<PAGE>
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
------------------
A MEMBER OF LINCOLN FINANCIAL GROUP EXHIBIT 1.5(a)
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Fort Wayne, Indiana 46801
Executive Office: 10 North Martingale Road
Schaumburg, Illinois 60173-2268 - (847) 466-8000
Administrative Office: [P.O. Box 150482 Attention:MXX
Hartford, Connecticut 06115-0482 (800) 444-2363]
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 Schaumburg, Illinois.
/s/ Marcia L. DuMond /s/ Roland C. Baker
Secretary President
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THE DOLLAR AMOUNT OF ACCOUNT VALUES PROVIDED BY THE VARIABLE ACCOUNT OF THIS
POLICY IS BASED UPON INVESTMENT EXPERIENCE AND IS NOT GUARANTEED.
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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
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VL-2020AA(01/00) Page 1
<PAGE>
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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.
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VL-2020AA(01/00) Page 2
<PAGE>
FIRST PENN-PACIFIC
LIFE INSURANCE CO.
------------------
A MEMBER OF LINCOLN FINANCIAL GROUP
--------------------------------------------------------------------------------
Fort Wayne, Indiana
Executive Office: 10 North Martingale Road
Schaumburg, Illinois 60173-2268 - (847) 466-8000
Administrative Office: [P.O. Box 150482 Attention:MXX
Hartford, Connecticut 06115-0482 (800) 444-2363]
POLICY SCHEDULE
POLICY NUMBER: [1,234,567]
INSURED: [JOHN DOE] DATE OF ISSUE: [JANUARY 1, 2000]
INITIAL SPECIFIED AMOUNT: [$ 41,525*] ISSUE AGE: [35]
MINIMUM SPECIFIED AMOUNT: [$ 41,525] PREMIUM CLASS: [STANDARD]
VL-2020AA(01/00) FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
BENEFIT AMOUNT: See Initial Specified Amount
GUARANTEED MINIMUM BENEFIT: [$ 36,971] (SEE THE GUARANTEE ENHANCEMENT RIDER
ATTACHED TO THIS POLICY)
PREMIUM MODE: [Unscheduled]
*NOTE: This policy may terminate during the Insured's lifetime if the actual
premium paid and the investment experience are insufficient to continue coverage
in force.
LIMITS ON ALLOCATION OF NET PREMIUM PAYMENTS: All allocations of Net Premium
Payments must be made in whole percentages and in aggregate must total 100%.
Premium Payments will be allocated net of the Premium Expense Charge specified
Schedule 2.
TRANSFERS:
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 transferred during any one Policy Year may not
exceed [25%] of the Fixed Account Value on the immediately preceding Policy
Anniversary.
MINIMUM TRANSFER AMOUNT: The lesser of [$ 100.00] or the balance in the
Sub-Account being transferred.
TRANSFER FEE: (SEE SCHEDULE 2)
3a
<PAGE>
POLICY SCHEDULE CONTINUED
SCHEDULE 1: SURRENDER CHARGES
The charge assessed upon full surrender of this policy will be the lesser of the
Surrender Charge shown below or the then current Net Account Value. The
Surrender Charge does not apply to a partial withdrawal or a decrease in the
Specified Amount. An additional Surrender Charge table will apply to each
increase in Specified Amount permitted by First Penn-Pacific. The additional
table will apply as of the date of the increase.
SURRENDER CHARGE FOR INITIAL SPECIFIED AMOUNT
<TABLE>
<CAPTION>
END OF POLICY SURRENDER
YEAR CHARGE
<S> <C>
[1-10 [$ 699.47
11 524.38
12 393.28
13 262.19
14 131.09
15 AND AFTER] 0]
</TABLE>
We describe the procedures for Surrender and the Surrender Charges in greater
detail in the PARTIAL WITHDRAWALS AND SURRENDER provision.
TRANSACTION FEE: We will assess a Transaction Fee of the lesser of [$25 or 2%]
of the amount withdrawn for each Partial Withdrawal. We describe the procedures
for Partial Withdrawals and the Transaction Fee in greater detail in the PARTIAL
WITHDRAWALS AND SURRENDER provision.
