum as described in the Rider.
The types of expenses covered by the Rider are as follows: Care Planning
expenses; Caregiver Training expenses; Adult Day Care expenses; Home Health Care
expenses; Homemaker Services expenses; Hospice Services expenses; Respite Care
expenses; Nursing Home Care expenses; Bed Reservation expenses; Assisted Living
Facility expenses; and Alternative Care Services expenses. Covered expenses, and
any restrictions on the types and levels of services and expenses covered, are
described in more detail in the Rider.
Subject to the terms and conditions of this Rider, benefits are payable under
this Rider once the Insured has been Chronically Ill for at least 90 days. We
may require verification of eligibility for benefits, including a review of
medical facts or an examination of the Insured by a physician of our choice.
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<PAGE>
To submit a claim, you must give us written notice at our administrative office
within 60 days of when you first incur an expense covered by the Rider, or as
soon thereafter as is reasonably possible. We will then send you a Claim Form to
fill out and return to us. Be aware that your Benefit Limit is determined as of
the date when we approve your claim, not the date on which you file your claim.
A decrease in your Policy Account Value while your claim is pending may reduce
your Benefit Limit, if your Policy's Death Benefit is higher than the Specified
Amount. See "Death Benefit" at pages [27-28]. To avoid that risk, you may wish
to transfer part or all of your Policy Account Value to the Fixed Account while
your claim is pending.
When we approve your claim, we will transfer the entire Policy Account Value to
the Fixed Account. You may not transfer Policy Account Value from the Fixed
Account as long as you continue to claim benefits under this Rider. We will
continue to deduct charges from your Policy Account Value while you are claiming
benefits under this Rider. The charges will reflect the decreases in the Death
Benefit and the Policy Account Value resulting from the benefit payments under
the Rider. You may also take Policy Loans and Partial Withdrawals. Each benefit
payment will reduce the Net Policy Account Value in proportion to the reduction
in the Net Death Benefit.
If your Policy lapses while you are collecting benefits under the Rider, your
coverage under the Rider will not cease. Instead, we will continue to pay
benefits to you under the Rider until your total benefit payments equal the
Benefit Limit. However, if the Insured is ineligible for benefits for 30
consecutive days (excluding any hospital stay), the Rider also will lapse.
EXTENSION OF CONVALESCENT CARE BENEFITS RIDER. This Rider provides additional
Long-Term/Convalescent Care Benefits. This Rider covers the same types of
expenses the Convalescent Care Benefits Rider
Under this Rider, we will reimburse additional covered expenses in the amount of
the Additional Benefits Limit shown in your Policy Schedule. The Additional
Benefit Limit is payable when you reach the Benefit Limit in your Convalescent
Care Rider. The Additional Benefit Limit is a fixed amount. It is not affected
by changes in your Policy's Net Death Benefit or the Benefit Limit in your
Convalescent Care Rider. This Rider also has its own Daily Maximums. It is not
affected by any changes to the Daily Maximums in your Convalescent Care Rider.
In addition, after your Policy and this Rider have been in effect for three
years, a benefit is payable under this Rider even if a qualifying claim begins
after your Policy and this Rider lapse. In this circumstance the Benefit Limit
will equal the greater of the premium paid for the Rider or 30 times the Daily
Maximum for Nursing Home Care in effect as of the date of lapse.
EXTENSION OF CONVALESCENT CARE BENEFITS RIDER WITH AUTOMATIC INCREASING
BENEFITS. This Rider provides the same type of benefits as the Extension of
Convalescent Care Benefits Rider, except that on each Rider Anniversary the
Additional Benefit Limit and Daily Maximum for the Rider increases by 5%.
GUARANTEE ENHANCEMENT RIDER.
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<PAGE>
While this Rider is in effect, if your Policy Account Value is insufficient to
pay a Monthly Deduction when due, your Policy will not lapse. Instead we will
reduce the Specified Amount of your Policy (and the Benefit Limit of any
Convalescent Care Benefits Rider) to the Guaranteed Minimum Benefit. To qualify
for this Benefit you must meet the following conditions:
- You must not have taken any Policy Loan;
- You must not have taken any partial withdrawal;
- You must not have changed the Specified Amount of your Policy or added
benefits, except upon our written recommendation; and
- You must agree to the reduction in Specified Amount described above.
This Rider may not be available in all states.
POLICY LOANS. While your Policy is in force, you may borrow money from us using
the Policy as the only security for your loan. Loans have priority over the
claims of any assignee or any other person. The minimum loan amount is the
lesser of $500 or the minimum required in your state. We may change this limit.
In addition, if you have named an irrevocable Beneficiary, you must also obtain
his or her written consent before we make a Policy Loan to you.
We will treat as a Preferred Loan your total Policy Loans (including accrued and
unpaid interest) up to the "gain" in your Policy. Your "gain" equals your Policy
Account Value minus your Premiums paid, plus any partial withdrawals. Any
additional Policy Loan balances are treated as Regular Loans. The effective
interest rate on Preferred Loans and Regular Loans is 8% annually. Interest on
Policy Loans is due at the end of each month. If you do not pay the interest on
a Policy Loan when due, the unpaid interest will be added to your Policy Loan
balance and will accrue interest at the applicable rate.
When we make a Policy Loan to you, we will transfer to the Loan Account a
portion of the Policy Account Value equal to the loan amount. We will credit
interest to your Loan Account Value at the rates shown on your Policy Schedule.
Currently we credit interest at the rate of 8% annually on Loan Account Value
attributable to Preferred Loans and 6% annually on Loan Account Value
attributable to Regular Loans. If you do not pay loan interest when due, we will
transfer to the Loan Account an amount of Policy Account Value equal to the
amount by which the interest due on your loan exceeds the interest credited to
your Loan Account Value in the previous month. We will take the transfers pro
rata from the Fixed Account and the Sub-Accounts, unless you instruct us
otherwise in writing.
If you purchase a Policy in exchange for another life insurance policy under
which a loan is outstanding, in our discretion we may permit you to continue
that loan under your Policy. We will advise you of the applicable interest rate.
You may repay all or any part of any Policy Loan while the Policy is still in
effect and the Insured is living. If you have a Policy Loan outstanding, we will
treat any payment we receive from you as a loan repayment, unless you instruct
us otherwise in writing. We will deduct an amount equal to your loan repayment
from the Loan Account and allocate your payment among
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<PAGE>
the Sub-Accounts and the Fixed Account in accordance with your then current
Premium allocation, unless you instruct us otherwise.
A Policy Loan, whether or not repaid, will have a permanent effect on the Policy
Account Value because the investment results of each Sub-Account and the
interest paid on the Fixed Account will apply only to the amounts remaining in
those accounts. The longer a loan is outstanding, the greater the effect is
likely to be. The effect could be favorable or unfavorable. If the Sub-Accounts
and/or Fixed Account earn more than the annual interest rate charged on your
Policy Loan, your Policy Account Value will not increase as rapidly as it would
if you had not taken a Policy Loan. If the Sub-Accounts and/or Fixed Account
earn less than that rate, then your Policy Account Value will be greater than it
would have been if you had not taken a Policy Loan. Also, if you do not repay a
Policy Loan, your Loan Account Value will be subtracted from the Death Benefit
and Surrender Value otherwise payable.
You may realize taxable income when you take a Policy Loan. In most instances, a
Policy is treated as a "modified endowment contract" for federal tax purposes.
As a result, Policy Loans usually are treated as withdrawals for tax purposes,
and the amount of the loan may be treated as taxable income to you. In addition,
you may also incur an additional ten percent penalty tax. You should also be
aware that interest on Policy Loans is generally not deductible. If your Policy
lapses while a Policy Loan is outstanding and your Policy is not a MEC, you may
owe taxes or suffer other adverse tax consequences. Accordingly, before you take
a Policy Loan, you should consult your tax adviser and carefully consider the
potential impact of a Policy Loan on your rights and benefits under the Policy.
AMOUNT PAYABLE ON SURRENDER OF THE POLICY. While your Policy is in force, you
may fully surrender your Policy. Upon surrender, we will pay you the Surrender
Value determined as of the day we receive your written request at our
Administrative Office, together with your Policy. Your Policy will terminate on
the day we receive your written request. Before we pay a full surrender, you
must provide us with tax withholding information.
The Surrender Value equals the Policy Account Value, minus any applicable
Surrender Charge, minus any Loan Account Value. We will determine the Surrender
Value as of the end of the Valuation Period during which we received your
request for surrender. We generally will pay you the Surrender Value of the
Policy within seven days of our receiving your complete written request or on
the effective surrender date you have requested, whichever is later. The
determination of the Surrender Charge is described on pages [38-39].
You may receive the Surrender Value in a lump sum or under any of the proceeds
options described in "Proceeds Options" on pages [34-35].
The tax consequences of surrendering the Policy are discussed in "Federal Tax
Considerations," beginning on page [42].
PARTIAL WITHDRAWALS. You may receive a portion of the Surrender Value by making
a partial withdrawal from your Policy. You may not withdraw less than $500 at
one time. You must request the partial withdrawal in writing, unless you
previously provided us with written
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authorization to request partial withdrawals by telephone. Your request will be
effective on the date we receive it at our Administrative Office. Before we pay
any partial withdrawal, you must provide us with tax withholding information.
When you request a partial withdrawal, we will pay you the amount requested and
subtract the amount requested plus any applicable Partial Withdrawal Charge from
your Policy Account Value. The Partial Withdrawal Charge does not apply to
certain withdrawals. The determination of the Partial Withdrawal Charge is
described on page [39]. We will take your partial withdrawal pro rata from the
Sub-Accounts and/or the Fixed Account.
A partial withdrawal will reduce the Specified Amount of your Policy as well as
the Policy Account Value. We will reduce the Specified Amount by the amount of
the partial withdrawal. We will not permit a partial withdrawal that would
reduce the Specified Amount below the Minimum Specified Amount shown in your
Policy Schedule. [If you have previously increased the Specified Amount of your
Policy, your partial withdrawals will first reduce the Specified Amount of the
most recent increase, then the next most recent increases successively, then the
Specified Amount of the original Policy. We will notify you of any change in the
Specified Amount in our next quarterly or annual report to you.]
The tax consequences of partial withdrawals are discussed in "Federal Tax
Considerations" beginning on page [42].
PROCEEDS OPTIONS. We will pay the Surrender Value or Death Benefit proceeds
under the Policy in a lump sum or under one of the proceeds options that we then
offer. Our consent is needed for any payment option that would result in
installment payments of less than $50. Unless we consent in writing, the
proceeds options described below are not available if the payee is an assignee,
administrator, executor, trustee, association, partnership, or corporation. We
will not permit surrenders or partial withdrawals after payments under a
proceeds option commence. We will transfer to our general account any amount
placed under a proceeds option and it will not be affected by the investment
performance of the Variable Account.
You may request a proceeds option by writing to us at our Administrative Office
before the death of the Insured.
The following proceeds options are available under the Policy:
OPTION A - PAYMENTS FOR A FIXED NUMBER OF YEARS. We will pay equal monthly
installments for a period selected by you of not less than five and not more
than 25 years. Payments are based on a guaranteed interest rate of 4% compounded
annually.
OPTION B - LIFE INCOME WITH A GUARANTEE MINIMUM PAYMENT PERIOD. We will pay
proceeds in equal monthly payments to the payee for as long as the payee is
alive. If the payee dies before the end of the Guarantee Period, we will
continue payments to a named beneficiary until the end of the Guarantee Period.
We offer Guarantee Periods of ten years, fifteen years or twenty years. The
amount of the payment will be determined from Option Table B in your Policy.
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OPTION C - PROCEEDS LEFT ON DEPOSIT. We will return the proceeds on deposit
while the payee is alive. We will disburse the proceeds as requested by the
payee. We will credit interest to unpaid balances at an annual effective rate of
4%. The amount left on deposit must equal at least $2,500 unless we agree
otherwise.
OPTION D - PAYMENTS OF FIXED AMOUNT UNTIL PROCEEDS ARE EXHAUSTED. We will pay
equal monthly installments until the proceeds are exhausted. We will credit
interest to unpaid balances at an annual effective rate of 4%.
When we begin to make payments under Options A, B and D, we will tell you the
amount of your installment payment. Your installment payment will never be less
than the amounts determined using the tables in the Policy. It may be higher.
In our discretion, from time to time we may credit interest in addition to the
interest guaranteed under the proceeds options. If the Payee dies, under Options
A and B, we will pay the commuted value of the remaining payments to the Payee's
estate; under Options C and D, we will pay the unpaid balance left with us plus
any unpaid interest.
In addition, we may agree to other proceeds option plans. Write or call us to
obtain information about them.
POLICY AFTER AGE 100. The Policy does not have a maturity date. When the Insured
reaches age 100 and the Policy is in force, we will make the following changes
to your Policy:
- We will transfer all of your Variable Account Value to the Fixed
Account. We will continue to credit interest to the Fixed Account as
described above.
- We will discontinue charging a cost of insurance charge, and we will
not deduct any other charge.
- You may not pay additional Premiums.
The other provisions of the Policy will continue in force.
TERMINATION AND GRACE PERIOD. The Policy will terminate and life insurance
coverage will end when one of the following events first occurs:
(a) you surrender your Policy;
(b) the Grace Period ends without payment of sufficient additional
Premium and your Policy does not have an in force Guarantee
Enhancement Rider; or
(c) the Insured dies.
Your Policy will enter the Grace Period if on a Monthly Anniversary Day the
Surrender Value is insufficient to pay the Monthly Deduction or the Loan Account
Value exceeds the Surrender
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Value. You will be given a 61-day Grace Period in which to pay an amount
sufficient to keep your Policy in force after the end of the Grace Period.
At least 30 days before the end of the Grace Period, we will send you and any
assignee a notice telling you that you must pay at least the amount shown in the
notice by the end of the Grace Period to prevent your Policy from terminating.
The amount shown in the notice will approximately equal three Monthly
Deductions. You may pay a larger amount if you wish. If you do not pay us the
amount shown in the notice before the end of the Grace Period, your Policy will
end at the end of the Grace Period unless your Policy has an in force Guarantee
Enhancement Rider. See "Guarantee Enhancement Rider" at page [31] above.
Your Policy will continue in effect through the Grace Period. If the Insured
dies during the Grace Period, we will pay a Death Benefit in accordance with
your instructions. However, we will reduce the proceeds by an amount equal to
the Monthly Deductions due and unpaid. See "Death Benefit," on pages [27-28].
REINSTATEMENT. If your Policy lapses during the life of the Insured, you may
apply for reinstatement of your Policy by paying us the reinstatement Premium.
You must request reinstatement within five years from the end of the Grace
Period while the Insured is living. The reinstatement Premium is equal to any
charges due and unpaid on the date of lapse plus an amount sufficient to keep
your Policy from entering the Grace Period for two months. If you choose, you
may pay a larger amount. If any Policy Loan was outstanding at the time of
lapse, you must either repay or reinstate the loan before we will reinstate your
Policy. In addition, you must provide evidence of insurability satisfactory to
us. The Policy Account Value on the reinstatement date will reflect the Premium
paid at the time of reinstatement. We will advise you of the Surrender Charge,
if any, that will apply to surrender of your Policy after reinstatement. All
Policy charges will continue to be based on your original Issue Date.
CANCELLATION. You may cancel your Policy by returning it to us within thirty
days after you receive it. If you return your Policy, it terminates and we will
pay you an amount equal to your Premium. We will pay the refund within seven
days of receiving your request. No Surrender Charge is imposed upon return of
your Policy within the right to return period.
POSTPONEMENT OF PAYMENTS. We may defer for up to fifteen days the payment of any
amount attributable to a Premium paid by check to allow the check a reasonable
time to clear. We ordinarily will pay any amount attributable to the Policy
Account Value allocated to the Variable Account within seven days, except:
- whenever the New York Stock Exchange ("NYSE") is closed (other than
customary weekend and holiday closings);
- when trading on the NYSE is restricted or an emergency exists, as
determined by the SEC, so that disposal of the Variable Account's
investments or determination of the value of its net assets is not
reasonable practicable; or
- at any other time permitted by the SEC for your protection.
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In addition, we may delay payment of Policy Account Value in the Fixed Account
for up to six months or a shorter period if required by law. If we defer payment
for more than 30 days we will pay interest (if required) on the deferred amount
at such rate as may be required by the applicable state or jurisdiction.
DEDUCTIONS AND CHARGES
We assess charges and deductions under your Policy against Premiums, the
Sub-Accounts and the Policy Account Value. Additional deductions and expenses
are paid out of the Portfolios' assets, as described in the Prospectuses of the
Portfolios.
PREMIUM EXPENSE CHARGE. We charge a premium expense charge of 3.5% of each
Premium paid. The premium expense charge is intended to cover a portion of our
state premium tax expenses, certain federal tax liabilities resulting from the
receipt of Premiums, and a portion of our distribution expenses. State premium
tax rates vary from 0% to 4.0%. We do not vary this charge to reflect the actual
premium tax rate in individual states or the absence of premium tax in certain
states. Accordingly, the portion of this charge attributable to state premium
taxes may be more or less than the premium taxes assessed in your state.
MORTALITY AND EXPENSE RISK CHARGE. On each Valuation Day, we will take a
deduction from the Sub-Accounts to compensate First Penn-Pacific for certain
expenses incurred in connection with this Policy. The mortality and expense risk
charge will be calculated at an annual effective rate equivalent to 1.00% of
average daily net assets of each Sub-Account, as described in the table of
Policy Charges and Deductions on pages [9-11]. The amount deducted will be
determined on each Valuation Day.
The mortality and expense risk charge is intended to compensate us for incurring
certain expenses and assuming certain mortality risks under the Policies. The
mortality risk assumed in relation to the Policy includes the risk that the cost
of insurance charges specified in the Policy will be insufficient to meet
claims. We also assume a risk that, on the Monthly Anniversary Day preceding the
death of an Insured, the Death Benefit will exceed the amount on which the cost
of insurance charges were based. The expense risk assumed is that expenses
incurred in issuing and administering the Policies will exceed the
administrative charges set in the Policy.
OTHER VARIABLE ACCOUNT CHARGE. We currently are not maintaining a provision for
taxes attributable to the operations of the Variable Account (as opposed to the
federal tax related to the receipt of Premiums under the Policies). In the
future, however, we may make such a charge. Charges for other taxes, if any,
attributable to the Variable Account or to this class of Policies may also be
made.
MONTHLY DEDUCTION. Each month on the Monthly Anniversary Day we will take a
Monthly Deduction from your Policy Account Value. The Monthly Deduction will
consist of a cost of insurance charge, a Monthly Expense Charge, and any charges
for optional benefit Riders. We deduct the Monthly Deduction pro rata from your
interests in the Sub-Accounts and your Fixed Account balance.
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COST OF INSURANCE CHARGE. The cost of insurance charge is intended to pay for
the cost of providing life insurance coverage for the Insured. We guarantee that
this charge will not exceed the maximum cost of insurance charge determined on
the basis of the rates shown in the mortality table guaranteed in your Policy.
The current monthly cost of insurance charge is equal to the current cost of
insurance rate times the net amount at risk. The net amount at risk is (a) -
(b), where:
(a) is the Death Benefit on the first day of the Policy Month divided by
1.0032737; and
(b) the Policy Account Value on that day before the deduction of the
monthly Cost of Insurance.
Rates may differ based on the age, sex, rating class and history of tobacco use
of the Insured. Your guaranteed cost of insurance rates are set forth in the
mortality tables in your Policy. Because the net amount for which we are at risk
under your Policy may vary monthly, your cost of insurance charge is likely to
differ each month. If the Insured is still living and your Policy is in effect
on the first Policy Anniversary after the Insured's 100th birthday, we will
discontinue charging you a cost of insurance charge.
We determine the cost of insurance charge separately for the initial Specified
Amount and each subsequent increase. The current cost of insurance charge covers
our anticipated mortality costs for standard and substandard risks. We determine
the current cost of insurance rates based on our expectations as to our future
mortality experience and other factors. We guarantee, however, that we will
never charge you a cost of insurance charge higher than the amount determined
using the maximum guaranteed cost of insurance rates shown in the Policy. We
base our cost of insurance rates on the Insured's sex, attained age or, for the
first seven Policy Years, issue age and duration, rating class, and history of
tobacco use. However, we issue unisex Policies in Montana. Our cost of insurance
rates are based on the 1980 Commissioners Standard Ordinary ("1980 CSO")
Mortality Table based on the Insured's sex, age last birthday, and history of
tobacco use.
MONTHLY EXPENSE CHARGE. We charge a Monthly Expense Charge of $6.00 per month.
We may raise or lower this charge, but it will never exceed $8.00 per month. The
Monthly Expense Charge is intended to compensate us for administrative expenses
such as salaries, postage, telephone, office equipment and periodic reports.
RIDER CHARGES. If you select our Long Term/Convalescent Care Riders or Guarantee
Enhancement Rider, each month we will deduct a charge for each Rider. The charge
is intended to cover our anticipated costs for providing the benefits offered
under the Rider(s) you have selected. The monthly charge will depend on the type
of Rider you select and the level of coverage provided. The monthly charge for
our base Long-Term/Convalescent Care Rider also is based on the Insured's Age.
The monthly charge for our other Long-Term/Convalescent Care Riders reflects the
Insured's Age at issue. The monthly charge for our Guarantee Enhancement Rider
is a percentage of Policy Account Value.
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PORTFOLIO EXPENSES. You indirectly bear the charges and expenses of the
Portfolios whose shares are held by the Sub-Accounts to which you allocate your
Policy Account Value. The Variable Account purchases shares of the Portfolios at
net asset value. Each Portfolio's net asset value reflects investment advisory
fees and administrative expenses already deducted from the Portfolio's assets.
For a summary of current estimates of these charges and expenses, see page [11]
above. For more information concerning the investment advisory fees and other
charges against the Portfolios, see the Prospectuses and the statements of
additional information for the Portfolios, which are available upon request.
We may receive compensation from the investment advisers or administrators of
the Portfolios. Such compensation will be consistent with the services we
provide or the cost savings resulting from the arrangement and therefore may
differ between Portfolios.
SURRENDER CHARGE. If you surrender your Policy, you may pay a Surrender Charge.
The Surrender Charge equals the amount shown in the table in your Policy for the
Policy Year in which surrender occurs. The Surrender Charge equals a percentage
of your Initial Premium. The applicable Surrender Charge percentages are shown
in the table on page [9] above. The applicable percentage is based on the
Insured's age at issue and the number of complete years elapsed since the Issue
Date. The amount of the Surrender Charge decreases over time. After the 14th
Policy Year, the Surrender Charge is 0%. Payment of additional Premiums does not
affect the Surrender Charge.
The Surrender Charge is imposed to cover a portion of our actual distribution
expenses, which include agents' sales commissions and other sales and
distribution expenses. We expect to recover total sales expenses of the Policies
over the life of the Policies. However, to the extent distribution costs are not
recovered by the Surrender Charge, Partial Withdrawal Charge or the premium
expense charge, we may make up any shortfall from the assets of our general
account, which includes funds derived from the mortality and expense risk
charges charged to the Sub-Accounts and other fees and charges under the
Policies.
If you take a partial withdrawal, we will reduce the Surrender Charge in that
Policy Year by the amount of any Partial Withdrawal Charge. In addition, the
Surrender Charge in subsequent years will be reduced proportionately. For
example, assume you pay a $25 Partial Withdrawal Charge when the Surrender
Charge shown in the table is $500. If later that year you surrender your Policy,
the Surrender Charge would be $475, I.E., 5% less than the charge shown in the
Table. If you surrender your Policy in a subsequent Policy Year when the
Surrender Charge shown in the Table is $200, then you would pay a Surrender
Charge of $190. Changes in the Specified Amount of your Policy will not affect
the Surrender Charge.
PARTIAL WITHDRAWAL CHARGE. We also charge a Partial Withdrawal Charge on a
partial withdrawal from your Policy. The Partial Withdrawal Charge is $25 on
each partial withdrawal after the first in each Policy Year. The Partial
Withdrawal Charge is used to cover a portion of our distribution expenses and
our administrative expenses in processing partial withdrawal requests. See
"Surrender Charge" on pages [38-39].
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TRANSFER FEE. We charge a maximum transfer fee of $25 per transfer on each
transfer after the first twelve transfers in any Policy Year, excluding
transfers under our Dollar Cost Averaging and Asset Rebalancing Programs. We may
charge the number of free transfers and the transfer fee at any time, but you
will always be able to make at least 12 free transfers per year and the transfer
fee will never exceed $25.
We will deduct the transfer fee from the Policy Account Value remaining in the
Sub-Account or the Fixed Account from which the transfer was made. If that
amount is insufficient to pay the transfer fee, we will subtract it from the
transferred amount.
SPECIAL PROVISIONS FOR GROUP OR SPONSORED ARRANGEMENTS. Where permitted by state
insurance laws, Policies may be purchased under group or sponsored arrangements.
We may reduce or waive the charges and deductions described above for Policies
issued under these arrangements. Among other things, we may waive Surrender
Charges and deductions to employees, officers, directors, agents, and immediate
family members of the foregoing. We will reduce these charges and deductions in
accordance with our rules in effect when we approve the application for a
Policy. To qualify for a reduction, a group or sponsored arrangement must
satisfy our criteria as to, for example, the size of the group, the expected
number of participants and anticipated Premiums from the group. Generally, the
sales contacts and effort, administrative costs and mortality cost per Policy
vary based on such factors as the size of the group or sponsored arrangements,
the purposes for which Policies are purchased and certain characteristics of the
group's members. The amount of reduction and the criteria for qualification will
reflect the reduced sales effort and administrative costs resulting from, and
the different mortality experience expected as a result of, sales to qualifying
groups and sponsored arrangements.
From time to time, we may modify both the amounts of reductions and the criteria
for qualification. Reductions in these charges will not be unfairly
discriminatory against any person, including the affected Policy Owners and all
other owners of all other policies funded by the Variable Account.
GENERAL POLICY PROVISIONS
STATEMENTS TO POLICY OWNERS. We will maintain all records relating to the
Variable Account and the Sub-Accounts. Each year we will send you a report
showing information concerning your Policy transactions in the past year and the
current status of your Policy. The report will include information such as the
Policy Account Value as of the end of the current and the prior year, the
current Death Benefit, Surrender Value, Loan Account Value, partial withdrawals,
earnings, Premiums paid, and deductions made since the last annual report. We
will also include any information required by state law or regulation. [If you
ask us, we will send you an additional report at any time. We may charge you up
to [$25] for this additional report. We will tell you the current charge before
we send you the report.]
In addition, we will send you the financial statements of the Portfolios and
other reports as specified in the Investment Company Act of 1940, as amended. We
also will mail you confirmation notices or other appropriate notices of Policy
transactions quarterly or more
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frequently within the time periods specified by law. Please give us prompt
written notice of any address change. Please read your statements and
confirmations carefully and verify their accuracy and contact us promptly with
any questions.
LIMIT ON RIGHT TO CONTEST. In the absence of fraud, we may not contest the
insurance coverage under your Policy after it has been in force for two years
while the Insured is alive or for two years after any increase in the Specified
Amount or any reinstatement. The two-year incontestability period may vary in
certain states to comply with the requirements of state insurance laws and
regulations.
In issuing your Policy, we rely on your application. Your statements in that
application and any supplemental applications, in the absence of fraud, are
considered representations and not warranties. In the absence of fraud, we will
not use any statement made in connection with your application to void your
Policy or to deny a claim, unless that statement is a part of the application or
an amendment thereto.
SUICIDE. If the Insured commits suicide while sane or insane within two years of
the Issue Date, the Death Benefit would be limited to the Premiums paid, less
any Loan Account Value, Partial Withdrawals, and the cost of any riders, and the
Policy will end. Likewise, if the Insured dies by suicide while sane or insane
within two years after the effective date of any increase in the Specified
Amount or reinstatement, the amount we will pay you (a) with respect to that
increase will be limited to the Monthly Deductions taken in connection with that
increase; and (b) with respect to the reinstatement will be limited to the
Premiums paid since the reinstatement adjusted as described above. The suicide
provisions may vary in certain states to comply with the requirements of state
insurance laws and regulations.
MISSTATEMENT AS TO AGE AND SEX. If the age or sex of the Insured is incorrectly
stated in the application, we will adjust any proceeds appropriately as
specified in your Policy.
BENEFICIARY. You name the original Beneficiary(ies) in your Policy application.
You may designate numbered classes of Beneficiaries to show priority of payment.
You may assign more than one beneficiary to each class. You may change the
Beneficiaries at any time while the Insured is alive, except irrevocable
Beneficiaries may not be changed without their consent.
You must request a change of Beneficiary in writing. We will provide a form to
be signed and filed with us. Your request for a change in Beneficiary will take
effect as of the date you signed the form after we acknowledge receipt in
writing. Until we acknowledge receipt of your change instructions, we are
entitled to rely on your most recent instructions in our files. Accordingly, we
are not liable for making a payment to the person shown in our files as the
Beneficiary or treating that person in any other respect as the Beneficiary,
even if instructions that we subsequently receive from you seek to change your
Beneficiaries effective as of a date before we made the payment or took the
action in question.
If you name more than one Beneficiary, we will divide the Death Benefit among
your Beneficiaries according to your most recent written instructions. If you
have not given us written instructions, we will pay the Death Benefit in equal
shares to the Beneficiaries. If one of the
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Beneficiaries dies before you, we will divide the Death Benefit among the
surviving Beneficiaries. If no Beneficiary in the highest priority class is
living, we will distribute the proceeds among the next highest class having a
living member. The interest of any revocable Beneficiary is subject to the
interest of any assignee. If no Beneficiary of any class is living, we will pay
the proceeds to the Policy Owner or the Policy Owner's estate.
ASSIGNMENT. While the Insured is alive, you may assign your Policy as collateral
security. You must notify us in writing if you assign your Policy. Until we
receive notice from you, we are not liable for any action we may take or
payments we may make that may be contrary to the terms of your assignment. We
are not responsible for the validity of an assignment. Your rights and the
rights of the Beneficiary may be affected by an assignment. An assignment may
result in income tax and a ten percent penalty tax. You should consult your tax
adviser before assigning your Policy.
DIVIDENDS. We will not pay any dividend under the Policy.
NOTICE AND ELECTIONS. To be effective, all notices and elections under the
Contract must be in writing, signed by you, and received by us at our
Administrative Office. Certain exceptions may apply. Unless otherwise provided
in the Policy, all notices, requests and elections will be effective when
received at our Administrative Office complete with all necessary information.
MODIFICATION. We reserve the right to modify your Policy without your express
consent, in the circumstances described in this Prospectus or as necessary to
conform to applicable law or regulation or any ruling issued by a governmental
agency. The provisions of your Policy will be construed so as to comply with the
requirements of Section 7702 of the Tax Code.
FEDERAL TAX CONSIDERATIONS
NOTE: The following discussion is based upon our understanding of current
federal income tax law applicable to life insurance policies in general. We
cannot predict the probability that any changes in those laws will be made.
Also, we do not guarantee the tax status of the Policies. You bear the complete
risk that the Policies may not be treated as "life insurance contracts" under
federal income tax laws.
In addition, this discussion does not include a detailed description of the
federal income tax consequences of the purchase of these Policies or any
discussion of special tax rules that may apply to certain purchase situations.
We also have not tried to consider any other possibly applicable state or other
tax laws, for example, the estate tax consequences of the Policies. You should
seek tax advice concerning the effect on your personal tax liability of the
transactions permitted under the Policy, as well as any other questions you may
have concerning the tax status of the Policy or the possibility of changes in
the tax law.
TAXATION OF FIRST PENN-PACIFIC AND THE VARIABLE ACCOUNT. First Penn-Pacific is
taxed as a life insurance company under Part I of Subchapter L of the Tax Code.
The operations of the Variable Account are taxed as part of the operations of
First Penn-Pacific. Investment income and realized capital gains are not taxed
to the extent that they are applied under the Policies.
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Accordingly, we do not anticipate that First Penn-Pacific will incur any federal
income tax liability attributable to the operation of the Variable Account (as
opposed to the federal tax related to the receipt of Premiums under the
Policies). Therefore, we are not making any charge or provision for federal
income taxes. However, if the tax treatment of the Variable Account is changed,
we may charge the Variable Account for its share of the resulting federal income
tax.
In several states we may incur state and local taxes on the operations of the
Variable Account. We currently are not making any separate charge or provision
for them against the Variable Account. We do, however, use part of the charges
we receive under the Policies to offset these taxes. If these taxes should be
increased, we may make a charge or provision for them against the Sub-Accounts.
If we do so, the results of the Sub-Accounts will be reduced.
TAX STATUS OF THE POLICY. The Policy is structured to satisfy the definition of
a life insurance contract under the Tax Code using the cash value accumulation
test. As a result, the Death Benefit ordinarily will be fully excluded from the
gross income of the Beneficiary. The Death Benefit will be included in your
gross estate for federal estate tax purposes if the proceeds are payable to your
estate. The Death Benefit will also be included in your estate, if the
Beneficiary is not your estate but you retained incidents of ownership in the
Policy. Examples of incidents of ownership include the right to change
Beneficiaries, to assign the Policy or revoke an assignment, and to pledge the
Policy or obtain a Policy Loan. If you own and are the Insured under a Policy
and if you transfer all incidents of ownership in the Policy more than three
years before your death, the Death Benefit will not be included in your gross
estate. State and local estate and inheritance tax consequences may also apply.
In addition, certain transfers of the Policy or Death Benefit, either during
life or at death, to individuals (or trusts for the benefit of individuals) two
or more generations below that of the transferor may be subject to the federal
generation-skipping transfer tax.
In the absence of final regulations or other pertinent interpretations of the
Tax Code, some uncertainty exists as to whether a substandard risk Policy will
meet the statutory definition of a life insurance contract. If a Policy were
deemed not to be a life insurance contract for tax purposes, it would not
provide most of the tax advantages usually provided by a life insurance
contract. We reserve the right to amend the Policies to comply with any future
changes in the Tax Code, any regulations or rulings under the Tax Code and any
other requirements imposed by the Internal Revenue Service ("IRS").
DIVERSIFICATION REQUIREMENTS. Section 817(h) of the Tax Code requires that the
underlying assets of variable life insurance contracts be diversified. The Tax
Code provides that a variable life insurance contract will not be treated as a
life insurance contract for federal income tax purposes for any period and any
subsequent period for which the investments are not adequately diversified. If
the Policy were disqualified for this reason, you would lose the tax deferral
advantages of the Policy and would be subject to current federal income taxes on
all earnings allocable to the Policy.
The diversification standards set forth in the Tax Code and applicable U.S.
Treasury Department Regulations are applied to each Sub-Account of the Variable
Account by looking to the
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investments of the Portfolio underlying the Sub-Account. One of our criteria in
selecting the Portfolios is that their investment managers intend to manage them
in compliance with these diversification requirements. The Internal Revenue
Service has stated, however, that satisfaction of the diversification
requirements by itself does not prevent a contract holder from being treated as
the owner of separate account asset under the "owner control" test discussed
below.
OWNER CONTROL. In certain circumstances, variable life insurance contract owners
will be considered the owners, for tax purposes, of separate account assets
underlying their contracts. In those circumstances, the contract owners could be
subject to taxation on the income and gains from the separate account assets.
In published rulings, the Internal Revenue Service has stated that a variable
insurance contract owner will be considered the owner of separate account
assets, if the owner possesses incidents of ownership in those assets, such as
the ability to exercise investment control over the assets. As of the date of
this Prospectus, the Treasury Department has not issued guidance on the extent
to which variable contract owners could direct their investments among
Sub-Accounts without being treated as owners of the underlying assets of the
Variable Account. We cannot predict when or whether the Treasury Department will
issue that guidance or what position the Treasury Department will take. In
addition, although regulations are generally issued with prospective effect, it
is possible that regulations may be issued with retroactive effect.
The ownership rights under the Policy are similar in many respects to those
described in IRS rulings in which the contract owners were not deemed to own the
separate account assets. In some respects, however, they differ. For example,
under the Policy you have many more investment options to choose from than were
available under the contracts involved in the published rulings, and you may be
able to transfer Policy Account Value among the investment options more
frequently than in the published rulings. Because of these differences, it is
possible that you could be treated as the owner, for tax purposes, of the
Portfolio shares underlying your Policy and therefore subject to taxation on the
income and gains on those shares. Moreover, it is possible that the Treasury
Department's position, when announced, may adversely affect the tax treatment of
existing Policies. We therefore reserve the right to modify the Policy as
necessary to attempt to prevent you from being considered the owner for tax
purposes of the underlying assets.
The remainder of this discussion assumes that the Policy will be treated as a
life insurance contract for federal tax purposes.
TAX TREATMENT OF LIFE INSURANCE DEATH BENEFIT PROCEEDS. In general, the amount
of the Death Benefit payable under a Policy is excludable from gross income
under the Tax Code. Certain transfers of the Policy, however, may result in a
portion of the Death Benefit being taxable.
If the Death Benefit is not received in a lump sum and is, instead, applied
under one of the proceeds options, payments generally will be prorated between
amounts attributable to the Death Benefit, which will be excludable from the
Beneficiary's income, and amounts attributable to
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<PAGE>
interest (occurring after the insured's death), which will be includable in the
beneficiary's income.
TAX DEFERRAL DURING ACCUMULATION PERIOD. Under existing provisions of the Tax
Code, except as described below, any increase in your Policy Account Value is
generally not taxable to you unless you receive or are deemed to receive amounts
from the Policy before the Insured dies. If you surrender your Policy, the Cash
Value (less any Monthly Expense Charge paid upon surrender) will be includable
in your income to the extent the amount received exceeds the "investment in the
contract." The "investment in the contract" generally is the total Premiums and
other consideration paid for the Policy, less the aggregate amount received
under the Policy previously to the extent such amounts received were excludable
from gross income. Whether partial withdrawals (or other amounts deemed to be
distributed) from the Policy constitute income depends, in part, upon whether
the Policy is considered a "modified endowment contract" ("MEC") for federal
income tax purposes.
POLICIES WHICH ARE MECS
CHARACTERIZATION OF A POLICY AS A MEC. In general, this Policy will constitute a
MEC unless (1) it was received in exchange for another life insurance policy
which was not a MEC, (2) no Premiums or other consideration (other than the
exchanged policy) are paid into the Policy during the first seven Policy Years,
and (3) there is no withdrawal or reduction in the Death Benefit during the
first seven Policy Years. In addition, even if the Policy initially is not a
MEC, it may, in certain circumstances become a MEC, if there is a later increase
in benefits or any other "material change" of the Policy within the meaning of
the tax law.
TAX TREATMENT OF WITHDRAWALS, LOANS, ASSIGNMENTS AND PLEDGES UNDER MECS. If your
Policy is a MEC, withdrawals from your Policy will be treated first as
withdrawals of income and then as a recovery of your investment in the Policy.
Thus, you may realize taxable income upon a withdrawal if the Policy Account
Value exceeds the investment in the Policy. You may also realize taxable income
when you take a Policy Loan, because any loan (including unpaid loan interest)
under the Policy will be treated as a withdrawal for tax purposes. In addition,
if you assign or pledge any portion of the value of your Policy (or agree to
assign or pledge any portion), the assigned or pledged portion of your Policy
Account Value will be treated as a withdrawal for tax purposes. Before
assigning, pledging, or requesting a loan under a Policy that is a MEC, you
should consult a qualified tax adviser.
PENALTY TAX. Generally, withdrawals (or the amount of any deemed withdrawals)
from a MEC are subject to a penalty tax equal to ten percent of the portion of
the withdrawal that is includable in income, unless the withdrawals are made:
(1) after you reach age 59 1/2, (2) because you have become disabled (as defined
in the tax law), or (3) as substantially equal periodic payments over your life
or life expectancy (or the joint lives or life expectancies of you and your
beneficiary, as defined in the tax law). Certain other exceptions to the ten
percent penalty tax may apply.
AGGREGATION OF POLICIES. All life insurance policies which are MECs and which
are purchased by the same person from us or any of our affiliates within the
same calendar year will be aggregated
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and treated as one policy for purposes of determining the amount of a withdrawal
(including a deemed withdrawal) that is includable in taxable income.
POLICIES WHICH ARE NOT MECS
TAX TREATMENT OF WITHDRAWALS GENERALLY. If your Policy is not a MEC, the amount
of any withdrawal from the Policy will be treated first as a non-taxable
recovery of Premiums and then as income from the Policy. Thus, only the portion
of a withdrawal that exceeds the investment in the Policy immediately before the
withdrawal will be includable in taxable income.
CERTAIN DISTRIBUTIONS REQUIRED BY THE TAX LAW IN THE FIRST 15 POLICY YEARS.
Where cash distributions are required under the Tax Code in connection with a
reduction in benefits during the first 15 years after the Policy is issued (or
if withdrawals are made in anticipation of a reduction in benefits, within the
meaning of the Tax Code, during this period), some or all of such amounts may be
includable in taxable income.
TAX TREATMENT OF LOANS. If your Policy is not a MEC, a loan received under the
Policy generally will be treated as indebtedness for tax purposes, rather than a
withdrawal of Policy Account Value. As a result, you will not realize taxable
income on any part of the loan as long as the Policy remains in force. If you
surrender your Policy, however, any outstanding loan balance will be treated as
an amount received by you as part of the Surrender Value. Accordingly, you may
be subject to taxation on the loan amount at that time. Generally, you may not
deduct interest paid on loans under the Policy, even if you use the loan
proceeds in your trade or business.
LONG-TERM/CONVALESCENT CARE BENEFITS RIDER. The Riders are intended to be
"qualified long-term care insurance contracts" under Section 7702B(b) of the Tax
Code. Benefits paid under such qualified contracts will be excludable from
income. Under current law, amounts deducted to pay for these Riders are treated
for tax purposes as distributions from your Policy. Accordingly, if your Policy
is a MEC or in certain circumstances if your Policy is not a MEC, the Rider
charges assessed against the Policy Account Value may be taxable to you as
income. Furthermore, if your Policy is a MEC, these deductions may be subject to
a 10% penalty tax described above.
The Riders may be issued in certain states as "non-qualified" Riders.
"Non-qualified" means that the Rider does not constitute qualified long term
care insurance under section 7702B(b) of the Tax Code. The first page of your
Rider will state whether it is issued as a qualified or non-qualified Rider. The
tax treatment of the charges for and the benefits received from such a Rider,
are uncertain. Accordingly, you should consult a tax advisor before adding a
non-qualified Rider to your Policy or requesting benefits from such a Rider.
STATUS OF POLICY AFTER AGE 100. As described above, at the Insured's age 100 we
transfer the Variable Account Value to the Fixed Account and make certain other
changes to the Policy. We believe that the Policy will continue to qualify as
life insurance under the Tax Code. However, there is some uncertainty as to this
treatment. It is possible, therefore, that you would be viewed as constructively
receiving the Surrender Value in the year in which the Insured attains age 100
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<PAGE>
and would realize taxable income at that time, even if the Policy proceeds were
not distributed at that time.
ACTIONS TO ENSURE COMPLIANCE WITH THE TAX LAW. We believe that the maximum
amount of Premiums we intend to permit for the Policies will comply with the Tax
Code definition of a life insurance contract. We reserve the right to increase
the Death Benefit (which may result in larger charges under a Policy) or to take
any other action deemed necessary to ensure the compliance of the Policy with
the federal tax definition of a life insurance contract.
FEDERAL INCOME TAX WITHHOLDING. When we process a partial withdrawal or a
surrender under your Policy, we will ask you whether you want us to withhold and
remit to the federal government a part of the taxable portion of the amount
withdrawn or surrender proceeds. If you are subject to backup withholding,
withholding is required. As a Policy Owner, you will be responsible for the
payment of any taxes and early distribution penalties that may be due on the
amounts received under the Policy, whether or not you choose withholding. You
may also be required to pay penalties under the estimated tax rules, if your
withholding and estimated tax payments are insufficient to satisfy your total
tax liability.
TAX ADVICE. This summary is not a complete discussion of the tax treatment of
the Policy. You should seek tax advice from an attorney who specializes in tax
issues.
DESCRIPTION OF FIRST PENN-PACIFIC AND THE VARIABLE ACCOUNT
FIRST PENN-PACIFIC. First Penn-Pacific was incorporated on June 19, 1963 as a
stock life insurance company under the laws of the Commonwealth of Pennsylvania.
It redomesticated to the State of Indiana effective January 1, 1993. Its
executive and administrative offices are located at 1801 South Meyers Road,
Oakbrook Terrace, Illinois 60181-5214.
First Penn-Pacific is licensed to do business in the District of Columbia and
every state except New York. First Penn-Pacific writes deferred annuities,
universal life insurance, and term life insurance. It distributes its products
through stockbrokers, financial planners, banks and personal producing general
agents. It also manufactures deferred annuity products for its parent, Lincoln
National Life Insurance Company for distribution through its career agents and
banks. We intend to market the Policies everywhere in the United States we
conduct life insurance business.
First Penn-Pacific is a member of the Insurance Marketplace Standards
Association ("IMSA"). Accordingly, we may use the IMSA logo and membership in
IMSA in advertisements. Being a member means that First Penn-Pacific has chosen
to participate in IMSA's Life Insurance Ethical Market Conduct Program.
First Penn-Pacific is a wholly-owned subsidiary of Lincoln National Insurance
Company, which is in turn a wholly-owned subsidiary of Lincoln National
Corporation ("LNC"). Through its subsidiaries LNC operates multiple insurance
and investment management businesses.
A fidelity bond in the amount of $100 million in the aggregate per year covers
the officers and employees of First Penn-Pacific.
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OFFICERS AND DIRECTORS OF FIRST PENN-PACIFIC. Our directors and officers are
listed below, together with information as to their dates of election and
principal business occupations during the past five years (if other than their
present occupation). Where no dates are given, the person has held that position
for at least the past five years.
ROLAND C. BAKER, President, January 1995 to date; Director, February 1995 to
date.
MARCIA L. DUMOND, Vice President and General Counsel, August 1995 to date; Vice
President, Government Relations, Lincoln National Corporation, August 1990 to
August 1995.
THOMAS W. FITCH, Senior Vice President, Sales and Distribution, July 1999 to
date; Director, November 1999 to date; Senior Vice President, Marketing,
Financial Markets Division, July 1997 to July 1999, Vice President, Marketing,
December 1986 to July 1997.
JOHN H. GOTTA, Director, January 2000 to date; Chief Executive Officer of Life
Insurance, Senior Vice President and Assistant Secretary, Lincoln National Life
Insurance Company, December, 1999 to date; Senior Vice President and Assistant
Secretary, Lincoln National Life Insurance Company, April, 1998 to December
1999; Senior Vice President, Lincoln National Life Insurance Company, February
1998 to April 1998; Vice President and General Manager, Lincoln National Life
Insurance Company, January 1998 to February 1998; Senior Vice President, CIGNA,
March 1996 to December 1997; Vice President, Connecticut Mutual/Mass Mutual Life
Insurance Company, August 1994 to March 1996.
RICHARD C. KLEIN, Senior Vice President and Chief Actuary, July 1999 to date;
Director, November 1999 to date; Senior Vice President, Product Development
Financial Markets Division, July 1997 to July 1999; Vice President, Product
Development, December 1987 to July 1997.
STEPHEN J. MAC DONALD, Vice President Business Acquisition Services, July 1999
to date; Vice President, New Business, Brokerage Division, February 1995 to July
1999;
MARK J. OBERHELLMAN, Vice President Product Development, July 1999 to date; Vice
President Product Development, Brokerage Division, February 1998 to July 1999;
Second Vice President Product Development, Brokerage Division, February 1995 to
February 1998.
LAWRENCE T. ROWLAND, Director, November 1999 to date; Chairman, CEO, President
and Director, Lincoln National Reassurance Company, October 1996 to date;
Executive Vice President and Director, Lincoln National Life Insurance Company,
October 1996 to date; Chairman, President and Director, Lincoln Re S.A., October
1996 to date; Senior Vice President, Lincoln National Life Reinsurance Company,
October 1995 to October 1996; Vice President, Lincoln National Life Reinsurance
Company, October 1991 to October 1995
STEVEN W. ROGERS, Second Vice President and Chief Financial Officer, November
1999 to date; Second Vice President and Controller, July 1992 to November 1999.
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MAUREEN T. SLOAN, Vice President, Life and Annuity Client Services and Claims,
July 1999 to date; Vice President, Life Client Services and Claims, January 1999
to July 1999; Vice President, Annuity Product Development and Administration
July 1997 to January 1999; Second Vice President, Annuity Product Development
and Administration July 1991 to July 1997.
TODD R. STEPHENSON, Director, November 1999 to date; Senior Vice President,
Chief Financial Officer, Lincoln National Life Insurance Company, March 1999 to
date; Director, Annuity Net, Inc. and AnnuityNet Insurance Agency, Inc., March
1999 to date; Vice President and Director, Lincoln Realty Capital Corp., January
1999 to date; Senior Vice President and COO, Lincoln Life and Annuity
Distributors, Inc., January 1998 to March 1999; Senior Vice President and COO,
Lincoln Financial Advisors Corp, January 1998 to March 1999; Senior Vice
President, Treasurer, Director and Chief Financial Officer, American States
Insurance Co., February 1995 to December 1997.
The business address of each of the foregoing officers and directors is 1801
South Meyers Road, Oakbrook Terrace, Illinois 60181-5214.
VARIABLE ACCOUNT. First Penn-Pacific Variable Life Insurance Separate Account
was originally established on May 25, 1995, as a segregated asset account of
First Penn-Pacific, under the laws of the State of Indiana. The Variable Account
meets the definition of a "separate account" under the federal securities laws
and is registered with the SEC as a unit investment trust under the Investment
Company Act of 1940. The SEC does not supervise the management of the Variable
Account or First Penn-Pacific.
We own the assets of the Variable Account, but we hold them separate from our
other assets. To the extent that these assets are attributable to the Policy
Account Value of the Policies offered by this Prospectus, these assets are not
chargeable with liabilities arising out of any other business we may conduct.
Income, gains, and losses, whether or not realized, from assets allocated to the
Variable Account are credited to or charged against the Variable Account without
regard to our other income, gains, or losses. Our obligations arising under the
Policies are general corporate obligations of First Penn-Pacific.
The Variable Account is divided into Sub-Accounts. The assets of each
Sub-Account are invested in the shares of one of the Portfolios. We do not
guarantee the investment performance of the Variable Account, its Sub-Accounts
or the Portfolios. Values allocated to the Variable Account will rise and fall
with the values of shares of the Portfolios and are also reduced by Policy
charges. In the future, we may use the Variable Account to fund other variable
universal life insurance policies. We will account separately for each type of
variable life insurance policy funded by the Variable Account.
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS. We hold the assets of the Variable
Account. We keep those assets physically segregated and held separate and apart
from our general account assets. We maintain records of all purchases and
redemptions of shares of the Portfolios.
STATE REGULATION OF FIRST PENN-PACIFIC. We are subject to the laws of Indiana
and regulated by the Indiana Division of Insurance. Every year we file an annual
statement with the Division of
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Insurance covering our operations for the previous year and our financial
condition as of the end of the year. We are inspected periodically by the
Division of Insurance to verify our contract liabilities and reserves. Our books
and records are subject to review by the Division of Insurance at all times. We
are also subject to regulation under the insurance laws of every jurisdiction in
which we operate.
DISTRIBUTION OF POLICIES
First Penn-Pacific Securities, Inc. ("FPPSI") serves as distributor of the
Policies. FPPSI is located at 1801 South Meyers Road, Oakbrook Terrace, Illinois
60181. FPPSI is our wholly-owned subsidiary. It is registered as a broker-dealer
under the Securities Exchange Act of 1934, and is a member of the National
Association of Securities Dealers, Inc.
The Policies described in this Prospectus are sold by registered representatives
of broker-dealers or bank employees who are licensed insurance agents appointed
by the Company, either individually or through an incorporated insurance agency.
FPPSI enters into selling agreements with affiliated and unaffiliated
broker-dealers and banks whose personnel participate in the offer and sale of
the Policies. In some states, Policies may be sold by representatives or
employees of banks that may be acting as broker-dealers without separate
registration under the Securities Exchange Act of 1934, pursuant to legal and
regulatory exceptions.
Generally, representatives will receive a commission of [not more than ___% of
the Premiums received in the first year. Representatives also will generally
receive a commission on a Specified Amount increase. In addition we may pay or
permit other promotional incentives in cash, or credit or other compensation. We
also may pay asset-based expense allowances and services fees.]
The distribution agreement with FPPSI provides for indemnification of FPPSI by
First Penn-Pacific for liability to owners arising out of services rendered or
policies issued.
The name and position of each officer and director of FPPSI as of January 1,
2000, is as follows:
Michael P. Jeanfreau President and Director
Maureen A. Klouda Chief Compliance Officer and Vice President
Steven W. Rogers Treasurer and Chief Financial Officer
Thomas W. Fitch Director
Roland C. Baker Director
Marcia L. DuMond Corporate Secretary
The principal business address of the officers and managers of FPPSI is 1801
South Meyers Road, Oakbrook Terrace, Illinois 60181.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. First
Penn-Pacific is involved in various pending or threatened legal proceedings
arising from the conduct of its
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business. Most of these proceedings are routine in nature and in the ordinary
course of business. In some instances, they include claims for unspecified
punitive damages and similar fines of relief in addition to amounts for
equitable relief. After consultation with legal counsel and a review of
available facts, it is management's opinion that the ultimate liability, if any,
under these suits will not have a material adverse effect on the financial
position of First Penn-Pacific.
First Penn-Pacific is presently defending one lawsuit in which Plaintiff seeks
to represent a national class of policyholders in connection with alleged
violations of California's Insurance Code and Business and Professional Code
related to premium collection. As of the date of this prospectus, the court has
not certified a class in this suit. Plaintiff seeks unspecified damages and
penalties for himself and on behalf of the putative class and equitable relief.
Since this case is in the preliminary stages of litigation, it is premature to
make assessments about potential loss, if any. Management is defending this suit
vigorously. The amount of liability, if any, that may ultimately arise as a
result of this suit cannot be reasonably determined at this time.
LEGAL MATTERS
All matters of Indiana law pertaining to the Policy, including the validity of
the Policy and our right to issue the Policy under Indiana law, have been passed
upon by Marcia DuMond, Esq., General Counsel. The law firm of Jorden Burt Boros
Cicchetti Berenson & Johnson, 1025 Thomas Jefferson St., Suite 400, East Lobby,
Washington, D.C. 20007-5201, serve as special counsel to First Penn-Pacific with
regard to the federal securities laws.
REGISTRATION STATEMENT
We have filed a registration statement with the SEC, Washington, D.C., under the
Securities Act of 1933 as amended, with respect to the Policies offered by this
Prospectus. This Prospectus does not contain all the information set forth in
the registration statement and the exhibits filed as part of the registration
statement. You should refer to the registration statement and the exhibits for
further information concerning the Variable Account, First Penn-Pacific, and the
Policies. The descriptions in this Prospectus of the Policies and other legal
instruments are summaries. You should refer to those instruments as filed for
their precise terms.
EXPERTS
The financial statements of First Penn-Pacific as of December 31, 1999 and 1998
and for each of the three years in the period ended December 31, 1999 included
in this Prospectus have been audited by [accounting firm], independent auditors,
as stated in their report appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such Firm as experts in
accounting and auditing.
FINANCIAL STATEMENTS
No financial statements are included for the Variable Account. It has not yet
commenced operations, has no assets or liabilities, and has received no income
or incurred any expense. The financial statements of First Penn-Pacific that are
included should be considered only as bearing
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upon First Penn-Pacific's ability to meet its contractual obligations under the
Policies. First Penn-Pacific's financial statements do not bear on the
investment experience of the assets held in the Variable Account.
[financial statements to be added by pre-effective amendment.]
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ILLUSTRATIONS OF POLICY ACCOUNT VALUES,
SURRENDER VALUES AND
DEATH BENEFITS
The following tables have been prepared to help show how values under Policies
change with investment experience. The tables illustrate how Policy Account
Values, Surrender Values, and Death Benefits under a Policy issued on an Insured
of a given age would vary over time if the hypothetical gross investment rates
of return on the Portfolios' assets were a uniform, gross, after tax, annual
rate of 0%, 6%, and 12%. If the hypothetical gross investment rate of return
averages 0%, 6%, or 12%, but fluctuates over or under those averages throughout
the years, the Policy Account Values, Surrender Values and Death Benefits may be
different.
The amounts shown for the Policy Account Value, Surrender Value and Death
Benefit as of each Policy Anniversary reflect the fact that the net investment
return on the assets held in the Sub-Accounts is lower than the gross after-tax
return on the assets held in the Portfolios, as a result of expenses paid by the
Portfolios and charges levied against the Sub-Accounts. The values shown reflect
a daily charge to the Sub-Accounts of 1.00% of average daily net assets to
compensate First Penn-Pacific for assuming mortality and expense risks under the
Policies. The illustrations also reflect the deduction of the Premium Expense
Charge of 3.5% of each Premium.
In addition, the net investment returns also reflect the deduction of the
Portfolio investment advisory fees and other Portfolio expenses at an annual
effective rate of __%, which is the arithmetic average of the actual and
estimated fees and expenses for all of the Portfolios, including any expense
reimbursements or fee waivers. Without expense reimbursements and fee waivers,
the annual effective rate would have been _____%. First Penn-Pacific anticipates
that the expense reimbursement and fee waiver arrangements will continue past
the current year. If there should be an increase or decrease in the expense
reimbursements and fee waivers of a Portfolio that has such arrangements, that
change will be reflected in the net asset value of the corresponding Portfolio.
The tables also reflect applicable charges including monthly cost of insurance
charges and a monthly expense charge of $6.00 per month on a current basis and
$8.00 per month as a guaranteed maximum. For each hypothetical gross investment
rate of return, tables are provided reflecting current and guaranteed cost of
insurance charges and monthly expense charges. After deduction of these amounts
(other than the cost of insurance charges, monthly expense charges and premium
expense charges), hypothetical gross average investment rates of return of 0%,
6% and 12% correspond to approximate net annual investment rates of return of
__%, __% and __%, respectively or both a current and guaranteed basis. Cost of
insurance rates vary by issue age (or attained age in the case of increases in
Specified Amount), sex, tobacco use, rating class and Policy Year and,
therefore, cost of insurance charges are not reflected in the approximate net
annual investment rate of return stated above.
The tables illustrate the Policy Account Values, Surrender Values, and Death
Benefits that would result based upon the hypothetical investment rates of
return if no Premium other than the
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indicated Initial Premium is paid, if the entire Initial Premium is allocated to
the Separate Account, and if no Policy loans are taken. The tables also assume
that no partial withdrawals or transfers have been made.
Values are shown for Policies that are issued to standard class Insureds. Values
for Policies issued on a basis involving a higher mortality risk would result in
lower Policy Account Values, Surrender Values and Death Benefits than those
illustrated. Females generally have a more favorable guaranteed rate structure
than males.
Where the Surrender Value shown in an illustration is zero, the Policy may lapse
in accordance with the Grace Period provisions if you do not pay sufficient
additional premium.
The tables reflect the fact that no charges for Federal, state or other income
taxes are currently made against the Separate Account. If such a charge is made
in the future, it will take a higher gross rate of return than illustrated to
produce the net after-tax returns shown in the tables.
The benefit Riders described in the prospectus are available to add optional
insurance benefits to your Policy. The charges for benefit Riders are deducted
from your Policy Account Value as part of the Monthly Deduction. The attached
illustrations do not include any optional insurance benefits.
Upon request, First Penn-Pacific will furnish a comparable illustration based on
the proposed Insured's age, sex, underwriting classification, proposed Initial
Premium, and any available Riders requested.
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<PAGE>
INDIVIDUAL
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE STANDARD NON-SMOKER ISSUE AGE 65
$XX,XXX INITIAL PREMIUM
$XX,XXX SPECIFIED AMOUNT
VALUES--GUARANTEED COST OF INSURANCE
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
INITIAL GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUM ----------------------- ----------------------- -----------------------
PLUS POLICY POLICY POLICY
POLICY INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
35
</TABLE>
ASSUMPTIONS:
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
I-3
<PAGE>
(2) VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND GUARANTEED
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS
INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS.
(4) DEATH BENEFIT REFLECTS CURRENT INTERNAL REVENUE CODE REQUIREMENTS BASED
ON THE CASH VALUE ACCUMULATION TEST.
(5) WHEN THE SURRENDER VALUE IS ZERO, THE POLICY MIGHT LAPSE IN ACCORDANCE
WITH THE GRACE PERIOD PROVISIONS UNLESS SUFFICIENT ADDITIONAL PREMIUM
IS PAID.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND ACTUAL EXPENSES. THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND SURRENDER
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE
OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE BY FIRST PENN-PACIFIC LIFE INSURANCE COMPANY THAT THESE HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
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<PAGE>
INDIVIDUAL
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE STANDARD NON-SMOKER ISSUE AGE 65
$XX,XXX INITIAL PREMIUM
$XX,XXX SPECIFIED AMOUNT
VALUES--CURRENT COST OF INSURANCE
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
INITIAL GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUM ----------------------- ----------------------- -----------------------
PLUS POLICY POLICY POLICY
POLICY INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
35
</TABLE>
I-5
<PAGE>
ASSUMPTIONS:
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND CURRENT MONTHLY
EXPENSE CHARGES.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS
INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS.
(4) DEATH BENEFIT REFLECTS CURRENT INTERNAL REVENUE CODE REQUIREMENTS BASED
ON THE CASH VALUE ACCUMULATION TEST.
(5) WHEN THE SURRENDER VALUE IS ZERO, THE POLICY MIGHT LAPSE IN ACCORDANCE
WITH THE GRACE PERIOD PROVISIONS UNLESS SUFFICIENT ADDITIONAL PREMIUM
IS PAID.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND ACTUAL EXPENSES. THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND SURRENDER
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE
OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE BY FIRST PENN-PACIFIC LIFE INSURANCE COMPANY THAT THESE HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
I-6
<PAGE>
INDIVIDUAL
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
FEMALE STANDARD NON-SMOKER ISSUE AGE 65
$XX,XXX INITIAL PREMIUM
$XX,XXX SPECIFIED AMOUNT
VALUES--GUARANTEED COST OF INSURANCE
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
INITIAL GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUM ----------------------- ----------------------- -----------------------
PLUS POLICY POLICY POLICY
POLICY INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
35
</TABLE>
ASSUMPTIONS:
I-7
<PAGE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND GUARANTEED
MONTHLY EXPENSE CHARGES.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS
INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS.
(4) DEATH BENEFIT REFLECTS CURRENT INTERNAL REVENUE CODE REQUIREMENTS BASED
ON THE CASH VALUE ACCUMULATION TEST.
(5) WHEN THE SURRENDER VALUE IS ZERO, THE POLICY MIGHT LAPSE IN ACCORDANCE
WITH THE GRACE PERIOD PROVISIONS UNLESS SUFFICIENT ADDITIONAL PREMIUM
IS PAID.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND ACTUAL EXPENSES. THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND SURRENDER
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE
OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE BY FIRST PENN-PACIFIC LIFE INSURANCE COMPANY THAT THESE HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
I-8
<PAGE>
INDIVIDUAL
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
FEMALE STANDARD NON-SMOKER ISSUE AGE 65
$XX,XXX INITIAL PREMIUM
$XX,XXX SPECIFIED AMOUNT
VALUES--CURRENT COST OF INSURANCE
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
INITIAL GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUM ----------------------- ----------------------- -----------------------
PLUS POLICY POLICY POLICY
POLICY INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
35
</TABLE>
ASSUMPTIONS:
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
I-9
<PAGE>
(2) VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND CURRENT MONTHLY
EXPENSE CHARGES.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS
INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS.
(4) DEATH BENEFIT REFLECTS CURRENT INTERNAL REVENUE CODE REQUIREMENTS BASED
ON THE CASH VALUE ACCUMULATION TEST.
(5) WHEN THE SURRENDER VALUE IS ZERO, IS PAID, THE POLICY MIGHT LAPSE IN
ACCORDANCE WITH THE GRACE PERIOD PROVISIONS UNLESS SUFFICIENT
ADDITIONAL PREMIUM IS PAID.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN
OWNER AND ACTUAL EXPENSES. THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND SURRENDER
VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE
OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE BY FIRST PENN-PACIFIC LIFE INSURANCE COMPANY THAT THESE HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
I-10
<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, as amended, 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 AS TO FEES AND CHARGES
First Penn-Pacific Life Insurance Company hereby represents that the fees and
charges deducted under the Flexible Payment Variable Universal Life Insurance
Policies hereby registered by this Registration Statement in the aggregate are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by First Penn-Pacific Life Insurance Company.
REPRESENTATION PURSUANT TO RULE 6e-3(T)
This filing is made pursuant to Rule 6e-3(T) under the Investment Company Act of
1940, as amended (the "1940 Act").
UNDERTAKING AS TO INDEMNIFICATION
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "Securities Act"), may be permitted to directors, officers
and controlling persons of the Registrant, the Registrant has been advised that,
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
REPRESENTATION AS TO ACTUARIAL MATTERS
Actuarial matters included in this registration statement, including the
hypothetical Policy illustrations included in the Prospectus filed herewith,
have been examined by May Lee Low, Second Vice President and Actuary of the
Company, and are included in reliance upon her opinion as to their
reasonableness.
II-1
<PAGE>
CONTENTS OF THIS REGISTRATION STATEMENT
This Registration Statement consists of the following papers and documents:
Facing Sheet
Cross-Reference Sheet
Prospectus consisting of ___ pages
Undertaking to File Reports
Undertaking As To Indemnification
Representation As To Fees and Charges
Representation Pursuant to Rule 6e-3(T)
Signature Pages
Exhibits
EXHIBIT LIST
Exhibits required by paragraph A of the instructions as to Exhibits of
Form N-8B-2
(1) Resolution of the Board of Directors of First Penn-Pacific
Life Insurance Company authorizing establishment of First
Penn-Pacific Variable Life Insurance Separate Account, as
amended and restated on February 22, 2000 (filed herewith)
(2) Custodian Agreement (not applicable)
(3) (a) Form of Distribution Agreement (filed herewith)
(b) Form of Broker-Dealer and General Agent Sales
Agreement (filed herewith)
(c) Schedule of Sales Commissions (to be filed by
pre-effective amendment)
(4) Other Agreements between the depositor, principal underwriter,
and custodian with respect to Registrant or its securities
(not applicable)
(5) (a) Specimen Policy (filed herewith)
(b) Specimen Convalescent Care Benefits Rider
(filed herewith)
(c) Specimen Extension of Convalescent Care Benefits
Rider (filed herewith)
(d) Specimen Extension of Convalescent Care Benefits
Rider with Automatic Increasing Benefits
(filed herewith)
(e) Specimen Guarantee Enhancement Rider (filed herewith)
II-2
<PAGE>
(6) (a) Articles of Incorporation of First Penn-Pacific
Life Insurance Company (filed herewith)
(b) By-laws of First Penn-Pacific Life Insurance Company
(filed herewith)
(7) Not applicable
(8) Participation Agreements (to be filed by pre-effective
amendment)
(9) Other Material Contracts (not applicable)
(10) (a) Specimen Application for Life Insurance
(filed herewith)
(b) Specimen Application for Life Insurance
(filed herewith)
(c) Specimen Supplemental Application for Variable Life
Insurance (filed herewith)
(d) Specimen Supplement Application for Long Term Care
Rider (filed herewith)
4. Opinion and Consent of Counsel (to be filed by pre-effective amendment)
5. All financial statements omitted from the Prospectus (not applicable)
6. Not applicable
7. Financial Data Schedule (not applicable)
8. Procedures memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) (to be
filed by pre-effective amendment)
9. Actuarial Opinion and Consent (to be filed by pre-effective amendment)
10. Consent of Independent Accountants (to be filed by pre-effective
amendment)
II-3
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the registrant has duly caused this Registration Statement to be
signed on its behalf in the City of Oakbrook Terrace, State of Illinois on the
24th of February, 2000.
FIRST PENN-PACIFIC VARIABLE LIFE
INSURANCE SEPARATE ACCOUNT
(Registrant)
BY: FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Roland C. Baker
--------------------------------------------------
Roland C. Baker
President
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated:
<TABLE>
<S> <C> <C>
/s/ Roland C. Baker
- -----------------------
Roland C. Baker President and Director February 24, 2000
(Chief Executive Officer)
/s/ Steven W. Rogers
- -----------------------
Steven W. Rogers Second Vice President and February 24, 2000
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
/s/ Thomas W. Fitch
- -----------------------
Thomas W. Fitch Senior Vice President and Director February 24, 2000
/s/ Richard C. Klein
- -----------------------
Richard C. Klein Senior Vice President and Director February 24, 2000
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ John H. Gotta
- -----------------------
John H. Gotta Director February 24, 2000
- -----------------------
Lawrence T. Rowland Director February __, 2000
/s/ Todd R. Stephenson
- -----------------------
Todd R. Stephenson Director February 24, 2000
</TABLE>
II-5
<PAGE>
EXHIBIT LIST
1.(1) Amended and Restated Separate Account Resolution
1.(3)(a) Form of Distribution Agreement
1.3(b) Form of Broker-Dealer and General Agency Sales Agreement
1.(5)(a) Specimen Policy
1.(5)(b) Specimen Convalescent Care Benefits Rider
1.(5)(c) Specimen Extension of Convalescent Care Benefits Rider
1.(5)(d) Specimen Extension of Convalescent Care Benefits Rider with
Automatic Increasing Benefits
1.(5)(e) Specimen Guarantee Enhancement Rider
1.(6)(a) Articles of Incorporation
1.(6)(b) By-Laws
1.(10)(a) Specimen Application for Life Insurance
1.(10)(b) Specimen Application for Life Insurance
1.(10)(c) Specimen Supplemental Application for Variable Life Insurance
1.(10)(d) Specimen Supplement Application for Long Term Care Rider
66424.3
II-6
<PAGE>
Exhibit 1.1
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
BOARD OF DIRECTORS RESOLUTION
FEBRUARY 22, 2000
AMENDED AND RESTATED RESOLUTION ESTABLISHING
SEPARATE ACCOUNT FOR VARIABLE LIFE INSURANCE
FIRST PENN - PACIFIC LIFE INSURANCE COMPANY
-----------------------------------------
RESOLVED: That pursuant to the provision of Sections 27-1-5-1 through 27-1-5-3
of the Indiana Code, and any regulations promulgated thereunder by the Indiana
Commissioner of Insurance, the Board of Directors of First Penn-Pacific Life
Insurance Company (the "Company") does hereby establish a separate account to be
known as "First Penn-Pacific Variable Life Insurance Separate Account" for the
purpose of allocating thereto any amounts paid to or held by the Company in
connection with the issuance of variable life insurance policies (the
"Policies"), including but not limited to, amounts held under optional
settlement modes;
FURTHER RESOLVED: That the President, any Senior Vice President, any Vice
President and the Treasurer, or any of them, (herein "Officers") be, and they
each hereby are, severally authorized and directed, in conjunction with the
Company's independent certified public accountants, legal counsel, independent
consultants and/or such others as they may deem appropriate, to take such
actions as they deem necessary or appropriate to:
(1) Receive approval of the operation of First Penn-Pacific Variable
Life Insurance Separate Account by the Indiana Commissioner of
Insurance;
(2) Register First Penn-Pacific Variable Life Insurance Separate Account
as a unit investment trust under the Investment Company Act of 1940
(the "1940 Act");
(3) Register the Policies and such amounts, which may be indefinite
amounts, as the Officers shall from time to time deem appropriate
under the Securities Act of 1933, as amended (the "1933 Act");
(4) Register any investment company(s) in whose securities First
Penn-Pacific Variable Life Insurance Separate Account will invest
under the 1940 Act;
(5) Comply with the 1933 Act, the Securities Exchange Act of 1934, the
1940 Act and all other applicable federal laws and regulations in
connection with the offering of the Policies for sale and the
operation of First Penn-Pacific Variable Life Insurance Separate
Account, including the submission of requests for "no-action"
letters, the filing of any registration statements, amendments to
registration statements,
<PAGE>
notification of registration statements, any undertakings, and any
applications for exemptions; and
(6) Offer and sell the Policies, including making any registrations,
filings and qualifications of the Company, its officers, agents and
employees, First Penn-Pacific Variable Life Insurance Separate
Account, and of the Policies, under the insurance and securities
laws of any state or any other jurisdiction, and in connection
therewith to prepare, execute, deliver and file all such
applications, reports, covenants, resolutions, applications for
exemptions, irrevocable written consents to service of process and
other papers and instruments as may be required under such laws, and
to take any and all further actions, such as appointing appropriate
persons as agents as may be required by state insurance and
securities laws, which the Officers or legal counsel may deem
necessary or appropriate to maintain such registrations, filings, or
qualifications for as long as the Officers or legal counsel deem it
to be in the best interest of First Penn-Pacific Variable Life
Insurance Separate Account and the Company;
FURTHER RESOLVED: That the Officers be, and they each hereby are, severally
authorized and directed to take such actions as they deem necessary or
appropriate in accordance with applicable laws and regulations to:
(1) Divide First Penn-Pacific Variable Life Insurance Separate Account
into one or more divisions or subdivisions,
(2) Modify, consolidate, or eliminate any such divisions or
subdivisions,
(3) Change the designation of First Penn-Pacific Variable Life Insurance
Separate Account to another designation, and
(4) Designate any further divisions or subdivisions thereof;
FURTHER RESOLVED: That First Penn-Pacific Variable Life Insurance Separate
Account shall be divided into divisions and subdivisions so that each division
or subdivision may invest in the units or shares of designated investment
companies or series and classes thereof ("Permissible Investments") with the net
payments received under the Policies as directed by the owners of the Policies;
FURTHER RESOLVED: That amounts allocated to First Penn-Pacific Variable Life
Insurance Separate Account and any accumulations thereon, or to any division of
First Penn-Pacific Variable Life Insurance Separate Account, may be invested or
reinvested in Permissible Investments without regard to any requirements or
limitations prescribed by the laws of the State of Indiana governing the
investments of life insurance companies; provided, that except with the approval
of the Indiana Commissioner, no reserves for:
2
<PAGE>
(a) benefits guaranteed as to amount and duration; and
(b) funds guaranteed as to principal amounts or stated rate of interest
shall be maintained in First Penn-Pacific Variable Life Insurance Separate
Account;
FURTHER RESOLVED: That the Officers be, and they each hereby are, severally
authorized and directed to take such actions as they deem necessary or
appropriate in accordance with applicable laws and regulations to facilitate the
commencement and continued operation of First Penn-Pacific Variable Life
Insurance Separate Account, including but not limited to investing cash in First
Penn-Pacific Variable Life Insurance Separate Account or in any division thereof
in compliance with applicable tax laws, and transferring cash or securities from
time to time between the general account of the Company and First Penn-Pacific
Variable Life Insurance Separate Account so long as such transfers are
consistent with the terms of the Policies;
FURTHER RESOLVED: That the Officers be, and they each hereby are, severally
authorized and directed to execute such agreement or agreements as they deem
necessary or appropriate:
(1) With any investment company registered under the 1940 Act in whose
First Penn-Pacific Variable Life Insurance Separate Account will
invest;
(2) With First Penn-Pacific Securities, Inc. or any other qualified
entity, under which First Penn-Pacific Securities, Inc. or such
other entity will be appointed principal underwriter and distributor
for the Policies; and
(3) With one or more qualified banks or other qualified entities
including the Company or any of its affiliates to provide
administrative and/or custodial service in connection with the
establishment and maintenance of First Penn-Pacific Variable Life
Insurance Separate Account and the design, issuance and
administration of the Policies;
FURTHER RESOLVED: That the income, gains and losses, whether realized or not,
from assets allocated to First Penn-Pacific Variable Life Insurance Separate
Account or any division or subdivision thereof, are in accordance with the
issuance of any Policy, credited to or charged against First Penn-Pacific
Variable Life Insurance Separate Account or such division or subdivision without
regard to other income, gains or losses of the Company, or any other division or
subdivision of such Separate Account, and, to the extent permitted by law, are
not subject to the general claims of creditors, including under circumstances of
insolvency or rehabilitation;
FURTHER RESOLVED: That the President of the Company, any Senior Vice President
of the Company, and any Vice President of the Company are duly appointed as
agents for service of process under registration statements on applications and
are duly authorized to receive communications and notices from the Securities
and Exchange Commission with respect thereto and exercise any powers given to
such agents by the rules and regulations under the 1933 Act and
3
<PAGE>
applicable state law;
FURTHER RESOLVED: That any form of corporate resolution required by any state or
other jurisdiction in connection with any filing, registration, or approval as
contemplated in these resolutions is hereby adopted and the Officers be, and
they each hereby are, severally authorized and directed to certify to the
adoption thereof by this Board;
FURTHER RESOLVED: That the Officers be, and they each hereby are, severally
authorized and directed to establish such procedures as they deem necessary or
appropriate in accordance with applicable laws or regulations for providing to
the extent provided by law a pass-through of voting rights for owners of the
Policies with respect to the shares of an investment company or companies,
attributable to them, owned by First Penn-Pacific Variable Life Insurance
Separate Account;
FURTHER RESOLVED: That the following general Standard of Suitability, which
expresses the policy of the Company with respect to determining the suitability
for applicants be adopted: No recommendations shall be made to a potential
applicant to purchase a Policy and no Policy shall be issued in the absence of
reasonable grounds to believe that the purchase of same is not unsuitable for
such applicant on the basis of information furnished after reasonable inquiry of
such applicant concerning the applicant's insurance and investment objective,
financial situation and needs, and any other information known to the Company or
to the sales representative making the recommendations;
FURTHER RESOLVED: That the following binding Standards of Conduct applicable to
the Company, its officers, directors, employees, and affiliates ("Persons") with
respect to the purchase and sale of investments of First Penn-Pacific Variable
Life Insurance Separate Account be adopted:
(1) No Person shall engage in any action or activity which the Person
has reason to believe could in any way conflict with First
Penn-Pacific Variable Life Insurance Separate Account's interest;
(2) No Person, directly or indirectly, shall, in connection with any
transaction, (1) employ any device, scheme or artifice to defraud
First Penn-Pacific Variable Life Insurance Separate Account, (2)
make to First Penn-Pacific Variable Life Insurance Separate Account
any untrue statement of a material fact or omit to state to First
Penn-Pacific Variable Life Insurance Separate Account a material
fact necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading; (3) engage
in any act, practice or course of business which operates or would
operate as a fraud or deceit upon First Penn-Pacific Variable Life
Insurance Separate Account, or (4) engage in any manipulative
practice with respect to First Penn-Pacific Variable Life Insurance
Separate Account;
4
<PAGE>
(3) No Person shall accept, directly or indirectly, any gift, favor,
service, or anything of value from any broker, dealer or other
person which could be construed as being compensation for causing
First Penn-Pacific Variable Life Insurance Separate Account to
engage in any transaction with such broker, dealer or other person;
and
(4) Each Person shall keep confidential all information regarding past
or future transactions, investment programs and studies of First
Penn-Pacific Variable Life Insurance Separate Account, except as may
be required by applicable law or as approved by the Board of
Directors of the Company;
FURTHER RESOLVED: That the Officers be, and they each hereby are, severally
authorized and directed to take such actions as they deem necessary or
appropriate, including executing and delivering such agreements and other
documents, to carry out and enforce the foregoing resolutions and Standards, and
the intent and purposes thereof.
5
<PAGE>
EXHIBIT 1.3(a)
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT, dated as of __________ __, 1999, by and among First Penn-Pacific
Securities, Inc. ("Distributor"), First Penn-Pacific Life Insurance Company
("First Penn-Pacific") and [First Penn-Pacific Variable Life Insurance Separate
Account] ("Variable Life Insurance Separate Account").
W I T N E S S E T H
WHEREAS, the Variable Life Insurance Separate Account is a separate account
established and maintained by First Penn-Pacific pursuant to the laws of the
State of Indiana, under which income, gains and losses, whether or not realized,
from assets allocated to the Variable Life Insurance Separate Account, are
credited to or charged against the Variable Life Insurance Separate Account
without regard to other income, gains or losses of First Penn-Pacific;
WHEREAS, the Variable Life Insurance Separate Account is registered as an
investment company under the Investment Company Act of 1940, as amended ("1940
Act");
WHEREAS, First Penn-Pacific, through the Variable Life Insurance Separate
Account, intends to issue certain variable universal life insurance contracts
and may in the future issue additional forms of variable life insurance
contracts, whose net considerations may be allocated in whole or in part to the
Variable Life Insurance Separate Account for investment, and in the future may
issue, through other separate accounts, variable life insurance and variable
annuity contracts, whose net considerations may be allocated in whole or in part
to other separate accounts maintained by First Penn-Pacific;
WHEREAS, First Penn-Pacific proposes to make the variable life insurance
contracts and variable annuity contracts listed on Exhibit A of this Agreement
("Contracts") available for sale to suitable purchasers;
WHEREAS, the variable portions of the Contracts are registered under the
Securities Act of 1933 ("1933 Act");
WHEREAS, Distributor, a wholly-owned subsidiary of First Penn-Pacific, is a
broker-dealer registered under the Securities Exchange Act of 1934 ("1934 Act")
and is a member of the National Association of Securities Dealers, Inc.
("NASD");
WHEREAS, the parties hereto desire to have Distributor act as principal
underwriter or distributor for the separate accounts of First Penn-Pacific
listed on Exhibit B of this Agreement ("Separate Accounts") to assume the
responsibilities set forth in this Agreement with respect to the distribution of
the Contracts, and Distributor desires to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. APPOINTMENT AND AUTHORIZATION
a. First Penn-Pacific authorizes Distributor to act, and Distributor agrees to
serve, as the principal underwriter for the Separate Accounts and as a
distributor of the Contracts in each state or other jurisdiction where the
Contracts may legally be sold. Distributor also is authorized and hereby
agrees to find purchasers for the Contracts, in each case acceptable to
First Penn-Pacific.
b. Distributor is hereby authorized to enter into separate written agreements
("Selling Agreements"), on such terms and conditions as Distributor may
determine not to be inconsistent with this Agreement, with broker-dealers
("Selling Broker-Dealers") that agree to participate in the distribution
of, and to use their best efforts to solicit applications for, the
Contracts. The Selling Agreements shall be substantially in the form of the
Form of Selling Agreement attached as Exhibit C to this Agreement, or such
other form(s) as may be agreed upon by the parties. Each Selling
Broker-Dealer and its registered representatives ("Agents") soliciting
applications for the
Page 1 of 10
<PAGE>
Contracts shall be duly and appropriately licensed, appointed by First
Penn-Pacific, registered and otherwise qualified for the sale of the
Contracts under the NASD Rules and federal and state securities and
insurance laws applicable to the offer and sale of the Contracts.
d. Distributor will not publicly offer or seek purchasers for a Contract
unless and until the Registration Statement for that Contract is effective.
In addition, Distributor will not publicly offer or seek purchasers for a
Contract in a state or jurisdiction in which that Contract is not qualified
for sale under all applicable securities and insurance laws. Distributor
will use its best efforts to provide information and marketing assistance
to licensed insurance agents and broker/dealers on a continuing basis.
e. The variable contracts covered by this Agreement are described on Exhibit
A. The Separate Accounts covered by this Agreement are described on Exhibit
B. First Penn-Pacific in its sole discretion may amend Exhibit A from time
to time to add or delete other classes of variable life insurance or
variable annuity contracts issued by First Penn-Pacific and may amend
Exhibit B to add or delete other Separate Accounts. The provisions of this
Agreement shall apply with equal force to such additional Contracts and
Separate Accounts unless the Contract requires otherwise.
f. Anything in this Agreement to the contrary notwithstanding, First
Penn-Pacific shall retain the ultimate right of control over, and the
responsibility for, the issuance, servicing and marketing of the Contracts,
including the right to review and approve all advertising concerning the
Contracts, to suspend sales of the Contracts in any jurisdiction, to
appoint and discharge its agents authorized to sell the Contracts, and to
refuse to sell a Contract to any applicant for any reason whatsoever.
2. LICENSING AND APPOINTMENT OF ASSOCIATED PERSONS AND AGENTS
a. Distributor is authorized to recommend the appointment of its associated
persons ("Associated Persons") and the Selling Broker-Dealers and their
eligible Agents as agents of First Penn-Pacific in connection with the sale
of Contracts. Distributor shall not propose an Associated Person or Agent
for appointment unless such person is an "associated person" of
Broker-Dealer (as defined in Section 3(a)(18) of the 1934 Act), duly
registered as a representative of Distributor or a Selling Broker-Dealer,
as appropriate, and duly licensed as an insurance agent in the state(s) in
which it is proposed that such person engage in activities requiring such
appointment. Distributor shall be responsible for such Associated Persons'
continuing compliance with applicable securities registration requirements
and state insurance agent licensing laws. Each Selling Broker-Dealer shall
be responsible for its Agents' continuing compliance with applicable
securities registration requirements and state insurance agent licensing
laws.
b. Distributor shall assist First Penn-Pacific in the appointment of Agents
under applicable insurance laws. Distributor or the sponsoring Selling
Broker-Dealer, as appropriate, shall comply with First Penn-Pacific's
requirements, as First Penn-Pacific in its sole discretion may establish
and change from time to time, in submitting licensing or appointment
documentation for Associated Persons and Agents. All such documentation
shall be submitted to First Penn-Pacific or its designated agent licensing
administrator. A copy of First Penn-Pacific's current General Letter of
Recommendation, to be used in connection with the appointment of Agents, is
attached hereto as Exhibit D.
c. First Penn-Pacific reserves the right to refuse to appoint any such
designated Associated Person or Agent and, once appointed, to terminate or
refuse to renew such appointment.
d. The parties hereto recognize that any Associated Person or Agent selling
the Contracts as contemplated by this Agreement shall be acting as an
insurance agent of First Penn-Pacific and that the obligations and rights
of Distributor to supervise such persons shall be limited to the extent
specifically described herein or required under applicable federal or state
securities laws or NASD Rules. Such Agents shall not be considered agents
or employees of Distributor, unless any contract between Distributor and
any such person specifically provides otherwise. Further, it is intended by
the parties hereto that such Associated Persons and Agents are and shall
continue to be considered to have a common law independent contractor
relationship with First Penn-Pacific
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<PAGE>
and not to be considered common law employees of First Penn-Pacific, unless
any contract between First Penn-Pacific and any person selling the
Contracts specifically provides otherwise.
3. SUPERVISION OF ASSOCIATED PERSONS
a. Distributor shall be fully responsible for carrying out all compliance and
supervisory obligations in connection with the distribution of the
Contracts, as required by the NASD Conduct Rules ("NASD Rules") and by
federal and any applicable state securities laws. Distributor shall assume
full responsibility for training and oversight of its Associated Persons
engaged directly or indirectly in the distribution of the Contracts, and
shall have the authority to require that disciplinary action be taken with
respect to the Associated Persons. Distributor agrees to comply with First
Penn-Pacific's statement in support of the concepts in the Principles and
Code of Ethical Market Conduct of the Insurance Marketplace Standards
Association (the "IMSA Principles and Code"), as such statement may be
amended from time to time, and to engage in active and fair competition as
contemplated by the IMSA Principles and Code. A copy of First
Penn-Pacific's current statement in support of the IMSA Principles and Code
is attached as Exhibit E.
b. Distributor is specifically charged with the responsibility of supervising
and reviewing its Associated Persons' use of sales literature and
advertising and all other communications with the public in connection with
the Contracts. No sales solicitation, including the delivery of
supplemental sales literature or other such materials, shall occur, be
delivered to or used with a prospective purchaser unless accompanied or
preceded by the appropriate then current prospectus, the then current
prospectus for the underlying funds funding the Contract, and where
required by state insurance law, the then current statement of additional
information.
c. Distributor shall execute any electronic or telephone orders only in
accordance with the current prospectus applicable to the Contracts and
agrees that First Penn-Pacific will not be liable for any loss incurred as
a result of acting upon electronic or telephone instructions containing
unauthorized, incorrect or incomplete information received from Distributor
or its Associated Persons.
d. Upon request by First Penn-Pacific, Distributor shall furnish appropriate
records or other documentation to evidence its diligent supervision of
Associated Persons.
e. If an Associated Person performs any unauthorized transaction with respect
to a Contract, Distributor shall bear sole responsibility, shall notify
First Penn-Pacific and shall act to terminate such unauthorized activities.
f. If an Associated Person fails to meet Distributor's rules and standards,
Distributor shall notify First Penn-Pacific and shall act to terminate any
violative conduct of such Associated Person relating to the Contracts.