3b
<PAGE>
POLICY SCHEDULE CONTINUED
SCHEDULE 2: POLICY VALUE CREDITS AND DEDUCTIONS
INTEREST: We will credit interest to the Fixed Account on each Monthly
Anniversary Day. The current interest rate is [6%] per year compounded yearly.
The Guaranteed Interest Rate is 4% per year compounded yearly.
PREMIUM EXPENSE CHARGE: We will deduct an expense charge of 3.5% from each
premium payment.
MONTHLY DEDUCTION: We will deduct a Monthly Deduction from the Account Value on
each Monthly Anniversary Day. (See the CREDITS AND DEDUCTIONS provision.) The
Monthly Deduction includes an Administrative Fee charge, Cost of Insurance
charges and charges for any supplemental riders and optional benefits. The
current Monthly Deduction is [$6.00]. The maximum Monthly Deduction is $8.00.
CHARGES AND FEES ASSOCIATED WITH THE VARIABLE SUB-ACCOUNTS: We will deduct a
Mortality and Expense (M&E) charge 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 from each fund as set forth in its
prospectus.
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%
TRANSFER FEE. We will deduct a Transfer Fee of [$25] for each transfer in excess
of [12] made during any one Policy Year. A single transfer may consist of
multiple transactions.
FLAT EXTRA MONTHLY INSURANCE RATE: [None] (SEE SCHEDULE 3.)
RISK FACTOR: [None] (SEE SCHEDULE 3.)
Page 3c
<PAGE>
POLICY SCHEDULE CONTINUED
SCHEDULE 3: TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
(MONTHLY RATES PER $1,000 OF NET AMOUNT AT RISK)
The Monthly Cost of Insurance Rates charged for this policy is based upon the
Insured's age, sex, smoking status, and duration. If, however, the Insured is
in a Rated Premium Class, we may increase these rates by multiplying them by
a Risk Factor or by adding a Flat Extra Monthly Rate. The risk and rate
factors, if any, are shown in Schedule 2.
<TABLE>
<CAPTION>
------------------------------------------------------------- -----------------------------------------------------------
AGE M-N/S M-SM F-N/S F-SM AGE M-N/S M-SM F-N/S F-SM
------------------------------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 $ 0.22 $ 0.22 $ 0.16 $ 0.16 50 $ 0.43 $ 0.83 $ 0.36 $ 0.56
1 0.09 0.09 0.07 0.07 51 0.47 0.91 0.39 0.61
2 0.08 0.08 0.07 0.07 52 0.51 1.00 0.42 0.65
3 0.08 0.08 0.07 0.07 53 0.56 1.10 0.46 0.70
4 0.08 0.08 0.06 0.06 54 0.62 1.21 0.49 0.76
5 0.07 0.07 0.06 0.06 55 0.69 1.32 0.53 0.81
6 0.07 0.07 0.06 0.06 56 0.76 1.45 0.57 0.86
7 0.07 0.07 0.06 0.06 57 0.83 1.58 0.61 0.91
8 0.06 0.06 0.06 0.06 58 0.91 1.71 0.64 0.96
9 0.06 0.06 0.06 0.06 59 1.01 1.85 0.69 1.02
10 0.06 0.06 0.06 0.06 60 1.11 2.02 0.74 1.08
11 0.07 0.07 0.06 0.06 61 1.22 2.21 0.80 1.16
12 0.08 0.08 0.06 0.06 62 1.36 2.41 0.87 1.26
13 0.09 0.09 0.06 0.06 63 1.51 2.65 0.97 1.38
14 0.10 0.10 0.07 0.07 64 1.67 2.90 1.08 1.52
15 0.12 0.12 0.07 0.07 65 1.86 3.17 1.19 1.66
16 0.13 0.13 0.08 0.08 66 2.06 3.45 1.31 1.81
17 0.14 0.14 0.08 0.08 67 2.27 3.74 1.43 1.95
18 0.14 0.18 0.08 0.08 68 2.50 4.05 1.55 2.10
19 0.14 0.19 0.08 0.09 69 2.76 4.38 1.69 2.25