4. SUPERVISION OF SELLING-BROKER DEALERS
a. Each Selling Agreement shall provide as follows, in words or substance with
respect to the training and supervision of Agents and other persons
associated with such Selling-Broker Dealer who are involved directly or
indirectly in the offer or sale of Contracts:
(1) All such Agents and other persons shall be subject to the control
of such Selling-Broker Dealer with respect to such persons'
activities in connection with the sale of Contracts. Such
Selling-Broker Dealer shall be responsible for training and
supervision of all such persons. Distributor and First
Penn-Pacific shall not have responsibility for the training and
supervision of any Agent or other person associated with such
Selling-Broker Dealer. Distributor shall provide such Selling
Broker-Dealer with a copy of First Penn-Pacific's statement in
support of the concepts in the IMSA Principles and Code, as such
statement may be amended from time to time, and shall require
such Selling Broker-Dealer to agree to comply with that statement
and to engage in active and fair competition as contemplated by
the IMSA Principles and Code.
(2) Such Selling Broker-Dealer shall be required to assume full
responsibility for continued compliance by itself and its
associated persons (as defined in Section 3(a)(18) of the 1934
Act) with the NASD Rules
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<PAGE>
and applicable federal and state securities and insurance laws.
Such Selling-Broker Dealer shall be specifically charged with the
responsibility of supervising its Agents' compliance with all
applicable suitability requirements under federal or state law or
the regulations of the NASD. Such Selling Broker-Dealer shall be
specifically charged with providing or arranging for adequate
training to ensure that Agents have thorough knowledge of each
Contract and the ability to make appropriate product
presentations and suitability determinations in compliance with
applicable law. Such Selling Broker-Dealer and its Agents shall
not recommend the purchase of a Contract to a prospective
purchaser unless they have reasonable grounds to believe that
such purchase is suitable for the prospective purchaser and is in
accordance with applicable regulations of any regulatory
authority, including the Securities and Exchange Commission
("SEC") and the NASD. While not limited to the following, a
determination of suitability shall be based on information
concerning the prospective purchaser's insurance and investment
objectives, risk tolerance, need for liquidity, and financial and
insurance situation and needs.
b. Any supervision of the Selling Broker-Dealer required by applicable law
shall be performed by Distributor, and Distributor shall assume any legal
responsibilities of First Penn-Pacific for the acts or omissions of any
Selling Broker-Dealer or its Agents.
5. SALES PROMOTION MATERIAL AND ADVERTISING
a. During the term of this Agreement, subject to the approval of First
Penn-Pacific, Distributor will be responsible for providing certain and
approving all promotional, sales and advertising material to be used by
Distributor and Selling Broker-Dealers in connection with the offer and
sale of Contracts. Distributor will file such materials or will cause such
materials to be filed with the SEC and the NASD, and with any state
securities regulatory authorities, as required. First Penn-Pacific reserves
the right to require the recall of any material approved by it at any time
for any reason, and Distributor shall promptly comply, and cause all
Selling Broker-Dealers to promptly comply, with any such request for the
return of material and shall not use such material thereafter.
b. Distributor will require that the Associated Persons and Agents use only
the effective current prospectuses, statements of additional information
("SAIs") and other materials authorized by First Penn-Pacific for use in
soliciting the sale of the Contracts. Distributor is not authorized, and
may not authorize anyone else, to give any information or to make any
representation concerning First Penn-Pacific, the Contracts, the Separate
Accounts or the funding media for the Contracts other than those contained
in the current materials authorized for use by First Penn-Pacific.
Distributor and its Associated Persons may not modify or represent that
they are authorized to modify any such prospectus, SAI or other materials
authorized by First Penn-Pacific for use in soliciting the sale of the
Contracts.
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<PAGE>
6. OBLIGATIONS OF DISTRIBUTOR
a. All solicitations for the sale of Contracts will be made only by Associated
Persons and Agents who are registered representatives of Distributor or a
Selling Broker-Dealer and duly licensed insurance agents and appointed by
First Penn-Pacific. Continued solicitation for the Contracts shall be
contingent upon the continuing qualification of such Associated Persons and
Agents by possession of the required licenses, appointments, and
registrations. Solicitation may only occur in those states in which First
Penn-Pacific is admitted to do business and in which the Contracts have
been approved for sale by the appropriate regulatory authority.
b. All applications for the Contracts shall be made on application forms
supplied by First Penn-Pacific or in a form otherwise satisfactory to First
Penn-Pacific. All applications forwarded to First Penn-Pacific shall first
be approved as to suitability by an appropriate principal of the submitting
Selling-Broker Dealer or, if originated by Distributor, by an appropriate
principal of Distributor. All applications for Contracts shall be subject
to acceptance or rejection by First Penn-Pacific in its sole discretion. If
First Penn-Pacific rejects an application, it will return any premium paid
by that applicant to such applicant and promptly notify Distributor of such
action. If a purchaser exercises his or her free look right under a
Contract, any amount to be refunded as provided in such Contract will be so
refunded to the purchaser by or on behalf of First Penn-Pacific and the
relevant Separate Accounts(s) and First Penn-Pacific will promptly notify
Distributor of such action.
c. All money payable in connection with the Contracts, whether as purchase
payments or otherwise, and whether paid by, or on behalf of any applicant
or Contract owner, is the property of First Penn-Pacific. Distributor shall
promptly transmit to First Penn-Pacific any such payment received by it in
accordance with First Penn-Pacific's administrative procedures without any
deduction or offset for any reason, unless there has been mutual
arrangement for net wire transmissions between Distributor and First
Penn-Pacific. No cash payments shall be accepted by Distributor in
connection with the Contracts.
d. Before transmitting to First Penn-Pacific applications or other documents
relating to Contracts sold by Associated Persons, Distributor shall review
such documents for completeness and correctness, as well as compliance with
applicable suitability standards. Distributor promptly, but in no case
later than the end of the next business day following receipt by
Distributor or an Associated Person, shall forward completed applications
to First Penn-Pacific in accordance with First Penn-Pacific's
administrative procedures. An appropriate principal of Distributor shall
approve each such application as to suitability before forwarding such
application to First Penn-Pacific. Applications and payments shall be sent
to First Penn-Pacific at the address shown on the application or such other
address as First Penn-Pacific may specify from time to time. Checks, money
orders or electronic transmissions of funds in payment on any Contract
shall be drawn to the order of "First Penn-Pacific Life Insurance Company".
e. Contracts issued on accepted applications shall be delivered to the
Contract owner according to procedures established by First Penn-Pacific.
If First Penn-Pacific forwards a Contract to Distributor for delivery, such
Contract shall be delivered to the Contract owner within four days of
receipt.
f. Distributor agrees to comply with the established rules and regulations of
First Penn-Pacific now in effect or which may be established hereafter.
g. Distributor agrees to carry out its sales and administrative activities and
obligations under this Agreement in continuous compliance with the federal
and state laws and regulations, including those governing securities and
insurance related activities or transactions, as applicable. Distributor
shall notify First Penn-Pacific immediately in writing if Distributor fails
to comply with any applicable law or regulation.
h. The costs of printing the prospectuses, SAIs and sales material used in
connection with the solicitation of applications for the Contracts shall be
borne by First Penn-Pacific. First Penn-Pacific shall provide Distributor
with a reasonable supply of such materials. First Penn-Pacific shall make
available to Distributor copies of all financial statements and other
documents that Distributor shall reasonably request for use in connection
with the distribution of the Contracts.
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<PAGE>
i. Distributor periodically shall furnish reports to First Penn-Pacific as to
the sale of Contracts made pursuant to this Agreement.
7. BOOKS AND RECORDS
a. Distributor and First Penn-Pacific shall each maintain and preserve, or
cause to be maintained and preserved such books and records concerning the
offer and sale of the Contracts as may be required by the SEC, the NASD and
other agencies having jurisdiction and that may be reasonably required to
reflect adequately the Contracts business conducted by each party. Each
party shall make such books and records reasonably available to the other
party. The parties shall promptly furnish each other with any reports and
information the other party may reasonably request for the purpose of
meeting its reporting and recordkeeping requirements under the insurance
laws of any state, under any applicable federal or state securities laws,
rules or regulations, or under the rules of the NASD.
b. Distributor and First Penn-Pacific shall each submit to all regulators and
administrative bodies having jurisdiction over the sales of the Contracts,
present or future, any information, reports or other material that any such
body by reason of this Agreement may request or require pursuant to
applicable laws or regulations. In particular, without limiting the
foregoing, First Penn-Pacific agrees that any books and records which it
maintains which are required to be maintained by Distributor under Rule
17a-3 or 17a-4 of the 1934 Act shall be subject to inspection by the SEC in
accordance with Section 17(a) of the 1934 Act.
c. Distributor and First Penn-Pacific each agree and understand that all
documents, reports, records, books, files and other materials required
under applicable NASD regulations and federal and state securities laws
relative to the sale of Contracts shall be the property of Distributor,
except that: (a) any books and records maintained by First Penn-Pacific
that relate to sales compensation shall be the joint property of First
Penn-Pacific and Distributor, and (b) all such documents, reports, records,
books, files and other materials that are also required by applicable
regulation or law to be maintained by First Penn-Pacific shall be the joint
property of Distributor and First Penn-Pacific. All other documents,
reports, records, books, files and other materials maintained relative to
this Agreement shall be the property of First Penn-Pacific. Upon the
termination of this Agreement, all such material shall be returned to the
applicable party.
d. Subject to applicable SEC or NASD restrictions, First Penn-Pacific, as
agent for Distributor, will send confirmations of Contract transactions to
Contract owners. First Penn-Pacific will make such confirmations and
records of transactions available to Distributor upon request. First
Penn-Pacific also will maintain Contract owner records on behalf of
Distributor to the extent permitted by applicable securities laws.
Distributor and First Penn-Pacific from time to time during the term of
this Agreement shall allocate among themselves, subject to a right of
further delegation, the administrative responsibility for maintaining and
preserving the books, records and accounts kept in connection with the
Contracts.
8. REPRESENTATIONS
a. First Penn-Pacific represents and warrants to Distributor that:
(1) First Penn-Pacific has filed a Registration Statement with the SEC for
each of the Contracts. First Penn-Pacific has delivered to Distributor a
copy of each such Registration Statement. First Penn-Pacific will deliver
to Distributor a copy of each amendment to any such Registration Statement
promptly after such amendment is filed with the SEC.
(2) The Registration Statements for the Contracts and any further
amendments or supplements thereto will, when they become effective, conform
in all material respects to the requirements of the 1933 Act and the 1940
Act, and the rules and regulations of the SEC under such Acts, and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any
Page 6 of 10
<PAGE>
statement or omission made in reliance upon and in conformity with
information furnished in writing to First Penn-Pacific by Distributor
expressly for use therein.
(3) First Penn-Pacific is validly existing as a stock life insurance
company in good standing under the laws of the State of Indiana, with power
to own its properties and conduct its business as described in the
Prospectus. First Penn-Pacific has been duly qualified for the transaction
of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business.
(4) The Contracts have been duly and validly authorized and when issued and
delivered with payment therefor as provided herein, will be duly and
validly issued and will conform to the description of such Contracts
contained in the Prospectuses relating thereto.
(5) The performance of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in a violation
of any of the provisions of or default under any statute, indenture,
mortgage, deed of trust, note agreement or other agreement or instrument to
which First Penn-Pacific is a party or by which First Penn-Pacific is bound
(including Articles of Incorporation, By-Laws, or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over First Penn-Pacific or any of its properties).
(6) There are no material legal or governmental proceedings pending to
which First Penn-Pacific or the Separate Accounts are a party or of which
any property of the Separate Accounts is the subject (other than as set
forth in the Prospectus relating to the Contracts), or litigation incident
to the kind of business conducted by First Penn-Pacific which, if
determined adversely to First Penn-Pacific would individually or in the
aggregate have a material adverse effect on the financial position, surplus
or operations of First Penn-Pacific.
b. Distributor represents and warrants to First Penn-Pacific that:
(1) Distributor is a broker/dealer duly registered with the SEC pursuant to
the 1934 Act, is a member in good standing of the NASD, and is in
compliance with the securities laws in those states in which it conducts
business as a broker/dealer.
(2) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation
of any of the terms or provisions of or constitute a default under any
statute, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which Distributor is a party or by which it is
bound (including the Articles of Incorporation or Bylaws of Distributor or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over either Distributor or its property).
(3) To the extent that any statements made in the Registration Statement or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to First Penn-Pacific by
Distributor expressly for use therein, such statements will, when they
become effective or are filed with the SEC, as the case may be, conform in
all material respects to the requirements of the 1933 Act and the rules and
regulations of the SEC thereunder, and will not contain any untrue
statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
9. INDEPENDENT CONTRACTOR
Distributor shall at all times function as and be deemed to be an independent
contractor and not as an employee of First Penn-Pacific. Distributor will be
under no obligation to effectuate any particular number or dollar volume of
sales of Contracts, except to the extent Distributor deems advisable.
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<PAGE>
10. COMPENSATION AND EXPENSES
a. First Penn-Pacific shall compensate Distributor for its services under this
Agreement in accordance with the terms of Exhibit C hereto, as it may be
amended from time to time. Distributor shall be fully responsible for
compensating the Associated Persons (as defined in Paragraph 2.a) for their
sales of the Contracts. At Distributor's request, First Penn-Pacific will
pay all or a portion of the compensation due hereunder directly to the
relevant Associated Person in satisfaction of Distributor's obligation to
compensate such Associated Person.
b. Distributor shall be fully responsible for compensating the Selling
Broker-Dealers for their sales of the Contracts as provided in the Selling
Agreements. Distributor shall not be obligated to pay such compensation
with respect to a Contract until Distributor has received its compensation
with respect to such Contract from First Penn-Pacific. At Distributor's
request, First Penn-Pacific will pay all or a portion of the compensation
due hereunder directly to the relevant Selling Broker-Dealer in
satisfaction of Distributor's obligation to compensate such Selling
Broker-Dealer. If after reasonable efforts Distributor is unable to recover
a commission chargeback from a Selling Broker-Dealer, Distributor shall not
be liable to First Penn-Pacific for such chargeback and, in addition, First
Penn-Pacific shall compensate Distributor for its expenses associated with
such chargeback.
c. Unless otherwise agreed in writing by First Penn-Pacific, neither
Distributor nor any agent of First Penn-Pacific nor any Selling
Broker-Dealer shall have an interest in any surrender charges, deductions
or other fees payable to First Penn-Pacific.
11. NOTIFICATION OF CUSTOMER COMPLAINTS OR REGULATORY MATTER
a. Each party will promptly notify the other of any customer complaint or
notice of any regulatory investigation or proceeding received by such party
or their respective affiliates relating to the Contracts or any or
threatened or filed arbitration action or civil litigation arising out of
the offer or sale of the Contracts.
b. The parties shall cooperate fully in investigating and responding to any
such complaint, regulatory investigation or proceeding, arbitration, or
civil litigation, and in any settlement or trial of any actions arising out
of the conduct of business under this Agreement.
c. Any response by Distributor or First Penn-Pacific to an individual customer
complaint will be sent to the other for approval at least five (5) business
days before it is sent to the customer, except that if a more prompt
response is required, the proposed response may be communicated by
telephone, facsimile or in person.
d. Distributor will include in each Selling Agreement a notification provision
comparable to this Paragraph 11 requiring the Selling Broker-Dealer (a) to
notify Distributor and First Penn-Pacific promptly of any customer
complaint or notice of any regulatory investigation or proceeding received
by the Selling-Broker Dealer or its affiliates with respect to Distributor,
any Selling Broker-Dealer, or any agent or representative in connection
with any Contract and (b) to assist First Penn-Pacific and Distributor in
resolving any complaint to the satisfaction of all parties.
e. First Penn-Pacific shall promptly notify Distributor of:
(1) Any request by the SEC for any amendments or supplements to a
Contract's current prospectus or statement of additional information, other
than requests in the ordinary course of SEC review or registration
statements and amendments thereto prior to their effective date;
(2) Any request by the SEC for information that must be provided by
Distributor or any Selling Broker-Dealer, or any affiliated person of
Distributor or any Selling Broker-Dealer;
(3) The issuance by the SEC of any stop order with respect to a Contract's
Registration Statement or the initiation of any proceedings for that
purposes or for any other purpose relating to the registration and/or
offering of the Contracts; and
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(4) Any event as a result of which the prospectuses or any sales literature
for a Contract would include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein not
misleading.
12. INDEMNIFICATION
a. Distributor shall indemnify and hold harmless First Penn-Pacific, its
affiliates, officers, directors, employees and agents against any and all
loss, claim, damage, liability or expense (including reasonable attorneys'
fees), joint or several, insofar as such loss, claim, damage, liability or
expense arises out of or is based upon (i) any breach of this Agreement,
any applicable law or regulation, or any applicable rule of any
self-regulatory organization, by Distributor and/or any of its Associated
Persons; or (ii) any claim by any Associated Person of Distributor for
commissions, service fees, expense allowances or other compensation or
remuneration of any type. This indemnification will be in addition to any
liability which Distributor may otherwise have.
b. First Penn-Pacific shall indemnify and hold harmless Distributor and its
affiliates, officers, directors, employees and agents against any and all
loss, claim, damage, liability or expense (including reasonable attorneys'
fees), joint or several, insofar as such loss, claim, damage, liability or
expense arises out of or is based upon any breach of this Agreement, any
applicable law or regulation, or any applicable rule of any self-regulatory
organization, by First Penn-Pacific. This indemnification will be in
addition to any liability which First Penn-Pacific may otherwise have.
13. TERM OF AGREEMENT
a. This Agreement shall terminate automatically upon its assignment.
b. This Agreement may be terminated by any party hereto on not less than sixty
(60) days' prior written notice to the other parties or by an agreement in
writing signed by all of the parties hereto.
c. This Agreement shall terminate at the option of First Penn-Pacific upon
institution of formal proceedings against Distributor by the NASD or the
SEC, or if Distributor or any of its Associated Persons:
(1) employs any device, scheme, artifice, statement or omission to defraud
any person; or
(2) violates the provisions of this Agreement.
d. Upon termination of this Agreement, all authorizations, rights, and
obligations shall cease except the obligations to settle accounts
hereunder, including the settlement of monies due in connection with
Contracts in effect at the time of termination or issued pursuant to
applications received by First Penn-Pacific prior to termination, and the
agreements contained in Paragraphs 5, 7, 11, and 12.
14. MISCELLANEOUS
a. None of the parties hereto shall be liable to the other for any action
taken or omitted by it, or any of its officers, agents or employees, in
performing their respective responsibilities under this Agreement in good
faith and without negligence, willful misfeasance or reckless disregard of
such responsibilities.
b. Distributor will execute such papers and do such acts and things as shall
from time to time be reasonably requested by First Penn-Pacific for the
purpose of (a) maintaining the registration of the interests under the
Contracts under the 1933 Act and the Separate Accounts under the 1940 Act,
and (b) qualifying and maintaining qualification of the Contracts for sale
under the applicable laws of any state.
15. NOTICE
All notices under this Agreement shall be given in writing and addressed as
follows:
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<PAGE>
if to Distributor, to:
First Penn-Pacific Securities, Inc.
1801 South Meyers Road
Oakbrook Terrace, IL 60181-5213
Attention: ___________________
if to First Penn-Pacific or the Separate Accounts, to:
First Penn-Pacific Life Insurance Company
1801 South Meyers Road
Oakbrook Terrace, IL 60181-5213
Attention: __________________
or to such other address as such party may hereafter specify in writing.
Each such notice shall be either hand delivered or transmitted by certified
United States mail, return receipt requested, and shall be effective upon
delivery.
16. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
17. ENTIRE AGREEMENT AND AMENDMENTS
This Agreement constitutes the entire agreement between the parties hereto and
may not be modified except in a written instrument executed by all parties
hereto.
18. CONSTRUCTION
This Agreement shall be subject to the provisions of the 1934 Act and, to the
extent applicable, the 1940 Act and the rules, regulations and rulings
thereunder and of the NASD, from time to time in effect, including such
exemptions from the 1940 Act as the SEC may grant, and the terms hereof shall be
interpreted and construed in accordance therewith.
19. GOVERNING LAW
This Agreement shall be interpreted in accordance with the laws of the State of
Indiana, except to the extent those laws are inconsistent with the federal
securities laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials hereunto duly authorized, as of the day and
year first above written.
FIRST PENN-PACIFIC SECURITIES, INC.
By:
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
By:
FIRST PENN-PACIFIC VARIABLE LIFE INSURANCE SEPARATE ACCOUNT
66799v1
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By: FIRST PENN-PACIFIC LIFE INSURANCE COMPANY as depositor
By:
Page 11 of 10
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EXHIBIT A
CONTRACTS
Contract Name Policy Form No.
<PAGE>
EXHIBIT B
SEPARATE ACCOUNTS
First Penn-Pacific Variable Life Insurance Separate Account
<PAGE>
EXHIBIT C
FORM OF SELLING AGREEMENT
<PAGE>
EXHIBIT D
GENERAL LETTER OF RECOMMENDATION
Distributor hereby certifies to First Penn-Pacific that all the following
requirements will be fulfilled in conjunction with the submission by Distributor
of appointment papers for all applicants to become agents of First Penn-Pacific
("Applicants"). Distributor will, upon request, forward proof of compliance with
same to First Penn-Pacific in a timely manner.
1. We have on file a Form U-4 which was completed by each Applicant. We
have fulfilled all the necessary investigative requirements for the registration
of each Applicant as a registered representative, and each Applicant is
presently registered as an NASD registered representative. The above information
in our files indicates no fact or condition which would disqualify the Applicant
from receiving a license, and all the findings of all investigative information
is favorable.
2. We have made a thorough and diligent inquiry and investigation relative
to each Applicant's identity, residence, business reputation, and experience and
declare that each Applicant is personally known to us, has been examined by us,
is known to be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of appointment as a variable
contract agent of First Penn-Pacific. This inquiry and background investigation
has included a credit and criminal check on each Applicant. Based upon our
investigation, we vouch for each Applicant and certify that each individual is
trustworthy, competent and qualified to act as an agent for First Penn-Pacific
and hold himself out in good faith to the general public.
3. We certify that all educational requirements have been met for the
specific state in which each Applicant is requesting a license and that all such
persons have fulfilled the appropriate examination, education and training
requirements.
4. We hereby warrant that the Applicant is not applying for a license with
First Penn-Pacific in order to place insurance chiefly or solely on his or her
life or property or on the lives, property or liability of relatives or
associates.
5. We certify that each Applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all risks
written by these Applicants, to the end that the insurance interest of the
public will be properly protected.
6. We will not permit any Applicant to transact insurance as an agent until
duly licensed and appointed by First Penn-Pacific. No Applicants have been given
an insurance contract or furnished supplies, nor have any Applicants been
permitted to write, solicit business or act as an agent in any capacity, and
they will not be so permitted until the certificate of authority or license
applied for is received.
<PAGE>
EXHIBIT E
FIRST PENN-PACIFIC'S STATEMENT IN SUPPORT OF THE
PRINCIPLES AND CODE OF ETHICAL MARKET CONDUCT
OF THE INSURANCE MARKETPLACE STANDARDS ASSOCIATION
--------------------------------------------------
<PAGE>
EXHIBIT F
COMPENSATION
This schedule is attached to and made a part of the most current executed
Distribution Agreement (the "Agreement") between and among First Penn-Pacific
Life Insurance Company ("First Penn-Pacific"), for itself and on behalf of its
[First Penn-Pacific Variable Life Insurance Separate Account], and First
Penn-Pacific Securities, Inc. ("Distributor").
The compensation for the variable life insurance and annuity products (the
"Contracts") referred to in the Agreement is as follows:
FOR FLEXIBLE PAYMENT VARIABLE UNIVERSAL LIFE INSURANCE CONTRACTS, written on
Form No. _____________________, and any variations of that form as may be
required by insurance regulatory authorities:
1. NEW BUSINESS COMMISSION AND EXPENSE REIMBURSEMENT ALLOCATION:
a. On Contracts originated by Distributor, Distributor shall receive
commissions equal to _% of the initial Payment.
b. On Contracts originated by a Selling Broker-Dealer, Distributor
shall receive commissions equal in amount to the commissions
payable to the Selling-Broker-Dealer of record pursuant to the
Selling Agreement with such Selling Broker-Dealer. Such
commissions shall not exceed _% of the initial Payment on each
such Contract.
However, no compensation shall be paid on Payment received from a Contract owner
when an existing life insurance or annuity contract issued by First Penn-Pacific
on the same life has lapsed, been terminated or surrendered, been continued on a
nonforfeiture option, or been changed, modified or converted in any manner
within six months of the date of the application for the new Contract or twelve
months after the issue date of the new Contract, except to the extent that the
first year's annualized premium for the new Contract exceeds the first year's
annualized premium from the existing contract.
2. RETURN OF COMPENSATION IN SPECIFIED CIRCUMSTANCES
The following rules regarding "chargebacks" shall apply in connection with
the offer and sale of Contracts under this Agreement:
a. In the event that:
i. a Payment is returned because First Penn-Pacific rejects the
application for the Contract under which such Payment has been paid or
because the Payment, or the related application, is not timely received by
First Penn-Pacific as required herein, or a refund is made because a
purchaser exercises his or her free look right under a Contract; or
ii. within the first twelve months after the date on which a
Contract was issued, the purchaser surrenders the Contract, or otherwise
rescinds the Contract, or the Contract lapses;
then, in any such event, Distributor shall not be entitled to any compensation
with respect to such Contract, and any and all compensation previously received
by Distributor based on all Payments paid into the Contract shall be repaid to
First Penn-Pacific, and Distributor shall pay any loss incurred as a result of a
Payment being returned which was not timely received or for which an application
was not timely received by First Penn-Pacific.
b. If and to the extent that any loans or partial withdrawals are
made with respect to any Contract during the first year after issuance, the
compensation due to Distributor shall be recomputed as though the amount of the
loan or partial withdrawal had never been paid as a Payment.
<PAGE>
c. If and to the extent that a Contract is exchanged for another
contract during the first policy year of the Contract, the compensation due to
Distributor shall be recomputed as though the Contract had never been issued.
First Penn-Pacific shall have the right to collect from Distributor or to
withhold from future payments of compensation due to Distributor under this
Agreement an amount equal to any reduction in compensation effected by this
Exhibit F, to the extent permitted by applicable law; provided, however, that:
(1) this option on the part of First Penn-Pacific shall not prevent First
Penn-Pacific from pursuing any other means or remedies available to it to
recover such compensation; and (2) if after reasonable efforts Distributor is
unable to recover a commission chargeback from a Selling Broker-Dealer,
Distributor shall not be liable to First Penn-Pacific for such chargeback and,
in addition, First Penn-Pacific shall compensate Distributor for its expenses
associated with such chargeback. First Penn-Pacific will notify Distributor
promptly of any premium refund or commission chargeback. For purposes of this
Exhibit F, the payment of a death benefit pursuant to the terms of a Contract
shall not be deemed a surrender or rescission by a purchaser.
66799.1
<PAGE>
EXHIBIT 1.3(b)
- --------------------------------------------------------------------------------
BROKER-DEALER AND GENERAL AGENT
SELLING AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT, dated as of __________ __, ____, by and among First Penn-Pacific Life
Insurance Company ("First Penn-Pacific"), First Penn-Pacific Securities, Inc.
("Distributor"),_________________ ("Broker-Dealer") and ______________ ("General
Agent").
WHEREAS, First Penn-Pacific, through certain of its separate accounts, issues
certain insurance products and group and individual insurance contracts/policies
and certificates participating therein, some of which may be deemed securities
under the Securities Act of 1933 ("1933 Act"); and
WHEREAS, Distributor and Broker-Dealer are both broker-dealers registered with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended ("1934 Act"), and members of the National Association of
Securities Dealers, Inc. ("NASD");
WHEREAS, First Penn-Pacific, on behalf of certain of its separate accounts, has
appointed Distributor as the principal underwriter and distributor of the
variable life insurance and annuity contracts (the "Contracts") specified in
Exhibit C;
WHEREAS, Broker-Dealer is a broker/dealer engaged in the sale of securities and
other investment products; and
WHEREAS, General Agent is an insurance agency licensed to sell variable life
insurance, and variable annuity contracts; and
WHEREAS, if General Agent and Broker-Dealer are the same person, the duties,
responsibilities, and privileges of General Agent under this Agreement shall be
undertaken by Broker-Dealer;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
promises herein contained, the parties hereto agree as follows:
1. PURPOSE
Broker-Dealer and General Agent desire to enter into an agreement with First
Penn-Pacific and Distributor so as to have General Agent's sub-agents who are
also registered representatives of Broker-Dealer (the "Agents") appointed as
agents of First Penn-Pacific for the purpose of selling the Contracts.
2. APPOINTMENT AND AUTHORIZATION
Distributor hereby authorizes Broker-Dealer to solicit sales of the Contracts.
First Penn-Pacific hereby appoints and authorizes General Agent to solicit sales
of the Contracts. Broker-Dealer and General Agent accept such appointment and
authorization, and each agrees to use its best efforts to find purchasers of the
Contracts acceptable to First Penn-Pacific. This appointment and authorization
is non-exclusive. Neither Broker-Dealer nor General Agent shall possess or
exercise any authority on behalf of the Distributor or First Penn-Pacific other
than the authority expressly conferred by this Agreement.
3. LICENSING AND APPOINTMENT OF AGENTS
a. Broker-Dealer and General Agent are specifically authorized to designate
Agents proposed to be appointed as agents of First Penn-Pacific to solicit
applications for the Contracts, to deliver the Contracts, and to collect
the first premium thereon in conformance with applicable state laws and
First Penn-Pacific's rules and procedures. Broker-Dealer and General Agent
shall not propose an Agent for appointment unless such Agent is an
"associated person" of Broker-Dealer (as defined in Section 3(a)(8) of the
1934 Act), duly registered as a
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<PAGE>
representative of Broker-Dealer and duly licensed as an insurance agent in
the state(s) in which it is proposed that such Agent engage in solicitation
of sales of the Contracts. Broker-Dealer and General Agent together shall
be responsible for such Agents' continuing compliance with applicable
securities registration requirements and state insurance agent licensing
laws.
b. Broker-Dealer and General Agent shall assist First Penn-Pacific and
Distributor in the appointment of Agents under applicable insurance laws to
sell the Contracts. Broker-Dealer and General Agent shall comply with First
Penn-Pacific's requirements, as First Penn-Pacific in its sole discretion
may establish and change from time to time, in submitting licensing or
appointment documentation for Agents. All such documentation shall be
submitted by Broker-Dealer or General Agent to First Penn-Pacific or its
designated agent licensing administrator. A copy of First Penn-Pacific's
current General Letter of Recommendation, to be used in connection with the
appointment of Agents, is attached hereto as Exhibit A.
c. First Penn-Pacific agrees to pay the initial appointment fee required under
relevant state insurance laws to appoint Agents as agents of First
Penn-Pacific for the sale of Contracts. General Agent will be responsible
for paying all other state insurance licensing fees with respect to the
Agents, including transfer fees and termination fees. Broker-Dealer shall
be responsible for all fees, including registration and examination fees,
necessary to maintain the Agents' continuing compliance with applicable
securities registration requirements.
d. First Penn-Pacific reserves the right to refuse to appoint any such
designated Agent or, once appointed, to terminate or refuse to renew such
Agent's appointment.
4. SUPERVISION OF REPRESENTATIVES AND AGENTS
a. Broker-Dealer shall be responsible for training and supervision of all
Agents and other persons associated with Broker-Dealer who are involved
directly or indirectly in the offer or sale of the Contracts and all such
persons shall be subject to the control of Broker-Dealer with respect to
such person's activities in connection with the sale of Contracts. General
Agent shall be responsible for training and supervision of all Agents who
are involved directly or indirectly in the offer or sale of the Contracts
and for such Agents' compliance with applicable state insurance laws.
Distributor and First Penn-Pacific shall not have responsibility for the
training and supervision of any Agent. Broker-Dealer and General Agent each
agree to comply with First Penn-Pacific's statement in support of the
concepts in the Principles and Code of Ethical Market Conduct of the
Insurance Marketplace Standards Association (the "IMSA Principles and
Code"), as such statement may be amended from time to time, and to engage
in active and fair competition as contemplated by the IMSA Principles and
Code. A copy of First Penn-Pacific's current statement in support of the
IMSA Principles and Code is attached as Exhibit B.
b. Broker-Dealer is specifically charged with the responsibility of
supervising and reviewing its Agents' use of sales literature and
advertising and all other communications with the public in connection with
the Contracts. No sales solicitation, including the delivery of
supplemental sales literature or other such materials, shall occur, be
delivered to or used with a prospective purchaser unless accompanied or
preceded by the appropriate then current prospectus, the then current
prospectus for the underlying funds funding the Contract, and where
required by state insurance law, the then current statement of additional
information.
c. Broker-Dealer is specifically charged with the responsibility of
supervising its Agents' compliance with all applicable suitability
requirements under federal or state law or the regulations of the NASD.
Broker-Dealer is specifically charged with providing or arranging for
adequate training to ensure that Agents have thorough knowledge of each
Contract and the ability to make appropriate product presentations and
suitability determinations in compliance with applicable law.
Broker-Dealer, General Agent, and the Agents shall not recommend the
purchase of a Contract to a prospective purchaser unless they have
reasonable grounds to believe that such purchase is suitable for the
prospective purchaser and is in accordance with applicable regulations of
any regulatory authority, including the SEC and the NASD. While not limited
to the following, a determination of suitability shall be based on
information concerning the prospective purchaser's insurance and investment
objectives, risk tolerance, need for liquidity, and financial and insurance
situation and needs.
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<PAGE>
d. Broker-Dealer shall execute any electronic or telephone orders only in
accordance with the current prospectus applicable to the Contracts and
agrees, that in consideration for the telephone transfer privileges, First
Penn-Pacific will not be liable for any loss incurred as a result of acting
upon electronic or telephone instructions containing unauthorized,
incorrect or incomplete information received from Broker-Dealer or its
representatives.
e. Upon request by First Penn-Pacific, Broker-Dealer and General Agent shall
furnish appropriate records or other documentation to evidence
Broker-Dealer's and General Agent's diligent supervision.
f. If an Agent performs any unauthorized transaction with respect to a
Contract, Broker-Dealer and General Agent shall bear sole responsibility,
shall notify First Penn-Pacific, and shall act to terminate the sales
activities of such Agent relating to the Contracts.
g. If an Agent fails to meet Broker-Dealer's or General Agent's rules and
standards, Broker-Dealer or General Agent, as the case may be, shall notify
First Penn-Pacific, and shall act to terminate the sales activities of such
Agent relating to the Contracts.
5. SALES PROMOTION MATERIAL AND ADVERTISING
a. During the term of this Agreement, Distributor will be responsible for
providing and approving promotional, sales and advertising material to be
used by Broker-Dealer and General Agent in connection with the offer and
sale of Contracts. Distributor will file such materials or will cause such
materials to be filed with the SEC and the NASD, and with any state
securities regulatory authorities, as required. First Penn-Pacific and
Distributor reserve the right to require the recall of any material
approved by it at any time for any reason, and Broker-Dealer and General
Agent shall promptly comply with any such request and shall not use such
material thereafter.
b. Broker-Dealer, General Agent and Agents authorized to sell the Contracts
shall use only the effective current prospectuses, statements of additional
information ("SAIs") and other materials authorized by First Penn-Pacific
for use in soliciting the sale of the Contracts. Distributor will provide
the Broker-Dealer and the General Agent, without charge, with as many
copies of the prospectuses for the Contract and the underlying investment
funds as may be reasonably requested. Upon receipt of updated
documentation, the Broker-Dealer and the General Agent will promptly
discard or destroy all copies of such material previously provided to them,
except as needed to maintain proper records. First Penn-Pacific and
Distributor reserve the right to require the recall of any such material at
any time for any reason, and Broker-Dealer and General Agent shall promptly
comply with any such request and shall not use such material thereafter.
c. Broker-Dealer and General Agent are not authorized, and may not authorize
anyone else, to give any information or to make any representation
concerning First Penn-Pacific, the Contracts, the Variable Account or the
funding media for the Contracts other than those contained in the current
materials authorized for use by First Penn-Pacific. Broker-Dealer, General
Agent, and their Agents may not modify or represent that they are
authorized to modify any such prospectus, SAI or other materials authorized
by First Penn-Pacific for use in soliciting the sale of the Contracts.
6. OBLIGATIONS OF BROKER-DEALER AND GENERAL AGENT
a. All solicitations for the Contracts will be made only by Agents who are
registered representatives of Broker-Dealer and duly licensed insurance
agents and appointed by First Penn-Pacific. Continued solicitation for the
Contracts shall be contingent upon the continuing qualification of such
Agents by possession of the required licenses, appointments, and
registrations. Broker-Dealer and General Agent shall notify Distributor
immediately in writing if any Agent appointed by First Penn-Pacific ceases
to be a registered representative of Broker-Dealer or ceases to be properly
licensed in any state. Solicitation may occur only in those states in which
First Penn-Pacific is admitted to do business and in which the Contracts
have been approved for sale by the appropriate regulatory authority.
Page 3 of 8
<PAGE>
b. All applications for Contracts will be made on application forms supplied
by First Penn-Pacific. Broker-Dealer and General Agent shall review all
applications for completeness and correctness, as well as compliance with
applicable suitability standards, including those specified above.
Broker-Dealer will promptly, but in no case later than the end of the next
business day following receipt by Broker-Dealer or an Agent, forward
completed applications to First Penn-Pacific in accordance with First
Penn-Pacific's administrative procedures. An appropriate principal of
Broker-Dealer shall approve each such application as to suitability before
forwarding such application to First Penn-Pacific. Such applications shall
be accompanied by any premium payment received with such applications,
without deduction for any compensation, unless there has been mutual
arrangement for net wire transmissions between Distributor, First
Penn-Pacific, and Broker-Dealer. Applications shall be sent to First
Penn-Pacific at the address shown on the application or such other address
as First Penn-Pacific may specify from time to time. Checks or money orders
for the payment of premiums shall be drawn to the order of "First
Penn-Pacific Life Insurance Company". Neither Broker-Dealer nor General
Agent has authority to deposit or endorse checks payable to First
Penn-Pacific without the prior written approval of First Penn-Pacific.
First Penn-Pacific has the right to reject any application for a Contract
and return any premium payment made in connection with the sale of the
Contracts.
d. Contracts issued on accepted applications shall be delivered to the
Contract Owner according to procedures established by First Penn-Pacific.
If First Penn-Pacific forwards a Contract to Broker-Dealer for delivery,
Broker-Dealer shall cause each such Contract to be delivered to the
Contract Owner within [four] days of receipt. Broker-Dealer shall be liable
to First Penn-Pacific for any loss incurred by First Penn-Pacific
(including consequential damages and regulatory penalties) as a result of
any delay by Broker-Dealer or an Agent in delivering a Contract.
e. Broker-Dealer shall promptly pay any and all commissions and other
compensation due to its registered representatives in connection with the
sale of the Contracts.
f. Broker-Dealer and General Agent agree to comply with the established rules
and regulations of First Penn-Pacific now in effect or which may be
established hereafter. Broker-Dealer and General Agent shall be responsible
to Distributor and First Penn-Pacific for their and the Agents' acts and
omissions.
g. Broker-Dealer and General Agent each agree to carry out their respective
sales and administrative activities and obligations under this Agreement in
continuous compliance with federal and state laws and regulations,
including those governing securities and insurance-related activities or
transactions, as applicable. Broker-Dealer and General Agent shall notify
Distributor and First Penn-Pacific immediately in writing if Broker-Dealer
and/or General Agent fail to comply with any of the laws and regulations
applicable to either of them.
7. INDEPENDENT CONTRACTOR
Broker-Dealer, General Agent, and the Agents are performing the acts covered by
this Agreement in the capacity of independent contractors and not as an employee
of First Penn-Pacific or Distributor. Broker-Dealer and General Agent shall be
free and independent to exercise their own judgment as to the persons from whom
insurance will be solicited as well as the time, place and manner of such
solicitation.
8. REPRESENTATIONS
a. First Penn-Pacific, Distributor, Broker-Dealer and General Agent each
represents to one another that it and the officers signing below have full
power and authority to enter into this Agreement, and that this Agreement
has been duly and validly executed by it and constitutes a legal, valid and
binding agreement.
b. Distributor represents to Broker-Dealer that Distributor is registered as a
broker-dealer with the SEC under the 1934 Act and under the state
securities laws of each jurisdiction in which such registration is required
for underwriting the Contracts, and that it is a member of the NASD.
c. Broker-Dealer represents to Distributor that Broker-Dealer is, and at all
times when performing its functions and fulfilling its obligations under
this Agreement will be, registered with the SEC as a broker-dealer under
the
Page 4 of 8
<PAGE>
1934 Act and under the state securities laws of each jurisdiction in which
such registration is required for the sale of the Contracts, and a member
of the NASD. Broker-Dealer will notify Distributor in writing if any such
registration is terminated or suspended.
d. General Agent represents to Distributor and First Penn-Pacific that General
Agent is, and at all times when performing its functions and fulfilling its
obligations under this Agreement, will be, a properly licensed insurance
agency in each jurisdiction in which such licensing is required for the
sale of the Contracts.
e. First Penn-Pacific represents to Broker-Dealer that the Contracts,
including any variable account(s) supporting such Contracts, shall comply
in all material respects with the registration and other applicable
requirements of the 1933 Act and the Investment Company Act of 1940 (the
"1940 Act"), and the rules and regulations thereunder, including the terms
of any order of the SEC with respect thereto.
f. First Penn-Pacific represents to Broker-Dealer that the prospectuses
included in First Penn-Pacific's Registration Statement for the Contracts,
and in post-effective amendments thereto, and any supplements thereto, as
filed or to be filed with the SEC, as of their respective effective dates,
contain or will contain in all material respects all statements and
information which are required to be contained therein by the 1933 Act and
conform or will conform in all material respects to the requirements
thereof.
9. COMPENSATION
a. Broker-Dealer shall be paid compensation for the sale of Contracts as set
forth in the Contracts and Compensation Schedule attached as Exhibit C
hereto. Distributor may change such compensation prospectively as of a
specified date, provided such date is at least ten days after the date the
change is mailed to Broker-Dealer's last known address. Any such change
will apply only to Contracts issued pursuant to applications taken on or
after the effective date of the change. Distributor shall not be obligated
to pay such compensation with respect to a Contract until Distributor has
received its compensation with respect to such Contract from First
Penn-Pacific.
b. Compensation to the Agents for Contracts that they solicit and that are
issued by First Penn-Pacific shall be governed by agreements between
Broker-Dealer and the Agents and payment thereof will be the
Broker-Dealer's exclusive responsibility. General Agent shall have no
interest in any compensation paid by First Penn-Pacific to Distributor, now
or hereafter, in connection with the sale of any Contracts under this
Agreement.
c. Neither Broker-Dealer nor General Agent shall, directly or indirectly,
expend or contract for the expenditure of any funds of the Distributor or
First Penn-Pacific. Broker-Dealer and General Agent shall each pay all
expenses incurred by each of them in the performance of this Agreement,
unless otherwise specifically provided for in this Agreement or Distributor
shall have agreed in advance in writing to share the cost of certain
expenses.
10. NOTIFICATION OF CUSTOMER COMPLAINTS OR DISCIPLINARY PROCEEDINGS
a. Broker-Dealer and General Agent will promptly notify Distributor and First
Penn-Pacific of any customer complaint or notice of any regulatory
investigation or proceeding received by Broker-Dealer, General Agent, or
their respective affiliates relating to the Distributor, First
Penn-Pacific, any associated person of Distributor or First Penn-Pacific,
or the Contracts, or any or threatened or filed arbitration action or civil
litigation arising out of solicitation of the Contracts.
b. Broker-Dealer and General Agent shall cooperate with Distributor and First
Penn-Pacific in investigating and responding to any such complaint,
regulatory investigation or proceeding, arbitration, or civil litigation,
and in any settlement or trial of any actions arising out of the conduct of
business under this Agreement.
c. Any response by Broker-Dealer or General Agent to an individual customer
complaint will be sent to First Penn-Pacific and Distributor for approval
not less than five (5) business days prior to it being sent to the
customer, except that if a more prompt response is required, the proposed
response may be communicated by telephone, facsimile or in person.
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<PAGE>
11. INDEMNIFICATION
a. Broker-Dealer and General Agent, jointly and severally, shall indemnify and
hold harmless First Penn-Pacific, Distributor, and their respective
affiliates, officers, directors, employees and agents against any and all
loss, claim, damage, liability or expense (including reasonable attorneys'
fees), joint or several, insofar as such loss, claim, damage, liability or
expense arises out of or is based upon any breach of this Agreement, any
applicable law or regulation, or any applicable rule of any self-regulatory
organization, by Broker-Dealer, General Agent, and/or any of the Agents.
This indemnification will be in addition to any liability which the
Broker-Dealer and General Agent may otherwise have.
b. First Penn-Pacific and Distributor, jointly and severally, shall indemnify
and hold harmless Broker-Dealer, General Agent, and their respective
affiliates, officers, directors, employees and agents against any and all
loss, claim, damage, liability or expense (including reasonable attorneys'
fees), joint or several, insofar as such loss, claim, damage, liability or
expense arises out of or is based upon any breach of this Agreement, by
First Penn-Pacific or the Distributor. This indemnification will be in
addition to any liability which First Penn-Pacific and the Distributor may
otherwise have.
12. ASSOCIATED INSURANCE AGENCY
Broker-Dealer and General Agent represent that they are in compliance with the
terms and conditions of no-action letters issued by the staff of the SEC with
respect to non-registration as a broker-dealer of an insurance agency associated
with a registered broker-dealer. Broker-Dealer and General Agent shall notify
Distributor immediately in writing if Broker-Dealer and/or such Agency fail to
comply with any such terms and conditions and shall take such measures as may be
necessary to comply with any such terms and conditions. If General Agent is the
same person as Broker-Dealer, this Paragraph 12 does not apply, and
Broker-Dealer shall undertake all the duties, responsibilities and privileges of
General Agent under this Agreement.
13. FIDELITY BOND COVERAGE
Broker-Dealer represents that it and its directors, officers, employees, and
registered representatives are and shall be covered by a blanket fidelity bond,
issued by a reputable bonding company. This bond shall be maintained by
Broker-Dealer at Broker-Dealer's expense. Such bond shall be, at least, of the
form, type and amount required under the NASD Conduct Rules. Distributor may
require evidence, satisfactory to it, that such coverage is in force, and
Broker-Dealer shall give prompt written notice to Distributor of any
cancellation or change of coverage. Broker-Dealer assigns any proceeds received
from the fidelity bonding company to First Penn-Pacific to the extent of its
loss due to activities covered by the bond, and to Distributor to the extent of
its loss due to activities covered by the bond. Failure to secure and maintain
same shall be grounds for immediate termination of this Agreement for cause.
14. CONFIDENTIALITY
Each party to this Agreement shall maintain the confidentiality of any client
list or any other proprietary information that it may acquire in the performance
of this Agreement and shall not use such information for any purpose unrelated
to the administration of the Contracts without the prior written consent of the
other parties.
15. TERMINATION
a. Any party may terminate this Agreement without cause upon thirty days
written notice to the other party at its last known business address.
b. This Agreement will terminate automatically if Broker-Dealer or General
Agent cease to have the requisite regulatory licenses.
c. This Agreement may be terminated by First Penn-Pacific or Distributor for
cause. Termination for cause will become effective upon the mailing of a
notice of termination to Broker-Dealer's or General Agent's last known
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<PAGE>
address, if the reasons for the termination include conversion, fraud,
embezzlement or similar activity. Otherwise, a reasonable opportunity for
cure will be provided, and the termination will be effective at the end of
the cure period unless the grounds for termination have been corrected to
First Penn-Pacific's and Distributor's satisfaction.
d. This Agreement may be terminated immediately for cause upon an event of
default. Such termination shall be deemed to occur as of the date
immediately preceding the event of default. An "event of default" shall
occur when (i) the first of Broker-Dealer or General Agent files for
bankruptcy, or financial or corporate reorganization under federal or state
insolvency law, resulting in an impairment of such person's ability to
perform the services contemplated herein; or (ii) applicable laws or
regulations prohibit Broker-Dealer or General Agent from continued
marketing of the Contracts.
e. Failure of First Penn-Pacific and/or Distributor to terminate this
Agreement upon knowledge of a cause shall not constitute a waiver of the
right to terminate at a later time for such cause. If this Agreement is
terminated for cause with no opportunity to cure as described above, all
rights to compensation which might otherwise be payable under this
Agreement shall cease and Broker-Dealer's right, title and interest in and
to such commissions and compensation shall be forever barred. If the
parties litigate this provision of the Agreement, the unsuccessful litigant
shall pay to the successful litigant all costs and expenses, including
attorneys' fees and court costs, incurred by the successful litigant at
trial and on appeal.
f. No provision of this Agreement shall continue in force after any
termination, other than Paragraphs 5, 10, 11, 14, 16, and 18.
16. ASSIGNMENT
This Agreement, or any compensation due hereunder, may not be assigned by any
party except by mutual consent of all other parties.
17. AMENDMENTS
Except as stated in Paragraph 9.a., no amendment to this Agreement will be
effective unless it is in writing and signed by all the parties hereto.
18. BOOKS AND RECORDS
a. General Agent shall maintain such books and records concerning the
activities of the Agents as may be required by the appropriate insurance
regulatory agencies that have jurisdiction and that may be reasonably
required by Distributor to reflect adequately the Contracts business
processed through General Agent. Broker-Dealer represents that it maintains
and shall maintain appropriate books and records concerning the activities
of the Agents as are required by the SEC, the NASD and other agencies
having jurisdiction and that may be reasonably required by Distributor to
reflect adequately the Contracts business processed through Broker-Dealer.
General Agent and Broker-Dealer shall make such books and records available
to Distributor and/or First Penn-Pacific at any reasonable time upon
written request by Distributor or First Penn-Pacific.
b. The parties shall promptly furnish each other any reports and information
that another party may reasonably request for the purpose of meeting its
reporting and recordkeeping requirements under the insurance laws of any
state, under any applicable federal or state securities laws, rules or
regulations, or under the rules of the NASD.
19. NOTICE
a. In the event of sale, transfer or assignment or a controlling interest in
Broker-Dealer or General Agent, notice shall be provided in writing to
Distributor no less than thirty days prior to the closing date.
Page 7 of 8
<PAGE>
b. All notices to First Penn-Pacific and Distributor under this Agreement
shall be given in writing and addressed as follows:
First Penn-Pacific Securities, Inc. First Penn-Pacific Life Insurance Company
1801 South Meyers Road 1801 South Meyers Road
Oakbrook Terrace, IL 60181-5213 Oakbrook Terrace, IL 60181-5213
Attention: ___________________ Attention: ______________________________
All notices to Broker-Dealer and General Agent shall be mailed to their
respective address shown on the signature page or to such other person as
they may designate in writing. All notices shall be either hand delivered
or transmitted by certified United States mail, return receipt requested,
and shall be effective upon delivery.
20. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
21. CONSTRUCTION
This Agreement shall be subject to the provisions of the 1934 Act and, to the
extent applicable, the 1940 Act and the rules, regulations and rulings
thereunder and of the NASD, from time to time in effect, including such
exemptions from the 1940 Act as the SEC may grant, and the terms hereof shall be
interpreted and construed in accordance therewith.
22. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROKER-DEALER MASTER GENERAL AGENT
___________________________________ ___________________________________
Name Name
___________________________________ ___________________________________
Street Address Street Address
___________________________________ ___________________________________
City, State & Zip City, State & Zip
By:________________________________ By:________________________________
Title:_____________________________ Title:_____________________________
FIRST PENN-PACIFIC LIFE INSURANCE FIRST PENN-PACIFIC SECURITIES, INC.
COMPANY
By:________________________________ By:________________________________
Title:_____________________________ Title:_____________________________
Page 8 of 8
<PAGE>
EXHIBIT A
GENERAL LETTER OF RECOMMENDATION
The General Agent hereby certifies to First Penn-Pacific that all the following
requirements will be fulfilled in conjunction with the submission by General
Agent of appointment papers for all applicants to become agents of First
Penn-Pacific ("Applicants"). The General Agent will, upon request, forward proof
of compliance with same to First Penn-Pacific in a timely manner.
1. We have on file the appropriate state insurance department licensing
form and a Form U-4 which was completed by each Applicant. We have fulfilled all
the necessary investigative requirements for the registration of each Applicant
as a registered representative through our NASD member firm, and each Applicant
is presently registered as an NASD registered representative. The above
information in our files indicates no fact or condition which would disqualify
the Applicant from receiving a license, and all the findings of all
investigative information is favorable.
2. We have made a thorough and diligent inquiry and investigation relative
to each Applicant's identity, residence, business reputation, and experience and
declare that each Applicant is personally known to us, has been examined by us,
is known to be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of appointment as a variable
contract agent of First Penn-Pacific. This inquiry and background investigation
has included a credit and criminal check on each Applicant. Based upon our
investigation, we vouch for each Applicant and certify that each individual is
trustworthy, competent and qualified to act as an agent for First Penn-Pacific
and hold himself out in good faith to the general public.
3. We certify that all educational requirements have been met for the
specific state in which each Applicant is requesting a license and that all such
persons have fulfilled the appropriate examination, education and training
requirements.
4. We hereby warrant that the Applicant is not applying for a license with
First Penn-Pacific in order to place insurance chiefly or solely on his or her
life or property or on the lives, property or liability of relatives or
associates.
5. We certify that each Applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all risks
written by these Applicants, to the end that the insurance interest of the
public will be properly protected.
6. We will not permit any Applicant to transact insurance as an agent until
duly licensed and appointed by First Penn-Pacific. No Applicants have been given
a contract or furnished supplies, nor have any Applicants been permitted to
write, solicit business or act as an agent in any capacity, and they will not be
so permitted until the certificate of authority or license applied for is
received.
<PAGE>
EXHIBIT B
STATEMENT IN SUPPORT OF IMSA PRINCIPLES AND CODE
[to be inserted]
<PAGE>
EXHIBIT C
CONTRACTS AND COMPENSATION SCHEDULE
This schedule is attached to and made a part of the most current executed
Broker-Dealer and General Agent Selling Agreement (the "Agreement") between and
among First Penn-Pacific Life Insurance Company ("First Penn-Pacific"), First
Penn-Pacific Securities, Inc. ("Distributor"), ____________________
("Broker-Dealer") and _______________ ("General Agent").
The compensation for the variable life insurance and annuity products (the
"Contracts") referred to in the Agreement is as follows:
FOR FLEXIBLE PAYMENT VARIABLE UNIVERSAL LIFE INSURANCE CONTRACTS, written on
Form _______, and any variations of these forms as may be required by insurance
regulatory authorities:
1. NEW BUSINESS COMMISSION AND EXPENSE REIMBURSEMENT ALLOCATION:
[Selling Broker-Dealer shall receive commissions of __% of the initial
Payment for each Contract for which Broker-Dealer is the
broker-of-record.]
However, no compensation shall be paid on Payment received from a Contract owner
when an existing life insurance or annuity contract issued by First Penn-Pacific
on the same life has lapsed, been terminated or surrendered, been continued on a
nonforfeiture option, or been changed, modified or converted in any manner
within six months of the date of the application for the new Contract or twelve
months after the issue date of the new Contract, except to the extent that the
first year's annualized premium for the new Contract exceeds the first year's
annualized premium from the existing contract.
2. RETURN OF COMPENSATION IN SPECIFIED CIRCUMSTANCES
The following rules regarding "chargebacks" shall apply in connection with
the offer and sale of Contracts under this Agreement:
a. In the event that:
i. a Payment is returned because First Penn-Pacific rejects
the application for the Contract under which such Payment has been paid or
because the Payment, or the related application, is not timely received by
First Penn-Pacific as required herein, or a refund is made because a
purchaser exercises his or her free look right under a Contract; or
ii. within the first twelve months after the date on which a
Contract was issued, the purchaser surrenders the Contract, or otherwise
rescinds the Contract, or the Contract lapses;
then, in any such event, Broker-Dealer shall not be entitled to any compensation
with respect to such Contract, and any and all compensation previously received
by Broker-Dealer based on all Payments paid into the Contract shall be repaid to
Distributor, and Broker-Dealer shall pay any loss incurred as a result of a
Payment being returned which was not timely received or for which an application
was not timely received by First Penn-Pacific.
b. If and to the extent that any loans or partial withdrawals are
made with respect to any Contract during the first year after issuance, the
compensation due to Broker-Dealer shall be recomputed as though the amount of
the loan or partial withdrawal had never been paid as a Payment.
c. If and to the extent that a Contract is exchanged for another
contract during the first policy year of the Contract, the compensation due to
Broker-Dealer shall be recomputed as though the Contract had never been issued.
<PAGE>
Distributor shall have the right to collect from Broker-Dealer or to withhold
from future payments of compensation due to Broker-Dealer under this Agreement
an amount equal to any reduction in compensation effected by this Exhibit C, to
the extent permitted by applicable law; provided, however, that this option on
the part of Distributor shall not prevent both Distributor and Broker-Dealer or
either of them from pursuing any other means or remedies available to them to
recover such compensation. Distributor agrees to notify Broker-Dealer and
General Agent within thirty days after it receives notice from First
Penn-Pacific of any premium refund or commission chargeback. For purposes of
this Exhibit C, the payment of a death benefit pursuant to the terms of a
Contract shall not be deemed a surrender or rescission by a purchaser.
#66909
<PAGE>
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
- ------------------
A MEMBER OF LINCOLN FINANCIAL GROUP EXHIBIT 1.5(a)
- --------------------------------------------------------------------------------
Fort Wayne, Indiana
Executive Office: 1801 South Meyers Road
- Oakbrook Terrace, Illinois 60181-5214 - (630) 495-3336
Administrative Office: [ADDRESS AND TELEPHONE NUMBER WILL BE INSERTED HERE]
WE WILL PAY THE PROCEEDS of this policy to the Beneficiary upon receipt of due
proof of the Insured's death while this policy is in force. Our payment will be
subject to all of the provisions, terms and conditions of this policy.
RIGHT TO EXAMINE POLICY FOR 30 DAYS
It is important to us that you are satisfied with this policy and that it meets
with your insurance needs. If for any reason you are not satisfied, you may
return it to us within 30 days after its receipt. It may be returned to us at
the address listed above, or to our agent through whom it was purchased. If
returned, we will refund the premiums you have paid and this policy will be void
from its Issue Date.
During the 30 day period during which this policy may be returned to us, any
premium paid will be put in the Money Market Sub-Account. If this policy is not
returned, the premium payment will be processed and allocated as set forth in
this policy.
READ THIS POLICY CAREFULLY
This policy is a legal contract between you and us. It is important that you
read this policy carefully. We issued this policy at 12:01 a.m. Standard Time on
the Issue Date shown in the Policy Schedule.
Signed for First Penn-Pacific Life Insurance Company at Oakbrook Terrace,
Illinois.
/s/ Marcia L. DuMond /s/ Roland C. Baker
Secretary President
- --------------------------------------------------------------------------------
THE DOLLAR AMOUNT OF ACCOUNT VALUES PROVIDED BY THE VARIABLE ACCOUNT OF THIS
POLICY IS BASED UPON INVESTMENT EXPERIENCE AND IS NOT GUARANTEED.
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Death Benefit payable at the death of the Insured.
Flexible premiums payable during the Insured's lifetime.
Nonparticipating - No Dividends
- --------------------------------------------------------------------------------
VL-2020AA(01/00) Page 1
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
POLICY SCHEDULE...................................................3
PART 1 GENERAL PROVISIONS........................................4
PART 2. PREMIUM PROVISIONS.......................................7
PART 3. INSURANCE PROVISIONS.....................................8
PART 4. POLICY ACCOUNT VALUE.....................................9
PART 5. CREDITS AND DEDUCTIONS..................................12
PART 6. PARTIAL WITHDRAWALS AND SURRENDER.......................13
PART 7. POLICY LOAN PROVISIONS..................................14
PART 8. SETTLEMENT OPTIONS......................................15
A copy of the application is attached inside the back cover of this policy.
- --------------------------------------------------------------------------------
VL-2020AA(01/00) Page 2
<PAGE>
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
- ------------------
A MEMBER OF LINCOLN FINANCIAL GROUP
- --------------------------------------------------------------------------------
Fort Wayne, Indiana
Executive Office: 1801 South Meyers Road
- Oakbrook Terrace, Illinois 60181-5214
- (630) 495-3336
Administrative Office: [ADDRESS AND TELEPHONE NUMBER WILL BE INSERTED HERE]
POLICY SCHEDULE
INSURED: [John Doe] POLICY NUMBER: [1,234,567]
AGE AND SEX: [35 Male] ISSUE DATE: [January 1, 2000]
PREMIUM RATE CLASS: [Standard Non- Smoker]
SPECIFIED AMOUNT: [$41,525*]
INITIAL PREMIUM: [$ 10,000] PLANNED PERIODIC PREMIUM: [None]
PAYABLE: [Unscheduled]
MINIMUM SPECIFIED AMOUNT: [$41,525] GUARANTEED MINIMUM BENEFIT: [ $ 36,971]
POLICY VALUE FACTORS:
GUARANTEED INTEREST RATE: (Fixed Account) [ 4%] Per Year Compounded Yearly
PREMIUM EXPENSE CHARGE: [3.5 %] of All Premiums
MONTHLY EXPENSE CHARGE: [$ 6.00 ]
PARTIAL WITHDRAWAL CHARGE: See following page.
INTEREST CHARGED ON LOAN:
REGULAR LOAN: Equal to an Annual Rate of 8%
PREFERRED LOAN: Equal to an Annual Rate of 8%
INTEREST CREDITED TO LOAN ACCOUNT:
REGULAR LOAN: Equal to an Annual Rate of 6%
PREFERRED LOAN: Equal to an Annual Rate of 8%
ADDITIONAL BENEFITS PROVIDED BY RIDERS:
CONVALESCENT CARE BENEFITS RIDER
EXTENSION OF CONVALESCENT CARE BENEFITS RIDER
GUARANTEE ENHANCEMENT RIDER
*NOTE: THIS POLICY PROVIDES LIFE INSURANCE COVERAGE ON THE INSURED DURING THEIR
LIFETIME PROVIDED THAT THE SURRENDER VALUE IS SUFFICIENT TO COVER THE MONTHLY
DEDUCTIONS FOR THIS POLICY. YOUR INITIAL PREMIUM MAY BE INSUFFICIENT TO CONTINUE
THIS POLICY IN FORCE FOR YOUR LIFETIME.
- --------------------------------------------------------------------------------
3a
<PAGE>
- --------------------------------------------------------------------------------
POLICY SCHEDULE CONTINUED
POLICY NUMBER: [ 1234567 ]
INSURED: [John Doe]
CHARGES AND FEES ASSOCIATED WITH VARIABLE SUB-ACCOUNT(S)
A M&E charge is deducted from each Variable Sub-Account at the end of each
Valuation Period. This charge is equal to the value of each Variable Sub-Account
at the end of a Valuation Period multiplied by an annual effective rate of [1%].
Fund operating expenses may be deducted by each Fund as set forth in the
Prospectus.
TRANSFERS
TRANSFER FEE: [$ 25.00] per transfer for each transfer in excess of [12] made
during any Policy Year. A single transfer may consist of multiple transactions.
MINIMUM TRANSFER AMOUNT: The lesser of [$ 100.00] or the balance in the
Sub-Account being transfered.
TRANSFER LIMITATIONS FROM THE FIXED ACCOUNT: In addition to any other
limitations that apply to transfers from the Fixed Account to the Variable
Sub-Account(s), the amount transfered during any one Policy Year may not exceed
[25%] of the Fixed Account Value on the immediately preceding Policy
Anniversary.
SURRENDER CHARGE FOR INITIAL SPECIFIED AMOUNT
<TABLE>
<CAPTION>
END OF POLICY YEAR SURRENDER CHARGE
<S> <C>
[1-10 [$ 699.47
11 524.38
12 393.28
13 262.19
14 131.09
15 AND AFTER] 0]
</TABLE>
The Surrender Charge is level during a Policy Year and equal to the charge shown
for the end of the year. The Surrender Charge is deducted from the Net Policy
Account Value to determine the Surrender Value. There are no additional
Surrender Charges for increases in the insurance coverage.
PARTIAL WITHDRAWAL CHARGE: There is no charge for the first Partial Withdrawal
during any one Policy Year. For Partial Withdrawals in excess of one per Policy
Year, the Partial Withdrawal Charge shall be [$25.00].
- --------------------------------------------------------------------------------
3b
<PAGE>
POLICY SCHEDULE CONTINUED
Table of Guaranteed Maximum
Cost of Insurance Rates
for
Life Insurance Policy
This Table shows the Guaranteed Maximum Cost of Insurance Rates applicable to
this policy.
<TABLE>
<CAPTION>
Monthly Rate Monthly Rate Monthly Rate
Per Per Per
$1,000 $1,000 $1,000
Net Amount Net Amount at Net Amount
Age at Risk Age Risk Age at Risk
<S> <C> <C> <C> <C> <C>
30 0.12 54 0.62 78 6.88
31 0.12 55 0.69 79 7.52
32 0.13 56 0.76 80 8.22
33 0.13 57 0.83 81 9.02
34 0.14 58 0.91 82 9.92
35 0.14 59 1.01 83 10.91
36 0.15 60 1.11 84 11.99
37 0.16 61 1.22 85 13.12
38 0.17 62 1.36 86 14.30
39 0.18 63 1.51 87 15.50
40 0.20 64 1.67 88 16.72
41 0.21 65 1.86 89 17.97
42 0.23 66 2.06 90 19.29
43 0.25 67 2.27 91 20.68
44 0.27 68 2.50 92 22.22
45 0.29 69 2.76 93 24.04
46 0.31 70 3.07 94 26.50
47 0.34 71 3.40 95 30.21
48 0.36 72 3.76 96 36.36
49 0.39 73 4.19 97 47.21
50 0.43 74 4.67 98 66.21
51 0.47 75 5.18 99 83.33
52 0.51 76 5.72 100 + 00.00
53 0.56 77 6.28
</TABLE>
MORTALITY TABLE: Commissioners 1980 Standard Ordinary Smoker or Nonsmoker
Mortality Table, Age Last Birthday, Sex Distinct, with interest at the rate of
4% per year.
For a non-standard Premium Rate Class, the above table will be adjusted to
reflect any appropriate rating factors and/or any additional charges.
- --------------------------------------------------------------------------------
3c
<PAGE>
POLICY SCHEDULE CONTINUED
PERCENTAGE OF POLICY ACCOUNT VALUE TABLE
<TABLE>
<CAPTION>
Insured's Insured's Insured's
Attained Age Percentage Attained Age Percentage Attained Age Percentage
<S> <C> <C> <C> <C> <C>
30 509.31% 54 232.44% 78 131.74%
31 492.51% 55 225.59% 79 129.76%
32 476.21% 56 219.03% 80 127.89%
33 460.40% 57 212.76% 81 126.11%
34 445.10% 58 206.75% 82 124.44%
35 430.32% 59 201.00% 83 122.88%
36 416.03% 60 195.49% 84 121.43%
37 402.23% 61 190.22% 85 120.10%
38 388.93% 62 185.19% 86 118.87%
39 376.10% 63 180.40% 87 117.72%
40 363.75% 64 175.84% 88 116.65%
41 351.85% 65 171.50% 89 115.62%
42 340.40% 66 167.37% 90 114.61%
43 329.38% 67 163.45% 91 113.61%
44 318.76% 68 159.71% 92 112.58%
45 308.54% 69 156.15% 93 111.50%
46 298.70% 70 152.76% 94 110.33%
47 289.24% 71 149.53% 95 109.06%
48 280.14% 72 146.48% 96 107.72%
49 271.37% 73 143.61% 97 106.34%
50 262.94% 74 140.92% 98 105.03%
51 254.84% 75 138.40% 99 104.00%
52 247.06% 76 136.04% 100 + 100.00%
53 239.59% 77 133.83%
</TABLE>
- --------------------------------------------------------------------------------
3d
<PAGE>
- --------------------------------------------------------------------------------
POLICY SCHEDULE CONTINUED
POLICY NUMBER: [ 1234567 ]
INSURED: [John Doe]
<TABLE>
<CAPTION>
Extension of
Convalescent Care Convalescent Care
Benefits Rider Benefits Rider
DAILY MAXIMUMS -
<S> <C> <C>
Adult Day Care .................................................... [$ 56.88] [$ 56.88]
Home Health Care ................................................. [$ 56.88] [$ 56.88]
(Includes Homemaker Services, Hospice Services, Personal Care and
Respite Care. Respite Care is limited to a maximum of 21 days per
calendar year)
Nursing Home ....................................................... [$ 56.88] [$ 56.88]
(Includes Assisted Living, Alternative Care and Bed Reservation.
Bed Reservation is limited to 30 days per calendar year)
ANNUAL BENEFIT -
Care Planning Benefit........................................... [$ 500.00] [$500.00]
LIFETIME BENEFIT -
Caregiver Training Benefit...................................... [$ 500.00]
BENEFIT LIMIT - [$ 41,525.00] [$ 41,525.00]
********************************************************************************************************
Convalescent Care Benefits Rider Deductible Period.................. 90 Days
MONTHLY PREMIUM -
Convalescent Care Benefits Rider
First Monthly
Premium...................................................... [$ .53]
(Total for all covered Insureds. The Monthly Premium for
subsequent months will be determined as provided under the rider and will
be deducted from the Account Value of the policy each month.)
Extension of Convalescent Care Benefits Rider
Monthly Premium................................................. [$ 1.99]
(Total for all covered Insureds. The Monthly Premium is guaranteed not to change
and will be deducted from the Account Value of the policy each month.)
</TABLE>
Your Personal Long Term Care Advisor may be reached by calling [XXX-XXX-XXX].
- --------------------------------------------------------------------------------
3e
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------
PART 1. GENERAL PROVISIONS
- --------------------------------------------------------
DEFINITIONS. In this part, we define some of the words and phrases that we use
throughout this policy. We define other words in the provisions where they are
used.
"WE", "OUR" and "US", or "THE COMPANY" means First Penn-Pacific Life Insurance
Company.
"YOU" or "YOUR" means the Owner of this policy.
"ADMINISTRATIVE OFFICE" is the office where inquiries regarding this policy
should be directed. The address is shown on the first page of this policy. This
may be the address of a Third Party Administrator that is servicing this policy
for us.
"AGE" is the Insured's age shown in the Policy Schedule plus the number of whole
years elapsed from the Issue Date.
"DEATH BENEFIT" is the amount payable to the Beneficiary upon death of the
Insured. The Death Benefit is described under PART 3 INSURANCE PROVISIONS.
"EXECUTIVE OFFICE" is the corporate office of First Penn-Pacific Life Insurance
Company. The address is shown on the first page of this policy.
"FIXED ACCOUNT" is that part of the Policy Account Value to which interest is
credited at a rate of not less than the Guaranteed Interest Rate shown in the
Policy Schedule (See PART 4 POLICY VALUES PROVISIONS). The Fixed Account is a
part of our General Account.
"FUND" is a separate and distinct portfolio of investments held by a Variable
Sub-Account. You may allocate Net Premium Payments to a Variable Sub-Account, or
transfer amounts from one Variable Sub-Account to another Variable Sub-Account
that invests in a different Fund.
"GENERAL ACCOUNT" refers to our general assets other than those allocated to our
Separate Accounts.
"GUARANTEED INTEREST RATE" is the minimum rate of interest that we will credit
to the Fixed Account. This Guaranteed Interest Rate is shown in the Policy
Schedule.
"IN WRITING" means a written form satisfactory to us and received by us at our
Administrative Office. With respect to any notice given by us to you, or to any
assignee or other person, this term means written notice by ordinary mail to
such person at the most recent address shown in our records.
"INDEBTEDNESS" means any policy loan and any interest due on the loan that is
unpaid.
"INSURED" means the person so named in the Policy Schedule.
"ISSUE DATE" is the date from which Policy Years, Policy Months, Policy
Anniversaries, and Age are determined. The Issue Date is shown in the Policy
Schedule.
"LOAN ACCOUNT" is the account established for the amount transferred out of the
Fixed and/or Variable Sub-Account(s) as security for outstanding Indebtedness.
The Loan Account is a part of our General Account.
"MONTHLY ANNIVERSARY DAY" is the day of the month when we make the Monthly
Deduction. This day is the same day of the month as the Issue Date or the next
Valuation Day if the day that the policy was issued is not a Valuation Day or is
nonexistent for that month.
"MONTHLY DEDUCTION" is a monthly deduction made from the Policy Account Value.
This deduction includes the Cost of Insurance, an administrative expense charge
and charges for supplemental riders or benefits, if applicable (See PART 4
POLICY VALUES PROVISIONS). The first Monthly Deduction is made as of the Issue
Date. Monthly Deductions will be made thereafter on each Monthly Anniversary
Day.
"MORTALITY AND EXPENSE RISK (M&E)" is a daily charge assessed by us during each
Valuation Period for the assumption of mortality and expense risks. This charge
is expressed as a percentage of the value of the Variable Sub-Account(s). The
annual
- --------------------------------------------------------------------------------
VL-2020AA(01/00) Page 4
<PAGE>
- --------------------------------------------------------------------------------
effective M&E rate is shown in the Policy Schedule.
"NET POLICY ACCOUNT VALUE" is the Policy Account Value less the Loan Account
value.
"NET PREMIUM PAYMENT" is a premium payment after deduction of the Premium
Expense Charge shown in the Policy Schedule. This is the amount that will be
allocated to the Fixed Account and/or the Variable Sub-Account(s).
"1940 ACT" is the Investment Company Act of 1940, as amended.
"NYSE" means the New York Stock Exchange.
"POLICY ANNIVERSARY" is the anniversary of the Issue Date or the next Valuation
Day if that anniversary day is not a Valuation Day or is nonexistent for that
year.
"POLICY ACCOUNT VALUE" is the sum of the: (1) Fixed Account value, (2) Variable
Account Value, and (3) Loan Account value of this policy.
"POLICY MONTH" is a month that starts on the MONTHLY ANNIVERSARY DAY.
"POLICY YEAR" is each 12 month period, beginning on the Policy Anniversary,
during which the policy is in force.
"RIGHT-TO-EXAMINE PERIOD" is described on the first page of this policy.
"SEC" means the Securities and Exchange Commission.
"SPECIFIED AMOUNT" means the Specified Amount shown in the Policy Schedule
unless subsequently changed. The Specified Amount is chosen by the Owner and
used in determining the amount of the Death Benefit. It may be increased or
decreased as described in PART 3 INSURANCE PROVISIONS.
"SURRENDER VALUE" is the Net Policy Account Value less any Surrender Charges
shown in the Policy Schedule.
"VALUATION DAY" is any day on which the NYSE is open for business, except a day
during which trading on the NYSE is restricted or a day on which the Securities
and Exchange Commission (SEC) determined that an emergency exists or on which
the valuation or disposal of securities is not reasonably practicable, as
determined under applicable law.
If the NYSE is closed, or trading is restricted due to an emergency as defined
by the SEC so that we cannot value the Variable Sub-Account(s), or as otherwise
ordered by the SEC, we may postpone all procedures which require valuation of
the Variable Sub-Account(s) until valuation is possible. Any provision of this
policy which specifies a Valuation Day will be superseded by this emergency
procedure.
"VALUATION PERIOD" is a period beginning immediately after the close of regular
trading on the NYSE (currently 4:00 p.m. Eastern time) on each Valuation Day and
ending at the close of regular trading on the NYSE on the next succeeding
Valuation Day.
"VARIABLE ACCOUNT" is a separate account consisting of all Variable
Sub-Account(s) invested in shares of the Fund(s). Variable Account assets are
separate account assets, the investment performance of which is kept separate
from our general assets. Variable Account assets are not chargeable with our
general liabilities.
"VARIABLE ACCUMULATION UNIT" is a unit of measure used to calculate the value of
a Variable Sub-Account.
"VARIABLE SUB-ACCOUNT(S)" are divisions of the Variable Account.
THE CONTRACT. The Contract consists of:
- - This policy, including any attached amendments, endorsements and riders;
- - A copy of the original application;
- - Any subsequent application for a change to this policy;
- - Any application for reinstatement of this policy; and
- - The Policy Schedule.
We issued this policy in consideration of the original application and payment
of the first premium. All statements made in any application will, in the
absence of fraud, be deemed
- --------------------------------------------------------------------------------
VL-2020AA(01/00) Page 5
<PAGE>
- --------------------------------------------------------------------------------
representations and not warranties.
We will not use any statement in an application to void this policy or to deny a
claim unless the statement is material and a copy of the application was
attached to this policy when issued. We will not use any statement in an
application for change or reinstatement to void this policy or to deny a claim
unless the statement is material and a copy of the application was attached to
this policy when it was changed or reinstated.
POLICY MODIFICATIONS. Only our President, Vice President, or Secretary may agree
to modify this policy, and then only in writing.
OWNER. The Applicant for this policy is the Owner, unless:
- - A different person is named as the Owner in the application for this
policy; or
- - The Owner is changed in accordance with the CHANGE OF OWNER provision.
The Owner may be someone other than an Insured.
The Owner has all rights and privileges stated in this policy. The rights of the
Owner are subject to the rights of any irrevocable Beneficiary.
If the Owner dies before the Insured dies, all rights in this policy will belong
to the Contingent Owner, if any, otherwise to the estate of the Owner. Unless
changed in accordance to the CHANGE OF OWNER provision, the Contingent Owner, if
any, is named in the application for this policy.
CHANGE OF OWNER. You may transfer all of your ownership rights and privileges
in this policy to a new owner. You may also designate or change the
Contingent Owner. The request for any such designation or change must be in
writing in a form that meets our needs. The form must be signed by you and by
any irrevocable Beneficiary. The transfer will take effect when recorded by
us. Any payment or any action taken by us before the change in ownership is
recorded will be without prejudice to us. Unless otherwise provided, a change
in ownership will not affect the interest of any Beneficiary.
BENEFICIARY. The Beneficiary is the person to receive the Death Benefit. Unless
changed, the Beneficiary is the person who is named as the beneficiary in the
application for this policy.
If there are different classes of beneficiaries we may use numbered classes to
show priority so that the class with highest priority is called Class 1, the
class with next priority is called Class 2, and so on. There may be more than
one Beneficiary in a class.
If a Beneficiary dies before the Insured dies, all interest of such deceased
Beneficiary will end and be transferred to any remaining Beneficiaries in his or
her class. If there are no other beneficiaries in his or her class, then the
interest of the deceased Beneficiary will be transferred to the next lower
priority class of beneficiaries, and so on. If there are no other beneficiaries
in any beneficiary class, the interest of the deceased Beneficiary will be
transferred to you.
CHANGE OF BENEFICIARY. You may change the Beneficiary from time to time. The
request for the change must be in writing in a form that meets our needs. The
form must be signed by you and by any irrevocable Beneficiary.
A change of Beneficiary will not take effect until it is recorded in writing by
us. After it has been recorded, it will take effect as of the date the request
was signed, whether or not the Insured is then still alive. Any payment or any
action taken or allowed by us before the change of Beneficiary is recorded will
be made without prejudice to us.
SUICIDE. If the Insured commits suicide, while sane or insane, within 2 years
from the Issue Date, our total liability will be the premiums paid prior to
death, less any debt and any prior Partial Withdrawals and less the costs of any
riders.
If the Insured commits suicide, while sane or insane, within 2 years from the
effective date of any increase in insurance or any reinstatement, our total
liability with respect to such increase will be its costs and with respect to a
reinstatement will be the premiums paid since the reinstatement.
MISSTATEMENT OF AGE OR SEX. If the Insured's stated age or sex or both are not
correct, we will adjust the Proceeds to be paid to reflect the correct
information. The Death Benefit will be the amount that would have been purchased
by the most recent Cost of Insurance at the correct age and sex. The Cost of
Insurance is described in PART 5 CREDITS
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AND DEDUCTIONS.
If the misstatement is discovered prior to the death of the Insured, we will
base future calculations of the Policy Account, the Surrender Value, premiums
and the death benefit factors on the correct information.
INCONTESTABILITY. This policy will be incontestable after it has been in force,
during the lifetime of the Insured, for 2 years.
Any increase in coverage that takes effect after the Issue Date or any
reinstatement shall be incontestable only after such increase or reinstatement
has been in force, during the lifetime of the Insured, for 2 years from its
effective date.
A contest of an increase in Specified Amount or a reinstatement will be based on
material misrepresentations in the application for such increase or
reinstatement.
ASSIGNMENT. We will not honor any assignment unless we receive it, or a copy of
it, at our Administrative Office. We shall not assume the responsibility of
determining that the assignment is valid or sufficient.
This policy may not be assigned to another insurance company or to any employee
benefit plan without our consent. This policy may not be assigned if such
assignment would violate any Federal, state or local law or regulation
prohibiting sex distinct rates for insurance.
The interest of any Beneficiary will be subject to the rights of any Assignee on
record.
ELECTIONS, DESIGNATIONS, CHANGES AND REQUESTS. All elections, designations,
changes and requests must be in writing and will become effective only after we
have approved them. We reserve the right to require the policy to be returned to
our Administrative Office for the endorsement of any change.
ANNUAL REPORT. We will send you a report at least once a year. It will show:
- - The current Death Benefit;
- - The current Fixed Account value;
- - The current Policy Account Value;
- - The current Variable Account Value;
- - The current Loan Account value;
- - The current Variable Sub-Account(s) values;
- - The premium payments made since the last report;
- - The withdrawals made since the last report;
- - The policy loans and accrued interest;
- - The current Surrender Value;
- - The current premium allocation; and
- - The kind and amounts of the credits to, and the deductions from, the Policy
Account since the last report.
The report will also include any other data that may be currently required by
the state where this policy was delivered.
NONPARTICIPATING. This policy does not share in any distribution of surplus. No
dividends are payable.
TERMINATION. All coverage under this policy will terminate at the earliest of
the following dates or events:
- - You request that the coverage terminate;
- - The Insured dies;
- - The grace period ends; or
- - The policy is surrendered.
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PART 2. PREMIUM PROVISIONS
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PAYMENT OF PREMIUMS. The Initial Premium is due on the Issue Date and is payable
in advance. The Initial Premium must be paid at our Administrative Office or to
one of our authorized representatives. If paid to an authorized representative
it must be paid in exchange for a receipt signed by the representative.
This policy will not take effect until it has been delivered to you and the
Initial Premium has been received by us at our Administrative Office while the
Insured is alive and prior to any change in his or her health as shown in the
application.
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All subsequent Planned Periodic Premiums, if any, are payable at our
Administrative Office. The amount and the frequency of any Planned Periodic
Premium payments are shown in the Policy Schedule. We will send you a receipt
upon request.
We will also send premium payment reminder notices to you upon written request.
Notices may be sent annually, semi-annually or quarterly. Monthly premium
payments may only be made under our special premium payment plan.
PREMIUM PAYMENT CHANGES. You may change the frequency or the amount of the
Planned Periodic Premium payments. We reserve the right to limit the frequency
of the payments and the amount of any increase.
You may send us additional premium payments at any time during the continuance
of this policy. We reserve the right to limit the number and the amount of the
additional premium payments.
GRACE PERIOD. This policy will enter the Grace Period if at the beginning of the
Policy Month:
- - The Loan Account value of this policy is greater than the Surrender Value;
or
- - The Surrender Value is less than the Monthly Deduction for that Policy
Month.
If either occurs, this policy will enter the 61 day Grace Period. We will then
mail you, and any Assignee shown in our records, a notice stating the amount we
will need to keep this policy in force. The notice will be mailed at least 30
days before the end of the Grace Period. This policy will remain in force during
this period. If the premium is not paid by the end of the 61 day Grace Period,
this policy will terminate as of the date that the Surrender Value becomes
totally exhausted.
CONTINUATION OF INSURANCE. This policy will stay in force:
- - If the Surrender Value is sufficient to cover the Monthly Deduction each
month; and
- - If it has not lapsed as described in the GRACE PERIOD provision.
REINSTATEMENT. If this policy lapses as described in the GRACE PERIOD provision,
you may reinstate it. To reinstate this policy, you must send the following to
our Administrative Office within 5 years after the date of lapse:
- - Evidence of insurability, acceptable to us, that the Insured is insurable
in the same Premium Class that was applicable on the date of lapse; and
- - Payment of the premium that was due and unpaid on the date of lapse plus an
amount that is sufficient to keep this policy from entering a Grace Period
for at least 2 months.
The effective date of the reinstatement will be the Monthly Anniversary Day that
falls on, or next follows, the date that we approve the reinstatement.
The Policy Account Value on the date of reinstatement will be the amount
provided by the premium paid at reinstatement.
The Surrender Charge on the date of reinstatement will be an amount not greater
than the Surrender Charge on the date of termination. The Owner will be notified
of the Surrender Charges to be applicable upon reinstatement.
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PART 3. INSURANCE PROVISIONS
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PROCEEDS. Proceeds means the amount payable: (1) on the surrender of this
policy; or (2) at the death of the Insured.
The Proceeds payable at the death of the Insured will be the policy Death
Benefit, less any debt. The Proceeds payable on the death of any person insured
by rider will be as provided in the rider.
If this policy is surrendered the Proceeds shall be the Surrender Value.
The Proceeds payable are subject to the MISSTATEMENT OF AGE OR SEX,
INCONTESTABILITY and SUICIDE provisions.
PROCEEDS PAYABLE AT DEATH. The Proceeds payable at death shall be the Death
Benefit; described below, less:
- - The Loan Account value, if any, on the date of death; and
- - The unpaid interest, if any, on any Policy Loan
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to the end of the Policy Month of death.
If this policy is in the Grace Period, the Monthly Deduction needed to keep this
policy in force until the end of the Policy Month of death will be deducted from
the Proceeds.
Any premiums received after we have taken the Monthly Deductions for the Policy
Month of death will be refunded with the Proceeds.
INTEREST ON DEATH PROCEEDS. If the Proceeds payable at death are not paid or
applied under a Settlement Option within 30 days after the receipt of the due
proof of death, we will pay interest on the Proceeds at the rate of 3-1/2% per
year or at the rate required by law, whichever is greater.
DEATH BENEFIT. The Death Benefit is equal to the greater of:
- - The Specified Amount as of the date of death; or
- - The Minimum Death Benefit.
MINIMUM DEATH BENEFIT. The Minimum Death Benefit is equal to a percentage of the
Policy Account Value. This percentage is shown in the Percentage of Policy
Account Value Table and is based upon the Insured's age on the date of death.
The Percentage of Policy Account Value Table is shown in the Policy Schedule.
CHANGES IN THE SPECIFIED AMOUNT. You may request a change in the Specified
Amount. Your request must be in writing and will be subject to our approval. No
change will be allowed if:
- - The Insured is not living on the effective date of the change; or
- - This policy is in the Grace Period.
The changes are subject to the following provisions.
1. INCREASES IN THE SPECIFIED AMOUNT. To increase the Specified Amount, you
must provide us with evidence of the Insured's insurability, satisfactory
to us.
The increase will take effect on the Monthly Anniversary Day that falls on,
or next follows, the date of our approval. We will notify you when the
change has been made.
2. DECREASES IN THE SPECIFIED AMOUNT. A decrease will be applied in the
following order:
- First, to reduce the amount provided by the most recent increase;
- Next, to reduce the next most recent increases successively; and
- Finally, to reduce the initial Specified Amount.
The Specified Amount after the decrease cannot be less than the Minimum
Specified Amount shown in the Policy Schedule.
The decrease will take effect on the Monthly Anniversary Day that falls on,
or next follows, the date of our approval. We will notify you when changes
have been made.
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PART 4. POLICY ACCOUNT VALUE
- --------------------------------------------------------
POLICY ACCOUNT VALUE. The Policy Account Value, at any point in time, equals the
sum of:
- - The Fixed Account value;
- - The Variable Account Value; and
- - The Loan Account value.
The Policy Account Value reflects: (a) Net Premium payments credited, (b) Any
Partial Withdrawals and withdrawal charges, (c) any increases or decreases in
the Variable Sub-Account(s), (d) interest credited to the Fixed Account, (e)
interest credited to the Loan Account, and (f) all expenses and fees specified
in this policy.
FIXED ACCOUNT. The Fixed Account refers to the policy value to which interest is
credited at a rate not less than the Guaranteed Interest Rate shown in the
Policy Schedule. The Fixed Account value, at any one point in time, is equal to:
- - The Net Premiums allocated to the Fixed Account; plus
- - The amounts (net of any charges), if any, transferred into the Fixed
Account; plus
- - The interest credited to the Fixed Account; less
- - The portion of the Monthly Deductions deducted from the Fixed Account; less
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- - Any Partial Withdrawals, including withdrawal charges, or transfers from
the Fixed Account.
INTEREST CREDITED TO FIXED ACCOUNT. We will credit interest to the Fixed Account
daily. The interest will be at a rate which is the greater of:
- - A compounded daily equivalent of the Guaranteed Interest Rate shown in the
Policy Schedule; or
- - A different interest rate determined by us from time to time. We will
determine this rate on a prospective basis.