20 0.14 0.19 0.08 0.10 70 3.07 4.75 1.86 2.44
21 0.14 0.19 0.09 0.10 71 3.40 5.16 2.06 2.67
22 0.14 0.19 0.09 0.10 72 3.76 5.63 2.30 2.96
23 0.13 0.19 0.09 0.10 73 4.19 6.15 2.60 3.30
24 0.13 0.18 0.09 0.11 74 4.67 6.72 2.94 3.69
25 0.13 0.18 0.09 0.11 75 5.18 7.33 3.31 4.12
26 0.12 0.17 0.09 0.11 76 5.72 7.95 3.72 4.57
27 0.12 0.17 0.10 0.12 77 6.28 8.57 4.16 5.05
28 0.12 0.17 0.10 0.12 78 6.88 9.21 4.64 5.55
29 0.12 0.17 0.10 0.13 79 7.52 9.87 5.17 6.10
30 0.12 0.18 0.10 0.13 80 8.22 10.59 5.77 6.71
31 0.12 0.18 0.11 0.14 81 9.02 11.37 6.46 7.41
32 0.13 0.19 0.11 0.14 82 9.92 12.25 7.26 8.20
33 0.13 0.20 0.12 0.15 83 10.91 13.20 8.16 9.12
34 0.14 0.21 0.12 0.16 84 11.99 14.18 9.16 10.12
35 0.14 0.23 0.13 0.17 85 13.12 15.18 10.24 11.18
36 0.15 0.24 0.13 0.18 86 14.30 16.16 11.39 12.30
37 0.16 0.26 0.14 0.20 87 15.50 17.17 12.62 13.46
38 0.17 0.29 0.16 0.22 88 16.72 18.22 13.93 14.67
39 0.18 0.31 0.17 0.24 89 17.97 19.27 15.33 15.94
40 0.20 0.35 0.18 0.26 90 19.29 20.33 16.82 17.34
41 0.21 0.38 0.20 0.29 91 20.68 21.43 18.45 18.86
42 0.23 0.42 0.21 0.32 92 22.22 22.72 20.28 20.55
43 0.25 0.46 0.23 0.34 93 24.04 24.37 22.44 22.54
44 0.27 0.50 0.24 0.37 94 26.50 26.63 25.22 25.22
45 0.29 0.55 0.26 0.40 95 30.21 30.21 29.25 29.25
46 0.31 0.59 0.28 0.43 96 36.36 36.36 35.72 35.72
47 0.34 0.65 0.29 0.46 97 47.21 47.21 46.87 46.87
48 0.36 0.70 0.31 0.49 98 66.21 66.21 66.09 66.09
49 0.39 0.77 0.34 0.53 99 83.33 83.33 83.33 83.33
100+ 00.00 00.00 00.00 00.00
------------------------------------------------------------- -----------------------------------------------------------
</TABLE>
Page 3d
<PAGE>
POLICY SCHEDULE CONTINUED
SCHEDULE 4: PERCENTAGE OF POLICY ACCOUNT VALUE TABLE
The percentages shown in this table are used to calculate the Minimum Death
Benefit which is described in the Minimum Death Benefit provision on page 9
of this policy.
<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>
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3e
<PAGE>
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POLICY SCHEDULE CONTINUED
SCHEDULE 5: CONVALESCENT CARE BENEFIT RIDER
<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].
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3f
<PAGE>
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--------------------------------------------------------
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.
"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
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VL-2020AA(01/00) Page 4
<PAGE>
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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 representations and not warranties.
We will not use any statement in an application to void this policy or to deny a
claim unless the
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VL-2020AA(01/00) Page 5
<PAGE>
--------------------------------------------------------------------------------
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 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.