LOAN ACCOUNT. The Loan Account is an account established for amounts transferred
out of the Fixed Account and/or the Variable Sub-Account(s) as security for
outstanding Indebtedness. The Loan Account is a part of our General Account.
(See PART 7 POLICY LOAN PROVISIONS).
INTEREST RATE CREDITED TO LOAN ACCOUNT. We will credit interest to the Loan
Account daily. The annual equivalents of the daily interest rates credited to
the Loan Account for amounts attributed to Regular Loans and Preferred Loans are
shown in the Policy Schedule.
VARIABLE ACCOUNT. The variable benefits of this policy are provided through the
Variable Account. The Variable Account is registered with the SEC as a unit
investment trust under the 1940 ACT.
VARIABLE SUB-ACCOUNT(S). The assets of the Variable Account are divided among
Variable Sub-Account(s) that are listed in the current Prospectus that you have
received. Each Variable Sub-Account invests exclusively in shares of a
corresponding Fund. Any income, dividends, and gains distributed from the shares
of the Fund will be reinvested in additional shares of that Fund at its Net
Asset Value per Share.
VARIABLE ACCOUNT VALUE. The Variable Account Value of this policy, if any, for
any Valuation Period, is equal to the sum of your interest in all Variable
Sub-Account(s). The value of your interest in each Variable Sub-Account is
determined by multiplying the number of Variable Accumulation Units, if any,
credited or debited to this policy by the Variable Accumulation Unit Value of
the particular Variable Sub-Account for such Valuation Period. The Variable
Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
VALUATION OF ASSETS. Assets of Funds held by each Variable Sub-Account will be
valued at their Net Asset Value per Share on each Valuation Date. The Prospectus
that you have received describes each Fund and the Net Asset Value per Share of
the Fund.
VARIABLE ACCUMULATION UNIT VALUE. Premium payments or portions thereof,
allocated to each Variable Sub-Account, and the amounts transferred to each
Variable Sub-Account are converted into Variable Accumulation Units. The
Variable Accumulation Unit Value for each Variable Sub-Account, for any
Valuation Period, is determined by dividing the number of Variable Accumulation
Units for that Variable Sub-Account at the beginning of the Valuation Period by
the results of (a) minus (b), where:
(a) is the total value of Fund shares owned by the Variable Sub-Account. We
will calculate this value by multiplying the number of Fund shares owned
by the Variable Sub-Account, at the beginning of the Valuation Period, by
the Net Asset Value per Share of the Fund, at the end of the Valuation
Period, and then adding to this result any dividend or other distribution
of the Fund earned during the Valuation Period; and
(b) is the total liability of the Variable Sub-Account at the end of the
Valuation Period. Such liabilities include daily charges imposed on the
Variable Sub-Account, including any charges or credits for taxes that we
paid or reserved, for the operation of the Variable Sub-Account.
The daily charges imposed on a Variable Sub-Account for any Valuation Period are
equal to the daily M&E charge multiplied by the number of calendar days in the
Valuation Period. The M&E charge is determined by multiplying the M&E rate shown
in the Policy Schedule by the Variable Sub-Account Value. The annual effective
M&E rate is shown in the Policy Schedule.
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The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account are not chargeable with the
liabilities arising out of any other business we may conduct. We have the right
to transfer to our General Account any assets of the Variable Account that are
in excess of such reserves and other liabilities. The Assets of the Variable
Account are available to cover the liabilities of our General Account only to
the extent that the assets of the Variable Account exceed the liabilities of the
Variable Account arising under policies supported by the Variable Account.
TRANSFER PRIVILEGE. At any time while this policy is in force, other than during
the Right-to-Examine Period, you may transfer amounts among the Fixed Account
and the Variable Sub-Account(s) then available under this policy. All such
transfers are subject to the following provisions:
- - The transfer request must be in writing, unless telephone transfers have
been previously authorized in writing.
- - Transfer requests will be processed effective at the close of the Valuation
Period during which they are received at our Administrative Office.
We will not be liable for (a) any action taken in good faith pursuant to
transfer instructions given to us, or (b) the authenticity of such instructions.
A single transfer request, either in writing or by telephone, may consist of
multiple transactions.
Transfers are subject to a Transfer Fee that is described below. Transfers to
the Fixed Account will earn interest as specified in the INTEREST CREDITED TO
FIXED ACCOUNT provision. Transfers involving Variable Sub-Account(s) will
reflect the purchase or cancellation of Variable Accumulation Units having an
aggregate value equal to the dollar amount being transferred to or from a
particular Variable Sub-Account. The purchase or cancellation of such units will
be made using Variable Accumulation Unit Values of the applicable Variable
Sub-Account for the Valuation Period during which the transfer is made.
Unless otherwise changed by us to be less restrictive, transfers will be subject
to the following conditions: (a) You may request up to 12 transfers during any
Policy Year without charge, however, for each transfer request in excess of 12,
a Transfer Fee shown in the Policy Schedule may be deducted on a pro-rata basis
from the Fixed Account and/or Variable Sub-Account(s) from which the transfer is
being made; (b) The transfer from the Fixed Account to the Variable Account will
be subject to the Transfer Limitations from the Fixed Account shown in the
Policy Schedule; (c) The amount being transferred may not be less than $100
unless the entire value of the Fixed Account or the Variable Sub-Account is
being transferred; (d) Transfers between Variable Sub-Accounts or from a
Variable Sub-Account to the Fixed Account can be made at any time before the
Insured reaches age 100; (e) Transfers involving Variable Sub-Account(s) will be
subject to such additional terms and conditions as may be imposed by the Funds;
and (f) Any value remaining in the Fixed Account or a Variable Sub-Account
following a transfer may not be less than $100.
We reserve the right, at any time and without notice to any party, to terminate,
suspend, or modify any of these transfer rights if they are exercised by a
market timing firm or by any other third party authorized to initiate transfer
transactions on behalf of multiple participants. In exercising this right, we
may, among other things, refuse to accept transfer instructions from: (a) any
firm or party acting under a power of attorney on behalf of more than one policy
owner; or (b) any policy owner, who has executed a preauthorized transfer form,
that is being submitted at the same time by a market timing firm or other third
party on behalf of one or more policy owner. We shall not impose these
restrictions unless the transfers could act to the disadvantage, or potentially
impair the contract rights, of other owners of policies, in the class of
policies, to which this policy belongs.
TRANSFER AT AGE 100. Unless you and we agree otherwise, if the Insured reaches
age 100 and this policy is in force:
- - We will transfer the entire Variable Account Value, if any, to the Fixed
Account on the next Monthly Anniversary Day; and
- - We will continue to credit interest to the Fixed Account as described
above.
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This policy will then continue in force, subject to all of the provisions of
this policy, until it is surrendered or until the Death Benefit Proceeds become
payable.
CHANGES TO VARIABLE ACCOUNT(S). When permitted by law, we may:
- - Create new Variable Account(s);
- - Combine Variable Account(s);
- - Add new Sub-Account(s), combine existing Sub-Account(s) or remove existing
Sub-Account(s) from the Variable Account;
- - Make new Sub-Account(s) or make other Sub-Account(s) available to such
classes of policies as we may determine;
- - Substitute a different Fund for an existing Fund;
- - Deregister the Variable Account under the 1940 ACT if such registration is
no longer required;
- - Operate the Variable Account as a management investment company, or under
any other form permitted by law, instead of a unit investment trust under
the 1940 ACT; and
- - Make any changes to the Variable Account or its operations as may be
required by the 1940 ACT or other applicable law or regulation.
We will not make any of the above changes without the approval of the SEC and/or
the State Insurance Department of the state in which this policy was delivered,
if such approval is required by law.
The values and benefits of this policy provided by the Variable Account depend
on the investment performance of the Funds in which your selected Variable
Sub-Account(s) are invested. We do not guarantee the investment performance of
the Variable Sub-Account(s) or Funds. You bear the full investment risk for the
Net Premiums allocated or Policy Account Values transferred to the Variable
Sub-Account(s).
- --------------------------------------------------------
PART 5. CREDITS AND DEDUCTIONS
- --------------------------------------------------------
NET PREMIUMS. A Net Premium is the premium paid, less the Premium Expense Charge
shown on the Policy Schedule.
We will credit all Net Premiums received before the Allocation Date to the Money
Market Sub-Account. On the Allocation Date, we will transfer the funds from the
Money Market Sub-Account to the Fixed Account and/or the Variable Sub-Account(s)
in accordance with your instructions specified in the application.
The Allocation Date will occur no later than 10 days after the end of the 30 day
Right to Examine Period. We may delay the Allocation Date if there are any
outstanding issue requirements, that have not been met, that prevent us from
placing this policy in force.
We will credit all Net Premiums received after the Allocation Date in accordance
with your instructions specified in the application, unless we receive different
instructions from you, in writing, prior to crediting the premium. (See PART 4
POLICY VALUE PROVISIONS)
MONTHLY DEDUCTION. On each Monthly Anniversary Day, we will deduct a Monthly
Deduction from the Policy Account Value. The Monthly Deduction will be withdrawn
from the Fixed Account and/or the Variable Sub-Account(s) in the proportion that
the balances invested in such Fixed Account and/or Variable Sub-Account(s) bear
to the Policy Account Value as of the date on which the deduction is made,
unless otherwise agreed upon in writing between you and us. The Monthly
Deduction for each Policy Month will be:
- - The Cost of Insurance for this policy and any optional benefit riders
attached to this policy, and
- - The Monthly Expense Charge shown in the Policy Schedule.
TAXES: At the present time, local, state and federal tax liabilities
attributable to the operations of the
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Fixed Account or Variable Account(s) are not significant. Accordingly we
currently do not impose a separate charge for them. If, however, these tax
liabilities increase, we may impose a charge for those tax liabilities
attributable to the Fixed Account or the Variable Account(s).
COST OF INSURANCE. The Cost of Insurance is determined monthly. Such cost is
calculated as (a), multiplied by the result of (b) minus (c), where:
(a) is the Cost of Insurance Rate as described in the COST OF INSURANCE RATES
provision,
(b) is the Death Benefit at the beginning of the policy month, divided by
1.0032737, and
(c) is the Policy Account Value at the beginning of the policy month prior to
the deduction for the monthly Cost of Insurance.
COST OF INSURANCE RATES. We will determine the current monthly Cost of Insurance
Rates, but the rates will never be more than the rates shown in the Table of
Guaranteed Maximum Cost of Insurance Rates. The rates will be based upon the
Insured's age, sex and premium rate class. For the Specified Amount at issue,
the premium rate class is shown in the Policy Schedule. For each increase in the
Specified Amount, the premium rate class applicable to the increase will apply.
The premium rate class applicable to the most recent increase will apply to any
increase in Death Benefit that is a result of the application of the MINIMUM
DEATH BENEFIT provision.
We may change the Cost of Insurance Rates from time to time but they will never
be more than the rates shown in the Table of Guaranteed Maximum Cost of
Insurance Rates. Any change will be made on a uniform basis for all Insureds of
the same age, sex and premium rate class.
BASIS OF COMPUTATION. The Cost of Insurance Rates are based on the 1980
Commissioners Standard Ordinary Male Smokers and Nonsmokers Mortality Table (Age
Last Birthday) or on the 1980 Commissioners Standard Ordinary Female Smokers and
Nonsmokers Mortality Table (Age Last Birthday).
All policy values are at least equal to that required by the jurisdiction in
which this policy is delivered. Where required, a detailed statement of the
method of computing values has been filed with the insurance supervisory
official of that jurisdiction.
- --------------------------------------------------------
PART 6. PARTIAL WITHDRAWALS AND SURRENDER
- --------------------------------------------------------
PARTIAL WITHDRAWAL. You may withdraw part of the Policy Account Value on any
Valuation Day, during the lifetime of the Insured, and while this policy is in
force. A Partial Withdrawal must be requested in writing, unless telephone
Partial Withdrawals have been previously authorized in writing.
The Policy Account Value and the Specified Amount will be reduced by the amount
of the Partial Withdrawal. A Partial Withdrawal Charge will be deducted from
each Partial Withdrawal. The Partial Withdrawal Charge is shown on the Policy
Schedule.
A Partial Withdrawal may not be made:
- - If the amount is less than $500.00;
- - If it would reduce the Policy Account Value below $500.00; or
- - If it would cause the Specified Amount to decline below the Minimum
Specified Amount shown in the Policy Schedule.
The amount of the Partial Withdrawal and the Partial Withdrawal Charge will be
withdrawn from the Fixed Account and/or Variable Sub-Account(s) in proportion to
the balances invested in such accounts. Any withdrawal from a Variable
Sub-Account will result in the cancellation of Variable Accumulation Units which
have an aggregate value on the date of the surrender equal to the total amount
by which the Variable Sub-Account is reduced. The cancellation of such units
will be based on the Variable Accumulation Unit Value of the Variable
Sub-Account determined at the close of the Valuation Period during which the
withdrawal is made.
When a Partial Withdrawal Charge is deducted, the Surrender Charges then in
effect will be reduced by a proportion equal to (a) divided by (b), where:
(a) is the Partial Withdrawal Charge levied; and
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(b) is the Surrender Charge then in effect for the applicable policy year.
We will pay Partial Withdrawals from Variable Sub-Account(s) within 7 days after
our receipt of your request. However, we may defer our payment under certain
circumstances as described in "VALUATION DAY" on page 5. Additionally, we
reserve the right to defer payments from the Fixed Account for the period
permitted by law, but not for more than 6 months.
SURRENDER. You may surrender this policy for its Surrender Value on any
Valuation Day, during the lifetime of the Insured, and while this policy is in
force. The surrender will take effect on the business day we receive the request
for the surrender, in writing, together with the policy.
We will pay Surrender Value from Variable Sub-Account(s) within 7 days after our
receipt of your request. However, we may defer our payment under certain
circumstances as described in "VALUATION DAY" on page 5. Additionally, we
reserve the right to defer payments from the Fixed Account for the period
permitted by law, but not for more than 6 months.
SURRENDER VALUE. The Surrender Value will be the Net Policy Account Value less
any Surrender Charges shown in the Policy Schedule.
We will pay the Surrender Value in a lump sum or as provided under PART 8
SETTLEMENT OPTIONS.
- --------------------------------------------------------
PART 7. POLICY LOAN PROVISIONS
- --------------------------------------------------------
GENERAL. We will grant a loan if this policy has a Surrender Value provided:
- - a written loan agreement is executed; and
- - a satisfactory assignment of the policy is made to us.
This policy will be the sole security for the loan. The amount of the loan with
interest may not exceed the Surrender Value as of the date of the policy loan.
We reserve the right to postpone loans from Variable Sub-Account(s), except to
pay premiums to us, for up to 7 days. However, we may defer our payment under
certain circumstances as described in "VALUATION DAY" on page 5. Additionally,
we reserve the right to postpone loans from the Fixed Account, for the period
permitted by law, but not for more than 6 months.
The minimum loan amount is $500. We reserve the right to modify this amount in
the future. We will withdraw the amount of any loan from the Fixed Account
and/or Variable Sub-Account(s) in the proportion that the value of each such
account bears to the Net Policy Account Value, unless you instruct us otherwise
in writing. We will transfer an amount equal to the loan amount into the Loan
Account which is described in PART 4 POLICY VALUE PROVISIONS.
We will charge daily interest on the loan at the rate shown in the Policy
Schedule. The interest will be due at the end of each Policy Month. Any interest
due and not paid will be added to your total Indebtedness and will bear interest
in the same manner as the loan. In addition, if you do not pay the loan interest
when due, on the first Valuation Day of the next Policy Month we will transfer
to the Loan Account an amount equal to the difference between your total
Indebtedness and your Loan Account Value. We will take these transfers pro rata
from the Fixed Account and/or the Variable Sub-Account(s).
REGULAR LOAN. Until this policy is eligible for a Preferred Loan, any
Indebtedness will be treated as a Regular Loan. On Regular Loans, we will charge
daily interest at the Regular Loan Interest Rate shown in the Policy Schedule.
PREFERRED LOAN. After this policy becomes eligible for a Preferred Loan, any
Indebtedness, up to the maximum amount available for Preferred Loans, will be
treated as a Preferred Loan. On a Preferred Loan, we will charge daily interest
at the Preferred Loan Rate shown in the Policy Schedule.
The maximum amount available for Preferred Loans during any Policy Year is the
policy gain on the immediately preceding Monthly Anniversary Day. The policy
gain is the Policy Account Value minus the premiums paid for this policy. Any
loan amount in excess of this policy gain will be treated as a Regular Loan
subject to the interest charged on Regular Loan. A Preferred Loan will reduce
the
- --------------------------------------------------------------------------------
VL-2020AA(01/00) Page 14
<PAGE>
- --------------------------------------------------------------------------------
amount available as a Regular Loan.
LOAN REPAYMENT. The loan may be repaid at any time during the lifetime of the
Insured; however, the minimum loan repayment is $100 or the balance of the
outstanding loan, if less. Any loan repayment will reduce the Loan Account value
by the amount of such repayment. Such repayment, other than an interest
repayment, will be allocated to the Fixed Account and/or Variable Sub-Account(s)
in the same proportion in which Net Premium Payments are currently allocated,
unless the Owner and we agree otherwise in writing.
IMPACT OF LOAN ON POLICY. A policy loan, whether or not repaid, will have a
permanent effect on the Policy Account Value and on the Proceeds payable under
this policy at time of settlement. The amount transferred from the Variable
Sub-Account(s) as a result of a loan does not participate in the investment
experience of the Variable Sub-Account(s). Any policy loan will reduce the
Proceeds payable under this policy at time of settlement. A policy loan reduces
the current Net Policy Account Value while repayment of a loan will cause an
increase in the current Net Policy Account Value.
- --------------------------------------------------------
PART 8. SETTLEMENT OPTIONS
- --------------------------------------------------------
PAYEE DEFINED. In this part, the word "PAYEE" means a person who has a right to
receive the Proceeds of this policy. Such a person may be an Insured, the Owner
or a Beneficiary.
CHOOSING AN OPTION. A Payee may choose an option for any of the Proceeds that
become payable to him or her in one sum.
In some cases, a Payee will need our consent to choose an option. We describe
these cases under the CONDITIONS provision.
OPTIONS DESCRIBED. Here are the options we offer. We may also consent to other
arrangements.
OPTION A - PAYMENTS FOR A FIXED NUMBER OF YEARS. We will pay the Proceeds in
equal monthly payments for the number of months chosen. The amount of the
monthly payments will be determined from the Option A Table.
The Option A Table is based on a guaranteed interest rate of 4% per year
compounded annually.
OPTION B - LIFE INCOME WITH A GUARANTEED MINIMUM PAYMENT PERIOD. We will pay the
Proceeds in equal monthly payments for as long as the Payee lives. If the Payee
dies before we pay the Guaranteed Minimum Payment, we will continue to pay the
monthly payment until the Guaranteed Minimum Payment has been paid. The
Guaranteed Minimum Payment and the amount of each payment will be determined
from the Option B Table and will be based on the Payee's age and sex.
The age shown in the Option B Table will be the Payee's age, last birthday,
on the date of the first payment. The Option B Table is based on a guaranteed
interest rate of 4% per year compounded annually.
OPTION C - PROCEEDS LEFT ON DEPOSIT. We will retain the Proceeds on deposit
while the Payee is alive. We will pay interest on this deposit at a rate of not
less than 4% per year compounded annually.
OPTION D - PAYMENTS OF FIXED AMOUNT UNTIL PROCEEDS ARE EXHAUSTED. We will pay
the Proceeds in equal payments until the Proceeds and interest are exhausted.
The payment amounts must be at least $ 120 per year per $ 1,000 of Proceeds
retained. Interest will be payable at a rate of not less than 4% per year
compounded annually.
ADDITIONAL OPTIONS. The Proceeds may be applied under any other Settlement
Option which may be agreed upon between the Payee and us.
FIRST PAYMENT DUE DATE. Unless a different date is stated when the option is
chosen:
- - the first interest payment for Option C will be due at the end of the
chosen payment interval; and
- - the first payment for any of the other options will be due on the date the
option takes effect.
EXCESS INTEREST. We may, from time to time, pay or credit interest, in excess to
the interest guaranteed under the Settlement Options. The amount of the excess
interest, if any, will be determined by us.
PROOF PAYEE IS ALIVE. We shall have the right to require satisfactory proof that
the Payee is alive prior to making any payment. In this case, the
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VL-2020AA(01/00) Page 15
<PAGE>
- --------------------------------------------------------------------------------
payment will not be due until we receive the required proof.
PROOF OF AGE. We shall have the right to require satisfactory proof of the
Payee's age prior to making any payment which is based upon the Payee's age.
DEATH OF PAYEE. Unless otherwise provided in the election of the Settlement
Option or by subsequent change, upon receipt of proof of the Payee's death, we
will pay to the Payee's estate, in one sum:
- - the commuted value of any remaining unpaid payments under Options A or B.
(The commuted value will be based upon yearly interest of 4% compounded
annually); or
- - any unpaid balance left with us under Options C or D, plus any unpaid
interest.
CONDITIONS. Under any of these conditions, our consent is needed for the Payee
to choose or change an option:
- - The Payee is not a natural person who will be paid in his or her own right;
- - The Payee is an Assignee;
- - The amount to be held for the Payee under Option C is less than $ 2,500; or
- - Each payment to the Payee under the option would be less than $50.
- --------------------------------------------------------------------------------
VL-2020AA(01/00) Page 16
<PAGE>
- --------------------------------------------------------------------------------
SETTLEMENT OPTIONS (CONTINUED)
FOR MALES
AMOUNT OF PAYMENT FOR EACH $1,000 OF PROCEEDS APPLIED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
OPTION A TABLE OPTION B TABLE
- -----------------------------------------------------------------------------------------------------------------------------
AMOUNT OF MONTHLY PAYMENTS
PAYABLE FOR LIFETIME WITH
GUARANTEED MINIMUM PAYMENT
AMOUNT OF ----------- ----------- ----------- ----------- ----------- ----------- ---------- ------------
NUMBER OF MONTHLY Payee's 120 180 240 Payee's 120 180 240
YEARS PAYABLE PAYMENT Age Months Months Months Age Months Months Months
- -------------- --------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.84 10* $3.58 $3.58 $3.58 50 $5.05 $4.94 $4.81
2 43.25 11 3.60 3.59 3.59 51 5.12 5.01 4.86
3 29.40 12 3.61 3.61 3.60 52 5.21 5.08 4.92
4 22.47 13 3.62 3.62 3.62 53 5.29 5.16 4.98
5 18.32 14 3.64 3.64 3.63 54 5.38 5.23 5.03
6 15.56 15 3.65 3.65 3.65 55 5.48 5.31 5.09
7 13.59 16 3.67 3.67 3.66 56 5.58 5.39 5.15
8 12.12 17 3.69 3.68 3.68 57 5.68 5.47 5.21
9 10.97 18 3.71 3.70 3.70 58 5.79 5.56 5.27
10 10.06 19 3.72 3.72 3.71 59 5.90 5.64 5.33
11 9.31 20 3.74 3.74 3.73 60 6.02 5.73 5.39
12 8.69 21 3.76 3.76 3.75 61 6.14 5.83 5.45
13 8.17 22 3.78 3.78 3.77 62 6.27 5.92 5.50
14 7.72 23 3.81 3.80 3.79 63 6.41 6.01 5.56
15 7.34 24 3.83 3.82 3.82 64 6.55 6.11 5.61
16 7.00 25 3.85 3.85 3.84 65 6.70 6.21 5.66
17 6.71 26 3.88 3.87 3.86 66 6.85 6.30 5.71
18 6.44 27 3.91 3.90 3.89 67 7.01 6.40 5.75
19 6.21 28 3.93 3.93 3.91 68 7.17 6.49 5.79
20 6.00 29 3.96 3.96 3.94 69 7.34 6.58 5.83
21 5.81 30 3.99 3.99 3.97 70 7.51 6.67 5.87
22 5.64 31 4.03 4.02 4.00 71 7.69 6.76 5.89
23 5.49 32 4.06 4.05 4.03 72 7.87 6.84 5.92
24 5.35 33 4.10 4.08 4.06 73 8.05 6.91 5.94
25 5.22 34 4.13 4.12 4.10 74 8.23 6.98 5.96
35 4.17 4.16 4.13 75 8.41 7.05 5.97
36 4.22 4.20 4.17 76 8.58 7.11 5.98
37 4.26 4.24 4.20 77 8.76 7.16 5.99
38 4.31 4.28 4.24 78 8.92 7.20 5.99
39 4.35 4.33 4.28 79 9.08 7.23 6.00
40 4.40 4.37 4.32 80 9.23 7.26 6.00
41 4.46 4.42 4.37 81 9.37 7.28 6.00
42 4.51 4.47 4.41 82 9.50 7.30 6.00
43 4.57 4.52 4.46 83 9.62 7.31 6.00
44 4.63 4.58 4.50 84# 9.72 7.32 6.00
45 4.69 4.63 4.55
46 4.76 4.69 4.60
47 4.83 4.75 4.65
48 4.90 4.81 4.70
49 4.97 4.88 4.75
- -------------- --------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- ------------
</TABLE>
* Ages 10 and Under # Ages 84 and over.
- --------------------------------------------------------------------------------
VL-2020AA(01/00) Page 17
<PAGE>
- --------------------------------------------------------------------------------
SETTLEMENT OPTIONS (CONTINUED)
FOR FEMALES
AMOUNT OF PAYMENT FOR EACH $1,000 OF PROCEEDS APPLIED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
OPTION A TABLE OPTION B TABLE
- -----------------------------------------------------------------------------------------------------------------------------
AMOUNT OF MONTHLY PAYMENTS
PAYABLE FOR LIFETIME WITH
GUARANTEED MINIMUM PAYMENT
AMOUNT OF ----------- ----------- ----------- ----------- ----------- ----------- ---------- ------------
NUMBER OF MONTHLY Payee's 120 180 240 Payee's 120 180 240
YEARS PAYABLE PAYMENT Age Months Months Months Age Months Months Months
- -------------- --------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.84 10* $3.51 $3.51 $3.51 50 $4.65 $4.61 $4.55
2 43.25 11 3.52 3.52 3.52 51 4.72 4.67 4.60
3 29.40 12 3.53 3.53 3.53 52 4.79 4.74 4.66
4 22.47 13 3.54 3.54 3.54 53 4.87 4.80 4.72
5 18.32 14 3.55 3.55 3.55 54 4.94 4.87 4.78
6 15.56 15 3.57 3.57 3.56 55 5.03 4.95 4.84
7 13.59 16 3.58 3.58 3.58 56 5.11 5.02 4.90
8 12.12 17 3.59 3.59 3.59 57 5.20 5.10 4.97
9 10.97 18 3.61 3.60 3.60 58 5.30 5.19 5.03
10 10.06 19 3.62 3.62 3.62 59 5.40 5.28 5.10
11 9.31 20 3.64 3.63 3.63 60 5.51 5.37 5.17
12 8.69 21 3.65 3.65 3.65 61 5.62 5.46 5.24
13 8.17 22 3.67 3.67 3.66 62 5.74 5.56 5.31
14 7.72 23 3.68 3.68 3.68 63 5.86 5.66 5.38
15 7.34 24 3.70 3.70 3.70 64 6.00 5.77 5.44
16 7.00 25 3.72 3.72 3.71 65 6.14 5.87 5.51
17 6.71 26 3.74 3.74 3.73 66 6.29 5.98 5.57
18 6.44 27 3.76 3.76 3.75 67 6.45 6.10 5.63
19 6.21 28 3.78 3.78 3.77 68 6.62 6.21 5.69
20 6.00 29 3.81 3.80 3.79 69 6.80 6.32 5.74
21 5.81 30 3.83 3.82 3.82 70 6.98 6.43 5.78
22 5.64 31 3.85 3.85 3.84 71 7.18 6.54 5.82
23 5.49 32 3.88 3.87 3.87 72 7.37 6.64 5.86
24 5.35 33 3.91 3.90 3.89 73 7.58 6.74 5.89
25 5.22 34 3.94 3.93 3.92 74 7.78 6.83 5.91
35 3.97 3.96 3.95 75 7.99 6.91 5.93
36 4.00 3.99 3.98 76 8.20 6.98 5.95
37 4.03 4.02 4.01 77 8.40 7.05 5.96
38 4.07 4.06 4.04 78 8.59 7.10 5.97
39 4.10 4.09 4.07 79 8.78 7.15 5.98
40 4.14 4.13 4.11 80 8.96 7.19 5.99
41 4.18 4.17 4.14 81 9.12 7.22 5.99
42 4.22 4.21 4.18 82 9.26 7.25 5.99
43 4.27 4.25 4.22 83 9.39 7.27 6.00
44 4.32 4.29 4.26 84# 9.50 7.28 6.00
45 4.36 4.34 4.31
46 4.42 4.39 4.35
47 4.47 4.44 4.40
48 4.53 4.50 4.44
49 4.59 4.55 4.49
- -------------- --------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- ------------
</TABLE>
* Ages 10 and Under # Ages 84 and over.
- --------------------------------------------------------------------------------
VL-2020AA(01/00) Page 18
<PAGE>
- --------------------------------------------------------------------------------
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
------------------
A MEMBER OF LINCOLN FINANCIAL GROUP
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Death Benefit payable at the death of the Insured.
Flexible premiums payable during the Insured's lifetime.
Nonparticipating - No Dividends
- --------------------------------------------------------------------------------
<PAGE>
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
- ------------------
A MEMBER OF LINCOLN FINANCIAL GROUP
EXHIBIT 1.5(b)
- --------------------------------------------------------------------------------
Fort Wayne, Indiana
Executive Office: 1801 South Meyers Road
- Oakbrook Terrace, Illinois 60181-5214 - (630) 495-3336
Administrative Office: [ADDRESS AND TELEPHONE NUMBER WILL BE INSERTED HERE]
CONVALESCENT CARE BENEFITS RIDER
THIS RIDER PREPAYS THE DEATH BENEFIT PROVIDED BY THE POLICY TO COVER ADULT DAY
CARE, ASSISTED LIVING FACILITY CARE, ALTERNATIVE CARE, BED RESERVATION,
CAREGIVER TRAINING, HOME HEALTH CARE, HOMEMAKER SERVICES, HOSPICE
SERVICES, NURSING HOME CARE, PERSONAL CARE AND RESPITE CARE
EXPENSES. THIS PREPAYMENT WILL BE MADE AT YOUR OPTION AND
WILL BE SUBJECT TO ALL OF THE CONDITIONS STATED IN THIS RIDER.
TAXATION: THIS RIDER IS INTENDED TO BE A QUALIFIED LONG-TERM CARE INSURANCE
CONTRACT UNDER SECTION 7702B(B) OF THE INTERNAL REVENUE CODE.
CAUTION: WE ISSUED THIS RIDER BASED ON YOUR AND THE INSURED'S ANSWERS TO THE
QUESTIONS ON YOUR APPLICATION. A COPY OF YOUR APPLICATION IS ENCLOSED. IF YOUR
ANSWERS OR THE INSURED'S ANSWERS ARE INCORRECT OR UNTRUE, WE MAY DENY BENEFITS
OR RESCIND THIS RIDER. THE BEST TIME TO CLEAR UP ANY QUESTION IS NOW, BEFORE A
CLAIM ARISES! IF, FOR ANY REASON, ANY OF YOUR ANSWERS OR THE INSURED'S ANSWERS
ARE INCORRECT, CONTACT US AT THE ADDRESS SHOWN ABOVE.
NOTICE TO OWNER: THIS RIDER MAY NOT COVER ALL OF THE LONG-TERM CARE EXPENSE
INCURRED BY THE INSURED DURING THE PERIOD OF COVERAGE. YOU ARE ADVISED TO
CAREFULLY REVIEW ALL POLICY AND RIDER LIMITATIONS.
RIGHT TO EXAMINE RIDER FOR 30 DAYS. If for any reason you are not satisfied, you
may return it to us within 30 days after its receipt. It may be returned to us
at the address of our Administrative Office listed above, or to our agent
through whom it was purchased. If returned, we will refund the premiums you have
paid and this rider will be void from its Issue Date.
If this rider was applied for after the effective date of the policy and if you
return it to us within 30 days after its receipt, we will credit to the Policy
Account Value of the policy any premium which may have been deducted for this
rider and this rider will be void from its Issue Date.
WE PROMISE TO PAY the benefits provided by this rider for QUALIFIED LONG-TERM
CARE SERVICES if the Insured becomes CHRONICALLY ILL while this rider is in
force. Our payment will be subject to all of the terms and conditions of this
rider.
WHO IS COVERED. This rider covers the primary Insured under the policy. It does
not cover any other person.
RENEWABILITY. This rider is guaranteed renewable. We may not cancel or reduce
coverage provided by this rider. Unless you request termination of this rider,
this rider will remain in force for as long as the policy remains in force.
PREMIUMS. We have issued this rider in consideration of the payment of the first
premium and the statements made in the application.
The monthly premium for this rider is a specified percent of the monthly charge
for the "BASIC LIFE INSURANCE". The specified percent, which will not increase,
is shown in the Policy Schedule next to the caption, "Convalescent Care Benefits
Rider Premium Percent." The BASIC LIFE INSURANCE is the amount of life insurance
provided by the policy. The method of computing the monthly charge for the BASIC
LIFE INSURANCE is explained in the policy provision entitled "Cost of
Insurance."
On each Monthly Anniversary Day, we will deduct the premium for this rider from
the Policy Account. This will be done at the same time that we deduct the
monthly charge for life insurance and other monthly charges under the policy.
- --------------------------------------------------------------------------------
VL-2802AA(01/00) Page 1
<PAGE>
- --------------------------------------------------------------------------------
EFFECTIVE DATE. If this rider is applied for in the application for the policy,
the effective date of this rider will be the Issue Date of the policy. If it is
added to the policy after the Issue Date, the effective date of this rider will
be the date we approve the supplemental application.
- --------------------------------------------------------
PART 1: DEFINITIONS
- --------------------------------------------------------
THIS PART EXPLAINS THE MEANING OF SPECIAL WORDS AND PHRASES THAT ARE USED IN
THIS RIDER. IN ADDITION, SPECIAL WORDS AND PHRASES THAT ARE USED ONLY IN
SPECIFIC PARTS OF THIS RIDER ARE DEFINED IN THOSE PARTS.
BENEFIT PERIOD means a period which begins with the first day that the Benefit
Conditions are met. (The Benefit Conditions are explained in Part 2 of this
rider.) A Benefit Period ends when a period of 180 consecutive days elapses
during which no benefits are payable. We will not count, as part of that 180
days, any days the Insured is confined in a legally operated hospital.
CHRONICALLY ILL OR CHRONIC ILLNESS means that the Insured has been certified,
within the preceding 12 months, by a PHYSICIAN as:
a. Being unable to perform (without SUBSTANTIAL ASSISTANCE from another
individual) at least 2 "ACTIVITIES OF DAILY LIVING", as defined below, for
a period of at least 90 days due to loss of functional capacity; or
b. Requiring "SUBSTANTIAL SUPERVISION" to protect the Insured from threats to
health and safety due to "SEVERE COGNITIVE IMPAIRMENT" as defined below.
In this definition:
"ACTIVITIES OF DAILY LIVING" mean 6 basic functional abilities which relate to
the Insured's ability to live independently. They are:
a. BATHING: The Insured's ability to wash himself or herself in the tub or
shower, or by sponge bath from a basin, with or without the aid of
equipment.
b. CONTINENCE: The Insured's ability to maintain a reasonable level of
personal hygiene in the control of bowel and bladder functions, either
voluntarily or by effective use of special appliances or protective
undergarments designed to collect body waste.
c. DRESSING: The Insured's ability to put on or take off the garments he or
she usually wears, as well as any medically necessary braces or artificial
limbs, and to fasten and unfasten them.
d. EATING: The Insured's ability to get nourishment into his or her body by
any means once it has been prepared and made available.
e. TOILETING: The Insured's ability to maintain a reasonable level of personal
hygiene by using a toilet, getting to and from the toilet, and getting on
and off the toilet, with or without the aid of equipment.
f. TRANSFERRING: The Insured's ability to move in and out of a chair or bed
with or without the aid of equipment (including support and other
mechanical devices).
"SEVERE COGNITIVE IMPAIRMENT" means deterioration or loss in the Insured's
intellectual capacity as measured and confirmed by clinical evidence and
standardized tests which reliably measure impairment in the following areas:
a. The Insured's short or long term memory;
b. The Insured's orientation as to person (such as who they are), place (such
as their location), and time (such as day, date and year); and
c. The Insured's deductive or abstract reasoning.
Such loss in intellectual capacity can result from Alzheimer's disease or
similar forms of irreversible loss of mental capacity.
"SUBSTANTIAL ASSISTANCE" means hands-on assistance or the presence of another
person within arm's reach that is necessary to prevent, by physical
intervention, injury to the individual while the individual is performing the
"ACTIVITIES OF DAILY LIVING".
"SUBSTANTIAL SUPERVISION" means continual supervision (which may include verbal
cueing, prompting, gestures, or other demonstrations) by another person that is
necessary to protect the severely cognitively impaired individual from
- --------------------------------------------------------------------------------
VL-2802AA(01/00) Page 2
<PAGE>
- --------------------------------------------------------------------------------
threats to his or her health or safety (such as may result from wandering).
DEATH BENEFIT means the Death Benefit of the policy. The Death Benefit is
described in the policy.
IMMEDIATE FAMILY means the Insured's spouse and the children, brothers, sisters
and parents of either the Insured or the Insured's spouse.
INSURED means the person who is the primary Insured under the policy. It does
not include other persons covered by rider.
MEDICARE means the Health Insurance for the Aged Act, Title XVIII of the Social
Security Amendments of 1965, as then constituted or later amended.
NET POLICY ACCOUNT VALUE is the Policy Account Value less the Loan Account
value.
NET DEATH BENEFIT means the policy Death Benefit, less the Loan Account value.
PHYSICIAN means any physician as defined in Section 1861(r)(1) of the Social
Security Act, as then constituted or later amended.
PLAN OF CARE is a written document which was prepared and signed by the
attending PHYSICIAN which outlines the individualized medical treatment
(including medication and therapy) and non-medical assistance and services,
which are prescribed because the Insured suffers from loss of functional
capacity or from a "SEVERE COGNITIVE IMPAIRMENT". The plan must specify the
agency or facility where the care is to be provided, the type, frequency and
duration of all medication, therapy and services required, and the title of the
provider who is to perform each service. It must also describe the likelihood of
improvement or deterioration of the Insured's condition within the next 12
months from the date the PLAN OF CARE was prepared and must also describe the
supporting evidence upon which the PHYSICIAN has based his/her conclusions and
prognosis. Such supporting evidence may include an assessment of loss of
functional capacity and/or "SEVERE COGNITIVE IMPAIRMENT" which was prepared by a
PHYSICIAN, nurse, social worker or any other licensed or certified professional
who is qualified to perform such assessment by virtue of their licensure.
POLICY ACCOUNT VALUE is the sum of the: (1) Fixed Account value, (2) Variable
Account value, and (3) Loan Account value of this policy. See the policy for a
more detailed explanation of this term.
PRIMARY CAREGIVER means the person or persons, often members of the Insured's
Immediate Family, who provide ongoing daily care to the Insured while the
Insured resides outside of a hospital or a Nursing Home.
QUALIFIED LONG-TERM CARE SERVICES means necessary diagnostic, preventive,
therapeutic, curing, treating, mitigating, and rehabilitative services, and
"MAINTENANCE OR PERSONAL CARE SERVICES," as defined below, which are:
a. Required by the Insured because he or she is CHRONICALLY ILL; and
b. Provided pursuant to a PLAN OF CARE prescribed by the attending PHYSICIAN.
In this definition, "MAINTENANCE OR PERSONAL CARE SERVICES" means any care the
primary purpose of which is to provide needed assistance with any of the
disabilities as a result of which the Insured is CHRONICALLY ILL or in need of
protection from threats to health and safety due to SEVERE COGNITIVE IMPAIRMENT.
SURRENDER VALUE means the Net Policy Account Value less any Surrender Charges.
YOU AND YOUR means the Owner of the policy.
WE, OUR AND US means First Penn-Pacific Life Insurance Company.
- --------------------------------------------------------
PART 2: LIMITATIONS OR CONDITIONS ON
ELIGIBILITY FOR BENEFITS
- --------------------------------------------------------
THIS PART EXPLAINS HOW THE INSURED BECOMES ELIGIBLE FOR BENEFITS AND THE BENEFIT
LIMITATIONS.
BENEFIT CONDITIONS. The following conditions must be met to qualify for benefits
under this rider:
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VL-2802AA(01/00) Page 3
<PAGE>
- --------------------------------------------------------------------------------
a. The Insured must be unable to perform at least 2 ACTIVITIES OF DAILY LIVING
(without SUBSTANTIAL ASSISTANCE from another individual) for a period of 90
days due to loss of functional capacity or suffer from SEVERE COGNITIVE
IMPAIRMENT. ACTIVITIES OF DAILY LIVING, SUBSTANTIAL ASSISTANCE and SEVERE
COGNITIVE IMPAIRMENT are defined in the definition of CHRONICALLY ILL.
b. The attending PHYSICIAN must certify that the Insured is CHRONICALLY ILL.
If the Insured's CHRONIC ILLNESS is due to loss of functional capacity, the
PHYSICIAN must certify that the Insured's CHRONIC ILLNESS is expected to
continue for at least 90 days.
c. The PHYSICIAN must also approve a PLAN OF CARE in writing. The Insured must
incur expense for QUALIFIED LONG-TERM CARE SERVICES prescribed under the
approved PLAN OF CARE. The expense must be covered by this rider and must
begin while the policy and this rider are in force. No portion of the
policy Death Benefit can have been advanced under any other rider attached
to the policy.
d. At least once every 12 months thereafter, and for as long as the Insured
continues to be CHRONICALLY ILL, the PHYSICIAN must again:
1. Certify that the Insured is CHRONICALLY ILL. If the Insured's CHRONIC
ILLNESS is due to loss of functional capacity, the PHYSICIAN must
again certify that the Insured's CHRONIC ILLNESS is expected to
continue for at least 90 days; and
2. Approve a PLAN OF CARE, either a new plan, or reconfirm the existing
plan in writing.
DEDUCTIBLE PERIOD. This rider has a Deductible Period during which time this
rider does not provide certain benefits. This Deductible Period applies to all
benefits, except for the Care Planning Benefit, Caregiver Training Benefit and
the Respite Care Benefits. This Deductible Period must be satisfied before other
benefits become payable.
The Deductible Period may be satisfied only by days during which benefits, other
than Care Planning Benefit, Caregiver Training Benefit and the Respite Care
Benefits, would otherwise be payable under this rider. The Deductible Period is
shown in the Policy Schedule.
Long-term care is often received on an intermittent basis. For this reason, we
do not require that a Deductible Period be consecutive days. We do require,
however, that a Deductible Period be satisfied within a specified time span.
This time span is equal to 3 times the length of the Deductible Period. For
example, a Deductible Period of 90 days is satisfied by 90 days of care
occurring within a 270 day period.
REINSTATEMENT OF DEDUCTIBLE PERIODS. Because care is frequently received on an
intermittent basis, it is not necessary to satisfy a new Deductible Period each
time care stops and begins again. A new Deductible Period is required only when
a period of 180 consecutive days expires during which no benefits are payable.
We will not count, as part of that 180 days, any days the Insured is confined in
a legally operated hospital.
DAILY MAXIMUM. The Daily Maximum is the maximum amount we will pay for covered
expense incurred during any one day. There is a separate Daily Maximum for Adult
Day Care, for Home Health Care, and for Nursing Home Care. If the Insured should
incur more than one type of covered expense during any one day, we will pay for
all of the covered expense incurred during that day, but not more than the Daily
Maximum that provides the largest benefit.
The Daily Maximums, as of the Effective Date of this rider, are shown in the
Policy Schedule. These amounts may be changed as provided in the "Changes to the
Daily Maximums" provision found in Part 9 of this rider.
The Daily Maximum does not apply to the non-continual expense covered under the
Care Planning Benefit, Caregiver Training Benefit nor the Alternative Care
Services Benefit.
BENEFIT LIMIT. The Benefit Limit is the maximum amount of benefits which may be
paid under this rider. The Benefit Limit equals the Death Benefit of the policy.
The Benefit Limit, as of the Effective Date of this
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rider, is shown in the Policy Schedule. It may be changed as provided in the
"Changes to Benefit Limit" provision found in Part 9 of this rider.
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PART 3: PERSONAL CARE ADVISOR, CARE PLANNING,
AND CAREGIVER TRAINING BENEFITS
- ----------------------------------------------------------
THIS PART INTRODUCES THE PERSONAL CARE ADVISOR. IF YOU WANT TO TALK TO A PERSON
WHO CAN EXPLAIN THIS RIDER AND ANSWER YOUR QUESTIONS ABOUT BENEFITS, CALL YOUR
PERSONAL CARE ADVISOR. THIS IS AN OPTIONAL SERVICE WHICH IS AVAILABLE TO YOU AT
NO COST. ALTHOUGH YOU ARE NOT REQUIRED TO USE THIS SERVICE, IT MAY BE TO YOUR
ADVANTAGE TO DO SO. THIS PART ALSO DESCRIBES THE CARE PLANNING AND CAREGIVER
TRAINING BENEFITS.
PERSONAL CARE ADVISOR. We will provide you with a Personal Long-Term Care
Advisor. You may contact your Personal Long-Term Care Advisor at any time in
order to:
a. Discuss which types of care may be covered under this rider; and
b. Know in advance if a particular provider of service, such as a Nursing Home
or Home Health Care Agency, meets rider conditions.
To receive the services of your Personal Long-Term Care Advisor, you or the
Insured's PHYSICIAN should call the Personal Long-Term Care Advisor's Office.
The toll-free number of the Personal Long-Term Care Advisor's Office is shown in
the Policy Schedule.
CARE PLANNING BENEFIT. We will pay the expense incurred for Care Planning
provided by a Care Planning Agency to the extent that such services are covered
as Qualified Long-Term Care Services, but not to exceed the Care Planning
Benefit per calendar year. The Care Planning Benefit is shown in the Policy
Schedule.
Neither the Deductible Period nor the Benefit Limit applies to this benefit; nor
may this benefit be used to satisfy the Deductible Period. The benefit, however,
is subject to all other conditions specified under Part 2 of this rider.
"CARE PLANNING" means the following services provided for the Insured by a Care
Planning Agency under the direction of the attending PHYSICIAN:
a. The assessment of the circumstances in the Insured's home which relate to
his or her ability to live independently;
b. The assessment of the degree of the CHRONIC ILLNESS and the level of
assistance needed for each Activity of Daily Living or because of the
Severe Cognitive Impairment;
c. The preparation of a PLAN OF CARE for the Insured in coordination with the
attending PHYSICIAN;
d. The coordination of the Insured's schedule of services and the monitoring
of the delivery of such services; and
e. The monitoring of any changes in the Insured's abilities and the updating
of the PLAN OF CARE when appropriate.
"CARE PLANNING AGENCY" means an agency or an organization which primarily
engages in Care Planning on behalf of its clients. It is state licensed, if the
state in which it operates licenses Care Planning Agencies, and it is operating
within the scope of its license. If the state in which it is operating does not
license Care Planning Agencies, the agency must meet the following criteria:
a. It must operate at least 5 days per week for a minimum of 8 hours per day
and have someone on call to provide emergency coverage during non-operating
hours;
b. It must have at least one full-time Nurse and one full-time social worker
on staff; and
c. It must maintain a written record for each client which includes a record
of all services provided.
CAREGIVER TRAINING BENEFIT. We will pay the expense incurred for the Care
Training of the PRIMARY CAREGIVER provided by a properly accredited medical or
instructional institution or by an individual, such as a licensed Nurse, who is
qualified to provide such training. Such Care Training shall be covered to the
extent that it is covered as Qualified Long-Term Care Services. We will not pay
more than the Care Training Benefit shown in the Policy Schedule for all Care
Training provided while the Insured is covered under this rider.
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Neither the Deductible Period nor the Benefit Limit applies to this benefit; nor
may this benefit be used to satisfy the Deductible Period. The benefit, however,
is subject to all other conditions specified under Part 2 of this rider.
"CARE TRAINING" means training given to the PRIMARY CAREGIVER to provide him or
her with the knowledge and skills necessary to care for an individual who is
CHRONICALLY ILL. Such training may include:
a. the proper use and care of a therapeutic device and/or of disposable
medical aids, including but not limited to catheters, colostomy bags, or
suctioning tubes;
b. the performance of an appropriate care giving procedure, such as changing
of wound dressings or the repositioning in bed; or
c. other appropriate therapeutic or care giving procedures needed to enable a
CHRONICALLY ILL individual to continue to reside in his or her place of
residence.
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PART 4: HOME CARE AND COMMUNITY BASED BENEFITS
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THIS PART EXPLAINS THE ADULT DAY CARE, HOME HEALTH CARE, HOMEMAKERS SERVICES,
HOSPICE, PERSONAL CARE AND RESPITE CARE BENEFITS PROVIDED BY THIS RIDER TO A
CHRONICALLY ILL INSURED.
ADULT DAY CARE BENEFITS. Subject to the Deductible Period, we will pay the
expense incurred for Adult Day Care during a Benefit Period, but not to exceed
the Daily Maximum per day for Adult Day Care, nor the Benefit Limit.
The Daily Maximum per day for Adult Day Care and the Benefit Limit are shown in
the Policy Schedule.
"ADULT DAY CARE" means Qualified Long-Term Care Services provided by an Adult
Day Care Center during any part of the day on less than a 24 hour basis.
"ADULT DAY CARE CENTER" means an organization which is state licensed, if the
state in which it is located licenses adult day care centers. If the state does
not license Adult Day Care Centers, the center must meet all of the following
criteria:
a. Be operated as an Adult Day Care Center;
b. Be operated at least 5 days a week for a minimum of 5 hours per day and is
not an overnight facility;
c. Maintains a written record for each client which includes a PLAN OF CARE
prescribed by a PHYSICIAN and a record of all services provided;
d. Have established procedures for obtaining appropriate aid in the event of a
medical emergency;
e. Have formal arrangements for providing services of: a dietitian; a licensed
physical therapist; a licensed speech therapist; and a licensed
occupational therapist; and
f. Have on its staff all of the following: a full-time director; one or more
nurses in attendance during operating hours for at least 4 hours a day; and
enough full-time staff members to maintain a client-to-staff ratio of 8 or
less to 1.
HOME HEALTH CARE BENEFITS. Subject to the Deductible Period, we will pay the
expense incurred for Home Health Care during a Benefit Period, but not to exceed
the Daily Maximum per day for Home Health Care, nor the Benefit Limit.
The Daily Maximum per day for Home Health Care and the Benefit Limit are shown
in the Policy Schedule.
"HOME HEALTH CARE" means skilled nursing or other professional care provided by
a Home Health Care Agency at the Insureds' place of residence, outside of a
hospital or a Nursing Home, including but not limited to, part-time and
intermittent skilled nursing services, home health aide services, physical
therapy, occupational therapy, chemotherapy, speech therapy and audiology
services, and medical social services by a social worker, to the extent that
such services are Qualified Long-Term Care Services.
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"HOME HEALTH CARE AGENCY" means an entity which provides care and services at
the Insured's home or other residence, is primarily engaged in providing
residential health care services under policies and procedures established by a
group of professionals, including at least one PHYSICIAN and one nurse, and
meets at least one of the following criteria:
a. Is licensed by the appropriate licensing agency as a Home Health Care
Agency; or
b. Is accredited as a Home Health Care Agency or as a provider of Home Health
Care Services by the National League of Nursing, American Public Health
Association or Joint Commission on Accreditation of Health Care
Organizations or their successor organization; or
c. Is certified by Medicare as a Home Health Care Agency.
HOMEMAKER SERVICES BENEFITS. Subject to the Deductible Period, we will pay the
expense incurred for Homemaker Services during a Benefit Period, but not to
exceed the Daily Maximum per day for Home Health Care, nor the Benefit Limit.
The Daily Maximum per day for Home Health Care and the Benefit Limit are shown
in the Policy Schedule.
"HOMEMAKERS SERVICES" means assistance with activities necessary to, or
consistent with, the Insured's ability to remain in his or her residence, to the
extent that such services are Qualified Long-Term Care Services. Such services
must be provided by skilled or unskilled persons under a PLAN OF CARE developed
by a PHYSICIAN.
HOSPICE SERVICES BENEFITS. Subject to the Deductible Period, we will pay the
expense incurred for Hospice Services during a Benefit Period, but not to exceed
the Daily Maximum per day for Home Health Care, nor the Benefit Limit.
The Daily Maximum per day for Home Health Care and the Benefit Limit are shown
in the Policy Schedule.
"HOSPICE SERVICES" means the services that are given to provide palliative care,
alleviate the physical, emotional, social, and spiritual discomforts of the
Insured who is in the terminal phases of life, and the supportive care given to
the PRIMARY CAREGIVER and the Insured's Immediate Family, to the extent that
such services are Qualified Long-Term Care Services. Such services must be
provided by skilled or unskilled persons under a PLAN OF CARE developed by a
PHYSICIAN.
PERSONAL CARE BENEFITS. Subject to the Deductible Period, we will pay the
expense incurred for Personal Care during a Benefit Period, but not to exceed
the Daily Maximum per day for Home Health Care, nor the Benefit Limit.
The Daily Maximum per day for Home Health Care and the Benefit Limit are shown
in the Policy Schedule.
"PERSONAL CARE" means assistance with activities of daily living, including
INSTRUMENTAL ACTIVITIES OF DAILY LIVING, to the extent that such services are
Qualified Long-Term Care Services.
"INSTRUMENTAL ACTIVITIES OF DAILY LIVING" includes using a telephone, managing
medications, moving about outside, shopping for essentials, preparing meals,
laundry, and light housekeeping. Such services must be provided by skilled or
unskilled persons under a PLAN OF CARE developed by a PHYSICIAN.
RESPITE CARE BENEFITS. We will pay the expense incurred for Respite Care during
a Benefit Period, but not to exceed the Daily Maximum per day for Home Health
Care, 21 days per calendar year, nor the Benefit Limit. This benefit is not
subject to the Deductible Period and does not satisfy the Deductible Period
requirement.
The Daily Maximum per day for Home Health Care is shown in the Policy Schedule.
"RESPITE CARE" means short term care provided in an institution, in the home, or
in a community based program, that is designed to relieve the PRIMARY CAREGIVER,
to the extent that such services are Qualified Long-Term Care Services.
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PART 5: NURSING HOME, BED
RESERVATION, ASSISTED
LIVING AND ALTERNATIVE
CARE BENEFITS
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THIS PART EXPLAINS THE NURSING HOME, BED RESERVATION, ASSISTED LIVING FACILITY
AND ALTERNATIVE CARE SERVICES BENEFITS PROVIDED BY THIS RIDER TO A CHRONICALLY
ILL INSURED.
NURSING HOME CARE BENEFITS. Subject to the Deductible Period, we will pay the
expense incurred by the Insured for Qualified Long-Term Care Services in a
Nursing Home during a Benefit Period, but not to exceed the Daily Maximum per
day for Nursing Home Care, nor the Benefit Limit.
The Daily Maximum per day for Nursing Home Care and the Benefit Limit are shown
in the Policy Schedule.
"NURSING HOME" means a facility or distinctly separate part of a hospital or
other institution which is licensed by the appropriate state licensing agency as
a Nursing Home, if the state licenses such facilities. If the state does not
license Nursing Homes, then the facility must meet all of the following
criteria:
a. It must provide 24 hour a day nursing service under a planned program of
policies and procedures which were developed with the advice of, and is
periodically reviewed and executed by, a professional group of at least one
PHYSICIAN and one nurse;
b. It must have a PHYSICIAN available to furnish medical care in case of
emergency;
c. It must have at least one nurse who is employed there full time (or at
least 24 hours per week if the facility has less than 10 beds);
d. It must have a nurse on duty or on call at all times;
e. It must maintain clinical records for all patients; and
f. It must have appropriate methods and procedures for handling and
administering drugs and biologicals.
NOTE THESE CRITERIA ARE TYPICALLY MET BY LICENSED SKILLED NURSING
FACILITIES, COMPREHENSIVE NURSING CARE FACILITIES AND INTERMEDIATE
NURSING CARE FACILITIES AS WELL AS SOME SPECIALIZED WARDS, WINGS AND
UNITS OF HOSPITALS. THEY ARE GENERALLY NOT MET BY ASSISTED LIVING
FACILITIES, REST HOMES, HOMES FOR THE AGED, SHELTERED LIVING
ACCOMMODATIONS, RESIDENCE HOMES, OR SIMILAR LIVING ARRANGEMENTS.
LEVELS OF CARE. This rider makes no distinction, either in the duration or
amount of benefits you will be paid, for different levels of care (whether
skilled, intermediate or custodial) as long as the Insured's stay in a Nursing
Home meets the Nursing Home definition listed above.
BED RESERVATION BENEFIT. We will pay the expense incurred by the Insured to
reserve the Insured's bed in a Nursing Home while he or she is temporarily
confined in the hospital. Our payment will be subject to the following
conditions:
a. The Insured is receiving Nursing Home Care Benefits under this rider and
requires the hospitalization while confined in the Nursing Home; and
b. The Insured incurs a charge to reserve the bed in the Nursing Home during
the hospitalization.
We will not pay more than the Daily Maximum per day for Nursing Home Care for
each day that the bed is reserved, more than 30 days per calendar year, nor more
than the Benefit Limit.
The Daily Maximum per day for Nursing Home Care and the Benefit Limit are shown
in the Policy Schedule.
ASSISTED LIVING FACILITY BENEFITS. Subject to the Deductible Period, we will pay
the expense incurred by the Insured for Qualified Long-Term Care Services in an
Assisted Living Facility during a Benefit Period, but not to exceed the Daily
Maximum per day for Nursing Home Care, nor the Benefit Limit.
The Daily Maximum per day for Nursing Home Care and the Benefit Limit are shown
in the Policy Schedule.
"ASSISTED LIVING FACILITY" is a separate facility (or a specially dedicated wing
of a facility) which is licensed as an Assisted Living Facility, if the state
licenses such facilities. If the state does not license
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Assisted Living Facilities, then the facility must meet all of the following
criteria:
a. It must provide room, board, 3 meals a day, housekeeping, linens, laundry
and all the personal services required by a CHRONICALLY ILL individual, as
well as protective oversight, in private rooms to residents who require
personal assistance to perform activities of daily living;
b. It must provide personal care and substantial hands-on assistance to
prevent, by physical intervention, injury to the individual while the
individual is performing "ACTIVITIES OF DAILY LIVING." Such assistance may
also include transportation, help in dispensing medication, providing
assistance with baths or showers as well as other individual needs which
may be required; and
c. It must have a staff available to provide such assistance 24 hours a day
and 7 days a week and have a staff PHYSICIAN available on call.
ALTERNATIVE CARE SERVICES BENEFITS. Subject to the Deductible Period, we will
pay the expense incurred by the Insured for Alternative Care Services during a
Benefit Period, but not to exceed the Benefit Limit, nor:
a. the Daily Maximum per day for Nursing Home Care for continual Alternative
Care Services which are typically required on a daily or regular basis; and
b. 5% of the Benefit Limit during each calendar year for non-continual
Alternative Care Services which are typically one-time expenses. Such
services may include, but are not limited to, modifications to the home to
accommodate a wheelchair or other device.
The Daily Maximum per day for Nursing Home Care and the Benefit Limit are shown
in the Policy Schedule.
"ALTERNATIVE CARE SERVICES" means Qualified Long-Term Care Services prescribed
under a PLAN OF CARE that are not covered under any other part of this rider,
but which your attending PHYSICIAN, the Care Planning Agency, if any, and we
mutually agree would be appropriate to meet the Insured's long-term care needs.
We will not unreasonably withhold our agreement. These services must be provided
as an alternative to services covered under other parts of this rider which
would otherwise be required by the CHRONICALLY ILL Insured.
Except as provided below, Alternative Care Services may be provided in
facilities or by organizations or persons, other than the Insured's Immediate
Family, that do not otherwise meet the definitions of this rider. They must meet
or exceed the applicable professional standards and state legal requirements for
the services which are performed. The services may include, but are not limited
to, forms of personal care assistance, additional safety equipment or devices
and home delivered meals.
Alternative Care Services does not mean or include the services provided in an
Adult Day Care Center, an Assisted Living Facility, a hospital, or a Nursing
Home, nor the services provided by a Home Health Care Agency.
- --------------------------------------------------------
PART 6: BENEFIT DURATION
- --------------------------------------------------------
THIS PART EXPLAINS THE CONDITIONS UNDER WHICH BENEFITS MAY BE AVAILABLE AFTER
THIS RIDER LAPSES.
Benefits will be paid as long as the Benefit Conditions are met and the Benefit
Limit has not been reached. The Benefit Conditions and the Benefit Limit are
described in Part 2 of this rider.
If the policy and this rider should lapse without value after a Benefit Period
begins, the Insured will continue to be eligible for benefits provided by this
rider subject to the following conditions:
a. The Insured's eligibility for benefits will end if a period of 30
consecutive days elapses during which no benefits under this rider are
payable. We will not count as part of that 30 days, any days the Insured is
confined in a legally operated hospital; and
b. We will not pay benefits in excess of those we would have paid had this
rider remained in force.
To be eligible for the full range of policy and rider benefits after a Benefit
Period begins, you should keep the policy and this rider in force. The Grace
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Period provision of the policy explains the notice we will provide to you should
additional premium be required to keep the policy and this rider in force.
- --------------------------------------------------------
PART 7: ALZHEIMER'S DISEASE
- --------------------------------------------------------
This rider will cover Qualified Long-Term Care Services resulting from a
clinical diagnosis of Alzheimer's Disease or similar forms of irreversible loss
of mental capacity. Any exclusion contained in this rider for mental disorders
does not apply to these conditions.
- --------------------------------------------------------
PART 8: GENERAL EXCLUSIONS AND LIMITATIONS
- --------------------------------------------------------
THIS PART EXPLAINS WHEN BENEFITS WILL NOT BE PAID, EVEN IF YOU ARE OTHERWISE
ENTITLED TO PAYMENT UNDER ANOTHER PART OF THIS RIDER.
LOSSES NOT COVERED. This rider will not pay benefits for:
a. Treatment resulting from mental or nervous disorders which includes
neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional
diseases or disorders without demonstrable organic origin. This rider will,
however, cover qualifying stays or re resulting from Alzheimer's Disease or
similar forms of irreversible loss of mental capacity as explained in Part
7 above;
b. Treatment for alcoholism, drug addiction or chemical dependency (unless the
drug addiction or chemical dependency is a result of medication taken in
doses as prescribed by a PHYSICIAN);
c. Treatment arising out of an attempt (while sane) at suicide or an
intentionally self-inflicted injury;
d. Treatment provided in a Veteran's Administration or government facility,
unless the Insured or the Insured's estate is charged for the confinement
or services or unless otherwise required by law;
e. Loss to the extent that benefits are payable under any of the following:
Medicare (including that which would have been payable but for the
application of a deductible or a coinsurance amount), other governmental
programs (except Medicaid), workers compensation laws, employer's liability
laws, occupational disease laws, and motor vehicle no-fault laws;
f. Confinement or care received outside the United States;
g. Services provided by a facility or an agency that does not meet the rider
definition for such facility or agency, except as provided under the
"Alternative Care Services Benefits" provision found under Part 5; and
h. Services provided by a member of the Insured's Immediate Family or for
which no charge is normally made in the absence of insurance.
- --------------------------------------------------------
PART 9: EFFECT OF RIDER BENEFITS ON POLICY
VALUES
- --------------------------------------------------------
THIS PART EXPLAINS HOW THE PAYMENT OF THE RIDER BENEFITS AFFECTS THE DEATH
BENEFIT AND THE POLICY ACCOUNT VALUE OF THE POLICY.
POLICY ACCOUNT VALUE DURING BENEFIT PERIOD. We will transfer any amount that is
in the Variable Sub-Account(s) to the Fixed Account on the date that we approve
the claim for benefits. You may not subsequently transfer any amount back from
the Fixed Account to any Variable Sub-Account or allocate Net Premiums to any
Variable Sub-Account during the Benefit Period.
POLICY ACCOUNT VALUE REDUCTION. Each rider benefit payment will reduce the
Policy Account Value by an amount equal to (a) times (b) divided by (c), where:
(a) is the Net Policy Account Value immediately prior to the benefit payment;
(b) is the rider benefit payment; and,
(c) is the Net Death Benefit immediately prior to the benefit payment.
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WAIVER OF SURRENDER CHARGE. Any policy surrender charge which would otherwise be
applicable, will be waived during a Benefit Period and will not be reinstated at
the end of the Benefit Period. Waiver of the policy surrender charge will make
the Surrender Value equal to the Net Policy Account Value.
DEATH BENEFIT REDUCTION. Each rider benefit payment will reduce the Death
Benefit payable under the policy by a like amount.
CHANGES TO DAILY MAXIMUMS. Reductions to the Net Death Benefit resulting
directly from rider benefit payments will NOT cause a reduction in Daily
Maximums. Reductions to the Net Death Benefit resulting from your exercise of
your rights under the policy, including your right to make policy loans and
partial surrenders, will cause a reduction in Daily Maximums. The reduction in
Daily Maximums will be proportional to the reduction in the Net Death Benefit.
For example, if you make a partial surrender which causes the Net Death Benefit
to be reduced by 5%, then Daily Maximums will concurrently be reduced by 5%.
Similarly, policy loan repayments and increases to the Death Benefit will cause
Daily Maximums to increase. The increase in Daily Maximums will be proportional
to the increase in the Net Death Benefit. For example, if your repayment of a
policy loan causes the Net Death Benefit to be increased by 10%, then Daily
Maximums will concurrently be increased by 10%.
A change to Daily Maximums will apply to covered losses incurred on or following
the date of the change. A change to Daily Maximums will not apply to covered
losses incurred prior to the date of the change.
CHANGES TO BENEFIT LIMIT. Reductions to the Net Death Benefit resulting directly
from rider benefit payments will NOT cause a reduction in the Benefit Limit.
Reductions to the Net Death Benefit resulting from your exercise of your rights
under the policy, including your right to make policy loans and partial
surrenders, will cause a reduction in the Benefit Limit. The reduction in the
Benefit Limit will equal the reduction in the Net Death Benefit. For example, if
you make a partial surrender which causes the Net Death Benefit to be reduced by
$500, then the Benefit Limit will concurrently be reduced by $500.
Similarly, policy loan repayments and increases to the Death Benefit will cause
the Benefit Limit to increase. The increase in the Benefit Limit will equal the
increase in the Net Death Benefit. For example, if your repayment of a policy
loan causes the Net Death Benefit to be increased by $1000, then the Benefit
Limit will concurrently be increased by $1000.
- --------------------------------------------------------
PART 10: CLAIMS
- --------------------------------------------------------
THIS PART EXPLAINS THE PROCEDURE FOR FILING A CLAIM. IT ALSO EXPLAINS HOW WE PAY
BENEFITS; AND OTHER RIGHTS AND OBLIGATIONS UNDER THIS RIDER.
NOTICE OF CLAIM. You must tell us in writing when you have a claim for benefits.
Notice should be given to us at our Administrative Office. We must receive the
notice within 60 days of the date the covered loss starts or, if later, as soon
as reasonably possible. The notice should include at least: your name, the
Insured's name, your Policy Number and the address to which the Claim Form
should be sent. You may authorize someone else to act for you in filing a claim.
PROOF OF LOSS. When we receive notice of your claim, we will send you a Claim
Form to be used to file Proof of Loss.
The Claim Form has instructions on how to fill it out and where to send it.
Please read the form carefully. Answer all questions and send all required
information to the address on the form. You may contact your Personal Long- Term
Care Advisor (see Part 3 of this rider) if you have questions.
If you or your representative do not receive the Claim Form within 15 days after
you send your Notice of Claim, a claim can be filed without it by sending us a
letter which describes the occurrence, the character and the extent of the loss
for which claim is made. That letter must be sent to us within the time period
stated in the next paragraph. At a minimum, the description should tell us such
things as: your name and address; the type of benefits you are claiming; the
names and addresses of the Insured's PHYSICIANs; the places the Insured stayed;
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the Insured's diagnosis; and the periods for which you are claiming benefits.
CLAIM FOR CONTINUING LOSS. We must receive written Proof of Loss within 90 days
after the end of each month for which benefits may be paid. If it was not
reasonably possible to give us written Proof of Loss in the time required, we
will not reduce or deny a claim for being late if Proof of Loss is filed as soon
as reasonably possible. Unless the claimant is not legally capable, the required
Proof of Loss must always be given to us no later than 1 year from the time
specified.
TIME OF PAYMENT OF CLAIM. After we receive the proper written Proof of Loss, we
will pay any benefits then due:
a. Monthly, when the loss is expected to result in on-going benefits; and
b. Immediately, or upon termination of our liability, when the loss is not
expected to continue.
If a claim is not paid within 30 days after our receipt of the proper written
Proof of Loss we will, in addition to the claim payment, pay interest at the
rate required by the applicable laws of your state, if any, but not less than 6%
per year.
If we do not pay a claim when due, you may bring an action to recover such
benefits, and any other damages, as allowed by law.
PAYMENT OF CLAIMS. If you are the Insured, we will pay the benefits to you, if
living, otherwise to the policy Beneficiary. If you are not the Insured, we will
pay the benefits to you, if living, otherwise to your estate. However, you may
request in writing for payments to be made otherwise. You should make this
request no later than the time you file Proof of Loss.
We will send you a monthly statement showing the amount of benefits we paid.
This statement will also show the effect of such payment on the policy Death
Benefit and Policy Account Value as well as the remaining amount of rider
benefits available.
CLAIM REVIEW, RECERTIFICATION AND PHYSICAL EXAMINATION. We reserve the right to
verify that all of the criteria for eligibility for benefits have been
satisfied. Verification could include a review of the medical facts to determine
the extent of the Insured's condition or an examination by a physician of our
choice and at our expense to verify that the Insured does meet the criteria for
benefits.
We will ask the attending PHYSICIAN, who provided us with the initial assessment
and certification, to provide us with a current written assessment and a
recertification of the Insured's condition at least once every 12 months. The
review, recertification and any physical examination will be requested solely
for the purpose of determining whether the Insured's condition and treatment
qualify for benefits under the terms of this rider.
CLAIM APPEAL. We will inform you in writing if a claim or any part of a claim is
denied.
We will evaluate your claim based on this rider and the information given to us.
If you do not agree with a claim decision, you may then ask for a review. Your
request must be in writing and include any information you think will help your
claim. No special form is needed. Your request should be sent to our
Administrative Office within 3 years after the time for filing the Proof of
Loss. Within 30 days after receiving your request, we will send you or your
representative our decision. Our decision will be in writing with our reasons
stated clearly. You may authorize someone else to act for you under this review
procedure.
MISSTATEMENT OF AGE. If the Insured's age has been misstated, rider benefits
will be those that the most recent premium would have purchased at the correct
age. If coverage would not have been issued, we will refund the premium paid for
this rider.
LEGAL ACTIONS. You cannot sue or bring legal action before 60 days after written
Proof of Loss has been given to us, as required by this rider. You cannot sue
after the greater of the expiration of the applicable statute of limitations for
your state or 3 years from the time written Proof of Loss is required to be
given.
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- --------------------------------------------------------
PART 11: THE CONTRACT
- --------------------------------------------------------
THIS PART EXPLAINS OTHER IMPORTANT RULES AND CONDITIONS WHICH WILL AFFECT THIS
RIDER.
TERMINATION OF RIDER. This rider terminates:
a. Upon your written request;
b. When the Benefit Limit is reached;
c. Upon the payment or advance of any part of the Death Benefit as a benefit
under any provision of the policy or any rider other than this rider; or
d. Upon termination of the policy.
However, if the policy and this rider lapse without value after a Benefit Period
begins, we will continue the benefits provided by this rider subject to the
conditions stated in Part 6.
GRACE PERIOD NOTICE. We shall give the "DESIGNATED THIRD PARTY", if any, a
notice of any unpaid and due premium 30 days after such premium becomes due. The
policy and this rider shall then continue in force for an additional 30 days
after such notice has been given. Notice shall be considered to have been given
to the "DESIGNATED THIRD PARTY" 5 days after the date of our mailing via first
class United States mail, postage prepaid. If the premium is not paid by the end
of the additional 30 day period, this contract shall then terminate without any
value.
As used in this provision, the "DESIGNATED THIRD PARTY", if any, is the person
that you have named in a written designation to receive notices of impending
lapses or terminations because of nonpayment of premium.
REINSTATEMENT. If the policy to which this rider is attached is reinstated, then
this rider may also be reinstated. The reinstatement of this rider shall be
subject to evidence of good health and insurability satisfactory to us. The
reinstated rider will only provide benefits for care or confinement which begins
after the date of reinstatement and will be subject to all conditions in the
rider.
If, however, the Insured was CHRONICALLY ILL when this rider lapsed and, if the
reinstatement is requested within 5 months after the date of the lapse, then in
lieu of submitting evidence of good health and insurability, this rider may be
reinstated by submitting to us a statement from the attending PHYSICIAN
certifying that the Insured is CHRONICALLY ILL as defined by this rider. The
reinstated rider will provide benefits for care or confinement which begins
after the date of the lapse and will be subject to all conditions in the rider
not inconsistent herewith.
REPRESENTATIONS. In the absence of fraud, any statement made by you or the
Insured will be deemed a representation and not a warranty. Such statement may
not be used in defense of a claim, unless it is contained in a signed, written
application.
INCONTESTABILITY PERIOD. A misstatement by the Insured in any application for
the policy or this rider may be used to void or cancel this rider. During the
first 6 months following the effective date of this rider, we may take this
action only if the misstatement was material to the issuance of this rider.
After the first 6 months, but before the end of the first 24 months, we may take
this action only if the misstatement was material to both the issuance of this
rider and the claim for which benefits are being sought. After this rider has
been in force for 24 months, we can take this action only if we can show that
the Insured knowingly and intentionally misrepresented relevant facts relating
to his or her health. No benefits will be paid under this rider if it is voided
or canceled.
PRE-EXISTING CONDITIONS NOT EXCLUDED. We will NOT deny benefits for Pre-existing
Conditions. "PRE-EXISTING CONDITIONS" are physical or mental conditions which
existed when you applied for this rider. This provision does not preclude us
from exercising other remedies available to us under this rider because of
misrepresentation.
CONFORMITY WITH STATE AND FEDERAL STATUTES. If any provision of this rider is in
conflict with the statutes of the state in which you reside on the rider
Effective Date or with the Federal statutes which pertain to Qualified Long-Term
Care Insurance contracts, the rider provision is automatically amended to meet
the minimum requirements of the state or Federal statute.
- --------------------------------------------------------------------------------
VL-2802AA(01/00) Page 13
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISION. This rider shall be subject to all the terms and conditions
of the policy which are not inconsistent herewith.
Signed for First Penn-Pacific Life Insurance Company at Oakbrook Terrace,
Illinois.
/s/ Marcia L. DuMond /s/ Roland C. Baker
Secretary President
- --------------------------------------------------------------------------------
VL-2802AA(01/00) Page 14
<PAGE>
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
- ------------------
A MEMBER OF LINCOLN FINANCIAL GROUP
EXHIBIT 1.5(c)
- --------------------------------------------------------------------------------
Fort Wayne, Indiana
Executive Office: 1801 South Meyers Road
- Oakbrook Terrace, Illinois 60181-5214 - (630) 495-3336
Administrative Office: [ADDRESS AND TELEPHONE NUMBER WILL BE INSERTED HERE]
EXTENSION OF CONVALESCENT CARE BENEFITS RIDER
(Extending the Convalescent Care Benefits)
THIS RIDER EXTENDS THE BENEFITS PROVIDED BY THE CONVALESCENT
CARE BENEFITS RIDER. THE BENEFITS OF THIS RIDER BECOME EFFECTIVE AFTER THE
BENEFIT PAYMENTS UNDER THE CONVALESCENT CARE BENEFITS RIDER END
BECAUSE THE PAYMENTS REDUCED THE POLICY DEATH BENEFIT TO ZERO.
TAXATION: THIS RIDER IS INTENDED TO BE A QUALIFIED LONG-TERM CARE INSURANCE
CONTRACT UNDER SECTION 7702B(b) OF THE INTERNAL REVENUE CODE.
CAUTION: WE ISSUED THIS RIDER BASED ON YOUR AND THE INSURED'S ANSWERS TO THE
QUESTIONS ON YOUR APPLICATION. A COPY OF YOUR APPLICATION IS ENCLOSED. IF YOUR
ANSWERS OR THE INSURED'S ANSWERS ARE INCORRECT OR UNTRUE, WE MAY DENY BENEFITS
OR RESCIND THIS RIDER. THE BEST TIME TO CLEAR UP ANY QUESTION IS NOW, BEFORE A
CLAIM ARISES! IF, FOR ANY REASON, ANY OF YOUR ANSWERS OR THE INSURED'S ANSWERS
ARE INCORRECT, CONTACT US AT THE ADDRESS SHOWN ABOVE.
NOTICE TO OWNER: THIS RIDER MAY NOT COVER ALL OF THE LONG-TERM CARE EXPENSE
INCURRED BY THE INSURED DURING THE PERIOD OF COVERAGE. YOU ARE ADVISED TO
CAREFULLY REVIEW ALL POLICY AND RIDER LIMITATIONS.
RIGHT TO EXAMINE RIDER FOR 30 DAYS. It is important to us that you are satisfied
with this rider and that it meets with your insurance needs. If for any reason
you are not satisfied, you may return it to us within 30 days after its receipt.
It may be returned to us at the address of our Administrative Office listed
above, or to our agent through whom it was purchased. If returned, we will
refund the premiums you have paid and this rider will be void from its Issue
Date.
If this rider was applied for after the effective date of the policy and if you
return it to us within 30 days after its receipt, we will credit to the Policy
Account Value of the policy any premium which may have been deducted for this
rider and this rider will be void from its Issue Date.
WE PROMISE TO PAY the benefits provided by this rider for QUALIFIED LONG-TERM
CARE SERVICES if the Insured becomes CHRONICALLY ILL while this rider is in
force. Our payment will be subject to all of the terms and conditions of this
rider.
WHO IS COVERED. This rider covers the primary Insured under the policy. It does
not cover any other person.
RENEWABILITY. This rider is guaranteed renewable. We may not cancel or reduce
coverage provided by this rider. Renewal is subject to the TERMINATION OF RIDER
provision in Part 3 of this rider.
PREMIUMS. We have issued this rider in consideration of the payment of the first
premium and the statements made in the application, and in consideration of our
issuing to you the Convalescent Care Benefits Rider as part of this policy.
The monthly premium for this rider is shown in the Policy Schedule. Each month
we will deduct the premium for this rider from the Policy Account Value of the
policy. This will be done at the same time that we deduct the monthly charge for
life insurance and the other monthly charges under the policy.
The monthly premium for this rider is guaranteed not to change.
- --------------------------------------------------------------------------------
VL-2822AA(01/00) Page 1
<PAGE>
- --------------------------------------------------------------------------------
EFFECTIVE DATE. If this rider is applied for in the application for the policy,
the effective date of this rider will be the Issue Date of the policy. If it is
added to the policy after the Issue Date, the effective date of this rider will
be the date we approve the supplemental application.
- --------------------------------------------------------
PART 1: BENEFITS
- --------------------------------------------------------
THIS PART EXPLAINS THE RIDER BENEFITS AND EXPLAINS WHEN THEY BECOME PAYABLE.
BENEFITS. This rider increases the Benefit Limit of the Convalescent Care
Benefits Rider by the amount of the Additional Benefit Limit shown in the Policy
Schedule. The Additional Benefit Limit becomes effective when the Benefit Limit
of the Convalescent Care Benefits Rider is reached. In all other respects, the
terms, exclusions and limitations of the Convalescent Care Benefits Rider
governing the payment of benefits apply to this rider except as follows:
a. The benefits payable under this Extension of Convalescent Care Benefits
Rider are subject to the Daily Maximums shown for this rider in the Policy
Schedule. The Daily Maximums for this rider are not affected by any change
in the Daily Maximums for the Convalescent Care Benefits Rider.
b. The Additional Benefit Limit provided by this rider is not affected by
changes to the policy Net Death Benefit or by changes to the Benefit Limit
of the Convalescent Care Benefits Rider.
c. Benefits will be paid under this rider for as long as:
1. The Benefit Conditions of the Convalescent Care Benefits Rider are
met; and
2. The Additional Benefit Limit is not reached.
d. If the policy, the Convalescent Care Benefits Rider, or this rider lapse
without value after a Benefit Period begins, the Insured will continue to
be eligible for benefits provided by this rider subject to the following
conditions:
1. The Insured's eligibility for benefits will end if a period of 30
consecutive days elapses during which benefits are not payable under
this rider. We will not count as part of that 30 days, any days the
Insured is confined in a legally operated hospital; and
2. We will not pay benefits in excess of those that we would have paid
had this rider remained in force.
- --------------------------------------------------------
PART 2: BENEFITS AFTER LAPSE
- --------------------------------------------------------
THIS PART EXPLAINS THE BENEFITS WHICH MAY BE PAYABLE FOR COVERED EXPENSE WHICH
BEGINS AFTER THE POLICY AND THIS RIDER ARE LAPSED.
GUARANTEED BENEFIT. After the policy and this rider have been in force for 3
years, this rider shall cover qualifying claims which begin after the policy and
this rider are lapsed. This guaranteed benefit shall be payable in lieu of the
benefit described in Part 1 of this rider.
The Daily Maximums payable for covered expense shall remain unchanged and shall
be the amount in effect as of the date of lapse. The Additional Benefit Limit,
however, shall be reduced to an amount equal to the greater of:
a. 30 times the Daily Maximum for Nursing Home Care; or
b. An amount equal to the total premium paid for this rider, including the
premium, if any, waived under any waiver of premium provision of the
policy.
In no event shall the Additional Benefit Limit provided under this part be
greater than it would have been had the policy and this rider not lapsed and had
remained in force.
The benefits provided under this part shall become effective on the same date
that they would have become effective had the Convalescent Care Benefits Rider
not lapsed. This would be on the date that the Convalescent Care Benefits Rider
payments would have ended because the policy Death Benefit was reduced to zero.
- --------------------------------------------------------------------------------
VL-2822AA(01/00) Page 2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------
PART 3: THE CONTRACT
- --------------------------------------------------------
THIS PART EXPLAINS OTHER IMPORTANT RULES AND CONDITIONS WHICH WILL AFFECT THIS
RIDER.
TERMINATION OF RIDER. This rider terminates:
a. Upon your written request;
b. Upon termination of the policy or the Convalescent Care Benefits Rider,
unless termination of the policy or the Convalescent Care Benefit Rider was
the result of reaching the Benefit Limit in that rider; or
c. When the Additional Benefit Limit is reached.
However, even if the policy and the Convalescent Care Benefit Rider lapse
without value, benefits may still be provided under Part 2 of this rider.
GRACE PERIOD NOTICE. We shall give you and the "DESIGNATED THIRD PARTY", if any,
a notice of any unpaid and due premium 30 days after such premium becomes due.
The policy and this rider shall then continue in force for an additional 30 days
after such notice has been given. Notice shall be considered to have been given
to you and the "DESIGNATED THIRD PARTY", 5 days after the date of our mailing
via first class United States mail, postage prepaid. If the premium is not paid
by the end of the additional 30 day period, except as provided in Part 2 under
the BENEFITS AFTER LAPSE provision, this rider shall then terminate without any
value.
As used in this provision, the "DESIGNATED THIRD PARTY", if any, is the person
that you have named in a written designation to receive notices of impending
lapses or terminations because of nonpayment of premium.
REINSTATEMENT. If the policy to which this rider is attached is reinstated, then
this rider may also be reinstated. The reinstatement of this rider shall be
subject to evidence of good health and insurability satisfactory to us. The
reinstated rider will only provide benefits for care or confinement which begins
after the date of reinstatement and will be subject to all conditions in the
rider.
If, however, the Insured was CHRONICALLY ILL when this rider lapsed and, if the
reinstatement is requested within 5 months after the date of the lapse, then in
lieu of submitting evidence of good health and insurability, this rider may be
reinstated by submitting to us a statement from the attending PHYSICIAN
certifying that the Insured is CHRONICALLY ILL. The reinstated rider will
provide benefits for care or confinement which begins after the date of the
lapse and will be subject to all conditions in the rider not inconsistent
herewith.
REPRESENTATIONS. In the absence of fraud, any statement made by you or the
Insured will be deemed a representation and not a warranty. Such statement may
not be used in defense of a claim, unless it is contained in a signed, written
application.
INCONTESTABILITY PERIOD. A misstatement by the Insured in any application for
the policy or this rider may be used to void or cancel this rider. During the
first 6 months following the effective date of this rider, we may take this
action only if the misstatement was material to the issuance of this rider.
After the first 6 months, but before the end of the first 24 months, we may take
this action only if the misstatement was material to both the issuance of this
rider and the claim for which benefits are being sought. After this rider has
been in force for 24 months, we can take this action only if we can show that
the Insured knowingly and intentionally misrepresented relevant facts relating
to his or her health. No benefits will be paid under this rider if it is voided
or canceled.
PRE-EXISTING CONDITIONS NOT EXCLUDED. We will NOT deny benefits for Pre-existing
Conditions. "PRE-EXISTING CONDITIONS" are physical or mental conditions which
existed when you applied for this rider. This provision does not preclude us
from exercising other remedies available to us under this rider because of
misrepresentation.
CONFORMITY WITH STATE AND FEDERAL STATUTES. If any provision of this rider is in
conflict with the statutes of the state in which you reside on the rider
effective date or with the Federal statutes which pertain to Qualified Long-Term
Care Insurance
- --------------------------------------------------------------------------------
VL-2822AA(01/00) Page 3
<PAGE>
- --------------------------------------------------------------------------------
contracts, the rider provision is automatically amended to meet the minimum
requirements of the state or Federal statute.
GENERAL PROVISION. This rider shall be subject to all the terms and conditions
of the policy which are not inconsistent herewith.
Signed for First Penn-Pacific Life Insurance Company at Oakbrook Terrace,
Illinois.
/s/ Marcia L. DuMond /s/ Roland C. Baker
Secretary President
- --------------------------------------------------------------------------------
VL-2822AA(01/00) Page 4
<PAGE>
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
- ------------------
A MEMBER OF LINCOLN FINANCIAL GROUP
EXHIBIT 1.5(d)
- --------------------------------------------------------------------------------
Fort Wayne, Indiana
Executive Office: 1801 South Meyers Road
- Oakbrook Terrace, Illinois 60181-5214 - (630) 495-3336
Administrative Office: [ADDRESS AND TELEPHONE NUMBER WILL BE INSERTED HERE]
EXTENSION OF CONVALESCENT CARE BENEFITS RIDER
WITH AUTOMATIC INCREASING BENEFITS
(Extending the Convalescent Care Benefits)
THIS RIDER EXTENDS THE BENEFITS PROVIDED BY THE CONVALESCENT
CARE BENEFITS RIDER. THE BENEFITS OF THIS RIDER BECOME EFFECTIVE AFTER THE
BENEFIT PAYMENTS UNDER THE CONVALESCENT CARE BENEFITS RIDER END
BECAUSE THE PAYMENTS REDUCED THE POLICY DEATH BENEFIT TO ZERO.
TAXATION: THIS RIDER IS INTENDED TO BE A QUALIFIED LONG-TERM CARE INSURANCE
CONTRACT UNDER SECTION 7702B(b) OF THE INTERNAL REVENUE CODE.
CAUTION: WE ISSUED THIS RIDER BASED ON YOUR AND THE INSURED'S ANSWERS TO THE
QUESTIONS ON YOUR APPLICATION. A COPY OF YOUR APPLICATION IS ENCLOSED. IF YOUR
ANSWERS OR THE INSURED'S ANSWERS ARE INCORRECT OR UNTRUE, WE MAY DENY BENEFITS
OR RESCIND THIS RIDER. THE BEST TIME TO CLEAR UP ANY QUESTION IS NOW, BEFORE A
CLAIM ARISES! IF, FOR ANY REASON, ANY OF YOUR ANSWERS OR THE INSURED'S ANSWERS
ARE INCORRECT, CONTACT US AT THE ADDRESS SHOWN ABOVE.
NOTICE TO OWNER: THIS RIDER MAY NOT COVER ALL OF THE LONG-TERM CARE EXPENSE
INCURRED BY THE INSURED DURING THE PERIOD OF COVERAGE. YOU ARE ADVISED TO
CAREFULLY REVIEW ALL POLICY AND RIDER LIMITATIONS.
RIGHT TO EXAMINE RIDER FOR 30 DAYS. It is important to us that you are satisfied
with this rider and that it meets with your insurance needs. If for any reason
you are not satisfied, you may return it to us within 30 days after its receipt.
It may be returned to us at the address of our Administrative Office listed
above, or to our agent through whom it was purchased. If returned, we will
refund the premiums you have paid and this rider will be void from its Issue
Date.