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VL-2020AA(01/00) Page 6
<PAGE>
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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 policy values;
- The kind and amounts of the credits to, and the deductions from, the Policy
Account since the last report; and
- Outstanding policy loans.
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.
--------------------------------------------------------
PART 2. PREMIUM PROVISIONS
--------------------------------------------------------
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.
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 of no less than $100 at any time
during the continuance of this policy and before the Insured reaches age 100. We
reserve the right to limit the number and the amount of the additional premium
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payments. If an additional premium payment would increase our amount at risk, we
reserve the right to reject such premium payment unless satisfactory evidence of
insurability is provided to us.
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 to keep this policy in force for at least 2 months
plus any accrued loan interest is paid.
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 the same as it was on
the date of lapse. The Owner will be notified of the applicable Surrender
Charges upon reinstatement.
--------------------------------------------------------
PART 3. INSURANCE PROVISIONS
--------------------------------------------------------
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 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
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- 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.
--------------------------------------------------------
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 Transaction Fee, (c) any increases or decreases in
the Variable Sub-Account(s) as a result of market performance, (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
- 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, including any interest charged on the loan(s). The
Loan Account
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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 for amounts attributed to Regular Loans and Preferred Loans at the
annual equivalent rates shown in the Policy Schedule. Periodically, the
interest credited to the Loan Account will be transferred to the Fixed
Account and/or the Variable Sub-Accounts based on your current premium
allocation.
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 results of (a) minus (b),
which is explained below, by the number of Variable Accumulation Units for
that Variable Sub-Account at the beginning of the Valuation Period. As used
in this paragraph:
(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 made 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 Variable Accumulation Unit Value may increase or decrease from Valuation
Period to Valuation Period.
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.
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.
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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.
- The transfer request must be received at the Administrative Office prior
to the time of day set forth in the prospectus and provided the NYSE is
open for business, in order to be processed as of the close of the business
on the date the request is received; otherwise, the transfer will be
processed on the next business day the NYSE is open for business.
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.
- We will not make any Monthly Deductions; and
- We will not accept any more premiums.
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
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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 Net 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 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 minus
the Monthly
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Deduction excluding the policy Cost of Insurance charges and any rider
charges that are based on the policy Cost of Insurance charges.
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 and the Transaction Fee. The Transaction Fee is shown
on the Policy Schedule.
A Partial Withdrawal may be made if the withdrawal:
- Is not less than $500.00;
- Would not reduce the Policy Account Value below $500.00;
- Does not cause the Specified Amount to decline below the Minimum Specified
Amount shown in the Policy Schedule; or
- Is not more than 90% of the Surrender Value of the policy as of the end of
the Valuation period ending on the Valuation Day on which the request is
accepted by us.
The amount of the Partial Withdrawal and the Transaction Fee 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. We will pay Partial Withdrawals from Variable Sub-Account(s)
within 7 days after our receipt of
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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 loan may be for any amount up to 100% of the then current Surrender Value;
however we reserve the right to limit the amount of the loan so that the total
indebtedness will not exceed 90% of an amount equal to the then current Policy
Account Value less the Surrender Charge set forth in the Policy Schedule.
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 interest on the loan at the effective annual rates shown in
the Policy Schedule payable in arrears. The interest will be due annually on
each Policy Anniversary. Any interest due and not paid will be treated as a
new Policy Loan and will bear interest at the applicable rate. In addition,
if you do not pay the loan interest when due, we will transfer to the Loan
Account an amount equal to the unpaid interest. 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
interest at the annual Regular Loan Interest Rate shown in the Policy Schedule.
PREFERRED LOAN. Any Policy Loan, up to the maximum amount available for
Preferred Loans, when the Loan is made, will be treated as a Preferred Loan.
The Preferred Loan Rate is shown on the Policy Schedule.
The maximum amount available for a Preferred Loan is the policy gain at the
time of the Loan request. The policy gain is the Net Policy Account Value
minus the premiums paid for this policy, plus any partial withdrawals. 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 be
treated as a Preferred Loan until it is repaid.
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.
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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
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
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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.
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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.
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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.
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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
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