If this rider was applied for after the effective date of the policy and if you
return it to us within 30 days after its receipt, we will credit to the Policy
Account Value of the policy any premium which may have been deducted for this
rider and this rider will be void from its Issue Date.
WE PROMISE TO PAY the benefits provided by this rider for QUALIFIED LONG-TERM
CARE SERVICES if the Insured becomes CHRONICALLY ILL while this rider is in
force. Our payment will be subject to all of the terms and conditions of this
rider.
WHO IS COVERED. This rider covers the primary Insured under the policy. It does
not cover any other person.
RENEWABILITY. This rider is guaranteed renewable. We may not cancel or reduce
coverage provided by this rider. Renewal is subject to the TERMINATION OF RIDER
provision in Part 3 of this rider.
PREMIUMS. We have issued this rider in consideration of the payment of the first
premium and the statements made in the application, and in consideration of our
issuing to you the Convalescent Care Benefits Rider as part of this policy.
The monthly premium for this rider is shown in the Policy Schedule. Each month
we will deduct the premium for this rider from the Policy Account Value of the
policy. This will be done at the same time that we deduct the monthly charge for
life insurance and the other monthly charges under the policy.
The monthly premium for this rider is guaranteed
- --------------------------------------------------------------------------------
VL-2827AA(01/00) Page 1
<PAGE>
- --------------------------------------------------------------------------------
not to change.
- --------------------------------------------------------------------------------
L-2827AA(8/99) Page 2
<PAGE>
- --------------------------------------------------------------------------------
EFFECTIVE DATE. If this rider is applied for in the application for the policy,
the effective date of this rider will be the Issue Date of the policy. If it is
added to the policy after the Issue Date, the effective date of this rider will
be the date we approve the supplemental application.
- --------------------------------------------------------
PART 1: BENEFITS
- --------------------------------------------------------
THIS PART EXPLAINS THE RIDER BENEFITS AND EXPLAINS WHEN THEY BECOME PAYABLE.
BENEFITS. This rider increases the Benefit Limit of the Convalescent Care
Benefits Rider by an Additional Benefit Limit. The Additional Benefit Limit
becomes effective when the Benefit Limit of the Convalescent Care Benefits Rider
is reached.
The Additional Benefit Limit and the corresponding Daily Maximums as of the
effective date of this rider are shown in the Policy Schedule. On each rider
anniversary, the Additional Benefit Limit and the Daily Maximums for this rider
shall automatically increase by 5% of the amount then in effect. In all other
respects, the terms, exclusions and limitations of the Convalescent Care
Benefits Rider governing the payment of benefits apply to this rider except as
follows:
a. The benefits payable under this Extension of Convalescent Care Benefits
Rider are subject to the Daily Maximums and the Additional Benefit Limit
which is described above. The Daily Maximums and the Additional Benefit
Limit for this rider are not affected by any change in the Daily Maximums
and the Benefit Limit for the Convalescent Care Benefits Rider.
b. The Additional Benefit Limit provided by this rider is not affected by
changes to the policy Net Death Benefit or by changes to the Benefit Limit
of the Convalescent Care Benefits Rider.
c. Benefits will be paid under this rider for as long as:
1. The Benefit Conditions of the Convalescent Care Benefits Rider are
met; and
2. The Additional Benefit Limit is not reached.
d. If the policy, the Convalescent Care Benefits Rider, or this rider lapse
without value after a Benefit Period begins, the Insured will continue to
be eligible for benefits provided by this rider subject to the following
conditions:
1. The Insured's eligibility for benefits will end if a period of 30
consecutive days elapses during which benefits are not payable under
this rider. We will not count as part of that 30 days, any days the
Insured is confined in a legally operated hospital; and
2. We will not pay benefits in excess of those that we would have paid
had this rider remained in force.
- --------------------------------------------------------
PART 2: BENEFITS AFTER LAPSE
- --------------------------------------------------------
THIS PART EXPLAINS THE BENEFITS WHICH MAY BE PAYABLE FOR COVERED EXPENSE WHICH
BEGINS AFTER THE POLICY AND THIS RIDER ARE LAPSED.
GUARANTEED BENEFIT. After the policy and this rider have been in force for 3
years, this rider shall cover qualifying claims which begin after the policy and
this rider are lapsed. This guaranteed benefit shall be payable in lieu of the
benefit described in Part 1 of this rider.
The Daily Maximums payable for covered expense shall remain unchanged and shall
be the amount in effect as of the date of lapse. The Additional Benefit Limit,
however, shall be reduced to an amount equal to the greater of:
a. 30 times the Daily Maximum for Nursing Home Care; or
b. An amount equal to the total premium paid for this rider, including the
premium, if any, waived under any waiver of premium provision of the
policy.
In no event shall the Additional Benefit Limit provided under this part be
greater than it would have been had the policy and this rider not lapsed and had
remained in force.
The benefits provided under this part shall become effective on the same date
that they would have become effective had the Convalescent Care
- --------------------------------------------------------------------------------
L-2827AA(8/99) Page 3
<PAGE>
- --------------------------------------------------------------------------------
Benefits Rider not lapsed. This would be on the date that the Convalescent Care
Benefits Rider payments would have ended because the policy Death Benefit was
reduced to zero.
- --------------------------------------------------------
PART 3: THE CONTRACT
- --------------------------------------------------------
THIS PART EXPLAINS OTHER IMPORTANT RULES AND CONDITIONS WHICH WILL AFFECT THIS
RIDER.
TERMINATION OF RIDER. This rider terminates:
a. Upon your written request;
b. Upon termination of the policy or the Convalescent Care Benefits Rider,
unless termination of the policy or the Convalescent Care Benefit Rider was
the result of reaching the Benefit Limit in that rider; or
c. When the Additional Benefit Limit is reached.
However, even if the policy and the Convalescent Care Benefit Rider lapse
without value, benefits may still be provided under Part 2 of this rider.
GRACE PERIOD NOTICE. We shall give you and the "DESIGNATED THIRD PARTY", if any,
a notice of any unpaid and due premium 30 days after such premium becomes due.
The policy and this rider shall then continue in force for an additional 30 days
after such notice has been given. Notice shall be considered to have been given
to you and the "DESIGNATED THIRD PARTY", 5 days after the date of our mailing
via first class United States mail, postage prepaid. If the premium is not paid
by the end of the additional 30 day period, except as provided in Part 2 under
the BENEFITS AFTER LAPSE provision, this rider shall then terminate without any
value.
As used in this provision, the "DESIGNATED THIRD PARTY", if any, is the person
that you have named in a written designation to receive notices of impending
lapses or terminations because of nonpayment of premium.
REINSTATEMENT. If the policy to which this rider is attached is reinstated, then
this rider may also be reinstated. The reinstatement of this rider shall be
subject to evidence of good health and insurability satisfactory to us. The
reinstated rider will only provide benefits for care or confinement which begins
after the date of reinstatement and will be subject to all conditions in the
rider.
If, however, the Insured was CHRONICALLY ILL when this rider lapsed and, if the
reinstatement is requested within 5 months after the date of the lapse, then in
lieu of submitting evidence of good health and insurability, this rider may be
reinstated by submitting to us a statement from the attending PHYSICIAN
certifying that the Insured is CHRONICALLY Ill. The reinstated rider will
provide benefits for care or confinement which begins after the date of the
lapse and will be subject to all conditions in the rider not inconsistent
herewith.
REPRESENTATIONS. In the absence of fraud, any statement made by you or the
Insured will be deemed a representation and not a warranty. Such statement may
not be used in defense of a claim, unless it is contained in a signed, written
application.
INCONTESTABILITY PERIOD. A misstatement by the Insured in any application for
the policy or this rider may be used to void or cancel this rider. During the
first 6 months following the effective date of this rider, we may take this
action only if the misstatement was material to the issuance of this rider.
After the first 6 months, but before the end of the first 24 months, we may take
this action only if the misstatement was material to both the issuance of this
rider and the claim for which benefits are being sought. After this rider has
been in force for 24 months, we can take this action only if we can show that
the Insured knowingly and intentionally misrepresented relevant facts relating
to his or her health. No benefits will be paid under this rider if it is voided
or canceled.
PRE-EXISTING CONDITIONS NOT EXCLUDED. We will NOT deny benefits for Pre-existing
Conditions. "PRE-EXISTING CONDITIONS" are physical or mental conditions which
existed when you applied for this rider. This provision does not preclude us
from exercising other remedies available to us under this rider because of
misrepresentation.
CONFORMITY WITH STATE AND FEDERAL STATUTES. If any provision of this rider is in
conflict with the statutes of the state in which you reside on the rider
effective date or with the Federal statutes which pertain to Qualified Long-Term
Care Insurance
- --------------------------------------------------------------------------------
L-2827AA(8/99) Page 4
<PAGE>
- --------------------------------------------------------------------------------
contracts, the rider provision is automatically amended to meet the minimum
requirements of the state or Federal statute.
GENERAL PROVISION. This rider shall be subject to all the terms and conditions
of the policy which are not inconsistent herewith.
Signed for First Penn-Pacific Life Insurance Company at Oakbrook Terrace,
Illinois.
/s/ Marcia L. DuMond /s/ Roland C. Baker
Secretary President
- --------------------------------------------------------------------------------
L-2827AA(8/99) Page 5
<PAGE>
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
- ------------------
A MEMBER OF LINCOLN FINANCIAL GROUP
EXHIBIT 1.5(e)
- --------------------------------------------------------------------------------
Fort Wayne, Indiana
Executive Office: 1801 South Meyers Road
- Oakbrook Terrace, Illinois 60181-5214 - (630) 495-3336
Administrative Office: [ADDRESS AND TELEPHONE NUMBER WILL BE INSERTED HERE]
GUARANTEE ENHANCEMENT RIDER
GUARANTEE ENHANCEMENT BENEFIT. Subject to the Conditions set forth below, we
guarantee that the Specified Amount and the Convalescent Care Benefit Limit will
never be less than the Guaranteed Minimum Benefit shown in the policy.
CONDITIONS FOR RECEIVING THE RIDER BENEFIT. To qualify for the above described
benefit, the following conditions must be met:
- - You must have paid all Planned Periodic Premiums in the amounts and the
frequency scheduled (The amounts and the frequency of the Planned Period
Premiums, if any, are shown in the Policy Schedule);
- - You must not have made any Policy Loans or Partial Withdrawals;
- - You must not have changed or added benefits, or changed the Death Benefit
Option from Option 1 to Option 2, unless such change is made upon our
written recommendation; and
- - You must have followed our written recommendations, if any, to reduce the
total Convalescent Care Benefit Limit and Specified Amount. We will not
make any recommendation to reduce your benefits below the Guaranteed
Minimum Benefit.
CONSIDERATION. We issued this rider in consideration of the statements made in
the application and the payment of the Initial Premium shown in the Policy
Schedule. We will not charge a premium for this rider.
TERMINATION. This rider terminates:
- - When any condition for receiving benefits under this rider are not met;
- - Upon termination of the policy; or
- - Upon your written request to terminate this rider.
GENERAL PROVISIONS. This rider is a part of the policy to which it is attached.
It takes effect on the effective date of the policy.
This rider is subject to all the terms and conditions of the policy which are
not inconsistent herewith.
Signed for First Penn-Pacific Life Insurance Company at Oakbrook Terrace,
Illinois.
/s/ Marcia L. DuMond /s/ Roland C. Baker
Secretary President
- --------------------------------------------------------------------------------
VL-2872AA(01/00)
<PAGE>
Exhibit 1.6(a)
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
ARTICLES OF AMENDMENT
To Whom These Presents Come, Greeting:
WHEREAS, there have been presented to me at this office, Articles of Amendment
for:
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
and said Articles of Amendment have been prepared and signed in accordance with
the revisions of an Act entitled
"An Act concerning insurance, and declaring an
emergency," approved March 6, 1935, Section 11C of
Chapter 15A of the Acts of 1935.
NOW, THEREFORE, I, JOSEPH H. HOGSETT, Secretary of State of Indiana, hereby
certify that I have this day filed said articles in this office.
The effective date of these Articles of Amendment is January 1, 1993.
In Witness Whereof, I have hereunto set
my hand and affirmed the seal of the
State of Indiana, at the City of
Indianapolis, this Twentieth day of
November, 1992.
/s/ Joseph H. Hogsett
----------------------------------------
Joseph H. Hogsett, Secretary of State
By /s/ Michael W. [ILLEGIBLE]
----------------------------------------
[seal] Deputy
<PAGE>
[State of Indiana]
[Offices of Attorney General] [Indianapolis]
[Linley E. Pearson, Attorney General] [46204-2794]
[200 West Washington Street]
[219 State House]
November 18, 1992
CERTIFICATION
I have examined the Articles of Amendment of Articles of Incorporation of
First Pen-Pacific Life Insurance Company and I certify that they conform to the
provisions of the Indiana Insurance Law and are not inconsistent with the State
and Federal Constitutions.
Respectfully submitted,
LINLEY E. PEARSON
Attorney General of Indiana
By. /s/ Terry G. Duga
------------------------------------
Terry G. Duga
Deputy Attorney General
<PAGE>
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
A REDOMESTICATED STATE OF PENNSYLVANIA INSURANCE COMPANY
Stephen H. Lewis and James P. Sjoreen, the President and Secretary,
respectively of First Penn-Pacific Life Insurance Company (the "Company"),
desiring to give notice of corporate action effecting the amendment and complete
restatement of the Articles of Incorporation of the Company, as amended:
SUBDIVISION A
THE AMENDMENT
The text of the Articles of Incorporation has been amended and completely
restated so as to provide as follows:
ARTICLES OF INCORPORATION
OF
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
AS AMENDED AND COMPLETELY RESTATED
-----
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY, a corporation existing under
and pursuant to the laws of the State of Indiana (the "Company") hereby amends
and completely restates the provisions of the Articles of Agreement of First
Penn-Pacific Life Insurance Company which first became effective June 19, 1963,
as subsequently amended, as hereinafter set forth in these Articles of
Incorporation of First Penn-Pacific Life Insurance Company (the "Amended
Articles of Incorporation").
BE IT REMEMBERED that the following Amended Articles of Incorporation and
all matters heretofore done or hereafter to be done are in accordance with the
Indiana Insurance Law, as amended, IND. CODE Section 27-1-2-1 ET SEQ. (1992) and
all acts amendatory thereof and supplemental thereto (the "Act").
ARTICLE I
NAME
The name of this Company shall be First Penn-Pacific Life Insurance
Company.
<PAGE>
ARTICLE II
ADDRESS
The post office address of its principal office shall be:
1300 South Clinton Street
Fort Wayne, IN 46802
The name and address of its resident agent shall be:
The Prentice-Hall Corporation System, Inc.
Circle Tower
Indianapolis, IN 46204
ARTICLE III
PURPOSES AND POWERS
This Company is formed for the purpose of conducting the business of, and
acting as, an insurance company with the power to write such insurance as is
authorized under Class 1 of IND. CODE Section 27-1-5-1 (1992), as amended. The
Company shall have all of the rights and powers as set forth in IND. CODE
Section 27-1-7-2 (1992), as amended, and shall have the power to do all acts and
things necessary, convenient or expedient to carry out the purposes for which it
was formed.
ARTICLE IV
PERIOD OF EXISTENCE
The period during which the Company shall continue is perpetual.
ARTICLE V
CAPITAL STOCK AND PAID-IN CAPITAL
SECTION 1. PAID-IN CAPITAL. The Company shall have $2,500,000 in paid-in
capital.
SECTION 2. AUTHORIZED SHARES.
A. AUTHORIZED STOCK. The authorized shares of capital stock of
the Company shall consist of 200,000 shares of Common Stock, each of
which shall have a par value of twelve and 50/100 dollars ($12.50) per
share.
B. RELATIVE RIGHTS. All shares of Common Stock shall have the
same terms, conditions, rights, preferences, limitations and restrictions
as all other shares of Common Stock.
<PAGE>
C. VOTING RIGHTS. Each holder of record of shares of Common
Stock of the Company shall have the right to one vote for each share of
Common Stock standing in the shareholder's name on the books of the
Company on each matter submitted to a vote at any meeting of the
shareholders.
SECTION 3. EQUITABLE INTEREST IN RIGHTS OR SHARES. The Company, to the
extent permitted by law, shall be entitled to treat the person in whose name any
share or right is registered on the books of the Company as the owner thereof,
for all purposes, and shall not be bound to recognize any equitable or other
claim to, or interest in, such share or right on the part of any other person,
whether or not the Company shall have notice thereof.
ARTICLE VI
PLAN OF BUSINESS
The Company shall transact business as a stock company in accordance with
Article III of these Amended Articles of Incorporation. The Company may issue
insurance policies upon both the participating and the non-participating plan.
Payment of dividends in respect of capital stock of the Company shall be subject
to the rights, if any, of policyholders under participating policies issued by
the Company.
ARTICLE VII
INCORPORATORS
The names, occupations and post office addresses of the incorporators
are as follows:
<TABLE>
<CAPTION>
Name Occupation Address
<S> <C> <C>
Ian M. Rolland Chairman and Chief Executive 1300 South Clinton St.
Officer, Lincoln National Fort Wayne, IN 46802
Corporation and The Lincoln
National Life Insurance Company
Robert A. Anker President and Chief Operation 1300 South Clinton St.
Officer, Lincoln National Fort Wayne, IN 46802
Corporation and The Lincoln
National Life Insurance Company
Richard S. Robertson Executive Vice President, 1300 South Clinton St.
Lincoln National Corporation Fort Wayne, IN 46802
P. Kenneth Dunsire Executive Vice President, 1300 South Clinton St.
Lincoln National Corporation and Fort Wayne, IN 46802
The Lincoln National Life
Insurance Company
Dennis L. Schoff Associate Counsel, 1300 South Clinton St.
Lincoln National Corporation Fort Wayne, IN 46802
<PAGE>
<CAPTION>
<S> <C> <C>
Jonathan J. Meyers Associate Counsel, 1300 South Clinton St.
Lincoln National Corporation Fort Wayne, IN 46802
Diane M. Leakey Senior Law Assistant, 1300 South Clinton St.
Lincoln National Corporation Fort Wayne, IN 46802
</TABLE>
ARTICLE VIII
OFFICERS AND DIRECTORS
The names and post office addresses of the offices and directors of the
Company are as follows:
<TABLE>
<CAPTION>
Name Address Office
<S> <C> <C>
Stephen H. Lewis 1801 South Meyers Road President & Director
Oakbrook Terrace, IL 60181
James P. Sjoreen 1801 South Meyers Road Vice President, Secretary,
Oakbrook Terrace, IL 60181 Treasurer & Director
Thomas W. Fitch 1801 South Meyers Road Vice President
Oakbrook Terrace, IL 60181
Gerald S. Griffin 1801 South Meyers Road Vice President
Oakbrook Terrace, IL 60181
Richard C. Klein 1801 South Meyers Road Vice President & Actuary
Oakbrook Terrace, IL 60181
Carol J. Peacock 1801 South Meyers Road Vice President
Oakbrook Terrace, IL 60181
John J. Ptaszynski 1801 South Meyers Road Vice President
Oakbrook Terrace, IL 60181
Robert A. Anker 1300 South Clinton Street Director
Fort Wayne, IN 46802
P. Kenneth Dunsire 1300 South Clinton Street Director
Fort Wayne, IN 46802
Richard S. Robertson 1300 South Clinton Street Director
Fort Wayne, IN 46802
Ian M. Rolland 1300 South Clinton Street Director
Fort Wayne, IN 46802
Thomas M. West 1300 South Clinton Street Director
Fort Wayne, IN 46802
</TABLE>
<PAGE>
Each of the above named directors shall serve until the next annual
shareholders' meeting, and each of the officers shall serve until the board of
directors meeting following the next shareholders' meeting, and until the
officer's successor is chosen and qualified or until the officer's resignation,
removal, death or disqualification prior thereto.
ARTICLE IX
DIRECTORS
SECTION 1. MANAGEMENT. The business of the Company shall be managed by a
Board of Directors. The directors shall have all of the qualifications, powers
and authority and shall be subject to all limitations as set forth in the Act.
The number of directors of the Company shall be specified from time to time as
prescribed in the Company's bylaws.
SECTION 2. REMOVAL. Any or all members of the Board of Directors may be
removed, with or without cause, at a meeting of shareholders called for that
purpose by vote of 3/4 of the shares of capital stock of the Company outstanding
and entitled to vote.
ARTICLE X
REGULATION OF BUSINESS
SECTION 1. LOCATION OF MEETINGS. Meetings of the shareholders, the Board
of Directors or any committee of the Board of Directors may be held at such
place, within or without the State of Indiana, as may be specified in the
respective notices or waivers of notice thereof, PROVIDED, however, that
meetings of the Board of Directors may be held only at the principal office of
the Company or such other place as may be unanimously designated by the Board of
Directors.
SECTION 2. CODE OF BYLAWS. The Board of Directors shall have the power to
make, alter, amend or repeal the bylaws of the Company.
ARTICLE XI
AMENDMENTS
The Company reserves the right to amend, alter, change or repeal any
provision contained in the Articles of Incorporation, or in any amendment
hereto, or to add any provision to the Articles of Incorporation or to any
amendment hereto, in any manner now or hereafter prescribed or permitted by the
provisions of the Act or any amendment thereto, or by the provisions of any
other applicable statute of the State of Indiana; and all rights conferred upon
shareholders in the Articles of Incorporation or any amendment hereto are
granted subject to this reservation.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the incorporators as
set out in Article VII, execute these Articles of Incorporation and certify to
the truth of the facts herein stated.
/s/ Robert A. Anker /s/ Ian M. Rolland
- ------------------------ --------------------------
Robert A. Anker Ian M. Rolland
/s/ Richard S. Robertson /s/ P. Kenneth Dunsire
- ------------------------ --------------------------
Richard S. Robertson P. Kenneth Dunsire
/s/ Dennis L. Schoff /s/ Jonathan J. Meyers
- ------------------------ --------------------------
Dennis L. Schoff Jonathan J. Meyers
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
I, the undersigned, a Notary Public duly commissioned to take
acknowledgments and administer oaths in the State of Indiana, certify that
Dennis L. Schoff, Diane M. Leakey and Jonathan J. Myers, three of the
incorporators executing the foregoing Articles of Incorporation, personally
appeared before me, acknowledged the execution thereof, and swore to the truth
of the facts therein stated.
WITNESS my hand and Notarial Seal this 9th day of October, 1992.
/s/ Karen S. Miller
---------------------------
Notary Public
Karen S. Miller
---------------------------
(Printed Signature)
My Commission Expires: 3/5/96
------
My County of Resident: Allen
-----
SUBDIVISION B
MANNER OF ADOPTION AND VOTE
ACTION BY DIRECTORS. The Board of Directors of the Company, by unanimous
written consent, duly adopted a resolution proposing to the shareholders of the
Company entitled to vote in respect of the Amended Articles of Incorporation
that the provisions and terms of the Company's Articles of Incorporation be
amended so as to read as set forth above; and called a meeting of such
shareholders to be held on September 15, 1992, to adopt or reject the Amended
Articles of Incorporation.
ACTION BY SHAREHOLDERS. The Company has 200,000 shares of Common Stock
issued and
<PAGE>
entitled to vote in respect of the Amended Articles of Incorporation. At a
special meeting of the shareholders thereof, duly called, constituted and held
on September 15, 1992, at which all of the shareholders were present in person
or by proxy, the Amended Articles of Incorporation were adopted.
The number of shares entitled to vote in respect of the Amended Articles
of Incorporation, the number of shares voted in favor of the adoption of the
Amended Articles of Incorporation, and the number of shares voted against such
adoption are as follows:
<TABLE>
<CAPTION>
Total
-----
<S> <C>
Shares entitled to vote: 200.000
-------
Shares voted in favor: 200.000
-------
Shares voted against: 0
-------
</TABLE>
COMPLIANCE WITH LEGAL REQUIREMENTS. The manner of the adoption of the
Amended Articles of Incorporation and the vote by which they were adopted
constitute full legal compliance with the provisions of applicable law, the
Amended Articles of Incorporation, and the bylaws of the Company.
SUBDIVISION C
EFFECTIVE DATE OF AMENDMENT
These Amended Articles of Incorporation shall be effective at 12:01 A.M.,
January 1, 1993.
SUBDIVISION D
SURVIVAL OF ASSETS AND LIABILITIES
At and after the effective time of the redomestication as an Indiana
company, the Company shall succeed to and possess, without further act or deed:
all of the estate, rights, privileges, powers, and franchises, both public and
private, and all of the property, real, personal, and mixed, of First
Penn-Pacific Life Insurance Company, a Pennsylvania company ("FPP(PA)"); all
debts due to FPP(PA) of whatever account; and all claims, demands, property,
rights, privileges, powers and franchises and every other interest of FPP(PA).
Furthermore, the title to any real estate vested by deed or otherwise in FPP(PA)
shall not revert or be in any way impaired by reason of the redomestication, but
shall be vested in the Company; all rights of creditors and all liens upon any
property of the Company or of FPP(PA) shall be preserved unimpaired, limited in
lien to the property affected by such lien at the effective time of the
redomestication; and all debts, liabilities, and duties of FPP(PA) shall
thenceforth attach to the Company and may be enforced against it to the same
extent as if such debts, liabilities, and duties had been incurred or contracted
by it.
<PAGE>
IN WITNESS WHEREOF, the undersigned officers execute these Amended
Articles of Incorporation of the Company and certify to the truth of the facts
herein stated, this 9th day of October, 1992.
/s/ Stephen H. Lewis
---------------------------
Stephen H. Lewis, President
/s/ James P. Sjoreen
---------------------------
James P. Sjoreen, Secretary
STATE OF ILLINOIS )
) S:
COUNTY OF DUPAGE )
I, the undersigned, a Notary Public duly commissioned to take
acknowledgments and administer oaths in the State of Illinois, certify that
Stephen H. Lewis, President and James P. Sjoreen, Secretary, the officers
executing the foregoing Articles of Amendment of the Articles of Incorporation,
personally appeared before me, acknowledged the execution thereof, and swore to
the truth of the facts therein stated.
WITNESS my hand and Notarial Seal this 9th day of October, 1992.
/s/ Julie A. Brendt
---------------------------
Notary Public
Julie A. Brendt
---------------------------
Printed Signature
My Commission Expires: 3/9/93
------
My County of Resident: DuPage
------
This Instrument Prepared by: Dennis L. Schoff, Attorney-at-Law, 1300 South
Clinton Street, Fort Wayne, Indiana 46802.
<PAGE>
Exhibit 1.6(b)
BYLAWS
(As Last Amended 6/28/93)
OF
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
(an Indiana Company)
ARTICLE I
Shareholders
Section 1. Annual Meeting. An annual meeting of the shareholders shall be
held at such hour as shall be designated by the chief executive officer or the
board of directors on the fourth Wednesday of April, or such other date within
five months after the close of the fiscal year of the corporation as the chief
executive officer or the board of directors may select, in each year for the
purpose of electing directors for the terms hereinafter provided and for the
transaction of such other business as may properly come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday in the state of
Indiana, such meeting shall be held on the next succeeding business day.
Section 2. Special Meetings. Special meetings of the shareholders may be
called by the chief executive officer, by the board of directors, or by
shareholders holding not less than 25% of all votes entitled to be cast on any
issue to be considered at the special meeting who sign, date and deliver to the
secretary of the corporation one or more written demands for the meeting
describing the purpose or purposes for which it is to be held. Only business
within the purpose or purposes described in the meeting notice may be conducted
at a special shareholders meeting.
Section 3. Place of Meetings. All meetings of shareholders shall be held
at the principal office of the corporation in Fort Wayne, Indiana, or at such
other place, either within or without the state of Indiana, as may be specified
in the respective notices, or waivers of notice, of such meetings.
Section 4. Notice of Meetings. A written or printed notice, stating the
place, day and hour of the meeting, and in the case of a special meeting or when
required by law or by the articles of incorporation or these bylaws, the purpose
or purposes for which the meeting is called, shall be delivered or mailed by the
secretary, or by the officer or persons calling the meeting, at least thirty
(30) days
<PAGE>
before the date of the meeting, to each shareholder of record entitled to vote
at such meeting at such address as appears upon the stock records of the
corporation.
Section 5. Waiver of Notice. Notice of any meeting of shareholders may be
waived in writing by any shareholder if the waiver sets forth in reasonable
detail the purpose or purposes for which the meeting is called and the time and
place thereof. Attendance at any meeting in person, or by proxy when the
instrument of proxy sets forth in reasonable detail the purpose or purposes for
which the meeting is called, shall constitute a waiver of notice of such
meeting.
Section 6. Quorum. Unless otherwise provided by the articles of
incorporation or by these bylaws or by law, at any meeting of shareholders a
majority of the outstanding shares entitled to vote at such meeting, represented
in person or by proxy, shall constitute a quorum. If less than a majority of
such shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time. The shareholders present
at a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 7. Adjourned Meetings. At any adjourned meeting at which a quorum
shall be represented, any business may be transacted as might have been
transacted at the meeting as originally notified. If a new record date is or
must be established pursuant to law, notice of the adjourned meeting must be
given to persons who are shareholders as of the new record date.
Section 8. Voting at Shareholders' Meetings.
Subsection 1. Voting Rights. Unless otherwise provided by the
articles of incorporation or by these bylaws or by law, every shareholder
shall have the right at every shareholders' meeting to one vote for each
share standing in his or her name on the books of the corporation on the
date established by the board of directors as the record date for
determination of shareholders entitled to vote at such meeting; provided
that such date shall not exceed fifty (50) days preceding the date of the
meeting. If such date is not established by the board of directors, such
date shall be ten (10) days prior to the date of such meeting. Any
shareholder acquiring title to a share after the record date has been
established shall upon written request to the shareholder of record be
entitled to receive from the shareholder of record a proxy, with power of
substitution, to vote that share.
Subsection 2. Prohibition Against Voting Shares. No share shall be
voted at any meeting:
<PAGE>
(a) upon which any installment is due and unpaid; or
(b) which belongs to this corporation.
Subsection 3. Voting of Shares Owned by Corporations and
Fiduciaries. Shares of this corporation standing in the name of another
corporation may be voted by such officer, agent or proxy as the board of
directors of such other corporation may appoint, or as the bylaws of such
other corporation may prescribe. Shares held by fiduciaries may be voted
by the fiduciaries in such manner as the instrument or order appointing
such fiduciaries may direct. In the absence of such direction, or the
inability of the fiduciaries to act in accordance therewith, the
following provisions shall apply:
(a) where shares are held jointly by three (3) or more
fiduciaries, such shares shall be voted in accordance with the
will of the majority;
(b) where the fiduciaries, or a majority of them, cannot agree,
or where they are equally divided upon the question of voting such
shares, any court of general equity jurisdiction may, upon
petition filed by any of such fiduciaries, or by any party in
interest, direct the voting of such shares
as it may deem to be for the best interests of the beneficiaries,
and such shares shall be voted in accordance with such direction.
Subsection 4. Voting of Jointly Held Shares. Shares issued and
held in the name of two or more persons shall be voted in accordance with
the will of the majority, and if a majority of them cannot agree, or if
they are equally divided as to the voting of such shares, the shares
shall be divided equally between or among such persons for voting
purposes.
Subsection 5. Proxies. A shareholder may vote either in person or
by proxy executed in writing by the shareholder or a duly authorized
attorney-in-fact. No proxy shall be valid after eleven (11) months from
the date of its execution unless a longer time is expressly provided
therein.
Section 9. Order of Business. The order of business at each shareholders'
meeting shall be established by the person presiding at the meeting.
Section 10. Required Votes. A majority of the votes entitled to vote on
a matter represented at a meeting of shareholders at which a quorum is present
shall be required to take action on the
<PAGE>
matter, except for elections of directors which shall require a plurality of
votes, unless a different number is required by the articles of incorporation,
these bylaws or by law.
ARTICLE II
Board of Directors
Section 1. Number and Election of Directors. The business of the
corporation shall be managed by a board of directors composed of not less than
five nor more than fifteen members. The number of directors to serve for each
year shall be determined by resolution of the shareholders at the annual meeting
to be held each year; however, the board of directors may increase or decrease
the number of directors between annual meetings of the shareholders to a number
within the minimum and maximum as stated in this section.
<PAGE>
The directors shall be elected annually by the shareholders, each for a term of
one year, and shall hold office until their successors are elected and have
qualified.
Section 2. Qualifications of Directors. A majority of the directors
must, during their entire terms of service, be citizens of the United States or
Canada, and at least one of the directors shall reside in the state of Indiana.
Section 3. Directors' Oaths. Every director, when elected, shall take
and subscribe an oath that he will, insofar as the duty devolves upon him,
faithfully, honestly and diligently administer the affairs of the corporation,
and that he will not knowingly violate or willingly permit to be violated any of
the provisions of law applicable to the corporation. Such written form of oath
so taken subscribed and verified shall be filed with the minutes of the meeting
at which the oath is taken. Such oath shall be renewed by each director upon the
occasion of each election as a director of the corporation.
Section 4. Regular Meetings. A regular meeting of the board of
directors shall be held without other notice than this bylaw immediately after,
and at the same place as, the annual meeting of shareholders, or within thirty
days thereafter upon notice in the manner provided by these bylaws for calling
special meetings of the board. The board of directors may provide by resolution
the time and place, either within or without the state of Indiana, for the
holding of additional regular meetings without other notice than such
resolution. In lieu of a regular meeting of the board of directors, any action
required or permitted to be taken therein may be taken without a meeting in the
manner described in Section 11 of this Article.
Section 5. Special Meetings. Special meetings of the board of directors
may be called by the chairman of the board, or in his absence or incapacity or
if such office is vacant, by the president. The secretary shall call special
meetings of the board of directors when requested in writing to do so by any
member thereof. All special meetings of the board of directors shall be held at
the principal office of the corporation in Fort Wayne, Indiana, or at such other
<PAGE>
place, either within or without the state of Indiana, as may be unanimously
designated by the board of directors, and upon notice provided by these bylaws.
Section 6. Notice of Meetings. Unless otherwise provided by these
bylaws, notice of any meeting of the board of directors shall be given not less
than two days before the date fixed for such meeting by oral, telefax,
telegraphic, telephonic, electronic or written communication stating the time
and place thereof and delivered to each member of the board of directors or
telegraphed or mailed to such director at his or her address as it appears on
the books of the corporation.
Section 7. Waiver of Notice. A director may sign a written waiver of
notice either before the time of the meeting, at the time of the meeting or
after the time of the meeting, if the waiver sets forth in reasonable detail the
purpose or purposes for which the meeting is called and the time and place
thereof. A director's attendance at, or participation in, a meeting waives any
required notice to the director of the meeting.
Section 8. Vacancies. A vacancy in the board of directors caused by an
increase in the number of directors or otherwise (except death, resignation,
removal or disqualification), shall be filled by a majority vote of the
remaining members of the board until the next annual meeting of the
shareholders. A vacancy in the board of directors caused by death, resignation,
removal, disqualification or otherwise shall be filled by a majority vote of the
remaining members of the board for the unexpired term of the directorship.
Section 9. Quorum. The attendance of not less than a majority of the
whole board of directors shall be necessary to constitute a quorum for the
transaction of any business except the filling of vacancies, but if fewer than a
majority of the directors is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
Section 10. Required Votes. The act of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the board of
directors, unless a greater number is
<PAGE>
required by the articles of incorporation or by these bylaws or by law.
Section 11. Action Without a Meeting. Unless otherwise provided in the
articles of incorporation, any action required or permitted to be taken at any
meeting of the board of directors or of any committee thereof may be taken
without a meeting if, before the action is taken, a written consent to such
action is signed by all members of the board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of the
board or committee.
Section 12. Meeting by Conference Call. Unless otherwise provided by
the articles of incorporation, any or all members of the board of directors or
of a committee designated by the board may participate in a meeting of the board
or committee by means of a conference telephone or similar communications
equipment by which all persons participating in the meeting can communicate with
each other, and participation in this manner constitutes presence in person at
the meeting.
Section 13. Removal of Directors. Any or all members of the board of
directors may be removed, with or without cause, at a meeting of shareholders
called for that purpose by a vote of three-fourths of the shares of the
corporation outstanding and entitled to vote. A director may be removed only at
a meeting called for that purpose and the notice of the meeting must state that
the purpose, or one of the purposes, of the meeting is removal of the director.
Section 14. Other Duties of Directors. The board of directors shall
keep a record of the attendance of directors at meetings thereof, and the
secretary shall annually, for and on behalf of the board of directors, make a
report showing the names of the directors, the number of regular and special
meetings of the board, the number of meetings attended, and the number of
meetings from which each director was absent, which report shall be read at, and
incorporated in the minutes of, each annual meeting of shareholders. The
directors, at such times as they are meeting as a board of directors, shall
require the secretary to make such communications from the Department of
Insurance of the State of Indiana as such Department designates a matter of
record in the minutes of the meeting of the board of directors.
Section 15. Annual Statement of Condition. The board of directors, or a
committee therefrom, shall examine the corporation once each year and submit a
complete statement of the condition of the corporation to the Department of
Insurance of the State of Indiana.
<PAGE>
ARTICLE III
Board Committees
Section 1. Executive and Other Board Committees. The board of
directors may, by resolution adopted by a majority of the whole board, from time
to time designate from among its members an executive committee, or one or more
other committees, each of which shall have two or more members who serve until
the meeting of the board of directors held immediately after the next annual
meeting of the shareholders. The executive committee may exercise all the
authority of the board of directors in the management of the corporation during
the interval between meetings of the board. Each other committee shall exercise
such authority of the board of directors to the extent provided in the
resolution establishing the committee; however, no such committee shall (1)
authorize distributions, except to authorize or approve a reacquisition of
shares if done according to a formula or method prescribed by the board of
directors; (2) approve or propose to shareholders action required by law to be
approved by shareholders; (3) fill vacancies on the board of directors or on any
committee thereof; (4) amend the articles of incorporation; (5) adopt, amend, or
repeal the bylaws; or (6) approve a plan of merger not requiring shareholder
approval.
The minutes of each meeting of the executive committee shall be read
at the next succeeding meeting of the board of directors.
Section 2. Investment Committee. The board of directors may, by
resolution adopted by a majority of the whole board, from time to time designate
from among its members an investment committee, which shall consist of one or
more members who shall serve until the meeting of the board of directors held
immediately after the next annual meeting of the shareholders.
The investment committee shall have and possess all the rights and
powers of the board of directors to make, supervise and direct the investments
of the corporation, to sell, assign, exchange, lease, or otherwise dispose of
such investments, and to do and perform all things deemed necessary and proper
in relation to such investments. The investment committee shall have the further
right and power to delegate its powers and duties to such officers, employees
and agents, including investment advisers, of the corporation as it may select
and appoint in its discretion, subject to such policies, plans, standards,
limitations and objectives as the investment committee may prescribe from time
to time.
The investment committee shall keep a record of its proceedings, shall
make reports to the board of directors of its actions as may be required by law
or by the board, shall adopt its own rules of procedure, and shall take such
other actions as may be required from time to time by Indiana Code Section
27-1-12-2 or any
<PAGE>
other law of the State of Indiana relating to investments by life insurance
companies.
(Amended 6/28/93)
<PAGE>
ARTICLE IV
Officers
Section 1. Elected Officers. The elected officers of the corporation
shall be a president, a secretary, and a treasurer, and may also include a
chairman of the board, one or more vice presidents of a class or classes as the
board of directors may determine, and such other officers as the board of
directors may determine. Any two or more offices may be held by the same person.
Section 2. Appointed Officers. The appointed officers of the corporation
may include one or more second vice presidents, assistant vice presidents,
assistant treasurers, and assistant secretaries.
Section 3. Election or Appointment and Term of Office. The elected
officers of the corporation shall be elected annually by the board of directors,
each for a term of one year, at the regular meeting of the board of directors
held after the annual meeting of the shareholders. The appointed officers of the
corporation shall be appointed annually by the chief executive officer
immediately following the regular board meeting held after each annual meeting
of shareholders. Additional officers may be elected at any regular or special
meeting of the board of directors to serve until the regular meeting of the
board held after the next annual meeting of the shareholders and additional
officers may be appointed by the chief executive officer at any time to serve
until the next annual appointment of officers. Each officer shall hold office
until his or her successor is elected or appointed and has qualified or until
his or her death, resignation, retirement or removal.
Section 4. Removal. Any officer may be removed by the board of
directors and any appointed officer may be removed by the chief executive
officer, with or without cause, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed.
Section 5. Vacancies. A vacancy in the office of president, secretary
or treasurer because of death, resignation, retirement, removal or otherwise,
shall be filled by the board of directors, and a vacancy in any other elected
office may be filled by the board of directors.
Section 6. Chief Executive Officer. If the elected officers of the
corporation include both a chairman of the board and a president, the board of
directors shall designate one of such officers to be the chief executive officer
of the corporation. If the office of chairman of the board is vacant, the
president shall be chief executive officer of
<PAGE>
the corporation. The chief executive officer of the corporation shall be,
subject to the board of directors, in general charge of the affairs of the
corporation.
Section 7. Chairman of the Board. The chairman of the board shall
preside at all meetings of the shareholders and of the board of directors at
which he may be present and shall have such other powers and duties as may be
determined by the board of directors.
Section 8. President. The president shall have such powers and duties
as may be determined by the board of directors. In the absence of the chairman
of the board, or if such office is vacant, the president shall have all the
powers of the chairman of the board and shall perform all his or her duties.
Section 9. Vice Presidents. A vice president shall perform such duties
as may be assigned by the chief executive officer or the board of directors. In
the absence of the president and in accordance with such order of priority as
may be established by the board of directors, a vice president may perform the
duties of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president.
Section 10. Second Vice Presidents and Assistant Vice Presidents. A
second vice president and an assistant vice president shall perform such duties
as may be assigned by the chief executive officer or the board of directors.
Section 11. Secretary. The secretary shall (a) keep the minutes of
the shareholders' and board of directors' meetings in one or more books provided
for that purpose, (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law, (c) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation is affixed to all documents, the execution of which on behalf of
the corporation under its seal is duly authorized, and (d) in general perform
all duties incident to the office of secretary and such other duties as may be
assigned by the chief executive officer or the board of directors.
Section 12. Assistant Secretaries. In the absence of the secretary, an
assistant secretary shall have the power to perform his or her duties including
the certification, execution and attestation of corporate records and corporate
instruments. Assistant secretaries shall perform such other duties as may be
assigned to them by the chief executive officer or the board of directors.
Section 13. Treasurer. The treasurer shall (a) have charge and custody
of all funds and securities of the corporation, (b) receive and give receipts
for monies due and payable to the corporation from
<PAGE>
any source whatsoever, (c) deposit all such monies in the name of the
corporation in such depositories as are selected in the manner designated by the
board of directors, and (d) in general perform all duties incident to the office
of treasurer and such other duties as may be assigned by the chief executive
officer or the board of directors. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such
form and with such surety or sureties as the board of directors shall determine.
Section 14. Assistant Treasurers. In the absence of the treasurer, an
assistant treasurer shall have the power to perform his or her duties. Assistant
treasurers shall perform such other duties as may be assigned to them by the
chief executive officer or the board of directors.
Section 15. Positions and Titles. The chief executive officer may
establish such positions and appoint persons to them with such titles as he or
she may deem necessary. He or she may also fix the duties of such positions and
may discharge persons from them.
ARTICLE V
Corporate Instruments, Loans, Books and Records
Section 1. Corporate Instruments. The board of directors may authorize
any officer or officers to execute and deliver any instrument in the name of or
on behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
Section 3. Loans to Officers and Directors. Neither the corporation, nor
any of its directors or officers acting for and on its behalf, shall directly or
indirectly loan any of its funds, monies, capital or other property to any
director or officer of the corporation. This section shall not apply to loans
upon a policy of insurance issued by the corporation not in excess of the net
cash surrender value thereof.
Section 4. Books and Records. The corporation shall keep correct and
complete books of account and minutes of the proceedings of its shareholders,
directors and board committees, and shall likewise keep at its principal office
a complete and accurate list of shareholders, giving the names and addresses of
all shareholders and the number of shares held by each.
<PAGE>
ARTICLE VI
Stock Certificates and Transfer of Shares
Section 1. Certificates for Shares. Each shareholder shall be entitled to
a certificate, signed by the president or a vice president and the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him or her in the corporation. If such certificate is countersigned by the
written signature of a transfer agent other than the corporation or an employee
of the corporation, the signatures of the officers of the corporation may be
facsimiles. If such certificate is countersigned by the written signature of a
registrar other than the corporation or an employee of the corporation, the
signatures of the transfer agent and the officers of the corporation may be
facsimiles. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he or she
were such officer, transfer agent, or registrar at the date of its issue.
Certificates representing shares of the corporation shall be in such form
consistent with the laws of the state of Indiana as shall be determined by the
board of directors. All certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and the date of issue,
shall be entered on the stock transfer records of the corporation.
Section 2. Lost, Destroyed or Wrongfully Taken Certificates. Any person
claiming a certificate of stock to have been lost, destroyed or wrongfully
taken, and who requests the issuance of a new certificate before the corporation
has notice that the certificate alleged to have been lost, destroyed or
wrongfully taken has been acquired by a bona fide purchaser, shall make an
affidavit of the fact and shall give the corporation and its transfer agents and
registrars a bond of indemnity with unlimited liability, in form and with one or
more corporate sureties satisfactory to the chief executive officer or treasurer
of the corporation (except that the chief executive officer or treasurer may
authorize the acceptance of a bond of different amount, or a bond with personal
surety thereon, or a personal agreement of indemnity), whereupon in the
discretion of the chief executive officer or the treasurer and except as
otherwise provided by law a new certificate may be issued of the same tenor and
for the same number of shares as the one alleged to have been lost, destroyed or
wrongfully taken. In lieu of a separate bond of indemnity in each case, the
chief executive officer or the treasurer may accept an assumption of liability
under a blanket bond issued in favor of the corporation and its transfer agents
and registrars by one or more
<PAGE>
corporate sureties satisfactory to the chief executive officer or treasurer.
Section 3. Transfer of Shares. Transfer of shares of the corporation
shall be made on the stock transfer records of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the corporation,
and, except as otherwise provided in these bylaws, upon surrender for
cancellation of the certificates for such shares.
Section 4. Transfer Agent and Registrars. The board of directors by
resolution may appoint a transfer agent or agents or a registrar or registrars
of transfer, or both. All such appointments shall confer such powers, rights,
duties and obligations consistent with the laws of the state of Indiana as the
board of directors shall determine. The board of directors may appoint the
treasurer of the corporation and one or more assistant treasurers to serve as
transfer agent or agents.
ARTICLE VII
Liability
No person or his personal representatives shall be liable to the
corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken by such person in good faith as an officer or employee of
the corporation, or as a director, officer, partner, trustee, employee, or agent
of another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise, whether for profit or not, which he
serves or served at the request of the corporation, if such person (a) exercised
and used the same degree of care and skill as a prudent man would have exercised
and used under like circumstances, charged with a like duty, or (b) took or
omitted to take such action in reliance upon advice of counsel for the
corporation or such enterprise or upon statements made or information furnished
by persons employed or retained by the corporation or such enterprise upon which
he had reasonable grounds to
<PAGE>
rely. The foregoing shall not be exclusive of other rights and defenses to which
such person or his personal representatives may be entitled under law.
ARTICLE VIII
Indemnification
Section 1. Actions by a Third Party. The corporation shall indemnify any
person who is or was a party, or is threatened to be made a defendant or
respondent, to a proceeding, including any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than actions by or in the right of the corporation), and
whether formal or informal, who is or was a director, officer, or employee of
the corporation or who, while a director, officer, or employee of the
corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise, whether for profit or not, against:
(a) any reasonable expenses (including attorneys' fees) incurred with
respect to a proceeding, if such person is wholly successful on the
merits or otherwise in the defense of such proceeding, or
(b) judgments, settlements, penalties, fines (including excise taxes
assessed with respect to employee benefit plans) and reasonable expenses
(including attorneys' fees) incurred with respect to a proceeding where
such person is not wholly successful on the merits or otherwise in the
defense of the proceeding if:
(i) the individual's conduct was in good faith; and
(ii) the individual reasonably believed:
(A) in the case of conduct in the individual's capacity
as a director, officer or employee of the corporation, that
the individual's conduct was in the corporation's best
interests; and
(B) in all other cases, that the individual's conduct
was at least not opposed to the corporation's best
interests; and
(iii) in the case of any criminal proceeding, the individual
either:
(A) had reasonable cause to believe the
<PAGE>
individual's conduct was lawful; or
(B) had no reasonable cause to believe the individual's
conduct was unlawful.
The termination of a proceeding by a judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not,
of itself, determinative that the director, officer, or employee did
not meet the standard of conduct described in this section.
Section 2. Actions by or in the Right of the Corporation. The corporation
shall indemnify any person who is or was a party or is threatened to be made a
defendant or respondent, to a proceeding, including any threatened, pending or
completed action, suit or proceeding, by or in the right of the corporation to
procure a judgment in its favor, by reason of the fact that such person is or
was a director, officer, or employee of the corporation or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise, whether for
profit or not, against any reasonable expenses (including attorneys' fees)
(a) if such person is wholly successful on the merits or otherwise in
the defense of such proceeding, or
(b) if not wholly successful:
(i) the individual's conduct was in good faith; and
(ii) the individual reasonably believed:
<PAGE>
(A) in the case of conduct in the individual's capacity as a
director, officer, or employee of the corporation, that the
individual's conduct was in the corporation's best
interests; and
(B) in all other cases that the individual's conduct was at
least not opposed to the corporation's best interests,
except that no indemnification shall be made in respect of
any claim, issue, or matter as to which such person shall
have been adjudged to be liable to the corporation unless
and only to the extent that the court in which such action
or suit was brought shall determine upon application, that
despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such expenses
which such court shall deem proper.
Section 3. Methods of Determining Whether Standards for Indemnification
Have Been Met. Any indemnification under Sections 1 or 2 of this Article (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, or employee is proper in the circumstances because he has met the
applicable standards of conduct set forth in Section 1 or 2. In the case of
directors of the corporation, such determination shall be made by any one of the
following procedures:
(a) by the board of directors by a majority vote of a quorum consisting
of directors not at the time parties to the proceeding;
(b) if a quorum cannot be obtained under (a), by majority vote of a
committee duly designated by the board of directors (in which designation
directors who are parties may participate), consisting solely of two or
more directors not at the time parties to the proceeding;
<PAGE>
(c) by special legal counsel:
(i) selected by the board of directors or a committee thereof
in the manner prescribed in (a) or (b); or
(ii) if a quorum of the board of directors cannot be obtained
under (a) and a committee cannot be designated under (b),
selected by a majority vote of the full board of directors (in
which selection directors who are parties may participate)
In the case of persons who are not directors of the corporation,
such determination shall be made (a) by the chief executive
officer of the corporation or (b) if the chief executive officer
so directs or in his absence, in the manner such determination
would be made if the person were a director of the corporation.
Section 4. Advancement of Defense Expenses. The corporation may pay for
or reimburse the reasonable expenses incurred by a director, officer, or
employee who is a party to a proceeding described in Section 1 or 2 of this
Article in advance of the final disposition of said proceeding if:
(a) the director, officer, or employee furnishes the corporation a
written affirmation of his good faith belief that he has met the standard
of conduct described in Section 1 or 2; and
(b) the director, officer, or employee furnishes the corporation a
written undertaking, executed personally or on his behalf, to repay the
advance if it is ultimately determined that the director, officer, or
employee did not meet the standard of conduct; and
(c) a determination is made that the facts then known to those making
the determination would not preclude indemnification under Section 1
or 2.
The undertaking required by this Section must be an unlimited general obligation
of the director, officer, or employee but need not be secured and may be
accepted by the corporation without reference to the financial ability of such
person to make repayment.
Section 5. Non-Exclusiveness of Indemnification. The indemnification and
advancement of expenses provided for or authorized by this Article does not
exclude any other rights to indemnification or advancement of expenses that a
person may have under:
(a) the corporation's articles of incorporation or bylaws;
(b) any resolution of the board of directors or the
<PAGE>
shareholders of the corporation;
(c) any other authorization adopted by the shareholders; or
(d) otherwise as provided by law, both as to such person's actions in
his capacity as a director, officer, or employee of the
corporation and as to actions in another capacity while holding
such office.
Such indemnification shall continue as to a person who has ceased to be a
director, officer, or employee, and shall inure to the benefit of the heirs and
personal representatives of such person.
ARTICLE IX
Fiscal Year
The fiscal year of the corporation shall begin on the first day of
January of each year and end upon the last day of December next succeeding.
ARTICLE X
Amendments
These bylaws may be altered, amended or repealed and new bylaws may be
made by the board of directors.
<PAGE>
Exhibit 1.10(a)
FIRST PENN-PACIFIC 1801 South Meyers Road
LIFE INSURANCE CO. Oakbrook Terrace, Illinois 60181-5214
A member of Lincoln Financial Group (630) 495-3336
Application for Life Insurance
Part I
Please Print Using Dark Ink
SECTION I -- PROPOSED INSURED #1 (Applicant/Owner unless otherwise noted in
Section III)
Date of
Name:_____________________ Sex: ___ Birth:___/___/___ Age:____
(First)(Middle)(Last) M D Y
State of Social
Birth: ___________ Security No.:____________
Home Address: ________________________________________________
City State Zip
Phone # (Home) (___) __________
Marital Status: __ Occupation:________________________________
Employer: _________________________________________
Business Address: ____________________________________________
City State Zip
Phone #(Business) (___) ______________________________________
SECTION II - PROPOSED INSURED #2 (Contingent Owner, unless otherwise noted in
Section III) (Complete ONLY if applying for Second-to-Die Coverage)
Date of
Name:_____________________ Sex: ___ Birth:___/___/___ Age:____
(First)(Middle)(Last) M D Y
State of Social
Birth: ___________ Security No.:____________
Home Address: ________________________________________________
City State Zip
Phone # (Home) (___) __________
Marital Status: __ Occupation:________________________________
Employer: _________________________________________
Business Address: ____________________________________________
City State Zip
Phone #(Business) (___) ______________________________________
SECTION III - APPLICANT/OWNER (or Payor)(Applicant must sign Page 4) (Name of
Applicant/Owner (if other than Proposed Insured #1)
Date of
Name:_____________________ Birth:___/___/___
M D Y
Social Security No.
<PAGE>
or Taxpayer I.D. No.:_______________________
Address: _____________________________________________________
City State Zip
Relationship to
Proposed Insured(s): ________________________________
Name of Contingent Owner (if other than Proposed Insured
#2)(applicable only to Second-to-Die Coverage)
Date of
Name:_____________________ Birth:___/___/___
M D Y
Social Security No.
or Taxpayer I.D. No.:_______________________
All notices and reports will be sent to the Owner, unless otherwise specified
in Third Party Designation.
Relationship to
Proposed Insured(s): ________________________________
SECTION IV - BENEFICIARY
Primary Beneficiary: (full name and relationship to Proposed Insured(s): ______
_______________________________________________________________________________
Contingent: (full name and relationship to Proposed Insured(s): _______________
_______________________________________________________________________________
NOTE: Unless otherwise noted, death benefits will be divided equally among
multiple surviving beneficiaries.
SECTION V - POLICY BENEFITS AND PREMIUMS
Plan of Insurance: _________________ Specified Amount: _______
Premium Frequency:
__ Single Premium $_______________
Death Benefit Option __ Option 1 __ Option 2
__ Annual __ Semi-Annual
Rider(s): Other Riders (if available)
__ Quarterly __ PAC
Convalescent Care Benefits (Long-Term Care)
__ Waiver of Monthly Deduction __ Other
__ 2 years and no extension __ ________________________
__ 2 years and 2 year extension __ ________________________
Premium Payment Schedule: (if other than single)
__ 3 years and lifetime extension __ ________________________
Planned Periodic Premium $____________________
__ Other Combination ____________ __
________________________
Additional Initial Premium $__________________
Additional submitted with App $ ______________
L-3900 AA (10/99)
<PAGE>
<TABLE>
<CAPTION>
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SECTION VI - NON-MEDICAL QUESTIONS Proposed Insured #1 Proposed Insured #2
Has any Proposed Insured: (if yes, give name, date and
details in Section VIII) Yes No Yes No
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<S> <C> <C>
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(a) smoked cigarettes in the past 12 months --- --- --- ---
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(b) used any other type of tobacco or nicotine product
within the past 12 months? --- --- --- ---
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(c) been a cigarette smoker, user of tobacco or nicotine
products in the past and quit? (If yes, indicate
month and year) --- --- --- ---
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(d) piloted an aircraft within the last 3 years, or
has any intention of becoming a pilot? --- --- --- ---
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(e) participated in a sport or avocation such as
vehicle racing, sky diving, hang gliding, or scuba diving? --- --- --- ---
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(f) any intention of traveling or residing outside
the U.S. or Canada within the next 2 years? --- --- --- ---
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(g) within the past 3 years had their drivers
license suspended or revoked or been cited for more than
2 moving violations, or been convicted of DUI? --- --- --- ---
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(h) received advice or treatment for the use of
alcohol or drugs, or been a member of A.A.? --- --- --- ---
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(i) used marijuana, cocaine, heroin, amphetamines,
barbiturates, LSD, PCP or any other controlled substance
except that taken in doses as prescribed by a physician? --- --- --- ---
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SECTION VII - MEDICAL SECTION - Complete this section even if any of the Proposed Insured(s) will be medically
examined.
Proposed Insured #1 Proposed Insured #2
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1.(a) Height: ____ Ft. _____In. 1.(b) Height: ____ Ft. _____In.
Weight __________ lbs. Weight __________ lbs.
Weight Change in past year and reason? Weight Change in past year and reason?
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Personal Physician's Name, Address Personal Physician's Name, Address
and Phone Number__________________ and Phone Number___________________
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<S> <C>
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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Circle conditions to which "yes" answers apply giving Proposed Insured #1 Proposed Insured #2
details in Section VII. Yes No Yes No
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<S> <C> <C>
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2. During the past 10 years, has any Proposed Insured: --- --- --- ---
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(a) had or been advised to have an electrocardiogram, xray,
diagnostic test, laboratory test or any surgical operation
which has not been performed? --- --- --- ---
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(b) had treatment in a clinic, hospital or other
medical facility? --- --- --- ---
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3. Has any Proposed Insured had, been told they have, been
diagnosed or treated by a physical or taken medication for:
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(a) dizziness, syncope, vertigo, seizures, epilepsy, falls,
or any disease or disorder of the brain or nervous system? --- --- --- ---
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(b) depression, anxiety, psychosis, mental or nervous disorder
or consulted a psychiatrist or psychologist? --- --- --- ---
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(c) chest paid, angina, heart attack, coronary artery
disease, heart surgery, congestive heart failure, heart murmur,
palpitation, atrial fibrillation, or any other disease or
disorder of the heart or circulatory system? --- --- --- ---
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(d) high blood pressure, stroke, TIA (transient ischemic
attack) peripheral vascular disease, aneurysm, disease or --- --- --- ---
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(e) Parkinson's disease, tremor, multiple sclerosis,
Alzheimer's disease, dementia, memory loss? --- --- --- ---
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(f) diabetes, disease or disorder of they thyroid, pancreas,
or other endocrine glands? --- --- --- ---
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(g) cancer, tumor, polyp, cyst, lymphoma, leukemia, or
other malignant disorder? --- --- --- ---
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(h) asthma, emphysema, bronchitis, sleep apnea, or other
disease or disorder of the lung or respiratory system? --- --- --- ---
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(i) disease of the kidney, bladder, prostate, breast, or
reproductive organs, urine abnormality or sexually
transmitted disease? --- --- --- ---
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(j) cirrhosis of the liver, ulcerative colitis, Crohns
disease, hepatitis or other disease or disorder of the stomach,
liver, colon, rectum or intestines? --- --- --- ---
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(k) arthritis, osteoporosis, paralysis or disease or
disorder of the muscles, bones, joints or connective tissues? --- --- --- ---
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<PAGE>
(l) Acquired Immune Deficiency Syndrome (AIDS), AIDS Related
Complex (ARC), or any other immunological disorder, or tested
positive for the HIV virus? --- --- --- ---
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(m) any disease or disorder of the eyes, ears, nose, throat,
skin or lymph glands? --- --- --- ---
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4. Has any Proposed Insured within the past 5 years been
consulted, examined, or treated by any physician or practioner
for reasons not stated in this application? --- --- --- ---
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5. Is any Proposed Insured currently taking any medications?
(If yes, please list them and prescribed doses.) --- --- --- ---
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6. (a) Does any Proposed Insured have any impairment, whether
mental or physical, for which any Proposed Insured needs or
receives assistance or supervision in performing any daily
living activities such as bathing, dressing, eating, transferring
or locomotion, toileting, or bowel and bladder control? --- --- --- ---
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(b) Does any Proposed Insured use a wheelchair, walker or cane,
oxygen, catheter, dialysis machine, or other mechanical device? --- --- --- ---
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(c) Within the past 5 years, has any Proposed Insured been
confined or recommended admission to a nursing home or
received home heath care or is any Proposed Insured currently
confined to a hospital or nursing facility? --- --- --- ---
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(d) Is any Proposed Insured currently covered by Medicaid? --- --- --- ---
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</TABLE>
L-3900 AA (10/99)
<PAGE>
<TABLE>
<CAPTION>
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SECTION VIII - DETAILS TO MEDICAL QUESTIONS IN SECTIONS VI AND VII
- ---------------------------------------------------------------------------------------------------------------------------
Name and Address of Attending Doctor of
Proposed Insured Question # Date Details or Reason Hospital
<S> <C> <C> <C> <C>
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(If more room needed, please use a separate sheet of paper and have the Proposed
Insured sign and date the form.)
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</TABLE>
<TABLE>
<CAPTION>
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SECTION IX - EXISTING AND PENDING INSURANCE
Life and long-term care insurance in-force or pending on Proposed Insured(s)
- ---------------------------------------------------------------------------------------------------------------------------
Long-Term Care Max
Name of Insured Company Year of Issue Life Amount$ Daily Benefit Insured to be Replaced?
<S> <C> <C> <C> <C> <C>
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</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Proposed Insured #1 Proposed Insured #2
Regarding Proposed Insured(s): provide details to all "yes" Yes No Yes No
answers in remarks section)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
<PAGE>
(a) Will the policy applied for replace or change any life insurance or annuity
policy currently in force with this or any other Company? (If yes complete
required state replacement form) ---- ---- ---- ----
- ---------------------------------------------------------------------------------------------------------------------------
(b) Has any life insurance lapsed, been surrendered or otherwise terminated in
the last 24 months? ---- ---- ---- ----
- ---------------------------------------------------------------------------------------------------------------------------
(c) Does any Proposed Insured currently have, or within the past 12 months has
any Proposed Insured had any long-term care policies or riders (including
healthcare service or health maintenance organization contracts) in force or
pending? ---- ---- ---- ----
- ---------------------------------------------------------------------------------------------------------------------------
(d) Does any of the Proposed Insured's long-term care policies or riders include
Home Health Care coverage: ---- ---- ---- ----
- ---------------------------------------------------------------------------------------------------------------------------
(e) Has any life or health insurance, nursing home or home health care coverage
applied for ever been declined, postponed or offered other than applied for? ---- ---- ---- ----
- ---------------------------------------------------------------------------------------------------------------------------
Remarks:
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
L-3900 AA (10/99)
<PAGE>
Third Party Designation
I, the Applicant/Owner understand that I have the right to designate a third
party, in addition to myself, to receive copies of any grace period and lapse
notices of my insurance coverage. I understand that no Power of Attorney is
created by this designation and that no other policy information will be
supplied to the designated third party. I understand that the additional notice
will be mailed no later than 30 days after a premium payment is required and
unpaid. I also understand that I will be given the opportunity to change my
third party designation annually. My selection is as follows:
__ I elect NOT to designate a third party to receive any grace period or lapse
notices.
__ I designate the person listed below to receive copies of any grace
period or lapse notices.
Third Party Name: ____________________________________________
Address: ____________________________________________
Phone No. ______________________
Optional Inflation Protection Coverage (This coverage ONLY applies to the
optional Extension of Convalescent Care (Long-Term Care) Benefits Rider.)
I have received the Outline of Coverage and the graphs that compare the benefits
and premiums of the optional Extension of Convalescent Care Benefits Rider with
and without inflation protection. I understand and agree that I will be issued
the rider that includes the inflation protection UNLESS I sign the rejection
statement below.
Rejection Statement: I hereby REJECT the Optional Inflation Protection.
______________________________________________________________
(Signature of Applicant/Owner)
_____________________________
(Date)
Statement of Understanding
By signing the section below, I (we) understand and agree that:
All statements and answers given on all Parts of this application, when
required, are true, complete and correctly recorded to the best of my (our)
knowledge and belief. I (We) understand that all such statements and answers are
a part of this application and, therefore a part of any insurance policy issued.
It is agreed that:
(1) No agent or medical examiner can accept risks or make or change
contracts or waive First Penn-Pacific's rights or requirements.
(2) No insurance shall take effect unless the Proposed Insured(s) is
(are) alive and in the same condition of health as described in this
application when the policy is delivered to the Owner and the full
initial premium is paid. However, if the full initial premium is paid
as set forth in the
<PAGE>
attached Conditional Receipt and this Receipt is delivered to the
Owner, the terms of this Receipt shall apply.
(3) Acceptance of a policy by the Owner shall constitute ratification of
any changes made by First Penn-Pacific under "Executive Office
Endorsements." In those states where it is required, changes in plan
of insurance, amount, age at issue, classification of risks or
benefits will be made only with the Owner's consent.
Fraud Notice
I understand that any person who submits an application or files a claim with
the intent to defraud or helps commit a fraud against an insurer, as determined
by a court of competent jurisdiction, is guilty of a crime.
Authorization to Obtain and Disclose Information
In conjunction with an application for insurance, the proposed insured(s) hereby
authorize(s) any licensed physician, medical practitioner, hospital, clinic,
Veterans Administration, or other medical or medically related facility,
insurance company, the Medical Information Bureau or other organization,
institution or person or consumer reporting agency who possesses information of
me (us) or my (our) children to furnish such information to First Penn-Pacific
Life Insurance Company or its reinsurers.
This authorization includes information about drugs, alcoholism or mental
illness.
First Penn-Pacific Life Insurance Company or its reinsurers may make a brief
report regarding me (us) or my (our) children to other companies to whom I (we)
have applied or may apply.
I (We) authorize First Penn-Pacific Life Insurance Company and any reinsurer to
obtain an investigative consumer report on me (us). I (We) understand that if a
consumer report is prepared, I (We) will be interviewed in connection with this
application.
I (We) elect not to have personal information disclosed to non-affiliates of
First Penn-Pacific Life Insurance Company for purposes other than the marketing
of insurance products and services.
This authorization will be valid from the date signed for a period of two and
one-half years (30 months). I (We), or any person acting on my (our) behalf, may
obtain a copy of this authorization by writing to First Penn-Pacific Life
Insurance Company. A photographic copy of this authorization shall be as valid
as the original.
I (We) have read the Optional Inflation Protection Coverage
<PAGE>
notice, the Statement of Understanding, the Fraud Notice, the Authorization to
Obtain and Disclose Information and have received a copy of the Pre-Notification
which includes the Medical Information Bureau notice and the Fair Credit
Reporting Act notice. Caution: If your answers on this application are incorrect
or untrue, First Penn-Pacific may have the right to deny benefits or rescind
coverage.
Signed at _____________________________________________________________________
(City/State)
this date ____________________________
(Month/Day/Year)
_______________________________________________________________________________
(Signature of Proposed Insured #1 if other than Applicant)
_______________________________________________________________________________
(Signature of Applicant/Owner if other than Proposed Insured(s))
_______________________________________________________________________________
(Signature of Proposed Insured #2 if other than applicable)
_______________________________________________________________________________
Signature of Witness/Agent
Executive Office Endorsement
(Not applicable in Pennsylvania or West Virginia)
Special Requests or Instructions
L-3900 AA (10/99)
69164v1
<PAGE>
Exhibit 1.10(b)
FIRST PENN-PACIFIC 1801 South Meyers Road
LIFE INSURANCE CO. Oakbrook Terrace, Illinois 60181-5214
A member of Lincoln Financial Group (630) 495-3336
Application for Life Insurance
Part I
Please Print Using Dark Ink
SECTION 1 - PROPOSED INSURED #1 (Applicant/Owner unless otherwise noted in
Section III)
Date of
Name:_____________________ Sex: ___ Birth:___/___/___ Age:____
(First)(Middle)(Last) M D Y
State of Social
Birth: ___________ Security No.:____________
Home Address: ________________________________________________
City State Zip
Phone # (Home) (___) __________
Marital Status: __ Occupation:________________________________
Employer: _________________________________________
Business Address: ____________________________________________
City State Zip
Phone #(Business) (___) ______________________________________
SECTION II - PROPOSED INSURED #2 (Contingent Owner, unless
otherwise noted in Section III) (Complete ONLY if applying for
Second-to-Die Coverage)
Date of
Name:_____________________ Sex: ___ Birth:___/___/___ Age:____
(First)(Middle)(Last) M D Y
State of Social
Birth: ___________ Security No.:____________
Home Address: ________________________________________________
City State Zip
Phone # (Home) (___) __________
Marital Status: __ Occupation:________________________________
Employer: _________________________________________
Business Address: ____________________________________________
City State Zip
Phone #(Business) (___) ______________________________________
SECTION III - APPLICATION/OWNER (or Payor)(Applicant must sign
Page 4)
Name of Applicant/Owner (if other than Proposed Insured #1)
Date of
Name:_____________________ Birth:___/___/___
M D Y
<PAGE>
Social Security No.
or Taxpayer I.D. No.:_______________________
Address: _____________________________________________________
City State Zip
Relationship to
Proposed Insured(s): ________________________________
Name of Contingent Owner (if other than Proposed Insured
#2)(applicable only to Second-to-Die Coverage)
Date of
Name:_____________________ Birth:___/___/___
M D Y
Social Security No.
or Taxpayer I.D. No.:_______________________
All notices and reports will be sent to the Owner, unless otherwise specified
in Third Party Designation.
Relationship to
Proposed Insured(s): ________________________________
SECTION IV - BENEFICIARY
Primary Beneficiary: (full name and relationship to Proposed Insured(s): ______
_______________________________________________________________________________
Contingent: (full name and relationship to Proposed Insured(s): _______________
_______________________________________________________________________________
NOTE: Unless otherwise noted, death benefits will be divided equally among
multiple surviving beneficiaries.
L-3920 AAA (10/99)
<PAGE>
Part II
SECTION V - POLICY BENEFITS AND PREMIUMS
Plan of Insurance: _________________ Premium Frequency:
__ Single Premium $_______________
__ Annual __ Semi-Annual
Specified Amount: ________ __ Quarterly __ PAC
Death Benefit Option __ Option 1 __ Option 2 __ Other ________ Rider(s): Other
Riders (if available)
Premium Payment Schedule: (if other than single)
Convalescent Care Benefits (Long-Term Care)
__ Waiver of Monthly Deduction
Planned Periodic Premium $___________________
__ 2 years and no extension __ ________________________
Additional Initial Premium $__________________
__ 2 years and 2 year extension __ ________________________
Additional submitted with App $ ______________
__ 3 years and lifetime extension __ _______________________
__ Other Combination ____________ __ ________________________
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
SECTION VI - NON-MEDICAL QUESTIONS Proposed Insured #1 Proposed Insured #2
Has any Proposed Insured: (if yes, give name, date and
details in Section VIII) Yes No Yes No
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
(a) have any life insurance or annuities currently in
force which will be replaced or changed by the policy being
applied for? --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------
(b) smoked cigarettes in the past 12 months --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------
(c) used any other type of tobacco or nicotine product
within the past 12 months? --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------
(d) piloted an aircraft within the past 3 years, or
has any intention of becoming a pilot? --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------
(e) ever participated in a sport or avocation such
as vehicle racing, sky diving, hang gliding, scuba or
skin diving? --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------
(f) had any life or health insurance applied for ever
been declined, postponed or offered other than
applied for? --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------
(g) within the past 3 years had their driver's license
restricted or revoked or been cited for more than 2
moving violations or been convicted of DUI? --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------
(h) any intention of traveling or residing outside the
U.S. or Canada within the next two years? --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
SECTION VII - DETAILS TO NON-MEDICAL QUESTIONS IN SECTIONS VI
- ---------------------------------------------------------------------------------------------------------------
Proposed Insured Question # Date Details or Reason
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
(If more room needed, please use a separate sheet of paper and have the Proposed
Insured sign and date the form.)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
SECTION VIII - MEDICAL SECTION
Proposed Insured #1 Proposed Insured #2
- ---------------------------------------------------------------------------------------------------------------
Height: ____ Ft. _____In. Height: ____ Ft. _____In.
Weight __________ lbs. Weight __________ lbs.
Weight Change in past year and reason? Weight Change in past year and reason?
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Personal Physician's Name Personal Physician's Name
- ---------------------------------------------------------------------------------------------------------------
Address and Phone Number Address and Phone Number
<S> <C>
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
L-3920 AAA (10/99)
<PAGE>
Third Party Designation
I, the Applicant/Owner understand that I have the right to designate a third
party, in addition to myself, to receive copies of any grace period and lapse
notices of my insurance coverage. I understand that no Power of Attorney is
created by this designation and that no other policy information will be
supplied to the designated third party. I understand that the additional notice
will be mailed no later than 30 days after a premium payment is required and
unpaid. I also understand that I will be given the opportunity to change my
third party designation annually. My selection is as follows:
__ I elect NOT to designate a third party to receive any grace period or lapse
notices.
__ I designate the person listed below to receive copies of any grace
period or lapse notices.
Third Party Name: _____________________________________________________________
Address: _____________________________________________________________
Phone No. __________________________
Optional Inflation Protection Coverage (This coverage ONLY applies to the
optional Extension of Convalescent Care (Long-Term Care) Benefits Rider.)
I have reviewed the Outline of Coverage and the graphs that compare the benefits
and premiums of the optional Extension of Convalescent Care Benefits Rider with
and without inflation protection. I understand and agree that I will be issued
the rider that includes the inflation protection UNLESS I sign the rejection
statement below.
Rejection Statement: I hereby REJECT the Optional Inflation Protection.
________________________________________________________________________________
(Signature of Applicant/Owner)
______________________________________________
(Date)
Statement of Understanding
By signing the section below, I (we) understand and agree that:
All statements and answers given on all Parts of this application, when
required, are true, complete and correctly recorded to the best of my (our)
knowledge and belief. I (We) understand that all such statements and answers are
part of this application and, therefore a part of any insurance policy issued.
It is agreed that:
(1) No agent or medical examiner can accept risks or make or change contracts or
waive First Penn-Pacific's rights or requirements.
(2) No insurance shall take effect unless the Proposed Insured(s) is (are) alive
and in the same condition of health as described in this application when the
policy is delivered to the Owner and the full initial premium is paid. However,
if the full initial premium is paid as set forth in the
<PAGE>
attached Conditional Receipt and this Receipt is delivered to the Owner, the
terms of this Receipt shall apply.
(3) Acceptance of a policy by the Owner shall constitute ratification of any
changes made by First Penn-Pacific under Executive Office Endorsements. In
those states where it is required, changes in plan of insurance, amount, age
at issue, classification of risks or benefits will be made only with the
Owner's consent.
Fraud Notice
I understand that any person who submits an application or files a claim with
the intent to defraud or helps commit a fraud against an insurer, as determined
by a court of competent jurisdiction, is guilty of a crime.
Authorization to Obtain and Disclose Information
First Penn-Pacific Life Insurance Company, its reinsurers, insurance support
organizations, and their authorized representatives, are hereby authorized to
obtain medical and other information in order to evaluate my (our) application
for insurance. This authorization includes information about drugs, alcoholism
and mental illness.
Any physician, medical practitioner, hospital, clinic, or other medical or
medically related facility, the Veterans Administration, the Medical Information
Bureau, Inc., my employer, any consumer reporting agency or insurance company
who possesses information of care, treatment or advice given to me or my
children may furnish such information to First Penn-pacific, or its authorized
representative upon presenting this authorization to photocopy.
First Penn-Pacific or its reinsurers may make a brief report regarding me or my
children to other insurance companies to whom I have or may apply.
I authorize First Penn-Pacific to obtain an investigative consumer report on me.
I understand that if a consumer report is prepared, I will be interviewed in
connection with the report. I understand that I may request a copy of this
report.
I elect not to have personal information disclosed to non-affiliates of First
Penn-Pacific for purposes other than the marketing of insurance products and
services.
This authorization shall be valid from the date signed for a period of 22 years
(30) months. A photocopy of this authorization shall be as valid as the
original.
I understand that I, or any person who is authorized to act on my behalf, is
entitled to receive a copy of this authorization
<PAGE>
form.
I (We) have read the Optional Inflation Protection Coverage notice, the
Statement of Understanding, the Fraud Notice, the Authorization to Obtain and
Disclose Information and have received a copy of the Pre-Notification which
includes the Medical Information Bureau notice and the Fair Credit Reporting Act
notice. Caution: If your answers on this application are incorrect or untrue,
First Penn-Pacific may have the right to deny benefits or rescind coverage.
Signed at _____________________________________________________________________
(City/State)
this date ________________________________
(Month/Day/Year)
_______________________________________________________________________________
(Signature of Proposed Insured #1 if other than Applicant)
_______________________________________________________________________________
(Signature of Applicant/Owner if other than Proposed Insured(s))
_______________________________________________________________________________
(Signature of Proposed Insured #2 if applicable)
_______________________________________________________________________________
Signature of Witness/Agent
Executive Office Endorsement
(Not applicable in Pennsylvania or West Virginia)
Special Requests or Instructions
L-3920 AAA (10/99)
<PAGE>
AGENT'S REPORT
The degree of service which the Company is able to render the Agent and the
Applicant/Owner will be largely determined by the completeness and accuracy with
which the following questions are answered:
AGENT'S STATEMENT YES NO
1. Did you see and personally ask the Proposed Insured(s)
all the questions on the application(?)................. ___ ___
2. Are you aware of any information which is inconsistent
with the information shown on the application(s)?....... ___ ___
3. To your knowledge, has any Proposed Insured smoked
cigarettes or used any tobacco or nicotine product
within the past 12 months?.............................. ___ ___
4. Did you give the "prenotification" to the Proposed
Insured(s)? (If not, explain).......................... ___ ___
5. Will the policy applied for replace or change any
existing insurance or annuity?.......................... ___ ___
9. Proposed Insured's estimated worth?
Assets $_________________ Net Worth $________________
Liabilities $ ___________ Monthly Income $___________
10. Estimated invested assets exclusive of Home, Car, and personal property
_______________________________________________________________________________
11. Estimated total annual household income____________________________________
12. Source of premium and date available_______________________________________
List any health insurance policies (including Long-Term Care) you have sold to
the Proposed Insured(s) which are still in force:
_______________________________________________________________________________
List any health insurance policies (including Long-Term Care) you have sold to
the Proposed Insured(s) in the past five (5) years which are no longer in force:
_______________________________________________________________________________
_______________________________________________________________________________
Agent entitled to commission Commission
Split
____________________________ __________ ____________________________
Name Agent No.
____________________________ __________ ____________________________
Name Agent No.
____________________________ __________ ____________________________
<PAGE>
Agency Name Agent No.
________________________________________________________
Marketing Company Name and Phone (if known)
Please indicate requirements you ordered.
___ Exam APS Dr. __________________
___ EKG Dr. __________________
___ Urine Other
___ Blood Profile __________________________
___ Inspection Report
________________________________________________________
<TABLE>
<CAPTION>
_______________________________________________________________________________
<S> <C>
Agent I declare that, prior to the application being signed,
Statement I have asked and carefully explained each question and
Statement recorded each answer and that, to the best
of my knowledge and belief, the answers given in this
application are complete and accurate. I also declare
that the notice including the Medical Information
Bureau and Fair Credit Reporting Act was given to the
Proposed Insured(s). To the best of my knowledge, the
insurance applied for (will/will not) replace any
existing life insurance or annuity.
I declare that I have no personal knowledge of any
other factors which may have an effect on the Proposed
Insured(s) insurability.
_______________________________________________________________________________
</TABLE>
Date _______________, ________ ______________________
Month Day Year Print Agent Name
______________________________ ______________________
Agent Phone Number Signature of Agent
Agent Remarks
L-5029 AAA (5/97)
69209
<PAGE>
EXHIBIT 1.10(c)
[LOGO] [1801 S. Meyers Road
SUPPLEMENTAL APPLICATION Oakbrook Terrace, Illinois 60148
Required for all Variable Products (630) 495-3336]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
APPLICANT/OWNER
Date of
Name: Birth: _____/_____/_____
--------------------------------------- M D Y
Social Security No.
or Taxpayer I.D. No.:
---------------------------
Estimated Net Worth:
------------------------
Estimated Current Annual Household Income:
--------------------------
Number of Dependents:
--------------
Estimated Federal Income Tax bracket: / /15% / / 28% / / 31% / / %
----------
Employer:
----------------------------------------------------------
Occupation:
-----------------------------
Address of Employer:
-----------------------------------------------------------
Is Employer a member of the NASD?.................................../ /Yes / /No
SUITABILITY INFORMATION
1. Investment Objectives (check all that apply):
/ / Growth of Assets / / Conservation of Principal
/ / Other (specify)
--------------------------------------------------------
/ / Retirement Income / / Tax Sheltered Accumulations
2. I am comfortable assuming (check all that apply):
/ / Low Risk / / Moderate Risk / / High Risk
/ / Other (specify)
--------------------------------------------------------
3. Source of Funds:
/ / Current Income / / Qualified Plan Distribution
/ / IRA Rollover
/ / Personal Savings / / Mutual Fund Redemption
/ / Other (specify)
-----------------------------------------------------
/ / CD/Money Market Fund / / Insurance Proceeds
4. Did you receive the current prospectus for the life insurance or annuity
contract applied for?........................................../ /Yes / /No
5 Do you understand that the contract values including any death benefit may
increase or decrease, depending on the investment performance of the
Variable Sub-Account(s)?......................................./ /Yes / /No
6. If applying for a life insurance contract only, do you understand that the
contract may lapse if the Surrender Value becomes insufficient to cover the
Monthly Deductions?............................................/ /Yes / /No
7. Do you understand that any personalized illustrations received are based on
hypothetical rate of return assumptions which may not be indicative of
actual future investment experience of the Variable Sub-Account(s) or
actual interest credited to the Fixed Account?................./ /Yes / /No
8. Do you understand that all net premiums received before the Allocation
Date, which generally is within 10 days after the 30 day Right-to-Examine
Period, will initially be held in the Money Market Sub-Account until the
Allocation Date and then will be transferred in accordance with your
instructions specified below?................................../ /Yes / /No
9. Do you believe that this contract is consistent with your insurance needs
and financial objectives?....................................../ /Yes / /No
INITIAL PREMIUM ALLOCATION (TOTAL MUST EQUAL 100%, MINIMUM ALLOCATION NO LESS
THAN 5%, WHOLE PERCENTAGES ONLY)
[ % Fixed Account]
-------
[ % Lincoln National Bond Fund Sub-Account]
-------
[ % Delaware Trend Series Sub-Account]
-------
[ % Lincoln National Money Market Fund Sub-Account]
-------
[ % Delaware Growth and Income Series Sub-Account]
-------
[ % Delaware Select Growth Series Sub-Account]
-------
[ % Delaware International Equity Series Sub-Account]
-------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VL-3915AA(01/00) 1
<PAGE>
SPECIAL REQUESTS
1. To activate the TELEPHONE TRANSFER AND WITHDRAWAL PRIVILEGES OPTIONS in the
policy, please provide us with a 6 digit Personal Identification Number
(PIN#). If you do NOT wish to activate, please leave blank.
|___|___|___|___|___|___|.
2. Do you elect the DOLLAR COST AVERAGING ALLOCATION
OPTION?......................................................../ /Yes / /No
If yes, please select the frequency:
/ / Monthly / / Quarterly / / Semi-Annually / / Annually
Given the frequency indicated above, please provide the specific day of the
month when you wish this option to occur:
-------------------------------
Please indicate the $ or % to be transferred from the:
------- --------
/ / Money Market Sub-Account / / Fixed Account to the Sub-Accounts
selected below:
[$ or % Delaware Trend Series Sub-Account]
-------- -------
[$ or % Delaware Growth and Income Series Sub-Account]
-------- -------
[$ or % Delaware Select Growth Series Sub-Account]
-------- -------
[$ or % Delaware International Equity Series Sub-Account]
-------- -------
[$ or % Lincoln National Bond Fund Sub-Account]
-------- -------
3. Do you elect the AUTOMATIC REBALANCING ALLOCATION
OPTION?......................................................../ /Yes / /No
(THIS OPTION IS NOT AVAILABLE IF THE DOLLAR COST AVERAGING OPTION IS
ELECTED)
If yes, please select the frequency:
/ / Quarterly / / Semi-Annually / / Annually
Given the frequency indicated above, please provide the specific day of the
month when you wish this option to occur:
---------------------------------
SIGNATURES
I understand that the amount and duration of the Death Benefit and other values
provided by this life insurance or annuity contract are based on the investment
experience of the Variable Account, the Fixed Account earnings and contract
charges. Variable Account Values may increase or decrease. These Variable
Account Values are NOT GUARANTEED as to fixed dollar amount.
To the best of my knowledge, the above answers are true and correctly recorded.
I believe the life insurance or annuity contract applied for is suitable for my
investment objectives and understand and agree that this Supplemental
Application shall be attached to and made a part of any issued contract.
- ---------------------------------------- ---------------------------------
Signature of Applicant/Owner Date
The Applicant/Owner listed above has been informed of the risks involved in this
life insurance or annuity contract, and I certify that I have reasonable grounds
for believing that this contract is suitable for the Applicant/Owner's
objectives.
- ---------------------------------------- ---------------------------------
Signature of Registered Representative Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VL-3915AA(01/00) 2
<PAGE>
Exhibit 1.10(d)
FIRST PENN-PACIFIC 1801 South Meyers Road
LIFE INSURANCE CO. Oakbrook Terrace, Illinois 60181-5214
A member of Lincoln Financial Group (630) 495-3336
SUPPLEMENTAL APPLICATION FOR INSURANCE
Proposed Date of
Insured #1______________________ Birth _________________
Proposed Insured #2 Date of
(Second-to-Die only) __________________ Birth ________________
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Application Questions (provide details to yes answers below) Proposed Proposed
Insured #1 Insured #2
<S> Yes No Yes No
<C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
1. Does any Proposed Insured have any impairment, whether mental or physical,
for which any Proposed Insured needs or receives assistance or supervision in
performing every day living activities such as bathing, dressing, eating,
transferring or locomotion, toileting, or bowel and bladder control? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
2. Does any Proposed Insured use a wheelchair, walker or cane, oxygen, catheter,
dialysis machine, or other mechanical device? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
3. Has any Proposed Insured received a medical diagnosis within the past five
years under which any Proposed Insured was advised to have any surgical
operation which has not yet been performed? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
4. Within the past 5 years, has any Proposed Insured been confined to a nursing
home or recommended admission to same? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
5. Is any Proposed Insured currently confined to a hospital or nursing facility? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
6. In the past 5 years, has any Proposed Insured received home health care? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
7. Has any Proposed Insured ever been rejected or rated for nursing care or home
health care coverage? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
8. Is any Proposed Insured currently covered by Medicaid? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Question No. Date Details
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Existing Coverage (provide details to yes answers below) Proposed Proposed
Insured #1 Insured #2
Yes No Yes No
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
1. Does any Proposed Insured currently have, or within the last 12 months has
any Proposed Insured had, any long-term care policies or riders (including
healthcare service or health maintenance organization contracts) in force or
pending? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
2. Do any of the long-term care policies or riders include Home Health Care
coverage? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
3. Does any Proposed Insured intend to replace any long-term care policies? ---- --- ---- ---
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Maximum Daily
Proposed Insured Question No. Existing Insurance Co. Benefit Details
________________ ____________ ______________ __________ ___________________
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
I understand that any person who submits an application or files a claim with
intent to defraud or helps commit a fraud against an insurer, as determined by
a court of competent jurisdiction, is guilty of a crime.
Caution: If your answers on this Supplemental Application are incorrect or
untrue, the Company may have the right to deny benefits or rescind your policy.
I hereby declare that the statement and answers to the above questions are
complete and true to the best of my knowledge and belief. I agree that a copy of
<PAGE>
this Supplemental Application shall be attached to and form a part of any policy
issued.
Dated at: ___________________________________________
City State
On: _____________________________________
Month Day Year
_______________________________________________________________________________
Witness:
_______________________________________________________________________________
Signature of Proposed Insured #1
_______________________________________________________________________________
Witness:
_______________________________________________________________________________
Signature of Proposed Insured #2, if applicable
69251v1
